SNR Senior Plc

RNS Number:7089K
Senior PLC
17 May 2000

                         Results of strategic review
                                      
Introduction

The  Board of Senior plc announces that it has completed a thorough strategic
review of its businesses and has concluded that the interests of shareholders
are  best  served  by  the  Company continuing on an  independent  basis  and
implementing a restructuring under the stewardship of Graham Menzies, its new
Group Chief Executive.

Following the announcement of a strategic review, Senior sought and  received
a number of preliminary approaches from interested parties, including certain
of  the  former  executive directors of Senior.  These approaches  have  been
fully  explored  by  the  Board and its advisers  and  whilst  one  party,  a
consortium  of  trade  and  financial purchasers,  remains  interested  in  a
transaction with Senior, the Board believes that this interest is unlikely to
lead  in  the  near  future to an offer for Senior.   There  are  no  current
discussions ongoing with this consortium, nor with any other party.  In order
to  remove  the uncertainty that has been surrounding the Company, the  Board
has  decided to implement at this time its plans for an independent  strategy
under its new Group Chief Executive.

Proposed restructuring and cost savings

The  Board  believes  that Senior is well placed to  take  advantage  of  new
opportunities  in its chosen markets to better serve its existing  customers.
Senior  will  focus its resources on its more profitable and cash  generative
Aerospace  and Automotive divisions and dispose of its Specialised Industrial
division.   In  addition, the Company will substantially reduce  central  and
subsidiary  overheads  to  create  leaner  operations  and  give  operational
management increased responsibility and control.

The  increased  organisational  focus will  create  a  more  streamlined  and
accountable  organisational structure.  Following the  restructuring,  Senior
will operate through two divisions, Aerospace and Automotive, which will have
responsibility for 16 subsidiary business units, compared to the  current  34
in   the   Group.    Once  implemented,  the  Directors  believe   that   the
restructuring,  as well as offering considerable management  and  operational
benefits, will also drive further reductions in subsidiary overheads.

The  Board  has  so  far  identified potential annual central  overhead  cost
savings  of  in excess of #5 million within 12 months, at a cash cost  of  #3
million, by more than halving the number of personnel involved in head office
and  central overhead functions worldwide, leaving ongoing head office  costs
of  around #5 million per annum.  The Board is also targeting annual overhead
savings  from Senior's operating subsidiaries of around #6 million.  This  is
in  addition  to annual cost savings in excess of #6 million at Ketema  which
have  already  been  identified and actioned.  Throughout this  restructuring
period,  the  Board expects to maintain annual dividends at  4.88  pence  per
share.

New operational objectives

Senior supplies world class products to demanding blue chip end-manufacturers
in  the  global Automotive and Aerospace industries and already has a  strong
base  from which to build a more focussed business.  Across all areas of  its
operations,   the   Group  will  introduce  programmes  to  further   promote
manufacturing  best practice allowing it to achieve higher quality  standards
and service levels for customers.  To accomplish these objectives, divisional
management  will  continue  to  drive  lean  production  methods   into   all
operations, and will develop systems approaches and product partnerings where
appropriate.  Following the last two years of significant investment, capital
expenditure  will be brought down to below depreciation, although  the  Group
will continue to develop lower cost manufacturing capacity.

Senior  is  now  concentrating on driving organic growth.  In Aerospace,  the
Group  is seeking to increase its European exposure, particularly as a direct
and   indirect  supplier  to  Airbus,  building  on  the  enhanced   European
manufacturing  capability  provided  by  the  acquisition  of  the  Aerospace
Division of Cork Industries.  In Automotive, the Group intends to broaden its
customer  base, in particular to win more business from continental  European
OEMs, capitalising on recent successes with Fiat, PSA and Renault.

Divisional financial information

Senior  has  not historically disclosed financial information on a divisional
basis.   To  enable shareholders to better understand the Group's activities,
the   Board  will  in  future  provide  this  information  in  its   results'
announcements.

In  the  year  to 31 December 1999, the Group reported operating profit  from
continuing  operations of #4.3 million (before interest but after exceptional
costs  and  goodwill  amortisation) on sales of #465.2 million.  Adding  back
goodwill  impairment  and  amortisation of #12.9  million  and  #3.6  million
respectively  and  central  overheads  (including  reorganisation  costs  and
utilisation  of  central provisions) of #10.4 million gives operating  profit
from  continuing  operations  before central  costs  and  goodwill  of  #31.2
million.   Of  this, Aerospace contributed #1.8 million on  sales  of  #137.0
million,  Automotive #26.6 million on sales of #154.4 million and Specialised
Industrial #2.8 million on sales of #173.8 million.

These results, however, included #7.9 million of one-off reorganisation costs
and  accounting  irregularities at Ketema, in addition  to  losses  of  #10.5
million  related to prior years, and do not include a full year  contribution
from  acquisitions.   Management has therefore  estimated,  for  illustrative
purposes only, what the Group's operating profit would have been in the  same
period  excluding these items and assuming a 10% return on sales from  Ketema
(the   Directors'  target  margin  for  this  business)  and  a  full  year's
contribution from the Cork and Pathway acquisitions which took place  in  the
second half of 1999.

