Half Yearly Report

RNS Number : 5678M

Pittards PLC

19 September 2012

 



PITTARDS PLC

(AIM: PTD)

Unaudited Interim Results for the six months ended 30 June 2012

Pittards Plc ("Pittards" or "the Company"), 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 2012.

Summary

Year ended 31 December 2011			Six months ended 30 June 2012		Six months ended 30 June 2011 (restated)
£'m			£'m		£'m
38.2		Revenue	18.3		20.3
3.1		Profit before exceptional costs and finance costs	0.3		1.3
3.1		Profit from operations before finance costs	0.1		1.3
2.8		Profit before taxation	-		1.1
4.9		Net borrowings	6.2		4.0
16.0		Shareholders funds	15.6		13.0
Pence per share			Pence per share		Pence per share
0.83		Profit before exceptional costs	0.04		0.35
0.83		Profit (basic)	-		0.35
3.63		Net assets	3.55		2.95
31%		Gearing	40%		31%

Stephen Boyd, Chairman of Pittards, commented:

"At our AGM in May we advised shareholders that as a result of the 150% tariff on crust leather exports imposed by the Ethiopian Government, we expected the company to achieve a breakeven position in the first half of 2012.  I am pleased to report that we have succeeded with this objective against a tight timetable and our commitment to accelerate the realisation of the benefits from manufacturing more products in a low cost economy remains strong."

Contacts:
Pittards plc
Stephen Boyd, Chairman	[phone]
Reg Hankey, Chief Executive	[phone]
Jill Williams, Finance Director	[phone]
WH Ireland Limited
John Wakefield / Marc Davies	[phone]

About Pittards:

Pittards is a global brand supplying premium leather and leather products, working with leading international brands, retailers and manufacturers. Our future strategy is founded upon product innovation, targeted marketing and efficient logistics, together with the development of new raw material sources

Chairman's Statement

At our AGM in May we advised shareholders that as a result of the 150% tariff on crust leather exports imposed by the Ethiopian Government, we expected the company to achieve a breakeven position in the first half of 2012.  I am pleased to report that we have succeeded with this objective against a tight timetable and our commitment to accelerate the realisation of the benefits from manufacturing more products in a low cost economy remains strong.

The profit from operations of £0.1m (£1.3m in 2011) is after exceptional restructuring costs of £0.2m.  These comprised redundancy costs at our Yeovil site reflecting the reduced need for leather operatives following the transfer of more sheepskin production to our tannery in Ethiopia.  We noted previously that raw material prices had remained stubbornly high in Ethiopia.  This situation prevailed throughout the first half but there are now signs of prices easing which should contribute to improved gross margins in the second half.  Finance costs of £0.1m represent an improvement over £0.2m in 2011.  In line with recent practice, the Directors decided to release a further £0.2m of previously unrecognised deferred taxation asset  therefore there was no taxation charge for the period (2011: £0.4m tax credit).

Revenue of £18.3m represents a slight reduction from 2011 figure of £20.3m, although the dollar was slightly stronger in 2012, and our order book remained consistently high. The Ethiopian  business faced into the challenges of shortages of raw material and delays to chemicals and machinery coming through Djibouti port (resulting from the introduction of a new multimodal system), and responded well hence delays to the move to finished production were minimized.   At the Yeovil factory, as part of our back fill strategy, we have been adjusting to several new sources of raw material which performed slightly differently from the Ethiopian supplies to which we were accustomed, however we have now set up some robust supply chains accessing quality materials to better service our customers.  Export sales represented 93% (2011: 94%) of sales and demand remains strong across all product sectors.

Net assets of £15.6m at the end of June 2012 represented a major increase over June 2011 (£12.2m) but a slight reduction from December 2011 (£16.0m) due in some measure to exchange rate movements.

Net borrowings at the period end of £6.2m were higher than 2011 figure of £4.0m.  This reflected both higher skin prices noted earlier but also the increased value of stock in Ethiopia now being taken to the finished stage plus the carrying value of chemicals now needing to be duplicated at the two main sites.  In addition there is now inventory at our PPM (Pittards Products Manufacturing) site in Addis Ababa where glove stocks are built up to fill whole containers for export.  This is reflected in higher inventories at the period end of £15.4m (2011: £10.8m).  Gearing of 40% (2011 - 31%) is therefore very creditable in the light of the extra working capital required.

