Disposal & Trading Update
Cookson Group PLC
20 January 2003
20 January 2003
SALE OF PRECISION PRODUCTS BUSINESSES FOR $80 MILLION &
Q4 2002 TRADING UPDATE
Sale of Precision Products
Cookson Group plc has completed the sale of its Precision Products businesses
for a total consideration of $80.2 million (£50.0 million). The decision to sell
these businesses was announced in July 2002.
The Precision Products businesses, which were part of Cookson's Precious Metals
division, consisted of two sectors operating primarily in North America: the
manufacture of electrical contacts, contact assemblies and engineered plastic
components; and the manufacture of dental products. These businesses have been
sold in two separate transactions: the first to a company controlled by The
Jordan Company, LP and the second to Sterngold Dental LLC.
The total consideration for the transactions comprised: $3.8 million (£2.4
million) cash in November 2002 for the sale of the dental products businesses;
and, for the sale of the remainder, $72.9 million (£45.4 million) in cash in
January 2003 and a $3.5 million (£2.2 million) subordinated note repayable in
eight years. The cash proceeds, net of expenses, have been used to reduce bank
borrowings.
The tangible net asset value of the divested businesses was £28 million,
excluding goodwill of £23 million previously written off to reserves on original
acquisition. This results in a deficit of £4 million in 2002 for the sale of the
dental products business and a surplus of £2 million in 2003 for the balance. In
the year ended 31 December 2002, the Precision Products businesses had sales of
£69 million (2001: £79 million) and contributed operating profit of £9 million
(2001: £11 million).
Trading Update
Trading performance for the Group for Q4 2002 was in line with indications given
in the Q3 Trading Update issued in November 2002. As a result, operating profit
for the year will be within the range of market expectations. Group sales for Q4
2002 were up on both the preceding quarter and Q4 2001, and operating profit
improved markedly over the same periods. Cash generation was strongly positive
in Q4 and, after taking account of the above disposals, net borrowings on a pro
forma basis at the end of 2002 would have been less than £400 million; this
compares with £750 million at the end of 2001.
Sales for the Electronics division in Q4 2002 improved marginally over those of
both the preceding quarter and Q4 2001, although the electronics industry has
yet to show signs of a meaningful recovery. Cost saving measures did, however,
ensure that the Electronics division continued to operate at a break-even level,
a significant improvement over Q4 2001. Since the Q3 2002 Trading Update,
further initiatives to increase operating efficiency and reduce the division's
cost base have been implemented in the Equipment sector, in certain European
operations and in the division's central service activities. The one-off cash
costs of these initiatives will amount to some £6 million, most of which will be
outlaid in 2003, and cost savings of £8 million per annum are expected to
accrue. In addition, a £13 million write-down of assets associated with these
initiatives will be taken in 2002.
The Precious Metals division - which now consists solely of its Jewellery
Products activities following the sale of the Precision Products businesses -
experienced slower than normal holiday season sales as consumer demand remained
weak in its key US and European markets. Nevertheless, sales and operating
profit for Q4 as a whole improved over the preceding quarter.
For the Ceramics division, sales and operating profits in Q4 improved strongly
over both those of the preceding quarter and Q4 last year. The level of
profitability in the fourth quarter - as measured by return on sales - was the
highest for two years, highlighting the beneficial impact of the significant
restructuring of the division that was carried out over that period. Generally,
global steel production remained at a similar level to that of Q3 2002, other
than for the normal holiday season closures, and the non-steel operations of the
division performed soundly.
The Group's preliminary results for 2002 will be announced on 4 March 2003.
Shareholder/analyst enquiries:
Cookson Group plc Tel: 020 7766 4500
Stephen Howard, Group Chief Executive
Dennis Millard, Group Finance Director
Lisa Williams, Investor Relations Manager
Press enquiries:
Hogarth Partnership Tel: 020 7357 9477
John Olsen
Note: All financial information is unaudited. All financial comparisons are at
constant exchange rates. This announcement contains forward-looking statements
about Cookson. Although the Company believes its expectations are based on
reasonable assumptions, any such statements may be influenced by factors that
could cause actual outcomes and results to be materially different from those
predicted. These forward looking statements are subject to numerous risks and
uncertainties that could cause actual results to differ materially from those in
such statements, certain of which are beyond the control of Cookson.
This information is provided by RNS
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