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IMI PLC (IMI)

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Monday 04 September, 2000

IMI PLC

Interim Results 2000

IMI PLC
4 September 2000


IMI plc Interim Results 2000

                                                2000    1999
                                                            
Sales                                          £813m   £706m
                                                            
Results before goodwill amortisation and                    
exceptional items:
                                                            
     Profit before interest                   £86.1m  £71.0m
                                                            
     Profit before tax                        £72.7m  £67.4m
                                                            
     Adjusted earnings per share               14.0p   12.7p
                                                            
Dividend per share                              6.0p    5.8p


- Sales increased 15%

- Profit before goodwill and exceptional items increased 8%

- Adjusted earnings per share increased 10%


CHAIRMAN'S STATEMENT

IMI today reports a stronger first half performance with both sales
and profit before goodwill amortisation ahead of last year.  Sales at
£813m were 15% higher and profit before goodwill amortisation and
exceptional items at £72.7m was 8% higher.  These figures include
£120m  sales and £1.6m profit in respect of the additional months'
contribution from the Polypipe businesses acquired in May 1999.

The tax charge on profit before goodwill amortisation and exceptional
items was 32%, the same rate as for the whole of last year.

Adjusted earnings per share at 14.0p, was 10% ahead of the same period
last year.

Balance sheet gearing at 30 June was 100% (1999: 102%) increasing from
the December 1999 gearing of 90% mainly as a result of the seasonal
increase in working capital.  Interest cover for the six months based
on operating profit before goodwill amortisation was 6 times.

The Board has decided to increase the interim dividend by 3.4% to
6.0p.


Trading Review

Operating profit before goodwill amortisation at £86.1m (1999: £71.0m)
was 21% higher than last year including £10.5m from the additional
months' contribution from Polypipe.  Excluding this contribution,
operating profit was 6.5% ahead.

The further weakening of the Euro helped to stimulate growth in many
of our continental European markets although it has resulted in
increased pressure on our UK manufacturing businesses.

Raw material costs, particularly within the Polypipe businesses, have
increased considerably and although it is expected that the majority
of these cost increases will be recovered, there is a time-lag which
has resulted in a reduction in margins in the first half of the year.

We continued to drive efficiency in our manufacturing operations
resulting in rationalisation costs of £5.0m (1999: £9.6m).  We have introduced
a number of new products and increased our expenditure on the development of
innovative products and services, logistics, key account and sales channel
management.

The comments that follow relate to continuing operations and compare
performance with the first half of 1999.


Hydronic Controls

In copper tube and fittings volumes were up on last year.  Pricing
pressure continued throughout the period although margins improved
from the low point of last year.  Heimeier and TA, our Indoor Climate
Control businesses, maintained their excellent profit performance and
enhanced their commissioning and balancing capability.  In plastics,
operating profit of the Polypipe businesses for the six months was
£19.7m compared with £24.2m for the same period last year.  Volumes
improved with new products gaining strength.  However, profit reduced
due to polymer costs which on average increased by 60% over the same
period of 1999 and were not fully recovered in selling prices.  We
continue to market aggressively our products in Eastern Europe where
overall sales were up 14%.


Drinks Dispense

Sales for the period were 8% lower than in 1999 reflecting the
expected reduced expenditure by our major soft drinks customers and
further uncertainty in the brewing industry.  The weak demand in soft
drinks affected most geographic markets including the US.  However,
good progress continued to be made with quick service restaurants and
the success of new product launches is increasing our market
penetration.  In response to lower demand, further cost reduction
measures were implemented and we are well placed to benefit when
activity levels improve.  Our Cannon business maintained  its
excellent record, benefiting from strong sales of Point of Purchase
equipment and encouraging demand for distribution carts.  It ended the
period with a strong order book.


