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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Worthington Group Plc | LSE:WRN | London | Ordinary Share | GB00B01YQ796 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 87.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:6580B
Worthington Group PLC
30 November 1999
Worthington Group plc
Proposed Disposals, Rights Issue, Reduction of Share Premium Account
and Adoption of New Share Option Schemes
Introduction
Worthington has agreed to sell two businesses for an aggregate cash
consideration of #2,150,000.
A majority stake in Nottingham Braid and whole of the Industrial Threads and
Braids divisions of AJ Worthington (Leek) will be sold to their respective
existing management teams. Of the aggregate cash consideration payable,
#1,950,000 is payable on completion of the relevant sale agreements and
#200,000 is deferred for a period of up to 36 months. Worthington will retain
a 44 per cent. interest in Nottingham Braid.
The Disposals are in addition to the sale of the Group's former Head Office in
Willesden, North-West London, for a consideration of #2,300,000 (announced on
25 October 1999 and which completed last week) and the sale of a small
non-core division of Worthington Manufacturing for a consideration of #130,000
which completed on 5 October 1999.
The Company's report and accounts for the year ended 31 March 1999 referred to
the implementation of an action plan for the financial restructuring of the
Group. The measures announced today are significant steps towards achieving
this plan and a position from which we can take the Group forward through
diversification.
However, the Disposals are in themselves insufficient to bring down borrowings
to a level that will enable the Group to pursue the Board's strategy (as
expanded on below). The Company is therefore also announcing a 5 for 4 Rights
Issue at 10p per New Ordinary Share which will raise approximately #6.2
million, net of expenses.
The Directors and their connected parties, who own in aggregate 20.4 per cent.
of the Company's issued share capital, have irrevocably undertaken to take up
(or procure to be taken up) their full entitlements under the Rights Issue.
In addition, certain institutional investors, who own in aggregate 14.3 per
cent. of the Company's issued share capital, have also irrevocably undertaken
to take up their full entitlements under the Rights Issue. The balance of the
Rights Issue has been underwritten by Collins Stewart. Certain of the
Directors have agreed to sub-underwrite an aggregate of 10,830,000 New
Ordinary Shares in addition to taking up their entitlements.
The Company also announces proposals to adopt New Share Option Schemes and to
apply to court to reduce its share premium account.
The disposal of a majority stake in Nottingham Braid is conditional on
shareholder approval in view of its size and the fact that certain directors
of subsidiaries of Worthington are interested in that disposal. Shareholder
approval is also necessary before Worthington can implement the Rights Issue,
begin the process of reducing the Share Premium Account and adopt the New
Share Option Schemes. A circular is being sent to shareholders today setting
out details of these proposals and providing notice of an EGM at which
approval for these proposals will be sought. The Directors and certain
institutional investors, who own in aggregate 34.7 per cent. of the Company's
existing issued share capital, have irrevocably undertaken to vote in favour
of the proposed resolutions.
The Board also announces today Worthington's interim results for the six
months ended 30 September 1999.
Background to and reasons for the proposals
The Disposals
In the Chairman's statement which accompanied the 1999 Report and Accounts it
was mentioned that there would have to be disposals in order to complete the
Board's de-gearing plan. Businesses within the Group which are suitable for
disposal at the current time have been identified. Management teams from each
of those businesses have agreed to acquire them, subject where necessary, to
shareholder approval. The proceeds of the Disposals will be used to reduce
bank borrowings.
The Rights Issue
The Disposals will raise much needed cash for the Group, but on their own will
not be sufficient to put the Group back on course. The Board therefore
proposes a Rights Issue which will raise #6.2 million (net of expenses). The
proceeds from the Rights Issue will be used to reduce bank borrowings.
Reduction of Share Premium Account
The Company wishes to reduce the Share Premium Account in order to eliminate
the deficit on the profit and loss account of the Company and to assist the
Company in resuming the payment of dividends.
New Share Option Schemes
The Company previously operated the Worthington Group plc Senior Executive
Share Option Scheme, but the ability to grant options under this scheme
expired in August 1999. The Company therefore proposes to adopt the New Share
Option Schemes to enable the Company to spread the benefits of share ownership
to executives and to incentivise them to contribute to the Company's
development.
Current trading and prospects
In the two months since the interim period ended 30 September 1999 trading has
continued satisfactorily, in particular within the Clothing Components and the
Industrial & Home Furnishing divisions. The Board is confident that with the
Disposals and the reduction in cost base, those divisions which remain in the
Group are well positioned to improve their profitability.
