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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:1479J
Gaskell PLC
25 March 2003
Issued on behalf of Gaskell plc
Date: Tuesday, 25 March 2003
IMMEDIATE RELEASE
Gaskell PLC
Preliminary Results
for the 12 months ended 31 December 2002
2002 2001
#m #m
- Sales 55.6 68.9
- Operating (loss) / profit before exceptional items (2.0) 0.5
- Operating loss after exceptional items (4.7) (4.5)
- Basic loss per ordinary share before exceptional (9.0)p (1.1)p
items
- Basic loss per ordinary share after exceptional (32.5)p (21.0)p
items
- Substantial progress achieved in the restructuring of the Group
culminating in the sale of the Tile Division for up to #18m and the sale of the
Kidderminster property for #3.1m announced in January 2003.
- The proceeds strengthen significantly the financial position of the
Group by eliminating net debt and provide funds and flexibility to invest in
opportunities for growth. The Board is currently evaluating different
strategies to take the Group forward.
- The Disposals allow Gaskell to restructure its cost base, address its
loss-making subsidiary, Tomkinsons, and fund the Group's pension schemes on a
continuing basis.
- During the year the Group also disposed of Crucial Trading for #1.7m,
Mid-Wales Yarns for a nominal amount (but avoiding significant potential closure
costs) and the Rhoden Mill, Oswaldtwistle property for #0.5m.
- Your Board believes that with the activities that remain in the Group,
there are opportunities to develop additional profit streams without significant
capital expenditure.
"With a much stronger balance sheet and no significant debt, the Group has a
much more secure platform from which to move forward. Without the distraction of
severe cash constraints, your Board now has some breathing space but is even
more determined to resolve how shareholder value can be satisfactorily restored
in a reasonable timescale. I look forward to reporting our progress towards
this objective at the time of our Interim Announcement in September."
A J Chamberlain, Chairman
FULL STATEMENT ATTACHED
Enquiries:
Alan Chamberlain, Chairman
Gerry Wheeler, Chief Executive
Richard Hopkin, Group Finance Director Alan Cooke, Account Manager
Gaskell PLC Citigate Dewe Rogerson
Tel: 01254 236222 Tel: 0121 455 8370 / Mobile: 07767 771 533
-2-
Gaskell PLC
Preliminary Results
for the year ended 31 December 2002
STATEMENT BY THE CHAIRMAN, ALAN CHAMBERLAIN
2002 was a most difficult and demanding year for Gaskell. Sales volumes in the first half were over 20% below the
previous year across virtually all the Group's trading activities. This was due in part to the aftermath of the 9/11
tragedy which affected volumes severely in our Contract Tile and Broadloom markets and was further exacerbated by the
lack of competitiveness of the Tomkinsons range in the retail market. The pressure on cash flow intensified
throughout the first half of the year as a result of continuing substantial losses incurred by Tomkinsons and the
lack of cash generation from the normally secure contract markets. This necessitated a major restructuring and
disposal programme which is described in more detail below.
Although there was a significant improvement in performance in the second half of the year, in both sales volumes and
profits in our Contract Tile and Contract Broadloom businesses, the results for 2002 make disappointing reading.
Results
Turnover in 2002 was #55.6m which was a reduction of 19% on 2001. Operating losses before exceptional items were
#2.0m compared to a profit of #0.5m in the previous year. Exceptional costs of #6.0m (2001 - #5.9m) arose from the
various restructuring activities undertaken during the year which are described in more detail below. Operating
losses after operating exceptional items totalled #4.7m (2001 - #4.5m). The loss before interest was #8.0m (2001 -
#5.4m) of which #5.7m was attributable to discontinued activities. Interest charges were reduced by almost #0.2m to
#1.0m. The Group incurred a total pre-tax loss of #9.0m in 2002 (2001 - #6.6m) and the loss per share increased from
21.0p to 32.5p.
Dividends
In light of the continued heavy losses in 2002, no final dividend is proposed to shareholders. However, following the
substantial proceeds recently received from disposals and the completion of the remainder of the restructuring
programme later this year, the Board will be in a position to reconsider its dividend policy. It is the Board's
intention that, when the Group's continuing businesses are performing in line with expectations and cashflows can be
predicted with more certainty, dividend payments will be re-commenced.
Board Changes
In March 2002, Jim Harrison was appointed to the Board as Non-Executive Director following the retirement of Lowry
Maclean and I was appointed Chairman in May in anticipation of the retirement of Ted Andrew four months later. Nigel
Roberts stepped down from the Board in July following the decision to run down the retail carpet business, as did
Gordon Donald who resigned as a Director immediately prior to the announcement of the Tile division disposal in
January 2003. I am satisfied that the combined experience and responsibilities of your current Board is entirely
appropriate for the ongoing requirements of the Group in the short to medium term.
