TIDMDWSN
RNS Number : 1222T
Dawson International PLC
01 December 2011
DAWSON INTERNATIONAL PLC
HALF YEAR REPORT FOR THE PERIOD ENDED 1 OCTOBER 2011
KEY POINTS
-- Home Furnishings business sold on 17 May, estimated net proceeds GBP6.5 million.
- GBP4.4 million net proceeds received in the period.
- Loss incurred in the six weeks to disposal GBP0.5 million.
-- Dawson now strategically positioned as a specialist cashmere business.
Continuing operations highlights:
-- Turnover GBP19.8 million (2010: GBP21.5 million).
-- Operating profit before exceptional items GBP0.3 million (2010: GBP1.2 million).
-- Operating profit after exceptional items GBP0.4 million (2010: GBP1.8 million).
-- Margins of US business impacted by significant cashmere price
increases in the past two years.
-- Net cash outflow GBP5.1 million (2010: GBP7.1 million),
includes net proceeds from the sale of the Home Furnishings
business of GBP4.4 million and additional payments to pension
schemes of GBP2.3 million.
-- Strong cash position of GBP5.0 million.
Commenting on the half year results, chairman, David Bolton
said:
"I am pleased to report a profit after tax of GBP0.6 million for
the first half of the financial year as we progress our strategy to
re-position and develop the Company as a specialist cashmere
business, the area in which we are renowned. The disposal of our
non-cashmere business, Dawson Home Group Limited, was completed on
17 May 2011 and our focus is now on growing our cashmere business
by expanding our customer base in both new and existing
geographical areas and expanding our product offering in both
cashmere and complementary accessories.
We entered this financial year recognising that difficult global
economic conditions coupled with significant raw material price
increases in each of the last two years would have a negative
impact on our results. We have traded ahead of our expectations in
the first half of the year but this is due at least in part to the
timing of sales and our expectations for the full year remain
broadly unchanged.
We are cautiously hopeful that our negotiations with the
Pensions Trustees and the Pensions Regulator are reaching a
conclusion which will provide a measure of certainty for our
pension scheme members, employees, customers and shareholders going
forward."
For further information please contact:
David Bolton, Chairman 07710 497166
David Cooper, Group Finance Director 07836 299548
Zoe Biddick, Biddicks Financial
Public Relations 0203 178 6378
Robin Gwyn, WH Ireland 0161 832 2174
Chairman's Statement
I am pleased to report a profit after tax of GBP0.6 million for
the first half of the financial year as we progress our strategy to
re-position and develop the Company as a specialist cashmere
business, the area in which we are renowned. The disposal of our
non-cashmere business, Dawson Home Group Limited, was completed on
17 May 2011 and our focus is now on growing our cashmere business
by expanding our customer base in both new and existing
geographical areas and expanding our product offering in both
cashmere and complementary accessories.
Continuing operations reported an operating profit before
exceptional items of GBP0.3 million which compares with a profit of
GBP1.2 million in the previous year. This deterioration was
expected and is due principally to two factors: Talbots, one of the
significant customers of our US business has chosen to source
directly this year. Despite the addition of a number of new
customers, net sales of the US business consequently fell by $1.2
million or 5 per cent. Secondly, the US business has been
particularly affected by the significant rise in cashmere raw
material prices in the past two years with the result that margins
have fallen by 6 per cent. Volatility of cashmere prices has always
been a feature of our industry due to limited supply and variable
quality but it is noteworthy that increased domestic consumption
within China has now also impacted demand. We regard this as an
opportunity and are currently exploring a number of options to
market our products more widely in China. Further cost increases in
cashmere fibre are possible in 2012, however when prices stabilise
we expect to see margin recovery in the US business.
Our cashmere businesses in the UK and the USA are working more
closely together to exploit marketing opportunities in the USA,
Europe and the Far East. Where possible, cost savings have been
achieved through integration and rationalisation of the management
structure. We also recognise however the need to invest
appropriately if we are to achieve growth and it is vital that this
investment continues despite the difficult current economic
conditions that we are operating in.
The results of continuing operations benefited from an
exceptional credit of GBP0.1 million and from net finance income of
GBP0.7 million relating to the defined benefit pension schemes.
