Directors Report 1

Director's report for the year ended 30 September 2004

The director presents his report and the financial statements for the year ended 30 September 2004.
Principal activity and review of the business The principal activity of the company continued to be that of engine design and manufacture.
Results and dividends The results for the year are set out on page 3.
The director does not recommend payment of a final dividend.
Director and his interest The director who served during the year and his interest in the company are as stated below:
Ordinary shares 30/09/04 01/10/03
M. Lancaster 2 2
Director's responsibilities Company law requires the director to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the company and of the profit or loss of the company for that year. In preparing these the director is required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The director is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable him to ensure that the financial statements comply with the Companies Act 1985. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

This report was approved by the Board on 15 November 2004 and signed on its behalf by

A Ph, ps Secretary

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Advanced Engine Research Ltd

Accountants' report on the unaudited financial statements to the director of Advanced Engine Research Ltd

We report on the accounts for the period ended 30th September 2004 set out on pages 3 to 11 , which have been prepared under the accounting policies on pages 6 and 7. We have not been required to audit these accounts.
Our responsibility for this report is only to you as the Director of the company. We accept no responsibility to any other party.
As described on the balance sheet you are responsible for the preparation of the financial statements for the year ended 30 September 2004 set out on pages 3 to 11 and you consider that the company is exempt from an audit. In accordance with your instructions we have compiled these unaudited financial statements, in order to assist you to fulfil your statutory responsibilities, from the accounting records and information supplied to us.

C.J. Gardner Accountants Limited Chartered Certified Accountants 83 High Street Rayleigh Essex SS6 7EJ

Date: 15 November 2004

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Advanced Engine Research Ltd

Directors Report 2

Director's report for the year ended 30 September 2003

The director presents his report and the financial statements for the year ended 30 September 2003.
Principal activity and review of the business The principal activity of the company continued to be that of engine design and manufacture.
Results and dividends The results for the year are set out on page 4.
The director does not recommend payment of a final dividend.
Director and his interest The director who served during the year and his interest in the company are as stated below:
Ordinary shares 30/09/03 01/10/02
M. Lancaster 2 2
Director's responsibilities Company law requires the director to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the company and of the profit or loss of the company for that year. In preparing these the director is required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable him to ensure that the financial statements comply with the Companies Act 1985. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Auditors In accordance with Section 385 of the Companies Act 1985, a resolution proposing that C.J. Gardner & Co. be reappointed as auditors of the company will be put to the Annual General Meeting.

This report was approved by the Board on and signed on its behalf by

A Phipps Secretary

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Advanced Engine Research Ltd
Independent auditors' report to the shareholders of Advanced Engine Research Ltd
We have audited the financial statements of Advanced Engine Research Ltd for the year ended 30 September 2003 which comprise the profit and loss account, the balance sheet, the cash flow statement and the related notes. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein.
This report is made solely to the company's shareholders, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's shareholders those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of director and auditors As described in the statement of director's responsibilities the company's director is responsible for the preparation of the financial statements in accordance with applicable law and United Kingdom Accounting Standards.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the director's report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding director's remuneration and transactions with the company is not disclosed. We read the director's report and consider the implications for our report if we become aware of any apparent misstatements within it.
Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the director in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

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Advanced Engine Research Ltd
Independent auditors' report to the shareholders of Advanced Engine Research Ltd continued

Fundamental uncertainty

Opinion
In our opinion the financial statements give a true and fair view of the state of the company's affairs as at 30 September 2003 and of its loss and cash flows for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

C.J. Gardner & Co. 83 High Street Chartered Certified Accountants and Rayleigh Registered Auditor Essex 556 7EJ

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Directors Report 3

Directors' Report for the year ended 30 September 2002

The directors present his report and the financial statements for the year ended 30 September 2002.
Principal Activity and Review of the Business The principal activity of the company continued to be that of engine design and manufacture.
Results And Dividends The results for the year are set out on page 3.
The directors have paid an interim dividend amounting to ?19,571 and he do not recommend payment of a final dividend.
Director and his Interest The director who served during the year and his interest in the company are as stated below:
Ordinary shares 2002 2001
M. Lancaster 2 2
Directors' Responsibilities Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the company and of the profit or loss of the company for that year. In preparing these the directors are required to: -select suitable accounting policies and apply them consistently; -make judgements and estimates that are reasonable and prudent; -state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; -prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable him to ensure that the financial statements comply with the Companies Act 1985. He are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Auditors In accordance with Section 385 of the Companies Act 1985, a resolution proposing that C.J. Gardner & Co. be reappointed as auditors of the company will be put to the Annual General Meeting.

A Phipps Secretary and signed on its behalf by as approved by the Board ma

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Advanced Engine Research Ltd
Auditors' Report to the Shareholders of Advanced Engine Research Ltd
We have audited the financial statements on pages 3 to 12 which have been prepared in accordance with the Financial Reporting Standard for Smaller Entities, under the historical cost convention and the accounting policies set out on page 6.
Respective responsibilities of directors and auditors As described on page 1 the company's directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.
Basis of opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the financial statements give a true and fair view of the state of the company's affairs as at 30 September 2002 and of its profit for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

C.J. Gardner & Co.
Chartered Certified Accountants and Registered Auditor
83 High Street Rayleigh Essex SS6 7E1 anta
Page 2 Sheet2 There are no recognised gains or losses other than the profit or loss for the above two financial years.

The notes on pages 6 to 12 form an integral part of these financial statements.
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Advanced Engine Research Ltd