Interim Results
Sirdar PLC
21 March 2001
SIRDAR PLC
21st MARCH 2001
INTERIM RESULTS FOR THE SIX MONTHS TO 31st DECEMBER 2000
Chairman's Statement
Introduction
Since my statement in September 2000 accompanying the results
for the year ended 30th June 2000 there have been significant
changes to the structure of the group and its management. The
acquisition of Ryalux Carpets Limited was completed on 10th
October 2000 and I would like to take this opportunity to
welcome all the employees of Ryalux to the Sirdar group.
Following the acquisition of Ryalux the board decided that a
full time Group Chief Executive should be appointed and Duncan
Verity, who joined the main board on 17th October 2000, was
appointed to that position with effect from 1st January 2001.
At the same time I became Non-executive Chairman.
The results
I am pleased to report that operating profit for the half year
to 31st December 2000 was £4,760,000 (1999: £3,245,000).
After allowing for interest payable the profit before taxation
was £4,385,000 (1999: £3,137,000).
Ryalux contributed turnover of £7,949,000 and operating
profit, before goodwill amortisation, of £1,251,000 in the
twelve weeks from the date of its acquisition and the group
also benefited from elimination of the losses at Eversure
Textiles which was disposed of in June 2000.
Cash generation from operating activities has once again been
very strong amounting to £4,921,000 during the period. The
overall decrease in cash, having taken on net overdrafts of
£2,303,000 with the acquisition of Ryalux, was £145,000. Net
debt rose to £28,567,000 following the issue of £24,642,000
loan notes to finance the acquisition.
The improved performance detailed above and the method of
financing the acquisition of Ryalux has resulted in an
increase in earnings per share of 45 per cent. to 6.69p and an
increase in adjusted earnings per share of 52 per cent. to
7.00p. The board has declared an interim dividend of 2.00p
per share which represents a 5 per cent. increase on last
year's interim dividend. This dividend is payable on 8th May
2001 to those shareholders on the register of members at the
close of business on 6th April 2001.
Floor coverings
This division has been significantly strengthened by the
acquisition of Ryalux. The two businesses of Burmatex and
Ryalux now constitute the major part of the group's
activities. Both businesses are well established market
leaders with reputations for quality and track records of
strong profitability and cash generation.
Ryalux has instigated a number of major initiatives recently
including the introduction of Tru-trac technology to improve
the quality of its top of the range velvet carpets. It has
also launched a new brand 'Rugs by Ryalux' to capitalise on
the demand for rugs generated by the current popularity of
laminate, wood and other smooth flooring.
Sales at Burmatex have increased from £10,872,000 to
£11,371,000 due to Burmatex and the Carpet Tile Company
maximising their opportunities with strong performances from
their leading products within their range of contract carpet
and carpet tiles. Costs have been well controlled and in spite
of some price pressures this has resulted in an operating
profit of £2,647,000 compared to £2,572,000 to December 1999.
Confidence in the future has lead Burmatex to place an order
for a new £1million production facility for fibre bonded
carpet. This investment will not only improve quality, reduce
waste and increase margins but will enable the company to
develop new and exciting products whilst maintaining itself at
the leading edge of technology.
Hand knitting and machine yarns
Turnover in this division increased to £8,559,000 including a
contribution of £971,000 from Clutsom & Kemp. Sirdar hand knit
sales and Tilsa machine yarn sales improved over last year
with both businesses having success in export markets,
particularly in Eire and the USA. The new machines for
Clutsom & Kemp were commissioned later than expected but are
now fully operational. This delay did, however, impact on
operating profit which was £538,000 (1999: £561,000). There
has also been some rationalisation of the customer base in the
UK and the development of sales to new export markets is a
priority.
Hotel
The hotel has continued to trade well throughout the period
with turnover showing growth to £2,359,000 and operating
profit virtually in line with last year at £676,000.
Current trading and future prospects
Over the last twelve months the board has made significant
progress in implementing the strategy set out following last
year's strategic review. The loss making curtains and
accessories division has been sold and acquisitions have been
completed for both the yarns division and the floor coverings
division. We have appointed a Group Chief Executive whose
previous experience as Chief Executive of Ryalux reflects the
new balance of the group. He and the board are confident that
we have the right strategy and structure to continue to
produce the desired results. The main emphasis will remain on
our core business of floor coverings and specialist yarns. We
are actively seeking further acquisitions in our core business
area whilst consideration is being given to the disposal of
non-core activities.
