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(DWSN.L) Dawson International PLC Buy/Sell
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| Date/Time | Headline | Source |
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| 17-03-10 | RNS |
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RNS Number : 7494I Dawson International PLC 17 March 2010 Dawson International PLC Director's Dealing Dawson International Plc (the "Company") announces that, on 16 March 2010, it received notification that, on 11 March 2010, Pontek Limited ("Pontek"), a company controlled by Mr. Giovanni Ghione, a director of the Company, purchased 5,000,000 ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at a price of 2.00p per share. Following this transaction, Mr. Ghione, as a result of his shareholding in Pontek, is interested in 22,862,450 Ordinary Shares, representing 10.15% of the total voting rights in the issued share capital of the Company. For the purposes of the City Code on Takeovers and Mergers, Pontek is deemed to be acting in concert with Fairmont Limited which is the beneficial owner of 17,849,104 Ordinary Shares, representing 7.93% of the total voting rights in the issued share capital of the Company. For further information, please contact:
David Cooper, Group Finance Director
Robin Gwyn This information is provided by RNS The company news service from the London Stock Exchange END
HOLUBUVRRNAOAAR More |
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| 12-03-10 | RNS |
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RNS Number : 5362I Dawson International PLC 12 March 2010 Dawson International PLC (the "Company") Notice of interest The Company announces that, on 11 March 2010, it received notification that, following the sale of ordinary shares of 1p each in the capital of the Company on 10 March 2010, Brookwell Limited, a fund managed by Progressive AIM Realisation Limited, no longer has a notifiable interest in the issued share capital of the Company. For further information, please contact:
David Cooper, Group Finance Director
Robin Gwyn This information is provided by RNS The company news service from the London Stock Exchange END
HOLUUUNRRSAOAAR More |
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| 10-03-10 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 3385I
Dawson International PLC
10 March 2010
WEDNESDAY 10 MARCH 2010
PRELIMINARY RESULTS FOR PERIOD ENDED 2 JANUARY 2010
DAWSON INTERNATIONAL SUSTAINS SECOND YEAR OF PROFIT
KEY POINTS
- Operating profit of £2.0 million from continuing operations
- Excellent performance by Knitwear divisions
- Home Furnishings Private Label division impacted by Sterling weakness
- Strategically important disposal of Todd & Duncan achieved in difficult economic climate
- Recovery of £1.0 million debt due from previous joint venture partner
- Generated cash of £6.7 million including £5.4 million from the disposal of Todd & Duncan
- Ended the year with £12.3 million funds and no debt
- Increase in pension liabilities represents a challenge for the Company
Commenting on the preliminary results for the year ended 2 January 2010, chairman, David Bolton, said: "In a year of global economic recession and an uncertain outlook in all of our markets, Dawson International delivered a satisfactory trading performance from continuing operations reporting an operating profit of £2.0 million (2008: £1.9 million) and generating funds of £6.7 million (2008: £11.4 million).
"Through the planned exit from loss making divisions in 2009, the current year presents an opportunity to build on solid foundations and focus entirely on our profitable core businesses. A key priority during the year will be to seek ways in which to reduce the pension deficit and associated costs by working with the Pension Trustees to reduce liabilities and increase returns on assets. This is likely to restrict any development of the Group through potential acquisitions until substantial progress is made in this area.
"Although there are some signs of markets stabilising, we expect trading to continue to be tough throughout 2010. Our approach to 2009 has demonstrated that we are able to take the necessary steps to weather these difficult trading conditions constructively and take advantage of opportunities as they present themselves. With strong, focused management teams in all of our businesses the Board is confident we can maintain and develop our businesses during the course of 2010."
The Annual Report and Accounts for the year ended 2 January 2010 will be despatched to shareholders on 9 April 2010 and will also be available on the Company's website: (www.dawson-international.co.uk).
The Annual General Meeting of the Company will be held at Lochleven Mills, Kinross, KY13 8GL on Wednesday 5 May 2010 at 12 noon.
For further information please contact:
Andy Bartmess, Chief Executive, Dawson International PLC 0207 448 1000
Zoe Biddick, Biddicks Financial Relations: 0207 448 1000
Robin Gwyn, W H Ireland: 0161 832 2174
CHAIRMAN'S STATEMENT
In a year of global economic recession and an uncertain outlook in all of our markets, Dawson International delivered a satisfactory trading performance from continuing operations reporting an operating profit of £2.0 million (2008: £1.9 million) and generating funds of £6.7 million (2008: £11.4 million).
Strategy These trading results have been achieved through our strategy to maximise the inherent strengths and proven track record of profitability within our core businesses. Concluding the sale of the loss making Todd & Duncan business during the year has been a significant achievement and the winding down of the Home Furnishings Branded business following the sale of the Dorma brand to Dunelm Group in July 2008 has made considerable progress.
Performance I am pleased to report an operating profit from continuing operations of £2.0 million (2008: £1.9 million). This included a net gain from exceptional items of £0.6 million (2008: £1.3 million) which is discussed in the Financial Review. Both Knitwear divisions performed well, maintaining profits despite reductions in sales volumes. The phased exit from our Home Furnishings Branded division continued to plan with turnover and operating losses much reduced. The only operational disappointment in an otherwise satisfactory year was the performance of the Home Furnishings Private Label division where margins were impacted by higher product costs due to Sterling weakness.
Our strategy of staying close to customers in these challenging times and finding ways of adapting product and price point to respond to volatile market demands, whilst continuing to build on our strengths in design, product innovation and supply chain management, has largely been successful. It enabled us to deliver a strong final quarter in 2009, which saw improved demand in both our UK and US Knitwear businesses.