Marks & Spencer remains a substantial indirect customer of the Group and sales
to their suppliers to date are in line with expectations. Marks & Spencer
have indicated that they are undertaking a general review of their supplier
arrangements. The Company has received no information which would lead it to
believe that its overall level of business with Marks & Spencer suppliers will
at this stage be adversely affected.
Strategy
The UK textile industry is still experiencing difficult times and the Board
will continue its programme of reducing the cost base within the Group,
eliminating unprofitable areas, reducing working capital commitments and
generally re-engineering the Group to be leaner, more efficient and better
positioned in the current marketplace. The Board is giving particular
attention to improving the Group's profitability and is undertaking a serious
review of the scale and future of some of the Group's operations.
The Board will actively pursue opportunities to widen the Group's activities
into new business areas, outside the textiles sector, with the object of
enhancing shareholder value. The proposals announced today are aimed at
giving the Group the necessary springboard to develop future growth and a good
quality of sustainable earnings.
Information on the Disposals
Nottingham Braid
Nottingham Braid designs and manufactures high quality passementerie and
trimmings for the interior decorating, soft furnishings, blinds and lighting
markets. It trades under the names of Nottingham Braid Company and AJ
Worthington (Leek) and operates from facilities located in Derby and Leek. It
is proposed that the business be sold to Trimmings by Design, a company in
which the existing management team (consisting of David Chapman, Gary Fowler
and Grant Redfern) will hold 56 per cent. of the shares and Worthington will
hold the other 44 per cent. The cash consideration payable to Worthington in
respect of 56 per cent. of Nottingham Braid is #1,750,000, of which #1,600,000
is payable on completion and the remainder will be paid in 24 monthly
instalments of #6,250, commencing 12 months after completion. The net book
value of the assets to be acquired by Trimmings by Design as at 30 September
1999 was #2,254,000 and the profits attributable to these assets amounted to
#349,000 in the year ended 31 March 1999 and #139,000 in the year ended 31
March 1998.
Industrial Threads and Braids
The Industrial Threads and Braids Divisions of AJ Worthington (Leek) are being
sold for a consideration of #400,000 to a newly-formed company owned by Andrew
Bourne, the existing managing director of Industrial Threads and Braids.
#350,000 will be payable in cash on completion and the balance in 12 equal
monthly instalments commencing on 1 April 2000. The net book value of the
assets being acquired as at 30 September 1999 was #684,000 and the profits
(before interest and taxation) attributable to those assets amounted to
#53,759 in the year ended 31 March 1999 and #18,360 in the year ended 31 March
1998. By virtue of its small size, this sale does not require shareholder
approval. Completion is due to take place on 23 December 1999.
Principal terms of the Rights Issue
Subject to fulfilment of the conditions set out below, the Company proposes to
offer, by way of rights to Qualifying Shareholders other than certain Overseas
Shareholders, up to 65,484,621 New Ordinary Shares at 10p per share, payable
in full on acceptance, on the following basis:
5 New Ordinary Shares for every 4 Ordinary Shares
held at the close of business on 16 December 1999. Entitlements to New
Ordinary Shares will be rounded down to the nearest whole number and fractions
of New Ordinary Shares will not be allotted. The New Ordinary Shares will,
when issued fully paid, rank pari passu in all respects with the existing
issued Ordinary Shares.
The Directors and their connected parties, who own in aggregate 10,686,967
Ordinary Shares (representing 20.4 per cent. of the Company's issued share
capital) have irrevocably undertaken to take up in full their entitlements
under the Rights Issue. FP Asset Management, Edinburgh Fund Managers and
Jupiter Asset Management, who own in aggregate 7,469,137 Ordinary Shares
(representing 14.3 per cent. of the Company's issued share capital) have also
irrevocably undertaken to take up in full their entitlements under the Rights
Issue. The balance of 42,789,491 New Ordinary Shares comprised in the Rights
Issue has been underwritten by Collins Stewart.
The Rights Issue is conditional on:
(a) the passing of certain resolutions at the EGM;
(b) the Underwriting Agreement having become unconditional, subject only to
Listing, and not having been terminated prior to Listing;
(c) the Sale Agreements becoming unconditional and being completed in
accordance with their respective terms prior to Listing;
(d) Listing becoming effective not later than 8.00am on 24 December 1999 (or
such later time and/or date as the Company and Collins Stewart may agree,
but in any event not later than 8.00 am on 14 January 2000).
