Final Results

Bodycote International PLC
21 March 2001

EMBARGOED UNTIL 0700 HRS: 21 MARCH 2001

BODYCOTE INTERNATIONAL PLC

PRELIMINARY RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2000

H I G H L I G H T S

      + Sales volume increases by 14%.
      + EBITDA increases by 9%.
      + Operating profit performance up by 8%.
      + Outsourcing improves capacity utilisation.
      + Fourteen acquisitions completed.
      + Lindberg USA acquired January 2001.

                                                     
SUMMARY OF RESULTS                                   2000        1999 Change
                                                       £m          £m      %

Turnover                                            371.1       355.4      4

Operating profit before goodwill                     87.0        84.0      4

Profit before taxation, goodwill and exceptional     80.1        80.7    (1)
items

Earnings per share
          Headline                                  22.6p       22.5p    1/2

          Basic                                     24.9p       22.6p     10

Dividend per share                                   6.0p        5.5p      9


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


    'After two years of substantial investment Bodycote is well placed to move
    ahead. The acquisition of Lindberg will further improve our organic growth
    prospects over the short and medium term'.


CHAIRMAN'S STATEMENT


Bodycote made good progress in another demanding year. Markets, which overall
were encouraging in the first quarter, were more difficult thereafter. Profit
before taxation, amortisation of goodwill and exceptional items, was £80.1
million (1999: £80.7 million). Headline earnings per share were 22.6 pence
(1999: 22.5 pence). Interest cover was 13 times and gearing 25%. During
October 2000, 3.5 million shares were purchased by the company for
cancellation at a cost of £5.7 million.


The directors are recommending a final dividend of 3.85 pence per share,
making a total for the year of 6.0 pence per share (1999: 5.5 pence) - an
increase of 9%. The dividend is covered 3.8 times by headline earnings.


The most significant strategic event in the year was the offer in December for
Lindberg, the group's major heat treatment competitor in North America. This
acquisition was successfully completed on 19 January 2001 and will double
Bodycote's turnover in North America to over $300 million per annum. The
purchase price was $107.5 million (£74.1 million), together with net debt of
$54.8 million (£37.8 million), and was funded from the group's own resources
and external borrowings. Following the acquisition, the group's proforma
gearing stood at 50%. The potential for synergy savings, organic growth and
increased opportunities for outsourcing is considerable.


The group spent £33 million on 14 other acquisitions in Europe and North
America in the heat treatment, coatings and materials testing divisions. All
these acquisitions complement the group's existing businesses and strengthen
Bodycote's position geographically, technically and in major markets.


Bodycote's last significant non-core business, Hauzer Techno Coating, based in
the Netherlands, which manufactures physical vapour deposition equipment, was
sold for cash in October. The sale realised NLG 90 million (£24 million) and
produced an exceptional gain of £9.5 million.


Tim Bell was appointed a director of Bodycote in September. Tim, aged 40, who
joined the group in 1977, has held a number of increasingly responsible
positions. In 1996 he was appointed the profit driver responsible for the
group's network of 11 plants in Germany. He has successfully developed this
division so that it now operates in six other countries in Central and Eastern
Europe. At present, the network consists of 31 plants and is a significant and
increasing contributor to group profits.


Following the acquisition of Lindberg, Bodycote employs over 7,000 people at
242 facilities in 21 countries. I would like to thank all Bodycote employees
for their hard work, dedication and enthusiasm during a challenging

year and, at the same time, welcome the new members to the group. Bodycote now
has an even stronger pool of talent for its future growth.


World markets this year are likely to continue to be affected by the slowdown
in North America, particularly in the automotive sector. This should encourage
further outsourcing opportunities. Additionally, Bodycote's main markets,
aerospace and industrial gas turbines, are forecast to remain strong.
Acquisitions will continue to provide further growth. Consequently, we are
confident of the group's prospects for 2001.



Dr Bruce Farmer cbe

Chairman     21 March 2001

MANAGING DIRECTOR'S REPORT


Bodycote's efforts to increase capacity utilisation were rewarded last year
with the signing of a number of significant outsourcing contracts. As a
result, sales and operating profits growth of 11% and 7% respectively were
achieved for the continuing businesses. These results are all the more
commendable against a background of markets which were showing signs of
improvement early in the year but, generally, did not meet expectations.


