Interim Results

Bodycote International PLC
22 August 2001


EMBARGOED UNTIL 0700 HRS : 22 AUGUST 2001

                                        BODYCOTE INTERNATIONAL PLC

INTERIM RESULTS ANNOUNCEMENT
FOR THE HALF YEAR TO 30 JUNE 2001


H I G H L I G H T S


*        Sales increase by 36%

*        Operating profit (pre goodwill) for continuing business up by 20%

*        8 acquisitions completed

*        Lindberg integration and results on target



     SUMMARY OF RESULTS                              Half year  Half year
                                                            to         to
                                                       30 June    30 June
                                                          2001       2000

            Turnover                                   £251.7m    £184.9m

            Operating profit **                         £48.7m    £ 43.0m

            Profit before taxation and exceptional      £41.5m    £ 40.0m 
            items **
                                                       
            Headline earnings per share (pence)          11.9p      11.2p
                                                         
            Dividend per share (pence)                   2.25p      2.15p
                                                         

** Expressed before amortisation of goodwill.

Commenting on the results, John Chesworth, Managing Director said:

'This set of results demonstrates the benefit of Bodycote's operational and
geographic diversity. While automotive and telecommunications markets have
been challenging, our exposure to aerospace, industrial gas turbine and oil
and gas markets have offered compensation. It is pleasing to report that the
Lindberg acquisition is meeting our expectations and we fully expect to bring
returns in this business to the group average within the medium term.  We look
forward to another year of progress.'




                              Interim Statement


Results

Bodycote's sales for the first half of 2001 were 36% ahead of last year.
Operating profit has increased by 13% and profit before tax by 4%.  Headline
earnings per share were 11.9 pence (2000: 11.2 pence), an increase of 6%.
Aerospace, industrial gas turbine, oil and gas markets have been buoyant but
the benefit has been largely offset by the decline in the telecoms and US
automotive sectors.  Consequently the group's operating profit margin was
19.7% (2000: 23.3%), being also impacted by increased energy costs, especially
in North America, and the expected lower margins in the Lindberg business. The
Lindberg margins have already increased since acquisition and are capable of
further improvement in the short to medium term. .



Dividend

The directors have declared an interim dividend of 2.25 pence per share (2000:
2.15 pence), an increase of 5% over the first half of 2000.  The dividend will
be paid on 2 January 2002 to all shareholders on the register at the close of
business on 30 November 2001.



Balance sheet and cash flow

Group net borrowings at 30 June 2001 were  £234.5 million (2000: £111.5
million) which represents gearing of 60% (2000: 31%).  Interest payments are
covered 6.2 times by operating profit (2000: 13.7 times) and free cash flow
was marginally positive in the first half, with improvement in free cash flow
generation continuing to be a key target for the group. Capital expenditure
was £28.6 million  (2000: £28.2 million) and the ratio of capital expenditure
to depreciation was 1.4 times (2000: 1.6 times).



Lindberg

£97.2 million has been spent on acquisitions during the period. Of this £82.8
million is accounted for by the acquisition of Lindberg Corporation in January
2001.  Lindberg's trading results are in line with expectations and its
operations are being successfully integrated with Bodycote's existing North
American operations.



Acquisitions

Bodycote's Central European operations have been expanded by the acquisition
of Logotherm in Switzerland and Germany (heat treatment and PVD coatings), and
Technoheat in Hungary (heat treatment).  The materials testing division
extended its presence in Scandinavia by the acquisition of Celsius Materials
Karlskoga from SAAB.  The group's range of coatings services in North America
has been broadened by the purchase of K-Tech Inc., of Arkansas, which produces
ceramic coatings.  Bodycote already owns K-Tech's sister company in the UK,
Bodycote K-Tech, which was acquired in 1999.



Divisions

Bodycote's heat treatment division accounted for 73% of the group's sales and
operating profit during the period.  Sales and profits were boosted by the
acquisition of Lindberg.  Bodycote is improving the margin on Lindberg's
sales, which historically have been less than those achieved in the existing
Bodycote plants.  Whilst the automotive slowdown has been felt in the US
MidWest, in other regions, notably the East and West Coasts, there has been an
increase in demand for aerospace and power generation products.

