Final Results
Pittards PLC
18 March 2005
Pittards plc
Pittards plc produces technically advanced leather for many of the world's
leading brands of gloves, shoes, luxury leathergoods and sports equipment.
18 March 2005
Results for the year ended 31 December 2004
Summary
Year ended Year ended
31 Dec 2004 31 Dec 2003
£m £m
Turnover 73.2 85.4
Percentage export 87% 86%
Operating (loss) profit before exceptional and
discontinuance costs
(2.5) 1.5
Exceptional and discontinuance costs (2.3) -
Operating (loss) profit (4.8) 1.5
(Loss) profit before tax (5.5) 1.0
(Loss) earnings per share (20.8p) 2.1p
Ordinary dividend - 1.5p
Net assets per share 72p 93p
Stephen Boyd, Chairman of Pittards, commented:
'The international market for leather has remained depressed during the second
half of the year, and the weakness of the US dollar continues. During 2004 we
have suffered the costs of restructuring the business, and closing the loss
making Raw Materials Division. The benefits from ongoing cost savings and
efficiency improvements and from our investment in IT will be felt in 2005. The
international market for leather is not expected to recover before the second
quarter. However, with the exports still increasing, with a lower cost base far
more in line with current level of demand and with strong growth in areas of new
product introductions, the Company is better placed to make progress in the
first half of 2005.'
- ends -
For further information, please contact:
Stephen Boyd - Chairman
John Buckley - Group Financial Director
Pittards plc Tel: 01935 474321
Results for the year ended 31 December 2004
Chairman's statement
In our interim statement, we announced a pre-tax loss of £1.2m. This was
slightly less than estimated in our July trading update which had made it clear
that we were experiencing harsh trading conditions as a result of the continued
weakness of the US dollar, destocking by customers and generally reduced demand.
The view was expressed in the interim statement that with the benefit of
ongoing cost savings and efficiency improvements, we could expect our continuing
activities to operate profitably in the second half of the year. However,
towards the end of the year, the absence of any discernible recovery in the
international market for leather made it necessary for us to issue another
trading update to the effect that it was unlikely that the continuing activities
would operate profitably in the second half of the year.
In the event, with further substantial exceptional items having to be taken into
account, second half losses exceeded those recorded in the first half. Pre-tax
losses for the year as a whole have emerged at £5.5m after £2.5m of exceptional
costs and costs on discontinued operations, none of which are recurring,
principally relating to the closure of the Raw Materials Division. In these
circumstances, the directors are unable to recommend the payment of a final
ordinary dividend.
Sales turnover for the year was £73.2m (2003 - £85.4m), 87% of which was to
customers outside the UK (2003 - 86%). The international market for leather
remained depressed throughout the year and the volume of finished leather sold
by us was 17% less than in 2003. The average sterling price per foot was
virtually unchanged as the depreciation of the US dollar was broadly offset by
dollar price increases, and by changes in the mix of business.
The Raw Materials Division ceased the production of sheepskin pelts at its
Langholm factory on 8 October 2004. The sale of the factory for £0.12m was
completed on 17 December 2004. The Division's loss for the year, including the
costs associated with the closure, was £1.7m and has been shown separately as '
discontinued' in the accompanying financial statements.
Conditional contracts for the sale of the Raw Materials Division's remaining
former factory site at Kinghorn, Fife, for a price of £3.15m were exchanged on
24 December 2004. Completion of the sale is conditional upon receipt of an
outline planning consent satisfactory to the purchaser. Approximately 10 acres
of this 25 acre site are zoned for residential development in the Kirkcaldy Area
Local Plan. An application for outline planning consent in conformity with the
Local Plan was submitted in August 2003. At the year-end, we thought it
appropriate to obtain a professional open market valuation of the site. The
valuation has not been incorporated in the balance sheet as the asset is
disclosed as a Current Asset to which the alternative valuation rules permitted
by FRS 15 'Accounting for Fixed Assets' do not apply.
