Final Results

Sirdar PLC
14 September 2005





Summary

•      Group turnover up 4% to £71.4m.

•      Operating profit before exceptional items up 17% to £3.2m.

•      Adjusted earnings per share up 1% to 3.58p.

•      Final dividend up 17% to 1.40p per share, making a total dividend for the
       year of 2.10p per share.

•      Net debt down £3.2m to £9.2m.

•      Transfer to Alternative Investment Market proposed.

•      Streamlined board and new management structure agreed.

•      Brewin Dolphin Securities appointed as financial advisors and
       stockbrokers.

•      Residential Floor Coverings operation remains an area of concern and the
       subject of significant focus.

•      Potential for profitable growth within regenerated Contract Floor
       Coverings operation.

•      Significant contribution from restructured Specialist Yarns division.

•      Cost of product recall in line with expectations.








Sirdar PLC

Preliminary results for the year ended 30th June 2005

Chairman's Statement

Introduction



The interim statement summarised the conclusion of our review of the group's
strategy and confirmed our intention of focussing on the profitable growth of
our existing operations. We are currently implementing a wide range of
initiatives in pursuit of this objective. The diverse and challenging nature of
the markets in which we operate requires the careful prioritisation of our
transformation programme to ensure that the identified benefits are delivered
within agreed timescales. Where implementation is near completion, as in the
Specialist Yarns division, the benefits are clear, reaffirming our vision that
exceeding customer expectations through the marketing of innovative quality
products provides the greatest opportunity of delivering enhanced shareholder
value.



The results



Turnover for the year was £71.4m (2004: £68.8m).  Operating profit excluding
exceptional items amounted to £3.2m (2004: £2.8m). The statutory operating
profit amounted to £3.7m after exceptional income of £0.5m (2004: £1.2m after
exceptional costs of £1.6m). Divisional performance reviews are contained within
the Group Chief Executive's Review.



Earnings and dividend per share



Basic earnings per share amounted to 4.26p (2004: 1.13p).  Adjusted earnings per
share, which is calculated to show the underlying performance of the group and
excludes the exceptional item, amounted to 3.58p per share (2004: 3.56p). The
results to June 2004 benefited from a prior year tax credit of £0.5m, which was
not repeated in the current year.  The directors are proposing a final dividend
of 1.40p (2004: 1.20p) per share.  The dividend is payable on 22nd November 2005
to those shareholders on the register of members at the close of business on
28th October 2005.



Regulatory status



A move to the Alternative Investment Market (AIM) is proposed which would allow
the group to operate within a market more appropriate to its size and resources.
The move will be proposed as a resolution at an extraordinary general meeting
and if the resolution is passed, will take place shortly afterwards.



Management and personnel



The proposal to move to AIM, coupled with the ongoing drive to reduce costs and
maximise efficiencies, has led to a review of the management structure. The
proposed simplification detailed below is designed to balance the requirement
for a dynamic, value-adding central function with the need to control costs.

Duncan Verity has indicated his wish to retire from his role as group chief
executive with effect from 31st December 2005, and I would like to record the
board's appreciation of his contribution to the group's development and wish him
well for the future. Following his retirement, Duncan's responsibilities will be
reallocated between other members of the board.

Steve Harrison will resign from his role as senior independent non-executive
director and will be appointed to an executive role as chief operating officer,
on a part-time basis, with effect from 1st January 2006.  In this role he will
be directly accountable for the achievement of sales, profit and cash-flow
targets for the operating businesses.



Kevin Henry will continue to be responsible for finance and planning and will
combine this with his responsibilities for the residential floor coverings
business.



Carolyn Tobin will remain a non-executive director and I will be slightly
increasing my time commitment in my role as non-executive chairman to help
ensure the realisation of our vision for the group.



Current trading and future prospects



Despite the overall gains achieved during the year, areas of concern still exist
and further work is required to consolidate and strengthen the group. The
slowdown in consumer spending, combined with rapidly changing fashions,
continues to generate fresh challenges. Such a changeable environment creates
uncertainty and strains resources, creating a difficult position from which to
achieve sustainable growth. However, the management team has a collective
ambition to build an increasing share of our principal markets and we remain
confident that the group is well placed to exploit growth opportunities.



We will continue to major on the strengths of our brands and people and promote
an innovative culture to ensure the group is well positioned to meet all future
challenges and take advantage of opportunities as they arise.