Cash flow from operating activities for the year amounted to £108 million, an
increase of £13 million over 1999. Capital expenditure was at a reduced level
of £61 million (1999: £84 million), depreciation was £33 million (1999: £27
million) and acquisition costs were £33 million (1999: £39 million). The sale
in October of the PVD manufacturing business, Hauzer Techno Coating BV, for £
24 million provided funds for redeployment into core activities.


Organic sales growth became more evident as the year progressed and, although
cost pressures mainly relating to energy increased, operating margins were
broadly maintained at 23.4% (1999: 24.4%).


STRATEGY


The acquisition of Lindberg is a major event in the history of Bodycote and
represents an early achievement in the long-term strategy for the North
American heat treatment division. This division now has the critical mass to
encourage further the outsourcing of the very large in house market into the
sub contract sector. Over one third of Bodycote's activities are now situated
in North America and represent substantial opportunities for organic growth in
the future. In Europe, where the outsourcing concept is more developed, the
group's reputation and strength across all divisions continues to make
Bodycote the preferred choice for manufacturers. Continued outsourcing
success, to increase the use of existing capacity, remains a major strategic
objective for the group.


THE DIVISIONS


Heat treatment processing, with 158 operations from a total of 242 plants,
continues to be by far the largest division. Solid growth in operational
performance was achieved, resulting in sales and operating profits, in local
currency, improving by 14% and 9% respectively. The Central European network,
largely based in Germany and the Netherlands, was particularly strong and
reported a record year with sales advancing to £47.3 million (14%) and profits
to £12.7 million (14%) - a margin on sales of 27%. Generally markets were
stronger and, although automotive markets weakened towards the year end, the
overall prognosis for 2001 remains optimistic.


The hot isostatic pressing division made excellent progress. Organic sales
growth of 6%, in local currency, was achieved, together with organic profits
growth of 14%. Doubts about the strength of the aerospace sector proved to be
unfounded and the industrial gas turbine market also remained strong.
Additional capacity came on stream towards the end of the year which, together
with DENSAL II capacity commissioned in Germany and the USA during the year,
leaves the hot isostatic pressing division very well positioned to meet future
demand for existing and developing applications.


Materials testing experienced a difficult year. There was little recovery in
the oil and gas sector and this, coupled with increased price competition in
North America, meant that although sales increased by 11%, operating profits
fell by 11%. There are now clear signs of strengthening in oil and gas markets
and this will lead to increased volumes of business. Prospects for the
division are now back on track and we look forward to a significantly improved
performance in 2001.


The metallurgical coatings division continued to develop, particularly in the
recently formed Swedish network, which was further strengthened by two
first-class acquisitions. Our operations in Sweden now provide significant
support to the Nordic telecommunications market. Substantial increases in
sales of 30% and operating profits of 23%, were recorded, whilst margins
remained high at 19%. There still remain many acquisition opportunities in
Europe and North America and, together with sound organic growth prospects,
the division should continue to make further gains in 2001.


THE FUTURE


The continuing development of the outsourcing concept remains the major focus
of the group's marketing efforts to increase capacity utilisation. Margin
improvement in Lindberg will also be a key objective.


At the same time the group is actively pursuing a number of opportunities with
a view to the establishment of a network of metallurgical services operations
to support Far East manufacturers.


All of us at Bodycote are committed to the successful future of the group and
we are obliged to our shareholders for their continuing support. The new year
has started well and Bodycote is well placed to achieve good progress in 2001.


John Chesworth

Chief Executive 21 March 2001
John Chesworth, Managing Director                            Tel: [phone]
Bodycote International plc                         Tel: [phone] thereafter

Scott Fulton                                                 Tel: [phone]
Financial Dynamics


        Group profit and loss account

For the year ended 31 December 2000


                                                   Note        2000        1999

                                                                 £m          £m
Turnover                                          1 & 2

Existing operations                                           343.7       322.8

Acquisitions                                                   15.7           -

Continuing operations                                         359.4       322.8

Discontinued operations                                        11.7        32.6

                                                              371.1       355.4
Operating profit
Existing operations                                            76.8        75.0

Acquisitions                                                    2.2           -

Continuing operations                                          79.0        75.0

Discontinued operations                                         3.8         6.1

Total operations
  * Trading                                                    87.0        84.0
  * Goodwill                                                  (4.2)       (2.9)

                                                               82.8        81.1

Exceptional items
Profit on disposal of discontinued operations                   9.5        11.8

Fundamental restructuring costs, continuing                       -       (5.2)
operations
                                                                 
Profit on disposal of fixed assets, continuing                    -         0.8
operations

Profit on ordinary activities before interest and              92.3        88.5
taxation

