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Armor Holdings Inc – ‘8-K/A’ for 4/22/97

As of:  Monday, 6/23/97   ·   For:  4/22/97   ·   Accession #:  950136-97-759   ·   File #:  1-11667

Previous ‘8-K’:  ‘8-K’ on 4/22/97 for 3/26/97   ·   Next:  ‘8-K’ on 6/24/97 for 6/9/97   ·   Latest:  ‘8-K’ on / for 7/25/07

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/23/97  Armor Holdings Inc                8-K/A:7     4/22/97    2:102K                                   Capital Systems 01/FA

Amendment to Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Amended Form 8-K                                      52    207K 
 2: EX-23.1     Consent of Kpmg                                        1      5K

8-K/A   —   Amended Form 8-K
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
2Item 7. Financial Statements, Pro Forma Financial Information and Exhiits
47Unaudited pro forma income statement for the year ended December 28, 1996
48Unaudited pro forma balance sheet 
8-K/A1st Page of 52TOC↑TopPreviousNext↓BottomJust 1st
 

SECURITIES AND EXCHANGE COMMISSION  

Washington, D.C. 20549  

FORM 8-K/A-1  

CURRENT REPORT  

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  

Date of Report (Date of earliest event reported)       March 26, 1997           
                                               ---------------------------

Armor Holdings, Inc.  
-----------------------------------------------------------------------------   
(Exact name of registrant as specified in its charter)  

Delaware                          0-18863                         59-3392443    
-----------------------------------------------------------------------------   
(State or other                 (Commission                 (I.R.S. Employer    
jurisdiction                   File Number)                Identification No.)  
of incorporation)                                                               

13386 International Parkway, Jacksonville, Florida                    32218     
-----------------------------------------------------------------------------   
(Address of principal executive offices)                          (Zip code)    

Registrant's telephone number, including area code           (904) 741-5400     
                                               ---------------------------

-----------------------------------------------------------------------------   
(Former name or former address, if changed since last report.)  


8-K/A2nd Page of 52TOC1stPreviousNext↓BottomJust 2nd

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIITS      

In connection with the combination of Armor Holdings, Inc. (the "Company")
with DSL Group Limited ("DSL") (such transaction, the "DSL Transaction"), the   
Company's Current Report on Form 8-K, filed on April 22 1997, is hereby         
amended to include the following financial statements and pro forma financial   
information, which were previously omitted from such Current Report on Form     
8-K.                                                                            

(a) Financial Statements of Business Acquired.                                  

The following financial statements for DSL and DSL Holdings Limited ("DSL 
Holdings"), the predecessor of DSL (the "Predecessor"), are submitted herewith: 

                                                        [Enlarge/Download Table]

                                                                                   PAGE OF FORM 8-K/A-1
                                                                                   --------------------
                                                                                                       
Independent Auditors' Report ......................................................           3        
Consolidated profit and loss account--for the period ended 31 December 1996 .......           4        
Consolidated balance sheet--for the period ended 31 December 1996 .................           5        
Consolidated cash flow statement--for the period ended 31 December 1996 ...........           6        
Consolidated statement of total recognised gains and losses--for the period ended                      
  31 December 1996  ...............................................................           7        
Reconciliation of movements in shareholders' funds--for the period ended                               
  31 December 1996  ...............................................................           7        
Notes to financial statements .....................................................           8        
Independent Auditors' Report ......................................................          23        
Consolidated profit and loss accounts--31 March 1996 and 1995 .....................          24        
Consolidated balance sheets--31 March 1996 and 1995 ...............................          25        
Consolidated cash flow statements--31 March 1996 and 1995 .........................          26        
Consolidated statements of total recognised gains and losses--31 March 1996                            
 and 1995 .........................................................................          27        
Reconciliations of movements in shareholders' funds--31 March 1996 and 1995  ......          27        
Notes to financial statements .....................................................          28        


The following unaudited interim financial information for DSL and its     
Predecessor are submitted herewith:                                             

                                                        [Enlarge/Download Table]

                                                                        PAGE OF FORM 8-K/A-1
                                                                        --------------------
                                                                                            
Unaudited consolidated profit and loss account--31 March 1997 and 1996          41          
Unaudited consolidated balance sheet--31 March 1997 ....................        42          
Unaudited consolidated cash flow statement--31 March 1997 and 1996  ....        43          
Notes to unaudited interim financial statements ........................        44          


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DSL GROUP LIMITED   
CONSOLIDATED FINANCIAL STATEMENTS   
31 DECEMBER 1996  

INDEPENDENT AUDITORS' REPORT                                                    
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF DSL GROUP LIMITED                 

We have audited the accompanying consolidated balance sheet of DSL Group  
Limited and subsidiaries at 31 December 1996 and the related consolidated       
profit and loss account, consolidated statement of total recognised gains and   
losses, reconciliation of movements in shareholders' funds and consolidated     
cash flow statement for the period from 3 June 1996 (date of incorporation)     
to 31 December 1996. These consolidated financial statements are the            
responsibility of the management of DSL Group Limited. Our responsibility is    
to express an opinion on these consolidated financial statements based on our   
audit.                                                                          

We conducted our audit in accordance with auditing standards generally    
accepted in the United Kingdom and in the United States of America. Those       
standards require that we plan and perform the audit to obtain reasonable       
assurance about whether the financial statements are free of material           
misstatement. An audit includes examining, on a test basis, evidence            
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audit provides a reasonable basis   
for our opinion.                                                                

In our opinion, the consolidated financial statements referred to above   
present fairly, in all material respects, the financial position of DSL Group   
Limited and subsidiaries at 31 December 1996 and the results of their           
operations and their cash flows for the period from 3 June 1996 to 31           
December 1996, in conformity with generally accepted accounting principles in   
the United Kingdom.                                                             

Accounting principles generally accepted in the United Kingdom vary in    
certain significant respects from accounting principles generally accepted in   
the United States of America. Application of accounting principles generally    
accepted in the United States would have affected profit attributable to        
shareholders for the period from 3 June 1996 to 31 December 1996 and            
shareholders' funds at 31 December 1996, to the extent summarised in Note 24    
to the consolidated financial statements.                                       

KPMG                                                                            
Chartered Accountants                                                           
Registered Auditors                                                             
London, England                                                                 
15 April 1997                                                                   

3               


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DSL GROUP LIMITED   
CONSOLIDATED PROFIT AND LOSS ACCOUNT  
for the period ended 31 December 1996   

                                                        [Enlarge/Download Table]

                                                                       PERIOD FROM   
                                                                     INCORPORATION TO
                                                                       31 DECEMBER   
                                                                           1996      
                                                                          POUNDS     
                                                               NOTE    STERLING 000  
                                                             ------ ---------------- 
                                                                                     
TURNOVER ....................................................    2         7,968     
Cost of sales ...............................................             (6,330)    
                                                                    ---------------- 
GROSS PROFIT ................................................              1,638     
Administrative expenses (includes exchange gain of pounds                            
 sterling 326,000) ..........................................             (1,133)    
                                                                    ---------------- 
OPERATING PROFIT ............................................                505     
Income from interests in associated undertakings  ...........                197     
Other interest receivable and similar income ................                 31     
Interest payable and similar charges ........................    6          (192)    
                                                                    ---------------- 
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION ...............    3           541     
Tax on profit on ordinary activities ........................    7          (451)    
                                                                    ---------------- 
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ................                 90     
Equity minority interests ...................................   16            (3)    
                                                                    ---------------- 
PROFIT ATTRIBUTABLE TO SHAREHOLDERS .........................                 87     
Dividends--non-equity .......................................    8          (147)    
                                                                    ---------------- 
RETAINED LOSS FOR THE FINANCIAL PERIOD ......................   15           (60)    
                                                                    ================ 

                                                                [Download Table]

                                                                 PERIOD FROM   
                                                               INCORPORATION TO
                                                                 31 DECEMBER   
                                                                     1996      
                                                                    POUNDS     
                                                                 STERLING 000  
                                                              ---------------- 
                                                                               
RETAINED LOSS FOR THE FINANCIAL PERIOD                                         
The company .................................................          20      
Subsidiary undertakings .....................................        (226)     
Associated undertakings .....................................         146      
                                                              ---------------- 
                                                                      (60)     
                                                              ================ 

All results for the period are attributable to acquisitions in continuing       
activities.                                                                     

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DSL GROUP LIMITED   
CONSOLIDATED BALANCE SHEET  
at 31 December 1996   

                                                                [Download Table]

                                                                 31 DECEMBER 1996 
                                                               -------------------
                                                               POUNDS     POUNDS  
                                                              STERLING   STERLING 
                                                        NOTE    000        000    
                                                        ----  --------- --------- 
                                                                                  
FIXED ASSETS                                                                      
Tangible assets ........................................    9                 906 
Investments ............................................   10                 746 
                                                                         ---------
                                                                            1,652 
CURRENT ASSETS                                                                    
Debtors ................................................   11     4,181           
Cash at bank and in hand ...............................            578           
                                                               ---------          
                                                                  4,759           
CREDITORS: amounts falling due within one year  ........   12    (4,305)          
                                                               ---------          
NET CURRENT ASSETS .....................................                      454 
                                                                         ---------
TOTAL ASSETS LESS CURRENT LIABILITIES ..................                    2,106 
CREDITORS: amounts falling due after more than one year                           
                                                           13              (3,330)
                                                                         ---------
NET LIABILITIES ........................................                   (1,224)
                                                                         =========
CAPITAL AND RESERVES                                                              
Called up share capital ................................   14                 182 
Share premium account ..................................   15               4,656 
Profit and loss account ................................   15              (6,080)
                                                                         ---------
EQUITY AND NON-EQUITY SHAREHOLDERS' FUNDS ..............                   (1,242)
Equity minority interests ..............................   16                  18 
                                                                         ---------
                                                                           (1,224)
                                                                         =========

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DSL GROUP LIMITED   
CONSOLIDATED CASH FLOW STATEMENT  
for the period ended 31 December 1996   

                                                        [Enlarge/Download Table]

                                                                        PERIOD FROM   
                                                                     INCORPORATION TO 
                                                                     31 DECEMBER 1996 
                                                                   -------------------
                                                                    POUNDS     POUNDS 
                                                                   STERLING   STERLING
                                                             NOTE    000        000   
                                                            ------ --------- ---------
                                                                                      
NET CASH OUTFLOW FROM OPERATING ACTIVITIES .................   21                 (57)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE                                       
 Interest received .........................................             31           
 Interest paid .............................................           (167)          
 Dividends received from associated undertakings  ..........            197           
                                                                   ---------          
NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING                             
 OF FINANCE ................................................                       61 
TAXATION                                                                              
 UK tax refunded ...........................................             43           
 Overseas tax paid .........................................            (34)          
                                                                   ---------          
NET TAX REFUNDED ...........................................                        9 
INVESTING ACTIVITIES                                                                  
 Purchase of tangible fixed assets .........................           (415)          
 Purchase of subsidiary undertaking (net of cash and cash                             
  equivalents acquired) ....................................         (8,775)          
                                                                   ---------          
NET CASH OUTFLOW FROM INVESTING ACTIVITIES .................                   (9,190)
                                                                             ---------
NET CASH OUTFLOW BEFORE FINANCING ..........................                   (9,177)
                                                                             =========
FINANCING                                                                             
 Issue of ordinary share capital ...........................         (4,838)          
 New loans .................................................         (4,394)          
                                                                   ---------          
NET CASH INFLOW FROM FINANCING .............................                   (9,232)
INCREASE IN CASH AND CASH EQUIVALENTS ......................   22                  55 
                                                                             ---------
                                                                               (9,177)
                                                                             =========

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DSL GROUP LIMITED   
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES   
for the period ended 31 December 1996   

                                                                [Download Table]

                                      PERIOD FROM   
                                    INCORPORATION TO
                                      31 DECEMBER   
                                          1996      
                                         POUNDS     
                                      STERLING 000  
                                   ---------------- 
                                                    
LOSS FOR THE FINANCIAL PERIOD  ....        (60)     
Exchange adjustments ..............       (167)     
                                   ---------------- 
TOTAL GAINS AND LOSSES RECOGNISED         (227)     
                                   ================ 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS  
for the period ended 31 December 1996   

                                                                [Download Table]

                                       POUNDS   
                                    STERLING 000
                                    ------------
                                                
PROFIT ATTRIBUTABLE TO SHAREHOLDERS             
                                           87   
Dividends ...........................    (147)  
                                     ---------  
                                          (60)  
Exchange adjustments ................    (167)  
Share capital issued ................   4,838   
Goodwill written off ................  (5,853)  
                                     ---------  
DECREASE IN SHAREHOLDERS' FUNDS  ....  (1,242)  
Opening shareholders' funds .........      --   
                                     ---------  
CLOSING SHAREHOLDERS' FUNDS .........  (1,242)  
                                     =========  

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DSL GROUP LIMITED   
NOTES   
(forming part of the financial statements)  

1. ACCOUNTING POLICIES                                                          

The following accounting policies have been applied consistently in       
dealing with items which are considered material in relation to the group's     
financial statements.                                                           

BASIS OF PREPARATION                                                          

The financial statements have been prepared in accordance with applicable 
accounting standards and under the historical cost accounting rules.            

