Clarke cancels promised payout

CLARKE Foods, the owner of Lyons Maid ice-cream, saw its shares crash 80 per cent yesterday when the company reneged on its promise to pay an interim dividend.

Clarke also admitted it was 'having discussions with its bankers which are aimed at remedying the shortage of working capital'.

Shares slumped from 64p to 13p but recovered some ground later in the day to close at 21p.

The 0.75p interim dividend was promised on 3 August when Clarke anounced half-year pre-tax profits to 2 May of pounds 168,000. The cost of the dividend - which was due to be paid yesterday - was pounds 214,000.

Preference shareholders were paid, at a nominal cost of pounds 158,000. But a rival food company, Hillsdown Holdings, owns all the preference shares, and has agreed to take the dividend in more shares.

The company's operations changed out of recognition in September last year when it bought Lyons Maid from Allied-Lyons, the food and drink giant, for pounds 12m. In January it had staged a pounds 5m rights issue to part-fund the acquisition.

Clarke spent heavily on new manufacturing equipment and marketing, and has been unlucky with the weather.

When it was hot at the start of the summer, it had trouble getting its new machinery to work properly. The problems meant Clarke could not adequately supply the shops with ice-cream, and some of the marketing spend was wasted.

Then, when the new plant was working the weather turned bad, and Clarke was left with considerable stock. The company has also had difficulties getting shops to sell its product - particularly the more expensive Clarke brand.