The second half of the year has started well. Contract floor
coverings are particularly buoyant and, with a new production
management team in place with effect from 1st January 2001,
Burmatex are confident about the outlook for the next six
months. In addition, close co-operation is taking place
between Burmatex and Ryalux over the sales of existing
products, development of new products and the exploitation of
new markets. Ryalux is well covered in terms of raw material
supplies at favourable prices and this will help to maintain
or improve margins over the next eighteen months. The second
half of the year will also benefit from the inclusion of
Ryalux for the full period compared to less than half of the
first period. Yarns sales are continuing the trends recorded
in the first half but are facing up to further rationalisation
of the UK customer base. The recent growth in export sales
from this division is expected to continue.
Overall, I believe these results demonstrate the excellent
progress made in implementing the board's declared strategy
and I am confident of further significant progress in the
future.
GERRY LUMB
Chairman 21st March 2001
Enquiries:
Mr J D Verity Group Chief Executive, Sirdar PLC
01924 371 501
Mr K F Henry Group Finance Director, Sirdar PLC
01924 371 501
Consolidated Profit and Loss Account
6 months ended 31st December 2000
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31st 31st 30th
December December June
2000 1999 2000
£000 £000 £000
Note
Turnover
Continuing operations
- ongoing 22,289 20,305 41,082
Continuing operations
- acquisitions 7,949 - -
Discontinued operations - 3,901 6,498
2 30,238 24,206 47,580
Operating profit
Continuing operations
- ongoing 3,655 3,682 7,321
Continuing operations
- acquisitions 1,251 - -
Discontinued operations - (437) (1,272)
Operating profit
before goodwill amortisation 4,906 3,245 6,049
Goodwill amortisation (146) - -
Operating profit 2 4,760 3,245 6,049
Continuing operations
- ongoing 3,655 3,682 7,321
Continuing operations
- acquisitions 1,105 - -
Discontinued operations - (437) (1,272)
Operating profit 2 4,760 3,245 6,049
Loss on disposal of
discontinued operation 2 - - (7,024)
Interest payable (375) (108) (193)
Profit/(loss) before
taxation 4,385 3,137 (1,168)
Taxation 1,293 940 1,776
Profit/(loss) for the period 3,092 2,197 (2,944)
Dividends 3 925 906 2,686
Retained
profit/(loss) 5 2,167 1,291 (5,630)
for the period
Earnings/(loss) per 4 6.69p 4.60p (6.19p)
share
(Basic and fully diluted)
Adjusted earnings per 4 7.00p 4.60p 8.58p
share
There are no recognised gains or losses other than those
disclosed in the consolidated profit and loss account.
Consolidated Balance Sheet
as at 31st December 2000
Unaudited Unaudited Audited
31st 31st 30th June
December 2000 December 2000
1999
£000 £000 £000 £000 £000 £000
Note
Tangible 28,877 23,631 22,652
fixed assets
Intangible 12,980 - -
fixed assets
Current assets
Stocks 18,236 12,107 9,935
Debtors 13,453 9,660 8,119
Cash at bank 975 215 314
and in hand
32,664 21,982 18,368
Creditors (due
witin one year) 15,049 12,106 10,703
Net current assets 17,615 9,876 7,665
Total assets less
current
liabilities 59,472 33,507 30,317
Creditors
(due after one year) 27,699 773 721
31,773 32,734 29,596
Equity shareholders' funds
Called up ordinary
share
capital 11,561 11,920 11,556
Share premium
account 5 504 499 499
Capital redemption
reserve 5 2,395 2,031 2,395
Profit and
loss account5 17,313 18,284 15,146
31,773 32,734 29,596
Consolidated Cash Flow Statement
6 months ended 31st December 2000
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 30th June
31st 31st 2000
December December
2000 1999
£000 £000 £000 £000 £000 £000
Note
Net cash inflow
from operating
activities 7 4,921 4,056 9,100
Servicing of
finance
Interest paid (251) (111) (193)
(251) (111) (193)
Corporation tax
(paid)/received (500) 31 (1,220)
Capital expenditure
Purchase of
tangible fixed
assets (1,065) (598) (1,062)
Sale of tangible
fixed assets and
assets previously
held for resale 2,134 112 198
1,069 (486) (864)
Acquisitions and disposals
Acquisition of
business (including)
net overdraft
acquired) (3,591) - (262)
Disposal of
subsidiary
undertaking - - 44
(3,591) - (218)
Equity
dividends paid (1,781) (1,818) (2,724)
(133) 1,672 3,881
Financing
Issue of
share capital 10 131 131
Purchase of
own shares - (272) (1,151)
Repayment of
bank loan (22) - -
(12) (141) (1,020)
(Decrease)/
increase in 8 (145) 1,531 2,861
cash
A reconciliation of net cash flow to movement in net debt is
set out in Note 9.
