Half-year Report

RNS Number : 7697R

Pittards PLC

26 September 2017

 



Pittards plc

("Pittards" or "the Group")

Results for the six months ended 30 June 2017

Pittards plc, the specialist producer of technically advanced leather and luxury leather goods for sale to retailers, manufacturers and distributors today announces its results for the six months ended 30 June 2017.

Half year highlights:

·     Revenue up 6% to £14.2m (H1 2016: £13.4m)

·     Gross profit margin improved to 23.6% (H1 2016: 22.7%)

·     Profit before tax £0.1m (2016 pre-exceptional costs - H1 2016 PBT: £0.4m, H2 2016 LBT: £0.2m)

·     EBITDA £0.7m (2016 pre-exceptional costs - H1 2016: £0.9m, H2 2016: £0.4m)

·     Net assets £20.7m (31 December 2016: £21.3m)

·     Net debt down by £1m to £9.1m (31 December 2016: £10.1m)

·     Increased level of sampling activity for both existing core and new customers

Stephen Yapp, Chairman commented: "We have continued to make solid operational and strategic progress whilst delivering a profitable first half performance which improved upon the previous six months.

Recent discussions and heightened sampling activity demonstrate that our strategic roadmap for developing an increasingly diversified business model will provide not only revenue and profit growth but a more balanced business positioned to take advantage of the changing landscape.

Consequently, the Board remain confident that the positive trading momentum we are beginning to experience will continue into the second half of 2017 and anticipates full year trading will be ahead of the prior year."

For further information please contact: 

Pittards plc	www.pittardsleather.com
Stephen Yapp, Chairman	[phone]
Reg Hankey, CEO
Matthew O'Rourke, CFO
WH Ireland Limited	www.whirelandplc.com
Mike Coe/Ed Allsopp	[phone]

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Chairman's statement

The first half of 2017 has built upon the strategic and operational progress made at the end of last year. The final phase of the review is now refining the identified priorities in our core and target markets, investing accordingly and making operational improvements to drive future growth. These will be underpinned by our continued commitment to innovation and valued customer relationships.

I am cognisant that developing the strategic roadmap could have distracted us from the day job. Therefore, it is encouraging that the business also retained its operational focus, remained profitable and improved its financial performance in comparison with the previous six months.

Half year ended 30 June 2017:

·     Revenue up 6% to £14.2m (H1 2016: £13.4m)

·     Gross profit margin improved to 23.6% (H1 2016: 22.7%)

·     Profit before tax £0.1m (2016 pre-exceptional costs - H1 2016 PBT: £0.4m, H2 2016 LBT: £0.2m) 

·     EBITDA £0.7m (2016 pre-exceptional costs - H1 2016: £0.9m, H2 2016: £0.4m)

·     Net assets £20.7m (31 December 2016: £21.3m)

·     Net debt down by £1m to £9.1m (31 December 2016: £10.1m)

·     Increased level of sampling activity for both existing core and new customers

Strategic update

We have identified our priority markets for growth as being performance gloves, footwear, lifestyle and interiors. There are nascent signs that we have reached the bottom of the prolonged downward trend experienced in recent years and consumer demand for our technically advanced leathers within these markets has started to recover.

The respective objectives in these markets are being refined and our initial thoughts have been endorsed in advanced customer discussions. This has been further evidenced by an increase in sampling activity which typically occurs towards the end of what can be a protracted two to three year negotiation process. 

Financial review

Revenue was up 6% to £14.2m as a consequence of increased sales activity in the UK division. The UK has seen sales increases in most market sectors and in particular the shoe market. In Ethiopia, orders in our core market for work gloves increased and in line with our targeted new market, we have delivered some small but strategically important initial orders for men's footwear.

The gross margin improved to 23.6% reflecting a favourable currency improvement, principally against the US dollar and improved raw material prices. Costs for both distribution and administration increased by £0.5m, impacted predominantly by foreign exchange movements along with investment in key people.