The sale of the Todd & Duncan business to Ningxia Zhongyin Cashmere Company Limited completed on 28 August 2009. The subjects of the sale were the business operations, fixed assets and stocks. The business made an operating loss of £0.9 million in the period and incurred a loss on disposal of £5.2 million. Funds of £8.1 million were generated from the disposal and subsequent liquidation of working capital, which have been used to eliminate all UK borrowings.
Pensions The pension scheme liabilities reported in the balance sheet are calculated in accordance with IAS 19. On this basis the liabilities increased from £6.7 million to £19.3 million, mainly due to lower corporate bond yields, which are used to discount liabilities, and increased life expectancy assumptions.
The level of contributions paid by the Company is based on a full actuarial valuation of scheme liabilities which is updated by the independent scheme actuary every three years. A triennial valuation is currently being finalised which is expected to show a significantly higher deficit than both the IAS 19 valuation and the last triennial valuation mainly due to more conservative assumptions used by the scheme actuary concerning life expectancy and discount factors. This escalation of the deficit represents a significant challenge for the UK businesses in terms of the prospective future demands for increased financial support which may be placed on it by the pension schemes and discussions are ongoing with the Pensions Trustees and the Pensions Regulator to agree the way forward.
This issue is of course not unique to Dawson International and it is my view that a co-ordinated approach must be taken that shares the burden of reducing deficits and associated costs fairly amongst the various stakeholders involved.
Funding We begin 2010 in a strong cash position with funds of £12.3 million (2008: £5.7 million). This improved position has resulted principally from the disposal of Todd & Duncan.
The Group has seasonal working capital funding requirements in both the USA and UK which are financed by asset backed facilities provided by Bank of America and Gmac Commercial Finance ("Gmac") respectively. These facilities are due to be renewed in 2010. While Bank of America have provided verbal confirmation that they expect to renew the US facility on its existing terms for a further three years, Gmac have advised that they are withdrawing from the UK market and the facility will not be renewed when it expires in October 2010. The Directors have commenced the process of finding replacement facilities. They are currently talking to a number of financial institutions and based on those discussions are confident that they will be able to agree an adequate new facility.
Board and Management Following my appointment as Interim Chairman on 8 May 2009 the position was confirmed on 9 March 2010 with the support of shareholders holding a majority of shares. I have offered myself for re-election at the Annual General Meeting to enable all shareholders to vote on this issue.
Giovanni Ghione was appointed senior adviser to the Board on 17 June 2009. On 1 February 2010 he was re-appointed to the Board as Deputy Chairman. I am pleased to welcome him and value his wealth of experience in the textiles industry, particularly in the important Italian market. His appointment also improves the balance of shareholder representation on the Board.
Employees I would like to acknowledge the very difficult challenges faced by employees in all of our Group businesses during this turbulent economic environment. I thank everyone for their continued resilience and efforts to sustain existing business and their creative approach to maximising opportunities as they emerge. It is this drive and determination that has seen the Group return a satisfactory performance in a difficult year.
Outlook
Through the planned exit from loss making divisions, 2010 presents an opportunity to build on solid foundations and focus entirely on our profitable core businesses. A key priority during the year will be to seek ways in which to reduce the pension deficit and associated costs by working with the Pension Trustees to reduce liabilities and increase returns on assets. This is likely to restrict any development of the Group through potential acquisitions until substantial progress is made in this area.
Although there are some signs of markets stabilising, we expect trading to continue to be tough throughout 2010. Our approach to 2009 has demonstrated that we are able to take the necessary steps to weather these difficult trading conditions constructively and take advantage of opportunities as they present themselves. With strong, focused management teams in all of our businesses the Board is confident we can maintain and develop our businesses during the course of 2010.
David Bolton | Chairman
CHIEF EXECUTIVE'S STATEMENT
2009 was a challenging year with global economic conditions impacting product demand and pricing in all of the markets in which we operate. It is therefore a strong reflection on current strategy and the strength of our management teams that the Group's continuing operations generated an operating profit of £2.0 million in such a demanding environment.
This is particularly pleasing given the rapid deterioration of Sterling against the Dollar in late 2008 and its impact on our Home Furnishings division in 2009, which effectively increased costs by 18 per cent in a market where it was not possible to raise prices to compensate.
Against this challenging backdrop I believe the Group performed very well and made considerable progress in 2009:
- The Group was able to build on the significant improvements made in 2008 and improve operating profit from continuing operations by 5.5 per cent against the previous year;
- Cash of £6.7 million was generated including £5.4 million directly from the disposal of the Todd & Duncan business. Since the beginning of 2008 the Group has generated over £18 million of cash from a combination of trading performance, business disposals and associated working capital release and closed 2009 with a positive net cash position of £12.3 million;
- The Knitwear divisions sustained their exceptional performance, given that sales were down 17 per cent but managed to return an operating profit within four per cent of last year's record result. Overall, the Knitwear divisions achieved an operating profit of £4.9 million, a return of 13.4 per cent against sales.
In addition, the Group made continued progress on a number of strategic fronts creating a platform to support growth and value creation in future years. These include the sale of its capital intensive and loss-making Todd & Duncan cashmere yarn business to Ningxia Zhongyin Cashmere Company in August 2009. The disposal streamlines the Group structure and creates an opportunity to move forward with a core of businesses capable of generating excellent returns.
As noted in our 2008 annual report and 2009 interim report, the Company was able to resuscitate a long standing debt due to it by Inner Mongolia King Deer Cashmere Company Limited of approximately $10 million, which had been fully provided for. The first scheduled payments against an agreed payment plan were received during the year; $0.5 million was received in the first half of the year and $1.0 million in the second half. Considering the age of the debt, at present the Company considers it appropriate to retain full provision for the outstanding balance.