Fluid Power

Fluid Power operations across Europe enjoyed improved trading
conditions with volumes ahead of last year.  Although the UK softened
towards the end of the period, mainland Europe continued to improve
and remains strong.  Many of the industry sectors we serve, such as
commercial vehicles and textiles, are seeing export growth helped by
the weakness of the Euro.  In the US the margins in the automotive
sector came under pressure; the commercial vehicle sector slowed but
our sales to the general industrial market, helped by market share
gains, remained strong.   We continued our cost reduction projects and
initiated new advanced techniques to enhance process and product
reliability and performance.  We made significant progress with on-
line technical service and internet trading.  Investment in our market
sector programme continued and helped in securing a number of major
contracts for delivery commencing in 2001.


Energy Controls

Energy Controls achieved better results with volumes up 15%.  Demand
for severe service valves in both power generation and oil and gas
improved.  Order books are healthy and provide a good platform for the
balance of the year and 2001.  Safety Systems, Eley sporting
ammunition and Nuclear components produced satisfactory results and
Mecafrance increased sales and profit in Europe and the US.


Strategic Development

The closures of copper smelting and the Drinks Dispense operation in
Brazil are proceeding to plan and the costs are expected to be within
budget.

During the first half we spent around £6m on a number of small in-fill
businesses in Hydronic Controls and Drinks Dispense.

In August we announced the acquisition of Robimatic for a
consideration of up to £19m and Flow Design Inc for a consideration of
£14m.  Robimatic is the UK market leader in the packaging and
distribution of plumbing products and will in particular broaden the
range of Polypipe products channelled into the DIY and merchant
sectors.  Flow Design Inc is the US market leader in automatic flow
control devices for heating, air-conditioning and ventilation.  This
addition to our Indoor Climate Control businesses provides us with an
important entry into the world's largest balancing valve market.


Outlook

Current order intake is running ahead of last year except in Drinks
Dispense.  The UK and the US are showing some signs of softness but
with mainland European demand still strong prospects for the second
half remain satisfactory.  We will continue to take costs out of our
businesses and to take advantage of our market positions to improve
financial performance.


                     GROUP PROFIT AND LOSS ACCOUNT
                ------------------------------------------
                                                  
                                             6 months to
                                            30 June 2000
                                     -----------------------------------
                                                                        
                                           Before                       
                                         goodwill      Goodwill         
                                     amortisation  amortisation    Total
                             Notes             £m            £m       £m
                              ------------------------------------------
Turnover                       1                                
Continuing operations                         813                    813
Discontinued operations                         -                      -
                              ------------------------------------------
Total turnover                                813                    813
                              ------------------------------------------
Operating profit               1                                        
                                      ----------------------------------
Continuing operations                        86.1         (6.3)     79.8
Discontinued operations                         -                      -
                                      ----------------------------------
Operating profit                             86.1         (6.3)     79.8
Net interest payable                       (13.4)                 (13.4)
                              ------------------------------------------
Profit before exceptional                                               
items and taxation                           72.7         (6.3)     66.4
Profit on disposal of                                                   
discontinued operations        2                                       -
Provision for losses on                                                 
closure of businesses          2                                       -
                              ------------------------------------------
Profit before taxation                       72.7         (6.3)     66.4
Tax on profit                  3           (23.3)             -   (23.3)
                              ------------------------------------------
Profit after taxation                        49.4         (6.3)     43.1
Equity minority interests                   (0.3)                  (0.3)
                              ------------------------------------------
Profit for the period                        49.1         (6.3)     42.8
                              ---------------------------------         
Dividends paid and proposed    4                                  (21.1)
                                                                 -------
Transfer to reserves                                                21.7
                                                                 -------
Earnings per share             5                                   12.2p
Diluted earnings per share     5                                   12.2p
Adjusted earnings per share    5                                   14.0p
                                   
                                   

