Write-off of goodwill to cost Blue Circle pounds 44m

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The Independent Online
INTERIM profits at Blue Circle will take a pounds 43.8m hit after a goodwill write-off at the cement and heating group's New World cooker business sold to management, writes Tom Stevenson.

The write-off, which reduces forecast full-year profits to pounds 200m, was viewed with equanimity by analysts, who believe that Keith Orrell-Jones, managing director, is concentrating the business on its core activities.

The disposal of New World marks the final unravelling of Blue Circle's pounds 300m acquisition of Birmid Qualcast in 1988. The Potterton heating company was the attraction and it was always expected that the rest of the business would be sold.

The acquisition included pounds 215m of goodwill because of the brand names involved, a proportion of which has been attributed to the New World business, which its management is acquiring for pounds 5.5m. Last year New World made an operating loss of pounds 2.2m on sales of pounds 39.6m.

Blue Circle said the disposal was part of its strategy of concentrating on the core businesses of heavy building materials and heating.

It is Britain's largest manufacturer of cement and owns heating and bathroom businesses across Europe.

Separately, Cookson, the industrial materials conglomerate, is to make a pounds 50m write-off on small asset disposals - greater than expected, causing the shares to slip 4p to 256p.