AIREA Regulatory News (AIEA)

16 Mar 2006 07:03

Sirdar PLC16 March 2006 SIRDAR PLC Interim Report31st December 2005 Operating Review Summary• Group turnover up 7% to £38.4m• Operating profit before exceptional items up 17%• Adjusted earnings per share up 26%• Interim dividend up 14% to 0.80p per share• Transfer to Alternative Investment Market completed• Streamlined board and new management structure in place• Review of the Residential Floor Coverings business• Continuation of strong performance from Specialist Yarns IntroductionThe six months to 31st December 2005 has been another period of change for thegroup. The move to the Alternative Investment Market was completed on 21stDecember 2005 and the simplified management structure is now in place. As partof the ongoing process of change, the board instigated a thorough review of theprovision of audit services to the group. Following this review the board hasappointed Grant Thornton UK LLP as auditors to replace PricewaterhouseCoopersLLP. In addition, the group transformation programme aimed at focusing on theprofitable growth of our existing operations is ongoing. All of the group'semployees have shown great commitment to this programme and the board isgrateful for their continued enthusiasm and dedication. The Specialist Yarnsdivision continues to provide proof that real benefits are achievable throughthe implementation of a well planned and managed change process. As set out inour last Annual Report, the Floor Coverings division is now the subject ofgreater focus for the group board and subsidiary management. The resultsTurnover for the half year to 31st December 2005 was £38.4m (2004: £36.0m)generating operating profit of £3.5m (2004: £3.4m (as restated), operatingprofit before exceptional items £3.0m (as restated)). Earnings per share andadjusted earnings per share were 3.84p representing an increase in earnings pershare of 4% (as restated) and an increase in adjusted earnings per share of 26%(as restated). Cash inflow from operating activities amounted to £1.7m (2004: £3.8m) with thereduction reflecting additional working capital requirements. Net debt remainedunchanged at £9.2m. The board has declared an increased interim dividend of 0.80p per share (2004:0.70p). The dividend is payable on 8th May 2006 to those shareholders on theregister of members at the close of business on 18th April 2006. Specialist YarnsSales in this division increased by 26% to £9.6m (2004: £7.6m) and operatingprofit increased to £2.4m (2004: £1.8m (as restated) after net exceptionalcredits of £0.4m). The division's core ranges continued to benefit from a fashion led upturn in themarket for hand knitting yarn, particularly in the UK, and sales of technicalproducts under the Tilsatec brand have grown steadily. Management continue tofocus on the expansion of the division's customer base and product ranges inorder to capitalise on current conditions and provide a sound base for thefuture. Floor CoveringsWhilst sales of floor covering products increased by 2% to £28.8m (2004:£28.3m), operating profit fell to £1.3m (2004: £1.9m (as restated)) as difficulthigh street conditions and increased raw material and utility costs continue toimpact on margins. A programme of substantial investment in people, products and processes withinContract Floor Coverings has been undertaken, with a consequential impact onoverhead costs in the period. Whilst this sector of the market remainsdifficult we are optimistic that this investment will enable the new managementteam to overcome these difficulties. As reported previously, the Residential Floor Coverings operation has been anarea of concern and the subject of significant attention as we seek to counterthe adverse trading conditions which have affected most players within thismarket sector. Following a review of the business we have concluded that thedivision continues to enjoy a strong reputation for the quality of its productsand services and that these provide a sound underpinning for the future of thebusiness. Since the acquisition of the William Pownall business in 2002, a step-by-stepapproach has been taken to integrating that business with the existing RyaluxCarpets organisation. The last six-month period has seen the operation of thetwo businesses brought together under a single management team with a consequentsimplification in administration and a reduction in cost. It is envisaged that further streamlining and simplification of the ResidentialFloor Coverings operation will be required to enable this operation to