The streamlined organisation is now aligned with our strategic focus to develop businesses with strengths in design, product development and supply chain management capable of delivering high quality, innovative products consistently on time. Product offerings are complemented by extensive service for customers seeking turnkey design, merchandising and supply chain solutions. Our strategy of staying close to customers and developing and maintaining an in-depth understanding of their changing needs, particularly in these challenging economic conditions, will remain core to our approach, resulting in product ranges that out-perform the competition at retail.
As reported in the Chairman's Statement, our pension deficit has increased sharply in the year, growing by £12.6 million due to changes in corporate bond rates, which are used to discount liabilities, and increases in assumed life expectancy. While these factors are largely outside of management's control, it is important to recognise that this issue has a significant impact on shareholder value. One of our key objectives for 2010 is to finalise negotiations with the Pension Trustees on an affordable arrangement that addresses the Group's commitments to its pension plan members. However, at the same time this agreement must ensure that the Group retains the resources necessary to fund growth, and that shareholders can share equitably in the future benefits of the business. In the last few years we have made significant operational and structural improvements in the Group. Addressing this major remaining legacy issue will enable us to sustain these improvements and translate them into increased value for shareholders.
Outlook
Whilst we are seeing some signs of recovery, selling conditions remain very challenging, particularly in the US. Commodity price inflation is also becoming a factor in cashmere fibre and cotton, negatively impacting our Knitwear divisions and Home Furnishings division respectively. Despite this, we enter 2010 with positive momentum, a much stronger financial position and a revitalized organisation well positioned to grow market share and capitalise on improving economic conditions. We continue to make excellent progress towards our goals of sustained profitability and delivering consistent competitive returns on capital employed. As a management team we look forward to continuing this progress in 2010 and beyond.
Andy Bartmess | Chief Executive
BUSINESS REVIEW
Following the disposal of the Todd & Duncan yarn spinning division in August 2009, the continuing operations of the Group are analysed into four reporting divisions: UK Knitwear, US Knitwear, Home Furnishings Private Label and Home Furnishings Branded. The Home Furnishings Branded division is being wound down following the sale of the 'Dorma' brand in 2008 but is included within continuing operations as required by International Financial Reporting Standards. In addition there is a central administrative function. The operations of each are reviewed in the following sections of this report, as are the results of the discontinued Todd & Duncan division.
The following sections contain a number of forward looking statements regarding the prospects of the Group and its individual businesses which may not be realised and should therefore be treated with an appropriate degree of caution.
UK KNITWEAR
2009 2008
£000 £000
Revenue 7,896 10,032
Operating profit before exceptional items 1,133 1,507
Exceptional items (125) -
Capital expenditure 80 210
Average capital employed* (101) 720
The UK Knitwear division comprises the Barrie Knitwear business, based in Hawick, Scotland. It manufactures highest quality cashmere garments at its factory in the Scottish Borders and sells to some of the world's most prestigious couture houses, department stores and private label retail outlets.
Performance
Following an exceptional year in 2008 and the growing economic uncertainty, Barrie's turnover was expected to decline in 2009. This proved to be the case with a decrease of 21 per cent to £7.9 million. Export sales were down due to a reduction in couture sales and 'John Laing' branded knitwear in USA. UK sales grew principally due to an increase in lower margin contract business. The net impact was a poorer sales mix overall. The business did benefit from an improved sales mix in the final quarter of the year with higher margin sales to couture customers brought forward at the customer's request. This is likely to have some negative impact on the first quarter of 2010 with the sales mix impact reversing.
Gross profits fell as a result of the lower turnover however variable sales costs and operating overheads also reduced significantly, partly due to the lower turnover, and partly due to cost reductions and savings across the business. The business therefore achieved another excellent result, reporting an operating profit before exceptional items of £1.1 million.
Exceptional costs of £0.125 million were incurred in respect of a redundancy programme announced in May 2009 comprising 19 jobs losses required to bring production into line with demand.
Position at Year End and Outlook 2010 has started positively with order book volumes significantly higher than the same time last year, although the current order book is biased more towards low margin contract business than was the case in 2009.
With the exception of the USA, Barrie's main markets appear to have stabilised and higher order intake levels are expected. However, the USA market does not yet show signs of stability or any return to historical volumes.
US KNITWEAR
2009 2008
$000 $000
Revenue 44,994 62,871
Operating profit 5,918 6,631
Capital expenditure 58 65
Average capital employed* 4,549 9,281
£000 £000
Revenue 28,695 34,023
Operating profit 3,774 3,588
Exchange Rate
- Average for the year $1.57 $1.85
- Year end $1.62 $1.45
The US Knitwear division comprises the Dawson Forte Cashmere business based in Boston, Massachusetts, USA. Dawson Forte sources cashmere garments from China for US private label retail programmes and its own branded cashmere collection 'Kinross'.
Performance
While turnover was down 28 per cent to $45.0 million reflecting the challenging US economy, Dawson Forte was able to maximize both branded and private label margins and maintain tight control of costs and working capital. Consequently, profit for the full year fell just 11 per cent to $5.9 million based on excellent margin performance. With the US Dollar 18 per cent stronger in 2009, Sterling reported profits were 5 per cent higher than 2008 at £3.8 million.
The business implemented a range of improved marketing initiatives including increased tradeshow presence. Supply chain performance improved during the year with over 99 per cent of orders delivered to customers on time during the year. The business also successfully managed its working capital investment, halving its average net operating assets.
The final quarter of 2009 saw the business sustain sales and margins in spite of the fragile US economic environment. In particular, in-season reorder sales of branded lines and overall margin levels were both stronger than expected.
