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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:6088C
Gaskell PLC
06 September 2004
GASKELL PLC
6th SEPTEMBER 2004
INTERIM RESULTS FOR THE 6 MONTHS ENDED 2nd JULY 2004
The first half of 2004 was focused primarily on the implementation of the
radical restructuring plans announced in December. I am pleased to report that
the 'Singleco project' has proceeded on schedule and is now substantially
completed. As anticipated, this restructuring has resulted in a significant
reduction in the Group's cost base, as well as the re-sourcing of certain key
products from low cost, high quality manufacturers in Continental Europe. In
addition, there has been further capital investment in the remaining production
facilities in order to provide a sound platform from which to re-build the core
Gaskell business.
Having taken these vital steps to re-engineer the Group's operations following
the Tile Division disposal in 2003, the Board is now considering a number of
strategic options to drive the business forward.
Results
The Group reported an operating loss from continuing operations of #1.58m
(2003-#1.22m), on sales for the first half of #13.6m. Turnover for the
continuing business is slightly ahead of the same period last year due to a
combination of strong UK Contract Carpet and Underlay business. Retail and
export markets have remained difficult but the recent launch of new products in
both areas is aimed at stimulating demand in the second half. Gross margins
have declined slightly in the first half reflecting some disruption to the
business during the Singleco project and the stock reduction programme effected
during the period. Overheads for the continuing business showed a reduction
compared with the first half of 2003, particularly in the area of
administration. Total Group headcount fell by 15% over the six month period.
However, the bulk of the savings arising from the recent restructuring will only
materialise in the second half of 2004. The profit on disposal of fixed assets
arose primarily from the sale of the surplus Hampton office property in January.
The net interest credit of #7,000 (2003-charge of #86,000) benefited from
positive cash balances in the first quarter, aided by continued tight controls
over working capital. The overall loss before taxation was #1.31m, including
pension charges of #0.5m (2003 - profit of #3.12m, after a profit on disposal of
the Tile Division of #5.46m), resulting in a loss per share of 5.3p (2003 -
earnings per share of 8.6p).
Cashflow
The Group incurred a net cash outflow of #2.66m in the period. Operating
activities resulted in an additional cash requirement of #2.52m arising from a
combination of the trading losses and an increase in working capital, due
primarily to cash costs of restructuring totalling #1.1m. Stocks fell by #0.2m
as a result of specific efforts to eliminate slow moving and discontinued lines.
Total capital expenditure accounted for payments from overdraft facilities of
#0.2m and net repayments under leasing and hire purchase arrangements of #0.3m.
The repayment of loan notes totalled a further #0.1m while the disposal of the
Hampton site realised cash proceeds of #0.4m. Total net borrowings at the end
of the period were #2.31m - well within both planned levels and borrowing
facilities - to give an overall gearing level of 34%.
The Group has recently contracted with an Austrian company, Nowotecma, to sell
its surplus fibre bonded carpet manufacturing equipment for a total cash
consideration of #500,000. The book value of these assets is approximately
#160,000. The proceeds, which will be received in the second half of 2004, will
be utilised to meet ongoing working capital requirements of the Group.
Pensions
As noted in our Annual Report issued in March, negotiations have been undertaken
with the trustees of both of our final salary pension schemes with a view to
minimising the financial burden on the Group in the short term. While these
discussions are not yet completed, the Board has made considerable progress and
remains confident that a satisfactory outcome can be achieved. As previously
stated, it is important that a sensible long-term view is taken in order to
avoid damaging consequences for the Group.
Dividends
Although the Board remains committed to re-establishing an appropriate dividend
as soon as possible, continued trading losses and, in particular, the likely
impact of the pension scheme deficits on distributable reserves, are likely to
make this impossible in the near term. Accordingly, no interim dividend will be
paid in 2004 (2003 - Nil).
