Final Results

RNS Number : 1013D

Pittards PLC

17 March 2011

 



PITTARDS PLC

(AIM: PTD)

Preliminary announcement of results for the year ended 31 December 2010

	Year ended  31 December 2010			Year ended 31 December 2009 Restated
		£m			£m
Revenue		36.1			24.6
Percentage export		91%			88%
Profit from trading activities		3.3			0.8
Exceptional items		-			2.2
Profit on operations before finance costs		3.3			3.0
Finance costs		(0.4)			(0.2)
Profit on continuing operations before taxation		2.9			2.8
Net assets		10.8			7.7

-               Revenue up 47% from consolidated group, or 27% on like for like basis excluding ETSC

-               Profit from trading activities up to £3.3m from £0.8m (312% increase)

-               Profit from trading (without impairment release) up to £2.7m from £0.8m

-               Cash generated from operating activities of £3m

-               Net assets increased by 39%

-               Net borrowings fell by 43% (to £3.5m from £6.2m)

-               Gearing reduced to 33% from 80%

Stephen Boyd, Chairman of Pittards, commented:

The Group achieved a consolidated profit from trading activities of £3.3m in 2010, the first full year of our expanded group including the Ethiopia Tannery Share Company (ETSC) which we acquired in December 2009.  This compares to £0.8m in 2009 and shows the benefits of this strategic purchase.

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]

About Pittards plc:

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

Preliminary announcement of results for the year ended 31 December 2010

Chairman's statement

The Group achieved a consolidated profit from trading activities of £3.3m in 2010, the first full year of our expanded group including the Ethiopian Tannery Share Company (ETSC) which we acquired in December 2009.  This compares to £0.8m in 2009 and shows the benefits of this strategic purchase.

The result includes a release from impairment of £0.6m in respect of inventories as a result of year end counts, but even without that adjustment this represents considerable progress.  At the end of 2010, the earliest practical opportunity to establish a final fair value, the freehold buildings owned by ETSC were revalued, which produced a total increase over provisional fair value on acquisition of £1.6m.  Of this figure, £1.1m was considered to relate to fair value at the time of acquisition and has been restated as an exceptional item in 2009, and the balance has been included within other comprehensive income in 2010.  Finance costs of £0.4m for the combined operations are increased from £0.2m as we have taken over various loans in Ethiopia, and the interest on the deferred element of the loan from PPESA to purchase ETSC is now included.

The Group had been carrying an unrecognised deferred taxation asset of £4.6m representing temporary differences and losses brought forward.  In view of the continued profitability of the Group the directors now consider it likely that further taxable profit will be available against which the temporary differences can be utilised therefore mainly £1m of this deferred tax asset has been recognised in the current year.  This has reduced a tax charge of £0.3m (arising mainly in ETSC) to a tax credit of £0.7m, leading to a profit on continuing operations after taxation of £3.7m (2009: £2.8m after restatement).

We have instructed lawyers to assist us in restructuring our balance sheet in order to make payment of dividends possible.

Revenue of £36.1m represents an increase of 47% over 2009, which did not include ETSC's external revenue.  This reflects a major recovery in volumes from key customers, partly due to the refilling of  the pipelines they had emptied in late 2008/early 2009 during the global recession, and partly in response to improved consumer demand.

Sales derived from skin based products, which include sports, service and dress gloves, improved by 20% in value terms.  There was an upturn across all the different sectors to which gloves are sold.  Sales of hide based products rose 46% with sports products particularly in demand with consumers.

The acquisition of ETSC has yielded benefits in terms of better inventory control, better co-ordination between raw material purchasing and commercial selling and has given the opportunity to sell some products direct to customers around the world rather than shipping to England and then to the Far East, as our quality control improves and more products are taken to the finished stage in Ethiopia.

Our consumer products section is developing well with revenue from finished products growing steadily.  We are in the process of expanding our retail shop in Yeovil and we have established a sample production unit for garments and leathergoods at the Yeovil head office, where we now have designers producing exciting new ranges which can be manufactured either in the Daines & Hathaway unit or in our joint venture in Ethiopia, Pittards Global Sourcing. 