Restructuring
At the start of 2002 the Group embarked on a series of business and asset disposals with a view to achieving
sustainable operations with a more appropriate level of debt. In June 2002 we announced the sale of the trade and
certain assets of the Crucial Trading division of Tomkinsons Carpets Limited for a cash consideration of
approximately #1.7m. In August, we effected the disposal of Mid-Wales Yarns Limited for a nominal consideration,
albeit securing 100 jobs and avoiding significant potential closure costs. In October, we completed the sale of the
surplus Rhoden Mill, Oswaldtwistle site for a cash consideration of #0.5m.
continued...
-3-
By mid 2002 it had become clear that the Group was in a difficult position and, whilst we had continued support from
our bankers, it was apparent that additional facilities would not be forthcoming such that we could deal with the
ever mounting losses being generated at Tomkinsons. Alternative methods of finance were researched but proved not to
be practicable. Furthermore, it became apparent that the Group as a whole was unlikely to be saleable due to two
problems:-
the amount of borrowings and continuing demand for further facilities by the Group;
the underlying liabilities of the two Group final salary pension funds (details of which I comment on later).
It became inevitable therefore that the only solution to the financial problems facing the Group was to consider the
disposal of the Tile Division, particularly when it became apparent that your Board could reasonably expect to
dispose of the Tile business on favourable terms.
This initiative culminated in the signing of an agreement with Low & Bonar PLC on 27 January 2003 to sell the Tile
Division for a price of #18m, with #17m cash received on completion and a further #1m subject to the production of
satisfactory completion accounts. At the same time, we had completed our planning to stem the losses at Tomkinsons by
running down the manufacturing activity such that the large majority of the Kidderminster site could be released for
sale. Consequently, on 27 January 2003 we also signed a contract for the sale of that site to Lescren Holdings
Limited for a price of #3.1m, with #2.2m received in March and the balance to be settled not later than 30 April
2003. Additional consideration will become payable if the property is developed for non-industrial use or disposed of
with such planning permission within a seven year period. Manufacturing operations at Kidderminster ceased in March
2003 following the required period of consultation with the workforce.
As shareholders will be aware, the Group's bank facilities, which were due to expire on 31 December 2002, were
extended until 7 March 2003 to enable these deals to be concluded. Your Board is in no doubt that these recent
disposals were in the best interests of the Company, its shareholders and other stakeholders in the Group.
Pension Schemes
In line with many UK companies, the Gaskell Group has final salary pension schemes which are currently in deficit.
The substantial fall in stock market values over the past two years, together with the effect of the withdrawal of
tax credits for pension funds, has had a dramatic effect on the funding position of most schemes of this type. The
Board is of the opinion that with the exception of a liability estimated at #0.2m which will crystallise as a result
of the disposal of the Tile business, the schemes should be maintained (albeit closed to new members) and funded on
an ongoing basis in accordance with pension regulations. Therefore, these problems should be dealt with in an orderly
manner until such time as the equity markets recover.
Prospects
As to the future strategy of the Group, there now needs to be a period of stability to enable your Board to reassess
the options available to it. Following the disposal of the Tile business, the Group is considerably smaller and your
Board is evaluating different strategies to take the Group forward. The early part of 2003 will generate a loss as
the wind-down arrangements for Tomkinsons are completed. However, the Group is confident that the second half will
benefit from:-
* an expected stronger performance in Gaskell Carpets
* a planned reduction in central costs
* the final elimination of Tomkinsons manufacturing losses
* the establishment of a cost effective warehousing and distribution activity
* the elimination of interest payable to our bankers
continued...
-4-
Your Board believes that with the activities that remain in the Group, there are opportunities to develop additional
profit streams without significant capital expenditure.
The pressure that all employees in the Group have been under over the last twelve months has been considerable. The
Group has been in breach of its banking covenants and many of our normal day to day activities have been curtailed
due to the funding problems of the Group. It is a testimony to the innovation, determination and sheer hard work of
all our employees that the Group has survived at all. The support from its bankers, customers and particularly its
long suffering creditors has been a source of major encouragement when times have been particularly difficult and I
offer to everyone concerned my thanks.
With a much stronger balance sheet and no significant debt, the Group has a much more secure platform from which to
move forward. Without the distraction of severe cash constraints, your Board now has some breathing space but is even
more determined to resolve how shareholder value can be satisfactorily restored in a reasonable timescale. I look
forward to reporting our progress towards this objective at the time of our Interim Announcement in September.
