RNS Number:1023U
Gaskell PLC
5 April 2002
The issuer has advised that the following amendment should be made to the
Gaskell PLC 'Final Results' announcement released at 11:42 today under RNS No
0907U.
The Register Date for the final dividend should read 7th June 2002 and not 1st
June 2002 as originally shown.
All other details remain unchanged and the full amended text is shown below.
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Friday, 5 April 2002 IMMEDIATE RELEASE
Gaskell PLC
Preliminary Results
for the year ended 31 December 2001
STATEMENT BY THE CHAIRMAN, E D ANDREW
During 2001, the Group faced its most challenging market conditions for over a
decade. An already difficult carpet retail market was compounded by unforeseen
problems in the UK contract sector as a result of both 'foot and mouth' disease
and the 'September 11' atrocities. These problems have led, in the last few
months, to closures of UK carpet and carpet yarn manufacturers on an
unprecedented scale.
Gaskell too has experienced significant difficulties over the past year.
However, the appointment of Gerry Wheeler as Chief Executive in September 2000,
the subsequent re-organisation of the Group from 1 January 2001 and the
strengthening of the management team better places Gaskell to overcome these
various challenges. It has become evident that, while our core contract carpet
tile and contract broadloom businesses remain relatively strong, the retail and
non-wovens operations have detracted significantly from the Group's overall
performance. The result for 2001 is a clear reflection of this, with the Group
reporting the first pre-tax loss in its history, despite profitable core
contract businesses.
Restructuring
The Board took significant measures during 2001 to reduce the cost base and
restrict the losses in the unprofitable parts of the Group. As noted in our
Interim Statement some restructuring has already been undertaken involving a
reduction in headcount of approximately 150, representing almost 15% of the
Group workforce, during the past twelve months. However, in view of the
continuing losses in certain of the Group's businesses and the uncertain market
outlook, particularly in the residential sector, the Board has decided to exit,
as soon as practically possible, its unprofitable and non-core businesses. In
particular, the Group's retail businesses are being actively marketed with a
view to sale. Although these steps may in due course lead to further balance
sheet write-offs, they will ultimately eliminate the Group's current loss-making
operations and help to return it to profitability and positive cash flow. More
importantly, the Group will revert to its areas of core competence of contract
carpet tiles and contract broadloom carpets where Gaskell has traditionally
reported consistent earnings growth. These businesses contributed total
operating profits before exceptional items of more than £4m in 2001 and, with
continued investment in new products and state of the art equipment, should be
capable of providing satisfactory returns to shareholders. Given the Group's
cash constraints, the extent to which the refocusing on these divisions can be
progressed will depend upon the speed with which the loss making activities can
be exited.
Results
The Group's turnover fell by 9% to £68.9m in 2001, although £3.1m (4%) of this
reduction was attributable to the withdrawal from the lightweight non-wovens
business towards the end of the previous year. Sales of carpet tile to the
office sector continued their recent growth benefiting from the division's
enhanced product range and its strong reputation with major end users. In
contrast, turnover of broadloom carpets and underlays fell slightly due
primarily to the difficult conditions in the retail and leisure markets. Gross
margins before exceptional items were held at 32% with the benefits of various
cost reduction initiatives offsetting both manufacturing inefficiencies during
plant closures and adverse changes in sales mix. Total overheads, excluding
exceptional costs, fell by over £1m primarily as a result of the lower activity
level and the headcount reductions referred to above. Interest charges were
reduced by more than £200,000 to £1.19m (2000: £1.43m), due largely to lower
average interest rates in 2001.
continued...
-2-
Total non-recurring charges of £5.9m, including impairment charges of £2.2m,
were taken in the year following the completion of a Group-wide strategic review
and the creation of the new Divisional structure. These charges related
primarily to the closure of Axminster operations at Kidderminster and their
relocation to Rishton, the rationalisation of retail stock ranges and point of
sale materials, the rationalisation of the Tile product range and the
re-organisation of, and recognition of impairment provisions in, the non-wovens
business. After reflecting these one-off, exceptional items, the Group incurred
a pre-tax loss of £6.55m in 2001 (2000: profit of £0.53m) and earnings per share
declined from 3.2p to a loss per share of 21.0p.
Dividends
Despite the Group's losses in 2001, we remain confident that the Board's
strategy to eliminate all non-core and unprofitable businesses will ultimately
return Gaskell to profitability and positive cashflow. However, in view of the
Group's high level of gearing and cash constraints, combined with the fact that
the Group's future distributable reserves are likely to be adversely affected by
the new Accounting Standard for Retirement Benefits ('FRS 17'), the Board
announced on 26 March 2002 that it has decided to re-base its dividend policy.
Consequently, we recommend a final dividend of 0.7p (2000: 1.4p) giving a total
dividend of 2.1p (2000: 2.8p). If approved by shareholders at the Annual General
Meeting on 2 May 2002, the final dividend will be paid on 3 July 2002 to
shareholders on the register at 7 June 2002.