Position at Year End and Outlook
The US economy has seen modest improvement throughout 2009. Retailers reported improved sales during December 2009. Unemployment in the US remains high resulting in consumers continuing to be cautious, which is constraining retail sales. Overall it is anticipated that the economy will continue to recover in 2010 but at a slow pace.
HOME FURNISHINGS PRIVATE LABEL
2009 2008
£000 £000
Revenue 24,795 21,766
Operating (loss) profit (117) 2,862
Capital expenditure 31 2
Average capital employed* 4,441 3,932
The Home Furnishings Private Label division is part of Dawson Home Group, based in Manchester, England. It designs and sources bed linen products, for sale to retailers.
Performance Despite very difficult market conditions, turnover increased by 14 per cent to £24.8 million. This growth reflected strong performances by some key customers, increased market share driven by our premium design capability and excellent service, and the addition of new customers during the year.
However, as projected in last year's annual report, margins in this business were severely impacted by the decline in the value of Sterling against the US Dollar at the end of 2008. This business sources most of its products in US Dollars and sells almost exclusively in Sterling. The average Dollar/Sterling exchange rate for 2009 was $1.57 compared with $1.85 in 2008 which had the effect of increasing our average cost by around 18 per cent. Due to the speed with which this change occurred and the very difficult economic circumstances that prevailed it was impossible to recover the increase by raising prices. As a result, gross margins fell sharply. Rising product costs were offset to some extent by negotiating better prices from suppliers, moving production to lower cost locations and tightening operating costs. However, the net result was an operating loss of £0.1 million in 2009 against a profit of £2.9 million in 2008.
Position at Year End and Outlook The outlook for 2010 is cautiously optimistic despite indications that cotton commodity prices are increasing. A number of positive trends are emerging: market conditions in the UK appear to be improving, Sterling strengthened against the Dollar in the second half of 2009 and some of this improvement has been secured through forward currency contracts. Increased sales are anticipated from new customer gains in 2009.
* Average capital employed figures are derived from monthly management results and comprise fixed assets, working capital and provisions. Central assets and liabilities are not reallocated to divisions.
HOME FURNISHINGS BRANDED
2009 2008
£000 £000
Revenue 11,497 19,892
Operating loss before exceptional items (1,365) (2,422)
Exceptional items - (157)
Closure provisions 613 2,316
The Home Furnishings Branded division is part of Dawson Home Group, based in Manchester, England. Previously it sold 'Dorma' branded product through various channels but primarily through retail concessions. In 2008 the Dorma trademark was sold to Dunelm Group plc and the business entered a wind down phase.
This process, which involves exiting from retail operations and liquidating working capital, is expected to conclude by mid 2010. During 2009 the planned exit from 68 department store concessions was completed, leaving a final 39 to close in the first six months of 2010. As a result of the reduced number of concessions, sales in 2009 fell to £11.5 million from £20.2 million in 2008, and operating losses fell to £1.4 million from £2.4 million.
A further operating loss will be incurred in 2010 as the exit from this business is completed. In addition, final closure costs of £0.6m are expected, which have been fully provided.
CENTRAL COSTS
2009 2008
£000 £000
Payroll costs 897 1,381
Pension related costs 795 906
Legal, professional and treasury fees 321 656
Other costs 215 615
Total costs before exchange and exceptional items 2,228 3,558
Exchange gain ( loss) 209 (1,460)
Net exceptional income 681 -
The Group has a central administrative and treasury function based in Kinross, Scotland. All costs not directly incurred or attributable to the divisions are borne centrally.
Payroll costs comprise the remuneration, inclusive of pension costs, of the Executive Directors and the corporate office staff and the fees paid to the Non-Executive Directors.
Pension related costs comprise the pension protection fund levy of £0.4 million (2008: £0.4 million) and adviser fees of £0.4 million (2008: £0.5 million). All pension fees, with the exception of investment manager fees are borne by the Company. In addition to these costs the Company made deficit repair contributions of £0.35 million (2008: £0.9 million) to the UK plans and £0.25 million (2008: nil) to the discontinued US plan.
The level of legal, professional and treasury fees reflects the relative complexity of the Group with its overseas operations, legacy issues from discontinued operations and restructuring activities. These costs have reduced significantly as the Group structure has simplified.
Other costs are mainly the administrative and facility costs associated with running the central function and any legacy costs associated with discontinued activities. In 2008 these included £0.25 million rental expense in respect of the Kinross leasehold property.
An exchange gain of £0.2 million was recorded in the year compared with a loss of £1.5 million in 2008.
Net exceptional income of £0.7 million was recorded (2008: nil), comprising £1.0 million income from the recovery of a long standing debt due from the Company's former joint venture partner offset by a charge of £0.3 million to exit from an onerous property lease.
DISCONTINUED OPERATIONS
2009 2008
£000 £000
Revenue 14,625 21,514
Operating (loss) profit before exceptional items (927) 502
Exceptional operating charge - (1,000)
Exceptional loss on disposal (5,200) -
Year end net assets 637 14,743
The sale of the Todd & Duncan business to Ningxia Zhongyin Cashmere Company Limited was completed on 28 August 2009. The subjects of the sale were the business operations, fixed assets and stocks. The Company retained the debtors and creditors, the majority of which have been realised during the second half of 2009.
The business incurred a pre-exceptional trading loss of £0.9 million in the year (2008: £0.5 million profit). A loss of £5.2 million was incurred on disposal of the business. Net assets at the end of the year mainly comprise the remaining trade debtors of the business which had extended credit terms and are expected to be collected during the course of the current year.
