Dawson International

Fronted by chairman Mike Hartley, Dawson International operates in every aspect of cashmere ‘from goat to garment’, and following February 2005 acquisition Dorma, is a leading maker of fine bed linen.

Hartley, appointed chairman in the summer of 2003, has restructured the business, strengthened the balance sheet, and restored profits. Figures for calendar 2005 revealed pre-tax profits of £2.9m (£100,000), from a near 60% leap in total turnover to £112m. Stripping out acquisitions and disposals, underlying turnover rose 9% to £63.9m, but the crucial point for investors is that all the key ongoing businesses raised sales and profits.

Dawson Forte, the US supplier of cashmere garments, stitched up record revenues and profits, and cashmere knitwear designer and manufacturer Barrie boosted sales of couture and private label cashmere. Cashmere yarn spinner Todd & Duncan benefited from good buying and improved yields in the first half, and investors have yet to see the best of a major investment programme.

Dorma’s reorganisation is running ahead of schedule, and the business traded profitably in the second half, although performance has been held back by the reintroduction of quotas on Chinese sourced products last summe. This disrupted the supply chain, which meant Dawson wasn’t able to get new products through as swiftly as hoped, and caused ‘customer service damage’. The quota issue also impeded Dawson’s smaller European cashmere garment sourcing businesses.

Investors have yet to see anything from February acquisition John Laing of Hawick (Dawson has acquired the stock, machinery and brand of this cashmere knitter which is being integrated into Barrie), and investment in Todd & Duncan should shine through in the second half of this year. Dawson has its baggage, but the shares are cheap, and are well worth holding.