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Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesNo.000InformationMemorandumThis Memorandum has been compiled from information provided by theShareholder/Directors of BOWES DESIGN & DEVELOPMENT LTD (“Bowes”)who have confirmed that (i) to the best of their knowledge and belief it iscorrect and (ii) no material fact, the absence of which would prejudice aPurchaser, has been knowingly omitted or withheld. The information has notbeen verified by Tangible Securities Limited (“TSL”) and this Memorandum,which is confidential to the addressee, does not constitute an invitation to thePublic by TSL or Bowes to subscribe for or purchase shares in or assets of Bowes.By accepting the Memorandum, the recipient acknowledges that no warranty orrepresentation as to its accuracy (or as to the accuracy of any other informationsupplied or to be supplied in the future in connection with the sale) is given byTSL, Bowes or by any of their respective representatives, directors, employees,agents or shareholders and that all terms and conditions of any transaction shallbe governed solely by a written sale and purchase contract to be entered into.A prospective purchaser should take separate professional advice.E&OEDatedAddressee


Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesIndexPagePage1 Introduction 11.1 Overview 31.2 Ownership 41.3 Reasons for Sale 41.4 Key Attractions for a Purchaser 52 The Business 72.1 Principal Activities 92.2 History 102.3 Range of Products and Services 113 Manufacturing 153.1 Overview 173.2 Accreditation 203.3 Premises 204 Management 234.1 Overview 254.2 Staff CVs 254.3 Terms and Conditions and Benefits 274.4 Pensions 275 The Market 295.1 Market Size and Characteristics 315.2 Customers 325.3 Key Competitors 335.4 Sales and Marketing 346 Financial 376.1. Introduction 396.2 Sales and Margins 396.3 P & L 416.4 Balance Sheets 426.5 Cash Flow 436.6 Foreign Currency Exposure 437 Budget 2007and Three Year Plan 457.1 Budget 477.2 Three Year Plan 488 Information Technology 538.1 Management Information Systems 559 Legal 579.1 Outstanding Litigation 599.2 Environmental 5910 Advisers 6110.1 Advisers 6311 Appendix One 65Accounts Y.E 31 st December 2006


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries1 Introduction1.1 Overview 31.2 Ownership 41.3 Reasons for Sale 41.4 Key Attractions for a Purchaser 5Page


Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesIntroduction1.1 OverviewBowes Design & Development, “Bowes”, was founded by DavidBowes in 1967 to develop product concepts through the detaileddesign phase to prototype and then ultimately production design andassociated tooling.The company evolved over the years in a number of different ways but the present phase of itsdevelopment essentially started in 2000 when a total of seven various production sites aroundMeopham were brought together in a single purpose built unit on a modern light industrialestate near Aylesford in Kent.Today the company is focused on four main product areas:• Motorsport• Mock-ups• Tooling and Fixtures• ProductionMotorsport is almost entirely tooling and fixtures for Formula One racingand encompasses many of the most famous names in the sport such asMcLaren, Honda and Red Bull.Mock-ups are mainly of aircraft interiors and recently Bowes completed their largestproject - the First Class accommodation of the A380, comprising both floors of thenose section. This was similar to the A350 project last year. In addition Bowes hasworked for automotive clients such as Saab, Ford and Bentley.Tooling and fixtures are mainly provided to the automotive industry and, again, thereare some famous names such as Nissan and Volvo amongst the clients they haveworked for.In order to satisfy these markets, Bowes has developed a sophisticated design andmanufacturing organisation. Design skills are centred round a separate ComputerAided Design department. This drives a well equipped CNC shop which, after theaddition of two new machines earlier this year, now has a total of seven largemachining centres. Their skills in advanced composite manufacture cover a broadrange of production techniques such as Resin Infusion, Resin Transfer Moulding,Pre-Preg Vacuum Moulding and Reaction Injection Moulding.Page Page


Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesFinancially the company has shown strong growth since consolidating on the Aylesford site in 2000as is shown in the sales graph below. The regression line highlights the strong underlying trend.Graph 1: Sales History and Regression Line1.4 Key Attractions for a Purchaser• Long term relationships with major OEM and Tier One suppliers in theAerospace and Automotive industries• leading position in the world market for aerospace mock-ups• strong management team, independent of owner• two large CNC machining centres installed this year for an investment inexcess of £350k to support future growth. Sophisticated CNC machiningshop with seven machines and highly developed manufacturing skillscapable of working with an extensive range of materials from clay andpolystyrene through a range of composite modelling boards and up tohigh tensile steels and titaniumThis financial year, to 31 st December 2007, is budgeted for sales of £5.5 million and an operatingprofit of £558 thousand. A well considered Plan sees this rising to £6.2 million sales and a profit of£620 thousand in 2009. The business is strongly cash generative and in the same year projects a netcash surplus of £900 thousand.1.2 OwnershipBowes Design & Development Ltd has a total of 11,111 shares issued.10,000 of these are held in a UK based trust for the benefit of David Bowes. The remaining 1,111 areheld by William Redgrove, the General Manager and MD Designate.A potential purchaser should proceed on the basis that all these shares be delivered at completion1.3 Reasons for SaleDavid Bowes is now sixty eight and for some years has been building amanagement team in order that he can reduce his time in the businesswith a view to sale and exiting entirely. This process is now effectivelycomplete and David has virtually no involvement in the daily running ofthe business and the next stage of the plan is the sale.• major increase in marketing department to take a more aggressiveapproach to future growth• highly skilled and experienced department devoted to ComputerAided Design (CAD)• range of production techniques for advanced composites• talented and very adaptable staff and shop floor team capableof dealing with the most complex bespoke projects• track record in the industry as the company that will take on the mostdifficult projects against the tightest timetables• strong and consistent growth in sales and profits since the latenineties, with operating profit of £558k expected from sales of£5.5m for 2007• a well considered Plan sees this performance increasing to £620kand £6.2m respectively in 2009• tight financial control sees profit reflected in strong cash flow anda projected net cash balance in 2009 of £900k• modern, purpose-built factory, constructed in 2000.William Redgrove was fully aware of these plans when he joined the company and will sell his sharesalongside David Bowes.Page Page


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries2 The Business2.1 Principal Activites 92.2 History 102.3 Range of Products and Services 11Page Page


Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesThe Business2.1 Principal ActivitiesThe original concept of the founder, David Bowes, was to provide aservice to engineers and designers that would turn their drawings andconcepts into physical products. Originally this was based aroundthe traditional skills of pattern and model makers.As the company developed it embraced a wide range of modern high tech manufacturingprocesses and now possesses a high degree of skill in CAD/CAM and CNC machining,high performance composite manufacture including RIM, RTN and vacuum processing ofpre-preg materials.These skills allowed Bowes to extend its offering into short-run production and itnow provides components for civil aerospace and automotive customers, such asContour Premium Aircraft Seating and McLaren. Bowes has excellent and long standingrelationships with many of the OEM and Tier One companies in these industries.As the modelling skills developed and the production ability expanded, Bowes enteredthe market for full scale mock-ups. Starting with car companies such as Ford, Saab andBentley, the company subsequently developed the ability to mock-up entire aircraftinteriors, from small regional jets to the double deck Airbus A380 and most recently forthe high-tech A350.This growth in technical skills was based on the ability to build tooling and fixtureswhich still features as one of the major product lines of the company.Page Page


