Final Results

Pittards PLC 6 March 2001 Pittards plc Preliminary results for the year ended 31 December 2000 Pittards plc produces technically advanced leather for many of the world's leading brands of gloves, shoes, luxury leathergoods and sports equipment. 6 March 2000 Results for the year ended 31 December 2000 Summary Year ended Year ended 31 December 2000 31 December 1999 Turnover £80.2m £62.1m Percentage export 75% 67% Profit before taxation £3.0m £1.8m Earnings per share 12.7p 6.8p Ordinary dividend 3.8p 3.6p Net assets per share 107p 98p Gearing 22% 20% * Sales up by 31% as demand for our products from international customers continues to grow. * Exports up by 47% * Profit up by 71% * Earning per share up by 87% * Gearing held at 22% despite increased activity * Dividend increased by 6% to 3.8p for the year * The increased investment in innovation and the accelerated pace of new product development is delivering results. Robert Tomkinson, Chairman of Pittards, commented: 'We are encouraged that the Company has made further substantial progress in the last 12 months. We were confident this would continue in the current year until the recent outbreak of foot and mouth disease in the UK. Hopefully this will be resolved promptly but until the disease is contained and our supplies of raw material return to normality the trading outlook will remain unclear. We have started the year with healthy order books and our sales turnover in the first two months is ahead of last year'. - ends - For further information, please contact: John Pittard - Group Managing Director John Buckley - Group Financial Director Pittards plc, Tel: 01935 474321 PITTARDS plc Preliminary results for the year ended 31 December 2000 CHAIRMAN'S STATEMENT Your Company has made substantial further progress in the last year. I am pleased to report an increase in profit before tax for the year ended 31 December 2000, to £3.003m from £1.759m for the previous year and an increase in earnings per share of 87% to 12.7p (1999 - 6.8p). Strong international demand for leather in the sport and leisure sectors continued into the second half. Group turnover in the second six months was similar to the first and amounted to £81.2m for the year as a whole, 31% ahead of sales for the previous year. 75% of this turnover was generated outside the United Kingdom (1999 - 67%) with export sales, at £60.9m, up by 47% on the previous year. Much of the growth in turnover was attributable to sales of products brought to market within the last two years, and to the rapid development of new accounts as we broaden our customer base. The special factors which depressed sales in 1999 did not feature in 2000. As I predicted in my interim statement, the operating profit of £1.572m achieved in the second half did not match the £1.921m achieved in the first. This was due primarily to the steady rise in hide and skin prices throughout the year in response to international demand, and to increases in fuel, chemical, and other input costs. We managed to contain much of the impact of higher costs and increased volumes on working capital and there was only a modest increase in interest costs to £0.490m (1999 - £0.473m). Tax losses of approximately £3.1m brought forward from previous years have reduced the charge to corporation tax in the year to £0.020m (1999 - £0.001m). After preference dividends, earnings were £2.699m (1999 - £1.473m) and earnings per share were 12.7p (1999 - 6.8p). The board is recommending a final dividend of 2.7p (1999 - 2.6p) making a total for the year of 3.8p (1999 - 3.6p), an increase of 6%. Assuming a full tax charge the proposed dividend is covered more than twice by earnings. If approved at the Annual General Meeting the final dividend will be paid on 11 May 2001 to shareholders on the register at the close of business on 6 April 2001. Net assets have risen to £26.3m equivalent to 107p per ordinary share (1999 - £24.5m and 98p). Funds generated from profitable trading were offset by higher working capital as a result of rising raw material costs, and the increased volume of business, particularly from Europe, where longer credit terms are the norm. Borrowings rose by £0.9m to £5.9m but still represent only 22% of shareholders funds (1999 - 20%). The volume of leather sold by the Glove Leather Division increased by 24% and the sales turnover by 29%. New products boosted sales of golf glove leather as they rebounded from the impact of destocking in the previous year. Further growth was also achieved in the sales of glove leather for sporting applications other than golf, such as baseball and motorcycling, and for service and dress gloves. The