DC Gardner sells training division: Escape from Docklands lease costs pounds 5m
Monday 07 June 1993
The training division is being sold to Euromoney Publications for pounds 3.7m. The proceeds will be put towards the pounds 5m cost of giving up a 25- year lease on offices in Harbour Exchange that the division has occupied since 1989.
Yesterday Stephen Johnson, chief executive, said of the firm's departure from Harbour Exchange: 'I have never been more unsad about anything in my life. That place was a pain in the lower part of the body.'
The training division made operating profits of pounds 306,000 in 1992. But these were more than offset by costs of some pounds 1.2m, including rent and rates, incurred by the division on the Docklands offices.
'When we decided to move in, Docklands was seen as a good training location. It was not a good training location. People don't like going to Docklands,' Mr Johnson said.
The company has arranged pounds 2m worth of loan facilities with National Westminster Bank to help meet the balance of the costs of withdrawing from the lease. It ended 1992 with net debt of pounds 2.96m.
Yesterday Mr Johnson defended the company's decision to pay a total of pounds 430,000 in 'golden handcuffs' payments to some of the 69 employees in the training division.
DC Gardner is currently pounds 480,000 in arrears on the payment of dividends for convertible preference shares. It cannot resume dividend payments on the ordinary shares until these arrears have been paid.
'This is a people business,' he said. 'We are not selling (to Euromoney) very much by way of fixed assets, but people and contracts and our reputations.'
DC Gardner will seek the approval of shareholders and the courts to reduce its share premium account and help eliminate the deficit on its profit and loss account caused by the surrender of the Harbour Exchange lease.
Mr Johnson said he was confident that the performances of the two remaining divisions would continue to improve.
In 1992, operating profits in the core outplacement division rose from pounds 1.42m to pounds 2.09m. The conference centres saw operating profit leap 22 per cent to pounds 1.18m.
DC Gardner has undergone extensive restructuring over the past two years. Last November, Sir Kit McMahon took over as non-executive chairman, Mr Johnson arrived as the new chief executive and the company issued a profits warning.
It announced pre-tax profits for 1992 of pounds 1.22m, against a restated loss of pounds 10.1m for the previous year. The loss, originally reported as pounds 3.76m, was recalculated under the new FRS3 reporting standard.
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