Change of Auditors
The Board is also pleased to announce the appointment, with effect from 29
November 1999, of KPMG Audit Plc as the Group's auditors in place of BDO Stoy
Hayward.
Litigation in respect of accounting errors
A Dispute Resolution Agreement between the Company and Penmarric Plc, a
company owned and controlled by the Company's chairman, Joseph Dwek, has been
entered into in the context of the accounting errors that were uncovered after
Mr Dwek's appointment to the Board, as disclosed in the annual report and
accounts for the year ended 31 March 1999. The effect of this agreement is to
protect the Company from any liability which might arise were Penmarric's
possible claim against the Company to succeed. In the circumstances, the
Company has made no provision in respect of the potential claim by Penmaric
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The close of business
on (unless stated)
Record date for entitlement to New Ordinary Shares 16 December 1999
Latest time for receipt of Forms of Proxy 10.00am on 21 December 1999
Extraordinary General Meeting 10.00am on 23 December 1999
Despatch of Provisional Allotment Letters 23 December 1999
Completion of the Disposals 23 December 1999
Dealings in New Ordinary Shares commence, nil paid 24 December 1999
Latest time for splitting Provisional Allotment Letters,
nil paid 3.00pm on 13 January 2000
Latest time for acceptance and payment in full and 3.00pm on 17 January 2000
registration of renunciation
Dealings in New Ordinary Shares expected to commence, 18 January 2000
fully paid / CREST stock accounts credited
Definitive certificates for New Ordinary Shares despatched by 24 January 2000
If shareholders have any questions on the procedure for acceptance and
payment, they should contact New Issues Department, IRG plc, PO Box 166,
Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TH (telephone 0181 639
2000).
DEFINITIONS
The following definitions apply throughout this announcement unless the
context otherwise requires:
"AJ Worthington (Leek)" AJ Worthington (Leek), a division of Worthington
Manufacturing
"Collins Stewart" Collins Stewart Ltd
"Continuing Group" the Group following completion of the Disposals
"CREST" the relevant system (as defined in the
Uncertificated Securities Regulations 1995) in
respect of which CRESTCo Limited is the Operator (as
defined in those Regulations)
"Directors" or "Board" the directors of Worthington
"Disposals" the proposed disposals of Nottingham Braid and
Industrial Threads and Braids
"EGM" the Extraordinary General Meeting of Worthington to
be held at 10.00am on 23 December 1999
"Industrial Threads and the Industrial Threads and Industrial Braids
Braids" divisions of AJ Worthington (Leek)
"Listing" the admission of New Ordinary Shares, nil paid, to
the Official List, in accordance with the Listing
Rules
"Listing Rules" the rules made by the London Stock Exchange under
section 142 of the Financial Services Act 1986
"London Stock Exchange" London Stock Exchange Limited
"New Ordinary Shares" the new Ordinary Shares to be issued pursuant to the
Rights Issue
"New Share Option Schemes" the Worthington Group plc 1999 Approved Senior
Executive Share Option Scheme and the Worthington
Group plc 1999 Non-Approved Senior Executive Share
Option Scheme
"Nottingham Braid" the divisions of S.Jerome & Sons trading as
Nottingham Braid Company and certain assets of AJ
Worthington (Leek)
"Official List" the Official List of the London Stock Exchange
"Ordinary Shares" ordinary shares of 10p each in Worthington
"Overseas Shareholders" Shareholders who have registered addresses in, or
who are citizens or residents of, countries other
than the United Kingdom
"Provisional Allotment the renounceable provisional letter of allotment in
Letter" respect of New Ordinary Shares proposed to be sent
to Qualifying Shareholders
"Qualifying Shareholders" holders of Ordinary Shares other than certain
Overseas Shareholders on the register of members of
Worthington at the Record Date
"Rights Issue" the proposed issue by way of rights of up to
65,484,621 New Ordinary Shares
"Sale Agreements" The Nottingham Braid Sale Agreements and the
Industrial Threads and Braids Sale Agreement.