additional commitment to product development and innovation is delivering results, with almost a quarter of the Division's total turnover in 2000 generated by products developed within the last two years. In the Shoe and Leathergoods Division sales turnover grew by 19%, with an underlying volume increase in finished leather sales of 11%. Sales of upper leather for casual footwear and sports shoes showed the largest advances helped both by new products and new business. The volume of leather supplied to manufacturers of luxury leathergoods was also usefully ahead of the previous year. Strong international demand and, latterly, BSE concerns in Europe have created a shortage of hides and fuelled the rise in their price When combined with resistance from customers to accept price increases these factors have resulted in some reduction in margin in the second half of the year. This in turn has stimulated the development of new products - 38% of the Division's sales were of products developed within the last two years - and has intensified the focus on process improvement and cost reduction. As I indicated at the interim stage, the Raw Materials Division faced some difficult trading conditions in the second half. A surge in demand for raw sheepskins from European manufacturers of wool-on garment leather pushed prices to levels that made fellmongering uneconomic in the third quarter. Although the Division incurred a small loss in the second half it recorded a profit for the year as a whole. Tragically during the year Mrs Gill Thwaites, a non-executive director, died. Her loss was felt very deeply by her many friends in the company and we all miss her wise counsel and advice. Our deepest sympathy goes out to her husband David. We are fortunate to have secured the services of Louise Cretton (44) who will be joining us as a non-executive director in April. She is a director of a company specialising in brand development, market research and marketing strategy, and has worked as a consultant to some of the world's best known brands. She was previously a board director of a leading international advertising agency. We are confident she will contribute greatly to the strategic direction of the Group. As was announced last year, Steve Johnson took over the management of the Shoe and Leathergoods Division and joined the Group Board in April 2000, and Tony Marriott retired from the Board in July 2000. During the year we published our 2000 Environmental Report which describes the environmental effects of our business and how we are addressing environmental management matters for our different stakeholders. This has been extremely well received. In June 2000, the Remuneration Committee made conditional awards of incentive shares to more than 60 senior managers under the Long Term Incentive Plan approved by shareholders at the AGM in May. The awards will only vest in full if the target real rate of growth in earnings per share of at least 5% per annum over the three years ending 31 December 2002 is satisfied. An increasing number of our employees has an interest in the shares of the Company through the employee share schemes and the incentive share schemes. The employee share ownership trust now holds 828,824 (3.8%) of shares in the Company on behalf of employees. We welcome this development. Your company only survives and grows on the dedication of its employees at all levels. This year, a period of increasing turnover and productivity, has amply demonstrated this commitment. During the last few months the US economy has slowed down markedly and the economies of its principal trading partners are likely to follow suit. Whilst slowing economic activity has caused many commodity prices to soften, concerns over BSE in Europe have underpinned raw material prices generally, and have pushed cattle hide prices higher still. Once a clear policy for dealing with BSE in Europe has emerged, we would expect hide prices to ease back. Despite these issues, and until the recent outbreak of foot and mouth disease in the United Kingdom, we were confident of making further progress in the current year. However, the necessary measures announced to bring foot and mouth under control are inevitably impacting on our supplies of raw material in the Shoe and Leathergoods and Raw Materials Divisions. We are actively seeking alternative supplies of hides and skins to meet the demand for our products. Until the foot and mouth outbreak is contained, and the raw material supply chain returns to normality, the trading outlook will remain unclear. Nevertheless, we have started the year with healthy order books, and our sales turnover in the first two months