Including these items, the net profit from continuing operations
was GBP1.1 million compared with a profit of GBP1.7 million last
year.
The discontinued Home Furnishings business, Dawson Home Group
Limited, made a loss of GBP0.5 million in the six week period to
its disposal on 17 May 2011. Net proceeds of the sale, after
disposal costs, are expected to be GBP6.5 million of which GBP4.8
million was received by the period end and the balance is due by 31
March 2012. The loss on sale of GBP2.5 million was fully provided
in the last financial period.
As noted in the last annual report the most recent actuarial
valuation of the UK defined benefit pension schemes indicated a
funding deficit in excess of GBP50 million. While this figure is
constantly moving as a result of changes in market conditions, it
is of such a size that it has not been possible for the Company and
the Trustee to agree realistic recovery plans despite protracted
and expensive consultations. The Pensions Regulator has been
involved through the course of these consultations and has recently
been conducting its own review. We expect that this review will be
concluded shortly and that a meeting between the parties will be
held without undue delay to agree how to secure the best possible
outcome for pension scheme members and the Company.
Operating and Financial Review
In 2010 the Company changed its accounting reference date from
31 December to 31 March. The half year financial statements
therefore compare the six month period to 1 October 2011 with the
six month period to 2 October 2010 and the fifteen month period to
2 April 2011.
Income Statement Summary
6 months 6 months
to to
1 October 2 October
2011 2010
GBP000 GBP000
------------------------------------------- ---------- ----------
Continuing operations:
Revenue
UK Knitwear 4,976 4,893
US Knitwear 14,800 16,561
---------- ----------
19,776 21,454
Operating profit before exceptional
items
UK Knitwear 541 388
US Knitwear 982 2,400
Central overheads
- Pension costs (809) (617)
- Other costs (414) (1,007)
---------- ----------
300 1,164
Exceptional items 125 668
Net finance income (charges)
- on borrowings (19) (104)
- on pension obligations 695 -
------------------------------------------- ---------- ----------
Profit before tax - continuing operations 1,101 1,728
Loss before tax - discontinued operations (480) (436)
------------------------------------------- ---------- ----------
621 1,292
------------------------------------------- ---------- ----------
Operating Results - continuing operations
Turnover from continuing operations for the six months ended 1
October 2011 was GBP19.8 million, a reduction of GBP1.7 million or
8 per cent. Pre-exceptional operating profit for the period was
GBP0.3 million, a reduction of GBP0.9 million or 74 per cent.
UK Knitwear
Turnover in the first half of the year was GBP5.0 million (2010:
GBP4.9 million) and the operating profit GBP0.5 million (2010:
GBP0.4 million). Both turnover and margins benefited from an
improved sales mix with higher couture sales and lower sourced
goods. This excellent first half performance will not be repeated
in the second half of the year which is seasonally weaker and will
be impacted by yarn price increases.
US Knitwear
Turnover in the first half of the year in US Dollars was $24.0
million (2010: $25.2 million) and the operating profit $1.6 million
(2010: $3.7 million). Sales fell by $5.0 million as a result of one
customer, Talbots, choosing to source directly. The revenue
shortfall was largely compensated for by a combination of new
business and earlier timing of sales to existing customers; however
these were at lower margin. Margins generally fell across the
business as the substantial increases in cashmere fibre prices
experienced in the past two years were reflected in higher product
costs which could not be fully passed on to customers. The business
successfully introduced a cashmere/silk scarf accessory line in the
period and a number of other accessories to complement the core
cashmere offering are being considered. The US Knitwear business is
expected to be loss making in the second half which, as with the UK
Knitwear business, is seasonally weaker.
Central Overheads
Central overheads were GBP1.2 million (2010: GBP1.6 million).
Reductions of GBP0.3 million were achieved in payroll costs
following the reorganisation of the Corporate Office while an
exchange gain of GBP0.1 million compared with a loss of GBP0.1
million in the previous year. Pension costs are a significant
proportion of central overheads with administration fees,
consultancy fees and pension protection fund levies totalling
GBP0.8 million (2010: GBP0.6 million).