Prospects
Difficult conditions continue to prevail in certain of the Group's markets,
particularly in the retail sector. However, the Contract business remains
relatively robust and the Board continues to pursue aggressive strategies to
generate organic growth. The recent major re-launch of the Mr Tomkinson brand,
with an exciting new range of tufted carpets to complement the premium Wool Rich
products, is a prime example of this approach. This has been supplemented with
new Axminster products targeted specifically at key segments of the UK Contract
and Export markets. In addition, the introduction of innovative new Underlay
products and point of sale materials has helped to stimulate significant growth
in a traditionally conservative market. It is anticipated that these
initiatives, together with further investment in high speed Axminster loom
technology and partnerships with leading overseas manufacturers, will help to
give Gaskell an advantage over the majority of competitors in its respective
markets. These developments, now aligned with a substantially reduced cost
base, should help to produce more encouraging results over the coming months.
The Board continues to consider the strategic alternatives for the Group,
including potential acquisitions and long term partnerships both within and
outside the UK carpet industry. Shareholders will be kept informed of any
developments in this area.
A J Chamberlain
Chairman
6th September 2004
Consolidated profit & loss account for the half year ended 2nd July 2004
Half year Half year Full year ended
ended ended
2nd July 30th June 31st December
2004 2003 2003
Note #000 #000 #000
Turnover
Continuing operations 13,598 13,465 25,778
Discontinued operations - 3,491 3,590
======= ======= =======
2 13,598 16,956 29,368
Operating loss
Continuing operations (1,576) (1,215) (5,522)
Discontinued operations - (1,221) (912)
--------- -------- --------
2 (1,576) (2,436) (6,434)
Profit on disposal of fixed assets 261 184 209
Profit on disposal of businesses 4 - 5,458 5,389
-------- -------- --------
(Loss)/profit on ordinary activities before (1,315) 3,206 (836)
interest
Interest receivable/(payable) 7 (86) (72)
-------- -------- --------
(Loss)/profit on ordinary activities before (1,308) 3,120 (908)
taxation
Tax on (loss)/profit on ordinary activities 5 - (1,000) (1,000)
-------- -------- --------
(Loss)/profit on ordinary activities after (1,308) 2,120 (1,908)
taxation
Dividends - - -
-------- -------- --------
Amount (deducted from)/transferred to reserves (1,308) 2,120 (1,908)
======= ======= =======
Basic and diluted (loss)/earnings per ordinary 6 (5.3p) 8.6p (7.8)p
share
======= ======= =======
Statement of total recognised gains and losses for the half year ended 2nd July 2004
With the exception of loss after taxation there were no recognised gains and losses in the Group.
Consolidated balance sheet as at 2nd July 2004
2nd July 30th June 31st December
2004 2003 2003
Note #000 #000 #000
Fixed assets
Tangible assets 5,103 5,211 4,899
-------- -------- --------
5,103 5,211 4,899
======= ======= =======
Current assets
Stocks 4,768 5,620 4,967
Debtors 6,530 6,116 5,823
Cash at bank and in hand 406 3,806 1,584
-------- -------- --------
11,704 15,542 12,374
======= ======= =======
Creditors (amounts falling due within one
year)
Bank overdraft 1,483 - -
Obligations under finance leases and hire purchase 362 519 383
contracts
Loan notes 406 - 493
Other creditors 7,398 7,304 8,196
-------- -------- --------
9,649 7,823 9,072
-------- -------- --------
Net current assets 2,055 7,719 3,302
-------- -------- --------
Total assets less current liabilities 7,158 12,930 8,201
-------- -------- --------
Creditors (amounts falling due after more than
one year)
Obligations under finance leases and hire purchase 460 403 195
contracts
Loan notes - 493 -
-------- -------- --------
460 896 195
======= ======= =======
Net assets 6,698 12,034 8,006
======= ======= =======
Capital and reserves
Called up share capital 1,226 1,226 1,226
Share premium account 4,630 4,630 4,630
Revaluation reserve 831 881 838