is ahead of last year. ROBERT C TOMKINSON Chairman PITTARDS plc CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2000 Year ended Year ended 31 31 December December 2000 1999 Note £'000 £'000 Turnover 81,195 62,115 Cost of sales (67,694) (51,312) Gross profit 13,501 10,803 Distribution costs (4,466) (3,724) Administrative expenses (5,542) (4,847) Operating profit 3,493 2,232 Interest payable (490) (473) Profit on ordinary activities before taxation 3,003 1,759 Taxation (20) (1) Profit on ordinary activities after taxation 2,983 1,758 Dividends - equity and non-equity 2 (1,113) (1,070) Transfer to reserves 1,870 688 Earnings per share - basic 3 12.7p 6.8p - diluted 3 12.6p 6.8p There were no discontinued activities in 2000 or 1999. Accordingly the above results relate entirely to continuing activities. PITTARDS plc CONSOLIDATED BALANCE SHEET as at 31 December 2000 31 31 December December 2000 1999 £'000 £'000 Fixed assets Tangible fixed assets 17,529 17,850 Current assets Stocks 13,661 12,830 Debtors 11,086 8,027 Investments 196 14 Cash at bank & in hand 32 22 24,975 20,893 Creditors - amounts falling due within one year Bank loans & overdrafts (5,866) (4,982) Trade creditors (6,283) (5,676) Other creditors (4,045) (3,637) (16,194) (14,295) Net current assets 8,781 6,598 26,310 24,448 Capital & Reserves Called up share capital 8,441 8,449 Reserves 17,848 15,978 Shareholders' funds (including £2,991,500 (1999 -£3,000,000) attributable to non-equity 26,289 24,427 interests) Minority interest 21 21 26,310 24,448 PITTARDS plc CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2000 Year Year ended ended 31 31 December December 2000 1999 Note £'000 £'000 Net cash inflow from 4 2,195 2,130 operating activities Returns on investments and servicing of finance Interest paid (484) (441) Interest element of finance - (9) lease rental repayments Preference dividends paid (284) (285) Returns on investments and servicing of finance (768) (735) Taxation UK corporation tax paid - (91) Overseas tax paid - (1) Taxation - (92) Capital expenditure and financial investment Purchase of tangible fixed (1,217) (497) assets Purchase of matching shares under (40) (16) restricted share plan Purchase of shares under long (245) - term incentive plan Sale of tangible fixed assets 16 46 Capital expenditure and (1,486) (467) financial investment Equity dividends paid (807) (763) Net cash (outflow) inflow (866) 73 before financing Financing Repayment of term loans - (4,198) Repurchase of preference (9) - shares Issue of new shares 1 - Capital element of finance - (44) lease rental repayments Financing (8) (4,242) Decrease in cash (874) (4,169) Notes 1. The figures for the year ended 31 December 2000 are unaudited and do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 December 1999, set out above, are extracted from the full accounts for that year. A full Report and Accounts for 1999, including an unqualified report from the auditors, has been filed with the Registrar of Companies. 2. Dividends 2000 1999 £'000 £'000 Equity: Ordinary interim - 1.1p per share (1999 - 1.0p) 240 218 Ordinary final proposed - 2.7p per share (1999 - 2.6p) 589 567 Total ordinary for year - 3.8p per share (1999 - 3.6p) 829 785 Non-equity: Preference paid 30 June and 31 December 284 285 1,113 1,070 3. Earnings per ordinary share Basic earnings per ordinary share are based on the profit on ordinary activities after taxation and preference dividends of £2,699,000 (1999 - £ 1,473,000) and 21,295,914 (1999 - 21,797,638) ordinary shares, being the weighted average number of ordinary shares in issue during the year after excluding the shares owned by the Pittards Employee Share Ownership Trust. On a diluted basis the average number of shares in issue was 21,397,482 (1999 - 21,818,721). 4. Notes to the cashflow statement 2000 1999 Reconciliation of operating profit to net cash inflow from £'000 £'000 operating activities Operating profit 3,493 2,232 Depreciation charges 1,538 1,516 Amortisation of matching shares under restricted share plan 21 25 Amortisation of shares under long term incentive plan 82 - Profit on sale of tangible fixed assets (16) (46) Increase in stocks (831) (601) Increase in debtors (3,059) (886) Increase(decrease) in creditors 967 (110) Net cash inflow from operating activities 2,195 2,130 5. Copies of the 2000 Annual Report and Accounts will be posted to shareholders in early April. Further copies may be obtained by contacting the Company Secretary at Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA. The annual general meeting is to be held at the registered office on 2 May 2001.

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