Notes:
1. BASIS OF PREPARATION
The financial information has been prepared using the
accounting policies set out in the group's report and
accounts for the year ended 30th June 2000. The
comparative figures for the year ended 30th June 2000 do
not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985. Statutory accounts
for the year ended 30th June 2000 have been delivered to
the Registrar of Companies. The auditors have reported on
those accounts. Their report was not qualified and did
not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
2. SEGMENTAL INFORMATION
Analysis of results by class of business
Turnover
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Floor coverings 19,320 10,872 22,023
Hand knitting
and machine yarns 8,559 7,106 14,496
Hotel 2,359 2,327 4,563
Continuing 30,238 20,305 41,082
Curtains and
accessories - 3,901 6,498
(discontinued)
30,238 24,206 47,580
Operating profit/(loss) before central group costs
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Floor coverings 3,752 2,572 5,348
Hand knitting
and machine yarns 538 561 944
Hotel 676 679 1,299
Continuing 4,966 3,812 7,591
Curtains and
accessories - (419) (1,239)
(discontinued)
4,966 3,393 6,352
Central group costs (206) (148) (303)
Operating profit 4,760 3,245 6,049
Loss on disposal of
subsidiary - - (7,024)
4,760 3,245 (975)
Net interest (375) (108) (193)
4,385 3,137 (1,168)
Net operating assets
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Floor coverings 34,504 7,531 8,416
Hand knitting
and machine yarns 16,270 13,713 13,034
Hotel 10,111 9,573 9,424
Continuing 60,885 30,817 30,874
Curtains and
accessories - 4,906 -
(discontinued)
60,885 35,723 30,874
The results of Ryalux Carpets Limited are included within
the floor coverings division from the date of acquisition.
Net operating assets are stated excluding inter-company
financing and are derived from the balance sheet total by
excluding bank borrowings, loans and loan notes totalling
£29,542,000 (31st December 1999: £2,989,000, 30th June
2000: £1,758,000) and excluding deferred consideration
receivable of £430,000 (31st December 1999: Nil, 30th June
2000: £480,000) on the disposal of Eversure Textiles
Limited.
The loss on disposal of subsidiary in the year ended 30th
June 2000 relates to the sale of Eversure Textiles
Limited.
3. DIVIDENDS
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Ordinary :-
Interim - 2.00p
(1999 : 1.90p) 925 906 906
Final - 3.85p - - 1,780
925 906 2,686
4. EARNINGS/(LOSS) PER SHARE
The calculation of basic earnings/(loss) per share is
based on earnings of £3,092,000 (31st December 1999:
earnings of £2,197,000, 30th June 2000: losses of
£2,944,000) and on 46,230,716 (31st December 1999:
47,775,385, 30th June 2000: 47,565,240) ordinary shares
being the weighted average number in issue during the
period. Adjusted earnings per share is calculated after
excluding the goodwill amortisation in the period ended
31st December 2000 and after excluding the loss on
disposal of subsidiary in the year ended 30th June 2000
and is calculated in order to demonstrate the underlying
progress of the group.
There is no dilution caused by share options.