BASIS OF CONSOLIDATION                                                        

The group's financial statements consolidate the results of DSL Group     
Limited and all its subsidiary undertakings with effect from the date of        
acquisition on 31 July 1996 until 31 December 1996. In respect of associated    
undertakings, the group includes its share of post acquisition profits and      
losses in the consolidated profit and loss account and its share of post        
acquisition retained profits or accumulated deficits in the consolidated        
balance sheet.                                                                  

The consolidated financial statements are based on the reported results of
subsidiary undertakings and associated undertakings, which are based on the     
financial statements of these companies whose period ends are coterminous       
with or end three months before those of the parent company, and on             
management accounts where appropriate for the period from 1 October to 31       
December 1996.                                                                  

The acquisition method of accounting has been adopted. Under this method, 
the results of subsidiary and associated undertakings acquired or disposed of   
in the period are included in the consolidated profit and loss account from     
the date of acquisition or up to the date of disposal. Goodwill arising on      
consolidation (representing the excess of the fair value of the consideration   
given over the fair value of the separable net assets acquired) is written      
off against reserves on acquisition.                                            

FIXED ASSETS AND DEPRECIATION                                                 

Depreciation is provided by the group to write off the cost less the      
estimated residual value of tangible fixed assets by equal instalments over     
their estimated useful economic lives as follows:                               

                                                                [Download Table]

                                                              
Freehold land and buildings              --  not depreciated  
Short leasehold land and buildings       --  term of lease    
Plant and machinery                      --  20%-25% per annum
Fixtures and fittings                    --  20% per annum    

FOREIGN CURRENCIES                                                            

Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities          
denominated in foreign currencies are translated using the rate of exchange     
ruling at the balance sheet date and the gains or losses on translation are     
included in the profit and loss account.                                        

For consolidation purposes, the assets and liabilities of overseas        
subsidiary undertakings and associated undertakings are translated at the       
closing exchange rates and the profit and loss accounts are translated at the   
average exchange rates. Exchange differences arising on these translations      
are taken to reserves.                                                          

Subsidiaries operating in hyper-inflationary economies adjust the local   
currency financial statements to reflect current price levels before            
translation.                                                                    

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

LEASES                                                                        

Where the group enters into a lease which entails taking substantially all
the risks and rewards of ownership of an asset, the lease is treated as a       
'finance lease'. The asset is recorded in the balance sheet as a tangible       
fixed asset and is depreciated over its estimated useful life or the term of    
the lease, whichever is shorter. Future instalments under such leases, net of   
finance charges, are included within creditors. Rentals payable are             
apportioned between the finance element, which is charged to the profit and     
loss account, and the capital element which reduces the outstanding             
obligation for future instalments.                                              

All other leases are accounted for as 'operating leases' and the rental   
charges are charged to the profit and loss account on a straight line basis     
over the life of the lease.                                                     

PENSIONS                                                                      

The group operates a defined contribution pension scheme. The assets of   
the scheme are held separately from those of the group in an independently      
administered fund. The amount charged against profits represents the            
contributions payable to the scheme in respect of the accounting period.        

TURNOVER                                                                      

Turnover represents the amounts (excluding value added tax) derived from  
the provision of goods and services to third party customers during the         
period.                                                                         

TAXATION                                                                      

The charge for taxation is based upon the profit for the period and takes 
into account deferred taxation on timing differences. Provision is made for     
deferred taxation if there is reasonable evidence that such tax will be         
payable in the foreseeable future.                                              

2. SEGMENTAL INFORMATION                                                        

The table below sets out information on turnover for each of the group's  
geographic areas of operation.                                                  

                                                                [Download Table]

                   PERIOD FROM   
                 INCORPORATION TO
                   31 DECEMBER   
                       1996      
                ---------------- 
                      POUNDS     
                   STERLING 000  
                                 
United Kingdom          299      
Rest of Europe          197      
Asia ...........         43      
Africa .........      4,877      
Americas .......      2,358      
Middle East  ...        194      
                ---------------- 
                      7,968      
                ================ 


In the opinion of the directors there is one class of business.           

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

3. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                                

                                                        [Enlarge/Download Table]

                                                                        PERIOD FROM   
                                                                      INCORPORATION TO
                                                                        31 DECEMBER   
                                                                            1996      
                                                                     ---------------- 
                                                                           POUNDS     
                                                                        STERLING 000  
                                                                                      
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS STATED                               

AFTER CHARGING                                                                        
Auditors' remuneration:                                                               
 Audit...............................................................       105       
 Other services......................................................        32       
Depreciation of fixed assets:                                                         
 Owned...............................................................        67       
 Leased..............................................................        22       
Hire of plant and machinery--rentals payable under operating leases          42       
Hire of other assets--rentals payable under operating leases  .......        83       
                                                                     ================ 
AFTER CREDITING                                                                       
Exchange gains ......................................................       326       
                                                                     ================ 

The total amount charged to revenue for the hire of plant and machinery   
amounted to pounds sterling 72,000. For the period ended 31 December 1996 this  
comprises rentals payable under operating leases and depreciation on plant      
and machinery held under finance leases together with the related finance       
charges.                                                                        

4. REMUNERATION OF DIRECTORS AND DIRECTORS' INTERESTS                           

                                                                [Download Table]

                                    PERIOD FROM   
                                  INCORPORATION TO
                                    31 DECEMBER   
                                        1996      
                                 ---------------- 
                                       POUNDS     
                                    STERLING 000  
                                                  
Directors' emoluments ...........       112       
Amounts paid to third parties in                  
 respect of directors' services          77       
                                 ---------------- 
                                        189       
                                 ================ 

Benefits in kind include employers' pension contributions and health      
insurance.                                                                      

The emoluments, excluding pension contributions, of the chairman were:    

                                                                [Download Table]

                                                PERIOD FROM   
                                              INCORPORATION TO
                                                31 DECEMBER   
                                                    1996      
                                             ---------------- 
                                              POUNDS STERLING 
                                                              
AGA Morrison from 31 July to 1 December                       
 1996........................................      38,808     
C Mackay from 1 to 31 December 1996..........       1,667     

The emoluments, excluding pension contributions, of the highest paid      
director were pounds sterling 48,510.                                           

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

The emoluments, excluding pension contributions, of the directors         
(including the chairman and highest paid director) were within the following    
ranges:                                                                         

                                                                [Download Table]

                                                           NUMBER OF DIRECTORS
                                                               PERIOD FROM    
                                                            INCORPORATION TO  
                                                              31 DECEMBER     
                                                                  1996        
                                                           -------------------
                                                                              
     pounds sterling 0 --  pounds sterling 5,000 ........            4        
pounds sterling 15,001 -- pounds sterling 20,000 ........            2        
pounds sterling 40,001 -- pounds sterling 45,000 ........            1        
pounds sterling 45,001 -- pounds sterling 50,000 ........            2        
                                                                    ---       

SHARES                                                                        

The interests of the directors of DSL Group Limited in office as at 31    
December 1996 (including family interests) in the shares of group companies     
are as follows:                                                                 

                                                                [Download Table]

                                                 INTEREST    INTEREST AT
                                    CLASS OF     AT END OF    BEGINNING 
                     COMPANY         SHARE        PERIOD      OF PERIOD 
                --------------- -------------- ----------- -------------
                                                                        
AGA Morrison  ..       DSL Group pounds           16,551           --   
                         Limited sterling 1                             
                                 ordinary                               
                                 "A" shares                             

AGA Morrison  ..       DSL Group pounds            6,207           --   
                         Limited sterling 1                             
                                 ordinary                               
                                 "B" shares                             

AGA Morrison  ..    DSL Holdings pounds               --            1   
                         Limited sterling 1                             
                                 ordinary                               
                                 shares                                 

AGA Morrison  .. Defence Systems pounds                1            1   
                   International sterling 1                             
                         Limited ordinary                               
                                 shares                                 

AGA Morrison  .. Defence Systems pounds                1           --   
                         Limited sterling 1                             
                                 ordinary                               
                                 shares                                 

AGA Morrison  .. Defence Systems P$1,000           1,900*        1,900* 
                     Colombia SA ordinary                               
                                 shares                                 

RN Bethell .....       DSL Group pounds           11,034           --   
                         Limited sterling 1                             
                                 ordinary                               
                                 "A" shares                             

RN Bethell ..... Defence Systems P$1,000           1,900*        1,900* 
                     Colombia SA ordinary                               
                                 shares                                 

------------                                                                    
*     this represents 1% of the company's total share capital denominated in    
   Colombian pesos and is held in trust on behalf of DSL Holdings Limited.

SHARE OPTIONS                                                                 

According to the register of directors' interests, no rights to subscribe 
for shares in group companies were held by or granted to any of the directors   
or their immediate families, or exercised by them, during the financial         
period except as indicated below.                                               

To acquire pounds sterling 1 ordinary shares in DSL Holdings Limited:       

At 3 June 1996 AGA Morrison had an option to purchase 73,332 pounds       
sterling 1 ordinary shares in DSL Holdings Limited. This option was exercised   
on 31 July 1996.                                                                

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

At 3 June 1996 RN Bethell held an option to acquire 25,000 pounds         
sterling 1 ordinary shares in DSL Holdings Limited from Hambro Group            
Investments Limited. This option was exercised on 31 July 1996.                 

OTHER INTERESTS                                                             

At the end of the period AGA Morrison had an amount outstanding to a      
subsidiary company of pounds sterling 1,127, which was repaid subsequent to     
the period end.                                                                 

5. STAFF NUMBERS AND COSTS                                                      

The average number of persons employed by the group (including directors) 
during the period, analysed by category, was as follows:                        

                                                                [Download Table]

                                NUMBER OF EMPLOYEES
                                    PERIOD FROM    
                                 INCORPORATION TO  
                                 31 DECEMBER 1996  
                               ------------------- 
                                                   
Security services .............        2,128       
Management and administration             65       
Operatives ....................           27       
                               ------------------- 
                                       2,220       
                               =================== 

The aggregate payroll costs of these persons were as follows:             

                                                                [Download Table]

                                      PERIOD FROM   
                                    INCORPORATION TO
                                      31 DECEMBER   
                                          1996      
                                   ---------------- 
                                         POUNDS     
                                      STERLING 000  
                                                    
Wages and salaries ................      3,394      
Social security costs .............        211      
Other pension costs (see note 20)           73      
                                   ---------------- 
                                         3,678      
                                   ================ 

6. INTEREST PAYABLE AND SIMILAR CHARGES                                         

                                                        [Enlarge/Download Table]

                                                                         PERIOD FROM   
                                                                       INCORPORATION TO
                                                                         31 DECEMBER   
                                                                             1996      
                                                                      ---------------- 
                                                                            POUNDS     
                                                                         STERLING 000  
                                                                                       
On bank loans, overdrafts and other loans wholly repayable within                      
 five years ..........................................................       184       
Finance charges payable in respect of finance leases and hire                          
 purchase contracts ..................................................         8       
                                                                      ---------------- 
                                                                             192       
                                                                      ================ 

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

7. TAXATION                                                                     

                                                                [Download Table]

                                                   PERIOD FROM   
                                                 INCORPORATION TO
                                                   31 DECEMBER   
                                                       1996      
                                                ---------------- 
                                                      POUNDS     
                                                   STERLING 000  
                                                                 
UK corporation tax .............................        39       
Overseas taxation ..............................       361       
Tax attributable to the share of profits of the                  
 associated undertakings .......................        51       
                                                ---------------- 
                                                       451       
                                                ================ 

No deferred tax provision has been made for the UK corporation tax which  
would become payable if further dividends were declared by associated           
companies from accumulated reserves.                                            

No deferred tax is provided in respect of the accumulated reserves of     
overseas subsidiary companies as there is no current intention to remit         
profits to the UK.                                                              

8. DIVIDENDS                                                                    

                                                                [Download Table]

                                              PERIOD FROM   
                                            INCORPORATION TO
                                              31 DECEMBER   
                                                  1996      
                                           ---------------- 
                                                 POUNDS     
                                              STERLING 000  
                                                            
Proposed dividend on 8% preference shares         147       
                                           ================ 

Preference dividends are payable on 31 January and 31 July each year, the 
first payment falling due on 31 July 1997.                                      

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

9. TANGIBLE FIXED ASSETS                                                        

                                                                [Download Table]

                                                      FIXTURES          
                              LAND AND    PLANT AND     AND             
                              BUILDINGS   MACHINERY   FITTINGS   TOTAL  
                            ----------- ----------- ---------- -------- 
                               POUNDS      POUNDS      POUNDS    POUNDS 
                              STERLING    STERLING    STERLING  STERLING
                                000         000         000       000   
                                                                        
COST                                                                    
At incorporation............      --           --         --        --  
Acquisition of DSL                                                      
 Holdings...................      69          855        473     1,397  
Currency translation........      --          (23)        (8)      (31) 
Additions...................      --          321         94       415  
Disposals...................      --         (135)       (31)     (166) 
                            ----------- ----------- ---------- -------  

At 31 December 1996.........      69        1,018        528     1,615  
                            ----------- ----------- ---------- -------  