Capital redemption reserve fund 175 175 175
Profit and loss account (164) 5,122 1,137
-------- -------- --------
Equity shareholders' funds 8 6,698 12,034 8,006
======= ======= =======
Consolidated cash flow statement for the half year ended 2nd July 2004
Half year Half year Full year
ended ended ended
2nd July 2004 30th June 31st December
2003 2003
Note #000 #000 #000
Net cash outflow from operating activities 3 (2,524) (4,747) (7,174)
-------- -------- --------
Returns on investments and servicing of
finance
Interest received/(paid) 20 (159) (28)
Interest element of finance leases and hire purchase (19) (19) (44)
contracts
-------- -------- --------
1 (178) (72)
======= ======= =======
Taxation - 29 29
Capital expenditure
Purchases of tangible fixed assets (excluding finance (224) (56) (324)
lease and hire purchase assets)
Sale of tangible fixed assets and assets held for 433 3,030 3,326
resale
-------- -------- --------
209 2,974 3,002
======= ======= =======
Business disposals
Receipt from sale of trade, net of costs 4 - 16,367 16,528
Financing
Repayment of capital element of finance leases and hire (260) (799) (847)
purchase rentals
New finance lease - 42 -
Repayment of bank loans - (5,930) (5,930)
Repayment of loan notes (87) (518) (518)
-------- -------- --------
(347) (7,205) (7,295)
======= ======= =======
(Decrease)/increase in cash 7 (2,661) 7,240 5,018
======= ======= =======
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 2003 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 31st December 2003 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
The continuing business represents Gaskell PLC, Gaskell Carpets Limited and
Gaskell Textiles Limited and the associated warehousing and distribution
operations. The discontinued operations comprised businesses sold in the
previous year (Bamber Carpets Limited, Gaskell Carpet Tiles Limited and Modulus
Flooring Systems Limited) and the manufacturing and selling operations of
Tomkinsons Carpets Limited which ceased during the previous year.
3. Reconciliation of operating loss to net cash outflow from operating
activities.
Half year Half year Full year
ended ended ended
2nd July 30th June 31st December
2004 2003 2003
#000 #000 #000
Operating loss (1,576) (2,436) (6,434)
Depreciation/amortisation and loss/ 333 468 961
(profit) on sale of assets
Decrease/(Increase) in stock 199 (890) (614)
Increase in debtors (707) (1,055) (1,209)
(Decrease)/Increase in creditors (773) (834) 122
------- ------- -------
(2,524) (4,747) (7,174)
======= ======= =======
4. Profit on disposal of businesses
The profit on disposal of businesses arose on the sale of the trade and certain
assets of the Gaskell Tile Division.
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 #1,308,000 (2003: profit of #2,120,000) by the weighted average
of 24,522,079 (2003: 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
2nd July 2004 30th June 31st December 2003
2003
#000 #000 #000
(Decrease)/Increase in cash in the period (2,661) 7,240 5,018
Decrease in lease financing 260 799 1,181
Repayment of bank loan - 5,930 5,930
Repayment of loan notes 87 518 518
-------- -------- --------
Change in net debt resulting from cash (2,314) 14,487 12,647
flows
New finance leases and hire purchase (504) (42) (80)
contracts
-------- -------- --------
Movement in net debt in the period (2,818) 14,445 12,567
Net cash/ (debt) brought forward 513 (12,054) (12,054)
-------- -------- --------
Net (debt)/cash carried forward (2,305) 2,391 513
======== ======== ========
8. Reconciliation of movement in shareholders' funds
Half year Half year Full year
ended ended ended
2nd July 2004 30th June 31st December 2003
2003
#000 #000 #000
(Loss)/profit for the financial period (1,308) 2,120 (1,908)
Goodwill previously written off against - 1,012 1,012
reserves
-------- -------- --------
(1,308) 3,132 (896)
Opening shareholders' funds 8,006 8,902 8,902
-------- -------- --------
Closing shareholders' funds 6,698 12,034 8,006
========= ========= =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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