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Dennis Millard Group Finance Director

Dennis Millard Group Finance Director. Preliminary Results 2001. Group - Continuing Operations. vs. Growth Reported. 2000. 2001 Actual. Organic. Sales £ 2,012m. -17%. -24%. -77%. Operating Profit* £ 56.5 m. -76%. Return on Sales* 2.8%. 2000 : 10.0%.

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Dennis Millard Group Finance Director

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  1. Dennis Millard Group Finance Director Preliminary Results 2001

  2. Group - Continuing Operations vs GrowthReported 2000 2001 Actual Organic Sales £2,012m -17% -24% -77% Operating Profit* £56.5m -76% Return on Sales* 2.8% 2000 : 10.0% *(Before goodwill amortisation and exceptional items)

  3. Electronics % of Continuing Group Sales vs GrowthReported 2000 2001 Actual 43% Organic Sales £856m -35% -38%

  4. Electronics Quarterly Sales* £ million 350 300 250 200 150 100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2000 2001 *(At constant exchange rates)

  5. vs Growth 2000 2001 Actual Reported Electronics: Sales by Sector Sales £856m -35% -31% PWB Materials & Chemistry £456m -21% Assembly Materials £273m Equipment £127m -58%

  6. Electronics vs GrowthReported 2000 2001 Actual Organic Sales £856m -35% -38% -110% Operating Loss* £14.3m -111% Return on Sales* (1.7)% 2000 : 10.3% *(Before goodwill amortisation and exceptional items)

  7. vs GrowthReported 2000 2001 Actual Organic Ceramics % of Continuing Group Sales 36% Sales £731m -1% -4%

  8. vs Growth 2000 2001 Actual Reported Ceramics: Sales by Sector Sales £731m -1% Iron and Steel £478m -6% Foundry and IP £172m 7% Glass £81m 18%

  9. vs GrowthReported 2000 2001 Actual Organic Ceramics Sales £731m -1% -4% -42% -41% Operating Profit* £40.5m Return on Sales* 5.5% 2000 : 9.3% *(Before goodwill amortisation and exceptional items)

  10. vs GrowthReported 2000 2001 Actual Organic Precious Metals % of Continuing Group Sales 21% Sales £425m +17% -13% *(Before goodwill amortisation and exceptional items)

  11. vs Growth 2000 2001 Actual Reported Precious Metals: Sales by Sector Sales £425m +17% +30% Jewellery Products £346m Precision Products £79m -18%

  12. vs GrowthReported 2000 2001 Actual Organic Precious Metals Sales £425m +17% -13% -26% -18% Operating Profit* £30.3m Return on Sales* 7.1% 2000 : 10.2% *(Before goodwill amortisation and exceptional items)

  13. 2000 2001 5% 6% 13% 14% 11% 11% 20% 26% 51% 43% Geographic Sales Contributions (%) ROW Asia-Pacific UK Continental Europe USA *(Continuing operations)

  14. Geographic Analysis Sales and Operating Profit* Sales Operating Profit (£m) vs 2000 (%) £m vs 2000 (£m) USA UK Continental Europe Asia-Pacific ROW Continuing operations -28% -24% +8% -13% +5% -17% 22 37 11 57 (9) (4) (125) (8) (25) (22) (4) (184) *(Continuing operations; operating profit before goodwill)

  15. Group Operating Profit* £ million 2001 Inc/(Dec) vs 2000 CONTINUING OPERATIONS 57(184)Electronics (14)(149)Ceramics 41(28)Precious Metals 30(7) DISCONTINUED OPERATIONS 2001 Mouldings, Premier Chemicals 2(4) 2000 Telecommunication Products - (6) GROUP 59(194) * (Before goodwill amortisation & exceptional items)

  16. Group Profit Before Tax* £ million 2001 Inc/(Dec) vs 2000 OPERATING PROFIT59(194) Less : Interest (52)3 PROFIT BEFORE TAX 7(191) Lower rates Current avg. c.6% * (Before goodwill amortisation & exceptional items)

  17. Group Profit Before Tax* £ million 120 106 100 92 80 60 40 31 20 (24) 0 -20 H1 H2 H1 H2 2000 2001 * (Before goodwill amortisation & exceptional items)