Our new factory in Addis Ababa for garment production should be operational before the end of the year and we have just agreed to purchase the neighbouring factory on the Addis Ababa ring road for leather goods production.  This will considerably increase our capability to produce high quality goods in a lower cost environment.

Our Yeovil headquarters is the intellectual hub of our group and the base for our innovations team who produce new leathers in response to customer demands, such as the multi terrain camouflage leathers for the MOD.  We have increased our capital expenditure in Yeovil this year in order to ensure that our facilities remain at the forefront of leather technology.

We have been working with USAid on a project to improve sheep skin and meat quality in Ethiopia by improving animal husbandry and hope to develop this further in the coming year.

As we noted in our interim report for 2010, ETSC was the first recipient of Tannery of the Year award sponsored by World Leather magazine (www.leathermag.com) in March 2010 and we are keen to build on this recognition of our achievements in Ethiopia.  To this end we have forged closer links with the village school near to the factory, providing books and refurbishing classrooms, and we have been able to provide leather for shoemaking for the Mossyfoot project in Ethiopia (www.mossyfoot.com).

We were pleased to receive an award for development and rehabilitation of natural resources in the area of our factory from the East Shoa zone of Oromia.

Net assets at the end of 2010 increased from £7.7m (restated) to £10.8m due primarily to continued profitability.

Net borrowings of £3.5m at the end of 2010 represented a substantial improvement over £6.2m at the end of 2009 as the Group continued to generate cash whilst still settling residual loans and lease arrangements during the year.  This in turn led to a greatly improved gearing ratio of 33%, compared to a restated figure of 80% at the end of 2009.

We are very pleased with the way the employees at our UK and Ethiopian operations are co-operating and working closely together and I am delighted at the way they continue to embrace the ongoing changes and demands of our expanding business.

As we enter 2011 our orderbook remains strong and our customers remain confident about consumer demand but the current inflationary climate is affecting raw material prices therefore maintaining margins will be a challenge.  We will continue to make maximum use of our strong brand and market knowledge and experience during this growth phase in our development.

Stephen Boyd  

Chairman

16 March 2011

PITTARDS plc

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2010

	Note	2010 £'000		2009 restated  £'000
Revenue		36,086		24,617
Cost of sales - trading		(27,343)		(19,591)
Cost of sales - release of impairment		567		-
Gross profit		9,310		5,026
Distribution costs		(2,507)		(1,808)
Administrative expenses		(3,494)		(2,439)
(Loss) gain on foreign currency translation		(12)		34
Profit from trading activities		3,297		813
Exceptional item - gain on bargain purchase		-		999
Exceptional item - fair value restatement	6	-		1,215
Gain on derivatives classified as fair value through income statement		-		15
Profit from operations before finance costs		3,297		3,042
Finance  costs		(366)		(208)
Profit on continuing operations before taxation		2,931		2,834
Taxation credit (charge)	5	731		(10)
Profit  for the year on continuing operations after taxation attributable to the equity shareholders of the parent		3,662		2,824
Profit attributable to:
Owners of the parent		3,662		2,824
Non controlling interest		-		-
Profit per share attributable to equity shareholders of the parent
Basic	3	0.85p		1.24p
Diluted	3	0.84p		1.24p
Pre-exceptional item - fair value restatement	3	0.85p		0.71p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2010

	Note	2010 £'000		2009 restated  £'000
Profit for the year on continuing operations after taxation attributable to the equity shareholders of the parent Other comprehensive income		3,662		2,824
Unrealised exchange loss on translation of overseas subsidiaries		(1,315)		(10)
Revaluation of land and buildings		552		-
Other comprehensive income, net of tax		(763)		(10)
Total comprehensive income for the year attributable to the equity shareholders of the parent		2,899		2,814
Total comprehensive income attributable to:
Owners of the parent		2,899		2,814
Non controlling interest		-		-

There were no discontinued operations in 2010 or 2009.  Accordingly the results relate to continuing operations.

