Half Yearly Report

RNS Number : 3676S

Pittards PLC

09 September 2010

 



PITTARDS PLC

(AIM: PTD)

Unaudited Interim results for the six months ended 30 June 2010

Pittards, the specialist producer of technically advanced leather and luxury leather goods for sale to retailers, manufacturers and distributors,  is pleased to announce its unaudited interim results for the six months ended 30 June 2010.

Summary

Year ended 31 December 2009			Six months ended 30 June 2010		Six months ended 30 June 2009
					Restated
£'m			£'m		£'m
24.6		Revenue	16.6		12.7
88%		Percentage export	92%		89%
0.8		Profit from trading activities	1.1		0.4
1.0		Exceptional items	-		-
1.8		Profit on operations before finance costs	1.1		0.4
(0.2)		Finance costs	(0.2)		(0.1)
1.6		Profit on continuing operations before taxation	0.9		0.3
6.5		Net assets	7.5		2.2

Stephen Boyd, Chairman of Pittards, commented:

"The Group's recovery and return to profitability continues apace and I am very pleased to report improved results for the first half of 2010."

Contacts:
Pittards plc	www.pittards.com
Stephen Boyd, Chairman	[phone]
Reg Hankey, Chief Executive	[phone]
Jill Williams, Finance Director	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
John Wakefield / Marc Davies	[phone]

PITTARDS PLC

Unaudited Interim results for the six months ended 30 June 2010

The Group's recovery and return to profitability continues apace and I am very pleased to report improved results for the first half of 2010.

In our first reporting period since acquiring the Ethiopia Tannery Share Company (ETSC) at the end of last year, we achieved a consolidated profit from trading activities of £1.079m (2009: £0.410m).  Finance costs of £0.156m are higher than £0.097 in 2009 as they now include the borrowing costs of ETSC.  The profit before taxation was thus £0.928m compared to £0.329m in the same period last year. 

This result has reinforced the need for us to consider ways in which we could restructure our balance sheet, which currently precludes us from paying dividends because of the legacy of historic losses.  We are not in a position to declare a dividend at this stage but we are taking advice on the most appropriate way to rectify the position for the future.

Revenue from the combined operation totalled £16.632m (2009: £12.654m) which benefitted partly from the relative weakness of sterling but also from a recovery from the global recession which prevailed in early 2009.  Group sales to customers outside the UK made up 92% of revenue (2009: 89%).

Sales from skin based products, mainly sports, service and dress gloves, which had been badly affected by the recession in the first half of 2009, picked up well.  In the dress glove area this was due to a winter featuring sustained cold spells and in the sports glove area our customers restocked their pipelines in response to renewed consumer demand, having let their inventory levels reduce dramatically in 2009.  Sales from products derived from hides showed a similar pattern to skin products as consumer confidence started to return around the world.

The acquisition of ETSC which took place on 29 December 2009 has opened up new opportunities to service global customers at different points along the value added chain.  We have continued our strategy to move more products to this lower cost environment and this is starting to free up more production capacity in the UK to service higher margin premium products based primarily on UK raw materials.

We were very excited that  ETSC  was the very first recipient of the Tannery of the Year award for the African region and then went on to win the overall Tannery of the Year award, a prestigious new competition sponsored by World Leather magazine.  This was presented at the Asia Pacific Leather Fair in March in front of an international audience.  This achievement is a credit to the whole Pittards and ETSC team.

Pittards export achievements were also recognised in May this year by winning the award for textile export achievement at the UK Fashion and Textile Awards lunch.  The award was  presented by HRH the Princess Royal, UKFTE President.

The establishment of Pittards as a finished product brand as well as a premium leather producer is going well with retail sales volumes improving all the time.  The Daines & Hathaway subsidiary has launched a new refreshed website at www.dainesandhathaway.com enabling customers to buy directly through the internet.  We are also progressing with our joint venture in Ethiopia, established in 2009, which will make garments and handbags.  Our new manufacturing unit on the Addis Ababa ring road is starting to take shape.

Net assets at the end of June 2010 improved from £6.519m at the end of 2009 to £7.465m, benefitting from the return to profitability.

Period end net borrowings of £6.527m were slightly higher than December 2009 borrowings of £6.209m due mainly to the higher levels of activity which involve higher working capital with increased inventory and debtors.  However, the gearing position has improved from 95% at December 2009 to 88% at the period end.

Global confidence is still variable with uncertainty about whether the recession has truly ended but we enter the second half of the year with a strong order book and sterling still relatively weak compared to the levels of recent years.  We will be striving to maximise the benefits of our Ethiopian investment as soon as possible.