Exceptional Items - continuing operations
Net exceptional income for the period was GBP0.1 million (2010:
GBP0.7 million). Exceptional income of GBP0.2 million resulted from
the release of a provision for the costs of liquidating overseas
dormant companies. Exceptional costs of GBP0.1 million were
incurred to remove asbestos from a vacant factory which will now be
demolished.
Net Finance Costs
Net finance costs, excluding pension related items were nil in
the period (2010: GBP0.1 million). Net finance income on pension
obligations was GBP0.7 million (2010: nil). This is a notional
figure only calculated as the expected return on scheme assets in
the year less the unwinding of one year's discount on pension
obligations.
Discontinued Operations
Dawson Home Group Limited incurred a loss of GBP0.5 million
(2010: GBP0.4 million) in the six week period prior to its disposal
on 17 May 2011.
Balance Sheet Summary
1 October 2 October 2 October
2011 2010 2010
Total Total Discontinued*
GBP000 GBP000 GBP000
------------------------------- ---------- ---------- --------------
Fixed assets 641 933 261
Working Capital
Inventory 3,645 9,801 6,141
Trade and other receivables 11,449 13,165 3,809
Trade and other payables (5,095) (9,743) (3,514)
---------- ---------- --------------
9,999 13,223 6,436
Provisions (2,009) (1,528) (59)
Tax assets 351 1,995 -
Pension obligations (12,904) (18,991) -
Net funds 5,006 5,509 -
Net assets 1,084 1,141 6,638
------------------------------- ---------- ---------- --------------
* Net assets of the discontinued Home Furnishings business at 2
October 2010 are extracted from the total figures shown to
demonstrate the impactof the disposal on comparative figures.
Fixed assets were GBP0.6 million (2010: GBP0.9 million) with the
reduction primarily due to the disposal of Dawson Home Group
Limited.
Working capital was GBP10.0 million (2010: GBP13.2 million) with
the reduction primarily due to the disposal of Dawson Home Group
Limited. Working capital at 1 October 2011 includes receivables due
from Inner Mongolia King Deer Cashmere Company Limited of GBP0.5
million and Dawson Home Group Limited of GBP2.2 million.
Provisions were GBP2.0 million (2010: GBP1.5 million) with the
increase primarily due to an additional provision made at 2 April
2011 in respect of US environmental liabilities.
Tax assets were GBP0.4 million (2010: GBP2.0 million) with the
reduction primarily due to the reversal of the US deferred tax
asset of GBP1.8 million at 2 April 2011.
The net pension liability, calculated in accordance with IAS19,
was GBP12.9 million (2010: GBP19.0 million). The reduction reflects
updated valuations by the scheme actuaries in the UK and the USA
and deficit repair contributions of GBP2.2 million in the UK and
GBP0.3 million in the USA.
Net funds were GBP5.0 million (2010: GBP5.5 million). In the six
months to 1 October 2011 total cash outflow was GBP5.1 million
(2010: GBP7.1 million outflow) with the significant items as
follows:
- The cash outflow from continuing operating activities was
GBP8.1 million (2010: GBP6.6 million) of which GBP2.3 million was
additional contributions to pension schemes (2010: GBP0.2 million).
The cash outflow before pension contributions reflects the seasonal
build of working capital.
- The cash outflow from discontinued operating activities was
GBP1.3 million (2010: GBP0.3 million).
- Net cash proceeds from the disposal of Dawson Home Group
Limited were GBP4.4 million (2010: nil).
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 twelve months from the date of
signing this Half Year Report. These have been based on a
comprehensive review of revenue, expenditure and cash flows, taking
into account the likelihood of recovering the balance of King Deer
debt and the deferred consideration from the disposal of Dawson
Home Group Limited and specific business risks and the
uncertainties brought about by the current economic
environment.
The key assumption made in these forecasts is that there is no
demand for a pensions' deficit repair contribution beyond the means
of the Group to pay. Based on current negotiations with the
Trustees and the Pensions Regulator, the Directors consider that
the imposition of a Contribution Notice by either the Pensions
Regulator or the scheme actuary is unlikely. The Company has not
taken any steps which are materially detrimental to the pension
schemes and, in any event, a Contribution Notice is likely to
result in the insolvent realisation of Company assets which is not
expected to be in any stakeholders' best interests.
