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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:1561X
Gaskell PLC
31 March 2004
Gaskell PLC
Preliminary Results
for the year ended 31 December 2003
STATEMENT BY THE CHAIRMAN ALAN CHAMBERLAIN
2003 was a further year of substantial change for the Group. The sale of the
Gaskell Tile Division was completed in February and the Tomkinsons manufacturing
and selling operations closed, culminating in the sale of the Kidderminster site
in March. The completion of these disposals and the elimination of bank debt
enabled management to concentrate on the Group's remaining core businesses and
to define a strategy for the future, details of which are set out below.
This work has been carried out against a background of depressed markets for
many of the areas in which Gaskelloperate, with particular difficulties in the
UK contract sector. The Gaskell Logistics business was also being established at
this time and, after initial teething problems, good quality service is now
being provided to its customers.
Results
Total sales in 2003 were #29.4m (2002 - #55.6m), of which #25.8m related to the
continuing businesses. Turnover from continuing operations is #6.8m higher than
for 2002. This primarily reflects the inclusion of the re-established Gaskell
Wool Rich brand and sales to the housebuilder sector that were part of the
discontinued Tomkinsons operation in the previous year. On a like for like
basis, Group sales are approximately 3% down, with growth in the retail carpet
and underlay business offset bylower UK contract turnover. Gross margins before
exceptional items are over 2% up on 2002 due to better sourcing of product and
improved efficiencies at the Rishton site. Despite further cost reduction
measures taken in 2003, the Group produced an operating loss before exceptional
items of #3.0m (2002 - #2.0m). There was a net exceptional credit of #2.1m in
2003 (2002 - charge of #6.0m), with the profit on disposal of the Tile division
of #5.4m and a profit on disposal of fixed assets of #0.2m partly offset by
operating exceptional charges of #3.5m. Operating exceptional items arose on the
closure of the Tomkinsons operations at the Kidderminster site and the
re-establishment of the Gaskell Wool Rich business in Rishton, together with the
major restructuring announced in December, which is described in more detail
below. Operating losses after operating exceptional items totalled #6.4m (2002 -
#4.7m). The loss before interest was #0.8m (2002 - #8.0m) while net interest
charges were reduced to #0.1m (2002 - #1.0m) due to the repayment of the Group's
entire bank debt in the first quarter. The Group's total pre-tax loss was #0.9m
(2002 - #9.0m) while a taxation charge of #1.0m (2002 - credit of #1.0m) arose
as expected on the income streams generated from the major disposals in the
year. The overall loss per share fell from 32.5p to 7.8p.
Dividends
The prospect of further substantial restructuring costs in 2004, together with
continuing trading losses and pension schemefunding issues, make the payment of
a dividend extremely difficult to justify at the current time. However, it is
the Board's intention to keep the situation under constant review.
Strategy and Restructuring
Throughout 2003 it became increasingly apparent that for the Group to succeed in
the future there needed to be not only a significant reduction in the cost base,
but also a re-sourcing of certain of the Group's products on a more competitive
basis. Unless products can be supplied that are of first class quality and on a
genuinely competitive basis, then the Group can neither prosper in its chosen
market places nor generate any real value for shareholders.
The strategy that the Group has adopted is based on the:-
- continued enhancement of a world class manufacturing capability in
Axminster carpet, based on high speed loom technology.
- further development of the long established underlay business based on the
Group's own manufacturing expertise.
-relocation of manufacturing of the Group's stocked narrow width Axminster
products into Poland.
- sourcing of the Group's tufted and fibre bonded products from low cost,
world class manufacturers in Continental Europe.
- fullintegration of the Group's logistics operations based on a retail
distribution centre at Kidderminster and a contract hub at Clayton Park,
Accrington.
This will enable the Group to adopt a more focused and cost effective management
structure, together with one centralised sales administration, design and
finance function. This rationalisation will involve a reduction in the Group's
current workforce of approximately 20% and generate significant savings. It is
important to stress that no major changes are being made to the market-facing
activities of the Group, with minimal disruption to the sales effort. Indeed,
the establishment of the new supply arrangements will mean enhanced product
ranges and quality and ensure a rapid response to any market led changes in
style and design.
The details of this restructuring were announced on 11 December 2003 and
implementation is now well underway.
Prospects
The early indications in 2004 are that the Group reorganisation isproceeding
according to plan. A number of narrow looms are already operational in Poland
and sources of supply for tufted and fibre bonded products have been fully
secured. Further investments in high speed Axminster loom technology are due to
comeon stream shortly and the whole reorganisation process is due to be
completed by the third quarter.
Finance to accomplish the restructuring has been secured from our bankers and
the Board is confident that the substantial savings anticipated at the outset
will be delivered.
