AIREA Regulatory News (AIEA)

18 Sep 2007 07:01

Sirdar PLC18 September 2007 Sirdar PLC Preliminary results for the year ended 30 June 2007 Operating Review Introduction Over the last twelve months we have continued with the restructuring of theresidential floor coverings operation, as detailed in previous announcements,and the implementation of the strategy to focus on floor coverings, announced inMarch 2007. We believe that the effect of these changes will be to position thebusiness to have a sustainable future and be better placed to achieve profitablegrowth in a substantial market. As part of the implementation of this strategy, we stated our intention toreview our property portfolio and to sell the Specialist Yarns division. Thefirst stage in this process was completed at the end of July 2007 with thecompletion of the sale of Bective Mills, Wakefield and Ensor Mill, Rochdale forgross proceeds of £16.25m, which was significantly in excess of the book value.This disposal, which will be reflected in the financial statements for the yearending 30 June 2008, provides scope to amend the way that the business isfinanced in the future. The results Turnover for the year was £65.3m (2006: £74.8m). This represents a reduction of13% due to a decline in the sales of fashion hand knitting yarns and residentialcarpets. Operating profit before exceptional costs was £1.5m (2006: £5.3m).After exceptional costs of £0.9m (2006: nil) associated with the reorganisationof the residential floor coverings operation, operating profit was £0.6m (2006:£5.3m). The group also recorded an exceptional profit on sale of fixed assets of£0.2m (2006: nil). Interest charges reduced to £0.5m (2006: £0.6m) and otherfinance costs reduced to £0.3m (2006: £0.6m). After interest charges and financecosts the result was a loss on ordinary activities before taxation of £0.1m(2006: profit £4.1m). Net cash inflow from operating activities in the year amounted to £4.5m (2006:£7.6m), driven by an aggressive stock reduction programme. This enabled thegroup to fund the reorganisation of the residential floor coverings operation,including a significant increase in capital expenditure, and still reduce netdebt by £0.2m to £5.2m (2006: £5.4m). Earnings and dividends per share Basic loss per share amounted to 0.89p (2006: basic earning per share 5.65p).Adjusted earnings per share, after eliminating the effect of the exceptionalitems, amounted to 0.24p (2006: 5.65p). An interim dividend of 0.80p per share was paid in May 2007 and the proposedfinal dividend is 1.60p per share. This gives an unchanged total dividend of2.40p per share for the year. Key performance indicators As part of its internal financial control procedures the board monitors certainfinancial ratios. For the year to 30 June 2007 sales per employee amounted to£107,000 (2006: £110,000), operating return on sales was 2.3% (2006: 7.1%),return on average net operating assets was 3.8% (2006: 12.5%) and workingcapital to sales percentage was 18.2% (2006: 20.5%). The first three of theseperformance indicators reduced as a consequence of the challenging marketconditions. However, the working capital ratio benefited from the success of thestock reduction programme. Floor Coverings division Turnover reduced to £50.3m (2006: £56.2m), delivering an underlying operatingprofit of £1.8m (2006: £2.9m). After exceptional costs of £0.9m (2006: nil)associated with the reorganisation of the residential floor coverings operationand goodwill of £0.9m (2006: £0.9m) the operating result was a loss of £40,000(2006: profit £2.1m). Modest growth was achieved by Burmatex in the commercialsector of the market but the residential sector was more difficult and Ryaluxexperienced a decline in sales. The restructuring programme within the residential operation moved closer tocompletion. The site at Wakefield now has tufting and backing facilitiesoperational with a small batch dye house due to come on stream in the nearfuture. The Rochdale site was sold at the end of July 2007 and, although we havea licence to remain in occupation until 31 January 2008, activity at this siteis gradually being scaled back with a view to ceasing manufacturing on site bythe end of September 2007. The restructuring of the residential operationremains on target to be concluded by the original deadline of the end ofDecember 2007. In June 2007, we started the process of amalgamating the two floor coveringsbusinesses, Burmatex and Ryalux, into one operation which will form the heart ofthe business in the future. A number of management appointments were announcedon 1 August 2007 and key personnel are now working on an integration andamalgamation programme. When complete, we expect benefits to arise from theexploitation of additional sales opportunities, a greater focus on new productdevelopment and further cost savings. Specialist Yarns division Turnover reduced to £15.0m (2006: £18.6m) and delivered an operating profit of£1.0m (2006: £3.7m). As reported previously, sales of hand knitting yarns weremore difficult than in the previous two years as the buoyant market conditionsfor fancy yarns came to an end. However, the focus on the development ofinnovative high performance