Had the Group been permitted to show the asset at its open market value for
redevelopment, a surplus of £2.1m, net of selling costs of £0.1m, would have
been transferred to reserves, increasing shareholders' funds to £20.1m.
Net assets, as at 31 December 2004, were £18.0m, equivalent to 72.1p per
ordinary share. Total borrowings rose to £11.7m (2003 - £10.3m) and gearing
rose to 65% (2003 - 46%). This was primarily as a result of the degree to which
the unwinding of working capital in both the continuing and discontinued
businesses fell short of the operating losses and exceptional costs for the
year. The project to implement a new enterprise resource planning computer
system which began in mid-2003 was completed towards the end of the year. We
are starting to see the benefits of enhanced planning and resource allocation
information as we move into 2005.
More than three quarters of the Glove Leather Division's sales are denominated
in US dollars. The sterling value of turnover in the year fell by 13%, and the
underlying volume by 10%. Strong growth was achieved in sales to the military
and service sectors, based on the introduction of our technically advanced
Custom Image Generation leathers, and also to the golf market based on new
product introductions with Titleist FootJoy. However, the loss in volume sales
of leather for dress gloves, baseball batters' gloves and for comfort shoes more
than offset these achievements as the Division lost ground to competitors who
were largely unaffected by the weakness of the US dollar and who priced
accordingly.
The Division has been vigorously addressing its cost base. Although its raw
material purchases are denominated in US dollars, the majority of its other
costs, particularly payroll, are in sterling. During the year, management has
reduced the numbers employed at all levels within the Yeovil business from 297
to 255 (14%) through a combination of natural wastage and redundancy.
The Shoe and Leathergoods Division suffered an 11% drop in turnover compared
with 2003, with finished leather sales volumes down by 22%. The volume
shortfall arose mainly in the leisure footwear sector where two significant
customers - one European and one Asian - undertook substantial destocking
exercises at different stages during the year. Sales to the sports footwear and
leathergoods sectors held up well, but with some sacrifice to margin, as a
result of the dollar's devaluation. The Division has been attacking its cost
base in Leeds, and has reduced the numbers employed throughout the business from
375 to 333 (11%) during the course of the year.
The Company's entire issued ordinary share capital and preference share capital
were admitted to trading on AIM with effect from 30 September 2004. The
transfer from the Official List of the London Stock Exchange has reduced both
the burden and the cost of compliance to a level more appropriate to the size of
the Company.
John Pittard decided to relinquish his responsibilities as Chief Executive of
the Group with effect from 1 September 2004, and resigned from the Board.
Robert Paisley, Managing Director of the Raw Materials Division also resigned
from the Board on 1 September 2004, following the Board's decision to close that
Division. John Pittard and Robert Paisley have each completed more than forty
years of dedicated and loyal service and we thank them both for their
considerable contribution to the Group during that time.
Robert Tomkinson, who had been Chairman since 1997, retired from the Board on 6
December 2004. We thank him for his contribution over the last seven years.
I joined the Group as of 1 September 2004 as Deputy Executive Chairman and was
appointed Chairman on 6 December, following Robert Tomkinson's retirement.
Although the international market for leather is not expected to recover much
before the second quarter, we have entered 2005 with a cost base more in line
with the current depressed level of demand. The total number of employees in
early 2005 is less than 600, and compares with 770 twelve months ago. We have
made substantial savings in central overheads, some of which were made possible
by the transfer to AIM. We shall be carrying out progessively more of our
initial processing closer to source. Our investment in research and development
continues to support our strategy to provide customers with innovative leathers
which are differentiated from competing products by their performance,
properties, quality and consistency. The investment in an integrated IT
infrastructure will enhance our ability to allocate our resources effectively
and to provide our customers with the highest standards of service.