PITTARDS plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2010

	Share capital	Share premium account	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
At 1 January 2009	2,233	4,214	8,158	6,475	(18,724)	-	(495)	-	-	1,861	24	1,885
Comprehensive income for the year
Retained profit for the year - restated	-	-	-	-	2,824	-	-	-	-	2,824	-	2,824
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries	-	-	-	-	-	(10)	-	-	-	(10)	-	(10)
Total comprehensive income for the year - restated	-	-	-	-	2,824	(10)	-	-	-	2,814	-	2,814
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 1 January 2010 - restated	4,298	5,184	8,158	6,475	(15,900)	(10)	(495)	-	-	7,710	24	7,734
Comprehensive income for the year
Retained profit for the year	-	-	-	-	3,662		-	-	-	3,662	-	3,662
Other comprehensive income
Gain on the revaluation of buildings	-	-	-	-	-		-	552	-	552	-	552
Unrealised exchange loss on  translation of foreign subsidiaries	-	-	-	-	-	(1,315)	-	-	-	(1,315)	-	(1,315)
Total other comprehensive income	-	-	-	-	-	(1,315)	-	552	-	(763)	-	(763)
Total comprehensive income for the year	-	-	-	-	3,662	(1,315)	-	552	-	2,899	-	2,899
Transactions with owners
Employee share option scheme - value of employee services	-	-	-	-	-	-	-	-	48	48	-	48
Proceeds from shares issued	33	15	-	-	-	-	-	-	-	48	-	48
Investment in Pittards Global Sourcing	-	-	-	-	-	-	-	-	-	-	26	26
Total transactions with owners	33	15	-	-	-	-	-	-	48	96	26	122
At 31 December 2010	4,331	5,199	8,158	6,475	(12,238)	(1,325)	(495)	552	48	10,705	50	10,755

PITTARDS plc

CONSOLIDATED BALANCE SHEET

As at 31 December 2010

			2010	2009 restated
			£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment			4,987	5,017
Intangible assets			115	197
Investments in subsidiary undertakings			-	-
Deferred income tax asset			1,000	-
Held to maturity financial assets			2	3
Total non-current assets			6,104	5,217
Current assets
Inventories			10,444	10,180
Trade and other receivables			3,751	3,201
Cash and cash equivalents			1,307	833
Total current assets			15,502	14,214
Total assets			21,606	19,431
LIABILITIES
Current liabilities
Trade and other payables			(6,033)	(4,655)
Interest bearing loans and borrowings			(2,022)	(5,651)
Total current liabilities			(8,055)	(10,306)
Non-current liabilities
Interest bearing loans and borrowings			(2,796)	(1,391)
Total non-current liabilities			(2,796)	(1,391)
Total liabilities			(10,851)	(11,697)
Net assets			10,755	7,734
EQUITY
Called up share capital			4,331	4,298
Share premium account			5,199	5,184
Capital redemption reserve			8,158	8,158
Capital reserve			6,475	6,475
Shares held by ESOP			(495)	(495)
Retained earnings			(12,238)	(15,900)
Translation reserve			(1,325)	(10)
Revaluation reserve			552	-
Share options reserve			48	-
Total equity attributable to equity shareholders of the parent			10,705	7,710
Non-controlling interest			50	24
TOTAL EQUITY			10,755	7,734

PITTARDS plc

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2010

		2010		2009
	Note	£'000		£'000
Cash flows from operating activities
Cash generated from operations	4	3,401		1,359
Tax paid		(80)		(10)
Interest paid		(284)		(208)
Net cash generated from operating activities		3,037		1,141
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment		10		12
Purchases of property, plant and equipment		(675)		(129)
Purchases of intangible assets		(17)		-
Acquisition of subsidiary, net of cash acquired		-		(2,165)
Net cash used in investing activities		(682)		(2,282)
Cash flows from financing activities
Loan financing		2,500		-
Repayment of bank loans		(1,340)		(442)
Repayment of obligations under finance leases and hire purchase obligations		(47)		(84)
Share issue		48		3,035
Net cash generated from financing activities		1,161		2,509
Increase in cash and cash equivalents		3,516		1,368
Cash and cash equivalents at beginning of the year		(2,237)		(2,648)
Exchange gains (losses) on cash and cash equivalents		28		(957)
Cash and cash equivalents at end of the year		1,307		(2,237)

