Final Results

SIRDAR PLC 16 September 1999 PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 1999 STATEMENT BY THE CHAIRMAN, MR F G LUMB The results and accounts The profit before taxation for the year to 30 June 1999 was £5,835,000 compared with £6,169,000 for the previous year, a reduction of 5%. Operating profit, which excludes profit on sale of property and interest payable, was £5,849,000, a 13% reduction on the comparative figure of £6,715,000. Earnings per share decreased to 7.96p compared with 8.25p last year, a reduction of 4%. The directors are recommending a final dividend of 3.80p, the same as last year. Underlying cash flow in the year has continued to be excellent. As a result of good management of working capital, cash generated from operations amounted to £10,032,000. This has enabled the company to meet, from internal resources, the cost of repurchasing 6,954,373 ordinary shares and of repurchasing and cancelling £200,000 of preference shares. The cost of these repurchases, in total, amounted to £4,370,000. The opportunity was also taken during the year to restructure the group's borrowings by the repayment of the long term bank loan from overdraft facilities at lower rates of interest. Total group borrowings at the year end were only £380,000 higher than last year at £4,544,000 and are now comprised entirely of short term overdrafts. Floor coverings The floor coverings market has remained very competitive and further pressure on selling prices has been experienced. As a result, UK sales reduced by 3% but with exports suffering from the continued strength of sterling and recording a decline of 20% the overall reduction for the year was 5%. There have been reductions in the cost of some raw materials, again because of the strength of sterling, but a reduction in margins combined with certain cost increases has resulted in a 10% reduction in operating profit from £5,469,000 to £4,910,000. Both home and export sales forces have undergone significant change in the year and, with further strengthening to take place, increases in turnover are anticipated for the coming year. The investment in additional plant and machinery towards the end of the year will also have a beneficial impact on margins in the coming year. Hand knitting and machine yarns The restructuring that took place last year has now started to pay dividends and, combined with action taken by the new management board during the year, this has returned the spinning division to profitability. Sales of branded hand knitting yarns increased by approximately 10% in the year due to the success of particular fashion products. Combined with a decision to focus on higher margin machine yarns this resulted in an operating profit of £622,000 compared to last year's loss of £376,000. Assets employed in this division have been reduced by a further £2.2 million and, with two long term tenants now on site, management are actively seeking occupiers for the remaining surplus production units at Wakefield. Curtains and accessories Eversure had an extremely difficult twelve months and have suffered from the adverse market conditions affecting most companies in this sector. Turnover has declined by 27% and this has resulted in a loss of £906,000 compared to a profit of £499,000 last year. The introduction of a new integrated computer system presented unexpected problems in the second half of the year which was also affected by restructuring costs and consequential stock provisions. Internal rationalisation and market repositioning are now taking place and will put the company in a stronger position to face the challenges of the next twelve months. Hotel The hotel has continued to perform well during the year. In line with industry trends, there has been a modest decline in occupancy during the year but better room rates, combined with a significant increase in function business, have resulted in a 5% increase in turnover from £4,256,000 to £4,465,000. Operating profit improved by 6% from £1,414,000 to £1,503,000. The future Sales of floor coverings have started to improve in the new financial year and, despite continuing pressure and competition in this area, management are confident that there will be an upturn in performance this year. As a result of the action taken in recent years, the spinning operation now has a solid base for the future and, whilst the machine yarn market is still difficult, sales growth is being achieved in hand knitting and this should lead to further progress towards an adequate return from this division. Sales of ready made curtains remain extremely difficult. The new year has started slowly but with a number of cost saving measures now implemented, management are optimistic that there will be an improvement in the results of this division this year. The hotel has also had a good start to the new year and advance bookings are healthy. The current strong performance of