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Monday 10 March, 2003


Final Results

10 March 2003

10 March 2003

IMI plc Preliminary Results

IMI plc, the major international engineering group, today announced its
preliminary results for the year ended 31 December 2002.

                                                                                    2002            2001

Sales                                                                              £1612m          £1642m

Results before rationalisation & restructuring costs *

Operating profit from continuing businesses                                        £146.0m         £138.8m

Profit before tax                                                                  £131.5m         £126.1m

Adjusted earnings per share                                                         25.0p           26.7p

Rationalisation & restructuring costs                                              £32.2m          £44.6m

Profit before tax                                                                  £74.3m          £86.4m

Earnings per share                                                                  15.7p           18.3p

Borrowings                                                                         £173.5m         £345.3m

Gearing                                                                              33%             70%

*    Before goodwill amortisation and exceptional items

•        Operating margins improving

•        Another excellent cash performance

•        Borrowings halved

•        Maintained dividend of 15.5p for full year


Looking back at the year 2002, it is pleasing to be able to report good progress
both operationally and strategically.  Against a backdrop of an increasingly
uncertain economic outlook we pressed ahead into the second year of our
restructuring programme and continued to reshape our portfolio of businesses.

Each of our businesses faced challenging market conditions and each responded
positively with market initiatives and strong cost and cash management.

In continuing businesses on a like for like basis, new products and market share
gains limited volume reductions in the first half to less than 2% while volumes
in the second half were slightly ahead of last year.

The benefits from the restructuring and cost reduction are now showing through
in most areas with operating profit and margins improving.  We continue with our
policy of reinvesting some of the savings to promote longer term growth.  We
also continue to seek to optimise our capital employed and have again improved
working capital and released assets for disposal.

During the year we completed the acquisition of STI (Severe Service) and DCI
Marketing (Merchandising Systems).  Since the year end we have added further to
Severe Service with the acquisition of Fluid Kinetics, and increased our
investment in Indoor Climate with the acquisition of Commtech in the UK, at a
combined cost of around £15m.

Significant activity on the disposal front saw us divest all the remaining
copper businesses with the sale of Copper Fittings and Copper Tube.  We also
sold the small Eley shotgun cartridge business.

In late December the sale of the Witton site was completed and we shall be
relocating our headquarters within the Birmingham area in April 2003.

We have maintained focus on cash throughout the last two years of restructuring
and repositioning of IMI.  Strong operational cash flow performance and
controlled corporate activity has reduced borrowings from £403m at the end of
2000 to £174m at 31 December 2002.


The triennial actuarial valuation of the principal UK pension fund was carried
out at 31 March 2002.  At that date there was an actuarial surplus of £51m.  In
view of the deterioration of financial markets it has been decided that funding
reviews will be carried out annually.  The next reviews will be at 31 March

We continue to account for pensions in accordance with SSAP24: Pension Costs.
Details of the impact on the balance sheet and profit and loss account of
adopting FRS17: Retirement Benefits are shown in note 6 of the Notes Relating to
the Financial Statements.

Results Summary

Group sales at £1612m compare with £1642m reported last year.  Sales of
continuing businesses at £1463m (2001: £1419m) included £55m from acquisitions.

Profit before rationalisation and restructuring costs, goodwill amortisation and
exceptional items increased by over 4% to £131.5m compared with £126.1m last

Rationalisation and restructuring costs charged against profit were £32.2m
(2001: £44.6m), making a total of £76.8m for the full two years of our
restructuring programme, in line with our previous indications.

Reduced borrowings and lower rates enabled the interest charge to fall to
£16.7m, (2001: £25.3m) giving interest cover based on operating profit before
rationalisation and restructuring costs and goodwill amortisation of 9 times
(2001: 6 times).

For 2002, the effective rate of tax on profit before goodwill amortisation and
exceptional items is 32%, the same underlying rate as last year.  The 2001 tax
charge benefited from overseas tax credits on profit distributions which reduced
the actual rate to 25%.

Net exceptional gains arising from the disposal of businesses and property
amounted to £26.3m (2001: £27.1m) before charging £33.3m (2001: £5.8m) for
acquired goodwill previously written off to reserves.

