AIREA Regulatory News (AIEA)

14 Sep 2006 07:01

Sirdar PLC14 September 2006 Sirdar PLC Preliminary results for the year ended 30th June 2006 14th September 2006 Chairman's Statement Introduction In an increasingly competitive market place, we have continued to implement awide range of initiatives in support of the group's strategy to focus on theprofitable growth of our existing operations. The change programme in the FloorCoverings division is on track and has identified opportunities to improve thesales and profitability of the division over time. The results Turnover for the year was £74.8m (2005: £71.4m), an increase of 5% and operatingprofit was £5.3m (2005: £4.8m before exceptional income (as restated), £5.2mafter exceptional income (as restated)). Divisional performance reviews andfurther financial information are contained within the Review of Operations. Management and personnel Following the move to AIM, the simplified management structure referred to inlast year's annual report was implemented on 1st January 2006. This reflects ourdetermination to continue to improve the effectiveness of the management teamand reduce costs. The board is focused on the group's strategic agenda, whilstdelegating appropriate authority and accountability to the management teams ofthe operating businesses. Current trading and future prospects In view of the downturn in demand for fashion hand knitting yarns and acontinuing uncertainty over the level of consumer spending, the prospects forfurther increases in sales and profitability in the current financial yearremain challenging. However, the ongoing implementation of our change programme will continue toyield benefits, particularly in the areas of working capital and operatingefficiencies. We have a strong, determined and enterprising management team inplace. This team is committed to improving our market shares through a clearfocus on exceeding customer expectations through the marketing of innovative,quality products. TIM VERNON 14th September 2006Chairman Review of Operations Introduction The group continues to adapt to the competitive pressures in its major markets.We have sought to increase the rate of change within the group to address marketpressures where they exist, and to exploit market opportunities where they areto be found. There has been a continuing focus on innovation, cost control andworking capital management with a view to delivering the best achievable resultfrom the group's operations. The group is likely to continue facing challengesin its markets. However, it is becoming better able to adapt and change in orderto cope with those demands. The results Turnover in the year amounted to £74.8m (2005: £71.4m). This represents anincrease of 5% attributable to growth within the Specialist Yarns division. Operating profit increased to £5.3m (2005: £4.8m before exceptional income (asrestated), £5.2m after exceptional income (as restated)). Lower average debtlevels reduced the interest charge for the year to £0.6m (2005: £0.7m). Afterthis interest charge and other finance costs, calculated in accordance with FRS17, of £0.6m (2005: £0.7m) profit on ordinary activities before taxation was£4.1m (2005: £3.8m (as restated)). Net cash inflow from operating activities increased in the year to £7.6m (2005:£6.0m), driven by effective working capital management. Net debt reduced by£3.8m to £5.4m (2005: £9.2m). Earnings and dividends per share Basic earnings per share amounted to 5.65p per share compared to 5.38p (asrestated) last year. Adjusted earnings per share for 2005, after eliminatingthe effect of the exceptional item, amounted to 4.70p (as restated). An interim dividend of 0.80p per share was paid in May 2006 and the proposedfinal dividend is 1.60p per share. This gives a total dividend of 2.40p pershare for the year, representing an increase of 14% over last year's total of2.10p per share. In accordance with FRS 21, the proposed final dividend is notrecognised as a liability at the balance sheet date. Key performance indicators As part of its internal financial control procedures the board monitors certainfinancial ratios. For the year to 30th June 2006 sales per employee amounted to£110,000 (2005: £109,000), operating return on sales was 7.1% (2005: 6.7%(before exceptional income)), return on average net operating assets was 12.5%(2005: 10.5% (before exceptional income)) and working capital to salespercentage was 20.5% (2005: 23.3%). The board is pleased to note modest improvements in each of these performancemeasures during the year. Specialist Yarns division Turnover increased to £18.6m (2005: £15.3m) and delivered operating profit of£3.7m (2005: £3.3m (as restated)). The division has enjoyed buoyant marketconditions for its range of hand knitting yarns and has been able to exploitthese opportunities to good effect as a result of the transformation of thebusiness in 2004. As indicated in the year end trading update, much of this market buoyancy hassurrounded UK demand for fashion yarns. Recent market indications are that thisfashion led peak in demand may be set to reduce over the coming year, therebyreturning demand to more normal levels. To counter this effect the business hasbeen active in broadening the scope of its product offering and in seeking togrow sales in export markets. Sales of the Tilsatec range of technical products have continued to grow throughthe development of innovative, high performance products. This was recognisedpublicly in April 2006 when the