Restructuring Programmes at Whatman as Result of Schleicher & Schuell Aquisition
Whatman plc announced that the full review of the integration programme for Whatman and Schleicher & Schuell (S&S) has been completed, following the acquisition of S&S on 1 December 2004. As a consequence, the following exceptional charges will be recorded in the accounts of Whatman for the year ending 31 December 2004:
Facilities rationalisation programmes will result in a net headcount reduction of around 160 taking the headcount of the combined group to around 1000. This will give rise to a one off implementation cost of £11.4 million.
- US operations will centre in Sanford, Maine for manufacturing and Florham Park, New Jersey for global business development and US sales and administrative functions.
- Paper conversion currently performed at both Dassel, Germany and Banbury, UK will be consolidated onto one site. The space vacated will be taken by the expansion of other production lines, as the "centre of manufacturing excellence" programme is rolled out across the Group. A consequence of these moves will be an initial reduction in staff numbers at one or other location, followed by a change of skills mix required to operate the configuration of the new operations.
- The former S&S head office functions will be absorbed into Whatman and streamlined.
- The sales and business development organisations of both companies have areas of overlap. These will be combined and the unified organisations optimised.
A product rationalisation programme to reduce and focus the product range of the combined group from approximately 21,000 to 7,000 products will cost an expected £0.8 million. It is anticipated that this programme will benefit customers and hence there will be little impact on future sales. A further £2.4m charge unrelated to the S&S acquisition will also be booked in 2004. This represents £1.7m for Whatman onerous leaseholds and £0.7m for other Whatman management restructuring.
Together these actions will result in a P&L charge of £14.6m, of which the pre tax cash cost is £13.8m (£1.6m in 2004, £10.6m in 2005 and £1.6m in later years). A further £0.8m is the write-down of S&S inventory with no cash effect.
The £13.8m is higher than the £10m cash charge estimated on announcement of the acquisition due to the inclusion of :
- the consolidation of paper conversion at one site £1.2m
- further provisions for Whatman's onerous leaseholds £1.7m
- other Whatman management restructuring £0.7m
Whatman's (excluding S&S) full year sales are disappointing at around 3% below expectations, but earnings before exceptional charges remain in line with consensus for the year.
Other news from the department business & finance
