Strategic Re-alignment
December 11 2003 - 9:00AM
UK Regulatory
RNS Number:1544T
Gaskell PLC
11 December 2003
Issued on behalf of Gaskell PLC
Date: Thursday, 11 December 2003
Embargoed 2.00pm
GASKELL PLC ("Gaskell or the "Group")
Strategic Re-alignment and Trading Update
STATEMENT BY THE CHAIRMAN, ALAN CHAMBERLAIN
As I outlined to shareholders in my interim statement of 8 September 2003
progress has been made in developing the future strategy of the Group. It was
also reported that certain markets in which the Group operates, particularly
retail, continued to be difficult.
The finalisation of the Group's future strategy has been partly dependent on the
completion of its obligations in relation to the Gaskell Tile division which Low
& Bonar PLC acquired earlier this year. These on-going obligations during 2003
had a particular impact on the Group's logistics and administrative functions,
as well as its overall space requirements.
Following the fulfilment of these obligations and in response to the continuing
challenging market conditions in the floorcovering sector, the Board today
announces a major restructuring which, subject to regulatory employment
procedures including consultation with the Group's workforce, will involve the
following initiatives:
* The creation of a more focussed and streamlined organisation, with a
single operating Board combined with one centralised sales administration,
design and finance function.
* The consolidation of the Group's manufacturing operations on to the
Clayton Park site in Accrington, thus releasing the freehold Rishton
property for disposal.
* The sourcing of key products such as fibre bonded carpet and certain
Axminster ranges from low-cost but world class manufacturers in Continental
Europe, in place of in-house manufacture.
* The full integration of the Group's existing logistics operations,
centred on a retail distribution centre at Kidderminster and a contract hub
at Clayton Park.
* Continued capital investment in high speed Axminster loom technology and
underlay equipment at the cost of #0.6m.
These measures, which are expected to be completed by September 2004, will
create a cost structure more commensurate with the current size of the Group and
allow it to concentrate its manufacturing investment in areas where it has
sustainable competitive advantage. The restructuring is expected to involve the
loss of approximately 80 jobs (equivalent to over 20% of the Group's current
workforce) and generate significant savings. It is anticipated that the related
one-off costs will be funded ultimately by the Rishton property sale.
Commenting on the Strategic Re-alignment Alan Chamberlain said:
"The adoption of the measures highlighted are critical to the long term
profitability of Gaskell and will result in a leaner and more efficient Group
structure appropriate to the on-going operations. By focusing on Axminster
weaving and traditional felt underlays we can concentrate our manufacturing
activities and channel capital investment in to these market leading
businesses."
As previously stated, the challenging trading conditions have continued in the
second half of 2003. Consequently, although there has been a recent improvement
in orders and trading, operating losses before exceptional items for the year
ending 31 December 2003 are likely to be higher than current market forecasts.
continued...
-2-
The Board is actively considering the cancellation of the Company's entire
issued share capital from the Official List of the United Kingdom Listing
Authority and admission of its entire issued share capital to the Alternative
Investment Market ("AIM") of the London Stock Exchange plc. The Directors
believe that it may be appropriate for the Company to transfer its share
quotation to AIM to take advantage of the greater degree of flexibility afforded
by this market and the savings that will arise in the costs of administration
and any corporate transactions that may possibly be undertaken in the future.
Shareholders will be kept fully informed of developments regarding the possible
transfer of Gaskell's listing to AIM.
Enquiries:
Alan Chamberlain, Chairman
Gerry Wheeler, Chief Executive
Richard Hopkin, Group Finance Director Alan Cooke, Account Manager
Gaskell PLC Citigate Dewe Rogerson
Tel: 01254 236222 Tel: 0121 455 8370 / Mobile: 07767 771533
This information is provided by RNS
The company news service from the London Stock Exchange
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