I would like to thank all our team members for their support in addressing the
challenges facing the group and dealing with the difficult market conditions in
which we are operating.




TIM VERNON                                                   15th September 2005
Chairman








Group Chief Executive's Review



Introduction



The climate of change that surrounded the group during 2004 has remained
throughout the current year. Rapid evolution has been necessary to combat an
increasingly competitive market place whilst maintaining profitability. The
performance of the group against such a demanding backdrop provides optimism for
the future. However, areas of unsatisfactory performance still exist which
require attention.



As outlined within the Chairman's Statement this will be my final review due to
my impending retirement. My original contract ended in 2004 but, at the request
of the board, I was pleased to extend that contract to oversee the significant
changes that have occurred since that time. However, with those changes complete
and the new board structure and personnel agreed, it is an appropriate time for
me to retire and to allow the new team to take the business forward. My time at
Sirdar PLC has been challenging, yet enjoyable and fulfilling and I have enjoyed
contributing to the development of both the people and the businesses within the
group.



Floor Coverings division



Turnover of the Floor Coverings division was £56.2m (2004: £54.6m) in the year
to 30th June 2005. This generated an operating profit of £1.6m (2004: £3.1m).
The reduction in operating profit noted in the year is a reflection of the
market conditions within which we are operating, particularly in relation to
residential carpets.



The residential floor coverings operation, marketed under the Ryalux, Lomas and
Pownall brands, remains an area of concern for group management and one of
significant focus. A continuation of trends noted previously relating to
increased imports, the popularity of alternative floor coverings, tough high
street conditions and rising raw material and utility costs have all combined to
create the most challenging environment in recent times. The number of business
failures within this sector is indicative of these conditions and serves to
highlight the ongoing difficulties faced by UK based manufacturers.



A dedicated team, led by Kevin Henry, is striving to compete profitably in these
difficult conditions. Attempts to rationalise a complex cost base continue, with
progress being made in the year in establishing a leaner management structure
designed to reduce costs and improve flexibility. Such changes are necessary if
the business is to evolve and adapt to its current environment. Work to generate
efficiencies and improve profitability is ongoing although the size and
complexity of the operation is likely to slow progress. It is difficult to
envisage a change within the market easing the problems we are currently facing,
consequently, a significant upturn in the fortunes of this operation in the
short term is unlikely.



Contract floor covering products are marketed under the Burmatex, Carpet Tile
Company and Burmafloors International brands. The appointment of Gordon Donald
as managing director was announced in last year's annual report. Since his
appointment further senior personnel changes have occurred, providing fresh
impetus and a renewed drive, resulting in a new look to the business covering
branding, product offering and target markets. The result of this regeneration
is a strong, vibrant operation well positioned to meet the challenges of
business in the twenty-first century. I am confident these changes will enable
us to retain our position as a market leader and provide a platform for
profitable growth.





Specialist Yarns division



Turnover in this division increased to £15.3m (2004: £14.2m). The increase is
attributable to a combination of a gain in sales of hand knitting yarns and a
planned reduction in the, lower margin, machine yarns business. This movement in
the sales mix, combined with the benefits obtained from the reorganisation,
resulted in an operating profit of £2.7m (2004: loss £1.4m).



The Specialist Yarns division's products are marketed under the Sirdar, Tilsatec
and Tilsa brands. As announced in the interim report, Russell Morris now leads
the division, with the appointment of a new sales and marketing director
providing fresh impetus. The transformation from a manufacturing business to a
customer focused, innovative, marketing and distribution led operation was well
managed and has proven successful.  Further work is now required to consolidate
the considerable progress made to date and to explore additional value adding
opportunities.



Conclusion



The factors underpinning the achievements of the Specialist Yarns division in
the year are still present. By utilising the experience gained to date we can
further enhance our product offering and processes and are confident of building
on our success.



The residential floor coverings operation will remain an area of focus for the
board and subsidiary management. The complexity of the operation, combined with
tough market conditions, further complicates the revitalisation process and will
increase the time necessary to achieve this. The contract floor coverings
business is being operated from a simpler structure and is being supported by a
more buoyant market. The changes occurring within this business are therefore
capable of faster implementation and are likely to have a more immediate impact
on profitability.



The degree of change, both internally and externally, throughout this and the
previous year appears now to be indicative of the nature of our markets and our
industry. Evolving and adapting to these changes is a necessary skill to thrive
in such an environment.  The planned changes to a more streamlined board
structure, complemented by a move to AIM, should provide sufficient flexibility
to ensure we can capitalise on the opportunities this environment of change
presents.



