Sketchley to gain from pits reprieve

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The Independent Online
THE GOVERNMENT'S U-turn on the scale of pit closures has been greeted with relief by Sketchley, the dry cleaning group, which has an exclusive contract with British Coal to clean miners' clothes.

The company, which yesterday reported a robust first-half result, said that although it had expected the closure of British Coal pits the extent of the initial plans came as a surprise.

However, the closure of 10 pits would hit its textile services division profits by less than pounds 100,000, Tony Bollom, deputy chairman, said.

In the past two years the division has been forced to adjust to a 50 per cent reduction in the number of miners to 45,000 by winning business from other companies, including Sainsbury and Unigate.

Overall, group taxable profits slipped from pounds 3.18m to pounds 3.11m in the half-year to 2 October on sales down pounds 1m to pounds 54m.

The result reflects a more than halved interest bill of pounds 625,000, which offset a sharper decline in operating profits from pounds 4.7m to pounds 3.7m.

However, its high street dry cleaning activities were hit by a downturn in consumer spending and the closure of some outlets.

Although the average bill was relatively unchanged at about pounds 7, the number of customers was down on last year.

But the division's profit fall was partly stemmed by a further cost reduction programme.

Tight cash management reduced net borrowings by pounds 1m to pounds 11m, amounting to 28 per cent of shareholders' funds, compared with 31 per cent last year. By the year-end this is expected to drop to about 18 per cent.

The company is planning to sell a further 30 shops from a total of 471. Meanwhile, it is on the lookout for acquisitions to complement existing activities.

Earnings per share improved from 4.1p to 4.2p. The interim dividend is being resumed at 1p.

Last year Sketchley was forced to pass the interim following severe financial problems, which brought it to the brink of collapse in 1990.

Sketchley said that it was resisting a breach of warranty claim for pounds 9.3m from Eurocopy. Provision has been made for legal costs.