DEPRECIATION                                                            
At incorporation............      --           --         --        --  
Acquisition of DSL                                                      
 Holdings...................     (46)        (458)      (283)     (787) 
Currency translation........      --           13          4        17  
Charge for period...........      (3)         (72)       (14)      (89) 
On disposals................      --          119         31       150  
                            ----------- ----------- ---------- -------  

At 31 December 1996.........     (49)        (398)      (262)     (709) 
                            ----------- ----------- ---------- -------  

NET BOOK VALUE                                                          
AT 31 DECEMBER 1996 ........      20          620        266       906  
                            =========== =========== ========== =======  

ANALYSIS OF NET BOOK VALUE OF LAND AND BUILDINGS                                

                                                                [Download Table]

                                         31 DECEMBER 
                                             1996    
                                        -------------
                                            POUNDS   
                                        STERLING 000 
                                                     
Freehold................................      13     
Short leasehold.........................       7     
                                        -------------
                                              20     
                                        =============

Included in the total net book value of plant and machinery is pounds     
sterling 244,463 in respect of assets held under finance leases and similar     
hire purchase contracts. Depreciation for the period on these assets was        
pounds sterling 22,490.                                                         

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

10. FIXED ASSET INVESTMENTS                                                     

                                                                [Download Table]

                                                                 TOTAL     
                                GORANDEL  JARDINE SECURICOR GROUP INTERESTS
                                TRADING    GURKHA SERVICES   IN ASSOCIATED 
                                LIMITED        LIMITED       UNDERTAKINGS  
                              ---------- ----------------- --------------- 
                                 POUNDS        POUNDS           POUNDS     
                              STERLING 000   STERLING 000     STERLING 000 
                                                                           
At beginning of period .......     --             --               --      
Acquired during the period  ..    702            154              856      
Retained profits less losses       36            110              146      
Movement on exchange..........    (59)            --              (59)     
Less: Dividends received  ....     --           (197)            (197)     
                              ---------- ----------------- --------------- 
At end of period .............    679             67              746      
                              ========== ================= =============== 

Gorandel Trading Limited and Jardine Securicor Gurkha Services Limited are
both associated undertakings of DSL Group Limited and therefore can be          
considered to be related parties under Financial Reporting Standard 8.          

Certain expenses are borne by a group company and recharged to Gorandel   
Trading Limited and the balance receivable by the group as at 31 December       
1996 was pounds sterling 247,860. A loan was payable by the group to Gorandel   
Trading Limited of pounds sterling 479,130.                                     

The companies which are material to the results of DSL Group Limited are  
as follows:                                                                     

                                                        [Enlarge/Download Table]

                                                      PRINCIPAL         % SHARES       COUNTRY OF     
SUBSIDIARY UNDERTAKINGS                               ACTIVITY            HELD        INCORPORATION   
                                               --------------------- ------------  -------------------
                                                                                                      
DSL Holdings Limited* .........................       Holding Company      100%               UK(1)   
Defence Systems International Limited  ........     Security Services      100%               UK(1)   
Defence Systems Limited .......................     Security Services      100%               UK(1)   
                                                       Asset Recovery                                 
Brooksight Limited ............................              Services      100%               UK(1)   
US Defense Systems Inc ........................     Security Services      100%                 USA   
DSL Security (Asia) Private Limited ...........     Security Services      100%           Singapore   
Defence Systems Colombia SA** .................     Security Services     97.5%            Colombia   
DSL (Overseas) Limited ........................       Holding Company      100%              Cyprus   
Defence Systems (Jersey) Limited ..............     Security Services      100%                  UK   

ASSOCIATED UNDERTAKINGS                                                                               
Gorandel Trading Limited ......................     Security Services       50%              Cyprus   
Jardine Securicor Gurkha Services Limited  ....     Security Services       20%           Hong Kong   

------------                                                                    
(1)    Registered in England and Wales.                                         

*      Owned directly by DSL Group Limited.                                     

**     94.5% of the shares held are owned directly by DSL Holdings Limited and  
3% are held in trust on its behalf.                               

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

11. DEBTORS                                                                     

                                                                [Download Table]

                                                    31 DECEMBER 
                                                       1996     
                                                  ------------- 
                                                      POUNDS    
                                                    STERLING 000
                                                                
AMOUNTS FALLING DUE WITHIN ONE YEAR                             
Trade debtors ....................................     2,680    
ACT recoverable ..................................        37    
Amounts recoverable from associated undertakings         248    
Amounts receivable in respect of group relief  ...        97    
Other debtors ....................................       816    
Prepayments and accrued income ...................       303    
                                                  ------------- 
                                                       4,181    
                                                  ============= 

12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR                              

                                                                [Download Table]

                                                                31 DECEMBER
                                                                   1996    
                                                              -------------
                                                                  POUNDS   
                                                               STERLING 000
                                                                           
Bank loan ....................................................       805   
Bank overdrafts ..............................................       347   
Amounts payable in respect of finance leases .................       108   
Deferred consideration for acquisition of DSL Holdings                     
 Limited......................................................       400   
Trade creditors ..............................................       465   
Amounts owed to associated undertakings ......................       479   
Dividends payable.............................................       147   
Other creditors including taxation and social security:                    
 Corporation tax .............................................        79   
 ACT payable .................................................        37   
 Other taxes and social security .............................        70   
 Other creditors .............................................     1,009   
Accruals and deferred income .................................       359   
                                                              -------------
                                                                   4,305   
                                                              =============

The bank loan is secured by fixed and floating charges over the assets of 
DSL Group Limited.                                                              

13. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR                     

                                                                [Download Table]

                                                31 DECEMBER
                                                   1996    
                                              -------------
                                                  POUNDS   
                                               STERLING 000
                                                           
Bank loan (denominated in US$) ...............     3,222   
Amounts payable in respect of finance leases         108   
                                              -------------
                                                   3,330   
                                              =============

The bank loan is secured by fixed and floating charges over the assets of 
DSL Group Limited.                                                              

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

14. CALLED UP SHARE CAPITAL                                                     

                                                                [Download Table]

                                              1996        
                                      --------------------
                                                   POUNDS 
                                                  STERLING
                                           NO.      000   
                                      ----------- --------
                                                          
AUTHORIZED                                                
Preference shares                                         
Preference shares of pounds                               
 sterling 0.01 each ..................  4,400,000    44   
                                                  ======  
Ordinary shares                                           
Ordinary shares of pounds sterling 1                      
 each        "A"......................     27,585    28   
Ordinary shares of pounds sterling 1                      
 each        "B"......................      6,207     6   
Ordinary shares of pounds sterling 1                      
 each        "C"......................      4,137     4   
                                      ----------- ------  
                                           37,929    38   
                                      =========== ======  
Preferred ordinary shares                                 
Preferred ordinary shares of pounds                       
 sterling 1 each .....................    100,000   100   
                                                  ------  
                                                    182   
                                                  ======  
ALLOTTED, CALLED UP AND FULLY PAID                        
Preference shares                                         
Preference shares of pounds                               
 sterling 0.01 each ..................  4,400,000    44   
                                                  ======  
Ordinary shares                                           
Ordinary shares of pounds sterling 1                      
 each "A".............................     27,585    28   
Ordinary shares of pounds sterling 1                      
 each "B".............................      6,207     6   
Ordinary shares of pounds sterling 1                      
 each "C".............................      4,137     4   
                                      ----------- ------  
                                           37,929    38   
                                      =========== ======  
Preferred ordinary shares                                 
Preferred ordinary shares of pounds                       
 sterling 1 each .....................    100,000   100   
                                                  ------  
                                                    182   
                                                  ======  

The shares were allotted on 31 July 1996 for pounds sterling 4,838,000 and
an amount of pounds sterling 4,656,000 was transferred to the share premium     
account. The proceeds from the allotment were used primarily to acquire         
shares in DSL Holdings Limited.                                                 

SUMMARY OF RIGHTS OF PREFERENCE SHARES                                        

Dividends                                                                     

The preference shares are eligible for dividends at a rate of 8% per annum
of the issue price of the shares, payable in two equal instalments on 31        
January and 31 July each year, commencing on 31 July 1997.                      

Priority on winding up                                                        

The preference shareholders have priority over the ordinary shareholders  
on the winding up of the company and are entitled to receive the issue price    
of the shares plus any accrued preference dividends. They have no entitlement   
to any surplus following repayment of the share capital and accrued             
dividends.                                                                      

Voting rights                                                                 

The preference shareholders are entitled to receive notice of general     
meetings but are not entitled to attend or vote except in respect of certain    
resolutions concerning the winding up of the company or the reduction of the    
share capital or the variation of the rights of the shares.                     

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

15. SHARE PREMIUM AND RESERVES AND SHAREHOLDERS' FUNDS                          

                                                                [Download Table]

                                                       SHARE     PROFIT 
                                                      PREMIUM   AND LOSS
                                                      ACCOUNT   ACCOUNT 
                                                    --------- ----------
                                                      POUNDS     POUNDS 
                                                     STERLING   STERLING
                                                       000        000   
                                                                        
At incorporation ...................................      --         -- 
Arising on shares issued in period .................   4,656         -- 
Retained loss for period ...........................      --        (60)
Goodwill written off on acquisition of DSL Holdings                     
 Limited............................................      --     (5,853)
Exchange adjustments ...............................      --       (167)
                                                    --------- ----------
AT 31 DECEMBER 1996 ................................   4,656     (6,080)
                                                    ========= ==========

Shareholders' funds                                                           

Of the total amount of shareholders' funds of the group of pounds         
sterling (1,242,000) at 31 December 1996, an amount of pounds                   
sterling 4,400,000 is attributable to non-equity interests and an amount of     
pounds sterling (5,642,000) is attributable to equity interests.                

16. MINORITY INTERESTS                                                          

                                                                [Download Table]

                                  POUNDS  
                              STERLING 000
                                          
At beginning of period .........    --    
Acquired during the period  ....    15    
Retained profit for period  ....     3    
                                --------  
At 31 December 1996 ............    18    
                                ========  

17. CONTINGENT LIABILITIES                                                      

A cross composite guarantee has existed since 1 August 1996 between DSL   
Holdings Limited, Defence Systems Limited, DSL Security (Asia) Private          
Limited and Brooksight Limited.                                                 

18. COMMITMENTS                                                                 

   (i) There were no authorised or contracted capital commitments unprovided
for at 31 December 1996.                                                

(ii) Annual commitments under non-cancellable operating leases are as 
follows:                                                                

                                                                [Download Table]

                                                   31 DECEMBER     
                                                      1996         
                                            -----------------------
                                               LAND AND            
                                               BUILDINGS     OTHER 
                                            ------------- ---------
                                                POUNDS      POUNDS 
                                               STERLING    STERLING
                                                 000         000   
                                                                   
Operating leases which expire:                                     
 Within one year ...........................      --          12   
 In the second to fifth years inclusive  ...      --          30   
 Over five years ...........................      83          --   
                                            ------------- ---------
                                                  83          42   
                                            ============= =========

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

19. GUARANTEES                                                                  

There were liabilities of pounds sterling 103,000 under documentary credit
guarantees outstanding at 31 December 1996.                                     

20. PENSION SCHEME                                                              

The group operates a defined contribution pension scheme. The assets of   
the scheme are held separately from those of the group in an independently      
administered fund. The pension charge for the period represents the             
contributions payable by the group to the scheme and amounted to pounds         
sterling 73,000.                                                                

21. RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM                 
OPERATING ACTIVITIES                                                    

                                                                [Download Table]

                                               PERIOD FROM   
                                             INCORPORATION TO
                                               31 DECEMBER   
                                                   1996      
                                            ---------------- 
                                                  POUNDS     
                                               STERLING 000  
                                                             
Operating profit ...........................        505      
Depreciation charge ........................         89      
Loss on sale of tangible fixed assets  .....         16      
Increase in debtors ........................       (692)     
Increase in creditors ......................         25      
                                            ---------------- 
Net cash outflow from operating activities          (57)     
                                            ================ 

22. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS                            

                                                                [Download Table]

                                                 CASH    OVERDRAFT   NET   
                                               ------- ----------- ------  
                                                POUNDS    POUNDS    POUNDS 
                                               STERLING  STERLING  STERLING
                                                 000       000       000   
                                                                           
Balance at incorporation ......................    --        --       --   
Net cash inflow before adjustments for foreign                             
 exchange rate changes.........................   769      (714)      55   
Effect of foreign exchange rate changes  ......  (191)      367      176   
                                               ------- ----------- ------  
Balance at 31 December 1996 ...................   578      (347)     231   
                                               ======= =========== ======  

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

23. ACQUISITION OF DSL HOLDINGS LIMITED                                         

On 31 July 1996 100% of the share capital of DSL Holdings Limited was     
acquired. The fair values of the assets acquired were deemed to be equal to     
their book values.                                                              

                                                                [Download Table]

                                                    POUNDS   
                                                 STERLING 000
                                                 ------------
                                                             
NET ASSETS ACQUIRED                                          
Tangible fixed assets ............................     610   
Investments in associated companies ..............     856   
Debtors ..........................................   4,015   
Bank loans and overdrafts ........................  (1,555)  
Creditors ........................................  (2,144)  
Minority shareholders' interests .................     (15)  
                                                  ---------  
                                                     1,767   
Goodwill .........................................   5,853   
                                                  ---------  
                                                     7,620   
                                                  =========  
Satisfied by                                                 
Cash consideration (including costs of pounds                
 sterling 668,000) ...............................   7,220   
Deferred consideration (payable within one year)       400   
                                                  ---------  
                                                     7,620   
                                                  =========  

The consolidated profit and loss account includes the results of the      
company and its subsidiaries and associates with effect from the date of        
acquisition of DSL Holdings Limited on 31 July 1996.                            