"Shareholders" holders of Ordinary Shares
"Share Premium Account" the Company's share premium account
"S Jerome & Sons" S Jerome & Sons Limited, a subsidiary of the Company
"Trimmings by Design" Takeready Limited, the proposed purchaser
of Nottingham Braid, intended to be renamed
Trimmings by Design Limited
"Underwriting Agreement" the conditional agreement dated 30 November 1999
made between Worthington and Collins Stewart
"Worthington Group"or Worthington and its subsidiary undertakings
"the Group"
"Worthington" or Worthington Group plc
"the Company"
INTERIM RESULTS OF WORTHINGTON FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
The task of restructuing the Group has continued with much vigour in the first
half of the year and the benefits will not start to be apparent. The market
has been far from easy, with much turbulence in the retail sector. In the
circumstances, sales of #29.2 million producing trading profits of #1,169,000
and margins of some 4 per cent. averaged over the Group are considered
satisfactory.
From these trading profits must be deducted non-recurring items of #273,000,
which are to be expected given the ongoing rationalisation which is set to
continue until we have completed the streamlining of our operations.
Competitiveness is currently being maintained by cost reduction programmes
with the result that this half year performance was better than the last six
months of the previous year.
The interest charge has the most significant impact on these unaudited interim
results, borrowings are simply too high and must be quickly reduced in order
that the Group can progress plans for its development. The proposed Rights
Issue and disposals announced today will remedy the problem to a large extent.
The full details are contained in the circular which accompanies this
Statement.Further disposals are under consideration with a view to eliminating
all bank borrowings.
Turning now to the individual divisions, Clothing Components had a good period
with sales and profits well above budget. Industrial and Home Furnishings
traded in line with expectations. The results for Yarns and Fabrics were a
disappointment with sales and profits well below budget. Yours Board is
giving particular attention to improving the Group's profitability, and is
undertaking a serious review of the scale and future of some of the Group's
operations.
The Board is generally pleased with the progress to-date and feels that the
time is now right to actively consider a measured diversification into new
areas. Notwithstanding this proposed change of emphasis, some of the
underlying businesses which are retained have a niche in the marketplace and
their profit contributions should sustain a stream of earnings sufficient for
dividends to be resumed once the balance sheet has been repaired.
JC Dwek, C.B.E.
30 November 1999
Consolidated profit and loss account
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
1999 1998 1999
unaudited unaudited audited
(restated
- note 1)
#'000 #'000 #'000
Turnover 39,364 18,649 45,001
------ ------ ------
Trading profit/(loss) 1,169 1,096 (382)
Exceptional and non-recurring items (note 3) (273) - (5,405)
Operating profit/(loss) 896 1,096 (5,687)
Profit on disposal of fixed assets - 4 134
Net interest payable (866) (479) (1,355)
------ ----- ------
Profit/(loss) before tax 30 631 (6,908)
Taxation - (181) (301)
------ ------ ------
Profit/(loss) attributable to shareholders 30 440 (7,209)
Dividends payable - (556) (556)
------ ------ ------
Retained profit/(loss) 30 (116) (7,765)
------ ------ -------
Earnings/(loss) per share 0.1p 1.1p (15.8p)
Consolidated balance sheet
30 September 31 March
1999 1999
unaudited audited
#'000 #'000
Fixed assets 18,777 19,528
Negative goodwill (80) (80)
Investments 27 27
------ ------
18,724 19,475
------ ------
Current assets
Stock 9,802 10,016
Debtors 13,129 12,474
Cash 4 28
------ ------
22,935 22,518
Creditors due in less than one year (29,220) (29,256)
------ ------
Net current liabilities (6,285) (6,738)
------ ------
Total assets less current liabilities 12,439 12,737
Creditors due in more than one year (5,712) (6,040)
------ ------
Net assets 6,727 6,697
------ ------
Capital and reserves
Share capital 5,238 5,238
Share premium 16,219 16,319
Other reserves 152 152
Profit and loss account (14,882) (14,912)
------ ------
6,727 6,697
------ ------
Consolidated cash flow statement
6 months Year
ended ended
30 September 31 March
1999 1999
unaudited audited
#'000 #'000
Net cash (outflow)/inflow from operating activities (90) 1,305
Returns on investments and servicing of finance:
Interest paid (603) (1,185)
Interest element of finance lease rental payments (118) (170)
------ ------
(721) (1,355)
------ ------
Taxation:
UK Corporation tax including advance corporation tax (40) (842)