FINANCIAL REVIEW
2009 2008
Income Statement summary £000 £000
Continuing operations:
Revenue
- Continuing businesses 61,386 67,198
- Home Furnishings Branded 11,497 20,160
72,883 87,358
Operating profit before exceptional items
- Continuing businesses 2,771 2,939
- Home Furnishings Branded (1,365) (2,422)
1,406 517
Exceptional items 556 1,342
Operating profit after exceptional items 1,962 1,859
Net finance costs
- on borrowings (498) (865)
- on pension obligations (889) 126
Taxation (291) (146)
Continuing operations profit after tax 284 974
Discontinued operations loss after tax (6,127) (498)
(Loss) profit after tax (5,843) 476
Operating results - continuing operations
In order to aid understanding of the underlying results of continuing operations, the results of the Home Furnishings Branded division which is being wound down have been shown separately.
The exit from the Home Furnishings Branded division continued to plan during the year with revenues reducing by £8.7 million to £11.5 million and operating losses reducing by £1.0 million to £1.4 million. This exit will be completed during the first half of 2010.
Revenues of the underlying continuing businesses fell by £5.8 million (9 per cent) to £61.4 million while operating profit before exceptional items fell by £0.1 million to £2.8 million:
- The UK Knitwear division reported revenues down £2.1 million at £7.9 million and pre-exceptional operating profit down £0.4 million at £1.1 million.
- The US Knitwear division reported revenues down £5.3 million at £28.7 million but pre-exceptional operating profit up £0.2 million at £3.8 million. The stronger US Dollar benefited Sterling revenues by £4.4 million and pre-exceptional operating profit by £0.6 million.
- The Home Furnishings Private Label division reported revenues up £1.6 million at £24.8 million but a reduction in pre-exceptional operating profit, down £3.0 million to a loss of £0.1 million.
- Central costs before exchange gains and losses were £1.3 million lower at £2.2 million.
- An exchange gain of £0.2 million was recorded compared with a loss of £1.5 million in 2008.
The performance of each division is discussed in the Chief Executive's Statement and the Business Review. The results of the Knitwear divisions are highly satisfactory having been achieved in a very challenging economic environment. The results of the Home Furnishings - Private Label division were disappointing but were severely impacted by the abnormal rapid weakening of Sterling against the US Dollar in the second half of 2008 which resulted in product cost increases of approximately 18 per cent which could not be passed on to customers.
Exceptional Items
As noted in last year's annual report, the Company agreed a payment plan with Inner Mongolia King Deer Cashmere Company Limited at the start of 2009 for the repayment of a long standing debt of approximately $10 million which had been fully provided in prior years. $1.5 million (£1.0 million) was received in the year in accordance with the payment plan and has been treated as an exceptional item. The balance remains fully provided with a further $2.5 million due to be received in 2010, $1.0 million in June and $1.5 million in December. The Company considers it appropriate to keep this debt fully provided at present as previous payment plans have been defaulted.
Exceptional charges totalling £0.4 million were recognised in the year, £0.1 million in respect of restructuring costs at the UK Knitwear division and £0.3 million for the costs of early termination of an onerous lease.
Further details are given in note 4 to the Preliminary Statement.
Net Finance Costs
Net finance costs, excluding pension related items, were £0.5 million on average net funds of £2.1 million (2008: £0.9 million on average net debt of £4.9 million). Effective interest rates are high due to the geographical spread of funds, the seasonal nature of the businesses which results in a significant inflow of funds in the final months of the year and the high fixed cost element of the Group's asset based lending facilities.
The net finance cost on pension obligations was £0.9 million (2008: £0.1m income). This is a notional charge only, calculated as the expected return on scheme assets in the year less the unwinding of one year's discount on pension obligations. The high charge in the year reflects a low expected return on assets at the start of the year. In fact, asset returns were high due to recovery in the stock market with the resulting benefit taken through reserves.
Taxation
A tax charge of £0.3 million (2008: £0.2 million) was incurred in respect of state and federal taxes in the USA.
Earnings Per Share
The basic loss per share was 2.6 pence (2008: 0.2 pence earnings). The adjusted loss per share, calculated on the results of continuing operations before exceptional items was 0.1 pence (2008: 0.1 pence loss). The weighted average number of shares in issue was 225.2 million (2008: 225.2 million).
Dividends
No dividends were paid or proposed in the year.
2009 2008
Balance Sheet summary £000 £000
Fixed assets 1,068 2,416
Working capital 8,180 23,487
Other financial liabilities (51) (2,028)
Provisions (2,166) (3,951)
Tax asset 1,366 1,358
Pension obligations (19,246) (6,730)
Net funds 12,343 5,688
Net assets 1,494 20,240
Fixed Assets
Fixed assets reduced by £1.4 million in the year, £1.3 million due to the disposal of the Todd & Duncan business. Capital expenditure was £0.4 million and depreciation also £0.4 million.
Working Capital
Working capital reduced by £15.3 million in the year, £13.0 million due to the disposal of the Todd & Duncan business.
Other Financial Liabilities
As noted below, the policy of the Company is to enter into forward foreign exchange contracts to protect against the impact of unfavourable exchange movements on its forecast Euro sales and US Dollar purchases. These are not designated as cash flow hedges, instead any unrealised gains or losses arising on open contracts at the end of the year are taken to the Income Statement in the period and an asset or liability recorded in the balance sheet. At the year end the unrealised loss was £0.1 million (2008: £2.0 million).
Provisions
Provisions were £2.2 million at year end, comprising £0.8 million for reorganisation costs, £0.8 million for environmental liabilities, £0.2 million for the cost of exiting an onerous lease and £0.4 million for customer claims and unfunded retirement benefits. The provision for reorganisation costs will be utilised during the course of 2010.