  18. Group Profit Before & After Tax* £ million 2001 Inc/(Dec) vs 2000 OPERATING PROFIT59(194) - Interest (52)3 PROFIT BEFORE TAX 7(191) - Taxation -51 - Minorities(2)- PROFIT FOR PERIOD 5(140) * (Before goodwill amortisation & exceptional items)

  19. Earnings and Dividends per Share 2001 2000 EARNINGS PER SHARE Headline* Basic 0.7p (14.9)p 20.1p 10.5p 4.5p 4.5p 10.0p 4.5p 5.5p DIVIDEND Interim Final - * (Before goodwill amortisation & exceptional items)

  20. Operating Exceptionals £ million £ million P & L Charge Cash Outflow 2000 2001 2002 (E) 2000 2001 2002 (E) CASH RELATED 2001 Rationalisation & Redundancy Programme Acquisition Integrations - Premier* - Enthone 24 11 17 4 16 13 3 19 6 4 20 15 35 3 20 11 15 21 32 29 NON-CASH 38 31 15 TOTAL * (1999: £12m P & L charge)

  21. Non-Operating Exceptionals - 2001 £ million (59) Loss on Business Disposals* 4 - Profit before goodwill (63) - Goodwill written back 13 Net gain on disposal of fixed assets (46) * (Mouldings; Premier Chemicals; prior period adjustments)

  22. Accounting Standards £ million Surplus/(Deficit) (21) FRS 17 - Pension 50* FRS 19 - Deferred Tax 29 Net increase in Shareholders’ Funds * (Current estimate)

  23. Operating Cash Flow £ million Inflows/(Outflows)2001 Surplus/(Deficit)vs 2000 EBITDA* Capital Expenditure (net) - Capital Expenditure (gross) - Asset Disposals Rationalisation/Other Working Capital 124 (34) (68) 34 (33) 69 (186) 54 23 31 (4) 71 OPERATING CASH FLOW 126 (65) • Lower trading levels • Significant inventoryreduction: £95m * (EBITDA from subcos and dividends from JVs)

  24. Free Cash Flow £ million Inflows/(Outflows)2001 Surplus/(Deficit)vs 2000 OPERATING CASH FLOW Interest - normal - swap proceeds 126 (31) (59) 28 (65) 20 (8) 28 (22) 73 (72) 1 Taxation FREE CASH FLOW - before dividend Dividends (2000 Final and 2001 Interim) NET FREE CASH FLOW 12 (33) (2) (35)

  25. Net Cash Flow - 2001 £ million2001 • FREE CASH FLOW – NET • Disposals • Mouldings • Premier Chemicals / Others • Acquisitions (incl. prior period costs) 1 60 35 25 (25) NET CASH INFLOW 36

  26. Borrowings and Ratios 31 December2001 31 December2000 NET DEBT£750m £794m - Gross borrowings - Cash RATIOS EBITDA: Interest 2.3 times 5.7 times Net Borrowings: EBITDA 6.1 times 2.5 times Leverage 47% 46% 773 (23) 834 (40)

  27. Gross Borrowings & Facilities 31 December 2001 £969m £196m Unutilised Other & uncommitted £773m Syndicated bank facility Convertible USPP notes Facilities Gross Borrowings

  28. Average:5.0 years Committed Borrowing Facilities 31 December 2001 £ million 600 500 400 380 373 300 200 150 100 17 Nil 0 0 - 1 Year 1 - 2 Years 2 - 3 Years 3 - 5 Years >5 Years

  29. Free Cash Flow - 7 Year History £ million 1,000 347 927 580 431 149 0 Net Operating Cash Flow Tax and Interest FreeCash Flow before Dividends Dividends Net FreeCash Flow after Dividends

  30. 1995 1996 1997 1998 1999 2000 2001 Free Cash Flow - 7 Year History £ million 120 100 Avg. £83m 80 60 40 20 0 Before Dividend After Dividend

  31. Summary Group sales & profits fall sharply - Electronics: all sectors - Ceramics: Iron & Steel - US activities Strong cash flow - Despite sharp fall in profits - Significant working capital inflows - Positive net free cash flow for 7th year in succession - Free cash flow before dividends of £73m Dividend - Final 2001 passed - No current intention to pay 2002 interim Borrowing facilities in place

  32. Stephen Howard Group Chief Executive Preliminary Results 2001

  33. Agenda Summary of 2001, and Cookson's response Recent investment - what it has delivered Cookson today 2002 outlook & current trading 2002 priorities