SD Boyd

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  (UNAUDITED)

for the six months ended 30 June 2010

Year ended 31 December 2009			Note	Six months ended 30 June 2010		Six months ended 30 June 2009
£'000				£'000		£'000
						Restated
24,617		Revenue	3	16,632		12,654
(19,591)		Cost of sales		(12,801)		(10,120)
5,026		Gross profit		3,831		2,534
(1,808)		Distribution costs		(1,381)		(927)
(2,439)		Administrative expenses		(1,520)		(1,181)
34		Gain (loss) on foreign currency translation		149		(16)
813		Profit from trading activities		1,079		410
999		Exceptional item	4	-		-
15		Gain on derivatives		5		16
1,827		Profit from operations before finance costs		1,084		426
(208)		Finance costs		(156)		(97)
1,619		Profit on continuing operations before taxation		928		329
(10)		Taxation	5	9		(5)
1,609		Profit on continuing operations after taxation attributable to the equity shareholders of the parent		937		324
		Other comprehensive income
(10)		Currency translation differences		(29)		(2)
1,599		Total comprehensive income for the period attributable to the equity shareholders of the parent		908		322
		Profit per share attributable to equity shareholders of the parent	1
0.71p		- basic		0.21p		0.15p
0.71p		- diluted		0.21p		0.15p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2010

	Share capital	Share premium account	Capital redemption reserve	Capital reserve	Retained earnings	Shares held by ESOP	Total attributable to owners of the parent	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2009	2,233	4,214	8,158	6,475	(18,724)	(495)	1,861	24	1,885
Comprehensive income for the period
Retained profit for the period	-	-	-	-	324	-	324	-	324
Other comprehensive income
Currency translation differences	-	-	-	-	(2)	-	(2)	-	(2)
Total comprehensive income for the period	-	-	-	-	322	-	322	-	322
At 30 June 2009	2,233	4,214	8,158	6,475	(18,402)	(495)	2,183	24	2,207
Comprehensive income for the period
Retained profit for the period	-	-	-	-	1,285	-	1,285	-	1,285
Other comprehensive income
Currency translation differences	-	-	-	-	(8)	-	(8)	-	(8)
Total comprehensive income for the period	-	-	-	-	1,277	-	1,277	-	1,277
Transactions with owners
Issue of shares	2,065	1,033	-	-	-	-	3,098	-	3,098
Cost of share issue	-	(63)	-	-	-	-	(63)	-	(63)
Total transactions with owners	2,065	970	-	-	-	-	3,035	-	3,035
At 31 December 2009	4,298	5,184	8,158	6,475	(17,125)	(495)	6,495	24	6,519
Comprehensive income for the period
Retained profit for the period	-	-	-	-	937	-	937	-	937
Other comprehensive income
Currency translation differences	-	-	-	-	(29)	-	(29)	-	(29)
Total comprehensive income for the period	-	-	-	-	908	-	908	-	908
Transactions with owners
Issue of shares	27	13	-	-	-	-	40	-	40
Cost of share issue	-	(2)	-	-	-	-	(2)	-	(2)
Total transactions with owners	27	11	-	-	-	-	38	-	38
At 30 June 2010	4,325	5,195	8,158	6,475	(16,217)	(495)	7,441	24	7,465

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2010

31 December 2009			30 June 2010		30 June 2009
£'000			£'000		£'000
		ASSETS
		Non-current assets
3,923		Plant, property and equipment	3,754		1,969
197		Intangible assets	149		244
3		Held to maturity financial assets	3		-
4,123		Total non-current assets	3,906		2,213
		Current assets
10,180		Inventories	11,154		5,124
3,395		Trade and other receivables	4,581		3,246
833		Cash and cash equivalents	729		77
14,408		Total current assets	16,464		8,447
18,531		Total assets	20,370		10,660
		LIABILITIES
		Current liabilities
(4,970)		Trade and other payables	(5,649)		(4,334)
(5,651)		Interest bearing loans and borrowings	(4,359)		(4,078)
(10,621)		Total current liabilities	(10,008)		(8,412)
		Non-current liabilities
(1,391)		Interest bearing loans and borrowings	(2,897)		(41)
(1,391)		Total non-current liabilities	(2,897)		(41)
(12,012)		Total liabilities	(12,905)		(8,453)
6,519		Net assets	7,465		2,207
		EQUITY
4,298		Called up share capital	4,325		2,233
5,184		Share premium account	5,195		4,214
8,158		Capital redemption reserve	8,158		8,158
6,475		Capital reserve	6,475		6,475
(495)		Shares held by ESOP	(495)		(495)
(17,125)		Retained earnings	(16,217)		(18,402)
6,495		Total equity attributable to equity shareholders of the parent	7,441		2,183
24		Minority interest	24		24
6,519		Total equity	7,465		2,207