A J CHAMBERLAIN
Chairman
-5-
Gaskell PLC
Preliminary Results
for the year ended 31 December 2002
Consolidated profit and loss account
for the year ended 31 December 2002
2002 2002 2002 2001
Before Exceptional After After
Exceptional Items Exceptional Exceptional
Items (notes 1 & 2) Items Items
#000 #000 #000 #000
Turnover
Continuing operations 19,026 22,034
Discontinued operations 36,610 46,856
55,636 - 55,636 68,890
Cost of sales (39,147) (1,563) (40,710) (51,104)
Gross profit 16,489 (1,563) 14,926 17,786
Net operating expenses (18,472) (1,109) (19,581) (22,320)
Operating loss
Continuing operations (2,054) (251) (2,305) (5,093)
Discontinued operations 71 (2,421) (2,350) 559
(1,983) (2,672) (4,655) (4,534)
Discontinued operations -
Provision for loss on disposal of fixed assets - (2,561) (2,561) (832)
Loss on disposal of businesses - (755) (755) -
Loss on ordinary activities before interest (1,983) (5,988) (7,971) (5,366)
Interest payable (1,013) - (1,013) (1,186)
Loss on ordinary activities before taxation (2,996) (5,988) (8,984) (6,552)
Tax on loss on ordinary activities 779 236 1,015 1,401
Loss for the financial year (2,217) (5,752) (7,969) (5,151)
Dividends - - - (515)
Amount deducted from reserves (2,217) (5,752) (7,969) (5,666)
Basic loss per ordinary share (9.0)p (23.5)p (32.5)p (21.0)p
Diluted loss per ordinary share (9.0)p (23.5)p (32.5)p (21.0)p
-6-
Statement of total recognised gains and losses
for the year ended 31 December 2002
There were no recognised gains or losses in either year other than the loss for each year as shown above.
Note of historical cost profits and losses
for the year ended 31 December 2002
2002 2001
#000 #000
Reported loss on ordinary activities before taxation (8,984) (6,552)
Realised surplus on disposal of revalued property 341 -
Difference between the historical cost depreciation charge and the actual depreciation charge
of the year calculated on the revalued amount 88 37
Historical cost loss on ordinary activities before taxation (8,555) (6,515)
Historical cost loss for the year retained after taxation and dividends (7,540) (5,629)
-7-
Gaskell PLC
Preliminary Results
for the year ended 31 December 2002
Balance sheets
at 31 December 2002
Group Company
2002 2001 2002 2001
#000 #000 #000 #000
Fixed assets
Negative goodwill - (441) - -
Tangible assets 13,352 20,091 773 1,078
Investments - - 11,211 20,235
13,352 19,650 11,984 21,313
Current assets
Stocks 10,941 16,305 - -
Debtors (amounts falling due within one year) 9,477 9,628 11,678 4,676
Cash at bank and in hand 1,111 1,702 1,015 1,571
21,529 27,635 12,693 6,247
Creditors (amounts falling due within one year) 20,968 22,503 12,346 8,593
Net current assets/(liabilities) 561 5,132 347 (2,346)
Total assets less current liabilities 13,913 24,782 12,331 18,967
Creditors (amounts falling due after more than one year) 5,011 7,911 4,166 6,343
Provisions for liabilities and charges - - - 9
8,902 16,871 8,165 12,615
Capital and reserves
Called up share capital 1,226 1,226 1,226 1,226
Share premium account 4,630 4,630 4,630 4,630
Revaluation reserve 1,117 1,546 - -
Capital redemption reserve fund 175 175 175 175
Profit and loss account 1,754 9,294 2,134 6,584
Equity shareholders' funds 8,902 16,871 8,165 12,615
-8-
Gaskell PLC
Preliminary Results
for the year ended 31 December 2002
Cash Flow Statement
for the year ended 31 December 2002
2002 2001
#000 #000
Net cash inflow from operating activities 2,364 2,503
Returns on investments and servicing of finance
Interest paid (874) (725)
Interest element of finance leases and hire purchase contracts (129) (212)
(1,003) (937)
Taxation 198 1,105
Capital expenditure
Purchases of tangible fixed assets (excluding finance lease and hire purchase assets) (233) (640)
Sale of tangible fixed assets and assets held for resale 1,128 14
895 (626)
Business disposals
Receipts from sales of trades, net of costs 1,496 -
Loan relating to businesses subject to disposal (250) -
1,246 -
Equity dividends paid (172) (686)
Financing
Repayment of long term loans (850) (2,125)
Repayment of capital element of finance leases and hire purchase rentals (1,678) (1,046)
Costs of medium term loan 45 44
(2,483) (3,127)
Increase/(Decrease) in cash 1,045 (1,768)
-9-
Notes to the Preliminary Results
1. Operating exceptional items
Following a detailed review of the Group's businesses and its future strategy, the Group decided to further
rationalise certain activities and locations. The exceptional costs associated with this are as follows : -
Cost of Distribution Administrative 2002 2001
Sales Costs Expenses
#000 #000 #000 #000 #000
Redundancy costs 302 - 371 673 1,077
Other rationalisation costs 1,261 292 446 1,999 1,767
Impairment charges - - - - 2,236
1,563 292 817 2,672 5,080
Other rationalisation costs relate primarily to product rationalisation costs, lease termination costs and
professional fees.