Work with our lawyers to restructure our balance sheet to enable the payment of a dividend is progressing well and we expect to give notice of a General Meeting to seek approval for this change shortly.

The core elements of our business strategy are the ability to manufacture high quality leather and leather products in competitively costed environments, currently Ethiopia, the strengthening of the intellectual hub in Yeovil focused on innovation and design and the development of the brand into a consumer arena.

Our move into the retail of our finished products progressed with the formal opening of the Pittards Leather Centre a couple of weeks ago.  The "Made in Britain" movement is gathering pace and our Daines and Hathaway brand is benefiting from it with the appointment of new overseas agents to cover Europe and Japan.

We were delighted to be able to play our part in the Olympics by assisting Peter Wilson, double trap shooting Gold Medallist, in personalising his shooting vest and by the manufacture for Nike of stylish athletes' kit bags.  We also reinforced our close links to Ethiopia by providing specially designed leather jackets for their Olympic athletes and support team plus their team of four Paralympians which included Wondiye Fikre Indelbu who gained their first ever silver medal. 

During the Queen's Diamond Jubilee tour of the UK we were proud to present gloves to both Her Majesty the Queen and HRH the Duke of Edinburgh to represent Yeovil's glove making heritage.

Our glove making factory in Ethiopia, PPM, is becoming progressively more efficient as our expertise grows.  We will complete our first dress glove orders in the next few months which represents the next step forward now that the manufacture of  industrial gloves has been successfully established.

Our strategy for growth remains unchanged.  The strength of the order book and relationships with key customers reassure us that despite global economic uncertainties we are well placed to take advantage of opportunities as they arise and to make best use of our growing manufacturing facilities.

SD Boyd - Chairman

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the six months ended 30 June 2012

Year ended 31 December 2011			Note	Six months ended 30 June 2012		Six months ended 30 June 2011 restated
£'000				£'000		£'000
38,194		Revenue		18,276		20,301
(29,328)		Cost of sales		(15,218)		(15,728)
8,866		Gross profit		3,058		4,573
(2,767)		Distribution costs		(1,191)		(1,482)
(3,547)		Administrative expenses		(1,603)		(1,755)
398		Administrative expenses - adjustment to acquisition impairment		-		-
-		Administrative expenses - exceptional restructuring costs	1	(192)		-
100		Gain (loss) on foreign currency translation		77		(34)
3,050		Profit from operations before finance costs		149		1,302
(292)		Finance costs		(137)		(181)
2,758		Profit before taxation		12		1,121
879		Taxation (charge) credit	3	(11)		423
3,637		Profit for the period after taxation		1		1,544
		Profit attributable to:
3,645		Owners of the parent		1		1,548
(8)		Non controlling interest		-		(4)
		Earnings per share attributable to equity shareholders of the parent	2
0.83p		- basic		-		0.35p
0.82p		- diluted		-		0.35p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ended 30 June 2012

Year ended 31 December 2011			Note	Six months ended 30 June 2012		Six months ended 30  June 2011
£'000				£'000		£'000
3,637		Profit for the period after taxation		1		1,544
		Other comprehensive income
(238)		Unrealised exchange loss on translation of overseas subsidiaries		(332)		(239)
848		Revaluation of land and buildings		-		-
610		Other comprehensive income		(331)		(239)
4,247		Total comprehensive income for the period		(331)		1,305
		Total comprehensive income attributable to:
4,084		Owners of the parent		(322)		1,313
163		Non controlling interest		(9)		(8)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2012