producean acceptable return on the group's investment and that the implementation ofany changes will be completed by the end of the calendar year 2007. Management changesThe simplification of the group board structure, referred to in the last AnnualReport, took effect on 1st January 2006 following the retirement of DuncanVerity. From that date, Steve Harrison assumed the role of chief operatingofficer on a part-time basis. In view of the decentralised nature of the groupand the strong divisional management teams now in place, the new structure aimsto maintain the central costs of the group at an appropriate level and thisshould lead to savings in this area in future periods. Implementation of new financial reporting standardsThe group is now required to adopt Financial Reporting Standard 17, RetirementBenefits, and Financial Reporting Standard 21, Events after the Balance SheetDate, in its financial statements for the year ending 30th June 2006.Accordingly the provisions of these standards have been applied in the interimfinancial statements and comparative figures restated as appropriate. The effect of applying these standards on the profit and loss account is set outin note 6 and on shareholders' funds is set out in note 7. Current trading and future prospectsTrading conditions in the early part of 2006 have shown no material change fromthose apparent in the previous six months. Sales within the Specialist Yarnsdivision continue to be strong and there has been a modest element of growthfrom Floor Coverings. There is continued confidence within the Specialist Yarns division with marketconditions and product innovation, in both hand knitting and technical products,giving cause for optimism. There are some signs of improvement in FloorCoverings but the residential sector remains an area of concern and accordinglyis being given significant attention. 16th March 2006 Enquiries: Steve HarrisonChief Operating Officer, Sirdar PLC 01924 371 501 Kevin HenryFinance & Planning Director, Sirdar PLC 01924 371 501 Andrew KitchingmanDirector - Corporate Finance, Brewin Dolphin Securities 0113 2410 130 Consolidated Profit and Loss Account6 months ended 31st December 2005 Unaudited Unaudited Audited 6 months ended 6 months ended year ended 31st December 31st December 30th June 2005 2004 2005 Restated Restated Note £000 £000 £000 _______ _______ ________ Turnover 2 38,421 35,979 71,422Operating costs (34,940) (33,010) (66,658)Exceptional income - 432 452 ______ ______ ______ Net operating costs 2 (34,940) (32,578) (66,206)Operating profit 3,481 3,401 5,216Net interest payable and similar charges (329) (372) (690)Other finance costs (350) (350) (700) _______ ______ ______ Profit before taxation 2,802 2,679 3,826Taxation (1,026) (974) (1,338) ______ ______ ______ Profit for the period 1,776 1,705 2,488 ______ ______ ______ Earnings per share 4 3.84p 3.69p 5.38p (basic and diluted) ______ ______ ______ 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 period stated above and their historical costequivalents. Statement of Total Recognised Gains and Losses6 months ended 31st December 2005 Unaudited Unaudited Audited 6 months ended 6 months ended year ended 31st December 31st December 30th June 2005 2004 2005 Restated Restated £000 £000 £000 _______ _______ ________ Profit attributable to shareholders of the group 1,776 1,705 2,488 Actuarial gains/(losses) recognised in the pension scheme 1,260 (1,550) (3,100) ______ ______ ______ Total recognised gains/(losses) relating to the period 3,036 155 (612) ______ ______ ______ Consolidated Balance Sheetas at 31st December 2005 Unaudited Unaudited Audited 31st December 2005 31st December 2004 30th June 2005 Restated Restated Note £000 £000 £000 £000 £000 £000 ______ ______ ______ ______ ______ ______ Fixed assetsIntangible 13,297 14,177 13,737Tangible 15,340 15,966 15,694 ______ ______ ______ 28,637 30,143 29,431 Current assetsStocks 17,708 14,791 17,344Debtors 13,355 12,077 12,248Cash at bank and in hand 273 565 485 ______ ______ ______ 31,336 27,433 30,077 Creditors(due within one year) (20,316) (15,817) (19,230) ______ ______ ______ Net current assets 11,020 11,616 10,847 ______ ______ ______Total assets lesscurrent liabilities 39,657 41,759 40,278 Creditors(due after more than one year) (2,214) (5,253) (3,733) Deferred taxation 5 (2,217) (2,290) (2,230) ______ ______ ______ Net assets excluding pension liability 35,226 34,216 34,315Pensions deficit (11,612) (11,900) (13,090) ______ ______ ______ 23,614 22,316 21,225 ______ ______ ______ Equity