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Interim Results 2002

Cookson Group plc. Interim Results 2002. Interim Results 2002 : Summary. H1 2002 £m. H2 2001 £m. H1 2001 £m. Continuing operations - Turnover 903 915 1,097 - Operating profit* 17.6 2.4 54.1 Profit before tax* (11.9) (24.2) 30.9 Free cash flow before dividends 31.5 10.8 62.5

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Interim Results 2002

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  1. Cookson Group plc Interim Results 2002

  2. Interim Results 2002 : Summary H1 2002 £m H2 2001 £m H1 2001 £m Continuing operations - Turnover 903 915 1,097 - Operating profit*17.6 2.4 54.1 Profit before tax* (11.9) (24.2) 30.9 Free cash flowbefore dividends 31.5 10.8 62.5 Net debt - period end 749 750 775 * Before goodwill amortisation and exceptional items

  3. Turnover H1 2002 £m H2 2001 £m H1 2001 £m Continuing operations 903 915 1,097 - Electronics 358 359 497 - Ceramics 345 350 381 - Precious Metals 200 206 219 Discontinued - 29 58 Group 903 944 1,155

  4. Quarterly Turnover 2001 - 2002* £m £m 276 Group Continuing Operations Electronics 600 275 574 250 550 513 225 215 500 470 200 460 455 186 +8% 182 450 +8% 433 176 172 175 400 150 350 125 300 100 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 £m £m 2001 2002 2001 2002 Precious Metals Ceramics 200 120 195 186 113 181 178 180 173 110 +10% 107 164 105 103 160 100 +5% 100 98 140 90 120 100 80 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2001 2002 2001 2002 * At 30/6/02 average exchange rates; extracted from management accounts

  5. Operating Profit* Continuing operations 17.6 2.4 54.1 - Electronics (11.7) (25.2) 10.9 - Ceramics 18.6 13.9 26.6 - Precious Metals 10.7 13.7 16.6 Discontinued - 0.1 2.5 Group 17.6 2.5 56.6 H1 2002 £m H2 2001 £m H1 2001 £m * Before goodwill amortisation and exceptional items

  6. Group - Continuing Operations (£m) 40 Variance vs 35 2001 Q2 £m 2002 Q2 £m 2002 Q1 £m 30 (43) 0 Sales 470 +37 Operatingprofit 19 +20 20 19 19 10 2 1 0 -1 Costsavings Operational leverage Q1 Q2 Q3 Q4 Q1 Q2 -10 2001 2002 Operating Profit* 2001 - 2002 * Before goodwill amortisation and exceptional items, quarterly data based on unaudited management accounts

  7. Other Expenses (£m) 550 535 500 473 472 450 400 0 H1 H2 H1 2001 2002 Trading Results & Expense Reductions(1) Group - Continuing Operations Turnover 903 1,097 (194) Prime margin(2)490 589 (99) - % sales 54.2% 53.7% Other expenses 472 535 63 Operating profit(3)18 54 (36) Fav./ (Unfav) Variance £m H1 2001 £m H1 2002 £m (1) Extracted from unaudited management accounts (2) Turnover minus raw materials (3) Before goodwill amortisation and exceptional items

  8. Trading Results and Operational Gearing For Illustrative Purposes Only H1 2002£m % of sales Turnover 903100 Prime Margin(1)49054 Other Expenses - “Variable(2)” c.20% of 9410 Marginal Contribution 39644% Other expenses - “Fixed(2)” c.80% of 378 Operating Profit(3)18 H1 2002 Electronics 51% Ceramics 65% PreciousMetals 41% (1) Turnover minus raw materials (2) Estimates; applies notionally to +/- 10% of current levels of activity (3) Before goodwill amortisation and exceptional items; group - continuing operations

  9. Profit Before Tax* H1 2002 £m H2 2001 £m H1 2001 £m Operating profit 17.6 2.5 56.6 Interest (29.5) (26.7) (25.7) On borrowings (net) (27.4) (26.2) (25.4) Amortisation of fees, costs (2.1) (0.5) (0.3) Profit / (loss) before tax (11.9) (24.2) 30.9 * Before goodwill amortisation and exceptional items

  10. Exceptional Items H1 2002 £m H2 2001 £m H1 2001 £m Operating - Rationalisation 8.0 23.8 7.4 Non-operating 5.4 54.3 (8.2) (Profit) / loss on business sales 5.7 54.9 4.5 (Profit) / loss on property disposals (2.3) (3.5) (12.7) Other 2.0 2.9 -

  11. Operating Cash Flow Group EBITDA* 50 33 91 Working capital 16 64 5 Capex - gross (13) (40) (29) - sale proceeds 8 13 21 Rationalisation (10) (20) (12) Operating Cash Flow 51 50 76 H1 2002 £m H2 2001 £m H1 2001 £m * Operating profit of subsidiaries before goodwill amortisation and exceptional items + depreciation + associated co. dividends

  12. Net Cash Flow Group Operating Cash Flow 51 50 76 Interest - on borrowings (29) (31) (28) - swap proceeds 10 2 26 Tax - (10) (12) Dividends - (32) (40) Free Cash Flow 32 (21) 22 Investing activities (net) (16) 22 13 Exchange/other (15) 24 (16) Net decrease in debt 1 2519 H1 2002 £m H2 2001 £m H1 2001 £m

  13. Interim Results 2002 : Highlights • Turnover improves Q2 v Q1 • Operating profit improves- H1 2002 v H2 2001 - Q2 v Q1 2002 • Pre-tax profit in Q2 2002 • Significant reduction in operating costs • Operational gearing potential • Positive free cash flow in H1 • Net debt unchanged

  14. Borrowings - 30 June 2002 £m USPP loan notes 380 Convertible bonds 80 £450m syndicatedbank facility - drawings 297 Overdrafts etc. 20 Cash (28) Net debt 749 Maturities: 2005 - 2012 Maturity: 09 / 04 Headroom: £153m Facility maturity: -£50m 04 / 03 -£100m 09 / 03 -£300m 09 / 04 Fully secured

  15. Group Funding Arrangements • Consigned precious metals- normal industry practice- ownership does not pass - leasing costs c. 2-3% pa- at 30/6/02: £273m (at 31/12/01: £233m) - uncommitted, short term • Asset securitisation- limited programme - at 30/6/02: £12m (at 31/12/01: £15m)

  16. Group Funding Arrangements (cont’d) • USPP loan notes- normal terms and conditions- security granted to banks- leverage covenant: 50% (current 46%) • Bank facilities- margins - security- covenants: debt and interest to EBITDA (LTM)- restrictions: dividends, acquisitions, disposals etc.- timing of refinancing of facilities

  17. Rights Issue Pro forma at 30 June 2002 Before After Net Assets Borrowings (net) Gearing Leverage* £575m £749m 130% 46% £853m £471m 55% 36% * Gross borrowings as % (US GAAP shareholders’ funds + gross borrowings)

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