The proforma consolidated results of DSL Group Limited (being the         
consolidated results of DSL Holdings Limited from 1 April 1995 to 31 July       
1996 and DSL Group Limited from 1 August to 31 December 1996) for the nine      
month period ended 31 December 1996 and the twelve month period ended 31        
March 1996 are summarised below:                                                

                                                                [Download Table]

                                                         NINE MONTH               
                                                        PERIOD ENDED   YEAR ENDED 
                                                        31 DECEMBER     31 MARCH  
                                                            1996          1996    
                                                      -------------- ------------ 
                                                           POUNDS        POUNDS   
                                                        STERLING 000  STERLING 000
                                                                                  
Turnover .............................................     14,817        20,579   
                                                      ============== ============ 
Operating profit (including exchange gain of pounds                               
 sterling 326,000 (31 March 1996: pounds                                          
 sterling 56,000))....................................        790           751   
Income from interests in associated undertakings  ....        526           744   
Other interest receivable and similar income  ........         67            76   
Interest payable and similar charges .................       (287)         (276)  
                                                      -------------- ------------ 
Profit on ordinary activities before taxation  .......      1,096         1,295   
Tax on profit on ordinary activities .................       (758)         (678)  
                                                      -------------- ------------ 
Profit on ordinary activities after taxation  ........        338           617   
Minority interests ...................................         (5)           (5)  
                                                      -------------- ------------ 
Profit attributable to shareholders ..................        333           612   
Dividends ............................................       (147)           --   
                                                      -------------- ------------ 
Retained profit for the financial period .............        186           612   
                                                      ============== ============ 

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

24. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED        
STATES OF AMERICA GENERALLY ACCEPTED ACCOUNTING PRINCIPLES              

The group's consolidated financial statements are prepared in conformity  
with generally accepted accounting principles applicable in the United          
Kingdom (UK GAAP), which differ in certain significant respects from those      
applicable in the United States of America (US GAAP). These differences,        
together with the approximate effects of the adjustments on profit              
attributable to shareholders and shareholders' funds, relate principally to     
the items set out below:                                                        

(a) Goodwill                                                                    

Under UK GAAP, goodwill arising from acquisitions is written off against  
shareholders' funds. Under US GAAP, goodwill is capitalised and amortised       
over its estimated useful life. For the purpose of calculating the              
amortisation of goodwill a life of 20 years has been assumed.                   

(b) Deferred taxation                                                           

UK GAAP requires that no provision for deferred taxation should be made if
there is reasonable evidence that such taxation will not be payable in the      
foreseeable future. Under US GAAP, deferred taxation is recognised under the    
full liability method which permits deferred tax assets to be recognised if     
their realisation is considered more likely than not.                           

(c) Cash flows                                                                  

The principal difference between UK GAAP and US GAAP is in respect of     
classification. Under UK GAAP, the group presents its cash flows for            
operating activities, returns on investments and servicing of finance,          
taxation, investing activities, and financing activities. US GAAP requires      
only three categories of cash flow activities which are operating, investing    
and financing. Cash flows arising from taxation and returns on investments      
and servicing of finance under UK GAAP would, with the exception of dividends   
paid, be included as operating activities under US GAAP; dividend payments      
would be included as a financing activity under US GAAP. In addition, under     
UK GAAP, cash and cash equivalents include short term borrowings which under    
US GAAP would be presented as financing activities.                             

Approximate effect on profit attributable to shareholders of differences  
between UK and US GAAP:                                                         

                                                        [Enlarge/Download Table]

                                                                            PROFORMA  
                                                          PERIOD FROM      NINE MONTH 
                                                        INCORPORATION TO  PERIOD ENDED
                                                          31 DECEMBER     31 DECEMBER 
                                                              1996            1996    
                                                       ---------------- --------------
                                                             POUNDS          POUNDS   
                                                          STERLING 000    STERLING 000
                                                                                      
Profit attributable to shareholders in conformity with                                
 UK GAAP ..............................................         87             333    
Adjustments:                                                                          
 Goodwill amortisation ................................       (123)           (154)   
 Deferred taxation ....................................         68             137    
                                                       ---------------- --------------
Profit attributable to shareholders in conformity with                                
 US GAAP ..............................................         32             316    
                                                       ================ ==============

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DSL GROUP LIMITED   
NOTES (CONTINUED)   

Approximate cumulative effect on shareholders' funds of differences       
between UK and US GAAP:                                                         

                                                                [Download Table]

                                                  31 DECEMBER
                                                     1996    
                                                -------------
                                                    POUNDS   
                                                 STERLING 000
                                                             
Shareholders' funds in conformity with UK GAAP      (1,242)  
Adjustments:                                                 
 Goodwill ......................................     5,796   
 Deferred taxation .............................         2   
                                                -------------
Shareholders' funds in conformity with US GAAP       4,556   
                                                =============

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DSL HOLDINGS LIMITED  
CONSOLIDATED FINANCIAL STATEMENTS   
31 MARCH 1996 AND 1995  

INDEPENDENT AUDITORS' REPORT                                                    
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF DSL HOLDINGS LIMITED              

We have audited the accompanying consolidated balance sheets of DSL       
Holdings Limited and subsidiaries as of 31 March 1996 and 1995, and the         
related consolidated profit and loss accounts, consolidated statements of       
total recognised gains and losses, reconciliations of movements in              
shareholders' funds and consolidated cash flow statements for the years then    
ended. These consolidated financial statements are the responsibility of the    
management of DSL Holdings Limited. Our responsibility is to express an         
opinion on these consolidated financial statements based on our audits.         

We conducted our audits in accordance with Auditing Standards generally   
accepted in the United Kingdom and in the United States of America. Those       
standards require that we plan and perform the audit to obtain reasonable       
assurance about whether the financial statements are free of material           
misstatement. An audit includes examining, on a test basis, evidence            
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, the consolidated financial statements referred to above   
present fairly, in all material respects, the financial position of DSL         
Holdings Limited and subsidiaries at 31 March 1996 and 1995, and the results    
of their operations and their cash flows for the years then ended, in           
conformity with generally accepted accounting principles in the United          
Kingdom.                                                                        

Accounting principles generally accepted in the United Kingdom vary in    
certain significant respects from accounting principles generally accepted in   
the United States of America. Application of accounting principles generally    
accepted in the United States would have affected profit attributable to        
shareholders for each of the years in the two year period ended 31 March 1996   
and shareholders' funds as of 31 March 1996 and 1995, to the extent             
summarised in Note 24 to the consolidated financial statements.                 

KPMG                                                                            
Chartered Accountants                                                           
Registered Auditors                                                             
London, England                                                                 
29 July 1996                                                                    

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DSL HOLDINGS LIMITED  
CONSOLIDATED PROFIT AND LOSS ACCOUNTS   
FOR THE YEARS ENDED 31 MARCH 1996 AND 1995  

                                                        [Enlarge/Download Table]

                                                          NOTE     1996       1995   
                                                         ------ ---------- ----------
                                                                  POUNDS     POUNDS  
                                                                 STERLING   STERLING 
                                                                   000        000    
                                                                                     
TURNOVER ...............................................    3     20,579     18,379  
Cost of sales ..........................................         (14,606)   (14,233) 
                                                               ---------- ---------- 
GROSS PROFIT ...........................................           5,973      4,146  
Administrative expenses (includes exchange gain of                                   
 pounds sterling 55,673 (1995: loss of pounds                                        
 sterling 184,000)).....................................    2     (5,222)    (3,454) 
                                                               ---------- ---------- 
OPERATING PROFIT .......................................             751        692  
Income from interests in associated undertakings  ......             744        360  
Other interest receivable and similar income  ..........              76         24  
Interest payable and similar charges ...................    7       (276)      (258) 
                                                               ---------- ---------- 
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION ..........    4      1,295        818  
Tax on profit on ordinary activities ...................    8       (678)      (367) 
                                                               ---------- ---------- 
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION  ..........             617        451  
Equity minority interests ..............................   16         (5)        (7) 
                                                               ---------- ---------- 
PROFIT ATTRIBUTABLE TO SHAREHOLDERS' AND RETAINED                                    
 PROFIT FOR THE FINANCIAL YEAR..........................   15        612        444  
                                                               ========== ========== 

                                                                   1996       1995   
                                                               ---------- ---------- 
                                                                  POUNDS     POUNDS  
                                                                 STERLING   STERLING 
                                                                   000        000    
RETAINED PROFIT FOR THE FINANCIAL YEAR                                               
The company ............................................              46         (7) 
Subsidiary undertakings ................................             (60)       165  
Associated undertakings ................................             626        286  
                                                               ---------- ---------- 
                                                                     612        444  
                                                               ========== ========== 

All results for the year and the prior year are attributable to continuing      
activities.                                                                     

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DSL HOLDINGS LIMITED  
CONSOLIDATED BALANCE SHEETS   
AT 31 MARCH 1996 AND 1995   

                                                        [Enlarge/Download Table]

                                                NOTE        1996              1995       
                                              ------ ----------------- ----------------- 
                                                       POUNDS   POUNDS   POUNDS   POUNDS 
                                                      STERLING STERLING STERLING STERLING
                                                        000      000      000      000   
                                                                                         
FIXED ASSETS                                                                             
Tangible assets ..............................    9                428               445 
Investments ..................................   10                750               325 
                                                               -------           ------- 
                                                                 1,178               770 
CURRENT ASSETS                                                                           
Stock ........................................             --                11          
Debtors ......................................   11     3,776             4,171          
Cash at bank and in hand .....................            914               364          
                                                     ---------         ---------         
                                                        4,690             4,546          
CREDITORS: amounts falling due within one                                                
 year.........................................   12    (3,696)           (3,667)         
                                                     ---------         ---------         
NET CURRENT ASSETS ...........................                     994               879 
                                                               -------           ------- 
TOTAL ASSETS LESS CURRENT LIABILITIES ........                   2,172             1,649 
CREDITORS: amounts falling due after more                                                
 than one year................................   13               (611)             (813)
                                                               -------           ------- 
NET ASSETS ...................................                   1,561               836 
                                                               =======           ======= 
Represented by equity interests of:                                                      
CAPITAL AND RESERVES                                                                     
Called up share capital ......................   14                467               467 
Share premium account ........................   15                933               933 
Profit and loss account ......................   15                148              (572)
                                                               -------           ------- 
EQUITY SHAREHOLDERS' FUNDS ...................                   1,548               828 
Equity minority interests ....................   16                 13                 8 
                                                               -------           ------- 
                                                                 1,561               836 
                                                               =======           ======= 

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DSL HOLDINGS LIMITED  
CONSOLIDATED CASH FLOW STATEMENTS   
FOR THE YEARS ENDED 31 MARCH 1996 AND 1995  

                                                        [Enlarge/Download Table]

                                                       NOTE        1996             1995       
                                                     ------ ---------------- ----------------- 
                                                             POUNDS   POUNDS   POUNDS   POUNDS 
                                                            STERLING STERLING STERLING STERLING
                                                              000      000      000      000   
                                                                                               
NET CASH INFLOW FROM OPERATING ACTIVITIES  ..........   21            1,485             1,491  
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE                                                
 Dividends received .................................          200                --           
 Interest received ..................................           76                24           
 Interest paid ......................................         (266)             (255)          
 Interest element of finance lease rental payments  .           --                (3)          
                                                            -------         ---------          
NET CASH INFLOW/(OUTFLOW) FROM RETURNS ON                                                      
 INVESTMENTS AND SERVICING OF FINANCE ...............                    10              (234) 
TAXATION                                                                                       
 Overseas tax paid by UK group companies ............          (93)             (237)          
 Overseas tax paid by overseas subsidiaries  ........         (349)             (117)          
                                                            -------         ---------          
TAX PAID ............................................                  (442)             (354) 
INVESTING ACTIVITIES                                                                           
 Purchase of tangible fixed assets ..................         (190)             (313)          
 Purchase of subsidiary undertaking (net of cash                                               
  and cash equivalents acquired).....................           --               (34)          
 Sale of tangible fixed assets ......................           --                46           
                                                            -------         ---------          
NET CASH OUTFLOW FROM INVESTING ACTIVITIES  .........                  (190)             (301) 
                                                                    -------           -------  
NET CASH INFLOW BEFORE FINANCING ....................                   863               602  
                                                                    =======           =======  
FINANCING                                                                                      
 Capital element of finance lease rental payments  ..           --               (16)          
 Loan repaid to parent company ......................         (157)           (1,028)          
 New secured loan from parent company ...............           --               960           
                                                            -------         ---------          
NET CASH OUTFLOW FROM FINANCING .....................                  (157)              (84) 
INCREASE IN CASH AND CASH EQUIVALENTS ...............   22             (706)             (518) 
                                                                    -------           -------  
                                                                       (863)             (602) 
                                                                    =======           =======  