Adjusted earnings per share (before rationalisation and restructuring, goodwill
amortisation and exceptional items) were 25.0p (2001: 26.7p, including 2.5p as a
result of the lower tax charge).

Net cash flow for the year was £162m (2001: £60m) and net borrowings at the end
of the year £173.5m (2001: £345.3m) resulting in balance sheet gearing of 33%
compared with 70% last year.

The interim dividend paid in October was maintained at 6.0p and the Board is
recommending the payment of an unchanged final dividend of 9.5p making a total
of 15.5p for the year.  Excluding rationalisation and restructuring costs,
goodwill amortisation and exceptional items, the dividend is covered 1.6 times
(2001: 1.7 times).  Free cash flow before dividend payments was £189m and
dividend payments amounted to £55m.

The Board has maintained the dividend throughout the period of restructuring and
continues to recognise the importance to our shareholders of having a reliable
dividend income stream.


General economic conditions are yet to show any significant sign of improvement
and we expect that 2003 will again present a challenging environment.  The costs
of the major operational restructuring we embarked on in 2001 had been incurred
by the end of 2002 and the benefits are flowing through.  Our businesses are
stronger as a result and we look ahead with confidence to building on the solid
foundation we have been laying for the past two years.


For the past two years we have been engaged in a significant repositioning of
the Group, building our future around businesses which can develop
value-creating solutions for market-leading customers.

IMI will be focused in just two areas, Fluid Control and Retail Dispense, where
innovative, knowledge-based solutions provide protection from low-priced
competition, and where a highly targeted, blue chip customer base provides the
momentum for long term growth.

Delivering this repositioning requires us to:-

(i)         reshape the business portfolio by exiting commodity businesses, and
            making bolt-on acquisitions in our 'platform' businesses;

(ii)        significantly increase the resource dedicated to developing customer
            solutions and partnerships, whilst minimising downstream operational 
            costs through process simplification, the transfer of manufacturing 
            to low cost economies, and the disposal of under-utilised assets.

In 2002 we have made considerable progress in both respects:-

(i)         Of the businesses earmarked for disposal (Building Products), we
            have sold both Copper Fittings and Copper Tube, to separate trade 
            buyers, for a combined sum of £78m.  The major remaining business, 
            Polypipe, continues to generate good profits and excellent cashflow, 
            and will only be sold when full value can be extracted.  We 
            reinvested £47m in acquiring Milan-based STI for £4m, and 
            Milwaukee-based DCI for £43m, welcome additions to our Fluid 
            Controls and Retail Dispense platforms respectively.  Both 
            businesses have made an excellent first year contribution.

(ii)        Following the £45m of cost incurred in 2001, we have committed an
            additional £32m in 2002 in bringing about the required 
            redistribution of our assets and resources within our platform 
            businesses.  The required restructuring has now either been 
            completed or provided for, and rationalisation costs in 2003
            will revert to the more traditional amount of less than £10m per 

            Significant reductions in our cost base have been achieved, with six
            manufacturing plants now established in low cost economies (three in 
            Mexico, two in Czech Republic, one in China) collectively employing 
            more than 1000 people, rising to 1500 by the end of this year.  By 
            the end of 2004 we will be generating 30% of our output from these 
            facilities.  As well as the reduction in labour costs, significant 
            savings will also be generated by switching to locally sourced 
            materials.  Slimming organisational structures, eliminating low 
            margin product lines, and streamlining administrative processes have 
            resulted in a further reduction of 500 overhead positions by the end 
            of 2002.  By 2004 we anticipate that our operating cost base 
            compared to 2000, will have reduced by around £28m.  The sale of 
            under-utilised property assets (including the Witton site) has 
            yielded over £30m in cash in the year.

            With the savings generated, we have added significantly to our 
            customer development capabilities, this year alone bringing 100 top 
            quality sales professionals through the IMI Academy;  injecting a 
            further £5m into the enlargement of our three technology centres;  
            and investing further in e-commerce initiatives to transform our 
            supply chain capabilities.  We are greatly encouraged by the
            impact these initiatives are already having in building first class 
            customer relationships and stimulating higher growth opportunities.