	Note	Share capital	Share premium	Capital redemption  reserve	Capital reserve	Retained earnings	Translation reserve	Shares held by ESOP	Revaluation reserve	Share options reserve	Total attributable to owners of the parent	Non-controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2011 - as previously reported		4,331	5,199	8,158	6,475	(12,238)	(1,325)	(495)	552	48	10,705	50	10,755
Restatement	4	-	-	-	-	1,074	(228)	-	-	-	846	-	846
At 1 January 2011 - restated		4,331	5,199	8,158	6,475	(11,164)	(1,553)	(495)	552	48	11,551	50	11,601
Comprehensive income for the period
Retained profit for the period		-	-	-	-	1,548	-	-	-	-	1,548	(4)	1,544
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	(235)	-	-	-	(235)	(4)	(239)
Total comprehensive income for the period		-	-	-	-	1,548	(235)	-	-	-	1,313	(8)	1,305
Transactions with owners
Proceeds from shares issued		79	51	-	-	-	-	-	-	-	130	-	130
Total transactions with owners		79	51	-	-	-	-	-	-	-	130	-	130
At 30 June 2011		4,410	5,250	8,158	6,475	(9,616)	(1,788)	(495)	552	48	12, 994	42	13,036
Comprehensive income for the period
Retained profit for the period		-	-	-	-	2,097	-	-		-	2,097	-	2,097
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	15	-	(18)	-	(3)	-	(3)
Gain on the revaluation of buildings		-	-	-	-	-	-	-	677	-	677	171	848
Total comprehensive income for the period		-	-	-	-	2,097	15	-	659	-	2,771	171	2,942
Transactions with owners
Proceeds from shares issued		-	-	-	-	-	-	-	-	-	-	-	-
Total transactions with owners		-	-	-	-	-	-	-	-	-	-	-	-
At 31 December 2011		4,410	5,250	8,158	6,475	(7,519)	(1,773)	(495)	1,211	48	15,765	213	15,978
Comprehensive income for the period
Retained profit for the period		-	-	-	-	1	-	-	-	-	1	-	1
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	(276)	-	(47)	-	(323)	(9)	(332)
Total comprehensive income for the period		-	-	-	-	1	(276)	-	(47)	-	(322)	(9)	(331)
Transactions with owners
Proceeds from shares issued		-	-	-	-	-	-	-	-	-	-	-	-
Total transactions with owners		-	-	-	-	-	-	-	-	-	-	-	-
At 30 June 2012		4,410	5,250	8,158	6,475	(7,518)	(2,049)	(495)	1,164	48	15,443	204	15,647

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2012

31 December 2011			Note	30 June 2012		30 June 2011 restated
£'000				£'000		£'000
		ASSETS
		Non-current assets
6,441		Plant, property and equipment		6,187		5,181
15		Intangible assets		92		63
2,005		Deferred income tax asset	5	2,005		1,514
15		Available for sale financial instruments		16		2
8,476		Total non-current assets		8,300		6,760
		Current assets
14,524		Inventories		15,406		10,787
3,833		Trade and other receivables		5,000		4,749
1,142		Cash and cash equivalents		353		789
19,499		Total current assets		20,759		16,325
27,975		Total assets		29,059		23,085
		LIABILITIES
		Current liabilities
(5,904)		Trade and other payables		(6,833)		(5,266)
(1)		Current income tax liability		-		(17)
(6,092)		Interest bearing loans, borrowings and overdrafts		(6,554)		(3,194)
(11,997)		Total current liabilities		(13,387)		(8,477)
		Non-current liabilities
-		Interest bearing loans, borrowings and overdrafts		(25)		(1,572)
-		Total non-current liabilities		(25)		(1,572)
(11,997)		Total liabilities		(13,412)		(10,049)
15,978		Net assets		15,647		13,036
		EQUITY
4,410		Called up share capital		4,410		4,410
5,250		Share premium account		5,250		5,250
8,158		Capital redemption reserve		8,158		8,158
6,475		Capital reserve		6,475		6,475
(495)		Shares held by ESOP		(495)		(495)
(7,519)		Retained earnings		(7,518)		(9,616)
(1,773)		Translation reserve		(2,049)		(1,788)
1,211		Revaluation reserve		1,164		552
48		Share option reserve		48		48
15,765		Total equity attributable to owners of the parent		15,443		12,994
213		Non controlling interest		204		42
15,978		Total equity		15,647		13,036

