Interim Results

Bodycote International PLC
24 August 2004

Tuesday, 24 August 2004

                            BODYCOTE INTERNATIONAL PLC

         INTERIM RESULTS ANNOUNCEMENT FOR THE HALF YEAR TO 30 JUNE 2004

•      Turnover ahead £231.4m (2003: £228.1m) despite adverse currency movements
•      Headline operating profit* up 17%, reflecting benefit of 2 years of
       restructuring
•      Headline profit before tax* increased by 25% to £22.2m (2003: £17.7m)
•      Profit before tax £12.6m (2003: £10.7m)
•      Free cash flow** £24.7m (2003: £13.5m)
•      Dividend 2.25p per share (2003 (restated): 2.10p)
•      Successful rights issue completed raising £61.9m net proceeds


SUMMARY OF RESULTS                                       Half year to         Half year to       Change
                                                         30 June 2004         30 June 2003       %

Turnover                                                 £231.4m              £228.1m            +1%
Headline Operating Profit *                              £26.6m               £22.8m             +17%
Operating Profit                                         £22.4m               £15.8m             +42%
Headline Profit before taxation*                         £22.2m               £17.7m             +25%
Profit before taxation                                   £12.6m               £10.7m             +18%
Headline earnings per share (as restated+)*              6.0p                 5.0p               +20%
Basic earnings per share (as restated+)                  3.2p                 2.8p               +14%
Dividend per share (as restated+)                        2.25p                2.10p              +7%


* Expressed before amortisation of goodwill (£4.2m 2003: £4.6m) and exceptional
items (£5.4m 2003: £2.4m)

+ The comparative figures for dividend and earnings per share and share capital
have been adjusted to take into account the effect of the rights issue completed
in March 2004

**  Free cash flow is operating cash flow less payments for interest,
taxation and capital expenditures

Commenting on the results, John Hubbard, Chief Executive said:

'These much improved results reflect the success of our 'self-help' programme,
the gradual recovery in manufacturing demand, benefits of our rights issue, a
disciplined approach to capital expenditure and decisive action to restructure
wet coatings.'

INTERIM STATEMENT

Introduction

These much improved results reflect the success of our 'self-help' programme,
the gradual recovery in manufacturing demand, benefits of our rights issue, a
disciplined approach to capital expenditure and decisive action to restructure
wet coatings.

First half sales growth compared to last year resulted mostly from improved
manufacturing demand and new outsourcing contracts coming on stream in many
parts of the Group.  Our successful Rights Issue in March 2004 provides us with
the financial flexibility to resolve operational challenges in the wet coatings
business and grow the business by funding bolt-on acquisitions and new
outsourcing projects.  The major facility rationalisation and cost reduction
programme which started in 2002 is now essentially complete.

Results

Sales in the first half were £231.4m, which was 1.5% higher than in the
same period last year despite the impact of the strengthening of sterling and
the divestiture of electroplating facilities.  EBITDA was £47.8m (before
exceptional items) compared to £45.2m in the first half of 2003.
Operating profit (before goodwill and exceptional items) was £26.6m
versus £22.8m a year ago.  Operating profit was £22.4m compared to £15.8m in 
2003.  Profit before tax, goodwill and exceptional items was £22.2m compared 
with £17.7m last time.  Profit before tax was £12.6m against £10.7m in the 
prior year.  The effective tax rate for the Group, stated prior to exceptional 
charges and amortisation of goodwill, was 22% (full year 2003: 22%) and is 
expected to remain at this level for the rest of 2004. Headline earnings per 
share (adjusted for the recent rights issue) are 6.0p (5.0p H1 2003).

The two most important currencies for translation of Group sales and profits,
the US dollar and the euro, have weakened relative to sterling year on year by
8% and 5% respectively.  This reduced reported sales by £11.4m and operating 
profit by £1.7m.

As previously announced, an exceptional charge of £5.4m has been taken
in the period to deal with the costs of closure and reorganisation of the
electroplating businesses.  To date the disposals have realised £3.0m.

OPERATIONAL REVIEW

Heat Treatment

Sales were £154.8m (2003: £155.8m) and operating profit was £19.0m (2003:
£17.4m).  However, had exchange rates remained constant, sales would have been
£163.0m (+5%) and operating profit £20.0m (+15%).  The UK market remained flat
and a combination of mix and continued price pressure saw a small reduction in
margins.  We expect this trend to reverse over the coming year.  Our Nordic
business grew 9% (at constant exchange rates) compared to 2003 and progress will
be enhanced following the bolt-on acquisition in June of Haustrups Haerderi AS
in Denmark that will strengthen our existing market position and give us access
into the Northern German market.  Our Central European Group has continued to
produce excellent results in a soft automotive market with sales ahead 7% (at
constant exchange rates), operating profit up 30% and margins better by three
percentage points.  France has continued to be our weakest market in terms of
sales with volumes down 1% year on year, but cost reductions and firmer prices
have helped us maintain margins.  North American turnover, at constant exchange
rates, increased 5% and operating profit by 34%.  However the business is
starting from a low base and margins in North America remain well short of our
expectations.