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.
Accordingly, the Directors have continued to adopt the going
concern basis of preparing the financial statements.
Strategy and Outlook
We entered this financial year recognising that difficult global
economic conditions coupled with significant raw material price
increases in each of the last two years would have a negative
impact on our results. We have traded ahead of our expectations in
the first half of the year but this is due at least in part to the
timing of sales and our expectations for the full year remain
broadly unchanged.
We are committed to our strategy of developing our core cashmere
business and achieving growth both by accessing new markets and
extending our product range. We are cautiously hopeful that our
negotiations with the Pensions Trustees and the Pensions Regulator
are reaching a conclusion which will provide a measure of certainty
for our pension scheme members, employees, customers and
shareholders going forward.
David Bolton
Chairman
Consolidated Income Statement
-------------------------------------------------- ----- ---------- ---------- ----------
For the period ended 1 October
2011
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
Note GBP000 GBP000 GBP000
-------------------------------------------------- ----- ---------- ---------- ----------
Continuing operations
Revenue 2 19,776 21,454 38,095
Cost of sales (15,586) (16,238) (28,721)
-------------------------------------------------- ----- ---------- ---------- ----------
Gross profit 4,190 5,216 9,374
Other income 3 3 124
Selling and distribution costs (808) (870) (1,624)
Administrative expenses (3,085) (3,185) (7,759)
Operating profit before exceptional
items 2 300 1,164 115
Exceptional items 3 125 668 1,787
-------------------------------------------------- ----- ---------- ---------- ----------
425 1,832 1,902
Operating profit
Finance income 5 11 2 10
Finance costs 5 (30) (106) (244)
Net finance income on pension assets/liabilities 695 - 838
Profit before taxation 1,101 1,728 2,506
Taxation 6 - - (1,759)
-------------------------------------------------- ----- ---------- ---------- ----------
Profit for the period from continuing
operations 1,101 1,728 747
Discontinued operations
Loss for the period from discontinued
operations 4 (480) (436) (4,228)
Profit (loss) for the period 621 1,292 (3,481)
-------------------------------------------------- ----- ---------- ---------- ----------
Basic and diluted earnings (loss)
per share
- From continuing operations 7 0.5p 0.8p 0.3p
- From continuing and discontinued
operations 7 0.3p 0.6p (1.6)p
-------------------------------------------------- ----- ---------- ---------- ----------
Consolidated Statement of Comprehensive
Income
--------------------------------------------------------- ---------- ---------- ----------
For the period ended 1 October 2011
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
GBP000 GBP000 GBP000
--------------------------------------------------------- ---------- ---------- ----------
Profit (loss) for the period 621 1,292 (3,481)
--------------------------------------------------------- ---------- ---------- ----------
Other comprehensive income (loss):
Exchange differences on translation
of foreign operations 154 (139) 181
Actuarial gain (loss) on defined benefit
pension obligations (4,273) - 6,388
Other comprehensive income (loss) for
the period (4,119) (139) 6,569
--------------------------------------------------------- ---------- ---------- ----------
Total comprehensive income (loss) for
the period (3,498) 1,153 3,088
--------------------------------------------------------- ---------- ---------- ----------
Total comprehensive income is all attributable
to equity holders of the parent.
