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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gaskell | LSE:GKLL | London | Ordinary Share | GB0004320452 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:3089B
Gaskell PLC
18 September 2002
Issued by Citigate Dewe Rogerson, Birmingham
Date: Wednesday 18 September 2002
Embargoed: 7.00am
Gaskell PLC
Interim Results
for the six months ended 30 June 2002
STATEMENT BY THE CHAIRMAN, ALAN CHAMBERLAIN
The Group incurred operating losses in the first half of the current year in
line with expectations and as anticipated in our 2001 Annual Report. The first
quarter of 2002 was particularly problematic, following a decline in both
contract and retail orders towards the end of the previous year - partly a
reflection of the negative market response to the '9/11 atrocities'. Our
announcement in April 2002 to exit the unprofitable and non-core businesses also
inevitably had a destabilising effect on the Group's activities, specifically in
the residential market. We have, however, made good progress in the sale of the
non-core operations with the disposal of our Crucial Trading business in May and
subsequently, Mid-Wales Yarns Limited in August. Given the level of continuing
losses and significant liabilities in Tomkinsons, the planned exit from the
remainder of that business has proved challenging. Alternative plans which
preserve some value for the business and scale down these liabilities are
currently being pursued. Despite the difficult start to the year, our core
contract carpet tile and contract broadloom carpet businesses remain robust,
based on the solid foundations of innovative products, state of the art
manufacturing equipment and a firm commitment to customer service.
Results
Turnover was 18% down on the first half of last year at #29.7m (2001: #36.3m).
This reduction reflected not only the disappointing start to 2002 referred to
above but also an unusually strong first quarter in the previous year, which was
not sustained across the remainder of 2001. Gross margins fell slightly due to a
combination of lower overall manufacturing activity and some inefficiencies at
the Rishton site following the transfer of Retail Axminster production from
Kidderminster at the end of 2001. The fixed overhead base continued to fall due
to significant cost reduction activities. The operating loss reported for the
period was #2.13m (2001: profit of #0.35m), while interest charges were reduced
slightly to #0.56m (2001: #0.59m). Exceptional items of #0.39m comprised the net
profit on the Crucial Trading disposal completed in the period less the
impairment charges in respect of Mid-Wales Yarns assets in anticipation of its
sale in August, to leave a pre-tax loss of #2.31m (2001: #0.24m).
Cashflow
Despite the disappointing trading performance, the Group generated a positive
net cashflow of #1.29m in the first half of 2002. Operating activities produced
an inflow of #0.47m due entirely to further reductions in working capital. Group
stocks fell by #1.4m in the period. The Crucial Trading disposal generated net
proceeds of #1.55m and corporation tax repayments produced a further #0.33m.
Capital expenditure was #0.17m (2001: #0.62m), following the substantial
investment made in previous periods. The Group's overall gearing level increased
slightly from 92% at the end of 2001 to 94% at 30 June 2002.
Borrowing Facilities
The Group has continued to remain within its existing borrowing facilities with
Barclays Bank Plc throughout the year to date. Although the prevailing losses
have led to further breaches of the covenants attached to its loan facility, the
Bank has waived any such breaches during the period. In light of the
uncertainties regarding the timing and cost of the exit from non-core
activities, overdraft facilities continue to be negotiated on a short-term basis
and are currently in place up to 31 December 2002. Provided Gaskell is able to
realise its current plans and forecasts, and based upon the continuing dialogue
with the Bank, the Board is confident that adequate facilities will be
maintained to meet the Group's funding requirements.
continued...
-2-
Dividends
In light of the Group's cash constraints and in particular, the need to conserve
resources to facilitate the exit from certain non-core activities, the Board has
decided not to pay an interim dividend in 2002. Clearly, once the restructuring
programme has been completed and the Group is refocused on its profitable core
activities, the Board will reconsider its dividend policy.
Board Changes
In July 2002 we announced that Nigel Roberts, Managing Director of the Carpet
Division had stepped down from the Board. Nigel had latterly been responsible
for the non-core retail business and his departure from the Group was a direct
consequence of the decision to focus on our contract business.
Restructuring
On 5 June 2002 we reported the sale of the trade and certain assets of the
Crucial Trading division of Tomkinsons Carpets for a cash consideration of
approximately #1.7m. This was followed by our announcement of the disposal of
Mid-Wales Yarns Limited on 20 August 2002 for a nominal consideration. The
latter business had incurred operating losses of #0.35m in the first half of
2002 and its disposal meant that the future of approximately 100 jobs had been
secured while at the same time avoiding significant potential closure costs for
the Group. Both of these sales represented important steps to achieving the
Board's strategy of refocusing the Group solely on its core area of expertise.
As part of the Board's objective of realising surplus assets to reduce the
Group's high gearing levels, contracts were exchanged recently for the sale of
the Rhoden Mill, Oswaldtwistle site for a cash consideration of #0.5m. The
Hampton office site, with a book value of #0.2m, is currently being marketed
while surplus plant and machinery has been sold for total cash consideration of
#0.4m since the end of the first half.