During 2001, in accordance with FRS 11 "Impairment of fixed assets and goodwill ", the Group carried out an
impairment review of certain assets, comparing the year end asset values with the present values of the future cash
flows expected to be generated by those assets, using a discount rate of 8%. As a result of the impairment reviews
it was considered that impairment charges totalling #2,236,000 were required in order to reflect the value in use
of these assets. These impairment charges were reviewed at the end of 2002 and no adjustment to the charges already
made was considered necessary.
2. Non-operating exceptional items
Provisions for the write down or loss on disposal of fixed assets totalling #2,561,000 have been made in the year
(2001 - #832,000).
During the year the Group disposed of certain non-core businesses. On 31 May 2002 the Group completed the sale of
the trade and certain assets of the Crucial Trading division of Tomkinsons Carpets Limited for a cash consideration
of #1.7million.On 19 August 2002 the Group completed the disposal of Mid-Wales Yarns Limited for a consideration of
#1.The profit/(loss) on disposal of the businesses comprised:
#'000
Profit on disposal of Crucial Trading 936
Loss on disposal of Mid-Wales Yarns Limited (1,691)
(755)
3. Post balance sheet events
On 21 February 2003, the Group completed the disposal of the trade and certain assets and liabilities of the Tile
Division to Low & Bonar PLC for an initial consideration of #17 million, with a further potential consideration of
#1 million, subject to verification of the net assets at completion. On 7 March 2003, the Group completed the
disposal of its site at Kidderminster to Lescren Holdings Limited for a consideration of #3.1 million, of which
#2.2 million was received immediately, with the remaining #0.9 million receivable on vacant possession of the
entire site.
4. Dividends 2002 2001
#000 #000
Equity:
On ordinary shares-
Interim of Nil per share ( 2001 - 1.4p) - 343
Final of Nil per share ( 2001 - 0.7p) - 172
- 515
continued...
-10-
5. Loss per ordinary share 2002 2001
#000 #000
Loss attributable to parent company shareholders (7,969) (5,151)
Basic loss per ordinary share based on 24,522,079 average (32.5)p (21.0)p
ordinary shares in issue and outstanding (2001 - 24,522,079)
Diluted loss per ordinary share based on 24,522,079 average (32.5)p (21.0)p
ordinary shares in issue and outstanding (2001 - 24,534,690)
The outstanding share options are currently anti-dilutive.
6. Reconciliation and analysis net debt 2002 2001
#000 #000
a) Reconciliation of net debt:
Increase/(decrease) in cash in the period 1,045 (1,768)
Decrease in lease financing 1,678 1,046
Repayment of bank loan 850 2,125
Change in net debt resulting from cash flows 3,573 1,403
New finance leases and hire purchase contracts (63) (988)
Amortisation of bank loan costs (45) (44)
Movement in net debt in the period 3,465 371
Net debt at 1 January 2002 (15,519) (15,890)
Net debt at 31 December 2002 (12,054) (15,519)
b) Analysis of net debt:
1 January Cash Other 31 December
2002 flow non-cash 2002
Cash at bank and in hand 1,702 (591) - 1,111
Bank overdraft (6,181) 1,636 - (4,545)
(4,479) 1,045 - (3,434)
Finance leases and hire purchase contracts (3,294) 1,678 (63) (1,679)
Loan notes (1,011) - - (1,011)
Bank loan due within 1 year (1,700) 850 (1,925) (2,775)
Bank loan due after 1 year (5,035) - 1,880 (3,155)
(15,519) 3,573 (108) (12,054)
As described in note 3. "Post Balance Sheet Events", the Group completed the disposals of its Tile division on 21
February 2003 for a minimum consideration of #17 million, and the property at Kidderminster on 7 March 2003, for
consideration of #3.1 million. The proceeds of the disposals have been applied to eliminate the net debt of the
Group, with all bank loans and overdrafts repaid.
7. This preliminary announcement of the results to 31 December 2002 does not constitute the Company's statutory
accounts. The statutory accounts on which the company's auditors will report under Section 235 of the Companies Act
1985, will be mailed to shareholders on 28 March 2003 and subsequently delivered to the Registrar of Companies.
Further copies will be available from the Company's Registered Office: Clayton Park, Clayton-le-Moors, Lancashire,
BB5 5GT.
8. 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.
9. The fifty-fifth Annual General Meeting of the Company will be held at The Dunkenhalgh Hotel, Blackburn Road,
Clayton-le-Moors, Accrington on 1 May 2003 at 11.30am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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