Consolidated Balance Sheet
-------------------------------------- ----- ---------- ---------- ---------
As at 1 October 2011
1 October 2 October 2 April
2011 2010 2011
Note GBP000 GBP000 GBP000
-------------------------------------- ----- ---------- ---------- ---------
Non-current assets
Intangible assets 1 101 1
Property, plant and equipment 640 832 646
Deferred tax asset - 1,787 -
Total non-current assets 641 2,720 647
-------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventories 3,645 9,801 2,684
Trade and other receivables 11,449 13,165 2,581
Income tax recoverable 351 208 351
Cash and cash equivalents 5,006 5,509 10,157
Disposal group held for sale - - 11,636
-------------------------------------- ----- ---------- ---------- ---------
Total current assets 20,451 28,683 27,409
-------------------------------------- ----- ---------- ---------- ---------
Total assets 21,092 31,403 28,056
-------------------------------------- ----- ---------- ---------- ---------
Current liabilities
Trade and other payables 5,095 9,743 3,384
Provisions 506 510 495
Other financial liabilities - - 106
Liabilities directly associated with
disposal group held for sale - - 6,435
Total current liabilities 5,601 10,253 10,420
-------------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Provisions 1,503 1,018 1,510
Retirement benefit obligations 8 12,904 18,991 11,544
Total non-current liabilities 14,407 20,009 13,054
-------------------------------------- ----- ---------- ---------- ---------
Total liabilities 20,008 30,262 23,474
-------------------------------------- ----- ---------- ---------- ---------
Net assets 1,084 1,141 4,582
-------------------------------------- ----- ---------- ---------- ---------
Equity
Share capital 51,989 51,989 51,989
Share premium account 5,489 5,489 5,489
Translation reserve 575 409 421
Retained earnings (56,969) (56,746) (53,317)
Total equity 1,084 1,141 4,582
-------------------------------------- ----- ---------- ---------- ---------
Consolidated Statement of Changes in
Equity
------------------------------------------ -------- ------------ --------- --------
For the period ended 1 October
2011
Share Share Translation Retained
Capital Premium Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- ------------ --------- --------
At 3 April 2010 51,989 5,489 548 (58,038) (12)
Total comprehensive income
for the period - - (139) 1,292 1,153
At 2 October 2010 51,989 5,489 409 (56,746) 1,141
-------------------------------- -------- -------- ------------ --------- --------
At 2 April 2011 51,989 5,489 421 (53,317) 4,582
Total comprehensive income
for the period - - 154 (3,652) (3,498)
At 1 October 2011 51,989 5,489 575 (56,969) 1,084
-------------------------------- -------- -------- ------------ --------- --------
Consolidated Cash Flow Statement
-------------------------------------------- ---------- ---------- ----------
For the period ended 1 October 2011
6 months 6 months 15 Months
to to to
1 October 2 October 2 April
2011 2010 2011
GBP000 GBP000 GBP000
-------------------------------------------- ---------- ---------- ----------
Continuing operations
Cash flows from operating activities
Profit before tax 1,101 1,728 2,506
Depreciation 87 90 216
Net finance (income) expense (676) 104 (604)
-------------------------------------------- ---------- ---------- ----------
512 1,922 2,118
Increase in inventories (879) (2,607) (1,455)
(Increase) decrease in receivables (6,403) (7,573) 1,458
Increase (decrease) in payables 1,121 2,273 (1,369)
Increase (decrease) in provisions (216) (77) 466
Cash generated (used) by operations (5,865) (6,062) 1,218
Additional contributions to pension
schemes (2,257) (200) (480)
Taxes paid - (354) (702)
Net cash generated (used) by operating
activities (8,122) (6,616) 36
-------------------------------------------- ---------- ---------- ----------
Cash flows from investing activities
Interest received 13 2 10
Proceeds from disposal of Dawson Home
Group 4,443 - -
Purchase of property, plant and equipment (71) (19) (48)
Purchase of intangible assets - - (47)
Net cash generated (used) by investing
activities 4,385 (17) (85)
-------------------------------------------- ---------- ---------- ----------
Cash flows from financing activities
Interest paid (34) (106) (244)
Net cash used by financing activities (34) (106) (244)
-------------------------------------------- ---------- ---------- ----------
Net cash used by continuing operations (3,771) (6,739) (293)
-------------------------------------------- ---------- ---------- ----------
Discontinued operations
Net cash used by operating activities (1,289) (310) (1,960)
Net cash used by investing activities (58) (25) (36)
Net cash used by discontinued operations (1,347) (335) (1,996)
-------------------------------------------- ---------- ---------- ----------
Net decrease in cash and cash equivalents (5,118) (7,074) (2,289)
Cash and cash equivalents at the beginning
of the period 10,157 12,508 12,343
Exchange rate effects (33) 75 103
-------------------------------------------- ---------- ---------- ----------
Cash and cash equivalents at the end
of the period 5,006 5,509 10,157
-------------------------------------------- ---------- ---------- ----------
Reconciliation of Movement in Net
Funds
-------------------------------------------- ---------- ---------- ----------
For the period ended 1 October 2011
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
GBP000 GBP000 GBP000
-------------------------------------------- ---------- ---------- ----------
Decrease in cash and cash equivalents (5,118) (7,074) (2,289)
Exchange rate effects (33) 75 103
-------------------------------------------- ---------- ---------- ----------
Decrease in net funds (5,151) (6,999) (2,186)
Opening net funds 10,157 12,508 12,343
-------------------------------------------- ---------- ---------- ----------
Closing net funds 5,006 5,509 10,157
-------------------------------------------- ---------- ---------- ----------
NOTES TO THE HALF YEAR REPORT
1. Basis of preparation and significant accounting policies
Basis of preparation
This half year report contains the condensed consolidated
financial information of the Company and its subsidiaries ("the
Group") for the six month period ended 1 October 2011 prepared in
accordance with the AIM rules. It is unaudited and has not been
reviewed by the auditors. The report does not contain all of the
information and disclosures required in the annual financial
statements and does not therefore constitute statutory accounts as
defined in section 435 of the Companies Act 2006. It should be read
in conjunction with the 2011 annual report.