Profit before tax for the half year at £0.1m, compares favourably to the second of half 2016 loss of £0.2m (excluding exceptional costs).

Stock levels stabilised over the first half in line with our ongoing reduction and realignment programme.

Net debt reduced by £1m to £9.1m from 31 December 2016, due to a £0.3m cash improvement, £0.3m of loan repayments and a £0.4m foreign exchange movement on Ethiopian balances. The decrease in net assets from £21.3m to £20.7m largely reflects a weaker Ethiopian birr impacting the value of the Ethiopian net assets.

Board changes

Jill Williams will step down as a non-executive director on 31 December 2017. The Board would like to thank Jill for her contribution and support over the past 28 years at Pittards and recently throughout the transitional phase and wish her well for the future

Outlook

Recent discussions and heightened sampling activity demonstrate that our strategic roadmap for developing an increasingly diversified business model will provide not only revenue and profit growth but a more balanced business positioned to take advantage of the changing landscape.

Consequently, the Board remain confident that the positive momentum we are beginning to experience will continue into the second half of 2017 and anticipates full year trading will be ahead of the prior year.

Consolidated income statement (unaudited)

for the six months ended 30 June 2017

Year ended 31 December 2016 £'000		Note	Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
27,009	Revenue		14,229	13,373
(20,554)	Cost of sales		(10,866)	(10,339)
(4,307)	Cost of sales - exceptional stock provision		-	-
2,148	Gross profit		3,363	3,034
(2,167)	Distribution costs		(1,064)	(857)
(3,572)	Administrative expenses		(1,938)	(1,555)
-	Administrative expenses - exceptional restructuring costs		-	(98)
(3,591)	Profit/(Loss) from operations before finance costs		361	524
(499)	Finance costs		(276)	(215)
19	Finance income		-	5
(4,071)	Profit/(Loss) before taxation		85	314
(75)	Taxation charge	2	(45)	(97)
(4,146)	Profit/(Loss) for the period after taxation		40	217
	Earnings/(Loss) per share attributable to equity shareholders of the parent	1
(29.89p)	- basic		0.29p	1.56p
(28.91p)	- diluted		0.28p	1.51p

Consolidated statement of comprehensive income (unaudited)

for the six months ended 30 June 2017

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
(4,146)	Profit/(Loss) for the period after taxation	40	217
	Other comprehensive income Items that will not be reclassified to profit or loss
135	Revaluation of land and buildings	-	-
279	Revaluation of land and buildings -  unrealised exchange (loss)/gain	(213)	123
414		(213)	123
	Items that may be subsequently reclassified to profit or loss
827	Unrealised exchange (loss)/gain on translation of overseas subsidiaries	(489)	353
827		(489)	353
1,241	Other comprehensive (loss)/income	(702)	476
(2,905)	Total comprehensive (loss)/income for the period	(662)	693

Consolidated statement of changes in equity (unaudited)