Kolsterizing, which gives stainless steel wear resistance while maintaining
corrosion resistance, continues to gain market acceptance through additional
applications.  The food and aerospace industries are particularly interested in
this technology. Kolsterizing will be available in North America by year end.
We have started to commission a new heat treatment facility in Poland to support
expansion by our customers in Eastern Europe.

Materials Testing

Sales were £30.5m (2003 £29.7m) and operating profit was £5.3m (2003 £5.4m),
with margins remaining stable.  Last year's results were boosted by a  major
project in the Middle East which was completed during September 2003.  The
integration of the five laboratories acquired last year in the Middle East has
been very successful.  We continue to see the Materials Testing Strategic
Business Unit (SBU) develop as expertise is rolled out geographically leveraging
existing technology, infrastructure and customer contacts.  In June we completed
the acquisition of Hoogensen, a two location company in Western Canada; this
will fit well with our existing international network of specialist oil and gas
laboratories and has the potential for us to transfer broader capability from
other locations.

In North America we are expanding our high end aerospace and automotive testing
capabilities.  Working in conjunction with government bodies, original equipment
manufacturers and universities, Bodycote intends to establish an industry
leading technology centre in the Detroit automotive hub to deliver specialist
services and expertise in structural dynamics, engine emissions and
environmental exposure simulation studies.  Similarly in aerospace, we are
rolling out expertise into our US network.  Our business development activities
are yielding ongoing success as we continue to convert outsourcing opportunities
and evaluate acquisition candidates in what is still a highly fragmented service
sector.

Hot Isostatic Pressing

Sales were £16.0m (2003 £13.5m) and operating profit was £3.5m (2003 £1.6m).  In
North America, increased demand for IGT applications and the ramp-up of several
powder metallurgy products resulted in a 40% increase in sales (at constant
exchange rates) compared to H1 2003.  European sales (at constant exchange
rates) grew 12%.

Densal continues to penetrate the automotive market and volumes are increasing.
The good results also reflect the high operational gearing of this SBU.

Metallurgical Coatings

Metallurgical Coatings had sales of £30.1m (2003 £29.1m) and a reduced loss of
£0.1m  (2003 loss £0.9m).  Within this, the electroplating business, which is
being discontinued, accounted for sales of £13.0m and an operating loss of
£2.7m.  Having to date disposed of or closed 9 of the 17 electroplating plants
(including the major loss makers) this SBU is expected to contribute positive
margins in the future.  The remaining electroplating facilities are at various
stages of the disposal process and we continue to anticipate completion of the
process before the end of 2004.  We will retain five anodising facilities,
serving primarily the automotive and architectural sectors; these have
proprietary technology and we believe capable of continuing to contribute a
satisfactory return on capital employed.  Once we have completed the divestiture
programme, Metallurgical Coatings is anticipated to be a £35m per annum business
unit in advanced anodizing, physical vapour deposition, diffusion bonded and
thermal barrier coatings. Each has market and technological synergies with our
other businesses, good return on capital employed and growth potential.

Our physical vapour deposition (PVD) business is showing strong sales growth (up
19% over last year, at constant exchange rates) with expanded facilities in UK,
France and Italy providing growth opportunity going forward.  Our strategy
remains to participate in the consolidation of the PVD market.

BALANCE SHEET AND CASH FLOW

At 30 June 2004, Group net assets were £426.1m (2003: £401.6m) and net
borrowings stood at £127.1m (2003: £226.2m), which represents net gearing of 30%
(2003: 56%).  The Group remains keenly focused on cash generation and the inflow
from operating activities less net capital expenditure was £29.1m (2003: £21.8m)
in the half year.  Capital expenditure continues to fall, being £16.0m (2003:
£18.2m) for the period and the ratio of capital expenditure to depreciation was
0.75x (2003: 0.81x).  We continue to manage our capital investment strictly and
remain committed to improving our return on capital.

The Group also continues to focus on the reduction of working capital.  At 30
June debtor days stood at 59 compared to 64 days in December 2003 and 62 in June
last year.  Inventories have been reduced by £2.3m since the year-end.