Two years into our repositioning we stand in good shape.  Much of the portfolio
reshaping has been completed;  we are focused around a much smaller number of
higher added value businesses, each with leading market positions in closely
defined global niches;  we have a much greater proportion of our assets and
resources engaged in value-building activities with a high quality customer
base;  our operational cost base has been materially reduced;  and the
cash-generating qualities of our businesses have significantly strengthened the
balance sheet.

Although economic and political uncertainties continue to cloud the outlook, we
are confident of our future direction and our ability to deliver long term,
sustainable growth in shareholder value.


The following is a review of our business areas where comparisons with the
previous years relate to continuing operations and operating profit is stated
before rationalisation and reorganisation costs and goodwill amortisation.


Sales:                                       £661m (2001: £668m)
Operating profit:                            £65.2m (2001: £62.8m)

Severe Service

Despite softer demand in the US power generation market, our Severe Service
valve business maintained its growth record with organic sales some 10% ahead of
last year.  Global demand in power markets generally remained steady and the gas
market had a strong year.  CCI's ability to redirect its resources produced its
most successful year to date in securing LNG (liquified natural gas) orders and,
with continuing focus in the market on plant improvements, it enjoyed a good
year in customer service and aftermarket business.  The new facilities in Mexico
and Czech Republic, although still only small, are coming on stream and will
help provide a platform for capacity expansion.  STI of Italy added to our
actuation technology and the recent purchase of Fluid Kinetics in California
extends our noise reduction expertise.

Fluid Power

Fluid Power volumes remain exposed to the capital equipment markets and declined
further in 2002.  However, the decline was largely in the first half of the year
with second half volumes ahead overall, particularly against the fourth quarter
of 2001. Margins improved significantly in the second half of the year.

Our key OEM sector strategy continues to gather pace as resources are targeted
increasingly at our chosen markets.  We are not neglecting our end user and
distribution channels with many new marketing initiatives implemented.

The move to low cost manufacturing made significant progress with production in
Mexico making a good start and the new facility in the Czech Republic opening
during the fourth quarter.  The restructuring of sales and technical resource
and simplification of the infrastructure was accelerated further during the
year.  Further investment was made in new products and key account development.

Following a major review of ISI Systems it was announced last December that
further investment in this activity could not be justified and that it would
close early in 2003. Closure costs of £5.7m have been provided.  In 2002, ISI
Systems incurred losses of around £2.5m which are included in discontinued
businesses in the profit and loss account.

Indoor Climate

Although German TRV (thermostatic radiator valves) volumes were again lower this
year, margins were maintained through aggressive cost reduction within our
German operations.  Encouragingly, balancing valve volumes which had been flat
in the early part of the year regained momentum with some growth in the second
half.  Significant efficiency improvement measures have been taken including
outsourcing of some manufacturing to Estonia and China.  We continue to add to
our European commissioning and service capability with the purchase of a small
French business in June 2002 and Commtech in February 2003.  UK-based Commtech
is a specialist provider of commissioning services to building facility


Sales:                                       £437m (2001:  £382m)
Operating profit:                            £42.3m (2001: £36.7m)

Beverage Dispense

In Beverage Dispense, underlying volumes were around 3% ahead of last year and
in addition, sales in the first half included around £21m from the roll out of
the frozen carbonated beverage order received at the end of 2001.  Good UK
demand and increased market share led to a strong performance in beer dispense

2002 was a year of major operational changes particularly in the United States,
where our ambitious programme to relocate a significant amount of component
manufacture to Mexico and China had the most impact.  The change in operations
involved not only the closure of two of our US plants but also a significant
relocation of production within the US.  Given the magnitude of these changes,
it became necessary to maintain parallel running of the US plants and the
Mexican facility for most of the year, thus deferring costs savings into 2003.
In a year with so much activity it is pleasing to report increased profit.

Merchandising Systems

In Merchandising Systems the volume decline experienced at the end of 2001
continued into 2002 but levelled out in the fourth quarter.  Display
Technologies, purchased in June 2001, produced a solid performance, a reflection
of the large added value and innovative nature of its business.  Operational
improvements and overhead reductions were implemented throughout 2002 resulting
in progressive enhancement of margins during the year.  DCI, purchased in August
2002, made an excellent start.  In what is traditionally its strongest period of
trade during the year, it produced sales of £33m and operating profit of £4m
and, encouragingly, a number of major new contracts were won.