products enabled sales of the Tilsatec range oftechnical products to continue to grow. Management and personnel We would like thank the divisional directors, senior management and all our teammembers throughout the group for their ongoing commitment and support during achallenging period. Current trading and future prospects In spite of the highly competitive conditions in the markets in which weoperate, it is encouraging to report that sales in both divisions are currentlyrunning ahead of the same period last year. Trends in hand knitting are difficult to predict and subject to fluctuationscaused by changes in fashion although Tilsatec continues to offer opportunityfor sustainable growth in the future. Floor coverings remains a challengingmarketplace but we believe that the planned amalgamation of the two businesseswill deliver profitable growth over time. In summary, the group is currently undergoing a period of significanttransformation in order to become a highly focussed, lower cost, marketing-ledbusiness which majors on the strengths of its brands and people and whichpromotes an innovative culture. Our vision for the future remains clear and weare pursuing our strategy with vigour and determination in order to competeeffectively in the years ahead. Enquiries:Steve Harrison 01924 371501Chief Operating Officer Kevin Henry 01924 371501Group Finance Director & Company Secretary Andrew Kitchingman 01132 410130Managing Director - Corporate FinanceBrewin Dolphin These preliminary financial statements, which have been prepared on a basisconsistent with the previous year, do not constitute statutory accounts withinthe meaning of section 240 of the Companies Act 1985. The information for theyear ended 30 June 2007 is an extract from the group's statutory financialstatements on which the company's auditor, Grant Thornton UK LLP, has given anunqualified opinion in accordance with Section 235 of the Companies Act 1985,and which are to be delivered to the Registrar of Companies. The announcement has been agreed with the company's auditor for release. Consolidated Profit and Loss Accountyear ended 30 June 2007 2007 2006 £000 £000 Turnover 65,330 74,811 -------------------------------------------------------------------------------- Operating costs before exceptional items (63,838) (69,490) Exceptional costs (937) - ------- ------- Net operating costs (64,775) (69,490)-------------------------------------------------------------------------------- Operating profit 555 5,321 Exceptional profit on sale of 190 -fixed assets Net interest payable and similar charges (527) (609) Other finance costs (310) (590) ------- ------- (Loss) / profit on ordinary activities before taxation (92) 4,122 Taxation (319) (1,509) ------- ------- (Loss) / profit for the year (411) 2,613 ------- ------- (Loss) / earnings per share(basic and diluted) (0.89)p 5.65p ------- ------- Statement of Total Recognised Gains and Lossesyear ended 30 June 2007 2007 2006 £000 £000 (Loss) / profit attributable to shareholders of thegroup (411) 2,613 Actuarial gains recognised in the pension scheme, net ofdeferred taxation 2,534 2,814 ------- ------- Total recognised gains relating to the year 2,123 5,427 ------- ------- Consolidated Balance Sheetas at 30 June 2007 2007 2006 £000 £000 £000 £000Fixed assets Intangible 11,976 12,857 Tangible 15,729 15,107 -------- -------- 27,705 27,964 Current assets Stocks 13,312 16,517 Debtors 10,682 10,416 Cash at bank and in hand 176 537 ---------- ---------- 24,170 27,470 Creditors (amounts falling due within one year) (17,243) (17,399) ---------- ---------- Net current assets 6,927 10,071 -------- --------- Total assets less current liabilities 34,632 38,035 Creditors (amounts falling due aftermore than one year) - (739) Deferred taxation (2,104) (2,071) --------- --------- Net assets excluding pension deficit 32,528 35,225 Net pension deficit (5,880) (9,590) --------- --------- 26,648 25,635 --------- --------- 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 12,188 11,175 --------- --------- 26,648 25,635 --------- --------- Consolidated Cash Flow Statementyear ended 30 June 2007 2007 2006 £000 £000 £000 £000 Net cash inflow from operating activities 4,482 7,584 Interest paid and similar charges (602) (654) ------- ------- 3,880 6,930 Corporation tax paid (635) (1,121) Capital expenditure Purchase of tangible fixed assets (2,574) (1,227) Sale of tangible fixed assets 658 207 -------- --------- (1,916) (1,020) Equity dividends paid (1,110) (1,017) --------- --------- Cash inflow before financing 219 3,772 Financing Redemption of loan notes (80) (226) Increase / (decrease) in bank loans 86 (2,811) -------- --------- 6 (3,037) Increase in cash 225 735 --------- --------- Notes If approved, the final dividend will be paid on 20 November 2007 to thoseshareholders on the register of members on 26 October 2007. In accordance with Rule 20 of the AIM Rules, Sirdar confirms that the annualreport and accounts for the year ended 30 June 2007 will be posted toshareholders and will be available to view on the Company's website atwww.sirdarplc.co.uk. This information is provided by RNS The company news service from the London Stock Exchange