Interim Report 2009

Interim Report 2009

Overview
As was reported in the results for Seardel Investment Corporation Limited (“Seardel“ or “the Group“) for the nine months ended 31 March 2009, there are no quick ﬁxes to a group of this size, particularly when the macro-economic environment is as unfavourable as the one currently being experienced. The global recession and strong Rand have certainly slowed the rate of progress and given the long lead times, will continue to have an effect for the remainder of the year. However, despite this, we believe that the Group has made some tremendous steps forward operationally and signiﬁcant costs have been cut out of the business. The results for the ﬁrst six months do not reﬂect the full beneﬁts of the turnaround, but we are conﬁdent that we will be able to report improved results for the second half of this ﬁ nancial year.
During the period under review, the Group took the signiﬁcant decision to close certain of its textile divisions namely, Spinning, Weaving, Finishing and Denim (“the Affected Divisions”) after it became apparent that there was little that could be done within management’s control that would see these Affected Divisions returning to proﬁtability. The ﬁnancials reﬂect the results of these operations as part of the discontinuing operations disclosure.
The other signiﬁcant event of the period under review was the 12 day clothing industry strike which cost the Group around R16 million. It is acknowledged that in order to survive, the local industry has to have efﬁciency levels that are world class. This has been the focus of Seardel and we have seen marked improvement in efﬁciency levels. However, the high absenteeism levels experienced by the Group, particularly in the Western Cape, are a major stumbling block in the attainment of world class efﬁciencies on a consistent basis. The wage offer made by employers during this year’s negotiations represented an increase of 8% with certain conditions aimed at reducing absenteeism. The union rejected this offer on the grounds that it represented a downward variation in employment conditions. The strike was eventually settled on terms that effectively gave workers in the metro areas an increase of 7% without any signiﬁcant changes to the terms of employment. However, the union has acknowledged the problem of absenteeism and have stated a commitment to working with the industry to ﬁnd a solution to the problem. We hope that the commitment expressed by the parties translates into a positive action.
In addition to the industry strike, the period under review also incorporated a metro rail and taxi strike which also had an adverse effect on the reported results.