Finally, I would like to thank all the group's employees and everyone connected
with Sirdar PLC for their support throughout my time with the group and wish
them a prosperous future.




DUNCAN VERITY                                             15th September 2005
Group Chief Executive



Enquiries:


Duncan Verity                                      01924 371501
Group Chief Executive, Sirdar PLC

Kevin Henry                                        01924 371501
Group Finance Director, Sirdar PLC



Consolidated Profit and Loss Account

year ended 30th June 2005






                                             Note

                                                                            2005                         2004
                                                                            £000                         £000
Turnover                                        2                         71,422                       68,770

Operating costs                                                         (68,186)                     (66,004)
Exceptional income/(costs)                      3                            452                      (1,606)
Net operating costs                                                     (67,734)                     (67,610)


Operating profit                                2                          3,688                        1,160
Net interest payable and similar charges                                   (690)                        (783)
Profit before taxation                                                     2,998                          377
Taxation                                                                 (1,028)                          147
Profit for the year                                                        1,970                          524
Dividends                                       4                          (971)                        (832)
Retained profit/(loss) for the year                                          999                        (308)
Earnings per share
(basic and diluted)                             5                          4.26p                        1.13p





There were no recognised gains or losses in the year other than the profit/
(loss) shown above.



The results shown in the profit and loss account derive wholly from continuing
activities.



There is no difference between the profit on ordinary activities before taxation
and the retained profit/(loss) for the year stated above and their historical
cost equivalents.




Consolidated Balance Sheet

as at 30th June 2005


                                                                2005                           2004

                                                         £000           £000            £000          £000
Fixed assets
Intangible                                                            13,737                        14,617
Tangible                                                              15,694                        16,421
                                                                      29,431                        31,038

Current assets
Stocks                                                 17,344                        16,853
Debtors                                                15,638                        14,694
Cash at bank and in hand                                  485                           614
                                                       33,467                        32,161

Creditors (due within one year)                      (19,877)                       (18,126)
Net current assets                                                   13,590                        14,035
Total assets less current liabilities                                43,021                        45,073
Creditors (due after more than one year)                             (3,733)                       (6,772)
Deferred taxation                                                    (3,247)                       (3,259)
                                                                     36,041                        35,042

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                                              21,581                        20,582
                                                                     36,041                        35,042







Consolidated Cash Flow Statement

year ended 30th June 2005


                                                                       2005                   2004
                                                          Note       £000       £000       £000        £000

Net cash inflow from operating activities                    6                 5,995                  5,823
Interest paid and similar charges                                              (720)                  (754)
                                                                               5,275                  5,069

Corporation tax paid                                                           (122)                (1,994)
Capital expenditure
Purchase of tangible fixed assets                                 (1,415)               (1,464)
Sale of tangible fixed assets                                         340                   429
                                                                             (1,075)                (1,035)

Equity dividends paid                                                          (879)                (2,127)
Cash inflow/(outflow) before financing                                         3,199                   (87)
Financing
Redemption of loan notes                                            (118)                 (137)
Repayment of bank loans                                           (2,921)               (2,827)
                                                                             (3,039)                (2,964)

Increase/(decrease) in cash                                  7                   160                (3,051)



A reconciliation of net cash flow to movement in net debt is set out in note 8.





Notes



1.                   Basis of preparation



These preliminary financial statements, which have been prepared on a basis
consistent with the previous year, do not constitute statutory accounts within
the meaning of section 240 of the Companies Act 1985.  The information for the
year ended 30th June 2005 is an extract from the group's statutory financial
statements on which the company's auditors, PricewaterhouseCoopers LLP, have
given an unqualified opinion in accordance with Section 235 of the Companies Act
1985, and are to be delivered to the Registrar of Companies.



The announcement has been agreed with the company's auditors for release.



2.                   Segmental information



Analysis of results by class of business


                                                                                        Net operating
                                   Turnover                Operating profit                 assets
                               2005          2004          2005         2004          2005          2004
                               £000          £000          £000         £000          £000          £000

Floor Coverings              56,162        54,605         1,614        3,143        35,807        38,098
Specialist Yarns             15,260        14,165         2,671      (1,414)         8,144         8,789
                             71,422        68,770         4,285        1,729        43,951        46,887

Central group (costs)/assets                              (597)        (569)         1,784         1,177
Total net operating assets                                                          45,735        48,064
Operating profit                                          3,688        1,160

Net interest payable and similar charges                  (690)        (783)
Profit before taxation                                    2,998          377




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 £9,694,000 (2004:  £13,022,000).