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DSL HOLDINGS LIMITED  
CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES  
FOR THE YEARS ENDED 31 MARCH 1996 AND 1995  

                                                                [Download Table]

                                     1996    1995   
                                    ------  ------  
                                    POUNDS   POUNDS 
                                   STERLING STERLING
                                     000      000   
                                                    
PROFIT FOR THE FINANCIAL YEAR  .....  612    444    
Exchange adjustments ...............   57    (16)   
Gain on disposal of Brooksight Pty     11     --    
                                    ------ ------   
TOTAL GAINS AND LOSSES RECOGNIZED  .  680    428    
                                    ====== ======   

RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS   
FOR THE YEARS ENDED 31 MARCH 1996 AND 1995  

                                                                [Download Table]

                                       1996    1995   
                                     -------  ------  
                                      POUNDS   POUNDS 
                                     STERLING STERLING
                                       000      000   
                                                      
PROFIT FOR THE FINANCIAL YEAR  ......    612   444    
Exchange adjustments ................     57   (16)   
Goodwill written back ...............     40    44    
Gain on disposal of Brooksight Pty  .     11    --    
                                     ------- ------   
NET ADDITION TO SHAREHOLDERS' FUNDS      720   472    
Opening shareholders' funds .........    828   356    
                                     ------- ------   
CLOSING SHAREHOLDERS' FUNDS .........  1,548   828    
                                     ======= ======   

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DSL HOLDINGS LIMITED  
NOTES   
(forming part of the financial statements)  

1 ACCOUNTING POLICIES                                                           

The following accounting policies have been applied consistently in       
dealing with items which are considered material in relation to the group's     
financial statements.                                                           

BASIS OF PREPARATION                                                          

The financial statements have been prepared in accordance with applicable 
accounting standards and under the historical cost accounting rules.            

BASIS OF CONSOLIDATION                                                        

The group's financial statements consolidate the results of DSL Holdings  
Limited and all its subsidiary undertakings. In respect of associated           
undertakings, the group includes its share of post acquisition profits and      
losses in the consolidated profit and loss account and its share of post        
acquisition retained profits or accumulated deficits in the consolidated        
balance sheet.                                                                  

The consolidated financial statements are based on the reported results of
subsidiary undertakings and associated undertakings, which are based on the     
financial statements of these companies whose year ends are coterminous with    
or end either three or six months before those of the parent company, and on    
management accounts where appropriate for the period from 1 October to 31       
March 1996.                                                                     

For the year ended 31 March 1995 the results of the associate Jardine     
Securicor Gurkha Services Limited were consolidated for the 26 month period     
ended 31 March 1995. The first 14 months of results were immaterial to the      
results of the group. In addition the results of the subsidiary Defence         
Systems Colombia SA were consolidated for the 15 months ended 31 March 1995.    
The first 3 months of results were immaterial to the results of the group.      

Unless otherwise stated, the acquisition method of accounting has been    
adopted. Under this method, the results of subsidiary and associated            
undertakings acquired or disposed of in the year are included in the            
consolidated profit and loss account from the date of acquisition or up to      
the date of disposal. Goodwill arising on consolidation (representing the       
excess of the fair value of the consideration given over the fair value of      
the separable net assets acquired) is written off against reserves on           
acquisition. Any excess of the aggregate of the fair value of the separable     
net assets acquired over the fair value of the consideration given (negative    
goodwill) is credited direct to reserves.                                       

FIXED ASSETS AND DEPRECIATION                                                 

Depreciation is provided by the group to write off the cost less the      
estimated residual value of tangible fixed assets by equal instalments over     
their estimated useful economic lives as follows:                               

                                                                [Download Table]

                                                          
Freehold land and buildings        --    not depreciated  
Short leasehold land and buildings --    term of lease    
Plant and machinery                --    20%-25% per annum
Fixtures and fittings              --    20% per annum    

FOREIGN CURRENCIES                                                            

Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities          
denominated in foreign currencies are translated using the rate of exchange     
ruling at the balance sheet date and the gains or losses on translation are     
included in the profit and loss account.                                        

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

For consolidation purposes, the assets and liabilities of overseas        
subsidiary undertakings and associated undertakings are translated at the       
closing exchange rates and the profit and loss accounts are translated at the   
average exchange rates. Exchange differences arising on these translations      
are taken to reserves.                                                          

Subsidiaries operating in hyper-inflationary economies adjust the local   
currency statements to reflect current price levels before translation.         

LEASES                                                                        

Where the group enters into a lease which entails taking substantially all
the risks and rewards of ownership of an asset, the lease is treated as a       
'finance lease'. The asset is recorded in the balance sheet as a tangible       
fixed asset and is depreciated over its estimated useful life or the term of    
the lease, whichever is shorter. Future instalments under such leases, net of   
finance charges, are included within creditors. Rentals payable are             
apportioned between the finance element, which is charged to the profit and     
loss account, and the capital element which reduces the outstanding             
obligation for future instalments.                                              

All other leases are accounted for as 'operating leases' and the rental   
charges are charged to the profit and loss account on a straight line basis     
over the life of the lease.                                                     

PENSIONS                                                                      

The group operates a defined contribution pension scheme. The assets of   
the scheme are held separately from those of the group in an independently      
administered fund. The amount charged against profits represents the            
contributions payable to the scheme in respect of the accounting period.        

TURNOVER                                                                      

Turnover represents the amounts (excluding value added tax) derived from  
the provision of goods and services to third party customers during the year.   

STOCK                                                                         

Consumable stock is stated at the lower of cost or net realisable value.  

TAXATION                                                                      

The charge for taxation is based upon the profit for the year and takes   
into account deferred taxation on timing differences. Provision is made for     
deferred taxation if there is reasonable evidence that such tax will be         
payable in the foreseeable future.                                              

2 RECLASSIFICATION OF EXPENSES                                                  

Expenses have been reclassified such that administrative expenses contains
the total administration expenses for the whole group.                          

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

3 SEGMENTAL INFORMATION                                                         

The table below sets out information on turnover for each of the group's  
geographic areas of operation.                                                  

                                                                [Download Table]

                   1996    1995  
                -------- ------- 
                 POUNDS   POUNDS 
                STERLING STERLING
                  000      000   
                                 
United Kingdom     1,097   1,086 
Rest of Europe     6,665   8,264 
Asia ...........     331     102 
Australasia  ...      --     199 
Africa .........   9,461   6,259 
Americas .......   2,497   1,969 
Middle East  ...     528     500 
                -------- ------- 
                  20,579  18,379 
                ======== ======= 

In the opinion of the directors there is one class of business.           

4 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                                 

                                                                [Download Table]

                                                                    1996     1995  
                                                                 -------- -------- 
                                                                   POUNDS   POUNDS 
                                                                  STERLING STERLING
                                                                    000      000   
                                                                                   
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS STATED                            
AFTER CHARGING                                                                     
Auditors' remuneration:                                                            
 Audit...........................................................    69       45   
 Other services..................................................    29       45   
Depreciation of fixed assets:                                                      
 Owned ..........................................................   263      210   
 Leased .........................................................    --        2   
Exchange losses .................................................    --      184   
Hire of plant and machinery--rentals payable under operating                       
 leases..........................................................   122      118   
Hire of other assets--operating leases ..........................   368      324   
Exceptional costs--costs incurred in connection with the                           
 termination of employment of directors of subsidiary companies     325       --   
                                                                 -------- -------- 
AFTER CREDITING                                                                    
Exchange gains...................................................    56       --   
                                                                 -------- -------- 

The total amount charged to revenue for the hire of plant and machinery   
amounted to pounds sterling 122,297 (1995: pounds sterling 123,295). For the    
year ended 31 March 1995 this comprises rentals payable under operating         
leases and depreciation on plant and machinery held under finance leases        
together with the related finance charges but for the year ended 31 March       
1996 it comprises rentals payable under operating leases only.                  

 During the year pounds sterling 325,116 was incurred in connection with the
termination of the contracts of employment of four directors of Defence         
Systems Limited, one of whom was also a director of US Defense Systems Inc.     

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

5 REMUNERATION OF DIRECTORS AND DIRECTORS' INTERESTS                            

                                                                [Download Table]

                                                                 1996   1995   
                                                               ------  ------  
                                                               POUNDS   POUNDS 
                                                              STERLING STERLING
                                                                000      000   
                                                                               
Directors' emoluments .........................................  272    224    
Amounts paid to third parties in respect of directors'                         
 services......................................................   26     22    
                                                               ------ ------   
                                                                 298    246    
                                                               ====== ======   

Benefits in kind include employers' pension contributions, health         
insurance, personal tax advice costs and car benefits.                          

The emoluments, excluding pension contributions, of the chairman were:    

                                                                [Download Table]

                                               1996    1995   
                                             -------- ------- 
                                              POUNDS   POUNDS 
                                             STERLING STERLING
                                                              
DG Lewis:   from 1 April 1994--3 June 1994 ..      --   1,818 
JM May:     from 6 July 1994--31 March 1996 .  10,000   8,182 

Amounts for the services of DG Lewis and JM May are payable to a third    
party.                                                                          

The emoluments, excluding pension contributions, of the highest paid      
director were pounds sterling 142,456 (1995: pounds sterling 111,332).          

The emoluments, excluding pension contributions, of the directors         
(including the chairman and highest paid director) were within the following    
ranges:                                                                         

                                                                [Download Table]

                                                                  NUMBER OF    
                                                                  DIRECTORS    
                                                              -----------------
                                                                1996     1995  
                                                              -------- --------
                                                                               
      pounds sterling 0 -- pounds sterling 5,000 ........        --        1   
  pounds sterling 5,001 -- pounds sterling 10,000 ........        1        1   
 pounds sterling 10,001 -- pounds sterling 15,000 ........       --        1   
 pounds sterling 15,001 -- pounds sterling 20,000 ........        1       --   
pounds sterling  80,001 -- pounds sterling 85,000 ........       --        1   
pounds sterling 110,001 -- pounds sterling 115,000 ........       1        1   
pounds sterling 140,001 -- pounds sterling 145,000 ........       1       --   
                                                               -----    -----  

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

SHARES                                                                        

The interests of the directors of DSL Holdings Limited in office as at 31 
March 1996 (including family interests) in the shares of group companies are    
as follows:                                                                     

                                                        [Enlarge/Download Table]

                                                                    INTEREST   INTEREST AT 
                                                                     AT END    BEGINNING OF
                         COMPANY               CLASS OF SHARE       OF YEAR        YEAR    
              --------------------------- ----------------------- ---------- --------------
                                                                                           
AGA Morrison  DSL Holdings Limited        pounds sterling 1               1            1   
                                          ordinary shares                                  

AGA Morrison  Defence Systems Colombia SA P$1,000 ordinary shares     1,900*       1,900*  

RN Bethell    Defence Systems Colombia SA P$1,000 ordinary shares     1,900*       1,900*  

JM May        Hambros PLC                 20p ordinary shares         3,589        3,555   

JM May        Hambro Countrywide PLC      5p ordinary shares         77,858       77,858   

JR Hustler    Hambros PLC                 20p ordinary shares         1,000        1,000   

JR Hustler    Hambros PLC                 pounds sterling 1           2,000        2,000   
                                          7.5% Cumulative                                  
                                           Redeemable Preference                           
                                           shares                                          

JR Hustler    Hambro Insurance            pounds sterling 1           2,000        2,000   
               Services PLC               ordinary                                         
                                          shares                                           

------------                                                                    
*     this represents 1% of the company's total share capital denominated in    
   Colombian pesos and is held in trust on behalf of DSL Holdings Limited.

SHARE OPTIONS                                                                 

According to the register of directors' interests, no rights to subscribe 
for shares in group companies were held by or granted to any of the directors   
or their immediate families, or exercised by them, except as indicated below.   

(i) To subscribe for 20p ordinary shares of Hambros PLC:                  

HAMBROS SENIOR EXECUTIVE SHARE OPTION SCHEME 1984                         

Options exercisable at prices between 298p and 333p per share between 1990
and 2004.                                                                       

                                                                [Download Table]

          AT 1 APRIL 1995  GRANTED DURING THE YEAR  AT 31 MARCH 1996
          ---------------  -----------------------  ----------------
                                                                    
JM MAY        95,000                --                 95,000       

HAMBROS BANK "SAVE AS YOU EARN" SHARE OPTION SCHEME 1983                  

Options exercisable at 226p per share between 2001 and 2002.              

                                                                [Download Table]

          AT 1 APRIL 1995  GRANTED DURING THE YEAR  AT 31 MARCH 1996
          ---------------  -----------------------  ----------------
                                                                    
JM MAY         8,628                --                 8,628        

(ii) To acquire pounds sterling 1 ordinary shares in DSL Holdings Limited:

At 1 April 1994 AGA Morrison had an option to purchase 73,332 pounds      
sterling 1 ordinary shares in DSL Holdings Limited, exercisable on or before 4  
June 1996 from Hambro Group Investments Limited at a minimum acquisition        
price of pounds sterling 3.86 per share.                                        

This option has been extended such that it was still exercisable at the   
date of signing these financial statements.                                     

