Demand for shares in state-owned enginemaker &lt;Rolls Royce Plc> is expected to be substantial when the
government privatises it at the end of April, Christopher Clark
of the group's bankers Samuel Montagu and Sons Ltd said.
    He told a press conference after the release of an initial
prospectus for the float that the issue would be offered to
U.K. Institutions, company employees and the general public.
    As in previous flotations, clawback arrangements would be
made if public subscriptions exceeded initial allocations.
    He declined to say how the shares would be allocated beyond
saying that a "significant proportion" would go to institutions.
    A decision on what percentage would go to each sector would
be made shortly before the sale price was announced on April
28.
    Minimum subscription would be for 400 shares with payment
in two tranches, again a method broadly in line with previous
privatisations.
    Chairman Sir Francis Tombs denied suggestions that Rolls
was a stock that should be left to the institutions. He noted
that although the aircraft industry was cyclical, Rolls had
several operations -- such as spare parts and military
equipment -- that evened out the swings.
    Rolls' 1986 research and development expenditure in 1986
was 255 mln stg and could be expected in the future to vary
according to changes in turnover.
    He noted that net research and development expenditure was
written off in the year it occurred, a policy that received
"inadequate recognition in one or two of the more extravagant
forecasts of future profits." He made no forecast himself.
    In 1986, Rolls reported that pretax profit rose 48 pct to
120 mln stg on turnover 12 pct higher at 1.8 billion.
 Reuter