shareholders' fundsCalled up share capital 11,561 11,561 11,561Share premium account 504 504 504Capital redemption reserve 2,395 2,395 2,395Profit and loss account 6 9,154 7,856 6,765 ______ ______ ______ 23,614 22,316 21,225 ______ ______ ______ Consolidated Cash Flow Statement6 months ended 31st December 2005 Unaudited Unaudited Audited 6 months ended 6 months ended year ended 31st December 2005 31st December 2004 30th June 2005 Note £000 £000 £000 £000 £000 £000 ______ ______ ______ ______ ______ ______ Net cash inflow from operating activities 8 1,654 3,848 5,995 Interest paid and similar charges (374) (375) (720) ______ ______ ______ 1,280 3,473 5,275 Corporation tax (247) 620 (122) Capital expenditurePurchase of tangible fixedassets (556) (681) (1,415) Sale of tangible fixed assets 163 192 340 ______ ______ ______ (393) (489) (1,075)Equity dividends paid (647) (555) (879) ______ ______ ______Cash (outflow)/inflow before financing (7) 3,049 3,199 FinancingRedemption of loan notes - (14) (118)Repayment of bank loans (1,519) (1,505) (2,921) ______ ______ ______ (1,519) (1,519) (3,039) ______ ______ ______ (Decrease)/increase in cash 9 (1,526) 1,530 160 ______ ______ ______ A reconciliation of net cash flow to movement in net debt is set out in note 10. Notes 1. BASIS OF PREPARATION The financial information has been prepared using the accounting policies setout in the group's annual report and financial statements for the year ended30th June 2005 except that for the current period the company has adopted FRS17, Retirement Benefits, and FRS 21, Events after the Balance Sheet Date, andthe comparative figures have been restated accordingly. The comparative figures for the year ended 30th June 2005 do not constitutestatutory financial statements within the meaning of section 240 of theCompanies Act 1985. Statutory financial statements for the year ended 30th June2005 have been delivered to the Registrar of Companies. The auditors havereported on those financial statements. Their report was not qualified and didnot contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. SEGMENTAL INFORMATION Analysis of results by class of business 6 months ended 6 months ended Year ended 31st December 31st December 30th June 2005 2004 2005Turnover £000 £000 £000 ______ ______ ______ Floor Coverings 28,779 28,348 56,162Specialist Yarns 9,642 7,631 15,260 ______ _______ ______ 38,421 35,979 71,422 ______ ______ ______ Operating profit 6 months ended 6 months ended Year ended 31st December 31st December 30th June 2005 2004 2005 Restated Restated £000 £000 £000 _______ _______ ________ Floor Coverings 1,319 1,890 2,443Specialist Yarns 2,441 1,760 3,303 _______ _______ _______ 3,760 3,650 5,746 Central group costs (279) (249) (530) ______ ______ ______ 3,481 3,401 5,216 ______ ______ ______ There were no exceptional items in the period ended 31st December 2005. Theoperating result for the Specialist Yarns division for the period ended 31stDecember 2004 is stated after exceptional income of £432,000 and for the yearended 30th June 2005 is stated after exceptional income of £452,000. 2. SEGMENTAL INFORMATION (CONTINUED) Net operating assets 31st December 31st December 30th June 2005 2004 2005 Restated Restated £000 £000 £000 ______ ______ ______ Floor Coverings 37,573 35,277 34,841Specialist Yarns 8,099 6,298 6,814 ______ ______ ______ 45,672 41,575 41,655 Central group (liabilities)/assets (957) 2,565 2,354 ______ ______ ______ 44,715 44,140 44,009 ______ ______ ______ Net operating assets are stated excluding inter-company financing and arederived from the balance sheet total by excluding bank borrowings, loans andloan notes totalling £9,489,000 (31st December 2004: £9,924,000, 30th June 2005:£9,694,000) and a pensions deficit of £11,612,000 (31st December 2004:£11,900,000, 30th June 2005: £13,090,000). 3. DIVIDENDS Dividends on equity shares 6 months ended 6 months ended Year ended 31st December 31st December 30th June 2005 2004 2005 £000 £000 £000Paid during the period: _______ _______ ________ Final dividend for year ended 30th June 2005 - 1.40p per share 647 - - Interim dividend for year ended 30th June 2005 - 0.70p per share - - 324 Final dividend for year ended 30th June 2004 - 1.20p per share - 555 555 _______ _______ _______ 647 555 879 _______ _______ _______ Proposed after the period end (not recognised as aliability): Interim dividend for year ending 30th June 2006- 0.80p per share 370 - - Final dividend for year ended 30th June 2005 - 1.40p per share - - 647 Interim dividend for year ended 30th June 2005- 0.70p per share - 324 - ______ ______ ______ 370 324 647 ______ ______ ______ The interim dividend will be paid on 8th May 2006 to members registered at theclose of business on 18th April 2006. 