Net interest payable                                          (6.9)       (3.3)

Profit on ordinary activities before taxation     1 & 2       85.4         85.2

Tax on profit on ordinary activities                  3      (20.9)      (27.2)
                                                     

Profit on ordinary activities after taxation                   64.5        58.0

Minority interests - equity                                       -         0.1

Profit for the financial year                                  64.5        58.1

Dividends - paid and proposed                                 (15.4)     (14.2)
                                                              
                                                                          
Retained profit for the financial year                         49.1        43.9

Earnings per share                                    4
Headline                                                      22.6p       22.5p

Headline - diluted                                            22.6p       22.3p

Basic                                                         24.9p       22.6p

Basic - diluted                                               24.9p       22.4p


Balance sheet

As at 31 December 2000

                                                              2000         1999

                                                                £m           £m
Fixed assets
Intangible assets                                             81.6         64.1

Tangible assets                                              410.5        357.4

Investments                                                    1.9          1.5

                                                             494.0        423.0
Current assets
Stocks                                                        13.2         13.1

Debtors                                                      110.2         98.6

Cash at bank and in hand                                      96.4         96.4

                                                             219.8        208.1
Creditors
Amounts falling due within one year                        (177.3)       (145.5)

Net current assets                                            42.5         62.6

Total assets less current liabilities                        536.5        485.6

Creditors
Amounts falling due after more than one year               (136.1)       (136.9)

Provisions for liabilities and charges                      (20.9)       (16.4)

Net assets                                                   379.5        332.3

Capital and reserves
Called-up share capital                                       25.6         25.8

Share premium account                                        243.9        239.6

Revaluation reserve                                            2.7          2.7

Currency and other reserves                                  (9.6)        (9.3)

Profit and loss account                                      116.7         73.3

Shareholders' funds - equity                                 379.3        332.1

Minority interests - equity                                    0.2          0.2

                                                             379.5        332.3


Consolidated statement of total recognised gains and losses
                                                              2000         1999

                                                                £m           £m

Profit for the financial year                                 64.5         58.1

Currency adjustments                                         (0.3)       (11.7)

Total recognised gains and losses relating to the year        64.2         46.4



Consolidated cash flow statement

For the year ended 31 December 2000


                                       2000        2000        1999        1999

                                         £m          £m          £m          £m

Operating profit                       82.8                    81.1

Depreciation charges                   32.8                    27.0

Amortisation of goodwill                4.2                     2.9

Profit on sale of tangible fixed      (0.5)                   (0.4)
assets
                                          -                   (4.3)
Cash impact of restructuring
                                      (6.4)                   (3.0)
Increase in stocks
                                      (9.8)                  (10.6)
Increase in debtors
                                        4.8                     1.9
Increase in creditors

Net cash inflow from operating                    107.9                    94.6
activities

Returns on investment and servicing               (6.4)                   (3.8)
of finance

Taxation                                         (14.0)                  (26.1)

Capital expenditure and financial                (61.1)                  (83.6)
investment

Acquisitions and disposals                        (5.7)                  (10.9)

Equity dividends paid                            (14.7)                  (13.0)

Cash inflow/(outflow) before
management of liquid resources and                  6.0                  (42.8)
financing

Management of liquid resources                     18.0                     2.6

Financing                                        (10.9)                    32.9

Increase/(decrease) in cash in the                 13.1                   (7.3)
year




Consolidated cash flow statement (continued)

For the year ended 31 December 2000



                                       2000        2000        1999        1999

                                         £m          £m          £m          £m


Reconciliation of net cash flow to
movement in net debt

Increase/(decrease) in cash in the     13.1                    (7.3)
year
                                        6.1                   (32.1)
Cash inflow from decrease/(increase)
in debt                               (18.0)                   (2.6)

Cash inflow from movement in liquid
resources

Change in net cash/(debt) resulting                 1.2                   (42.0)
from cash flows
                                                  (8.0)                    (7.9)
Debt acquired with subsidiaries
                                                  (8.3)                      6.5
Currency adjustments

Movement in net debt position in the             (15.1)                   (43.4)
year
Net debt position at 1 January                   (78.4)                   (35.0)

Net debt position at 31 December                 (93.5)                   (78.4)




Reconciliation of movements in
shareholders' funds
                                                   2000                    1999

                                                     £m                      £m

Profit for the financial year                      64.5                    58.1

Dividends                                        (15.4)                  (14.2)
Retained profit for the financial                  49.1                    43.9
year
Currency adjustments                              (0.3)                  (11.7)