Sales:                                       £365m (2001:  £369m)
Operating profit:                            £33.5m (2001: £32.3m)

Continuing good UK demand enabled the Polypipe pipe businesses to produce
another solid performance in both sales and profit.  Operational efficiencies
generally mitigated upward pressure on raw material prices.  Significant
reductions in working capital enhanced the excellent cash generated by this
business.  Elsewhere the small European businesses were affected during the year
by weather and general economic conditions. The leisure business remains
vulnerable to seasonal conditions but significantly reduced its capital
employed.  Polypipe continues to be managed vigorously and its results reflect
the pro-active attitude of its management.

for the year ended 31 December 2002

                                                     Before            isation &                                      
                                             restructuring,        restructuring                                      
                                              goodwill and             & goodwill          Exceptional                
                                               exceptionals          amortisation                items         Total  
                                                       2002                  2002                 2002           2002 
                                 Notes                   £m                    £m                   £m            £m  
                                        -------------------   -------------------   ------------------   ------------ 
  Turnover                          1                                                                                 
  Continuing operations                             1427.0                                                    1427.0  
  Acquisitions                                        36.3                                                      36.3  
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                       1463.3                                                    1463.3  
  Discontinued operations                            148.6                                                     148.6  
                                        -------------------   -------------------   ------------------   ------------ 
  Total turnover                                    1611.9                                                    1611.9  
                                        -------------------   -------------------   ------------------   ------------ 
  Operating profit                  1                                                                                 
                                        -------------------   -------------------   ------------------   ------------ 
  Continuing operations before                                                                                        
  and restructuring                                  141.0                 (17.3)                              123.7  
  Acquisitions                                         5.0                  (0.7)                                4.3  
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                        146.0                 (18.0)                              128.0   
  before rationalisation and                                                                                          
  Rationalisation/restructuring                                            (31.3)                              (31.3) 
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                        146.0                 (49.3)                               96.7  
  Discontinued operations                              2.2                  (0.9)                                1.3  
                                        -------------------   -------------------   ------------------   ------------ 
  Operating profit                                   148.2                 (50.2)                               98.0  
  Profit on disposal of             2                                                             4.0            4.0  
  discontinued operations                                                                                             
  Provision for loss on             2                                                           (30.7)         (30.7) 
  closure of a business                                                                                               
  Profit on disposal of                                                                          19.7           19.7  
                                        -------------------   -------------------   ------------------   ------------ 
  Profit before interest                             148.2                 (50.2)                (7.0)          91.0  
  Net interest payable                               (16.7)                                                    (16.7) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit on ordinary                                 131.5                 (50.2)                (7.0)          74.3  
  activities before taxation                                                                                          
  Tax on profit                     3                (42.1)                 10.3                 14.2          (17.6) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit on ordinary                                  89.4                 (39.9)                 7.2           56.7  
  activities after taxation                                                                                           
  Equity minority interests                           (1.3)                                                     (1.3) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit for the financial                            88.1                 (39.9)                 7.2           55.4  
                                        -------------------   -------------------   ------------------                
  Dividends paid and proposed       4                                                                          (54.6) 
  Transfer to reserves                                                                                           0.8  
  Adjusted earnings per share       5                 25.0p                                                           
  Earnings per share                5                                                                           15.7p 
  Diluted earnings per share        5                                                                           15.7p 
                                                     Before            isation &                                      
                                             restructuring,        restructuring                                      
                                              goodwill and             & goodwill          Exceptional                
                                               exceptionals          amortisation                items          Total 
                                                       2001                  2001                 2001           2001 
                                 Notes                   £m                    £m                   £m            £m  
                                        -------------------   -------------------   ------------------   ------------ 
  Turnover                          1                                                                                 
  Continuing operations                             1419.0                                                    1419.0  
  Acquisitions                                           -                                                         -  
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                       1419.0                                                    1419.0  
  Discontinued operations                            222.7                                                     222.7  
                                        -------------------   -------------------   ------------------   ------------ 
  Total turnover                                    1641.7                                                    1641.7  
                                        -------------------   -------------------   ------------------   ------------ 
  Operating profit                  1                                                                                 
                                        -------------------   -------------------   ------------------   ------------ 
  Continuing operations before                                                                                        
  and restructuring                                  138.8                 (16.4)                              122.4  
  Acquisitions                                           -                     -                                   -  
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                        138.8                 (16.4)                              122.4  
  before rationalisation and                                                                                          
  Rationalisation/restructuring                                            (38.4)                              (38.4) 
                                        -------------------   -------------------   ------------------   ------------ 
  Total continuing operations                        138.8                 (54.8)                               84.0  
  Discontinued operations                             12.6                  (6.2)                                6.4  
                                        -------------------   -------------------   ------------------   ------------ 
  Operating profit                                   151.4                 (61.0)                               90.4  
  Profit on disposal of             2                                                            20.3           20.3  
  discontinued operations                                                                                             
  Provision for loss on             2                                                               -              -  
  closure of a business                                                                                               
  Profit on disposal of                                                                           1.0            1.0  
                                        -------------------   -------------------   ------------------   ------------ 
  Profit before interest                             151.4                 (61.0)                21.3          111.7  
  Net interest payable                               (25.3)                                                    (25.3) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit on ordinary                                 126.1                 (61.0)                21.3           86.4  
  activities before taxation                                                                                          
  Tax on profit                     3                (31.6)                 11.2                 (0.8)         (21.2) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit on ordinary                                  94.5                 (49.8)                20.5           65.2  
  activities after taxation                                                                                           
  Equity minority interests                           (0.7)                                                     (0.7) 
                                        -------------------   -------------------   ------------------   ------------ 
  Profit for the financial                            93.8                 (49.8)                20.5           64.5  
                                        -------------------   -------------------   ------------------                
  Dividends paid and proposed       4                                                                          (54.5) 
  Transfer to reserves                                                                                          10.0  
  Adjusted earnings per share       5                 26.7p                                                           
  Earnings per share                5                                                                           18.3p 
  Diluted earnings per share        5                                                                           18.3p 