 Notes

1.         The figures for the years ended 31 December 2010 and 2009 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006.  The figures for the year ended 31 December 2010 have been extracted from the statutory accounts for that year which have yet to be delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report.  A full Report and Accounts for the year ended 31 December 2009, on which the auditor has issued an unqualified audit report has been delivered to the Registrar of Companies. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts.

This preliminary announcement was approved by the board of directors and authorised for issue on 16 March 2011.

2.             Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together "IFRS") as endorsed by the European Union.

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

The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2010 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').

3.             Profit per ordinary share

	2010	2009 restated
	£'000	£'000
Analysis of the profit in the year
Profit from continuing operations attributable to ordinary shareholders	3,662	2,824
Profit pre-exceptional item - fair value restatement	3,662	1,609
Weighted average number of ordinary shares in issue (excluding the shares owned by the Pittards Employee Share Ownership Trust)	'000's	'000's
Basic	430,591	227,387
Diluted	436,240	227,387
Basic profit  per ordinary share from continuing operations	0.85p	1.24p
Diluted profit per ordinary share from continuing operations	0.84p	1.24p
Pre-exceptional item profit per ordinary share	0.85p	0.71p

4.             Cash generated from operations

	2010	2009 restated
	£'000	£'000
Profit before taxation	2,931	2,834
Adjustments for:
Depreciation of property, plant and equipment	759	460
Amortisation	99	97
Profit on sale of plant and equipment	(7)	-
Gain on derivatives	-	(15)
Foreign exchange gain	(12)	(28)
Bank and other interest charges	284	208
Gain on bargain purchase and fair value restatement	-	(2,214)
Share based payments	48	-
Operating cash flows before movement in working capital	4,102	1,342
Working capital:
Increase in inventories	(1,138)	(1,349)
Decrease (increase) in receivables	(671)	2,253
Increase (decrease) in payables	1,108	(887)
Cash generated from operations	3,401	1,359

5.             Taxation

The Group has 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 £1.0m of the deferred tax asset in the current year in view of the Group's continued profitability.  This has reduced a tax charge of £0.269m (arising mainly in ETSC) to a tax credit of £0.731m.

6.             Fair value adjustment

As at December 2010 the fair values originally reported for certain assets and liabilities were adjusted to take account of new information that came to light in the year.

In preparing the 31 December 2009 financial statements, the directors included the freehold buildings acquired as part of the acquisition of ETSC at their book value (as reduced to take into account their best estimate of works required to the property at that time) as it was not practicable for full surveys to be undertaken at that point.  These surveys were completed during the course of 2010 and a valuation received in August 2010 which was subsequently updated as at 31 December 2010.  The valuation received in August 2010 was used as the basis for updating the calculation of the provisional fair value established at the date of acquisition which resulted in an increase to the fair value at this time of £1.093m.  This has been treated as an update to the provisional fair value as required under IFRS3 (revised).  The additional uplift in the value of the freehold property which arose between the date of the initial valuation and that carried out as at 31 December 2010 has been treated as a revaluation adjustment and the uplift has been credited to a revaluation reserve.

Additionally, the value of other receivables included within the ETSC balance sheet at the date of acquisition was impaired by £0.049m reflecting an update of the assessment of the recoverability of these sums and payables were reduced by £0.17m following finalisation of the taxation provision.  These adjustments occurred during the assessment period under IFRS3 (revised) and have resulted in restatements to the provisional fair values assessed by the directors at the date of acquisition.

7.             Copies of the 2010 Annual Report and Accounts will be posted to shareholders in April and will be available on the 
Company's website at www.pittardsleather.com. 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 11 May 2011.

 

END

 

 

FR DQLFFFXFZBBV