Trading in the early part of the year has started in line with expectations and
the improved product ranges that will come on stream during the first half of
2004 should underpin this performance.
These significant changes cannot be implemented successfully without the
commitment of all our employees. Although 2003 proved to be a difficult year,
the enthusiasm with which the new plans have been accepted and are now being
implemented gives further encouragement for the future.
I thank all employees for their contribution and I hope that their continued
efforts will see us safely through both the implementation of the current
reorganisation and the development of a more robust business for the future.
A J CHAMBERLAIN
Chairman
31 March 2004
Consolidated profit and loss account
for the year ended 31 December 2003
2003 2003 2003 2002
Before Exceptional After After
Exceptional Items Exceptional Exceptional
Items (notes 1&2) ItemsItems
#000 #000 #000 #000
Turnover
Continuing operations 25,778 19,026
Discontinued operations 3,590 36,610
--------- --------- --------- ---------
29,368 - 29,368 55,636
--------- --------- --------- ---------
Cost of sales (19,844) (2,073) (21,917) (40,710)
--------- --------- --------- ---------
Gross profit 9,524 (2,073) 7,451 14,926
Net operating expenses (12,505) (1,380) (13,885)(19,581)
--------- --------- --------- ---------
Operating loss
Continuing operations (3,233) (2,289) (5,522) (2,305)
Discontinued operations 252 (1,164) (912) (2,350)
--------- --------- --------- ---------
(2,981) (3,453) (6,434) (4,655)
--------- --------- --------- ---------
Discontinued operations -
Profit/(loss) on disposal of - 209 209 (2,561)
fixed assets
Profit/(loss) on disposal of - 5,389 5,389 (755)
businesses
--------- --------- --------- ---------
Loss on ordinary activities (2,981) 2,145 (836) (7,971)
before interest
Interest receivable 287 - 287 -
Interest payable (359) - (359) (1,013)
--------- --------- --------- ---------
Loss on ordinary activities (3,053) 2,145 (908) (8,984)
before taxation
Tax on loss on ordinary - (1,000) (1,000) 1,015
activities
--------- --------- --------- ---------
Amount deducted from reserves (3,053) 1,145 (1,908) (7,969)
========= ========= ========= =========
Basic loss per ordinary share (12.5)p 4.7p (7.8)p (32.5)p
Diluted loss per ordinary share (12.5)p 4.7p (7.8)p (32.5)p
Statement of total recognised gains and losses
for the year ended 31 December 2003
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 2003
2003 2002
#000 #000
Reported loss on ordinary activities before taxation (908) (8,984)
Realised surplus on disposal of revalued property 265 341
Difference between the historical cost depreciation charge and the actual 14 88
depreciation charge for the year calculated on the revalued amount
-------- --------
Historical cost loss on ordinary activities before taxation (629) (8,555)
-------- --------
Historical cost loss for the year after taxation and dividends (1,629) (7,540)
-------- --------
Balance sheets
at 31 December 2003
Group Company
2003 2002 2003 2002
#000 #000 #000 #000
Fixed assets
Tangible assets 4,899 13,352 237 773
Investments - - 7,962 11,211
--------- --------- --------- ---------
4,899 13,352 8,199 11,984
========= ========= ========= =========
Current assets
Stocks 4,967 10,941 - -
Debtors (amounts falling due within one 5,823 9,477 5,459 11,678
year)
Cash at bank and in hand 1,584 1,111 5,560 1,015
--------- --------- --------- ---------
12,374 21,529 11,019 12,693
========= ========= ========= =========
Creditors (amounts falling due within 9,072 20,968 8,759 12,346
one year)
--------- --------- --------- ---------
Net current assets 3,302 561 2,260 347
--------- --------- --------- ---------
Total assets less current liabilities 8,201 13,913 10,459 12,331
Creditors (amounts falling due after 195 5,011 - 4,166
more than one year)
--------- --------- --------- ---------
8,006 8,902 10,459 8,165
========= ========= ========= =========
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 838 1,117 - -
Capital redemption reserve fund 175 175 175 175
Profit and loss account 1,137 1,754 4,428 2,134
--------- --------- --------- ---------
Equity shareholders' funds 8,006 8,902 10,459 8,165
========= ========= ========= =========
Cash flow statement
for the year ended 31 December 2003
2003 2002
#000 #000
Net cash (outflow)/inflow from operating activities (7,174) 2,364
Returns on investments and servicing of finance
Interest received 287 -
Interest paid (315) (874)
Interest element of finance leases and hire purchase contracts (44) (129)
------- -------
(72) (1,003)
------- -------
Taxation 29 198
Capital expenditure
Purchases of tangible fixed assets (excluding finance lease and hire (324) (233)
purchase assets)
Sale of tangible fixed assets and assets held for resale 3,326 1,128
-------- ---------
3,002 895
-------- ---------
Business disposals
Receipts from sales of trades, net of costs 16,528 1,496
Loan relating to businesses subject to disposal - (250)
------- -------
16,528 1,246
------- -------
Equity dividends paid - (172)
Financing
Repayment of bank loans (5,930) (850)
Repayment of capital element of finance leases and hire purchase rentals (847) (1,678)
Repayment of loan notes (518) -
Costs of medium term loan - 45
------- -------
(7,295) (2,483)
------- -------
Increase in cash 5,018 1,045
======= =======
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 Costs Administrative 2003 2002
Sales Expenses
#000 #000 #000 #000 #000
Redundancy costs 938 244 236 1,418 673
Other rationalisation 1,135 535 365 2,035 1,999
costs
----- ----- ----- ----- -----
2,073 779 601 3,453 2,672
===== ===== ===== ===== =====
Other rationalisation costs relate primarily to machinery relocation, product
rationalisation and lease termination costs.