DIVIDEND

The Directors have declared an interim dividend of 2.25 pence per share (2003:
2.1p as adjusted for the effects of the rights issue).  This will be paid on 7
January 2005 to all shareholders on the register at the close of business on 3
December 2004.

OUTLOOK

The hard work of the last 30 months to reduce costs and rationalise our
operations is continuing to deliver the expected cost savings and operational
benefits; however, the second half of the year typically has lower organic sales
than the first as there are more holidays during which our customers shut down,
and we expect this pattern to be repeated.  In addition, we anticipate that
energy costs will increase, with efforts to pass costs along in selling prices
achieving only partial success.

Industrial outsourcing is of increasing interest to manufacturers and with our
highly experienced team of people, productive capacity available and strong
market position, we are well positioned to capitalise on the numerous
opportunities as demand increases.  Transfer of technology within the Group
remains a high priority to enhance the value we offer to customers.  Geographic
expansion will, in the main, be determined by the changing needs of our
customers.

It is gratifying to our team of dedicated professionals to be able to
demonstrate improved results from their hard work, outsourcing wins and market
recovery.  As a service Group we are only as good as our people and we are
fortunate to have an excellent team committed to improving return on capital and
managing the business for profitable growth.

Unaudited consolidated profit and loss account

Year to                                                                      Half year to        Half year to
31 December 2003                                                             30 June 2004        30 June 2003
£m                                                                           £m                  £m

                 Turnover
448.4            Existing operations                                         231.2               228.1
-                Acquisitions                                                0.2                 -
448.4            Continuing operations                                       231.4               228.1

                 Operating profit
25.1             Existing operations                                         22.3                15.8
-                Acquisitions                                                0.1                 -
25.1             Continuing operations                                       22.4                15.8

                 Total operations
41.7             - Trading                                                   26.6                22.8
(7.5)            - Operating exceptional items arising from restructuring    -                   (2.4)
                 and asset write downs
(9.1)            - Goodwill amortisation                                     (4.2)               (4.6)

25.1             Operating profit - continuing operations                    22.4                15.8

                 Exceptional items
3.5              Profit on disposal of discontinued operations               -                   -
(30.0)           Loss on termination of operations                           (5.4)               -
(1.4)            Profit/(loss) on ordinary activities before interest and    17.0                15.8
                 taxation
(9.7)            Net interest payable                                        (4.4)               (5.1)
                                                                        
(11.1)           Profit/(loss) on ordinary activities before taxation        12.6                10.7
(6.2)            Tax on profit /(loss) on ordinary activities                (3.3)               (3.0)

(17.3)           Profit/(loss) on ordinary activities after taxation         9.3                 7.7
(0.1)            Minority interests - equity                                 (0.1)               -

(17.4)           Profit/(loss) for the financial period                      9.2                 7.7
(15.6)           Dividends  - paid and proposed                              (7.2)               (5.8)

(33.0)           Retained profit/(loss) for the period                       2.0                 1.9

Restated         Earnings/(loss) per share                                                       Restated
9.1p             Headline                                                    6.0p                5.0p
(6.4)p           Basic                                                       3.2p                2.8p
(6.4)p           Basic - diluted                                             3.2p                2.8p



Unaudited consolidated balance sheet

As at                                                                       As at               As at
31 December 2003                                                            30 June 2004        30 June
                                                                                                2003
£m                                                                                              Restated
                                                                            £m                  £m

                 Fixed assets
137.5            Intangible assets                                          135.1               151.1
478.7            Tangible assets                                            455.7               503.5
0.9              Investments                                                0.8                 0.9
617.1                                                                       591.6               655.5

                 Current assets
18.2             Stocks                                                     15.1                18.4
102.7            Debtors                                                    107.7               114.1
35.2             Cash at bank and in hand                                   108.1               36.1
156.1                                                                       230.9               168.6

                 Creditors
(119.1)          Amounts falling due within one year                        (116.9)             (190.7)

37.0             Net current assets/(liabilities)                           114.0               (22.1)

654.1            Total assets less current liabilities                      705.6               633.4

                 Creditors
(239.5)          Amounts falling due after more than one year               (238.7)             (189.2)

(42.8)           Provisions for liabilities and charges                     (40.8)              (42.6)

371.8            Net assets                                                 426.1               401.6

                 Capital and reserves
25.7             Called-up share capital                                    32.1                25.6
244.4            Share premium account                                      299.9               244.2
14.2             Currency and other reserves                                4.6                 9.4
86.6             Profit and loss account                                    88.6                121.5

