Disposal
Cookson Group PLC
03 January 2006
3 January 2006
COOKSON GROUP PLC
SALE OF SPECIALTY COATING SYSTEMS ('SCS') FOR $55.5M
£100M DISPOSALS PROCEEDS TARGET NOW ACHIEVED
Cookson Group plc ('Cookson'), the leading materials science company, announces
that on 31 December 2005 it sold SCS, a business which forms part of the
Assembly Materials sector of Cookson's Electronics division, to Bunker Hill
Capital for US$55.5 million (£32.3 million*). The consideration was satisfied
by way of an immediate cash payment of US$54.0 million (£31.4 million*), with an
additional US$1.5 million (£0.9 million*) to be paid upon closing of the sale of
the SCS China business in early 2006. The consideration will be subject to
completion balance sheet adjustments in respect of working capital and capital
expenditure, which are not expected to be material.
The sale of SCS is part of Cookson's strategy of achieving progressive
debt reduction through, in part, non-core business disposals, and brings the
proceeds from disposals agreed in 2005 up to the £100 million targeted by the
end of 2006.
SCS comprises a group of companies and business assets with its main operations
in the USA, Europe and Asia-Pacific. Its primary business is the service
application of a specialty conformal coating product principally for use in
automotive, electronic and medical applications.
On an International Financial Reporting Standards ('IFRS') basis, for the year
ended 31 December 2004, SCS generated a trading profit** of £4.3 million on
revenue of £19 million. As at 31 December 2004, SCS had gross assets of £18
million and gross liabilities of £2 million. For the six months ended 30 June
2005, SCS generated a trading profit** of £2.1 million on revenue of £9 million.
As at 30 June 2005, SCS had gross assets of £19 million and gross liabilities
of £2 million and employed 285 people.
The net cash proceeds from the sale will strengthen Cookson's balance
sheet and provide greater financial flexibility. Additionally, Cookson will
consider making advanced payments into its UK pension scheme to reduce the
existing deficit.
In January 2005, Cookson announced a target of raising over £100 million from
disposal proceeds by the end of 2006. In the six month period to 30 June 2005,
proceeds from disposals totalled £13 million. Furthermore, on 15 December it
was announced that a conditional agreement had been entered into to sell
Cookson's Laminates business for US$91 million (£53 million*). On completion of
that disposal (expected in February 2006) together with some further property
disposals completed recently and including the proceeds from this transaction,
Cookson will have generated disposal proceeds of over £100 million.
Commenting on the sale of SCS, Nick Salmon, Chief Executive of Cookson Group
plc, said:
'SCS is a good quality business, as reflected in the price achieved.
However, it does not fit strategically with our core electronics business, and
the sale represents further significant progress in terms of our strategy of
progressive debt reduction. Following the recent announcement regarding the
sale of our Laminates business, this deal means we have achieved our strategic
goal of raising £100 million through disposals, a year ahead of schedule.
'Our strategic plan also involves achieving significant improvements in
profitability, and our third quarter trading update in early November
demonstrated that we are making solid progress in this regard as well.'
Shareholder/analyst enquiries:
Nick Salmon, Chief Executive Cookson Group plc
Mike Butterworth, Group Finance Director Tel: + 44 (0)20 7061 6500
Isabel Vilela, Investor Relations Manager
Media enquiries:
John Olsen Hogarth Partnership
Tel: +44 (0)20 7357 9477
Notes:
* translated at an exchange rate of US$1.718/£1
** trading profit consists of profit from operations before central Group and
Divisional cost allocations, rationalisation costs, amortisation and impairment
of intangible assets and profit/(loss) relating to fixed assets
Note to editors:
In January 2005, Cookson announced its strategy which focuses on performance
enhancement, debt reduction and the disposal of non-core activities.
Cookson's objectives include improving profitability, with targeted
return on sales by 2007 of 10% in both the Ceramics and Electronics divisions
and a return on net sales value (i.e. excluding the precious metals content) of
15% for the Precious Metals division. Cookson also plans to reduce total debt
significantly over the next 2-3 years. This will be achieved through a
combination of strong operational cash flow - from improved profitability and
working capital management - and a disposal programme which will raise over £100
million from the sale of a number of non-core activities and assets by the end
of 2006. In addition, Cookson intends to resume a sustainable dividend payment
as soon as possible with dividends funded from free cash flow.
About Cookson Group plc
Cookson Group plc is a leading materials science company which provides
materials, processes and services to customers worldwide. The Group's
operations are formed into three divisions - Ceramics, Electronics and
Precious Metals.
The Ceramics division is the world leader in the supply of advanced flow control
and refractory products and systems to the iron and steel industry and is also a
leading supplier of specialist ceramics products and refractory linings to the
steel, glass, foundry and other industries.
The Electronics division is a leading supplier of materials and services to
fabricators and assemblers of printed circuit boards and semiconductor packaging
and to industrial markets including automotive and construction.
The Precious Metals division is a leading supplier to the jewellery industry of
fabricated precious metals products.
Headquartered in London, Cookson employs some 16,000 people in more than 35
countries and sells its products in over 100 countries.
This information is provided by RNS
The company news service from the London Stock Exchange