Jewels pull Excalibur down into pounds 6.2m loss

DRASTIC restructuring at Excalibur's jewellery manufacturing arm meant the engineering, giftware and jewellery group made losses of pounds 6.2m before tax in the year to 30 April.

The dividend for the year has been halved to 0.5p on losses per share of 10.5p.

The result compares with a pounds 20,000 profit last year. Operating profits, excluding the jewellery division and exceptional charges of pounds 6.4m, were also lower at pounds 3.4m ( pounds 4m). The group declared first-half losses of pounds 183,000 in January and halved its interim dividend. Last year the group restructured its borrowings away from short-term debt to longer-term arrangements with fewer lenders.

Arthur Church, who recently completed a rationalisation at Metal Closures after it was bought by Wassall, joins as group chief executive, replacing Richard Griffiths, who will remain a non-executive director.

His brother, Michael Griffiths, chairman, said that the board had decided to take radical action to eliminate the losses from Excalibur Jewellery and Hi-Ton, an engineering subsidiary.

Excalibur Jewellery lost pounds 1.6m at the operating level - pounds 5.8m of the exceptional provisions are to cover scaling down the subsidiary's Birmingham manufacturing base. But Mr Griffiths said the cash cost of the closure should be no more than pounds 1m.

Two other jewellery subsidiaries - the Premier Chain Company and TA Durant - remained profitable despite a continuing decline in the jewellery market.

The remaining pounds 600,000 provision is to meet the cost of merging Burman and Hi-Ton, two engineering companies. The aerospace division performed well, with a 40 per cent rise in sales buoying profitability, Mr Griffiths said.

He added that there might be further disposals once the restructuring was complete. 'Obviously we'll be sitting down with the new chief executive and reviewing all the businesses.'

Excalibur announced in April that it was in takeover talks, sending the share price surging from a low of 81 2 p to 171 2 p. Mr Griffiths confirmed that he had received an offer, but said it was not high enough. 'One of the disadvantages of a low share price is that people think they can come and steal your business.

'People have tended to focus on the high-profile jewellery side of the business, which has been having problems as the market contracted severely. But we have very high-quality businesses on the engineering side that others have recognised the value of.' Excalibur shares rose 1 2 p yesterday to 12p.