370.9            Shareholders' funds - equity                               425.2               400.7

0.9              Minority interests - equity                                0.9                 0.9

371.8                                                                       426.1               401.6


Unaudited consolidated cash flow statement

Year to                                                               Half year to        Half year to
31 December 2003                                                      30 June             30 June 2003
                                                                      2004
£m                                                                    £m                  £m
                                                                      
83.9              Net cash inflow from operating activities (Note A)  45.1                40.0

(10.3)            Return on investments and servicing of finance      (4.5)               (5.4)

(4.9)             Taxation                                            0.1                 (2.8)

(38.3)            Capital expenditure and financial investment        (16.0)              (18.2)

1.3               Acquisitions and disposals (Note B)                 (1.9)               0.4

(15.6)            Equity dividends paid                               (5.8)               (5.8)

16.1              Cash inflow before management of liquid resources   17.0                8.2
                  and financing

5.9               Management of liquid resources                      (59.4)              1.9

(23.5)            Financing                                           60.2                (14.7)

(1.5)             Increase/(decrease) in cash in the period           17.8                (4.6)


Reconciliation of net cash flow to movement in net debt

(1.5)             Increase/(decrease) in cash in the period           17.8                (4.6)

23.7              Cash outflow from decrease in debt and lease        1.7                 14.7
                  financing

(5.9)             Cash inflow/(outflow) from movement in liquid       59.4                (1.9)
                  resources

16.3              Change in net debt resulting from cash flows        78.9                8.2

-                 Debt acquired with subsidiaries                     (0.9)               -

7.6               Currency adjustments                                5.2                 (0.2)

23.9              Movement in net debt position                       83.2                8.0

(234.2)           Net debt position at 1 January                      (210.3)             (234.2)

(210.3)           Net debt position at end of period (Note C)         (127.1)             (226.2)



Year to                                                               Half year to        Half year to
31 December 2003                                                      30 June             30 June
                                                                      2004                2003

£m                                                                    £m                  £m


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

25.1           Operating profit                                          22.4             15.8
45.7           Depreciation charges                                      21.2             22.4
9.1            Amortisation of goodwill                                  4.2              4.6
0.1            (Profit)/loss on sale of tangible fixed assets            (0.2)            -
3.5            Write off of tangible fixed assets                        -                1.8
-              Decrease/(increase) in stocks                             2.3              (0.3)
12.1           (Increase)/decrease in debtors                            (8.7)            0.5
(11.7)         Increase/(decrease) in creditors                          3.9              (4.8)
83.9           Net cash inflow from operating activities                 45.1             40.0


Note B:  Acquisitions and disposals


0.7            Net cash acquired with subsidiaries                       0.1              0.7
(2.9)          Purchase of subsidiary undertakings                       (3.3)            (0.3)
3.5            Sale of discontinued operations                           1.3              -
1.3            Net cash (outflow)/inflow from acquisitions and disposals (1.9)            0.4


Note C: Analysis of net debt position

As at                                                                    As at            As at
31 December 2003                                                         30 June 2004     30 June 2003

£m                                                                       £m               £m
                                                                                          
33.7              Cash at bank and in hand                               47.2             30.6
1.5               Short term deposits                                    60.9             5.5
(5.4)             Bank overdrafts                                        (2.2)            (5.1)
(9.3)             Bank loans due within one year                         (4.2)            (76.9)
(224.9)           Bank loans due after one year                          (224.2)          (174.7)
(1.6)             Finance leases due within one year                     (1.3)            (1.3)
(4.3)             Finance leases due after one year                      (3.3)            (4.3)

(210.3)                                                                  (127.1)          (226.2)


Unaudited consolidated statement of total recognised gains and losses

Year to                                                                  Half year to        Half year to
31 December 2003                                                         30 June 2004        30 June 2003

£m                                                                       £m                  £m

(17.4)           Profit/(loss) for the financial period                  9.2                 7.7
14.4             Currency adjustments                                    (9.6)               9.6
(3.0)            Total recognised gains and losses relating to the       (0.4)               17.3
                 period


Unaudited reconciliation of movements in Group shareholders' funds

(17.4)         Profit/(loss) for the financial period                    9.2                 7.7
(15.6)         Dividends paid and proposed                               (7.2)               (5.8)


(33.0)         Retained profit/(loss) for the financial period           2.0                 1.9
14.4           Currency adjustments                                      (9.6)               9.6
0.3            New shares issued                                         61.9                -

(18.3)         Net movement in shareholders' funds                       54.3                11.5

390.0          Shareholder's fund at beginning of period (as previously  370.9               390.0
               stated)
(0.8)          Prior year adjustment                                     -                   (0.8)
                                                                    