New shares issued                                   4.1                     0.9

Redemption of shares                              (5.7)                       -

Goodwill previously written off                       -                     1.9
included in retained profit

Net movement in shareholders' funds                47.2                    35.0

Shareholders' funds at 1 January                  332.1                   297.1

Shareholders' funds at 31 December                379.3                   332.1



Notes to the accounts


 1. Divisional turnover and profit before taxation

                                        2000           %        1999           %

                                             £m                      £m
    Turnover

    Heat treatment                        240.8        64.9       220.5     62.0

    Hot isostatic pressing                 36.5         9.8        33.3      9.4

    Materials testing                      43.7        11.8        39.5     11.1

    Metallurgical coatings                 38.4        10.3        29.5      8.3

                                          359.4        96.8       322.8     90.8

    Discontinued equipment manufacture     11.7         3.2        32.6      9.2

                                          371.1       100.0       355.4    100.0


    Profit before tax

    Heat treatment                         53.9        61.3        51.2     60.4

    Hot isostatic pressing                 14.3        16.3        11.8     13.9

    Materials testing                       8.7         9.9         9.8     11.5

    Metallurgical coatings                  7.2         8.2         5.9      7.0

                                           84.1        95.7        78.7     92.8

    Discontinued equipment manufacture      3.8         4.3         6.1      7.2

                                           87.9       100.0        84.8    100.0

    Head office expenses                  (0.9)                   (0.8)

    Operating profit before amortisation   87.0                    84.0
    of goodwill
    Net interest                          (6.9)                   (3.3)
    Profit on ordinary activities before
    amortisation of goodwill               80.1                    80.7

    and exceptional items
    Amortisation of goodwill              (4.2)                   (2.9)

    Profit on ordinary activities before   75.9                    77.8
    exceptional items

    Exceptional items                       9.5                     7.4

    Profit on ordinary activities before   85.4                    85.2
    taxation


    Notes to the accounts (continued)

 2. Geographical analysis of turnover and profit before taxation by origin



                                              Turnover                 Profit

                                          2000        1999        2000      1999

                                           £m          £m          £m         £m

         United Kingdom                   65.4        61.8        15.4      15.5

         North America                    100.1       77.9        24.4      19.4

         Mainland Europe                  203.1       213.5       51.6      52.4

         Rest of World                    2.5         2.2         0.9        1.2
                                                             
                                          371.1       355.4       92.3      88.5

         Net interest                                             (6.9)    (3.3)

                                                                  85.4      85.2


 3. Tax on profit on ordinary activities
                                                              2000          1999

                                                                £m            £m
    The charge for taxation comprises :

    UK corporation tax                                         7.2           6.7

    Overseas (incl tax on exceptional                         13.7          20.5
    items of £0.8m (1999: £4.2m))
                                                              20.9          27.2


    Earnings per share                                        2000          1999

                                                                £m            £m

    Profit for the financial                                  64.5          58.1
    year
                                                               4.2           2.9
    Goodwill amortisation charge
                                                            (10.3)         (3.2)
    Exceptional items after tax
    Headline earnings                                         58.4          57.8


                                                              2000          1999

                                                            Number        Number

    Weighted average number of shares                  258,578,817   257,292,664
    in issue - basic
                                                          
    Adjustment in respect of share
    options                                                289,707     1,984,843

    Weighted average number of                         
    ordinary shares in issue - diluted                 258,868,524   259,277,507


    Notes to the accounts (continued)

 4. Analysis of net debt position

           1 Jan        Cash       Acquisitions-     Non        Currency      31
                        flow              loans     cash                     Dec
            2000                       acquired              adjustments    2000
                                                 changes   
              £m          £m                 £m       £m              £m      £m

Cash at      25.6        17.6                                        0.4    43.6
bank and
in hand

Short term   70.8      (18.0)                                               52.8
deposits

Bank        (6.6)       (4.5)                                             (11.1)
overdrafts

Bank loans (36.0)       (6.2)             (0.7)     (3.2)          (2.2)  (48.3)
due within
one year

Bank loans(127.5)        13.1             (6.5)       3.2          (6.3) (124.0)
due after
one year

Finance
leases due  (1.1)           -             (0.1)     (0.1)            0.2   (1.1)
within one
year

Finance
leases due  (3.6)       (0.8)             (0.7)       0.1          (0.4)   (5.4)
after one
year
           (78.4)         1.2             (8.0)       0.0          (8.3)  (93.5)