  34. Summary of 2001 Unique confluence of negative factors • Unprecedented downturn in global Electronics market • Harsh conditions in steel industry, in US andUK in particular • Precious Metals trading challenging; key Christmas period impacted by after-effects of 11 September • Stark short term impact on profitability

  35. Cookson's Response Managing in a downturn • Swift & decisive action to reduce costs and lowerbreak-even points • Intense focus on conserving and generating cash: - Capex minimised - Tight working capital management - Business, asset and property disposals • Opportunities seized to strengthen businesses • Bank facilities renegotiated

  36. Cookson’s Response Reducing costs and lowering break-even points • Total reduction of 3,700 people • Represents 18% of workforce • 20 plants closed / mothballed • Total annualised cost reduction: £90m • Benefit in 2001: circa £40m • One-time cash cost in 2001: £35m

  37. Cookson’s Response Opportunities seized to strengthen businesses • Continued focus on future growth engines: - Increased Electronics capacity in Asia-Pacific - Increased capacity in emerging steel markets - Building our capabilities in semiconductor packaging - Investment in early stage technologies in all three divisions • R & D spend maintained in 2001 • Retaining focus on customer service and onincreasing share of customer's business • Leverage market and technology leadership positions

  38. Agenda Summary of 2001, and Cookson's response Recent investment - what it has delivered Cookson today 2002 outlook & current trading 2002 priorities

  39. Recent Investment What it has delivered Geog. profile enhanced Product / serviceline extension Cost efficienciesachieved Enthone OMI Premier ACHEM Plaskon Engelhard CLAL Ongoing capex

  40. PWB Assembly: PWB Fabrication: Alpha Enthone Speedline Polyclad Enthone Cookson Electronics Semi-wafer fab / Copper Semiconductor packaging Enthone Plaskon Alpha Enthone Enthone Benefits

  41. Electronics: Geographic shift to Asia Pacific • Enthone & ACHEM have delivered excellent capacity platform in Asia-Pacific and China • Shift is driven by customer demand - Viasystems closing US capacity and opening in China - AT&S, Flextronics / Multek, Sanmina, Ruwel all expanding capacity in Asia-Pacific • Laminates already being shipped from ACHEMfacilities to satisfy US demand

  42. Premier Benefits • Ability to offer complete packages and expanded technologies in all three areas: Steel, Glass and Foundry • Economies of scale and synergistic savings • Stronger position in USA, Continental Europe and UK

  43. Ceramics: Geographic Shift to Emerging Markets • Capacity in place in Central & Eastern Europe,China, India and South America • Shift to continuous cast inthese regions far from complete: - Czech - Poland - China - India - Russia

  44. Agenda Summary of 2001, and Cookson's response Recent investment - what it has delivered Cookson today 2002 outlook & current trading 2002 priorities

  45. Cookson Today: Electronics • A horizontally integrated, global andtechnological leader • Enthone has strengthened the businessbeyond Chemistry • Competitive position strengthened during downturn; benefiting from instability amongst weaker players • Structured to benefit from Asia-Pacific growth:"The Future“ • Electronics remains strong growth industry

  46. The Alliance • Alliance between Cookson Electronics Speedlineand Assembléon (Philips) • Merges Assembléon’s pick-and-place expertisewith Cookson’s strength in equipment, systemsand processes • Launched at Productronica and Apex trade shows • Delivers complete assembly line solutions,including proprietary software

  47. Cookson Today: Ceramics • Unique positioning: The stable long termrefractories partner • Benefiting from instability amongst weaker players • Competitive positioning enhanced by Premier acquisition: both product / service offering and cost • Capacity in place to exploit Steel industry’s shiftto emerging market production • Focused on the growth technologies ofthe present and future

  48. Cookson Today: Precious Metals • Strong profitable business in Jewellery Products • Significant benefits of recent European restructuring • Solid niche player in Precision Products • Strong cash generative characteristic remains

  49. Agenda Summary of 2001, and Cookson's response Recent investment - what it has delivered Cookson today 2002 outlook & current trading 2002 priorities

  50. Current Trading: Q1 2002 15th January 2002 “Trading conditions in Cookson’s major marketsgenerally appeared to stabilise in the fourth quarter” • Recent weekly Electronics activity in linewith 2001 Q4 • US steel production currently ahead of 2001 Q4 • Precious Metals in line with seasonaland industry trends

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