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

On 3 April 1995 RN Bethell was granted an option to acquire 25,000 pounds 
sterling 1 ordinary shares in DSL Holdings Limited from Hambro Group            
Investments Limited exercisable between April 1998 and 2005 at an acquisition   
price of pounds sterling 4.50 per share.                                        

OTHER INTERESTS                                                               

At the end of the year AGA Morrison had an amount outstanding to a        
subsidiary company of pounds sterling 7,732 (1995: pounds sterling 2,332).      

6 STAFF NUMBERS AND COSTS                                                       

The average number of persons employed by the group (including directors) 
during the year, analysed by category, was as follows:                          

                                                                [Download Table]

                                   NUMBER OF  
                                   EMPLOYEES  
                               ---------------
                                 1996    1995 
                               ------- -------
                                              
Security services .............  1,159   1,004
Professional and logistics  ...    437     480
Management and administration       63      48
Operatives ....................     26      22
                               ------- -------
                                 1,685   1,554
                               ======= =======

The aggregate payroll costs of these persons were as follows:             

                                                                [Download Table]

                                     1996     1995  
                                   -------- --------
                                    POUNDS   POUNDS 
                                   STERLING STERLING
                                     000      000   
                                                    
Wages and salaries ................  11,805   11,381
Social security costs .............     164      177
Other pension costs (see note 20)       165       97
                                   -------- --------
                                     12,134   11,655
                                   ======== ========

7 INTEREST PAYABLE AND SIMILAR CHARGES                                          

                                                                [Download Table]

                                                               1996   1995   
                                                             ------  ------  
                                                             POUNDS   POUNDS 
                                                            STERLING STERLING
                                                              000      000   
                                                                             
On bank loans, overdrafts and other loans wholly repayable                   
 within five years...........................................  276    255    
Finance charges payable in respect of finance leases and                     
 hire purchase contracts.....................................   --      3    
                                                             ------ ------   
                                                               276    258    
                                                             ====== ======   

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

8 TAXATION                                                                      

                                                                [Download Table]

                                                               1996    1995   
                                                              ------  ------  
                                                              POUNDS   POUNDS 
                                                             STERLING STERLING
                                                               000      000   
                                                                              
UK corporation (tax loss)/tax at 33% (1995: 33%) on the                       
 profit for the year on ordinary activities...................  (55)   112    
UK corporation (tax loss)/tax--prior year ....................  (13)     8    
Overseas taxation--current year ..............................  544    173    
Overseas taxation--prior year ................................  162     --    
Tax attributable to the share of profits of the associated                    
 undertakings--current year...................................  119     67    
Tax attributable to the share of profits of the associated                    
 undertakings--prior year.....................................   --      7    
Double taxation relief .......................................  (79)    --    
                                                              ------ ------   
                                                                678    367    
                                                              ====== ======   

UK corporation tax losses are surrendered to other UK group companies.    

No deferred tax provision has been made for the UK corporation tax which  
would become payable if further dividends were declared by associated           
companies from accumulated reserves.                                            

No deferred tax is provided in respect of the accumulated reserves of     
overseas subsidiary companies as there is no current intention to remit         
profits to the UK.                                                              

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

9 TANGIBLE FIXED ASSETS                                                         

                                                                [Download Table]

                                               FIXTURES         
                       LAND AND    PLANT AND     AND            
                       BUILDINGS   MACHINERY   FITTINGS   TOTAL 
                     ----------- ----------- ---------- ------- 
                        POUNDS      POUNDS      POUNDS   POUNDS 
                       STERLING    STERLING    STERLING STERLING
                         000         000         000      000   
                                                                
COST                                                            
At 1 April 1994......      87         334        272        693 
Currency                                                        
 translation.........      --         (21)        (4)       (25)
Additions............      17         270         79        366 
Disposals............      --         (48)       (15)       (63)
Reclassification ....     (34)         34         --         -- 
                     ----------- ----------- ---------- ------- 

At 31 March 1995 ....      70         569        332        971 
Currency                                                        
 translation.........      --          (8)         3         (5)
Additions............      --         189         57        246 
Disposals............      --         (71)       (11)       (82)
                     ----------- ----------- ---------- ------- 

At 31 March 1996 ....      70         679        381      1,130 
                     ----------- ----------- ---------- ------- 

DEPRECIATION                                                    
At 1 April 1994......      50         149        146        345 
Currency                                                        
 translation.........      --          (5)        (9)       (14)
Charge for year......       8         151         53        212 
On disposals.........      --         (11)        (6)       (17)
Reclassification ....     (14)         14         --         -- 
                     ----------- ----------- ---------- ------- 

At 31 March 1995 ....      44         298        184        526 
Currency                                                        
 translation.........      --          (8)         3         (5)
Charge for year......       3         187         73        263 
On disposals.........      --         (71)       (11)       (82)
                     ----------- ----------- ---------- ------- 

At 31 March 1996 ....      47         406        249        702 
                     ----------- ----------- ---------- ------- 

NET BOOK VALUE                                                  
At 31 March 1996  ...      23         273        132        428 
                     =========== =========== ========== ======= 
At 31 March 1995 ....      26         271        148        445 
                     =========== =========== ========== ======= 

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

Analysis of net book value of land and buildings                          

                                                                [Download Table]

                  1996    1995   
                 ------  ------  
                 POUNDS  POUNDS  
                STERLING STERLING
                  000      000   
                                 
Freehold .......    13     13    
Short leasehold     10     13    
                 ------ ------   
                    23     26    
                 ====== ======   

Included in the total net book value of plant and machinery is pounds     
sterling nil (1995: pounds sterling nil) in respect of assets held under        
finance leases and similar hire purchase contracts. Depreciation for the year   
on these assets was pounds sterling nil (1995: pounds sterling 2,295).          

10 FIXED ASSET INVESTMENTS                                                      

                                                                [Download Table]

                                                                 TOTAL     
                                GORANDEL  JARDINE SECURICOR GROUP INTERESTS
                                TRADING    GURKHA SERVICES   IN ASSOCIATED 
                                LIMITED        LIMITED       UNDERTAKINGS  
                              ---------- ----------------- --------------- 
                                 POUNDS        POUNDS           POUNDS     
                              STERLING 000   STERLING 000     STERLING 000 
                                                                           
At 1 April 1994 ..............     39             --               39      
Retained profits less losses      207             79              286      
                              ---------- ----------------- --------------- 
At 31 March 1995..............    246             79              325      
Retained profits less losses .    319            306              625      
Less: Dividends received  ....     --           (200)            (200)     
                              ---------- ----------------- --------------- 
At 31 March 1996 .............    565            185              750      
                              ========== ================= =============== 

The companies which are material to the results of DSL Holdings Limited   
are as follows:                                                                 

                                                        [Enlarge/Download Table]

                                                      PRINCIPAL            % SHARES   COUNTRY OF  
                                                      ACTIVITY               HELD    INCORPORATION
                                            --------------------------- ------------ -------------
                                                                                                  
SUBSIDIARY UNDERTAKINGS                                                                           
Defence Systems International Limited*  ....Security Services                 100%   UK(1)        
Defence Systems Limited ....................Security Services                 100%   UK(1)        
Brooksight Limited* ........................Asset Recovery Services           100%   UK(1)        
US Defense Systems Inc* ....................Security Services                 100%   USA          
DSL Security (Asia) Private Limited  .......Security Services                 100%   Singapore    
Defence Systems Colombia SA** ..............Security Services                97.5%   Colombia     
DSL (Overseas) Limited .....................Holding Company                   100%   Cyprus       
Defence Systems (Jersey) Limited ...........Security Services                 100%   UK           

ASSOCIATED UNDERTAKINGS                                                                           
Gorandel Trading Limited ...................Security Services                  50%   Cyprus       
Jardine Securicor Gurkha Services Limited  .Security Services                  20%   Hong Kong    

------------                                                                    
(1)    Registered in England and Wales.                                         
*      Owned directly by DSL Holdings Limited.                                  
**     94.5% of the shares held are owned directly by DSL Holdings Limited and  
3% are held in trust on its behalf.                               

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

11 DEBTORS                                                                      

                                                                [Download Table]

                                      1996   1995   
                                    ------- ------- 
                                    POUNDS   POUNDS 
                                   STERLING STERLING
                                     000      000   
                                                    
AMOUNTS FALLING DUE WITHIN ONE YEAR                 
Trade debtors ......................  3,018   3,140 
Group relief recoverable ...........    105     258 
Other debtors ......................    418     564 
Prepayments and accrued income  ....    235     209 
                                    ------- ------- 
                                      3,776   4,171 
                                    ======= ======= 

12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR                               

                                                                [Download Table]

                                                           1996    1995   
                                                         ------- -------  
                                                          POUNDS  POUNDS  
                                                         STERLING STERLING
                                                           000      000   
                                                                          
Bank loans and overdrafts (see note 22)..................    973   1,196  
Trade creditors .........................................    206     782  
Amounts owed to parent and fellow subsidiary                              
 undertakings............................................    268     160  
Other creditors including taxation and social security:                   
 Corporation tax ........................................     --      38  
 Other taxes and social security ........................      6      74  
 Other creditors ........................................  1,827     816  
Accruals and deferred income ............................    416     601  
                                                         ------- -------  
                                                           3,696   3,667  
                                                         ======= =======  

13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR                      

                                                                [Download Table]

                                    1996    1995   
                                   ------  ------  
                                   POUNDS  POUNDS  
                                  STERLING STERLING
                                    000      000   
                                                   
Amounts owed to parent undertaking                 
 (repayable within 2-4 years) .....  611    813    
                                   ====== ======   

All amounts are repayable by instalments within four years.               

14 CALLED UP SHARE CAPITAL                                                      

                                                                [Download Table]

                                           1996                1995       
                                   ------------------- -------------------
                                               POUNDS              POUNDS 
                                              STERLING            STERLING
                                        NO.     000        NO.      000   
                                   ---------- -------- ---------- --------
                                                                          
AUTHORISED                                                                
Ordinary shares of pounds                                                 
 sterling 1 each ..................  1,000,000   1,000   1,000,000   1,000
                                   =========== ======= =========== =======
ALLOTTED, CALLED UP AND FULLY PAID                                        
Ordinary shares of pounds                                                 
 sterling 1 each ..................    466,668     467     466,668     467
                                   =========== ======= =========== =======

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

15 SHARE PREMIUM AND RESERVES                                                   

                                                                [Download Table]

                                           SHARE     PROFIT 
                                          PREMIUM   AND LOSS
                                          ACCOUNT   ACCOUNT 
                                        --------- ----------
                                          POUNDS     POUNDS 
                                         STERLING   STERLING
                                           000        000   
                                                            
At 1 April 1994 ........................    933      (1,044)
Retained profit for year ...............     --         444 
Goodwill written back ..................     --          44 
Exchange adjustments ...................     --         (16)
                                        --------- ----------
At 31 March 1995 .......................    933        (572)
Retained profit for year ...............     --         612 
Gain on the disposal of Brooksight Pty       --          11 
Goodwill written back ..................     --          40 
Exchange adjustments ...................     --          57 
                                        --------- ----------
At 31 March 1996 .......................    933         148 
                                        ========= ==========

The cumulative amount of goodwill resulting from acquisitions in the      
current year and earlier financial years which has been written off is pounds   
sterling 1,833,000 (1995: pounds sterling 1,873,000).                           

16 MINORITY INTERESTS                                                           

                                                                [Download Table]

                                 1996     1995  
                              -------- -------- 
                                POUNDS   POUNDS 
                               STERLING STERLING
                                 000      000   
                                                
At beginning of year .........     8       1    
Retained profit for year  ....     5       7    
                              -------- -------- 
At end of year ...............    13       8    
                              ======== ======== 

17 CONTINGENT LIABILITIES                                                       

A cross composite guarantee has existed since 16 February 1995 between DSL
Holdings Limited, Defence Systems Limited, DSL Security (Asia) Private          
Limited and Brooksight Limited.                                                 

18 COMMITMENTS                                                                  

(i) There were no authorised or contracted capital commitments unprovided 
for at 31 March 1996 (1995: pounds sterling nil).                               

(ii) Annual commitments under non-cancellable operating leases are as     
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                     1996                    1995         
                                           ----------------------- -----------------------
                                              LAND AND                LAND AND            
                                              BUILDINGS     OTHER     BUILDINGS     OTHER 
                                           ------------- --------- ------------- ---------
                                               POUNDS      POUNDS      POUNDS      POUNDS 
                                              STERLING    STERLING    STERLING    STERLING
                                                000         000         000         000   
                                                                                          
Operating leases which expire:                                                            
 Within one year ..........................       --         45           25          8   
 In the second to fifth years inclusive ...       --         41           --         80   
 Over five years ..........................      154         --          150         --   
                                           ------------- --------- ------------- ---------
                                                 154         86          175         88   
                                           ============= ========= ============= =========

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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

19 GUARANTEES                                                                   

There were liabilities of pounds sterling 67,242 under documentary credit 
guarantees outstanding at 31 March 1996.                                        

20 PENSION SCHEME                                                               

The group operates a defined contribution pension scheme. The assets of   
the scheme are held separately from those of the group in an independently      
administered fund. The pension charge for the period represents the             
contributions payable by the group to the scheme and amounted to pounds         
sterling 164,509 (1995: pounds sterling 96,636).                                