            ----------------------------------------------------------
                                                                        
                                       6 months to               Year to
                                      30 June 1999      31 December 1999
                              --------------------  --------------------
                                    Before                Before        
                               exceptional           exceptional        
                                   items &               items &        
                                  goodwill              goodwill        
                              amortisation   Total  amortisation   Total
                       Notes            £m      £m            £m      £m
                       ---------------------------   -------------------
Turnover                 1                                              
Continuing operations                  688     688          1470    1470
Discontinued                                                            
operations                              18      18            32      32
                       ---------------------------  --------------------
Total turnover                         706     706          1502    1502
                       ---------------------------  --------------------
Operating profit         1                                              
                              --------------------  --------------------
Continuing operations                 73.8    71.8         165.0   156.2
Discontinued                                                            
operations                           (2.8)   (2.8)         (4.2)   (4.2)
                              --------------------  --------------------
Operating profit                      71.0    69.0         160.8   152.0
Net interest payable                 (3.6)   (3.6)        (15.8)  (15.8)
                       ---------------------------  --------------------
Profit before                                                           
exceptional items and                                                   
taxation                              67.4    65.4         145.0   136.2
Profit on disposal of                                                   
discontinued                                                            
operations               2                     6.0                   6.0
Provision for losses                                                    
on closure of                                                           
businesses               2                       -                (19.1)
                       ---------------------------  --------------------
Profit before taxation                67.4    71.4         145.0   123.1
Tax on profit            3          (22.9)  (24.9)        (46.5)  (43.3)
                       ---------------------------  --------------------
Profit after taxation                 44.5    46.5          98.5    79.8
Equity minority                                                         
interests                                -       -         (0.5)   (0.5)
                       ---------------------------  --------------------
Profit for the period                 44.5    46.5          98.0    79.3
                              ------------          ------------        
Dividends paid and                                                      
proposed                 4                  (20.3)                (53.0)
                                            ------                ------
Transfer to reserves                          26.2                  26.3
                                            ------                ------
Earnings per share       5                   13.3p                 22.6p
Diluted earnings per                                                    
share                    5                   13.3p                 22.6p
Adjusted earnings per                                                   
share                    5                   12.7p                 28.0p

                                   

                          GROUP BALANCE SHEET
                                   
----------------------------------------------------------------------
                                    30 June       30 June   31 December
                                       2000          1999          1999
                                         £m            £m            £m
                                  -------------------------------------
 Fixed assets                                                          
 Intangible assets                    246.1         251.5         246.0
 Tangible assets                      392.2         410.8         392.2
                                  -------------------------------------
                                      638.3         662.3         638.2
                                  -------------------------------------
 Current assets                                                        
 Stocks                               317.1         295.5         289.1
 Debtors                              383.6         334.7         301.1
 Investments                            2.0           4.8           3.8
 Cash and deposits                     39.4          77.9          46.4
                                  -------------------------------------
                                      742.1         712.9         640.4
 Creditors:                                                            
 amounts falling due within one                                        
 year
 Borrowings and finance leases       (87.6)       (113.1)       (101.3)
 Other creditors                    (337.0)       (338.2)       (314.5)
                                  -------------------------------------
 Net current assets                   317.5         261.6         224.6
                                  -------------------------------------
 Total assets less current                                             
 liabilities                           955.8         923.9         862.8
                                                                       
 Creditors:                                                            
 amounts falling due after more                                        
 than one year
 Borrowings and finance leases      (406.1)       (411.4)       (333.1)
 Other creditors                     (30.9)        (25.9)        (31.0)
 Provisions for liabilities and                                        
 charges                              (62.7)        (50.1)        (69.6)
                                  -------------------------------------
 Net assets                           456.1         436.5         429.1
                                  -------------------------------------
 Capital and reserves                                                  
 Called up share capital               87.8          87.6          87.7
 Share premium account                131.6         129.9         130.8
 Revaluation reserve                    1.0           1.0           1.0
 Other reserves                         1.6           1.6           1.6
 Profit and loss account              234.1         216.4         208.0
                                  -------------------------------------
 Equity shareholders' funds           456.1         436.5         429.1
                                  -------------------------------------
                                   
                                   
                                   
                       GROUP CASH FLOW STATEMENT
                                   
----------------------------------------------------------------------
                                                                       
                                        6 months  6 months      Year to
                                              to        to
                                         30 June   30 June  31 December
                                            2000      1999         1999
                                              £m        £m           £m
                                         ------------------------------
 Reconciliation of operating profit to                                 
net cash inflow from operating
activities
                                                                       