5. RESERVES
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Share premium account
Brought forward 499 421 421
Premium on shares
issued 5 78 78
Carried forward 504 499 499
Capital redemption reserve
Brought forward 2,395 1,938 1,938
Purchase of
own shares - 93 457
Carried forward 2,395 2,031 2,395
Profit and loss account
Brought forward 15,146 17,265 17,265
Profit/(loss)
for period 2,167 1,291 (5,630)
Goodwill written
back - - 4,662
Purchase of
own shares - (272) (1,151)
Carried forward 17,313 18,284 15,146
6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Profit/(loss)
for period 3,092 2,197 (2,944)
Dividends (925) (906) (2,686)
2,167 1,291 (5,630)
New share capital
subscribed 10 131 131
Purchase of
own shares - (272) (1,151)
Goodwill written
back - - 4,662
Net addition to
/(reduction in)
shareholders' 2,177 1,150 (1,988)
funds
Opening
shareholders'
funds 29,596 31,584 31,584
Closing
shareholders'
funds 31,773 32,734 29,596
7. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
Operating profit 4,760 3,245 6,049
Depreciation 1,181 1,015 1,923
Goodwill
amortisation 146 - -
Profit on sale of
tangible fixed
assets (385) (67) (108)
Decrease in stock 1,239 329 545
Decrease/(increase 56 (523) (323)
in debtors
(Decrease)
/increase (2,076) 57 1,014
in creditors
Net cash inflow
from operating
activities 4,921 4,056 9,100
8. ANALYSIS OF CHANGES IN NET DEBT
31st Cash Other 30th
December flows June
2000 2000
£000 £000
£000 £000
Cash at bank
and in hand 975 661 - 314
Bank overdrafts (2,564) (806) - (1,758)
(1,589) (145) - (1,444)
Loan notes (26,462) - (26,462) -
issued
Bank loan
acquired (516) 22 (538) -
with
subsidiary
Total net debt (28,567) (123) (27,000) (1,444)
31st Cash Other 30th
December flows June
1999 £000 1999
£000 £000 £000
Cash at bank
and in hand 215 (24) - 239
Bank overdrafts (2,989) 1,555 - (4,544)
Total net debt (2,774) 1,531 - (4,305)
30th June Cash Other 30th
2000 flows June
£000 £000 1999
£000 £000
Cash at bank
and in hand 314 75 - 239
Bank overdrafts (1,758) 2,786 - (4,544)
Total net debt (1,444) 2,861 - (4,305)
9. RECONCILIATION OF MOVEMENT IN NET DEBT
31st 31st 30th June
December December 2000
2000 1999
£000 £000 £000
(Decrease)
increase in cash (145) 1,531 2,861
Loan notes (26,462) - -
issued
Bank loan
acquired (538) - -
with
subsidiary
Bank loan repaid
during the 22 - -
period
Movement in net (27,123) 1,531 2,861
debt
Net debt at
start (1,444) (4,305) (4,305)
of period
Net debt at end
of period (28,567) (2,774) (1,444)
10. ACQUISITION OF RYALUX CARPETS LIMITED
On 10th October 2000 the Company acquired Ryalux Carpets
Limited for a total consideration of £27,750,000.
Ryalux has contributed £1,332,000 to operating cash flow,
paid £324,000 in respect of interest and utilised £391,000
for capital expenditure
£000
The net assets acquired were as follows:-
Tangible fixed assets 6,484
Assets held for resale 1,562
Intangible fixed assets 1,879
Stock 9,540
Debtors 5,430
Cash & bank balances 50
Bank overdrafts (2,353)
Creditors (4,797)
Taxation (754)
Bank loan (538)
Net assets acquired 16,503
Goodwill 11,247
27,750
Consideration
Loan notes 26,462
Cash 100
Acquisition costs 1,188
27,750
Assets held for resale comprised certain assets not
related to the ongoing activities of Ryalux which, under
the terms of the Sale and Purchase Agreement, were
repurchased by one of the vendors immediately following
completion.
Loan notes amounting to £26,462,000 were issued to the
vendors, bear interest at 4 per cent. and are redeemable
by the vendors on not less than 30 days notice on 30th
April and 31st October in each calendar year.
OTHER INFORMATION
The interim results are unaudited
A copy of the announcement will be sent to shareholders
and 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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