4. EARNINGS PER SHARE The calculation of basic earnings per share is based on earnings of £1,776,000(31st December 2004: £1,705,000, 30th June 2005: £2,488,000) and on 46,242,455(31st December 2004: 46,242,455, 30th June 2005: 46,242,455) ordinary shares,being the weighted average number in issue during the period. Adjusted earningsper share, as set out below, is calculated after excluding net exceptionalitems, net of tax, and is presented in order to demonstrate the underlyingperformance of the group. 6 months ended 6 months ended Year ended 31st December 2005 31st December 2004 30th June 2005 Restated Restated £000 pence £000 pence £000 pence ______ ______ ______ ______ ______ ______ Earnings and basic earningsper share 1,776 3.84 1,705 3.69 2,488 5.38 Exceptional income - - (302) (0.65) (316) (0.68) ______ ______ ______ ______ ______ ______Adjusted earnings andearnings per share 1,776 3.84 1,403 3.04 2,172 4.70 ______ ______ ______ ______ ______ ______ 5. DEFERRED TAX 31st December 31st December 30th June 2005 2004 2005 £000 £000 £000 ______ ______ ______ Brought forward as stated previously 3,247 3,259 3,259Prior period adjustment for FRS 17 (1,017) (930) (930) ______ ______ ______ Brought forward as restated 2,230 2,329 2,329Profit and loss account (13) (39) (99) ______ ______ ______ Carried forward 2,217 2,290 2,230 ______ ______ ______ 6. PROFIT AND LOSS ACCOUNT 31st December 31st December 30th June 2005 2004 2005 £000 £000 £000 _______ _______ ________ Brought forward as stated previously 21,581 20,582 20,582Prior period adjustment for FRS 17 (15,463) (12,881) (12,881)Prior period adjustment for FRS 21 647 555 555 _______ _______ _______ Brought forward as restated 6,765 8,256 8,256Profit for the period 1,776 1,705 2,488Other recognised gains/(losses) 1,260 (1,550) (3,100)Equity dividends paid (647) (555) (879) ______ ______ ______ Carried forward 9,154 7,856 6,765 ______ ______ ______ 7. RECONCILIATION OF MOVEMENTS IN GROUP EQUITY SHAREHOLDERS' FUNDS 31st December 31st December 30th June 2005 2004 2005 £000 £000 £000 _______ _______ ________ Profit for the period 1,776 1,705 2,488Other recognised gains/(losses) 1,260 (1,550) (3,100)Equity dividends paid (647) (555) (879) _______ _______ _______ Net addition to equity shareholders' funds 2,389 (400) (1,491)Opening equity shareholders' fundsas stated previously 36,041 35,042 35,042Prior period adjustment for FRS 17 (15,463) (12,881) (12,881)Prior period adjustment for FRS 21 647 555 555 ______ ______ ______ Closing equity shareholders' funds 23,614 22,316 21,225 ______ ______ ______ 8. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months ended 6 months ended 31st Year ended 31st December December 30th June 2005 2004 2005 Restated Restated £000 £000 £000 _______ _______ ________ Operating profit 3,481 3,401 5,216Depreciation 896 1,001 2,022Goodwill amortisation 440 440 880Profit on sale of tangible fixed assets (18) (352) (357)Current service pension cost 130 130 260(Increase)/decrease in stocks (364) 2,062 (491)Increase in debtors (1,532) (1,417) (1,336)Decrease in creditors (1,379) (1,417) (199) _______ _______ _______ Net cash inflow from operating activities 1,654 3,848 5,995 ______ ______ ______ 9. ANALYSIS OF CHANGES IN NET DEBT 31st December 30th June 2005 Cash flows 2005 £000 £000 £000 _______ _______ ________ Cash at bank and in hand 273 (212) 485Bank overdrafts (4,237) (1,314) (2,923) _______ _______ _______ (3,964) (1,526) (2,438) Loan notes (394) - (394)Bank loans (4,858) 1,519 (6,377) ______ ______ ______ Total net debt (9,216) (7) (9,209) ______ ______ ______ 10. RECONCILIATION OF MOVEMENT IN NET DEBT 31st December 31st December 30th June 2005 2004 2005 £000 £000 £000 _______ _______ ________ (Decrease)/increase in cash (1,526) 1,530 160Redemption of loan notes - 14 118Repayment of bank loans 1,519 1,505 2,921 _______ _______ _______ Movement in net debt (7) 3,049 3,199Net debt at start of period (9,209) (12,408) (12,408) ______ ______ ______ Net debt at end of period (9,216) (9,359) (9,209) ______ ______ ______ OTHER INFORMATION The interim results are unaudited. Further copies of this report are available from the Company Secretary at theregistered office at Flanshaw Lane, Alverthorpe, Wakefield, West Yorkshire WF29ND. This information is provided by RNS The company news service from the London Stock Exchange