Stephen Boyd
Chairman
18 March 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2004
Year ended Year ended
Continuing Discontinued 31 Dec 31 Dec
Trading Exceptional Total 2004 2003
Note (a) Note (b)
Note £'000 £'000 £'000 £'000 £'000 £'000
Turnover 58,478 - 58,478 14,676 73,154 85,429
Cost of sales (50,755) - (50,755) (14,703) (65,458) (71,523)
Gross profit 7,723 - 7,723 (27) 7,696 13,906
Distribution costs (4,845) - (4,845) (573) (5,418) (6,056)
Administrative expenses (5,370) (802) (6,172) (934) (7,106) (6,340)
Operating profit (2,492) (802) (3,294) (1,534) (4,828) 1,510
Interest payable (672) (486)
Profit on ordinary activities (5,500) 1,024
before taxation
Taxation 1,349 (323)
Profit on ordinary activities (4,151) 701
after taxation
Dividends - equity and 2 (257) (588)
non-equity
Transfer to reserves (4,408) 113
Earnings per share - basic 3 (20.8p) 2.1p
- diluted 3 (20.8p) 2.0p
(a) Continuing operations - exceptional relates to redundancy and other related
costs of reorganising the continuing operations of the business.
(b) Discontinued operations comprises the results of the Raw Materials Division.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES
for the year ended 31 December 2004
Year ended Year ended
31 Dec 31 Dec
2004 2003
£'000 £'000
(Loss) profit for period (4,151) 701
Due to the implementation of UITF 38 - Accounting for ESOP Trusts, net
assets have reduced by £342,000 as explained in Note 1.
CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS' FUNDS
for the year ended 31 December 2004
Year ended Year ended
31 Dec 31 Dec
2004 2003
Note £'000 £'000
At 1 January as previously reported 22,723 22,596
Prior year adjustment 1 (342) (399)
At 1 January as restated 22,381 22,197
Total recognised gains & losses (4,151) 701
Dividends (257) (588)
Cost of own shares purchased (15) (51)
Share based expense recognised in the profit & loss 5 108
account
Issue of new shares - 14
At end of period 17,963 22,381
CONSOLIDATED BALANCE SHEET
as at 31 December 2004
31 Dec 31 Dec
2004 2003
Restated
Note £'000 £'000
Fixed assets
Tangible fixed assets 17,774 17,984
Current assets
Assets held for resale 4 748 481
Stocks 10,171 13,728
Debtors 9,029 9,941
Cash at bank & in hand 23 22
19,971 24,172
Creditors - amounts falling
due within one year
Bank loans & overdrafts (7,163) (9,937)
Trade creditors (4,509) (5,270)
Other creditors (3,757) (3,126)
(15,429) (18,333)
Net current assets 4,542 5,839
Total assets less current
liabilities 22,316 23,823
Provisions for liabilities & charges - (1,180)
Creditors - amounts falling due
after more than one year (4,353) (262)
17,963 22,381
Capital & Reserves
Called up share capital 8,227 8,227
Own shares (495) (485)
Reserves 10,231 14,639
Shareholders' funds (including £2,701,500
attributable to non-equity interests) 17,963 22,381
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2004
Year ended Year ended
31 Dec 2004 31 Dec 2003
Restated
Note £'000 £'000 £'000 £'000
Net cash inflow from operating activities 5 1,210 1,228
Returns on investments and servicing
of finance
Interest paid (613) (478)
Preference dividends paid (257) (257)
Net cash outflow from returns on investments and servicing of (870) (735)
finance
Taxation
UK corporation tax paid - (454)
UK corporation tax received 135 -
Net cash outflow from taxation 135 (454)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,281) (2,425)
Sale of tangible fixed assets 170 14
Net cash outflow from capital expenditure and financial (1,111) (2,411)
investment
Equity dividends paid (110) (629)
Net cash outflow before financing (746) (3,001)
Financing
Issue of shares on exercise of options - 14
Purchase of matching shares under Restricted Share Plan (15) (51)
New bank loans 4,499 -
Repayment of bank loans (101) -
Capital element of finance lease rental repayments (243) (131)
Net cash inflow (outflow) from financing 4,140 (168)
Increase (decrease) in cash 3,394 (3,169)
Reconciliation of net cashflow to movement in net debt
Increase (decrease) in cash 3,394 (3,169)
Repayment of bank loans 101 -
Capital element of finance lease rentals and hire purchase repayments 243 131
New bank loans (4,499) -
Change in net debt resulting from cash flows (761) (3,038)
New finance lease arrangements and hire purchase contracts (610) (204)
Movement in net debt (1,371) (3,242)
Net debt at 1 January (10,308) (7,066)
Net debt at 31 December (11,679) (10,308)
Notes
1. The figures for the year ended 31 December 2004 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 2003, set out above,
are extracted from the full accounts for that year with the exception of a
restatement relating to the change in accounting policy set out below. A
full Report and Accounts for 2003 including an unqualified report from the
auditors, has been filed with the Registrar of Companies.