21 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING         
ACTIVITIES                                                                

                                                                [Download Table]

                                             1996    1995   
                                           -------  ------  
                                            POUNDS   POUNDS 
                                           STERLING STERLING
                                             000      000   
                                                            
Operating profit ..........................    751    692   
Depreciation charge .......................    263    212   
Decrease in stock .........................     11     27   
Decrease in debtors .......................    332    128   
Increase in creditors .....................    141    446   
Write back of goodwill ....................     --     44   
Effect of exchange rates ..................    (13)   (58)  
                                           ------- ------   
Net cash inflow from operating activities    1,485  1,491   
                                           ======= ======   

22 ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS                             

                                                                [Download Table]

                                                  CASH   OVERDRAFT     NET   
                                                 ------ ----------- ---------
                                                 POUNDS   POUNDS     POUNDS  
                                                STERLING STERLING   STERLING 
                                                  000      000        000    
                                                                             
Balance at 1 April 1994 .........................  461     (1,800)    (1,339)
Net cash (outflow)/inflow before adjustments for                             
 foreign exchange rate changes...................  (62)       580        518 
Effect of foreign exchange rate changes  ........  (35)        24        (11)
                                                 ------ ----------- ---------
Balance at 1 April 1995 .........................  364     (1,196)      (832)
Net cash inflow before adjustments for                                       
 foreign exchange rate changes...................  323        383        706 
Effect of foreign exchange rate changes  ........  227       (160)        67 
                                                 ------ ----------- ---------
Balance at 31 March 1996 ........................  914       (973)       (59)
                                                 ====== =========== =========

23 ULTIMATE PARENT COMPANY AND PARENT UNDERTAKING OF LARGER GROUP               

The company is an indirect subsidiary undertaking of Hambros PLC which is 
the ultimate parent company, registered in England and Wales.                   

The only group in which the results of the company are consolidated is    
that headed by Hambros PLC. The consolidated financial statements of the        
group are available to the public and may be obtained from Hambros PLC, 41      
Tower Hill, London, EC3 4HA.                                                    

24 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED         
STATES OF AMERICA GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                

The group's consolidated financial statements are prepared in conformity  
with generally accepted accounting principles applicable in the United          
Kingdom (UK GAAP), which differ in certain significant                          

39                


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DSL HOLDINGS LIMITED  
NOTES (CONTINUED)   

respects from those applicable in the United States of America (US GAAP).       
These differences, together with the approximate effects of the adjustments     
on profit attributable to shareholders and shareholders' funds, relate          
principally to the items set out below:                                         

(a) Goodwill                                                                  

Under UK GAAP, goodwill arising from acquisitions is written off against  
shareholders' funds. Upon the subsequent disposal of a business, goodwill       
previously written off is reinstated and considered in the calculation of the   
gain or loss on disposal. Under US GAAP, goodwill is capitalised and            
amortised over its estimated useful life. For the purpose of calculating the    
amortisation of goodwill a life of 20 years has been assumed. Upon the          
subsequent disposal of a business, unamortised goodwill is considered in the    
calculation of the gain or loss on disposal.                                    

(b) Deferred taxation                                                         

UK GAAP requires that no provision for deferred taxation should be made if
there is reasonable evidence that such taxation will not be payable in the      
foreseeable future. Under US GAAP, deferred taxation is recognised under the    
full liability method which permits deferred tax assets to be recognised if     
their realisation is considered more likely than not.                           

(c) Cash flows                                                                

The principal difference between UK GAAP and US GAAP is in respect of     
classification. Under UK GAAP, the group presents its cash flows for            
operating activities, returns on investments and servicing of finance,          
taxation, investing activities, and financing activities. US GAAP requires      
only three categories of cash flow activities which are operating, investing    
and financing. Cash flows arising from taxation and returns on investments      
and servicing of finance under UK GAAP would be included as operating           
activities under US GAAP. In addition, under UK GAAP, cash and cash             
equivalents include short term borrowings which under US GAAP would be          
presented as financing activities.                                              

Approximate effect on profit attributable to shareholders of differences  
between UK and US GAAP:                                                         

                                                                [Download Table]

                                                         1996     1995   
                                                        ------   ------  
                                                         POUNDS  POUNDS  
                                                        STERLING STERLING
                                                          000     000    
                                                                         
Profit attributable to shareholders in conformity with                   
 UK GAAP ................................................  612    444    
Adjustments:                                                             
 Goodwill amortisation ..................................  (82)   (94)   
 Deferred taxation ......................................  (76)   (38)   
                                                         ------ ------   
Profit attributable to shareholders in conformity with                   
 US GAAP.................................................  454    312    
                                                         ====== ======   

Approximate cumulative effect on shareholders' funds of differences       
between UK and US GAAP:                                                         

                                                                [Download Table]

                                                  1996    1995   
                                                ------- -------  
                                                 POUNDS  POUNDS  
                                                STERLING STERLING
                                                  000      000   
                                                                 
Shareholders' funds in conformity with UK GAAP    1,548     828  
Adjustments:                                                     
 Goodwill ......................................  1,302   1,424  
 Deferred taxation .............................   (135)    (59) 
                                                ------- -------  
Shareholders' funds in conformity with US GAAP    2,715   2,193  
                                                ======= =======  

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  DSL GROUP LIMITED  (and Predecessor)
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT--31 MARCH 1997 AND 1996  

                                                                [Download Table]

                                                   THREE MONTHS   
                                                       ENDED      
                                                ----------------- 
                                                  MAR-97   MAR-96 
                                                  POUNDS   POUNDS 
                                                 STERLING STERLING
                                                   000      000   
                                                -------- -------- 
                                                                  
Turnover........................................  5,130    5,000  
Cost of sales...................................  4,115    4,377  
                                                -------- -------- 
Gross profit....................................  1,015      623  
Administrative expenses.........................    702      447  
                                                -------- -------- 
Operating profit................................    313      176  
Income from interest in associated                                
 undertakings...................................    168      166  
Interest payable and similar charges, net ......    (67)     (40) 
                                                -------- -------- 
Profit on ordinary activities before taxation ..    414      302  
Tax on profit on ordinary activities............    207      157  
                                                -------- -------- 
Profit on ordinary activities after taxation ...    207      145  
Dividends--non-equity...........................     88       --  
                                                -------- -------- 
Retained income for the financial period .......    119      145  
                                                ======== ======== 

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  DSL GROUP LIMITED  (and Predecessor)
UNAUDITED CONSOLIDATED BALANCE SHEET--31 MARCH 1997   

                                                                [Download Table]

                                                          MAR-97   
                                                          POUNDS   
                                                       STERLING 000
                                                       ------------
                                                                   
Fixed assets ...........................................           
 Tangible assets........................................     952   
 Investments............................................     885   
                                                        ---------  
                                                           1,837   
Current assets .........................................           
 Debtors................................................   4,864   
 Cash at bank and in hand...............................      (7)  
                                                        ---------  
                                                           4,857   
Creditors: amounts falling due within one year .........  (3,116)  
                                                        ---------  
Net current assets......................................   1,741   

Total assets less current liabilities...................   3,578   
Creditors: amounts falling due after more than one                 
 year...................................................  (4,577)  
                                                        ---------  
Net liabilities.........................................    (999)  
                                                        =========  
Capital and reserves ...................................           
 Calling up share capital...............................     182   
 Share premium account..................................   4,655   
 Profit and loss account................................  (5,856)  
                                                        ---------  
Equity and non-equity shareholders' funds...............  (1,018)  
 Equity minority interest...............................      20   
                                                        ---------  
                                                            (999)  
                                                        =========  

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 DSL GROUP LIMITED (and Predecessor)
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT -31 MARCH 1997 AND 1996  

                                                        [Enlarge/Download Table]

                                                                        MAR-97   MAR-96 
                                                                        POUNDS   POUNDS 
                                                                       STERLING STERLING
                                                                         000      000   
                                                                      -------- -------- 
                                                                                        
Net cash (outflow) inflow from operating activities...................   (420)     686  
Returns on investments and servicing of finance                                         

 Interest received....................................................     20       21  
 Interest paid........................................................    (87)     (61) 
 Dividends received from associated undertakings......................     24      102  
                                                                      -------- -------- 
Net cash (outflow) inflow from returns on investments and servicing                     
 of finance...........................................................    (43)      62  
Taxation                                                                                

 Overseas tax paid....................................................     --     (130) 
                                                                      -------- -------- 
Net tax paid..........................................................     --     (130) 
Investing activities                                                                    

 (Purchase) sale of tangible fixed assets.............................   (122)      16  
                                                                      -------- -------- 
Net cash outflow from investing activities............................   (122)      16  
Financing.............................................................     --       --  
                                                                      -------- -------- 
(Decrease) increase in cash and cash equivalents......................   (585)     634  
                                                                      ======== ======== 

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DSL GROUP LIMITED (and Predecessor)       
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS   

1. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED         
STATES OF AMERICA GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. The group's         
consolidated financial statements are prepared in conformity with generally     
accepted accounting principles applicable in the United Kingdom (UK GAAP),      
which differ in certain significant respects from those applicable in the       
United States of America (US GAAP). These differences, together with the        
approximate effects of the adjustments on profit attributable to shareholders   
and shareholders' funds, relate principally to the items set out below:         

(a) Goodwill                                                              

Under UK GAAP, goodwill arising from acquisitions is written off against  
shareholders' funds. Under US GAAP, goodwill is capitalized and amortized       
over its estimated useful life. For the purpose of calculating the              
amortization of goodwill, a life of 25 years has been assumed.                  

(b) Cash flows                                                            

The principal difference between UK GAAP and US GAAP is in respect of     
classification. Under UK GAAP, the group presents its cash flows for            
operating activities, returns on investments and servicing of finance,          
taxation, investing activities, and financing activities. US GAAP requires      
only three categories of cash flow activities which are operating, investing    
and financing. Cash flows arising from taxation and returns on investments      
and servicing of finance under UK GAAP would, with the exception of dividends   
paid, be included as operating activities under US GAAP; dividend payments      
would be included as a financing activity under US GAAP. In addition, under     
UK GAAP, cash and cash equivalents include short term borrowings which under    
US GAAP would be presented as financing activities.                             

Approximate effect on profit attributable to shareholders of differences  
between UK and US GAAP:                                                         

                                                                [Download Table]

                                                               THREE MONTHS ENDED
                                                                 MARCH 31, 1997  
                                                              POUNDS STERLING 000
                                                              -------------------
                                                                                 
Profit attributable to shareholders in conformity with UK                        
 GAAP.........................................................        207        
Adjustments:                                                                     
 Goodwill.....................................................         95        
                                                              ------------------ 
Profit attributable to shareholders in conformity with US                        
 GAAP.........................................................        112        
                                                              ================== 

Approximate cumulative effect on shareholders' funds of differences       
between UK and US GAAP:                                                         

                                                                [Download Table]

                                                               THREE MONTHS ENDED
                                                                 MARCH 31, 1997  
                                                              POUNDS STERLING 000
                                                              -------------------
                                                                                 
Shareholders' funds in conformity with UK GAAP................        (999)      
Adjustments:                                                                     
 Goodwill.....................................................       5,697       
                                                              ------------------ 
Profit attributable to shareholders in conformity with US                        
 GAAP.........................................................       4,698       
                                                              ================== 

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(b) Pro Forma Financial Information.                                            

The following unaudited pro forma financial information gives effect to   
the Company's combination with DSL which was completed on April 16, 1997. The   
DSL Transaction was accounted for as a pooling of interests and accordingly,    
all previously issued financial statements of the Company will be restated to   
include DSL, since DSL's inception on June 3, 1996. On August 1, 1996, DSL      
acquired the assets of DSL Holdings in a transaction accounted for as a         
purchase. The unaudited pro forma financial statements are derived from the     
historical financial statements of the Company, DSL, and DSL Holdings and       
estimates and assumptions set forth in the notes to the unaudited pro forma     
financial statements.                                                           

The unaudited pro forma balance sheet gives effect to the combination of  
the Company with DSL and the acquisition of DSL Holdings by DSL as if such      
transactions had occurred on March 29, 1997. Such unaudited pro forma balance   
sheet is derived from the unaudited consolidated balance sheet of the Company   
as of March 29, 1997 included in its Quarterly Report on Form 10-QSB for the    
three months ended March 29, 1997 which is incorporated by reference, as well   
as the unaudited balance sheet of DSL as of March 31, 1997 included herein.     