Deferred Tax
IAS 12 requires that deferred tax liabilities are provided in full and that deferred tax assets be recognised to the extent they are considered recoverable. While there is a substantial potential deferred tax asset in the UK, no asset has been recognised on the basis that the UK operations have yet to demonstrate a consistent future income stream. A deferred tax asset of £1.75 million (2008: £1.5 million) has been recognised in the USA based on unexpired operating losses brought forward which can be set against the prospective profits of the US Knitwear division.
Pension Liabilities
Pension liabilities are calculated by applying IAS 19 which specifies that assets are measured at market value at the balance sheet date and liabilities are measured by discounting projected future benefit payments at AA corporate bond rates. The projected future benefit payments are based on a number of actuarial assumptions such as life expectancy and inflation.
On this basis the liability increased from £6.7 million to £19.3 million in the period, driven mainly by a reduction in AA corporate bond rates from 6.5 per cent to 5.8 per cent and an increase in assumed life expectancy. Contributions by the Company were £0.8 million (2008: £1.2 million) of which £0.2 million (2008: £0.3 million) was current service cost and £0.6 million (£0.9 million) additional contributions to reduce the deficit.
Funding and Facilities
The Company was strongly cash generative in the year with an improvement in net funds of £6.7 million. Of this, £5.4 million was generated directly by the disposal of the Todd & Duncan business while a further £2.7 million was generated by the trading activities of the discontinued business, including the release of working capital.
Borrowing facilities currently comprise a working capital facility with Gmac Commercial Finance ("Gmac") which funds the Group's UK operations and a working capital facility with Bank of America which funds the Group's US operation. As noted in the Chairman's Statement, both facilities are due to be renewed in 2010. Bank of America have provided verbal confirmation that they expect the facility to be renewed on its existing terms for a further three years, however Gmac have advised that they are withdrawing from the UK market, and therefore the current facility running to October 2010 will not be renewed.
The Directors have commenced the process of finding a replacement facility in the UK. They are currently talking to a number of financial institutions and based on those discussions are confident that they will be able to agree an adequate new facility.
Going Concern
In carrying out their duties in respect of going concern, the Directors have reviewed the Group's financial position and cash flow forecasts for a period of 12 months from the date of signing these financial statements. These have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the uncertainties brought about by the current economic environment.
Key assumptions made in these forecasts include the renewal of the US bank facility which the Directors are confident of securing, that the Group will not be required to significantly increase its deficit repair payments to the pension funds over the forecast period and that a special contribution to the pension funds from the proceeds of the sale of Todd & Duncan will not be enforced until the new UK facility has been agreed. On this basis the Group's forecasts and projections, taking account of reasonably possible changes in trading performance and other business risks, show that the Group should be able to operate within the level of its current and forecast facilities in the absence of a replacement for the UK bank facility. Accordingly, the Directors have continued to adopt the going concern basis of preparing the financial statements.
Treasury
The Group's funding policy is to negotiate sufficient facilities to cover forecast net borrowings for the following 12 month period with adequate headroom against identified risks.
The Group's policy on currency risk is to minimise the impact of currency risk on currency transaction flow through use of forward foreign exchange contracts. Due to uncertainty of timing of future cash flows these are not accounted for as cash flow hedges. Instead all gains and losses are recognised in the Income Statement in the period arising. This can result in timing differences with gains or losses on forward foreign exchange contracts marked to market at each reporting period.
Translation exposures on foreign currency net assets and income streams are not hedged.
Andy Bartmess | Chief Executive
David Cooper | Finance Director
CONSOLIDATED INCOME STATEMENT
For the period ended 2 January 2010
2008
2009 re-presented
Note £000 £000
Continuing Operations
Revenue 2 72,883 85,713
Cost of sales (55,744) (63,621)
Gross profit 17,139 22,092
Other operating income 82 -
Selling and distribution costs (7,992) (12,484)
Administrative expenses (7,823) (9,091)
Operating profit before exceptional items 2,3 1,406 517
Exceptional items 2,4 556 1,342
Operating profit 2,3 1,962 1,859
Finance income 15 65
Finance costs (513) (930)
Net finance (expense) income on pension assets/liabilities (889) 126
Profit before taxation 575 1,120
Taxation (291) (146)
Profit for the period from continuing operations 284 974
Discontinued Operations
Loss for the period from discontinued operations 5 (6,127) (498)
(Loss) profit for the period (5,843) 476
Basic and diluted earnings (loss) per share
- From continuing operations 0.1p 0.4p
- From continuing and discontinued (2.6)p 0.2p
operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 2 January 2010
2009 2008
£000 £000
(Loss) profit for the period (5,843) 476
Other comprehensive income:
Exchange differences on translation of foreign subsidiaries (577) 1,689
Actuarial loss on defined benefit pension obligations (12,373) (2,533)
Other comprehensive income for the period (12,950) (844)
Total comprehensive income for the period (18,793) (368)
Total comprehensive income is all attributable to equity holders of the parent.
There is no tax impact in respect of the components of other comprehensive income in either year.