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries2.2 History2.3 Range of Products and ServicesThe business was founded in 1967 by David Bowes as Bowes PatternsLtd. His intention was to provide a facility that would turn concepts anddesigns into physical products.Initially the business was based round the toy industry with clients such as Meccano, Triang andCorgi. With the advent of electronic games and the decline in traditional toys, the company refocusedon the automotive industry with clients such as Ford and Rover.In 1985 the first CNC machine was installed to integrate with their customers’ adoption of CADtechnology. Now instead of working to paper drawings Bowes could use computer generated CADdata to directly machine the designer’s product. This also introduced the ability to take on shortproduction runs.In 1996 a new company was formed, Bowes Design & Development Ltd, which acted as a sales agentfor Bowes Pattern. This was for tax planning purposes. All the orders generated by Bowes Designwere passed to Bowes Pattern, and Bowes Pattern generated hardly any business on its own account.In the late 90s the company entered the aerospace market and began building mock-ups for Hunting.At this time the company was housed in six separate units in Meopham with a CNC machine in anearby barn. In 2000 Bowes moved to a new purpose built facility to form the basis of a major, selffunded, development programme. Critically, the building allowed the company to consolidate its CNCmachining capability and also provide room for expansion.In addition, it offered a high clearance to theeves of 6m, which allowed the largest mock-upsto be built, and a clear and very flexible workingarea which can be reconfigured as necessary toaccommodate varying production needs.Bowes divides its range of products and servicesinto four broad categories:-• Motorsport• Mock-ups• Tooling and Fixtures• ProductionIn addition, the Company has deliberately separated the design oriented CADactivity from the production oriented CAM department. This has greatlyassisted in creating a strong design ability that allows Bowes to integrate andassist early in the client’s design process. This has the advantages of not onlybeing a competitive plus but also allows a broad view of other work availableand thus helps direct this towards Bowes.Bowes has all the technical skills for complete product design from scratch butuntil now has not taken on design authority, although this is being consideredas a future development. An example of a product entirely designed and builtby Bowes is shown right.This is a mobile manicure cubicle for Manicure Express who use them inairports. The project consisted of the entire design from concept to prototypefollowed by a production run of four units with, potentially, more to follow.The business then went through a difficultfinancial period caused by cost over-runs fromthe move, the downturn in aerospace due to9/11 and the dip in the automotive marketwhich followed shortly after. Bowes Patternswas liquidated and all the manufacturingincorporated into Bowes Design to form thesingle company that exists today.However, the management held to their plans to grow the business and after a few years of tightmargins directed the business onto the profitable growth path that it exhibits today.2.3.1 MotorsportNormally this work entails fast turnaroundCNC machining of body moulding patternsand/or aluminium components. An example,a spoiler root, is shown left.Page 10Page 11


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries2.3.2 Mock-ups and PrototypesMock-ups are normally required by the aerospace and automotiveindustries: examples are given below.Aerospace, Bowes produces both external and internal mock-ups.These are used to test concepts in reality, for crew training and formarketing. Some examples are the interior of the A380 and the VirginJ2000 interior concept.They also produce fully working prototypes, usually of aircraft seats,where they have considerable expertise.Automotive Full scale interiors for concept cars and scale exteriormodels for wind tunnel testing.2.3.3 Tooling and FixturesBowes has the ability to build tooling for all the processes it operates.It also produces assembly and test rigs. Some examples are the vacuumactuated machining fixture used to hold the McLaren SLR floorplan formachining.2.3.4 ProductionBowes is seeking to expand its short run production ability andproduce items such as panels and trim for aircraft interiors (particularlyFirst Class, where the runs are shorter) and components for motorsport,particularly F1. Some examples are chassis diaphragms and door coresfor the McLaren SLR and aircraft seat fairings for American Airways.Page 12Page 13


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries3 Manufacturing3.1 Overview 173.2 Accreditation 203.3 Premises 20Page 14Page 15


