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Dawson International

  • BY: Andrew Hore |
  • POSTED: 18/05/2011 |

Dawson International is exiting the bed linen market and concentrating on cashmere.

Brookmann Home is paying £4m for the business, £2m less than net asset value, and buying £2.5m of stock over a six month period. The deal will cost £500,000 so the total write-down will be £2.5m.

The bed linen business lost £1.5m after exceptional costs on revenues of £30.3m in the last financial year. Group revenues were £65.7m and there was an underlying group profit of £740,000.

Brookmann’s contacts and skills should enable it to offset some of the increase in cost of cotton.

The cashmere operations are being brought under one management team.

The cash raised could help to reduce Dawson’s pension deficit. The IAS 19 pension deficit fell by £6.9m to £12.3m last year but Dawson is still paying out £1.5m each year to reduce the deficit. The government’s pension levy takes £600,000 and admin and adviser fees consume a further £500,000. Any change to the pension fund requires the agreement of the trustees.

At 2p a share, Dawson is valued at £4.5m. Dawson had net cash of £11.6m at the end of its 2010 financial year but that is the high point for the financial year. Dawson dips into its borrowing facilities in July, August and September.

Download the May 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFMay2011_20.pdf

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