for the six months ended 30 June 2017

	Share capital £'000	Share premium £'000	Capital reserve £'000	Shares held by ESOP £'000	Share based payment reserve £'000	Translation reserve £'000	Revaluation reserve £'000	Retained earnings £'000	Total attributable to owners of the parent £'000	Non-controlling interest £'000	Total equity £'000
At 1 January 2016	6,944	2,984	6,475	(495)	-	(2,692)	1,853	9,081	24,150	179	24,329
Comprehensive income for the period
Profit for the period after taxation	-	-	-	-	-	-	-	217	217	-	217
Other comprehensive income
Unrealised exchange gain on translation of foreign subsidiaries	-	-	-	-	-	353	123	-	476	-	476
Total other comprehensive income	-	-	-	-	-	353	123	-	476	-	476
Total comprehensive income for the period	-	-	-	-	-	353	123	217	693	-	693
Purchase of non-controlling interest	-	-	-	-	-	-	-	-	-	(179)	(179)
At 30 June 2016	6,944	2,984	6,475	(495)	-	(2,339)	1,976	9,298	24,843	-	24,843
Comprehensive income for the period
Loss for the period after taxation	-	-	-	-	-	-	-	(4,363)	(4,363)	-	(4,363)
Other comprehensive income
Gain on the revaluation of buildings	-	-	-	-	-	-	135	-	135	-	135
Unrealised exchange gain on translation of foreign subsidiaries	-	-	-	-	-	474	156	-	630	-	630
Total other comprehensive income	-	-	-	-	-	474	291	-	765	-	765
Total comprehensive income/(expense) for the period	-	-	-	-	-	474	291	(4,363)	(3,598)	-	(3,598)
Share based payment expense	-	-	-	-	29	-	-	-	29	-	29
At 31 December 2016	6,944	2,984	6,475	(495)	29	(1,865)	2,267	4,935	21,274	-	21,274
Comprehensive income for the period
Profit for the period after taxation	-	-	-	-	-	-	-	40	40	-	40
Other comprehensive income
Unrealised exchange loss on translation of foreign subsidiaries	-	-	-	-	-	(489)	(213)	-	(702)	-	(702)
Total other comprehensive expense	-	-	-	-	-	(489)	(213)	-	(702)	-	(702)
Total comprehensive (expense)/income for the period	-	-	-	-	-	(489)	(213)	40	(662)	-	(662)
Share based payment expense	-	-	-	-	54	-	-	-	54	-	54
At 30 June 2017	6,944	2,984	6,475	(495)	83	(2,354)	2,054	4,975	20,666	-	20,666

Consolidated balance sheet (unaudited)

as at 30 June 2017

31 December 2016 £'000		Note	30 June 2017 £'000	30 June 2016 £'000
	ASSETS
	Non-current assets
12,106	Property, plant and equipment		11,534	11,448
243	Intangible assets		227	257
1,800	Deferred income tax asset	3	1,761	1,628
14,149	Total non-current assets		13,522	13,333
	Current assets
17,353	Inventories		16,956	20,139
4,388	Trade and other receivables		4,208	4,307
206	Cash and cash equivalents		469	358
38	Current income tax recoverable		46	54
21,985	Total current assets		21,679	24,858
36,134	Total assets		35,201	38,191
	LIABILITIES
	Current liabilities
(4,362)	Trade and other payables		(4,772)	(4,660)
-	Current income tax liability		-	(13)
(6,781)	Interest bearing loans, borrowings and overdrafts		(7,560)	(5,503)
(11,143)	Total current liabilities		(12,332)	(10,176)
	Non-current liabilities
(183)	Deferred income tax liability	3	(178)	(106)
(3,534)	Interest bearing loans, borrowings and overdrafts		(2,025)	(3,066)
(3,717)	Total non-current liabilities		(2,203)	(3,172)
(14,860)	Total liabilities		(14,535)	(13,348)
21,274	Net assets		20,666	24,843
	EQUITY
6,944	Share capital		6,944	6,944
2,984	Share premium		2,984	2,984
6,475	Capital reserve		6,475	6,475
(495)	Shares held by ESOP		(495)	(495)
29	Share based payment reserve		83	-
(1,865)	Translation reserve		(2,354)	(2,339)
2,267	Revaluation reserve		2,054	1,976
4,935	Retained earnings		4,975	9,298
21,274	Total equity		20,666	24,843