In 2010 the Company changed its accounting reference date from
31 December to 31 March. The half year financial statements
therefore compare the six month period to 1 October 2011 with the
six month period to 2 October 2010 and the fifteen month period to
2 April 2011. Comparative information for the six month period to 2
October 2010, which has been extracted from management accounts, is
unaudited and has not been reviewed by the auditors. Comparative
information for the fifteen month period to 2 April 2011 is based
on the statutory accounts for that period which were prepared under
International Financial Reporting Standards as adopted by the EU
and have been delivered to the Registrar of Companies. The report
of the auditors was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain statements under section 498 (2) or (3) of the Companies
Act 2006.
The financial information is prepared on the historical cost
basis and is presented in Sterling, rounded to the nearest
thousand.
The condensed financial statements have been prepared on the
going concern basis which the Directors consider to be appropriate
based on a review of projected cashflows which take into account
(i) the general economic environment, which continues to be
challenging and (ii) the business specific risks and uncertainties
which are discussed on pages 13 and 14 of the 2011 annual report
and are not considered to have changed. Further details are given
in the Operating and Financial Review.
This half year report contains certain forward looking
statements which are subject to various risks and uncertainties and
should therefore be treated with an appropriate level of caution
and not regarded as a forecast of future results.
Significant accounting policies
The interim condensed consolidated financial statements have
been prepared applying the same accounting policies that are
expected to be adopted in the Group's full financial statements for
the twelve month period ended 1 April 2012 which are not expected
to be significantly different to those set out in note 1 of the
Group's audited financial statements for the period ended 2 April
2011.
The following new standards, amendments to standards and
interpretations are mandatory for the first time for financial
periods commencing on or after 1 January 2011 but have had no
material impact on the financial statements of the Group.
-- Revised IAS 24 - Related party disclosures.
-- Amendment to IFRIC 14 - Prepayments of a Minimum Funding Requirement.
-- IFRS 2010 Improvements - Improvements to IFRSs 2010.
This half year report was approved by the Board of Directors on
30 November 2011. Copies of this report and the 2011 Annual Report
are available on the Company's website at
www.dawson-international.co.uk
2. Segmental analysis
The 'Chief Operating Decision Maker' has been identified as the
Board of Directors.
The Board reviews the internal reports of the Group in order to
assess performance and allocate resources and has determined the
operating segments based on these internal reports as follows:
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 most of its sales and profit in
the third calendar quarter of the year.
Revenue Profit (loss)
6 months 6 months 15 months 6 months 6 months 15 months
to to to to to to
1 October 2 October 2 April 1 October 2 October 2 April
2011 2010 2011 2011 2010 2011
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK Knitwear 4,976 4,893 9,040 541 388 743
US Knitwear 14,800 16,561 29,055 982 2,400 2,358
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Segmental revenues/results
before 19,776 21,454 38,095 1,523 2,788 3,101
exceptional items
and central costs
Unallocated central
costs (1,223) (1,624) (2,986)
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Operating profit before
exceptional items 300 1,164 115
Exceptional items 125 668 1,787
Net finance charges (19) (104) (234)
Net finance income
on pension assets/liabilities 695 - 838
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Continuing operations 19,776 21,454 38,095 1,101 1,728 2,506
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
US Knitwear in US
dollars 23,972 25,187 45,202 1,591 3,652 3,669
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net finance charges are not allocated across segments as
borrowing requirements are managed on a Group wide basis.