The unaudited pro forma income statements present unaudited pro forma     
results of operations for the year ended December 28, 1996 and the three        
months ended March 29, 1997. For purposes of the unaudited pro forma income     
statements, the combination of the Company with DSL and the acquisition of DSL  
Holdings by DSL are included as if such transactions had occurred on January 1, 
1996. The unaudited pro forma income statement for the year ended December 28,  
1996 is derived from the audited income statement of the Company for the year   
ended December 28, 1996 included in the Company's Annual Report on Form 10-KSB  
for the year ended December 28, 1996, which is incorporated herein by           
reference, the audited income statement of DSL for the period June 3, 1996      
(inception) through December 31, 1996 included herein, and the unaudited        
income statement of DSL Holdings for the period January 1, 1996 through         
July 31, 1996. The unaudited pro forma income statement for the three months    
ended March 29, 1997 is derived from the unaudited income statement of the      
Company for the three months ended March 29, 1997 included in its Quarterly     
Report on Form 10-QSB for the three months ended March 29, 1997 which is        
incorporated herein by reference and the unaudited income statement of DSL      
for the three months ended March 31, 1997 included herein.                      

These unaudited pro forma financial statements may not be indicative of   
the results that actually would have occurred if the transaction referred to    
above had been in effect on the dates indicated or the results that may be      
obtained in the future.                                                         

                                                        [Enlarge/Download Table]

                                                                              PAGE OF FORM 8-K/A-1
                                                                              --------------------
                                                                                                  
Unaudited pro forma income statement for the three months ended                                   
  March 29, 1997..............................................................        46          
Unaudited pro forma income statement for the year ended December 28, 1996  ...        47          
Unaudited pro forma balance sheet--March 29. 1997 ............................        48          
Notes to unaudited pro forma financial statements ............................        49          

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UNAUDITED PRO FORMA INCOME STATEMENT  
FOR THE THREE-MONTHS ENDED MARCH 29, 1997   
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)   

                                                        [Enlarge/Download Table]

                                                  HISTORICAL                 PRO FORMA       
                                        ---------------------------- ------------------------
                                         AHI (A)  DSL (A)   COMBINED   ADJUSTMENTS   COMBINED
                                        -------- -------- ---------- ------------- ----------
                                                                                             
REVENUES................................ $ 6,422   $8,328   $14,750                  $14,750 
COST AND EXPENSES:                                                                           
 Cost of sales .........................   3,773    6,680    10,453                   10,453 
 Operating expenses ....................   1,901    1,076     2,977                    2,977 
 Depreciation and amortization .........     127       64       191          95 (e)      286 
 Interest expense, net .................     (40)     109        69         199 (b)      268 
 Equity in earnings of unconsolidated                                                        
  subsidiaries (income).................             (272)     (272)                    (272)
                                        -------- -------- ---------- ------------- ----------
OPERATING INCOME .......................     661      671     1,332        (294)       1,038 
INCOME TAXES ...........................     256      298       554         (82)(d)      472 
PREFERENCE SHARE DIVIDENDS .............              143       143        (143)(c)       -- 
                                        -------- -------- ---------- ------------- ----------
NET INCOME APPLICABLE TO COMMON                                                              
STOCKHOLDERS ........................... $   405   $  230   $   635       $  (69)    $   566 
                                        ======== ======== ========== ============= ==========
 EARNINGS PER COMMON SHARE.............. $  0.04                                     $  0.04 
                                        ========                                   ==========
 WEIGHTED AVERAGE COMMON SHARES  .......  11,523                                      12,797 
                                        ========                                   ==========

See accompanying Notes to Unaudited Pro Forma Financial Information.            

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UNAUDITED PRO FORMA INCOME STATEMENT  
FOR THE YEAR ENDED DECEMBER 28, 1996  
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)   

                                                        [Enlarge/Download Table]

                                            HISTORICAL                    PRO FORMA       
                                --------------------------------- ------------------------
                                               DSL         DSL                            
                                  AHI (A)   GROUP (A)  HOLDINGS(A)  ADJUSTMENTS   COMBINED
                                ---------- ---------- ----------- ------------- ----------
                                                                                          
REVENUES .......................  $18,011    $12,956     $18,191                  $49,158 
COST AND EXPENSES:                                                                        
 Cost of sales .................   10,879     10,293      15,175                   36,347 
 Operating expenses ............    5,088      1,812       2,107                    9,007 
 Depreciation and amortization        366        188         304          368 (e)   1,226 
 Interest expense, net .........      253        262         147          862 (b)   1,524 
 Equity in earnings of                                                                    
  unconsolidated subsidiaries ..     (320)       (768)                  (1,088)           
                                ---------- ---------- ----------- ------------- ----------
OPERATING INCOME ...............    1,425        721       1,226       (1,230)      2,142 
NON-OPERATING INCOME (EXPENSE)          2         (5)          1                       (2)
                                ---------- ---------- ----------- ------------- ----------
INCOME BEFORE INCOME TAXES AND                                                            
 PREFERENCE SHARE DIVIDENDS  ...    1,427        716       1,227       (1,230)      2,140 
INCOME TAXES....................      592        623         603         (504)(d)   1,314 
PREFERENCE SHARE DIVIDENDS .....       --        239          --         (239)(c)      -- 
                                ---------- ---------- ----------- ------------- ----------
NET INCOME APPLICABLE TO COMMON                                                           
 STOCKHOLDERS...................  $   835    $   (146)   $   624      $   (487)   $   826 
                                ========== ========== =========== ============= ==========
EARNINGS PER COMMON SHARE ......  $  0.10                                         $  0.09 
                                ==========                                      ==========
WEIGHTED AVERAGE COMMON SHARES .    8,133                                           9,407 
                                ==========                                      ==========

See accompanying Notes to Unaudited Pro Forma Financial Information.            

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UNAUDITED PRO FORMA BALANCE SHEET   
March 29, 1997  
(amounts in thousands)  

                                                        [Enlarge/Download Table]

                                                      HISTORICAL                   PRO FORMA       
                                          -------------------------------- ------------------------
                                            AHI (G)    DSL (G)    COMBINED   ADJUSTMENTS   COMBINED
                                          ---------- ---------- ---------- ------------- ----------
                                                                                                   
ASSETS                                                                                             
CURRENT ASSETS:                                                                                    
Cash and cash equivalents ................  $ 4,146    $    (11)  $ 4,135      $    77 (g) $ 4,212 
Accounts receivable, net .................    6,210      6,198     12,408                   12,408 
Inventories ..............................    4,897         --      4,897                    4,897 
Prepaid expenses and other current                                                                 
 assets...................................      653      1,779      2,432                    2,432 
                                          ---------- ---------- ---------- ------------- ----------
 Total current assets ....................   15,906      7,966     23,872           77      23,949 
PROPERTY, PLANT AND EQUIPMENT, net  ......    5,115      1,561      6,676                    6,676 
INTANGIBLE ASSETS ........................    7,501      9,343     16,844                   16,844 
INVESTMENT IN ASSOCIATED COMPANIES  ......               1,451      1,451                    1,451 
OTHER ASSETS .............................      337        112        449                      449 
                                          ---------- ---------- ---------- ------------- ----------
TOTAL ASSETS .............................  $28,859    $20,433    $49,292      $    77     $49,369 
                                          ========== ========== ========== ============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY                                                               
CURRENT LIABILITIES:                                                                               
 Short-term borrowings ...................  $   357    $    --    $   357                  $   357 
 Current portion of long-term debt  ......      251      1,118      1,369                    1,369 
 Accounts payable, accrued expenses and                                                            
  other ..................................    3,024      4,649      7,673       (1,257)(g)   6,416 
                                          ---------- ---------- ---------- ------------- ----------
  Total current liabilities ..............    3,632      5,767      9,399       (1,257)      8,142 
MINORITY INTEREST ........................       --         32         32                       32 
LONG-TERM DEBT and capitalized lease                                                               
 obligations..............................       95      6,850      6,945        8,550 (i)  15,495 
                                          ---------- ---------- ---------- ------------- ----------
  Total liabilities ......................    3,727     12,649     16,376        7,293      23,669 
PREFERENCE SHARES ........................       --      7,216      7,216       (7,216)(j)         
STOCKHOLDERS' EQUITY:                                                                              
Common stock .............................      106         13        119                      119 
 Additional paid-in capital ..............   22,810        670     23,480                   23,480 
 Foreign currency exchange translation  ..       --       (104)      (104)                    (104)
Retained earnings ........................    2,216        (11)     2,205                    2,205 
                                          ---------- ---------- ---------- ------------- ----------
  Total stockholders' equity .............   25,132        568     25,700                   25,700 
                                          ---------- ---------- ---------- ------------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY    $28,859    $20,433    $49,292      $    77     $49,369 
                                          ========== ========== ========== ============= ==========

See accompanying Notes to Unaudited Pro Forma Financial Information.            

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NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION                              

(a) Historical results of operations include the following:                     

AHI - results of operations of Armor Holdings, Inc. for the three months        
ended March 29, 1997 and for the fiscal year ended December 28, 1996            

DSL - results of operations of DSL Group Limited for the three months ended     
March 31, 1997 and                                                              

DSL Group Limited for the period June 3, 1996 (inception) to December 31, 1996. 

DSL Holdings Limited (Predecessor) - results of operations for the period       
January 1, 1996 to July 31, 1996                                                

(b) Reflects the elimination of interest expense recorded by DSL on             
historical debt and the additional interest expense for AHI's borrowing on      
the Credit Facility.                                                            

(c) Reflects the elimination of preference share dividends.                     

(d) Adjustment to reflect the income tax effect of the pro forma adjustments.   

(e) Reflects the UK to US GAAP adjustment of amortization of goodwill.          

(f) Reflects the accounts for Armor Holdings, Inc. as of March 29, 1997 and     
DSL Group Limited as of March 31, 1997.                                         

(g) Reflects the following adjustments to cash:                                 

                                                                [Download Table]

                                                    
Borrowing under existing Credit Facility..  $15,400 
Repayment of DSL indebtedness:                      
 N.M. Rothschild & Sons Limited ..........   (6,850)
 Other....................................     (872)
Payment for DSL preference share capital:           
 Principle ...............................   (7,216)
 Accrued interest ........................     (385)
                                          --------- 
                                            $    77 
                                          ========= 

(h) Reflects payment for DSL preference shares.                                 

(i) Reflects the following adjustments to long-term debt;                       

                                                                [Download Table]

                                                         
Borrowings under the existing Credit Facility    $15,400 
Repayment of DSL indebtedness .................   (6,850)
                                               --------- 
                                                 $ 8,550 
                                               ========= 

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(c) Exhibits.                                                                   

                                                        [Enlarge/Download Table]

   EXHIBIT  DESCRIPTION                                                                               
----------- ------------------------------------------------------------------------------------------
                                                                                                      
     2.1*   Share Acquisition Agreement, dated as of April 7,1997, between Bodycote, AHL and the      
            Company.                                                                                  
     2.2*   Agreement for the Sale and Purchase of the Whole of the Issued Share Capital of DSL Group 
            Limited, dated April 16, 1997, between the Company, AHL, NatWest Ventures Nominees Limited
            and Others and Martin Brayshaw.                                                           
    10.1*   Tax Deed, dated April 7, 1997, between the Company and Bodycote.                          
    10.2*   Form of Escrow Agreement, dated April 16, 1997, between the Company, the Warrantors and   
            Ashurst Morris Crisp.                                                                     
    10.3*   Form of Registration Rights Agreement, dated April 16, 1997, between the Company and the  
            Vendors.                                                                                  
    10.4*   Amended and Restated Loan Agreement dated March 26, 1997, between the Company and Barnett 
            Bank.                                                                                     
    10.5*   Renewal Promissory Note, dated March 26, 1997, made by Armor Holdings, Inc. in favor of   
            Barnett Bank.                                                                             
    10.6*   Form of Amended and Restated Security Agreement, dated March 26, 1997, made by each of the
            Company and the Subsidiaries in favor of Barnett Bank.                                    
    10.7*   Pledge Agreement, dated March 26, 1997, made by the Company in favor of Barnett Bank.     
    10.8*   Form of Collateral Assignment, dated March 26, 1997, made by each of Defense Technology   
            Corporation of America and NIK Public Safety, Inc. in favor of Barnett Bank.              
    10.9*   Amendment to Acceptance Credit Agreement, dated March 26, 1997, between the Company and   
            Barnett Bank.                                                                             
    10.10*  Consent with respect to Guaranty of Payment, dated as of March 26, 1997, of NIK Public    
            Safety, Inc., Armor Holdings Properties, Inc. and Defense Technology Corporation of       
            America.                                                                                  
    10.11*  Form of Guaranty of Payment, dated November 14, 1996.                                     

    23.1**  Consent of KPMG                                                                           


*   Previously filed as part of this Current Report on Form 8-K on              
April 22, 1997.                                                         

**  Filed herewith.                                                             

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SIGNATURES  

Pursuant to the requirements of the Securities Exchange Act of 1934, the  
Registrant has duly caused this report to be signed on its behalf by the        
undersigned hereunto duly authorized.                                           

                        ARMOR HOLDINGS, INC.

                      /s/ Carol T. Burke
                                       -----------------------------------
                  Carol T. Burke
                            Vice President - Finance
                 and Secretary
                         Dated: June  20, 1997

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The following Exhibit is filed herewith:                                        

Exhibit       Description                                                       
-------       -----------                                                       

23.1         Consent of KPMG

Dates Referenced Herein   and   Documents Incorporated by Reference

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