at 31 December 2002

                                                                2002                   2001
                                                                  £m                     £m
                                                --------------------   --------------------
Fixed assets                                                                               
Intangible assets                                              302.5                  298.0
Tangible assets                                                313.4                  373.0
                                                --------------------   --------------------
                                                               615.9                  671.0
                                                --------------------   --------------------
Current assets                                                                             
Stocks                                                         262.0                  312.2
Debtors                                                        305.5                  311.1
Investments                                                      8.2                    7.7
Cash and deposits                                               74.3                   58.2
                                                --------------------   --------------------
                                                               650.0                  689.2
amounts falling due within one year                                                        
Borrowings and finance leases                                  (65.1)                (141.5)
Other creditors                                               (380.2)                (330.6)
                                                --------------------   --------------------
Net current assets                                             204.7                  217.1
                                                --------------------   --------------------
Total assets less current liabilities                          820.6                  888.1
amounts falling due after more than one year                                               
Borrowings and finance leases                                 (182.7)                (262.0)
Other creditors                                                (25.9)                 (24.3)
Provisions for liabilities and charges                         (81.0)                (108.5)
                                                --------------------   --------------------
Net Assets                                                     531.0                  493.3
                                                --------------------   --------------------
Capital and reserves                                                                       
Called up share capital                                         88.1                   87.9
Share premium account                                          134.1                  132.4
Revaluation reserve                                              1.0                    1.0
Other reserves                                                   1.6                    1.6
Profit and loss account                                        303.1                  267.8
                                                --------------------   --------------------
Equity shareholders' funds                                     527.9                  490.7
                                                --------------------   --------------------
Minority interest                                                3.1                    2.6
                                                --------------------   --------------------
                                                               531.0                  493.3
                                                --------------------   --------------------

for the year ended 31 December 2002

                                                                                  2002                            2001
                                                                    £m              £m              £m              £m
                                                         -------------   -------------   -------------   -------------
  Reconciliation of operating profit to net cash                                                                      
  inflow from operating activities                                                                                    
    Operating profit                                                              98.0                            90.4
    Depreciation & goodwill amortisation                                          89.3                            87.1
    Stocks decrease                                                               16.8                             1.8
    Debtors (increase)/decrease                                                   (0.6)                           37.7
    Creditors and provisions increase                                             26.8                             3.7
                                                                         -------------                   -------------
    Net cash inflow from operating activities                                    230.3                           220.7
                                                                         -------------                   -------------
  GROUP CASH FLOW STATEMENT                                                                                           