   Operating profit                         79.8      69.0        152.0
   Depreciation/amortisation                41.1      30.0         78.7
   Stocks (increase)/decrease             (22.3)       1.9          3.6
   Debtors (increase)/decrease            (73.9)    (38.3)          0.7
   Creditors and provisions                                            
   increase/(decrease)                      25.9       5.5       (13.8)
   Exceptional items                       (4.1)         -            -
                                         ------------------------------
 Net cash inflow from operating                                        
 activities                                 46.5      68.1        221.2
                                         ------------------------------
 CASH FLOW STATEMENT                                                   
                                                                       
 Net cash inflow from operating                                        
 activities                                 46.5      68.1        221.2
 Return on investments and servicing                                   
 of finance                               (12.4)     (3.2)       (16.2)
 Taxation                                 (21.4)    (18.2)       (30.9)
 Capital expenditure and financial                                     
 investment                               (28.5)    (12.8)       (45.2)
 Acquisitions and disposals                (4.6)   (319.0)      (268.2)
 Equity dividends paid                    (32.7)    (31.9)       (52.2)
                                         ------------------------------
 Cash flow before use of liquid                                        
 resources and financing                  (53.1)   (317.0)      (191.5)
 Management of liquid resources            (1.1)       1.4          8.2
 Financing                                                             
   Issue of ordinary shares                  0.9       0.8          1.8
   Increase in borrowings                   34.2     361.7        205.8
                                         ------------------------------
                                            35.1     362.5        207.6
                                         ------------------------------
 (Decrease)/increase in cash in the                                    
 period                                   (19.1)      46.9         24.3
                                         ------------------------------
 Reconciliation of net cash to                                         
 movement in net borrowings
                                                                       
   (Decrease)/increase in cash in the                                  
   period                                 (19.1)      46.9         24.3
   Cash inflow from borrowings            (34.2)   (361.7)      (205.8)
   Cash outflow/(inflow) from                                          
   movement in liquid resources              1.1     (1.4)        (8.2)
                                         ------------------------------
   Change in borrowings resulting                                      
   from cash flows                        (52.2)   (316.2)      (189.7)
   Borrowings assumed with                                             
   acquisitions                            (0.8)    (49.0)       (53.6)
   Loan notes issued as part of                                        
   acquisition                                 -         -       (63.0)
   Currency translation differences       (13.3)       4.4          4.1
                                         ------------------------------
   Movement in net borrowings in the                                   
   period                                 (66.3)   (360.8)      (302.2)
   Net borrowings at start of period     (388.0)    (85.8)       (85.8)
                                         ------------------------------
   Net borrowings at end of period       (454.3)   (446.6)      (388.0)
                                         ------------------------------


                                   
         STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
----------------------------------------------------------------------

                                        6 months    6 months      Year to
                                      to 30 June  to 30 June  31 December
                                            2000        1999         1999
                                              £m          £m           £m
                                      -----------------------------------
Profit for the period                       42.8        46.5         79.3
Currency translation differences             4.4           -        (8.4)
                                      -----------------------------------
Total recognised gains and losses                                        
for the period                              47.2        46.5         70.9
                                      -----------------------------------




               GROUP HISTORICAL COST PROFITS AND LOSSES
----------------------------------------------------------------------

There is no material difference between the profit before taxation and        
the retained profit for each period as shown in the Group profit and          
loss account and their historical cost equivalent.                            
                                                                      
                                                                      
                                                                      
       RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
----------------------------------------------------------------------

                                           6 months   6 months    Year to
                                              to 30      to 30         31
                                               June       June   December
                                               2000       1999       1999
                                                 £m         £m         £m
                                            -----------------------------
Profit for the period                          42.8       46.5       79.3
Dividends                                    (21.1)     (20.3)     (53.0)
                                            -----------------------------
                                               21.7       26.2       26.3
Other recognised gains and losses                                        
relating to the period                          4.4          -      (8.5)
New ordinary share capital issued               0.9        0.8        1.8
                                            -----------------------------
Net increase in shareholders' funds for                                  
the period                                     27.0       27.0       19.6
Shareholders' funds at start of period        429.1      409.5      409.5
                                            -----------------------------
Shareholders' funds at end of period          456.1      436.5      429.1
                                            -----------------------------