Board Changes
In accordance with our succession plans and as recently announced, I shall be
stepping down as Chairman at the conclusion of the Annual General Meeting in
May. I am particularly pleased to be handing over the reins to Alan Chamberlain,
who, through a combination of his considerable business experience and his
extensive knowledge of the Group, is well placed to lead Gaskell through its
current challenges.
Lowry Maclean retired from the Board in December 2001 and I would like to thank
him for his valuable contribution to the Group. Lowry was Chairman of Tomkinsons
PLC and joined our Board when we acquired the company in 1999. I am also pleased
to welcome Jim Harrison, who joined the Board as Non-Executive Director on 8
March 2002 and will bring considerable textile manufacturing experience to the
Group. Jim is currently the Chief Executive of IPT Group Limited and has
previously held senior management positions in the Coats Viyella and Tootal
groups.
Prospects
Since the financial year end, market conditions in all of the Group's
floorcovering businesses have continued to be difficult. Although there are
early indications of a recovery in the contract office and leisure markets, the
Board is expecting the Group to continue to report significant operating losses
in the first half of 2002. A priority of the Board is to reduce the high levels
of gearing to enable Gaskell to invest in the core businesses. However, after a
challenging year, I am optimistic that in light of the steps being taken to
return the Group to its core contract business, Gaskell's fortunes will in due
course begin to improve. We remain a leading player in the UK carpet industry
and once the restructuring currently underway is completed, the Group should be
in a position to resume profitable growth.
Enquiries:
Gerry Wheeler, Chief Executive
Richard Hopkin, Group Finance Director Katie Hall, Account Executive
Gaskell PLC Citigate Dewe Rogerson
Tel: 01282 777890 Tel: 0121 455 8370
-3-
Gaskell PLC
Preliminary Results
Consolidated Profit and Loss Account
for the year ended 31 December 2001
2001 2001 2001 2000
Before Exceptional After After
Exceptional Items Exceptional Exceptional
Items (note 1) Items Items
£'000 £'000 £'000 £'000
Turnover 68,890 - 68,890 75,751
Cost of sales (46,307) (4,797) (51,104) (52,455)
Gross profit 22,583 (4,797) 17,786 23,296
Net operating expenses (22,037) (283) (22,320) (23,464)
Operating profit/(loss) 546 (5,080) (4,534) (168)
(Provision for loss)/profit on disposal of fixed assets - (832) (832) 2,125
Profit/(loss) on ordinary activities before interest 546 (5,912) (5,366) 1,957
Interest payable (1,186) - (1,186) (1,426)
(Loss)/profit on ordinary activities before taxation (640) (5,912) (6,552) 531
Tax on (loss)/profit on ordinary activities 356 1,045 1,401 257
(Loss)/profit for the financial year (284) (4,867) (5,151) 788
Dividends (including non-equity interests) (515) - (515) (690)
Amount (deducted from)/set aside to reserves (799) (4,867) (5,666) 98
Basic (loss)/earnings per ordinary share (1.1)p (19.9)p (21.0)p 3.2p
Diluted (loss)/earnings per ordinary share (1.1)p (19.9)p (21.0)p 3.2p
All of the above arose from continuing operations.
Statement of total recognised gains and losses
for the year ended 31 December 2001
There were no recognised gains or losses in either year other than the (loss)/
profit for each year as shown above.
Note of historical cost profits and losses
for the year ended 31 December 2001
2001 2000
£'000 £'000
Reported (loss)/profit on ordinary activities before taxation (6,552) 531
Difference between the historical cost depreciation charge and the actual depreciation charge for
the year calculated on the revalued amount 37 33
Historical cost (loss)/profit on ordinary activities before taxation (6,515) 564
Historical cost (loss)/profit for the year retained after taxation and dividends (5,629) 131
-4-
Gaskell PLC
Preliminary Results
Balance Sheets
at 31 December 2001
Group Company
2001 2000 2001 2000
£'000 £'000 £'000 £'000
Fixed assets
Goodwill - 234 - -
Negative goodwill (441) (609) - -
Tangible assets 20,091 24,541 1,078 1,185
Investments - - 20,235 20,235
19,650 24,166 21,313 21,420
Current assets
Stocks 16,305 19,890 - -
Debtors (amounts falling due within one year) 9,628 13,760 4,350 4,412
Debtors (amounts falling due after more than one year) - - 326 326
Cash at bank and in hand 1,702 1,049 1,571 1,011
27,635 34,699 6,247 5,749
Creditors (amounts falling due within one year) 22,503 24,136 8,593 8,988
Net current assets/(liabilities) 5,132 10,563 (2,346) (3,239)
Total assets less current liabilities 24,782 34,729 18,967 18,181
Creditors (amounts falling due after more than one year) 7,911 10,346 6,343 8,397
Provisions for liabilities and charges - 1,846 9 (170)
16,871 22,537 12,615 9,954
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 1,546 1,583 - -