  Net cash inflow from operating activities                                      230.3                           220.7
  Return on investments and servicing of finance                                 (16.7)                          (25.8)
  Taxation                                                                       (13.8)                          (27.0)
  Capital expenditure and financial investment                                   (11.3)                          (60.4)
  Acquisitions and disposals                                                      26.3                             6.5
  Equity dividends paid                                                          (54.5)                          (54.5)
                                                                         -------------                   -------------
  Cash flow before use of liquid resources & financing                           160.3                            59.5
  Management of liquid resources                                                  (3.3)                            2.5
    Issue of ordinary shares                                       1.8                             0.3                
    Decrease in borrowings                                      (141.5)                          (44.2)                
                                                         -------------                   -------------                
                                                                                (139.7)                          (43.9)
                                                                         -------------                   -------------
  Increase in cash in the year                                                    17.3                            18.1
                                                                         -------------                   -------------
  Reconciliation of net cash to movement in net                                                                       
    Increase in cash in the year                                  17.3                            18.1                
    Cash used to repay borrowings                                141.5                            44.2                
    Cash outflow/(inflow) from movement in liquid                                  
    resources                                                      3.3                            (2.5)                 
                                                         -------------                   -------------                
    Change in borrowings resulting from cash flows                               162.1                            59.8
    Currency translation differences                                               9.7                            (2.1)
                                                                         -------------                   -------------
    Movement in net borrowings in the year                                       171.8                            57.7
    Net borrowings at 1 January                                                 (345.3)                         (403.0)
                                                                         -------------                   -------------
    Net borrowings at 31 December                                               (173.5)                         (345.3)
                                                                         -------------                   -------------

for the year ended 31 December 2002

                                                                              2002             2001
                                                                                £m               £m
                                                                    --------------   --------------
Profit for the financial year                                                 55.4             64.5
Dividends                                                                    (54.6)           (54.5)
                                                                    --------------   --------------
                                                                               0.8             10.0
Other recognised gains and losses relating to the financial year               1.2            (1.5)
New ordinary share capital issued                                              1.9              0.3
Previously acquired goodwill taken through the profit and loss                                     
account in arriving at the profit for the financial year                      33.3              5.8
                                                                    --------------   --------------
Net increase in shareholders' funds for the year                              37.2             14.6
Shareholders' funds at 1 January                                             490.7            476.1
                                                                    --------------   --------------
Shareholders' funds at 31 December                                           527.9            490.7


1. Segmental analysis

                                                                                        Operating profit
                                                                                         before goodwill
                                                                                        rationalisation &
                                                     Turnover                             restructuring 
                                               2002             2001                  2002              2001
                                                 £m               £m                    £m                £m
                                       ------------     ------------           ------------     ------------
      BY ACTIVITY                                    
      Fluid Controls                            661              668                   65.2             62.8 
      ------------------------------   ------------     ------------           ------------     ------------
            Severe Service                      148              132                   17.3             13.8 
            Fluid Power                         379              402                   25.3             26.9 
            Indoor Climate                      134              134                   22.6             22.1 
      ------------------------------   ------------     ------------           ------------     ------------
      Retail Dispense                           437              382                   42.3             36.7 
      ------------------------------   ------------     ------------           ------------     ------------
            Beverage Dispense                   312              291                   28.6             26.7 
            Merchandising Systems               125               91                   13.7             10.0 
      ------------------------------   ------------     ------------           ------------     ------------
      Building Products                         365              369                   33.5             32.3 
                                       ------------     ------------           ------------     ------------
                                               1463             1419                  141.0            131.8 
      SSAP24 pension credit (note 6)              -                -                    5.0              7.0 
                                       ------------     ------------           ------------     ------------
      Total continuing operations              1463             1419                  146.0            138.8 
      ------------------------------   ------------     ------------           ------------     ------------
      BY GEOGRAPHICAL ORIGIN                              
      UK                                        436              428                   39.8             36.3 
      Rest of Europe                            470              487                   52.7             50.6 
      The Americas                              501              453                   42.5             41.8 
      Asia/Pacific                               56               51                    6.0              3.1 
                                       ------------     ------------           ------------     ------------
                                               1463             1419                  141.0            131.8 
      SSAP24 pension credit (note 6)              -                -                    5.0              7.0 
                                       ------------     ------------           ------------     ------------
      Total continuing operations              1463             1419                  146.0            138.8 
      ------------------------------   ------------     ------------           ------------     ------------