2. Non-operating exceptional items
Profit on the disposal of fixed assets of #209,000 was made during the year
(2002 - nil). Provisions for the write down or loss on disposal of fixed assets
totalling #nil have been made in the year (2002 - #2,561,000).
The trade and certain assets and liabilities of Gaskell Non-Wovens Limited,
Gaskell Contracts Limited and Gaskell Logistics Limited (the Gaskell Tile
Division) were sold to Low & Bonar PLC on 21 February 2003 resulting in a profit
of #5,389,000 as set out below.
#000
Proceeds, net of costs (including non-cash items of #121,000) 16,407
Fixed assets 4,479
Stock 6,588
Debtors 3,834
Creditors (4,895)
-------
10,006
Goodwill previously written off against reserves 1,012
-------
Profit on disposal 5,389
=======
Creditors included finance lease and hire purchase liabilities of #334,000.
In 2002 profits and losses of #936,000 and (#1,691,000) were realised on the
disposal of Crucial Trading and Mid-Wales Yarns Limited respectively.
3. Post balance sheet event
In January 2004 the Group sold its surplus long leasehold office property at
Hampton, Middlesex for a cash consideration of #430,000, resulting in a profit
of #238,000.
4. Loss per ordinary share 2003 2002
#000 #000
Loss attributable to parent company shareholders (1,908) (7,969)
Basic loss per ordinary share based on 24,522,079 average ordinary shares (7.8)p (32.5)p
in issue and outstanding (2002 - 24,522,079)
Diluted loss per ordinary share based on 24,522,079 average ordinary shares (7.8)p (32.5)p
in issue and outstanding (2002 - 24,522,079)
The outstanding share options are currently anti-dilutive.
5. Reconciliation and analysis of net debt 2003 2002
#000 #000
a) Reconciliation of net debt:
Increase in cash in the period 5,018 1,045
Decrease in lease financing 1,181 1,678
Repayment of bank loan 5,930 850
Redemption of loan notes 518 -
------- -------
Change in net debt resulting from cash flows 12,647 3,573
New finance leases and hire purchase contracts (80) (63)
Amortisation of bank loan costs -(45)
------- -------
Movement in net debt in the period 12,567 3,465
Net debt at 1January 2003 (12,054) (15,519)
------- -------
Net cash/(debt) at 31 December 2003 513 (12,054)
======= =======
b) Analysis of net debt: 1 January Cash flow Other non-cash 31 December
2003 2003
Cash at bank and in hand 1,111 473 - 1,584
Bank overdraft (4,545) 4,545 - -
-------- ------- -------- -------
(3,434) 5,018 - 1,584
-------- ------- -------- -------
Finance leases and hire purchase contracts (1,679) 847 254 (578)
Loan notes (1,011) 518 - (493)
Bank loan due within 1 year (2,775) 2,775 - -
Bank loan due after 1 year (3,155) 3,155 - -
-------- ------- -------- -------
(12,054) 12,313 254 513
======== ======= ======== =======
6. The preliminary announcement of the results to 31 December 2003
does not constitute the Company's statutory accounts. The statutory
accounts on which the Company's auditors have reported under Section 235 of
the Companies Act 1985, will be mailed to shareholders on 7 April 2004 and
subsequently delivered to the Registrarof Companies. Further copies will
be available from the Company's Registered Office: Clayton Park,
Clayton-le-Moors, Lancashire, BB5 5GT.
7. The abridged accounts for the year ended 31 December 2002 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.
8. The fifty-sixth Annual General Meeting of the Company will be held at The
Dunkenhalgh Hotel, Blackburn Road, Clayton-le-Moors, Accrington on
13 May 2004 at 11.30am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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