Capital redemption reserve fund 175 175 175 175
Profit and loss account 9,294 14,923 6,584 3,923
Equity shareholders' funds 16,871 22,537 12,615 9,954
-5-
Gaskell PLC
Preliminary Results
Cash Flow Statement
for the year ended 31 December 2001
2001 2000
£'000 £'000
Net cash inflow from operating activities 2,503 2,461
Returns on investments and servicing of finance
Interest paid (725) (1,235)
Interest element of finance leases and hire purchase contracts (212) (222)
Dividends paid on non-equity shares - (4)
(937) (1,461)
Taxation 1,105 (851)
Capital expenditure
Purchases of tangible fixed assets (640) (1,675)
Sale of tangible fixed assets and assets held for resale 14 3,669
(626) 1,994
Equity dividends paid (686) (1,221)
Net cash inflow before financing 1,359 922
Financing
Issue of ordinary share capital - 48
Repayment of loan notes - (10)
Repayment of preference share capital - (175)
Repayment of long term loans (2,125) -
Repayment of capital element of finance leases and hire purchase rentals (1,046) (932)
Costs of new medium term loan 44 (15)
(3,127) (1,084)
Decrease in cash (1,768) (162)
-6-
Gaskell PLC
Preliminary Results
Notes to the Accounts
1. Exceptional Items
Following a detailed review of the Group's businesses and its future
strategy, the Group decided to rationalise certain activities and
locations. The exceptional costs associated with this are set out below:
Cost of Distribution Administrative
2001 2000
Sales Costs Expenses
£'000 £'000
£'000 £'000 £'000
Redundancy costs 856 - 221 1,077 1,337
Other miscellaneous costs 1,705 62 - 1,767 736
Impairment charges 2,236 - - 2,236 -
4,797 62 221 5,080 2,073
In accordance with FRS11 "Impairment of fixed assets and goodwill", the
Group has 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 is considered that
impairment charges totalling £2,236,000 are required in order to reflect
the value in use of these assets. In addition, provisions for the write
down or loss on disposal of fixed assets totalling £832,000 have been
made.
In 2000, the Group charged exceptional costs of £2,073,000 against
operating profits, sold surplus freehold properties at a profit of
£1,244,000 and plant and machinery at a profit of £408,000, and released
impairment provisions totalling £473,000.
2. Dividends
2001 2000
£'000 £'000
Non-equity:
On cumulative preference shares - 4
Equity:
On ordinary shares -
Interim of 1.4p per share (2000 - 1.4p) 343 343
Recommended final of 0.7p per share (2000 - 1.4p) 172 343
515 690
3. (Loss)/Earnings per Ordinary Share
2001 2000
£'000 £'000
(Loss)/earnings attributable to parent company shareholders (5,151) 788
Less preference dividend - (4)
(5,151) 784
Basic (loss)/earnings per ordinary share based on 24,522,079 average ordinary
shares in issue and outstanding (2000 - 24,466,205) (21.0)p 3.2p
Diluted (loss)/earnings per ordinary share based on 24,534,690 average ordinary
shares in issue and outstanding (2000 - 24,575,205) (21.0)p 3.2p
The difference between the average numbers of ordinary shares used in
the calculations of basic and diluted (loss)/earnings per share relates
to share options outstanding at the year end.
continued...
-7-
4. Reconciliation of Operating Loss to Net Cash Inflow from Operating
Activities
2001 2000
£'000 £'000
Operating loss (4,534) (168)
Depreciation/amortisation and loss/(profit) on sale of assets 3,062 2,358
Impairment charges 2,236 -
Decrease/(increase) in stock 3,585 (1,010)
Decrease in debtors 3,115 913
(Decrease)/increase in creditors (4,961) 368
2,503 2,461
5. Reconciliation of Net Debt
2001 2000
£'000 £'000
Decrease in cash in the period (1,768) (162)
Decrease in lease financing 1,046 932
Repayment of bank loan 2,125 -
Change in net debt resulting from cash flows 1,403 770
New finance leases and hire purchase contracts (988) (2,292)
Loan notes - 10
Amortisation of bank loan costs (44) (15)
Movement in net debt in the period 371 (1,527)
Net debt at 1 January (15,890) (14,363)
Net debt at 31 December (15,519) (15,890)
6. This preliminary announcement of the results to 31 December 2001
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 9 April
2002 and subsequently delivered to the Registrar of Companies. Further
copies will be available from the Company's Registered Office: Walton
House, Syke Side Drive, Altham, Lancashire, BB5 5YE.
7. The abridged accounts for the year ended 31 December 2000
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-fourth Annual General Meeting of the Company will be
held at Walton House, Syke Side Drive, Altham, Lancashire on 2 May 2002
at 11.30am.
9. Financial Calendar
Payment of final ordinary dividend for 2001 3 July 2002
Half yearly results announced September 2002
Preliminary announcement of the 2002 results April 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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