                                                                                           Net assets
                                                  Operating profit                          goodwill

                                               2002             2001                  2002              2001
                                                 £m               £m                    £m                £m
                                       ------------     ------------           ------------     ------------
      BY ACTIVITY                                    
      Fluid Controls                           46.7             32.9                    221              246 
      ------------------------------   ------------     ------------           ------------     ------------
            Severe Service                     16.8             13.5                     48               29 
            Fluid Power                         9.8              2.0                    154              189 
            Indoor Climate                     20.1             17.4                     19               28 
      ------------------------------   ------------     ------------           ------------     ------------
      Retail Dispense                          26.5             27.2                    109              125 
      ------------------------------   ------------     ------------           ------------     ------------
            Beverage Dispense                  14.4             18.0                     82               99 
            Merchandising Systems              12.1              9.2                     27               26 
      ------------------------------   ------------     ------------           ------------     ------------
      Building Products                        18.5             16.9                    143              179 
                                       ------------     ------------           ------------     ------------
                                               91.7             77.0                    473              550 
      SSAP24 pension credit (note 6)            5.0              7.0                      -                -  
                                       ------------     ------------           ------------     ------------
      Total continuing operations              96.7             84.0                    473              550 
      ------------------------------   ------------     ------------           ------------     ------------
      BY GEOGRAPHICAL ORIGIN                              
      UK                                       20.8             15.7                    159              197 
      Rest of Europe                           40.8             28.8                    171              180 
      The Americas                             24.5             29.7                    129              160 
      Asia/Pacific                              5.6              2.8                     14               13 
                                       ------------     ------------           ------------     ------------
                                               91.7             77.0                    473              550 
      SSAP24 pension credit (note 6)            5.0              7.0                      -                -  
                                       ------------     ------------           ------------     ------------
      Total continuing operations              96.7             84.0                    473              550 
      ------------------------------   ------------     ------------           ------------     ------------


                                                 2002                     2001
                                                   £m                       £m
                               ----------------------   ----------------------
UK                                                393                      384
Germany                                           163                      180
Rest of Europe                                    311                      318
USA                                               438                      387
Asia                                               80                       75
Rest of World                                      78                       75
                               ----------------------   ----------------------
Total continuing operations                      1463                     1419
                               ----------------------   ----------------------


Acquisitions comprise STI acquired in March 2002 (reported within Severe Service
and Europe) and DCI Marketing acquired in July 2002 (reported within
Merchandising Systems and Americas).

Discontinued operations

The amounts shown for discontinued operations comprise the turnover and
operating profits for the Eley shotgun cartridge business sold in January 2002,
the Copper Fittings businesses sold in August 2002 and the Copper Tube business
sold in November 2002, all previously reported within Building Products and UK
and Rest of Europe, together with the ISI Systems business, closure of which was
announced in December 2002.  This business was previously reported within
Fluid Power and Americas and Rest of Europe. Comparatives for 2001
comprise a number of valve businesses sold in June 2001 which were located in
UK, France and US and Marston Cooling (UK) sold in October 2001.

2.                  Exceptional items

Profit on disposal of discontinued operations arises from the disposals of the
Copper Fittings, Copper Tube and Eley shotgun cartridge businesses.  Goodwill of
£8.3m, previously written off to reserves, has been charged in arriving at this
profit. The profit in 2001 relates to disposal of the valve businesses and
Marston Cooling.