389.2          Shareholders' funds at beginning of period (as restated)  370.9               389.2

370.9          Shareholders' funds at end of period                      425.2               400.7


Notes to the financial statements

1.     Segmental analysis by activity

Year to                                                                   Half year to        Half year to
31 December 2003                                                          30 June 2004        30 June 2003
Restated                                                                                      Restated
£m                                                                        £m                  £m

                 Turnover

302.9            Heat treatment                                           154.8               155.8
61.2             Materials testing                                        30.5                29.7
27.6             Hot isostatic pressing                                   16.0                13.5
31.1             Metallurgical coatings                                   17.1                15.8
422.8                                                                     218.4               214.8
25.6             Electroplating                                           13.0                13.3
448.4                                                                     231.4               228.1

                 Profit and loss

31.6             Heat treatment                                           19.0                17.4
11.4             Materials testing                                        5.3                 5.4
3.6              Hot isostatic pressing                                   3.5                 1.6
3.6              Metallurgical coatings                                   2.6                 2.1
50.2                                                                      30.4                26.5
(6.9)            Electroplating                                           (2.7)               (3.0)
43.3                                                                      27.7                23.5

(1.6)            Head Office expenses                                     (1.1)               (0.7)

41.7             Operating profit before amortisation of goodwill and     26.6                22.8
                 exceptional items

(9.7)            Net interest payable                                     (4.4)               (5.1)

32.0             Profit on ordinary activities before amortisation of     22.2                17.7
                 goodwill and exceptional items

(9.1)            Amortisation of goodwill                                 (4.2)               (4.6)

22.9             Profit on ordinary activities before exceptional items   18.0                13.1
(7.5)            Operating exceptional items                              -                   (2.4)
(26.5)           Exceptional items                                        (5.4)               -

(11.1)           Profit/(loss) on ordinary activities before taxation     12.6                10.7


Notes to the financial statements   (Continued)

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 2003.  The 30 June 2003 balance sheet has been restated
for the impact of UITF 38, 'Accounting for ESOP Trusts', which reduced net
assets by £0.8 million.  The segmental analyses for 2003 have been restated to
reflect the reclassification of anodizing operations within metallurgical
coatings.

3.              The calculation of basic earnings per share is based on earnings
of £9.2 million (2003: £7.7 million) and on the average number of shares in
issue during the half year, amounting to 290,258,656 (2003 restated:
273,872,603).  Headline earnings per share have been calculated on profits of
£17.3 million (2003: £13.7 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 3.2p (2003 restated: 2.8p) based
on a diluted weighted average share capital of 290,416,258 shares (2003
restated: 273,872,603).

4.              The 2003 values for dividend, earnings per share and share
capital have been adjusted to take into account the bonus element of the 1 for 4
rights issue completed in March 2004.

5.              The charge for taxation on the profit for the period is based on
the estimated effective rate for the full year.  The amount includes £3.3
million (2003: £3.0 million) relating to tax on overseas activities and tax on
exceptional items of £1.6m (2003: £0.9m)

6.              This interim report does not comprise the Group's statutory
accounts.  The results for the year ended 31 December 2003 are extracts from the
published accounts as filed with the Registrar of Companies.  These were audited
and reported upon without qualification by Deloitte & Touche LLP and did not
contain a statement under section 237 (2) or (3) of the Companies Act 1985.

7.              Copies of this report and the last Annual Report and Accounts
are available from the Secretary, Bodycote International plc, Hulley Road,
Macclesfield, Cheshire SK10 2SG, and can each be downloaded or viewed via the
group's website at www.bodycote.com.  Copies of this report are also being
submitted to the UK Listing Authority, and will shortly be available at the UK
Listing Authority's Document Viewing Facility at 25 The North Colonnade, Canary
Wharf, London E14 5HS (Telephone [phone]).


Enquiries:      Tuesday 24 August 2004:

                0900 hrs - 1130 hrs   Telephone:  [phone]
                John Hubbard, Chief Executive
                David Landless, Group Finance Director

Website:        http://www.bodycote.com


Independent Review Report to Bodycote International plc

•      Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 June 2004, which comprises the consolidated profit and
loss account, the consolidated balance sheet, the consolidated cash flow
statement, notes A, B and C, the consolidated statement of total recognised
gains and losses, the reconciliation of movement in shareholders' funds and
related notes 1 to 7.  We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board.  Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review 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, for our review work, for this report, or for the conclusions we
have formed.

•      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 are 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 Kingdom.  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 2004.

     Deloitte & Touche LLP
     Chartered Accountants
     Manchester

     24 August 2004








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