Additional demand for land-based industrial gas turbines in the USA, arising
from the need to raise electricity generating capacity, helped to increase the
underlying profit growth in Bodycote's HIP division.  Bodycote's proprietary
method of HIPping aluminium, Densal II(R), has gained early market approval in
both Europe and the US.  In the UK a consistent above budget performance is
being achieved, but trading results in continental Europe have been mixed.

Bodycote's materials testing division continued a steady recovery after a
disappointing outcome in 2000.  Both sales and profits have increased and
targeted levels have been achieved.   Stronger oil and gas sector demand has
more than offset the impact of the slowdown in the automotive sector in North
America.  Laboratories in the UK and Europe performed admirably.

The group's specialist and traditional coatings division has increased sales,
despite the scale and speed of the decline in the telecoms market which
materially affected performance in the UK and Scandinavia.



Outsourcing

The recent acquisition of Lindberg has added impetus to outsourcing enquiries
from a number of multi-national manufacturers, which Bodycote is increasingly
well placed to satisfy.



Board Succession

It is planned that John Chesworth, who will be 65 years of age next June, will
retire as Chief Executive and become Non-Executive Chairman by the Annual
General Meeting next year. The process of selecting his successor as Chief
Executive is well advanced.



Outlook

Bodycote has produced a good set of results for the first half of 2001 despite
the slowdown in world markets, particularly automotive and telecommunications.
With excellent market positions, a wide geographic spread and further
opportunities for outsourcing, the Board is confident in the group's prospects
for the year as a whole.


Dr Bruce Farmer CBE - Chairman    John Chesworth - Managing Director  22 August 
                                                                      2001


Enquiries to:   Wednesday 22 August 2001  :  0900 hrs - 1730 hrs



                David Landless, Finance Director
                Bodycote International plc


                Derek Sleight, Director
                Bodycote International plc


                On 020 7831 3113 or   Mobile : [phone] after 1130 hours

                Website:                 http://www.bodycote.com

                Scott Fulton/Jon Simmons
                Financial Dynamics

                On 020 7831 3113



Unaudited consolidated profit and loss account


    Year to                                        Half year to    Half year to
31 December                                             30 June         30 June
       2000                                                2001            2000
         £m                                                  £m              £m

            Turnover

      343.7 Existing operations                           197.4           176.6
       15.7 Acquisitions                                   54.3               -
      359.4 Continuing operations                         251.7           176.6
       11.7 Discontinued operations                           -             8.3
      371.1                                               251.7           184.9

            Operating profit

       76.8 Existing operations                            36.2            38.7
        2.2 Acquisitions                                    8.7               -
       79.0 Continuing operations                          44.9            38.7
        3.8 Discontinued operations                           -             2.4


            Total operations
       87.0 -  Trading                                     48.7            43.0

      (4.2) -  Goodwill                                   (3.8)           (1.9)


       82.8 Operating profit                               44.9            41.1

            Exceptional items

        9.5 Profit on disposal of discontinued                -               -
            operations


       92.3 Profit on ordinary activities before           44.9            41.1
            interest and taxation

      (6.9) Net interest payable                          (7.2)           (3.0)

       85.4 Profit on ordinary activities before           37.7            38.1
            taxation

     (20.9) Tax on profit on ordinary activities         (11.1)          (11.1)

       64.5 Profit for the period                          26.6            27.0

     (15.4) Dividends - paid and proposed                 (5.8)           (5.6)

       49.1 Retained profit for the period                 20.8            21.4



            Earnings per share

      22.6p Headline                                      11.9p           11.2p
      24.9p Basic                                         10.4p           10.4p
      24.9p Basic - diluted                               10.4p           10.4p


Unaudited consolidated balance sheet

        As at                                            As at            As at
  31 December                                          30 June          30 June
         2000                                             2001             2000
           £m                                               £m               £m

              Fixed assets

         81.6 Intangible assets                          156.7             76.2
        410.5 Tangible assets                            475.5            389.0
          1.9 Investments                                  2.1              1.9
        494.0                                            634.3            467.1


              Current assets

         13.2 Stocks                                      16.1             15.7
        110.2 Debtors                                    138.2            120.3
         96.4 Cash at bank and in hand                    66.6             73.5
        219.8                                            220.9            209.5


              Creditors

      (177.3) Amounts falling due within one year      (208.6)          (159.9)

         42.5 Net current assets                          12.3             49.6


        536.5 Total assets less current liabilities      646.6            516.7

              Creditors

      (136.1) Amounts falling due after more than      (225.6)          (136.8)
              one year