Bowes Design & Developmentrealisation experts for the automotive and aerospace industriesManufacturing3.1 OverviewBowes employs seven main production processes:• CAD/CAM and CNC Machining• Resin infusion• Resin Transfer Moulding (RTM)• Vacuum moulding of Pre-Preg Composites• Hand lay-up of epoxy and polyester resins• Reaction Injection Moulding (RIM)• Vacuum castingSix are related to processing advanced plastics and composite materials and one to conventionalmachining albeit with a very high computer aided content and the use of a very wide rangeof materials.The CNC shop is run 24 hours a day on a three shift basis during the week and 12/14 hours a dayat weekends to achieve the necessary loading for this capital intensive process.The rest of the factory operates a normal day shift pattern during the week. If extra capacityis required this is generally satisfied by working at weekends. Extending the week day shiftpattern is more difficult due to the problem of finding available skilled labour and lessdesirable due to the more continuous communication necessary to support the activities.Not all these processes will be running at any given time. Those such as RIM and inparticular Vacuum Casting operate in highly competitive subcontract markets and areessentially used to support internal projects as required.Page 16Page 17


Bowes Design & Developmentrealisation experts for the automotive and aerospace industries3.1.1 CAD/CAM and CNC Machining3.1.4 Vacuum Moulding of Pre-Preg CompositesBowes has a substantial and sophisticated CNC machining shop.There are seven major machines of which five are 5 axis and two 3 axis.Two of these are very new, only being commissioned in January this year.Table 1: Machine detailsPlant Capacity (mm) Axis Speed (rpm)CMS Antares 4800 x 2600 x 1200 5 axis 24000 rpmCMS Ares 2600 x 1500 x 1200 5 axis 24000 rpmCorrea 3500 x 3000 x 1200 5 axis 6000 rpmCorrea 2500 x 2500 x 1300 4+1 axis 6000 rpmRye 2438 x 1524 x 762 3+2 axis 14000 rpmBridgeport 1000 x 500 x 500 3 axis 15000 rpmHuron 1500 x 600 x 600 3 axis 2000 rpmThis process is different from the three described above. It is based around a wovencarbon fibre fabric which is pre-impregnated with phenolic resin. Because the fibres arewoven, and thus oriented, it is a far more controllable material than ordinary GRP. Thematerial is cut and laid over a mould which is then compressed in a vacuum bag. Thisassembly is then placed in an oven which cures the phenolic at medium temperatures,normally around 220 °C. Bowes use this process to make components for aircraftinteriors and seats.3.1.5 Hand lay-up of epoxy and polyester resinsThis is the original process used to manufacture composite structures. The reinforcementis cut by hand and laid in the mould and then soaked in resin by spraying or even using apaintbrush. It is highly labour intensive and used for awkward and very short run items.In addition, Bowes has a comprehensive range of off hand machines, such as circularand band saws, grinders, etc.3.1.2 Resin InfusionResin infusion is a process in which the reinforcement is placed in the mould, baggedand the resin drawn through under a low vacuum.3.1.3 Resin Transfer Moulding (RTM)RTM operates in a similar way to RIM but uses phenolic and epoxy resins. It alsofrequently involves the use of an integrated reinforcement core which is placed in themould prior to injection. These resins are more aggressive than polyurethanes and thetooling is a phenolic resistant composite, nickel plated aluminium or stainless steel.Given the more robust nature of the tooling, this process is more suited to productionruns and is presently making aircraft seating components.3.1.6 Reaction Injection Moulding (RIM)RIM is generally used for larger components and although using Polyurethane and stillclassed as a low pressure process, it mixes and injects the resin under higher pressurethan vacuum casting. Tooling is made from glass fibre, or glass reinforced plastic(GRP), which is manufactured on site using the CAD/CAM and CNC facility. As GRPis more robust than silicone rubber the process cycles 2-3 times faster than vacuumcasting and the tools can produce 200/300 components.3.1.7 Vacuum CastingVacuum casting is a low, essentially atmospheric, pressure, low temperature processwhich uses Polyurethane resins. An extensive range of these resins are availableand can be selected to simulate a wide range of commonly available thermoplastics.Tooling is typically made of various grades of silicone rubber and, depending on thetype of component, up to 40 prototypes can be produced.Page 18Page 19

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