The Board is now anticipating a broader restructuring, as referred to below.
Prospects
The first half of 2002 was very disappointing, but there is an improvement in
activity levels and profitability for our core business in the third quarter. If
this improvement can be maintained and the exit from the remainder of our
non-core activities can be achieved relatively quickly, the prospects for the
Group should be enhanced considerably. Since becoming Chairman, I have been
impressed with the underlying strength and resilience of our core tile and
contract broadloom businesses. However, the continuing burdens of significant
bank debt and final salary pension liabilities are of concern for a relatively
small public company. Under these circumstances the Board is reviewing its
options for a broader restructuring than originally planned. It is the Board's
intention to provide a longer-term solution which is in the best interests of
its shareholders, as well as the Group's other stakeholders. The overriding
objective, which is dependent upon a successful restructuring, is to achieve a
sustainable business with an appropriate and supportable level of debt.
Shareholders will be kept informed of developments as this review progresses.
Enquiries:
Gerry Wheeler, Chief Executive Alan Cooke, Account Manager
Richard Hopkin, Group Finance Director Katie Dale, Account Executive
Gaskell PLC Citigate Dewe Rogerson
Tel: 01254 724215 Tel: 0121 455 8370
-3-
Gaskell PLC
Interim Results
CONSOLIDATED PROFIT & LOSS ACCOUNT
for the half year ended 30 June 2002
Note Half year ended 30 June 2002
Half year Full year
Continuing Discontinued ended ended
Operations Operations Total 30 June 2001 31 December 2001
#'000 #'000 #'000 #'000 #'000
Turnover 2 27,322 2,416 29,738 36,283 68,890
Operating (loss)/profit 2, 3 (1,986) (149) (2,135) 352 (4,534)
Loss on disposal of fixed assets - - - - (832)
(Loss)/profit on ordinary
activities before exceptional items (1,986) (149) (2,135) 352 (5,366)
Exceptional items 4 - 391 391 - -
(Loss)/profit on ordinary activities
before interest (1,986) 242 (1,744) 352 (5,366)
Interest payable (524) (39) (563) (588) (1,186)
(Loss)/profit on ordinary activities (2,510) 203 (2,307) (236) (6,552)
before taxation
Tax on (loss)/profit on ordinary 5 - - - - 1,401
activities
(Loss)/profit on ordinary activities
after taxation (2,510) 203 (2,307) (236) (5,151)
Dividends - - - (343) (515)
Amount (deducted from)/added to
reserves (2,510) 203 (2,307) (579) (5,666)
Basic and diluted loss per
ordinary share 6 (9.4p) (1.0p) (21.0p)
Dividends per ordinary share - 1.4p 2.1p
Statement of total recognised gains and losses
For the half year ended 30 June 2002
With the exception of loss after taxation there were no recognised gains and
losses in the Group.
-4-
Gaskell PLC
Interim Results
CONSOLIDATED BALANCE SHEET
as at 30 June 2002
Note 30 June 2002 30 June 2001 31 December 2001
#'000 #'000 #'000
Fixed assets
Intangible assets (363) (296) (441)
Tangible assets 18,007 23,345 20,091
17,644 23,049 19,650
Current assets
Stocks 14,180 19,274 16,305
Debtors 9,749 12,159 9,628
Cash at bank and in hand 1,049 1,243 1,702
24,978 32,676 27,635
Creditors (amounts falling due within one year)
Bank loan and overdraft 5,936 6,484 7,881
Obligations under finance leases and
hire purchase contracts 732 699 1,429
Other creditors 13,279 14,742 13,193
19,947 21,925 22,503
Net current assets 5,031 10,751 5,132
Total assets less current liabilities 22,675 33,800 24,782
Creditors (amounts falling due after more than one year)
Bank loan 5,035 5,866 5,035
Obligations under finance leases and hire
purchase contracts 2,065 2,400 1,865
Loan notes 1,011 1,011 1,011
Other creditors - 592 -
8,111 9,869 7,911
Provisions for liabilities and charges - 1,973 -
Net assets 14,564 21,958 16,871
Capital and reserves
Called up share capital 1,226 1,226 1,226
Share premium account 4,630 4,630 4,630
Revaluation reserve 1,546 1,583 1,546
Capital redemption reserve fund 175 175 175
Profit and loss account 6,987 14,344 9,294
Equity shareholders' funds 8 14,564 21,958 16,871
-5-
Gaskell PLC
Interim Results
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 30 June 2002
Note Half year Half year Full year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
#'000 #'000 #'000
Net cash inflow from operating activities 3 475 945 2,503
Returns on investments and servicing of finance
Interest paid (442) (624) (725)
Interest element of finance leases and hire purchase
contracts (54) (13) (212)
(496) (637) (937)
Taxation 326 815 1,105
Capital expenditure
Purchases of tangible fixed assets
(excluding finance lease and hire purchase assets) (165) (615) (640)
Sale of tangible fixed assets and assets held for resale 111 230 14
(54) (385) (626)
Business disposals
Receipt from sale of trade, net of costs 4 1,552 - -
Equity dividends paid - - (686)
Financing
Repayment of capital element of finance leases and hire
purchase rentals (726) (318) (1,046)
New finance lease 215 - -
Repayment of bank loans - (675) (2,125)
Costs of new medium term loan - - 44
Net cash outflow from financing (511) (993) (3,127)
Increase/(decrease) in cash 7 1,292 (255) (1,768)
-6-
Gaskell PLC
Interim Results
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
These interim financial statements, which have been prepared on the
basis of the accounting policies set out in the Group's 2001 statutory
accounts, do not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985 and are neither audited nor
reviewed. The abridged accounts for the year ended 31 December 2001 are
an extract from the accounts for that period on which the auditors gave
an unqualified report and which have been filed with the Registrar of
Companies.
