Strategy

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A new Strategic Plan was announced in January 2005

The plan, announced following the appointment of Cookson's current Chief Executive, was based on the following principles, which continue to define our strategy:

Focus on higher technology products and exit commodity activities
Invest in production capacity in emerging markets and restructure in maturing markets
Cost and overhead reduction
Disposal of non-core activities and assets

By mid-2007 the main restructuring projects identified in 2005 had been completed

The most cyclical and volatile of the Electronics businesses, Speedline and Laminates, had been sold, as had 12 other non-core commodity type businesses
Operating performance was improving strongly

In October 2007 we announced the £620m acquisition of Foseco plc

Highly complimentary fit with our existing Ceramics division, creating the global leader in the supply of consumable ceramics for the handling of molten metals in the steel production, foundry casting and solar industries
part funded by a £150m equity placement, the acquisition was completed in April 2008 following competition authority approvals
By mid-2009, the integration of Foseco into the Ceramics division had been successfully completed, delivering an estimated £24m of annualised synergies

Response to the 2008/2009 global economic crisis

Through the last quarter of 2008 there was a rapid and significant weakening of all the Group's main end-markets, reflecting the severe global economic crisis. Prompt action was taken to implement substantial cost and debt-reduction measures:

Cost reduction initiatives generated annualised cost savings of over £65

Eight factories permanently closed and three more significantly downsized
Short-time working, salary freeze, expenses clampdown
Overall workforce reduced by almost 20%, including substantial overhead headcount reductions, mainly in US and EU

Cash conservation and debt reduction measures reduce Group net debt by £360m in 2009

Rights issue completed 4 March 2009 - £241m net proceeds used to reduce debt
Focus on reducing working capital in line with reduced activity
Suspended expansion capex, dividends and UK pension 'top-up' payments

Trading remained very challenging in the first half of 2010 but improved markedly through the second half, due to improvement in end-markets and as a result of the successful implementation of the cost-reduction programmes

Cookson is strategically well positioned as the global economy recovers

Group businesses have leading market positions and supplying high-technology consumable products to essential industries
A strong, established local presence exists in all major economic regions
With a much reduced cost base, profitability should continue to recover significantly as revenue improves

Strategic priorities for 2010

Our current focus is on maximising the performance of all our businesses as markets recover. Specific priorities include:

Continued tight control of costs and working capital as activity levels increase
Investment in further production capacity and people in our fastest growing markets such as China and India
Continued R&D investment to expand further our portfolio of higher technology products
Further reduction and de-risking of our post-retirement benefit obligations...