business was granted the Queen's Award forEnterprise in the innovation category. Floor Coverings division Turnover was static at £56.2m (2005: £56.2m), delivering an operating profit of£2.1m (2005: £2.4m (as restated)). The results reflect the continuing unhelpfulnature of the markets to which the division is exposed. The pace of change at the residential floor coverings operation has increased inthe second half of the year. Plans have been devised and actions have beentaken which will result in a more focused business capable of exploiting itsstrength in the market for high value residential carpets. The integration of the Pownall and Ryalux businesses has been advanced by thestreamlining of the relevant sales, marketing and administration activities.This integration will continue with the planned closure of the Spenbrook Millmanufacturing site. Investment in the future of the residential floor coverings operation has beenmade with the relocation of bespoke carpet manufacture into a newly createdcentre of excellence within the group's Wakefield site. This provides a highquality environment in which best practice, lean manufacturing methods can beadopted to enable this activity to be more responsive to the needs of themarket. The new management team at Burmatex, the division's contract floor coveringbusiness, has been active in making changes to arrest and reverse the gradualdecline recently experienced in this business. Changes have includedimprovements to operating methods, rationalisation and upgrading of the productrange, re-branding and an increased focus on customer needs. Enquiries: Steve Harrison 01924 371501Chief Operating Officer Kevin Henry 01924 371501Finance & Planning Director Andrew Kitchingman 01132 410130Director - Corporate FinanceBrewin Dolphin Securities The proposed final dividend for the year, of 1.60p per share will, if approved,be paid on 21st November 2006 to those shareholders on the register of membersat the close of business on 27th October 2006. The group has adopted, for the first time, Financial Reporting Standard 17,Retirement Benefits, and Financial Reporting Standard 21, Events after theBalance Sheet Date. This gives rise to prior year adjustments and therestatement of comparative figures accordingly. These preliminary financial statements, which have been prepared on a basisconsistent with the previous year, except as noted above, do not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985.The information for the year ended 30th June 2006 is an extract from the group'sstatutory financial statements on which the company's auditors, Grant ThorntonUK LLP, have given an unqualified opinion in accordance with Section 235 of theCompanies Act 1985, and which are to be delivered to the Registrar of Companies. This announcement has been agreed with the company's auditors for release. Consolidated Profit and Loss Accountyear ended 30th June 2006 2006 2005 Restated £000 £000 Turnover 74,811 71,422 Operating costs (69,490) (66,658) Exceptional income - 452 Net operating costs (69,490) (66,206) Operating profit 5,321 5,216 Net interest payable and similar charges (609) (690)Other finance costs (590) (700) Profit on ordinary activities before taxation 4,122 3,826 Taxation (1,509) (1,338) Profit for the year 2,613 2,488 Earnings per share (basic and diluted) 5.65p 5.38p The results shown in the profit and loss account derive wholly from continuingactivities. There is no difference between the profit on ordinary activities before taxationand the profit for the year stated above and their historical cost equivalents. Statement of Total Recognised Gains and Lossesyear ended 30th June 2006 2006 2005 Restated £000 £000 £000 £000 Profit attributable to shareholders of the 2,613 2,488group Actuarial gains/(losses) recognised in 4,020 (4,430)the pension schemeRelated deferred taxation (1,206) 1,330 2,814 (3,100) Total recognised gains/(losses) relating to the year 5,427 (612) Prior year adjustment (15,463) Total recognised losses since last financial statements (10,036) Consolidated Balance Sheet as at 30th June 2006 2006 2005 Restated £000 £000 £000 £000Fixed assets Intangible 12,857 13,737 Tangible 15,107 15,694 27,964 29,431 Current assets Stocks 16,517 17,344 Debtors 10,416 11,938 Cash at bank and in hand 537 485 27,470 29,767 Creditors (amounts falling due within one year) (17,399) (18,920) Net current assets 10,071 10,847 Total assets less current liabilities 38,035 40,278 Creditors (amounts falling due after more than one year) (739) (3,733) Deferred taxation (2,071) (2,230) Net assets excluding pension deficit 35,225 34,315 Net pension deficit (9,590) (13,090) 25,635 21,225 Equity shareholders' funds Called up share capital 11,561 11,561 Share premium account 504 504 Capital redemption reserve 2,395 2,395 Profit and loss account 11,175 6,765 25,635 21,225 Consolidated Cash Flow Statementyear ended 30th June 2006 2006 2005 £000 £000 £000 £000 Net cash inflow from operating activities 7,584 5,995 Interest paid and similar charges (654) (720) 6,930 5,275 Corporation tax paid (1,121) (122) Capital expenditure Purchase of tangible fixed assets (1,227) (1,415) Sale of tangible fixed assets 207 340 (1,020) (1,075) Equity dividends paid (1,017) (879) Cash inflow before financing 3,772 3,199 Financing Redemption of loan notes (226) (118) Repayment of bank loans (2,811) (2,921) (3,037) (3,039) Increase in cash 735 160 ENDS This information is provided by RNS The company news service from the London Stock Exchange