CONSOLIDATED BALANCE SHEET
As at 2 January 2010
2009 2008
£000 £000
Non-current assets
Intangible assets 143 131
Property, plant and equipment 925 2,285
Deferred tax asset 1,750 1,500
Total non-current assets 2,818 3,916
Current assets
Inventories 8,309 24,090
Trade and other receivables 9,350 14,973
Cash and cash equivalents 12,343 9,900
Total current assets 30,002 48,963
Total assets 32,820 52,879
Current liabilities
Trade and other payables 9,479 15,576
Income tax payable 384 142
Borrowings - 4,212
Provisions 1,144 1,977
Other financial liabilities 51 2,028
Total current liabilities 11,058 23,935
Non-current liabilities
Provisions 1,022 1,974
Retirement benefit obligations 19,246 6,730
Total non-current liabilities 20,268 8,704
Total liabilities 31,326 32,639
Net assets 1,494 20,240
Equity
Share capital 51,989 51,989
Share premium account 5,489 5,489
Translation reserve 240 818
Retained earnings (56,224) (38,056)
Total equity 1,494 20,240
The financial statements of Dawson International PLC (registered number SC 54505) were approved by the Board of Directors and authorised for issue on 9 March 2010. They were signed on its behalf by:
Andy Bartmess, Chief Executive
David Cooper, Finance Director
9 March 2010
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 2 January 2010
2009 2008
£000 re-presented
£000
Continuing operations
Cash flows from operating activities
Profit before tax 575 1,120
Depreciation 214 433
Gain on disposal of Dorma Brand - (1,517)
Net finance expense 1,387 739
Share based payment expense 47 85
2,223 860
Decrease in inventories 1,950 2,222
Decrease (increase) in debtors 1,799 (148)
(Decrease) increase in other financial liabilities (3,326) 1,842
Decrease in provisions (1,711) (21)
Cash generated by operations 935 4,755
Additional contributions to pension schemes (606) (887)
Taxes paid (261) (231)
Net cash generated by operating activities 68 3,637
Cash flows from investing activities
Interest received 15 63
Proceeds from disposal of Todd & Duncan 5,426 -
Proceeds from disposal of Dorma Brand - 4,523
Purchase of property, plant and equipment (114) (546)
Purchase of intangible assets (59) (2)
Net cash generated by investing activities 5,268 4,038
Cash flows from financing activities
Interest paid (513) (985)
Decrease in asset backed finance (4,212) (7,602)
Net cash used by financing activities (4,725) (8,587)
Net cash generated (used) by continuing operations 611 (912)
Discontinued operations
Net cash generated by operating activities 2,930 2,626
Net cash used by investing activities (270) (18)
Net cash generated by discontinued operations 2,660 2,608
3,271 1,696
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period 9,900 6,093
Exchange rate effects (828) 2,111
Cash and cash equivalents at the end of the period 12,343 9,900
RECONCILIATION OF MOVEMENT IN NET FUNDS (DEBT)
For the period ended 2 January 2010
2009 2008
£000 £000
Increase in cash and cash equivalents 3,271 1,696
Decrease in borrowings 4,212 7,602
Exchange rate effects (828) 2,111
Increase in net funds 6,655 11,409
Opening net funds (debt) 5,688 (5,721)
Closing net funds 12,343 5,688
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1 Basis of Information in the Preliminary Announcement
The financial information set out above does not constitute the Company's statutory accounts for the years ended 2 January 2010 or 3 January 2009, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2 January 2010 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) Companies Act 2006 or equivalent preceding legislation.
2 Segmental Reporting
Segmental analysis has been aligned with internal reporting to the 'Chief Operating Decision Maker' which is considered to be the Board of Directors.
The operating segments have been identified as the following:
UK Knitwear
This segment comprises the Barrie business which manufactures cashmere and woollen garments which are sold mainly in the European market. It sells both to private label customers and under its own labels which include Barrie, John Laing and Glenmac.
US Knitwear
This segment comprises the Forte business which sources cashmere garments from China which are sold in the American market, primarily to large private label customers. It also sells to smaller boutique customers under its own 'Kinross' label. This business is highly seasonal, making over 90 per cent of its sales and all of its profit in the second half of the year.
Home Furnishings - Private Label
This segment designs and sources bed linen, primarily from Asia, which is sold to Private Label customers.
Home Furnishings - Branded
This segment designed and sourced 'Dorma' branded bed linen which it retailed through a number of channels. Following the sale of the 'Dorma' brand to Dunelm Group in July 2008 a phased exit from this business is being conducted which will complete by mid 2010. Certain establishment costs, currently charged to the Branded segment will then transfer to the Private Label segment.
Revenue Profit (Loss)
2009 2008 2009 2008
£000 £000 £000 £000
UK Knitwear 7,896 10,032 1,133 1,507
US Knitwear 28,695 34,023 3,774 3,588
Home Furnishings - Private 24,795 21,766 (117) 2,862
Label
Home Furnishings - Branded 11,497 19,892 (1,365) (2,422)
Segmental revenues/operating 72,883 85,713 3,425 5,535
profit before exceptional
items and central costs
Unallocated central costs
- foreign exchange gain (loss) 209 (1,460)
- other administrative costs (2,228) (3,558)
Operating profit before 1,406 517
exceptional items
Exceptional items 556 1,342
Operating profit 1,962 1,859
Net finance charges (1,387) (739)
Continuing operations 575 1,120
Assets
2009 2008
£000 £000
UK Knitwear 2,267 1,698
US Knitwear 3,052 2,526
Home Furnishings - Private 8,313 7,450
Label
Home Furnishings - Branded 3,818 7,120
Segmental assets 17,450 18,794
Unallocated central assets 628 3,295
Deferred tax 1,750 1,500
Cash and deposits 12,343 9,900
Total assets, continuing 32,171 33,489
operations
Total assets, discontinued 649 19,390
operations
Total assets 32,820 52,879
Continuing Operations Discontinued Total
Operations
2009 2008 2009 2008 2009 2008
3 Operating Profit £000 £000 £000 £000 £000 £000
Operating profit is stated after charging
(crediting):
Staff costs 10,485 13,057 2,849 4,347 13,334 17,404
Depreciation of property, plant and equipment
- base 167 428 244 376 411 804
- impairment charge - 475 - 1,000 - 1,475
Amortisation of computer software
- base 47 33 - - 47 33
- impairment charge - 324 - - - 324
