Stefan Simmonds, chairman, said: 'We are being extremely cautious, planning and hoping for things to improve. We are optimistic things will improve.'
The company, whose worsted cloth is turned into suits, trousers and jackets sold in Marks & Spencer, Woolworth, Next and Debenhams, saw turnover fall from pounds 43m to pounds 40m. Profit margins were squeezed by operating problems, arising mainly from a pounds 2.8m restructuring coupled with the introduction of high-technology machinery.
'It should be recognised that the difficulties we have experienced have been brought about by the problems associated with the rapid expansion of the group's activities,' Mr Simmonds said.
He added: 'Our turnover has doubled in the last five years, and we are now the largest wool-based apparel manufacturer in the UK.
'The principal objectives over the next 18 months will be to focus our efforts and resources on recovery in our core activities.'
Excluding the recent pounds 3.7m sale of the South African operations, the company suffered a 'slight' cash outflow in the year. Net assets at the year-end were pounds 11m, and gearing was 60 per cent.
Some cash is being conserved with the dividend being passed. Loss per share was 22.6p.Reuse content