       (20.9) Provisions for liabilities and            (28.1)           (16.6)
              charges

        379.5 Net assets                                 392.9            363.3

              Capital and reserves

         25.6 Called-up share capital                     25.6             26.0
        243.9 Share premium account                      244.2            243.9
          2.7 Revaluation reserve                          2.7              2.7
        (9.6) Currency and other reserve                (17.3)            (4.2)
        116.7 Profit and loss account                    137.5             94.7

        379.3 Shareholders' funds - equity               392.7            363.1

          0.2 Minority interests - equity                  0.2              0.2

        379.5                                            392.9            363.3


Unaudited consolidated cash flow statement


    Year to                                          Half year to  Half year to
31 December                                               30 June       30 June
       2000                                                  2001          2000
         £m                                                    £m            £m
                                                               
      107.9 Net cash inflow from operating activities        50.8          35.2
            (Note A)

      (6.4) Returns on investment and servicing of          (5.5)         (2.8)
            finance

     (14.0) Taxation                                       (10.7)         (5.5)

     (61.1) Capital expenditure and financial              (28.6)        (28.2)
            investment

      (5.7) Acquisitions and disposals (Note B)            (96.4)        (16.9)

     (14.7) Equity dividends paid                           (5.5)         (5.0)


        6.0 Cash inflow/(outflow) before management of     (95.9)        (23.2)
            liquid resources and financing


       18.0 Management of liquid resources                 (22.6)          19.1

     (10.9) Financing                                        70.2           1.8

       13.1 Increase/(decrease) in cash in the period      (48.3)         (2.3)


Reconciliation of net cash flow to movement in net debt


       13.1 Increase/(decrease) in cash in the period      (48.3)         (2.3)

        6.1 Cash outflow/(inflow) from (decrease)/         (70.0)         (0.8)
            increase in debt and lease financing

     (18.0) Cash (inflow)/outflow from movement in           22.6        (19.1)
            liquid resources


        1.2 Change in net debt resulting from cash         (95.7)        (22.2)
            flows

      (8.0) Debt acquired with subsidiaries                (38.7)         (3.8)

      (8.3) Currency adjustments                            (6.6)         (7.1)


     (15.1) Movement in net debt position                 (141.0)        (33.1)


     (78.4) Net debt position at 1 January                 (93.5)        (78.4)


     (93.5) Net debt position at end of period            (234.5)       (111.5)


    Year to                                          Half year to  Half year to
31 December                                               30 June       30 June
       2000                                                  2001          2000
         £m                                                    £m            £m


  Note A:  Reconciliation of operating profit to net cash inflow from operating
           activities


      82.8 Operating profit                                  44.9          41.1
      32.8 Depreciation charges                              21.1          17.2
       4.2 Amortisation of goodwill                           3.8           1.9
     (0.5) Profit on sale of tangible fixed assets          (0.6)             -
     (6.4) Increase in stocks                               (2.9)         (2.1)
     (9.8) Increase in debtors                              (5.5)        (16.7)
       4.8 Increase/(Decrease) in creditors                (10.0)         (6.2)


     107.9 Net cash inflow from operating activities         50.8          35.2


Note B:  Acquisitions and disposals

       1.7 Net cash acquired with subsidiaries                0.8           0.7
    (29.0) Purchase of subsidiary undertakings             (97.2)        (17.6)
      21.6 Sale of discontinued operations                      -             -

     (5.7) Net cash outflow from acquisitions and          (96.4)        (16.9)
           disposals


Analysis of net debt position

      As at                                                 As at         As at
31 December                                               30 June       30 June
       2000                                                  2001          2000
         £m                                                    £m            £m


       43.6 Cash at bank and in hand                         36.4          21.8
       52.8 Short term deposits                              30.2          51.7
     (11.1) Bank overdrafts                                 (8.3)         (4.7)
     (48.3) Bank loans due within one year                 (76.6)        (49.4)
    (124.0) Bank loans due after one year                 (210.4)       (125.8)
      (1.1) Finance leases due within one year              (0.9)         (0.8)
      (5.4) Finance leases due after one year               (4.9)         (4.3)

     (93.5)                                               (234.5)       (111.5)




Consolidated statement of total recognised gains and losses

          Year to                                Half year to    Half year to
 31 December 2000                                     30 June          30 June
               £m                                        2001             2000
                                                           £m               £m