Decrease in inventory net realisable value - (438) - - - (438)
provision
Gain (loss) on disposal of property, plant and 5 - (4) - 1 -
equipment
Operating lease rentals - -
- plant and machinery 61 5 3 5 64 10
- other 510 759 - - 510 759
Net foreign exchange (gains) losses (405) 1,001 (270) (222) (675) 779
Government grants towards training costs 4 8 - - 4 8
Government grants towards market research costs 8 7 - - 8 7
Government grants towards efficiency projects 4 - - - 4 -
Cost of inventories recognised as an expense 53,318 58,092 13,470 18,052 66,788 76,144
Impairment (gains) losses recognised on trade (388) 260 236 276 (152) 536
receivables
Auditors' remuneration (as analysed below) 167 - 14 - 181 -
Previous auditors' remuneration (as analysed 28 440 - 18 28 458
below)
Auditors' remuneration:
Audit of these financial statements 66 - - - 66 -
Audit fees for subsidiaries pursuant to 26 - 14 - 40 -
legislation
Total audit fees 92 - 14 - 106 -
Valuation and actuarial services 31 - - - 31 -
Other services relating to taxation 44 - - - 44 -
Total non-audit fees 75 - - - 75 -
Previous auditors' remuneration:
Audit of these financial statements - 102 - - - 102
Audit fees for subsidiaries pursuant to - 50 - 18 - 68
legislation
Total audit fees - 152 - 18 - 170
Other services pursuant to such legislation 5 15 - - 5 15
Valuation and actuarial services (4) 82 - - (4) 82
Other services relating to taxation 27 191 - - 27 191
Total non-audit fees 28 288 - - 28 288
4 Exceptional Items - Continuing Operations 2009 2008£000
£000
Reorganisation costs(i)
- UK Knitwear (125) -
- Home Furnishings Branded - (175)
King Deer debt repayment(ii) 973 -
Property costs(iii) (292) -
Gain on sale of Dorma Brand(iv) - 1,517
556 1,342
(i) Reorganisation costs arise from the restructuring of the operating divisions and comprise redundancy costs, fixed asset write offs and associated fees.
(ii) During the year the Company received repayment of $1.5 million against a long outstanding debt due from Inner Mongolia King Deer Cashmere Company Limited. The original debt was approximately $10 million and has been fully provided against in the accounts. Given the age of the debt, the Company considers it appropriate to retain a full provision against the outstanding balance.
(iii) The Company is currently negotiating the early exit from a leasehold property and has made a full provision against the anticipated cost.
(iv) On 29 July 2008 the Company announced the sale of the Dorma trademark and associated rights to Dunelm Group plc for a cash consideration of £5 million and noted that it would incur costs of exiting its Dorma Branded business by January 2011. Costs estimated to be £3.5 million have been provided comprising £2.7 million cash costs and £0.8 million fixed asset impairment.
5 Discontinued Operations
On 28 August 2009 the Company completed the sale of the business, fixed assets and stocks of the Todd & Duncan yarn spinning division to Ningxia Zhongyin Cashmere Company Limited. The consideration was based on the value of fixed assets and stocks at completion less a discount of £4.2 million. The Company incurred costs of £946,000 in respect of the disposal. The results of discontinued operations are as follows:
2009 2008
£000 £000
Revenue 14,625 21,514
Cost of sales (13,201) (18,052)
Gross margin 1,424 3,462
Operating expenses (2,351) (2,960)
(Loss) profit before exceptional items (927) 502
Fixed asset impairment - (1,000)
Loss on disposal of business (5,200) -
Loss for the period from discontinued operations (6,127) (498)
As part of the sale two supply agreements have been entered into. Barrie, which currently sources some of its cashmere yarn from Todd & Duncan, has signed a four year supply agreement to source yarn from Todd & Duncan Limited at similar levels. Dawson Forte, which sources some its cashmere garments from Zhongyin, has signed a four year supply agreement to offer a minimum level of garment orders to Zhongyin.
The assets of the Todd & Duncan business which formed part of the sale agreement were as follows:
2009
£000
1,304
Property, plant and equipment
Inventories 8,890
10,194
Trade and other receivables 1,865
Trade and other payables (1,487)
10,572
(4,200)
Discount to net assets
Total consideration 6,372
Disposal costs (946)
Net proceeds 5,426
Satisfied by:
Cash and cash equivalents 5,426
All monies arising on the sale of the business were settled by the year end.
The impact of Todd & Duncan on the Group's results in the current and prior periods is disclosed above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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| 10-03-10 | RNS |
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RNS Number : 3384I Dawson International PLC 10 March 2010 10 March 2010 Dawson International PLC Board Change Dawson International PLC (the "Company") announces that, with the support of shareholders owning more than 50 per cent of the ordinary share capital of the Company, David Bolton, interim non-executive Chairman, was appointed as non-executive Chairman on 9 March 2010. For further information, please contact:
David Cooper, Group Finance Director
Robin Gwyn
Zoe Biddick
This information is provided by RNS The company news service from the London Stock Exchange END
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Mr Giovanni Ghione (company Director) purchased 5million shares at 2p each on 16th March 2010.
Increasing his holding to 10.15% of company and 22.8million shares. Usually a good sign for a firm. BUY |
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BTW- I thought that Scots didni have a long life expectancy!!
that's not what the statement says! |
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I suppose I am talking to myself here.
But I cannot understand how a small company has a pension deficit of almost £20 million and is able to keep trading as a going concern. Their UK bankers (GMAC) say they don't want to continue with them, and the directors state they face the future with confidence! Can someone, anyone, please explain. I like the look of this company, products etc, but if the pension deficit can increase by £14 million in one year it has to make any equity or debt investor nervous. |
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Amazing they have one debtor from King Deer Cashmere that is greater than the whole company's market cap!
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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