Capital expenditure and financial investments
Purchase of tangible fixed assets (300) (811)
Sale of tangible fixed assets 260 393
------ ------
(40) (418)
------ ------
Acquisitions and disposals
Purchase of subsidiary undertakings - (554)
Overdrafts acquired with subsidiary - (2,412)
------ -------
- (2,966)
------ -------
Equity dividends (paid) (556) (1,275)
Special dividend paid on acquisitions - (207)
------ ------
Net cash (outflow) before financing (1,447) (5,758)
Financing:
Issue of ordinary share capital - 7
Capital element of finance lease rental payments (615) (662)
Debt due within one year
Increase in short term borrowings - 500
Repayments of short term borrowings (496) (1,200)
Debt due after more than one year
New loan repayable 2006 - 4,620
Repayment of long term borrowings (258) (3,803)
------ -----
(1,369) (538)
------ ------
Decrease in cash (2,816) (6,296)
------ ------
Notes:
1. The unaudited results for the six months ended 30 September 1998 have been
re-stated to take into account the change in accounting treatment of
development costs and the error in the basis of stock valuation as
detailed in the 1998/99 Annual Report & Accounts dated 30 July 1999, as
follows:
Pro-forma Change in Error As
only re- account- in basis restated
stated ing trea- of stock
tment of valua-
developm- tion
ent costs
#'000 #'000 #'000 #'000
Turnover 18,649 - - 18,649
------ ------ ------ ------
Operating profit/(losses) 2,409 (450) (863) 1,096
Profit on disposal of fixed assets 4 - - 4
Net interest payable (479) - - (479)
------ ------ ------ ------
Profit before tax 1,934 (450) (863) 621
Taxation (561) 130 250 (181)
------ ------ ------ ------
Profit attributable to shareholders 1,373 (320) (613) 440
------ ------ ------ ------
(i) The "as previously reported" results for the half year ended 30 September
1998 are the Interim Results published on 7 December 1998.
(ii) In March 1999 the Group reviewed its treatment of development costs which
were previously classified as prepayments and written off against future
revenue streams. All development costs are now written off as incurred.
(iii)A review of the basis of stock valuation attributable to manufactured and
bought-in stock was carried out in 1999 and revealed that in prior
periods inappropriate costs had been absorbed into the carrying value of
stocks. Absorption of direct and indirect costs is now included in the
value of stock only when appropriate
(iv) A tax credit equivalent to 29% has been allocated to the tax charge in
respect of points (ii) and (iii) above
(v) The exceptional items written off as at 31 March 1999 have not been
allocated into the six month period ended 30 September 1998 since they
principally related to items included in the balance sheet as at 31
March 1998 (see note 3 below).
2. The Interim Results and the comparative figures are unaudited and do not
constitute Group accounts as defined in Section 240 of the Companies Act
1985.
The information relating to the year ended 31 March 1999 does not
constitute Group accounts as defined in Section 240 of the Companies Act
1985 and has been extracted from the audited accounts, reported without
qualification, which have been delivered to the Registrar of Companies.
3. The exceptional and non-recurring items consist of the following:
6 months 6 months Year ended
ended ended 31 March
30 Sept 99 30 Sept 98 1999
#'000 #'000 #'000
Non-recurring items
Closure costs of London Head Office (170) - -
Trading loss and loss on disposal of
"Davenport Street" operations (53) - -
Redundancy costs (50) - -
Exceptional items
As per note 6 to the 1998/9 Annual Report
and Accounts - - (5,405)
------- ------ ------
(273) - (5,405)
------- ------ ------
4. Earnings/(loss) per share have been calculated by reference to the average
number of of ordinary shares in issue in the period, amounting to
52,387,697 shares(six months ended 30 September 1998: 41,148,376 shares)
and on profit after taxation of #30,000 (six months ended 30 September
1998: related profits after taxation of #440,000). The diluted earnings
per share for the six months ended 30 September 1999 was 0.1p (six months
ended 30 September 1998: 1.1p).
5. Reconciliation of operating profit to net cash flow from operating
activities:
6 months Year
ended ended
30 Sept 99 31 March 99
Operating profit/(loss) 896 (282)
Depreciation 791 1,512
Decrease/(increase) in stock 214 877
Decrease/(increase) in debtors (655) 267
(Decrease)/increase in creditors (1,336) (1,060)
------ ------
Net cash flow from operating activities (90) 1,305
------ ------
6. Further copies of this statement are available from:
Worthington Group plc, Victoria Works, Shipley, West Yorkshire BD17 7EF.
END
COMQBFBXKFKLFKE
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