In preparing the financial statements for the current year the Group has
adopted Urgent Issues Task Force Abstract 38 'Accounting for ESOP Trusts'.
This requires that the cost of own shares, previously reported as a fixed
asset investment, be shown as a deduction from shareholders' funds.
A prior year adjustment has been made to reflect this change. There has
been no impact on the prior or current year profit & loss account. The
Group's opening net assets have been reduced by £342,000 from £22,723,000
to £22,381,000. The Company's opening net assets have been reduced by
£342,000 from £15,111,000 to £14,769,000. Prior year comparatives have
been restated accordingly.
2. Dividends
2004 2003
£'000 £'000
Equity:
Ordinary interim - nil per share (2003 - 1.00p) - 221
Ordinary final proposed - nil per share (2003 - 0.50p) - 110
Total ordinary for year - nil per share (2003 - 1.50p) - 331
Non-equity:
Preference paid 30 June and 31 December 257 257
257 588
3. Earnings per ordinary share
Basic earnings per ordinary share are based on the loss on ordinary activities
after taxation and preference dividends of £4,408,000 (2003 - profit £444,000)
and 21,156,000 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.
In 2004, the number of dilutive potential ordinary shares was nil (2003 -
25,000) relating to employee share options, and nil (2003 - 453,000) relating to
employee long term incentive plans. This gives a total weighted average number
of ordinary shares for the purpose of calculating the diluted earnings per
ordinary share for 2004 of 21,156,000 (2003 - 21,672,000).
4. Assets held for resale
Assets held for resale are carried at the lower of cost and net realisable
value. A full valuation of the property was carried out by Jones Lang LaSalle
(Scotland) Ltd, Chartered Surveyors, at 31 December 2004. In their opinion the
open market value for redevelopment at that date was £3,000,000 compared with
the net book amount of £748,000. The valuation has not been incorporated in the
balance sheet as the asset is disclosed as a Current Asset to which the
alternative valuation rules permitted by FRS 15 'Accounting for Fixed Assets' do
not apply.
Had the Group been permitted to show the asset at its open market value for
redevelopment a surplus of £2,172,000, net of selling costs of £80,000, would
have been transferred to reserves, increasing shareholders' funds to
£20,135,000.
5. Note to the statement of cashflows
Reconciliation of operating profit to net cash flows from operating activities
2004 2003
restated
£'000 £'000
Operating (loss) profit (4,828) 1,510
Depreciation charges 1,787 1,684
Share based expense 5 108
Loss on sale of tangible fixed assets 144 3
Increase in assets held for resale (267) (140)
Decrease (increase) in stocks 3,557 (449)
Decrease in debtors 946 893
Decrease in creditors (134) (2,381)
Net cash inflow from operating activities 1,210 1,228
6. Copies of the 2004 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 5 May 2005.
This information is provided by RNS
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Tuesday, 14th May 2024
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