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 June 2012

Year ended 31 December 2011				Six months ended 30 June 2012		Six months ended 30 June 2011
£'000			Note	£'000		£'000
		Cash flows from operating activities
(412)		Cash used in operations	6	(853)		(300)
(187)		Tax paid		(22)		-
(247)		Interest paid		(84)		(181)
(846)		Net cash used in operating activities		(959)		(481)
		Cash flows from investing activities
(1,261)		Purchases of property, plant and equipment		(301)		(644)
(6)		Purchases of intangible assets		(80)		-
(13)		Investment in available for sale financial assets		-		-
(1,280)		Net cash used in investing activities		(381)		(644)
		Cash flows from financing activities
(2,714)		Repayment of bank loans		(448)		(300)
-		Receipts from new finance leases		42		-
(23)		Repayment of obligations under finance leases		(3)		(17)
130		Share issue		-		130
(2,607)		Net cash used in financing activities		(409)		(187)
(4,733)		Decrease in cash and cash equivalents		(1,749)		(1,312)
1,307		Cash and cash equivalents at beginning of period		(3,412)		1,307
14		Exchange gains (losses) on cash and cash equivalents		14		(55)
(3,412)		Cash and cash equivalents at end of period		(5,147)		(60)

NOTES (unaudited)

1.         Administrative expenses - exceptional restructuring costs

The imposition of the crust tariff in December 2011 necessitated a redundancy exercise for production staff in early 2012, the cost of which totals £0.192m to date.

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

In the period to 30 June 2012 options over nil (June 2011: 7,913,332) shares were exercised by certain directors and managers under the Matching Share Option Plan established in December 2009.

(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 2011		Six months ended 30 June 2012		Six months ended 30 June 2011
£'000		£'000		£'000
3,645	Profit attributable to equity holders of the company	1		1,548
Shares '000		Shares '000		Shares '000
440,098	Weighted average number of ordinary shares in issue	440,098		440,098

(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.  A calculation is performed 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 2011		Six months ended 30 June 2012		Six months ended 30 June 2011
3,645	Profit attributable to equity holders of the company	1		1,548
3,645	Profit used to determine diluted earnings per share	1		1,548
Shares '000		Shares '000		Shares '000
443,650	Weighted average number of ordinary shares in issue	442,716		442,080

3.         Taxation

Year ended 31 December 2011				Six months ended 30 June 2012		Six months ended 30 June 2011
£'000				£'000		£'000
		(a) Analysis of the charge (credit) in the period The charge (credit) based on the profit  for the year comprises:
87		Corporation tax on profit for the year		-		-
39		Foreign tax		11		91
126		Total current tax		11		91
		Deferred Tax
(1,540)		Origination and reversal of temporary differences		(123)		(514)
399		Utilisation of tax losses		90		-
136		Impact of change in UK tax rate		33		-
(1,005)		Total deferred tax		-		(514)
(879)		Income tax charge (credit)		11		(423)

4.         Restatement

The result for the six months ended 30 June 2011 contains a reclassification of expenses between cost of sales and distribution and administrative expenses to bring it in line with the Group presentation for the year ended 31 December 2011.  This has no impact on profit before tax.

The brought forward figures at 1 January 2011 in the Statement of changes in equity were amended in the accounts to 31 December 2011 to reflect the write-off of an old loan in our Ethiopian subsidiary.

5.         Deferred taxation

The Group has recognized and unrecognised deferred tax assets in respect of temporary differences and losses. In accordance with the requirements of  IAS12 the directors considered the potential utilisation of the deferred tax asset and  have decided to recognise £0.176m of the deferred tax asset in the current period in view of the Group's continued profitability (£1.005m was recognised in the year ending 31 December 2011).

The analysis of the deferred tax assets is as follows:

Year ended			Six months ended	Six months ended
31 December 2011			30 June 2012	30 June 2011
2,005		Recognised	2,005	1,514
1,133		Unrecognised	937	2,401
3,138		Total	2,942	3,915

6.         Cash used in operations

Year ended 31 December 2011				Six months ended 30 June 2012		Six months ended 30 June 2011
£'000				£'000		£'000
2,758		Profit before taxation		12		1,121
		Adjustments for:
752		Depreciation of property plant and equipment		373		374
106		Amortisation		3		52
(252)		Other non-cash items in Income Statement		(7)		34
247		Bank and other interest charges		84		181
3,611		Operating cash flows before movement in working capital		465		1,762
		Movements in working capital (excluding exchange differences on consolidation)
(4,195)		Increase in inventories		(1,088)		(514)
(197)		Increase in trade and other receivables		(1,292)		(1,139)
369		Increase decrease in trade and other payables		1,062		(409)
(412)		Cash used in operations		(853)		(300)

7.         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 19 September 2012.  The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2011.  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 under the Companies Act 2006 in England.  It is quoted on 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.

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

 

END

 

 

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