On this basis, the Group's operating profit from continuing operations before
head-office costs, goodwill amortisation and interest would have  been  #57.8
million  on sales of #491.6 million of which Aerospace would have contributed
#23.8  million on sales of #166.4 million, Automotive #29.5 million on  sales
of  #155.3 million and Specialised Industrial #4.5 million on sales of #169.9
million.

These  statements  are not intended to be a profit forecast  for  Senior  and
should  not  be  interpreted to mean that future profits of Senior  following
implementation  of  the restructuring would necessarily be  higher  than  the
published profits of Senior.

Management changes

As  part of the reorganisation, two main Board directors, T.B. Garthwaite and
W.L.  Kowal, will be leaving the Company.  A new Group Finance Director  will
be appointed in due course.

Current trading

The  Group  is  now  seeing improved performance across its  three  divisions
which,  if  sustained,  would  represent a  recovery  from  the  difficulties
experienced last year.

Within Automotive, increased demand for passenger cars in the US is currently
giving  rise  to further growth in sales which, together with the  increasing
acceptance  in  Europe of common rail applications for diesel  engines,  will
more  than compensate for the continuing upheavals being experienced  in  the
first  half  by  the  UK  customer base.  However, as  previously  announced,
expected reductions from General Motors' initial launch volumes of AIR  tubes
will  impact  the second half, thus limiting progress in Automotive  for  the
year as a whole.

Aerospace,  boosted  by  acquisitions  in  1999,  is  currently  reporting  a
significant increase in sales.  Despite further softening in both  commercial
and  space  markets, real progress is being achieved, particularly  from  the
acquisition  of  the  Aerospace Division of Cork Industries  last  September.
Actions  taken  to improve controls and lower the cost base  at  Ketema  have
helped  to return the company to a modest profit for the first time in March.
Aerospace  can  be  expected to have a satisfactory first  half.   Previously
announced  programme  wins  within the regional and  businesses  jet  markets
(Bombardier and Embraer) and the start of shipments of ducting to Rolls-Royce
for the Trent 500 programme should underpin its second half performance.

Specialised  Industrial, whilst boosted by 1999 acquisitions,  is  benefiting
from  an underlying, if patchy, recovery in its markets.  Semi-conductor  has
provided  strong growth so far this year and the general industrial scene  in
the US is buoyant.  In contrast, the predicted growth for expansion joints at
Pathway has been much slower than expected.  Although Pathway's order  intake
has  increased sharply, particularly for its domestic market,  this  is  only
just  starting  to  impact profitability.  In Europe, the general  industrial
market  has  also  seen  some recovery.  The German  Air  Systems  operations
completed the reorganisation begun in 1999 and are currently benefiting  from
a  significant  increase in sales.  The balance of the year  should  see  the
general recovery in Specialised Industrial continue.

Commenting on the proposed restructuring, Dr. A.K. Watkins, Chairman, said:

"The  Board  and its advisers have considered various alternatives  over  the
last  five months as part of its strategic review process, including a number
of  approaches  for  the Company.  While one party remains  interested  in  a
transaction with Senior, the Board believes that this interest is unlikely to
lead  in  the  near  future  to an offer for Senior.   We  believe  that  the
restructuring  announced today, to be implemented by Graham Menzies,  is  the
right  independent  strategy for Senior which will  maximise  value  for  our
shareholders."

Graham Menzies, Group Chief Executive, said:

"Senior has many excellent businesses, with a number of talented managers and
a  dedicated  workforce.   The  Group has  a  well  deserved  reputation  for
engineering  and  technical excellence, with strong positions  in  attractive
markets  and a blue chip customer base.  I look forward to working  with  our
employees  to release the value that is inherent in these businesses  to  the
benefit of our shareholders, customers and staff."

Enquiries:

Senior plc        01923 775547
Dr. A.K. Watkins, Chairman
Graham Menzies, Group Chief Executive

Finsbury          020 7251 3801
James Murgatroyd
Morgan Bone


Notes for editors:

Graham  Menzies was appointed Group Chief Executive on 21 March 2000,  having
previously  been Group Chief Executive of Adwest Plc until its sale  to  Dura
Automotive  Systems  in  1999.  Adwest was a tier one  automotive  components
manufacturer with a turnover of #250 million and profits of #21.4 million.

Mr  Menzies  holds  graduate and post-graduate qualifications  in  Mechanical
Engineering and Machine Tool Technology.  He held senior management positions
at  Stone Platt Plc and Fenner Plc before joining Adwest in 1985 where he was
Director  of  the  Automotive  division and Group  Managing  Director  before
becoming  Group  Chief  Executive in 1994.  He is currently  a  non-executive
director of St Ives Plc.

END

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