Tomkins PLC Pre-Close Period Update

    LONDON--April 27, 2001--The board of Tomkins PLC today announces a Group trading update in advance of entering its close period ahead of the preliminary announcement on June 28, 2001 of its full year results for the year ending April 30, 2001.
    At the interim results' announcement in January we indicated that the second half of our financial year to April 30, 2001 was going to prove challenging. Since that time, and as anticipated, there has been further deterioration in a number of the markets in which we operate particularly in Engineered & Construction products and in the automotive original equipment market in North America. We have also seen some weakness in the Automotive aftermarket principally due to further de-stocking.
    The broad spread of our businesses has to some extent mitigated market weaknesses, but the deterioration in trading conditions has inevitably affected the Group's financial performance. We have during the period continued aggressively to take actions to reduce the cost base and improve efficiency although some of these actions have had associated short-term costs.
    Also during the period there has been a settlement of litigation, which was outstanding at the time of the acquisition of the Gates Group in 1996. The settlement has resulted in an award in favor of the Group of $41 million including interest of the order of $5 million. In accordance with the original acquisition agreement this will result in the issue of further preference shares with a nominal value of around $9 million to existing preference shareholders. The balance of some $32 million is required to be recorded as an exceptional credit to income classified as to approximately $27 million operating profit and $5 million interest income. The cash is expected to be received shortly after the year-end.

    Taking into account the above, the results for the current year are expected to be in line with current analysts' expectations. While we anticipate that trading in our new financial year will continue to be challenging, we are not expecting the sharp deterioration which we experienced in some of our markets in the first quarter of this calendar year to continue. It is too early to anticipate the financial effects of the weak economic climate but against this background the board expects, at this stage, an outcome for the new financial year towards the lower end of current expectations. The cost reductions and other actions we are taking in our businesses will provide a sound platform for growth as our markets recover.
    The share buy back program has continued and since January 16, 2001, the date of our announcement of the interim results, we have acquired a further 35.7 million Ordinary shares at an average price of 157.5 pence with 782.5 million Ordinary shares remaining in issue. The share buy back program has been suspended for the close period and will recommence following the announcement of the Group's financial results for the year to April 30, 2001.