The results of discontinued operations are disclosed in note
4.
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
3. Exceptional items - continuing operations GBP000 GBP000 GBP000
------------------------------------------- ---------- ---------- ----------
King Deer debt recovery(i) - 668 2,754
Reorganisation costs
- US Knitwear - - (103)
- Central(ii) 175 - (249)
Environmental remediation costs - - (615)
Property costs(iii) (50) - -
125 668 1,787
------------------------------------------------ ---------- ---------- ----------
(i) In January 2010 the Company restructured a debt of $8.9
million (GBP5.7 million) due by Inner Mongolia King Deer Cashmere
Company Limited ("King Deer") into a Loan Balance of $4.3 million
(GBP2.8 million) due to be repaid in instalments by December 2011
and an Equity Balance of $4.6 million (GBP2.9 million), which had
no fixed repayment date but was secured by an equity stake in King
Deer. The Loan Balance of GBP2.8 million was recognised as
exceptional income in the 15 month period to March 2011.
Instalments of $3.5 million (GBP2.3 million) have been received to
date with the balance of $0.8 million (GBP0.5 million) due in
December 2011.
(ii) During the period a provision for the costs of dissolving
dormant overseas subsidiaries was reassessed and GBP175,000
released.
(iii) During the period costs of GBP50,000 were incurred for the
removal of asbestos from a vacant property which is planned to be
demolished.
4. Discontinued operations
As detailed in the 2011 annual report the Company completed the
disposal of Dawson Home Group Limited on 17 May 2011. The
consideration was based on net asset value at completion less a
discount of GBP2.0 million. A provision of GBP2.5 million for loss
on sale was made at March 2011 comprising the discount to net asset
value and estimated disposal costs of GBP0.5 million. Immediately
prior to the sale GBP2.5 million of stock was transferred to a
Group company and was sold back to Dawson Home Group Limited in the
six month period following the sale. Net assets at completion were
GBP4.5 million. An initial consideration of GBP4.0 million was paid
at completion. The balance of GBP0.5 million together with the
stock sold since completion of GBP2.5 million is payable over the
period to 31 March 2012.
The results of discontinued operations, which have been included
in the Group Income Statement, were as follows:
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
GBP000 GBP000 GBP000
-------------------------------- ---------- ---------- ----------
Revenue 5,591 14,120 38,476
Cost of sales (5,447) (11,643) (32,275)
-------------------------------- ---------- ---------- ----------
Gross profit 144 2,477 6,201
Selling and distribution costs (247) (2,053) (5,149)
Administrative expenses (377) (860) (2,524)
-------------------------------- ---------- ---------- ----------
Operating profit (480) (436) (1,472)
Restructuring costs - - (256)
Loss on disposal of business - - (2,500)
-------------------------------- ---------- ---------- ----------
Loss before tax (480) (436) (4,228)
-------------------------------- ---------- ---------- ----------
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
5. Finance income (costs) GBP000 GBP000 GBP000
------------------------------------ ---------- ---------- ----------
Interest receivable on short-term
deposits 4 2 10
Finance income 4 2 10
----------------------------------------- ---------- ---------- ----------
Interest payable on asset backed
finance (30) (106) (244)
Finance costs (30) (106) (244)
----------------------------------------- ---------- ---------- ----------
6 months 6 months 15 months
to to to
1 October 2 October 2 April
2011 2010 2011
6. Income tax expense GBP000 GBP000 GBP000
------------------------------------ ---------- ---------- ----------
Current tax expense:
Current year - - 64
Adjustments in respect of prior
years - - (121)
----------------------------------------- ---------- ---------- ----------
- - (57)
Deferred tax:
Origination and reversal of timing
differences - - 1,816
Total income tax expense - - 1,759
----------------------------------------- ---------- ---------- ----------
6 months 6 months 15 months
to to to
1 October 2 October 2 April
7. Earnings (loss) per share 2011 2010 2011
------------------------------------------ -------------- ------------ ------------
Weighted average number of shares
in issue 225,158,542 225,158,542 225,158,542
----------------------------------------------- -------------- ------------ ------------
There were no potentially dilutive shares in either
the current or prior periods.