2. Continuing and discontinued operations
In the 2001 Report & Accounts the Board announced its intention to exit
the Group's non-core retail businesses. On 5 June 2002 the Group
announced the sale of the trade and certain assets of the Crucial
Trading division of Tomkinsons Carpets Limited for a cash consideration
of #1.7million and on 20 August 2002 the Group announced the disposal of
its wholly owned subsidiary, Mid-Wales Yarns Limited. Negotiations are
continuing regarding the exit of the remaining retail businesses.
The requirements of Financial Reporting Standard No.3 (FRS3) only permit
those companies disposed of prior to the approval of these financial
statements to be treated as discontinued operations. Accordingly the
results of those businesses for which sales have been agreed and
announced are shown as discontinued operations. The results of
continuing operations can be analysed between those core businesses to
be retained and those non-core businesses to be exited as follows:
Turnover Operating profit/(loss)
Half year Half year Half year Half year
ended ended ended ended
30 June 2002 30 June 2001 30 June 2002 30 June 2001
#'000 #'000 #'000 #'000
Core businesses to be retained 20,474 26,579 321 1,676
Non-core businesses to be exited 6,848 6,968 (1,622) (1,071)
Central costs - - (685) (581)
27,322 33,547 (1,986) 24
3. Reconciliation of operating (loss)/profit to net cash inflow from
operating activities
Half year Half year Full year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
#'000 #'000 #'000
Operating (loss)/profit before exceptional items (2,135) 352 (4,534)
Depreciation/amortisation and loss/(profit) on
sale of assets 1,119 1,584 3,062
Impairment charges - - 2,236
Decrease in stock 1,389 616 3,585
(Increase)/decrease in debtors (333) 1,601 3,115
Increase/(decrease) in creditors 435 (3,208) (4,961)
475 945 2,503
continued...
-7-
4. Exceptional items
On 5 June 2002 the Group announced the sale of the trade and certain
assets of the Crucial Trading division of Tomkinsons Carpets Limited for
a cash consideration of #1.7million, less attributable net assets of
#0.27million and costs of #0.15million resulting in a profit of
#1.28million. As at 30 June 2002 the Group was in final discussions for
the sale of Mid-Wales Yarns Limited and on 20 August announced the
disposal of Mid-Wales Yarns Limited for a nominal consideration. In
accordance with the provisions of Financial Reporting Standard No. 11
"Impairment of fixed assets and goodwill" (FRS 11) the Group has carried
out an impairment review of the assets of Mid-Wales Yarns. As a result
of the review it is considered that impairment charges totalling
#891,000 are required in order to reflect the realisable value of these
assets.
5. Taxation on (loss)/profit on ordinary activities
Taxation on the (loss) / profit on ordinary activities is based on the
estimated effective rate for the year.
6. Loss per ordinary share
Basic loss per ordinary share is calculated by dividing the loss
attributable to shareholders of #2,307,000 (2001: #236,000) by the
weighted average of 24,522,079 (2001: 24,522,079) ordinary shares in
issue during the period. The outstanding share options are currently
non-dilutive.
7. Reconciliation of net debt
Half year Half year Full year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
#'000 #'000 #'000
Increase/(decrease) in cash in the period 1,292 (255) (1,768)
Decrease in lease financing 726 318 1,046
Repayment of bank loan - 675 2,125
Change in net debt resulting from cash flows 2,018 738 1,403
New finance leases and hire purchase contracts (229) (65) (988)
Amortisation of bank loan costs - - (44)
Movement in net debt in the period 1,789 673 371
Net debt brought forward (15,519) (15,890) (15,890)
Net debt carried forward (13,730) (15,217) (15,519)
8. Reconciliation of movement in shareholders' funds
Half year Half year Full year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
#'000 #'000 #'000
Loss for the financial period (2,307) (236) (5,151)
Dividends - (343) (515)
(2,307) (579) (5,666)
Opening shareholders' funds 16,871 22,537 22,537
Closing shareholders' funds 14,564 21,958 16,871
This information is provided by RNS
The company news service from the London Stock Exchange
END
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