- May 24, 2010
- Posted by: admin
- Category: Clothing and Textiles
DISTRESSED clothing and textile manufacturer Seardel made significant inroads into turning its operations around in the year to February and said it would continue its case against former directors of the group, including recently deceased Aaron Searll.
Seardel’s generated gross profit of R612 million from turnover of R2.6 billion in the review period.
The group’s strong focus on cash generation meant that the neS- interest-bearing borrowings declined by R156m in the year, which improved the company’s gearing by 9 percentage points to 24 percent.
Seardel also turned its net cash flow from existing operations around from an outflow of Rl60m at the end of the previous year to an inflow of R148m in the review period.
Chief executive Stuart Queen said there was no single reason for the improvement but that the company was starting to see the effects of all its turnaround initiatives, which it started two years ago.
“Our efficiency improvements and cost cutting measures are a journey with progressive improvements throughout the year,” he said.
Queen said the closure of the group’s Frame Vertical Pipeline division last year was the most significant Seardel had earlier this month retrenched more than 800 workers from a number of its factories across the country as sales volumes, particularly in its suit-making facility, had diminished.
“We have also realigned our textile divisions around product clusters,” he said. The company had also consolidated Charmfit, Creative Fashions, Cygnet and Cape Underwear into one division, renamed Intimate Apparel.
Queen noted that the performance of the clothing operations remained disappointing.
The clothing segment recorded an operating loss of R55m.
He said at the weekend that while it was difficult to quantify the rand figure of the effect that the Metrorail strike had had on operations, he noted that it was “not insignificant”.
“When the trains do not run. we see a spike in late-coming and absenteeism and as our industry runs on very tight margins we can ill afford to lose any productive time,” he said.
He added that the Transnet strike created additional problems as raw materials were not being delivered, further impacting deliveries.
Though the company had a difficult year, Queen said Seardel was in a far better position now than 17 months ago.
Toward the end of last year, the company issued summonses for various substantial claims of relief totalling R300m against three former directors of the company.
The claims include personal property transactions and a large number of vehicles. Empowerment group Hosken Consolidated Investments – which owns a 70 percent stake in Seardel – had bailed out the company last year with a rights issue, which effectively gave it a majority stake in the group.
At Seardel’s last annual general meeting, it had emerged that the group would target former directors by claiming back funds. The names of the directors had been withheld as access pertaining to the case is privileged.
Directors who had since left the company include Aaron Searll and Arthur Jacobson. Searll died two weeks ago. Seardel’s legal representative, Koos Pretorius, said at the weekend that an executor would be appointed and that the case would continue against Searll’s estate.
“There can’t be a judgment against Searll himself anymore but definitely against his estate,” he said..
On Friday, Seardel’s shares closed 13.2 percent up at 43c.
Source: Business Report – Florence de Vries