Basic and diluted earnings (loss)
per share
GBP000 GBP000 GBP000
Profit (loss) for the period attributable
to equity holders of the parent:
Continuing operations 1,101 1,728 747
Discontinued operations (480) (436) (4,228)
621 1,292 (3,481)
--------------------------------------------------- ---------- ------------ ------------
Pence Pence Pence
Basic and diluted earnings (loss)
per share:
Continuing operations 0.5 0.8 0.3
Discontinued operations (0.2) (0.2) (1.9)
0.3 0.6 (1.6)
--------------------------------------------------- ---------- ------------ ------------
Adjusted earnings (loss) per
share GBP000 GBP000 GBP000
Profit (loss) for the period
from continuing operations
attributable to equity holders
of the parent 1,101 1,728 747
Add back exceptional items (note
3) (125) (668) (1,787)
----------------------------------- ------- ------- --------
976 1,060 (1,040)
----------------------------------- ------- ------- --------
Pence Pence Pence
Adjusted earnings (loss) per
share 0.4 0.5 (0.5)
----------------------------------- ------- ------- --------
Adjusted earnings (loss) per share is calculated on the profit
or loss for the period from continuing operations before
exceptional items.
8. Retirement benefit obligations
The Group operates two defined benefit pension schemes in the UK
(the "Staff" and the "Works" schemes) which are closed to new
members and a defined benefit pension scheme in the USA which is
closed to all members. The UK schemes have less than 60 active
members and the Company is considering closing the schemes to
future accrual for existing members.
Full actuarial valuations of the UK schemes are made triennially
by an independent, professionally qualified actuary and these form
the basis of a recovery plan which is agreed by the Company and the
pension Trustees. The assumptions applied by the actuary when
calculating the deficit and recovery plan differ from those
prescribed by IAS 19 for financial reporting purposes. In
particular, the assumptions used for valuing liabilities are more
conservative and can result in a significantly higher liability
than that reported in the balance sheet. As discussed in the
Chairman's Statement, the size of the deficit has meant that the
Company and the Trustee have been unable to agree a recovery plan
based on the latest actuarial valuation and are now discussing with
the Pensions Regulator how to address this issue.
An update of the UK pension schemes valuation on an IAS 19 basis
was carried out by the scheme actuary at 1 October 2011. There was
no update of the US scheme valuation by the scheme actuary due to
its smaller size and lower volatility.
The movements in the schemes were as follows:
UK schemes US scheme Total
GBP000 GBP000 GBP000
---------------------------------- ----------- ---------- ---------
Scheme assets at 2 April 2011 108,287 4,503 112,790
Expected return on scheme assets 3,957 173 4,130
Actuarial loss (919) - (919)
Contributions by employers 2,088 257 2,345
Contributions by participants 33 - 33
Benefits paid (2,806) (247) (3,053)
Exchange - 138 138
Scheme assets at 1 October 2011 110,640 4,824 115,464
---------------------------------- ----------- ---------- ---------
Scheme liabilities at 2 April
2011 118,122 6,212 124,334
Current service cost 88 - 88
Interest cost 3,262 173 3,435
Contributions by participants 33 - 33
Actuarial loss 3,354 - 3,354
Benefits paid (2,806) (247) (3,053)
Exchange - 177 177
Scheme liabilities at 1 October
2011 122,053 6,315 128,368
---------------------------------- ----------- ---------- ---------
Deficit at 2 April 2011 (9,835) (1,709) (11,544)
Deficit at 1 October 2011 (11,413) (1,491) (12,904)
---------------------------------- ----------- ---------- ---------
During the period deficit repair contributions of GBP2.0 million
were made to the UK schemes, GBP1.8 million of which had been
agreed with the Trustee following the disposal of Todd & Duncan
in 2009.
The significant change in actuarial assumptions compared with
those at 2 April 2011 was to the discount rate applied to UK scheme
liabilities which was reduced from 5.6% to 5.2%.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMMFMLGRGMZM
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