      64.5 Profit for the period                         26.6             27.0
      (0.6) Currency adjustments                        (7.7)              5.1

      63.9                                               18.9             32.1


Reconciliation of movements in shareholders' funds

      64.5 Profit for the period                         26.6             27.0
    (15.4) Dividends paid and proposed                  (5.8)            (5.6)




      49.1 Retained profit for the period                20.8             21.4
     (0.6) Currency adjustments                         (7.7)              5.1
       4.4 New shares issued                              0.3              4.5
     (5.7) Redemption of shares                             -                -


      47.2 Net movement in shareholders' funds           13.4             31.0

     332.1 Shareholders' funds at beginning of          379.3            332.1
           period

     379.3 Shareholders' funds at end of period         392.7            363.1



Notes to the Accounts

1.       Segmental analysis by activity

  Year to                                                    Half          Half
                                                          year to       year to
 31 December                                              30 June       30 June
     2000                                                    2001          2000
       £m                                                      £m            £m


          Turnover

    240.8 Heat treatment                                    184.2         120.2
     36.5 Hot isostastic pressing                            16.6          16.5
     43.7 Materials testing                                  26.4          20.8
     38.4 Metallurgical coatings                             24.5          19.1

    359.4                                                   251.7         176.6

     11.7 Discontinued equipment manufacture                    -           8.3


    371.1                                                   251.7         184.9

          Profit and loss

     53.9 Heat treatment                                     36.2          27.2
     14.3 Hot isostastic pressing                             4.3           5.4
      8.7 Materials testing                                   5.6           4.3
      7.2 Metallurgical coatings                              3.4           4.2
     84.1                                                    49.5          41.1
      3.8 Discontinued equipment manufacture                    -           2.4
     87.9                                                    49.5          43.5
    (0.9) Head Office expenses                              (0.8)         (0.5)

     87.0 Operating profit before amortisation of            48.7          43.0
          goodwill

    (6.9) Net interest                                      (7.2)         (3.0)

     80.1 Profit on ordinary activities before               41.5          40.0
          amortisation of goodwill and exceptional items

    (4.2) Amortisation of goodwill                          (3.8)         (1.9)

     75.9 Profit on ordinary activities before               37.7          38.1
          exceptional items

      9.5 Exceptional items                                     -             -

     85.4 Profit on ordinary activities before taxation      37.7          38.1



NOTES TO THE ACCOUNTS   /Cont'd



2.     The interim financial information has been prepared on the basis of the  
       accounting policies set out in the group's statutory accounts for the    
       year ended 31 December 2000.

3.     The calculation of basic earnings per share is based on earnings of £26.6
       million (2000: £27.0 million) and on the average number of shares in     
       issue during the half year amounting to 256,153,632 (2000: 259,205,930). 
       Headline earnings per share have been calculated on profits of £30.4     
       million (2000: £28.9 million), which are stated before amortisation of   
       goodwill and the post tax impact of exceptional items.  Diluted earnings 
       per share calculated in accordance with FRS14 were 10.4p (2000: 10.4p)   
       based on a diluted weighted average share capital of 256,492,601 shares  
       (2000: 259,563,223).



4.     The charge for taxation on the profit for the period is based on the     
       estimated effective rate for the full year.  The amount includes £9.4    
       million (2000: £9.1 million) relating to tax on overseas activities.


5.     The results for the year ended 31 December 2000 are extracts from the    
       published accounts as filed with the Registrars of Companies.  These were
       audited and reported upon without qualification by Arthur Andersen and   
       did not contain a statement under section 237 (2) or (4) of the Companies
       Act 1985.

6.     Copies of this report and the last Annual Report and Accounts are        
       available from the Secretary, Bodycote International plc, Hulley Road,   
       Hurdsfield, Macclesfield, Cheshire SK10 2SG, and can each be downloaded
       or viewed via the group's website www.bodycote.com


Independent Review Report to Bodycote International plc by Arthur Andersen
Chartered Accountants and Registered Auditors


-        Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 June 2001 set out in the interim report.  We have read
the other information contained therein and considered whether it contains any
apparent misstatements or material inconsistencies with the financial
information.


-        Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.  The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.


-        Review work performed

We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdon.
A review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed.  A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions.  It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit.  Accordingly we
do not express an audit opinion on the financial information.


-        Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2001.