the hotel is expected to continue. Overall, the board believes that the group is well placed to meet the challenges of the next twelve months. This should lead to a better trading performance within each division and combined with the full benefits of the share buy back there should be a significant enhancement of earnings per share. The board intend to seek permission, at the Annual General Meeting, to renew the authority to buy back ordinary shares and will continue to review opportunities to exercise this authority if it is in the best interests of shareholders generally. Enquiries: Mr F G Lumb Mr K F Henry Chairman Finance Director/Co. Secretary Sirdar PLC Telephone: 01924 371501 SIRDAR PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 1999 1999 1998 £000 £000 Turnover 48,679 55,975 Operating costs 42,830 49,260 ---------- ---------- Operating profit 5,849 6,715 Profit on sale of property 206 - Interest payable (220) (546) ---------- ---------- Profit before taxation 5,835 6,169 Taxation 1,602 1,641 ---------- ---------- Profit for year 4,233 4,528 Interim dividend paid 1.85p per share (1998: 1.85p) 912 1,014 Final dividend proposed 3.80p per share (1998: 3.80p) 1,818 2,082 Preference dividend paid 6 11 ---------- ---------- Retained profit for the year 1,497 1,421 ====== ====== Basic earnings per share 7.96p 8.25p ====== ====== Diluted earnings per share 7.96p 8.24p ====== ====== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 30 JUNE 1999 1999 1998 £000 £000 Profit for year 4,233 4,528 Deficit on revaluation - (348) ---------- ---------- Total recognised gains and losses relating to the year 4,233 4,180 ====== ====== SIRDAR PLC CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 1999 1999 1998 £000 £000 £000 £000 Tangible fixed assets 24,336 25,256 Current assets Stocks 12,436 13,803 Debtors 9,142 10,840 Cash at bank and in hand 239 95 ---------- ---------- 21,817 24,738 Creditors (due within one year) 13,796 12,841 ---------- ---------- Net current assets 8,021 11,897 ---------- ---------- Total assets less current liabilities 32,357 37,153 Creditors (due after one year) - 1,900 Deferred tax 773 796 ---------- ---------- 31,584 34,457 ====== ====== Equity shareholders' funds Called up ordinary share capital 11,960 13,698 Share premium account 421 421 Capital redemption reserve 1,938 - Profit and loss account 17,265 20,138 ---------- ---------- 31,584 34,257 Non-equity share capital - 200 ---------- ---------- 31,584 34,457 ====== ====== SIRDAR PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1999 1999 1998 £000 £000 £000 £000 Net cash inflow from operating activities 10,032 10,151 Servicing of finance Interest paid (258) (492) Dividends paid on non-equity share capital (6) (11) ---------- ---------- (264) (503) Corporation tax paid (2,187) (1,318) Capital expenditure Purchase of tangible fixed assets (1,181) (947) Sale of tangible fixed assets 728 267 ---------- ---------- (453) (680) Acquisitions and disposals Acquisition of subsidiary undertaking - (289) Disposal of subsidiary undertaking - 23 ---------- ---------- - (266) Equity dividends paid (2,994) (3,041) Financing Issue of share capital - 8 Repurchase of share capital (4,370) - Repayment of bank loan (2,600) (700) ---------- ---------- (6,970) (692) ---------- ---------- (Decrease)/increase in cash (2,836) 3,651 ====== ====== SIRDAR PLC ANALYSIS OF RESULTS BY CLASS OF BUSINESS FOR THE YEAR ENDED 30 JUNE 1999 Operating profit/(loss) Turnover before central group costs Net operating assets 1999 1998 1999 1998 1999 1998 £000 £000 £000 £000 £000 £000 Floor coverings 20,455 21,600 4,910 5,469 8,757 8,288 Hand knitting and machine yarns 14,170 16,986 622 (376) 12,649 14,847 Curtains and accessories 9,589 13,133 (906) 499 4,846 5,419 Hotel 4,465 4,256 1,503 1,414 9,876 10,067 ----- ----- ----- ----- ----- ------ 48,679 55,975 6,129 7,006 36,128 38,621 ====== ====== ====== ====== Central group costs (280) (291) ----- ----- Operating profit 5,849 6,715 Profit on sale of property by the hand knitting and machine yarns division 206 - ---- ----- 6,055 6,715 Net interest (220) (546) ---- ----- 5,835 6,169 ====== ====== Net operating assets are stated excluding inter-company financing and are derived from the balance sheet total by excluding bank borrowings of £4,544,000 (1998: £4,164,000). Notes 1. The final dividend is payable on 29 November 1999 to those shareholders on the register of members on 5 November 1999. 2. The above information has been extracted from the group's full accounts upon which the auditors have given an unqualified opinion. The full accounts will be filed with the Registrar of Companies in due course and will be posted to all shareholders on Monday, 4 October 1999. Further copies will be available from the Company Secretary at the registered office at Flanshaw Lane, Alverthorpe, Wakefield, West Yorkshire, WF2 9ND.

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