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 June 2010

Year ended 31 December 2009				Six months ended 30 June 2010		Six months ended 30 June 2009
£'000			Note	£'000		£'000
		Cash flows from operating activities
1,359		Cash (used in) generated from operations	2	(118)		544
(10)		Tax paid		-		(5)
(208)		Interest paid		(133)		(99)
1,141		Net cash (used in) generated from operating activities		(251)		440
		Cash flows from investing activities
12		Proceeds on disposal of property, plant and equipment		-		-
(129)		Purchases of property, plant and equipment		(260)		(49)
-		Deferred payment on investment in a subsidiary		-		(25)
(2,165)		Acquisition of subsidiary, net of cash acquired		-		-
(2,282)		Net cash used in investing activities		(260)		(74)
		Cash flows from financing activities
(442)		Repayments of bank loans		(686)		(142)
		Repayments of obligations under finance leases
(84)		and hire purchase arrangements		(29)		(41)
-		New loans		2,500		50
3,035		Share issue		38		-
2,509		Net cash generated from (used in) financing activities		1,823		(133)
1,368		Increase in cash and cash equivalents		1,312		233
(2,648)		Cash and cash equivalents at beginning of period		(2,237)		(2,648)
(957)		Exchange gains (losses) on cash and cash equivalents		154		(924)
(2,237)		Cash and cash equivalents at end of period		(771)		(3,339)

NOTES (unaudited)

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

During the year ended 31 December 2009 the Company issued 206,591,652 new ordinary shares in connection with a placing and loan conversions.  In the period to 30 June 2010 options over 2,633,333 shares were exercised by certain directors and managers under the Matching Share Option Plan established in December 2009.  This had the effect of increasing the weighted average number of shares in issue.

(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 2009		Six months ended 30 June 2010		Six months ended 30 June 2009
£'000		£'000		£'000
1,609	Profit attributable to equity holders of the company	937		324
Shares '000		Shares '000		Shares '000
227,387	Weighted average number of ordinary shares in issue	429,439		222,294

(b)     Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by the shares issued under the Matching Share Option scheme in 2010.  A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscription rights attached to outstanding share options.  The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Year ended 31 December 2009		Six months ended 30 June 2010		Six months ended 30 June 2009
1,609	Profit attributable to equity holders of the company	937		324
1,609	Profit used to determine diluted earnings per share	937		324
Shares '000		Shares '000		Shares '000
227,387	Weighted average number of ordinary shares in issue	429,439		222,294
	Adjustments for:
-	Share options	5,591		-
227,387	Weighted average number of ordinary shares for diluted earnings per share	435,030		222,294

2.   Cash (used in) generated from operations

Year ended 31 December 2009				Six months ended 30 June 2010		Six months ended 30 June 2009
£'000				£'000		£'000
1,619		Profit on continuing operations		928		324
		Adjustments for:
460		Depreciation		428		230
97		Amortisation		49		49
(28)		Foreign exchange (gain) loss		(180)		16
(15)		(Gain) on derivatives		(5)		(16)
208		Bank and other interest charges		156		97
(999)		Gain on bargain purchase		-		-
1,342		Operating cash flows before movement in working capital		1,376		700
		Working capital:
(1,349)		(Increase) in inventories		(975)		(715)
2,253		(Increase) decrease in trade and other receivables		(1,176)		356
(887)		Increase (decrease) in trade and other payables		657		203
1,359		Cash (used in)  generated from operations		(118)		544

3.   Revenue

In 2009 consultancy income of £0.188m for the six months ended 30 June 2009 (£0.367m for the year ended 31 December 2009) was shown as other operating income in the Statement of Comprehensive Income.  In 2010 this has been classified as part of revenue and the 2009 comparatives have been restated.

4.   Exceptional item

The fair value of the assets acquired from ETSC on 29 December 2009 was included in the 2009 Report & Accounts at a provisional valuation pending full surveys of the property and inventory and quantification of certain liabilities not yet recognised in ETSC's balance sheet.  These investigations are still ongoing in the measurement period allowed for the adjustment of provisional fair values under IFRS3 (revised).

5.   Taxation

Year ended				Six months ended		Six months ended
31 December 2009				30 June 2010		30 June 2009
£'000				£'000		£'000
-		UK taxation		-		-
(10)		Foreign taxation		9		(5)
(10)		Tax credit (charge)		9		(5)

At 30 June 2010 the Group had tax losses of approximately £12m, subject to agreement with HMRC, available to offset against future profits (31 December 2009: £13m, 30 June 2009: £13m).  No deferred tax asset has been recognised in respect of these losses due to the uncertainty in the timing of these offsets.

6.   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 9 September 2010.  The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2009.  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.

7.   Pittards plc is a public limited company incorporated in the United Kingdom under the Companies Act 2006.  The Company is domiciled in the United Kingdom and is quoted on the Alternative Investment Market ("AIM").

These financial statements are presented in sterling as that is 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.

8.   The report containing the interim financial information is to be sent direct to shareholders.  Copies of the report are available to the public from the registered office of Pittards plc and are available on the website, www.pittards.co.uk.  The address of the registered office is: Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA.

 

END

 

 

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