Statement of cash flows (unaudited)

for the six months ended 30 June 2017

Year ended 31 December 2016 £'000		Note	Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
	Cash flows from operating activities
(1,336)	Cash generated from/(used in) operations	4	1,191	(394)
(81)	Tax paid		-	(53)
(480)	Interest paid		(276)	(212)
(1,897)	Net cash generated from/(used in) operating activities		915	(659)
	Cash flows from investing activities
(1,181)	Purchases of property, plant and equipment		(289)	(736)
(5)	Purchases of intangible assets		(2)	(1)
(192)	Purchase of investments		-	(191)
(1,378)	Net cash used in investing activities		(291)	(928)
	Cash flows from financing activities
2,364	Proceeds from borrowings		737	340
(1,658)	Repayment of bank loans		(834)	(376)
374	New finance lease obligations		-	337
(88)	Repayment of obligations under finance leases		(41)	(13)
992	Net cash (used in)/generated from financing activities		(138)	288
(2,283)	Increase/(Decrease) in cash and cash equivalents		486	(1,299)
(1,474)	Cash and cash equivalents at beginning of period		(3,738)	(1,474)
19	Exchange gains on cash and cash equivalents		21	8
(3,738)	Cash and cash equivalents at end of period		(3,231)	(2,765)

Notes to the consolidated accounts (unaudited)

1.  Earnings per share attributable to equity shareholders of the parent

     (a)  Basic

     Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year excluding the shares owned by the Pittards employee share ownership trust.

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
(4,146)	Profit/(Loss) for the period after taxation	40	217
Shares '000		Shares '000	Shares '000
13,870	Weighted average number of ordinary shares in issue	13,870	13,870

     (b)  Diluted

     Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by the shares issued under the 2015 Long Term Incentive Plan (LTIP).

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
(4,146)	Profit/(Loss) for the period after taxation	40	217
Shares '000		Shares '000	Shares '000
14,341	Weighted average number of ordinary shares in issue	14,304	14,341

2.  Taxation

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
	Analysis of the charge in the period The charge based on the profit for the year comprises:
-	Corporation tax on profit for the year	-	-
32	Foreign tax on profit for the year	-	13
91	Foreign tax related to prior years	-	27
123	Total current tax	-	40
	Deferred tax
(169)	Origination and reversal of temporary differences	45	57
121	Impact of change in UK tax rate	-	-
(48)	Total deferred tax	45	57
75	Income tax charge	45	97

3.  Deferred taxation 

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
1,800	Deferred tax asset	1,761	1,628
(183)	Deferred tax liabilities	(178)	(106)
1,617	Deferred tax assets (net)	1,583	1,522

4. Cash used in operations

Year ended 31 December 2016 £'000		Six months ended 30 June 2017 £'000	Six months ended 30 June 2016 £'000
(4,071)	Profit/(Loss) before taxation	85	314
	Adjustments for:
605	Depreciation of property plant and equipment	319	283
35	Amortisation	18	17
480	Bank and other interest charges	276	210
29	Share based payment expense	54	-
(61)	Other non-cash items in Income Statement	87	(10)
(2,983)	Operating cash flows before movement in working capital	839	814
	Movements in working capital (excluding exchange differences on consolidation)
2,912	(Increase)/Decrease in inventories	(618)	(651)
(194)	Decrease/(Increase) in trade and other receivables	29	(213)
(1,071)	Increase/(Decrease) in trade and other payables	941	(344)
(1,336)	Cash generated from/(used in) operations	1,191	(394)

5. Basis of preparation

     The financial information contained in this interim statement has not been audited or reviewed by the Company's auditor and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The directors approved and authorised this interim statement for issue on 26 September 2017. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2016. Those accounts, upon which the auditor issued an unqualified opinion, have been delivered to the Registrar of Companies. The auditor's report did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

     Pittards plc is a public limited company incorporated and domiciled under the Companies Act 2006 in England. It is quoted on the Alternative Investment Market ("AIM").

     These financial statements are presented in sterling as that is considered to be the functional currency of the primary economic environment in which the Group operates.

     As permitted this interim report has been prepared in accordance with UK AIM listing rules and not in accordance with IAS 34 "Interim Financial Reporting" therefore it is not fully in compliance with IFRS.

6. Availability of interim report

    The interim report will be available at the Company's website www.pittards.com, in accordance with AIM Rule 20.

 

END

 

 

IR PGUQGBUPMPUA