               NOTES TO THE INTERIM FINANCIAL STATEMENTS
                                                      
 1.  Segmental Analysis                               
                                            Turnover
                                    6 mths     6 mths      Year
                                        to         to        to
                                   30 June    30 June    31 Dec
                                      2000       1999      1999
                                        £m         £m        £m
                                  -----------------------------
 (i) by activity:                                     
                                                      
     before goodwill amortisation                     
       Hydronic Controls               346        224       543
       Drinks Dispense                 176        191       353
       Fluid Power                     221        214       435
       Energy Controls                  70         59       139
                                  -----------------------------
     Continuing operations             813        688      1470
                                  -----------------------------
                              
(ii) by geographical origin: 
                                                      
     before goodwill                                  
     amortisation
       UK                              288        197       445
       Rest of Europe                  270        245       531
       The Americas                    223        216       435
       Asia/Pacific                     32         30        59
                                  -----------------------------
     Continuing operations             813        688      1470
                                  -----------------------------


(iii) turnover by geographical destination:
                                                     
                                    6 mths    6 mths        Year
                                        to        to          to
                                   30 June   30 June      31 Dec
                                      2000      1999        1999
                                        £m        £m          £m
                                 -------------------------------
      UK                               243       152         374
      Germany                          105       103         220
      Rest of Europe                   191       174         353
      USA                              198       187         373
      Asia                              31        26          55
      Rest of World                     45        46          95
                                 -------------------------------
      Continuing operations            813       688        1470
                                 -------------------------------


 1.   Segmental Analysis                                        
                                        Operating Profit
                                 -------------------------------

                                    6 mths    6 mths        Year
                                        to        to          to
                                   30 June   30 June      31 Dec
                                      2000      1999        1999
                                        £m        £m          £m
                                 -------------------------------
 (i)  by activity:                                              
                                                                
      before goodwill amortisation                                          
        Hydronic Controls             42.3      34.7        76.9
        Drinks Dispense               15.7      20.6        34.6
        Fluid Power                   21.4      13.3        38.1
        Energy Controls                6.7       5.2        15.4
                                 -------------------------------
      Continuing operations           86.1      73.8       165.0
                                 -------------------------------
      after goodwill amortisation                               
        Hydronic Controls             36.7      33.3        69.5
        Drinks Dispense               15.5      20.5        34.3
        Fluid Power                   20.9      12.8        37.2
        Energy Controls                6.7       5.2        15.2
                                 -------------------------------
      Continuing operations           79.8      71.8       156.2
                                 -------------------------------

(ii)  by geographical origin:
      
      before goodwill amortisation
        UK                            35.7      24.7        56.5
        Rest of Europe                27.4      23.2        55.0
        The Americas                  20.6      24.8        50.2
        Asia/Pacific                   2.4       1.1         3.3
                                 -------------------------------
      Continuing operations           86.1      73.8       165.0
                                 -------------------------------
      after goodwill amortisation
        UK                            30.1      23.2        49.1
        Rest of Europe                27.4      23.2        54.8
        The Americas                  19.9      24.3        49.0
        Asia/Pacific                   2.4       1.1         3.3
                                 -------------------------------
      Continuing operations           79.8      71.8       156.2
                                 -------------------------------

                                                     
 1.   Segmental Analysis                             
                                        Operating Assets
                                 -------------------------------
                                    6 mths    6 mths        Year
                                        to        to          to
                                   30 June   30 June      31 Dec
                                      2000      1999        1999
                                        £m        £m          £m
                                 -------------------------------
 (i)  by activity:                                   
                                                     
      before goodwill amortisation                   
        Hydronic Controls              345       310         306
        Drinks Dispense                133       136         108
        Fluid Power                    227       200         211
        Energy Controls                 39        58          36
                                 -------------------------------
      Continuing operations            744       704         661
                                 -------------------------------
      
                       
(ii)  by geographical origin:                        
                                                     
      before goodwill amortisation                   
        UK                             339       300         296
        Rest of Europe                 223       227         201
        The Americas                   161       153         142
        Asia/Pacific                    21        24          22
                                 -------------------------------
      Continuing operations            744       704         661
                                 -------------------------------

                                   
1.   Segmental Analysis

     Hydronic Controls for 2000 include a full 6 months' results  from
     Polypipe  (mainly  UK); 1999 included results from  the  date  of
     acquisition (19 May) to period end.