Provision for loss on closure of a business relates to the closure of the ISI
Systems business, including a charge of £25m for goodwill previously written off
to reserves.

3.         Taxation

The tax rate on profit before goodwill amortisation and exceptional items is
around 32%, the same as the underlying rate last year. The actual rate in 2001
was 25%, resulting from repatriation of overseas earnings from prior years.

4.         Dividend

The Directors recommend a final dividend of 9.5p per share (2001: 9.5p) payable
on 27 May 2003 to shareholders on the register at close of business on 11 April
2003, which will absorb £33.5m (2001: £33.4m).  Together with the interim
dividend of 6.0p per share paid on 21 October 2002, this makes a total
distribution of 15.5p per share (2001: 15.5p per share).

5.         Earnings per ordinary share

The weighted average number of shares in issue during the year was 351.8m,
352.7m diluted for the effect of outstanding share options (2001: 351.2m, 351.5m
diluted).  Earnings per share have been calculated on earnings of £55.4m (2001:
£64.5m).  The Directors consider that adjusted earnings per share figures, using
earnings as calculated below, give a more meaningful indication of the
underlying performance.

                                                               2002                     2001
                                                                 £m                       £m
                                             ----------------------   ----------------------
Profit for the period                                          55.4                     64.5
Goodwill amortisation                                          18.0                     16.4
Exceptional items (after tax)                                  (7.2)                   (20.5)
Rationalisation/restructuring (after tax)                      21.9                     33.4
                                             ----------------------   ----------------------
Earnings for adjusted EPS                                      88.1                     93.8
                                             ----------------------   ----------------------

6.         Pensions

The latest actuarial valuation of the main UK Pension Fund was carried out as at
31 March 2002. At that date the Funds assets were 106% of the accrued
liabilities giving an actuarial surplus of £51m.

For the year ended 31 December 2002, the Group has continued to account for
pension costs under SSAP24: Pension Costs.  The pension cost charged to the
profit and loss account is calculated by an independent actuary in such a way as
to spread the cost of pensions over the remaining service life of employees in
membership.  The net benefit in 2002 to the profit and loss account from
amortising surpluses less deficits on pension schemes is £5m (2001: £7m).

Adoption of FRS17: Retirement Benefits would have required the inclusion of an
additional net pension liability of £121m, which after tax of £37m would result
in a decrease in net assets of £84m. The impact on the published results of
fully adopting FRS17 in 2002 is as follows:

                           Published   FRS17
                                  £m      £m
Balance Sheet                               
Net assets                       531     447
Shareholder funds                528     444
Gearing                          33%     39%

Profit & Loss Account *                     
Pension cost                     (14)    (18)
SSAP24 credit                      5       -
Finance income                     -      10
Net cost                          (9)     (8)

Profit before interest         148.2   139.2
Finance costs                  (16.7)   (6.7)
                               ------  ------
Profit before tax              131.5   132.5

 *  Before rationalisation, goodwill amortisation and exceptional items.

7.         Exchange Rates

The profit and loss accounts of overseas operations are translated into sterling
at average rates of exchange for the year, balance sheets are translated at year
end rates.  The most significant currencies are the US Dollar and the Euro - the
relevant rates of exchange were:

                                     Average Rates                                              Balance Sheet Rates
                                   2002          2001                                            2002          2001
                              ------------- -------------                                   ------------- -------------
Euro                              1.59          1.61                                            1.53          1.63
US Dollar                         1.51          1.44                                            1.61          1.46

The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2001 or 2002 but is derived
from those accounts.  Statutory accounts for 2001 have been delivered to the
Registrar of Companies, and those for 2002 will be delivered following the
Company's Annual General  Meeting.  The auditor has reported on those accounts,
its reports were unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.

The Company's 2002 Annual Report and Accounts including the notice of the
forthcoming Annual General Meeting will be posted to shareholders on 8 April

                                  -   ends   -

Enquiries to:

Graham Truscott                    Corporate Communications                           Tel:  0121 332 2330

Press release available on the internet at

Issued by:
Ben Padovan                        Weber Shandwick Square Mile                        Tel:  0207 067 0700

                      This information is provided by RNS
            The company news service from the London Stock Exchange