By Chris Ferguson

CORPORATE RESTRUCTURING has seen Kinross-based Dawson International dramatically slash its losses by £17 million.

In 2004, the cashmere manufacturer reported pre-tax losses of £19.1 million for the year ended December 2003, but the sale of its loss-making firm Ballantyne and Joseph improved its performance.

Chairman Mike Hartley said that substantial progress had been made in the period to December 31, 2004, to stabilise the group’s financial position and restore all businesses to profit.

As well as disposing of Ballantyne, in March of this year, Dawson bought the Dorma Group from Coats Holdings for £13.2 million.

This has almost doubled the size of the Dawson group and allowed it to move into the manufacturing of bed linen, a departure for the group which was built around luxury knitwear.

Mr Hartley said, “The strategic review is now complete and we have embarked upon a new growth phase of the planned turnaround of the group.

“This is evidenced by the acquisition of Dorma earlier this year, which almost doubles the size of the group.

“We expect that our newly developed strategic position coupled with a strong operational results focus will deliver further improvements in profit and cash generation from the enlarged group.”

Turnover increased to £70.2 million compared with £68.3 million the previous year.

Mr Hartley continued, “Much has been achieved. The financial position of the group has been stabilised and there is scope for significant further improvement in trading from the enlarged group.

“However, it must be recognised that the group continues to face the financial burden of the high cost of its outstanding loan stock and its final salary pension schemes which, under the FRS 17 regime and on the basis of the situation at the end of 2004, would bring the group balance sheet into a deficit position overall.

“The focus will continue on delivering continued improvements in operating results and cash generation and I am confident of reporting progress in the near term.”

Todd and Duncan, the group’s cashmere-yarn business based at Kinross, increased turnover which was attributed to improved customer service as a result of better production planning and operational efficiency.

“These developments significantly improved profitability,” said Mr Hartley.

In November last year, Dawson launched Kinross Cashmere Europe as a new business.