Place the gear lever in the middle position ( 2nd gear ) and slacken the locknut (diagram 2) at the hub end of the cable, so it can be easily screwed to tighten or slacken the cable .
Next screw the cable connection (diagram 3) until the end of the indicator rod can be seen through the window of the right hand axle nut and is exactly level with the end of the hub axle. (diagram 1)
When the locknut (diag2) has been slackened the cable connection (diagram 3) can be screwed , make sure the lever is in the second gear position and the indicator rod is level (diagram 1)
If the gears still do not engage the cable is probably too tight or loose , the fulcrum clip (attached to rear stay) needs to be adjusted to tighten or slacken the cable.
This is a great tip from Gary Hughes RCOC.