3.                   Exceptional item


Exceptional operating (income)/charges        2005                2004
                                              £000                £000
Raw materials and consumables                  (72)                434
Other external charges                        (239)                380
Staff costs                                    (76)                792
Settlement of legal action                    (250)                  -
Profit on sale of fixed assets                (332)                  -
Fizz recall costs                              517                   -
                                              (452)              1,606



The exceptional cost in the year relates to the recall of the fashion hand
knitting yarn, Fizz. The cost includes the write off of stock on hand and stock
held at retailers, an estimate of the cost of recalling product already sold by
retailers and other associated costs.

The exceptional income in the year relates to settlement following legal action
for breach of contract against former directors, profit on the sale of fixed
assets associated with the decision to cease manufacturing and the release of
provisions associated with the reorganisation of the Specialist Yarns division.



The exceptional costs incurred in the year ended 30th June 2004 related
principally to redundancies, stock write downs and provisions for additional
charges associated with the reorganisation of the Specialist Yarns division.







4.             Dividends


                                                           2005            2004
                                                           £000            £000
Interim - 0.70p per share (2004:  0.60p)                    324             277
Proposed final - 1.40p per share (2004:  1.20p)             647             555
                                                            971             832





5.             Earnings per share



The calculation of basic earnings per share is based on earnings of £1,970,000
(2004: £524,000) and on 46,242,455 (2004: 46,242,455) ordinary shares, being the
weighted average number in issue during the year.



Adjusted earnings per share, as set out below, is calculated after excluding
exceptional items of £316,000, net of tax, consisting of the cost of the product
recall of the fashion hand knitting yarn Fizz, offset by a settlement following
legal action for breach of contract against former directors, profit on the sale
of fixed assets associated with the decision to cease manufacturing and the
release of provisions associated with the reorganisation of the Specialist Yarns
division.

Adjusted earnings per share for the year ended 30th June 2004 is calculated
after excluding exceptional costs of £1,124,000, net of tax, incurred during the
reorganisation of the Specialist Yarns division. The adjusted earnings per share
is presented in order to demonstrate the underlying performance of the group.


                                                                 2005                         2004
                                                         Earnings      Earnings      Earnings      Earnings
                                                                      per share                   per share
                                                             £000         pence          £000         pence
Earnings and basic earnings per share                       1,970          4.26           524          1.13
Exceptional item                                            (316)        (0.68)         1,124          2.43
Adjusted earnings and basic earnings per share              1,654          3.58         1,648          3.56



There is no dilution caused by share options.





6.             Reconciliation of operating profit to net cash inflow from
               operating activities


                                                2005                  2004
                                                £000                  £000
                                             
Operating profit                               3,688                 1,160
Depreciation                                   2,022                 2,278
Goodwill amortisation                            880                   880
Profit on sale of tangible fixed assets         (357)                 (286)
(Increase)/decrease in stocks                   (491)                1,038
Increase in debtors                           (1,625)                 (418)
Increase in creditors                          1,878                 1,171

Net cash inflow from operating activities      5,995                 5,823



Net operational exceptional cashflows amounted to an inflow of £350,000 (2004:
outflow £605,000).




7.             Analysis of changes in net debt


                                      2005            Cash flows  Loan note redemption                 2004
                                      £000                  £000                  £000                 £000
Cash at bank                           485                 (129)                     -                  614
Bank overdrafts                    (2,923)                   289                     -              (3,212)
                                   (2,438)                   160                     -              (2,598)

Loan notes                           (394)                    -                    118                (512)
Bank loans                         (6,377)                 2,921                     -              (9,298)
Total net debt                     (9,209)                 3,081                   118             (12,408)





8.             Reconciliation of movement in net debt


                                                 2005                  2004
                                                 £000                  £000

Increase/(decrease) in cash                       160               (3,051)
Redemption of loan notes                          118                   137
Repayment of bank loans                         2,921                 2,827
Movement in net debt                            3,199                  (87)
Net debt at start of year                     (12,408)              (12,321)
Net debt at end of year                        (9,209)              (12,408)






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