     Discontinued operations

     The  amounts  shown  for  discontinued  operations  comprise  the
     turnover  and  operating  profits of the  IMI  Refiners  smelting
     operation  (Hydronic Controls, UK), the Drinks Dispense operation
     in  Brazil  and  the  Marston  aerospace  businesses,  previously
     reported within Energy Controls and located in the UK.


2.   Exceptional items

     In  1999  the  profit  on  disposal  of  discontinued  operations
     comprises  the  surplus  arising  on  the  sale  of  the  Marston
     aerospace businesses.
     
     In  1999  the  provision  for losses  on  closure  of  businesses
     comprises  £16.0m for the complete cessation of  copper  smelting
     and £3.1m for closing the Drinks Dispense Brazilian operation.


3.   Taxation

     The effective tax rate on the profit before exceptional items and
     goodwill amortisation is 32%  (year 1999: 32%).


4.   Dividends

     The  Directors have declared an interim dividend for the  current
     year  of 6.0p per share (six months to 30 June 1999: 5.8p)  which
     will  be  paid on 16 October 2000 to shareholders on the register
     on 15 September 2000.


5.   Earnings per share

     The  weighted average number of shares in issue during the period
     was  350.9m,  350.9m diluted for the effect of outstanding  share
     options  (six  months to 30 June 1999: 350.3m,  350.5m  diluted).
     Earnings  per share have been calculated on earnings  of  £42.8m,
     (six  months  to 30 June 1999: £46.5m) and adjusted earnings  per
     share on earnings of £49.1m (six months to 30 June 1999: £44.5m).
     Adjusted earnings per share figures exclude goodwill amortisation
     and  exceptional items and have been shown because the  Directors
     consider  that  they  give a more meaningful  indication  of  the
     underlying performance.
                                   
                                   
6.   Exchange rates

     The  profit  and  loss  accounts  of  overseas  subsidiaries  are
     translated  into  sterling at average rates of exchange  for  the
     period,  balance sheets are translated at period end rates.   The
     main currencies are:

                   Average period rates   Balance sheet rates
                   --------------------  ---------------------
                    June   June   Dec   30 June 30 June   31 Dec
                    2000   1999   1999    200     1999     1999
                    -----  ----- -----   -----   -----    -----
                                                             
Euro                1.63   1.49   1.52   1.58     1.53     1.61
US Dollar           1.57   1.62   1.62   1.51     1.58     1.61



7.   Financial information

     This  interim statement has been reviewed by the Group's auditors
     having  regard  to  the  bulletin  Review  of  Interim  Financial
     Information, issued by the Auditing Practices Board.  A  copy  of
     their unqualified review opinion is attached.
     
     The  comparative figures for the year ended 31 December 1999  are
     not  the  Company's statutory accounts for that  financial  year.
     Those  accounts  have been reported on by the Company's  auditors
     and  delivered to the Registrar of Companies.  The report of  the
     auditors  was  unqualified and did not contain a statement  under
     Section 237(2) or (3) of the Companies Act 1985.

     The  Interim Report will be posted to shareholders on 7 September
     2000  and  will be available from the same date at the  Company's
     registered office, Kynoch Works, Witton, Birmingham, B6 7BA.
     
Enquiries to:

Gary Allen     -    Chief Executive          -    Tel: 020 7329 0096
Nick Paul      -    Deputy Chief Executive   -    Tel: 020 7329 0096
Trevor Slack   -    Finance Director         -    Tel: 020 7329 0096
Gerard Whelan  -    Corporate Communications -    Tel: 020 7329 0096
Nigel Gilpin   -    Controller               -    Tel: 0121 356 4848

Press release available on the Internet at www.imi.plc.uk

Issued by:
Ben Padovan    -    Shandwick International  -     Tel: 020 7329 0096