Half Yearly Report

RNS Number : 2608O

Pittards PLC

15 September 2011

 



PITTARDS PLC

(AIM: PTD)

Unaudited Interim results for the six months ended 30 June 2011

Summary

Year ended 31 December 2010			Six months ended 30 June 2011		Six months ended 30 June 2010
£'m			£'m		£'m
36.1		Revenue	20.3		16.6
3.3		Profit from trading activities	1.3		1.1
3.3		Profit on operations before finance costs	1.3		1.1
(0.4)		Finance costs	(0.2)		(0.2)
2.9		Profit on continuing operations before taxation	1.1		0.9
10.8		Net assets	12.2		8.7
33%		Gearing	37%		75%

Stephen Boyd, Chairman of Pittards, commented:

"The results for the first half of 2011 demonstrate further progress over 2010 as the Group continues to expand its activities globally."

- ends -

For further information, please contact:

Stephen Boyd, Chairman	Pittards plc	Tel: [phone]
Reg Hankey, CEO	Pittards plc	Tel: [phone]
Jill Williams, Finance Director	Pittards plc	Tel: [phone]
John Wakefield	WH Ireland	Tel: [phone]

PITTARDS PLC

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

The results for the first half of 2011 demonstrate further progress over 2010 as the Group continues to expand its activities globally.

We achieved a profit from trading activities of £1.3m, an improvement of 20% compared to the same period last year, despite an environment of fairly severe price inflation on raw materials.  Finance costs of £0.2m were slightly higher than last year as we invested more in plant, property and equipment around the Group to support the recovery and increased demand for our products.

The Directors also considered it appropriate to release a further £0.5m from the unrecognised deferred taxation asset, carrying on from the £1.0m released at the end of 2010.  This led to a tax credit of £0.4m for the period and hence a profit on continuing operations after taxation of £1.5m (2010: £0.9m).

Revenue for the six months totalled £20.3m, an improvement of 22% on 2010 (£16.6m), reflecting our strong order book throughout this period and  despite the dollar being some 6% weaker than in the corresponding period in 2010.  Export sales represented 94% of revenue (2010: 92%).  The increased revenue is fairly evenly spread across the product range.  Sales of sheepskin and goat based products benefitted from early winter cold spells in UK and USA which led customers to restock pipelines.  Demand for sports glove leathers was also strong. Sales of hide based products were similarly robust with the military and services sector faring well alongside sport and casual footwear.

Net assets at the end of June 2011 were £12.2m (2010: £8.7m).  This improvement reflects continued profitability, the release of a proportion of the previously unrecognised deferred tax asset and further payments against loans.

Net borrowings at the end of the period of £4.5m compared favourably with the 2010 figure of £6.5m as inventories and receivables were tightly managed despite increased activity levels, and this led to a gearing ratio of 37% compared to 75% in 2010.

We continue to work with our legal advisors on restructuring our balance sheet to enable the payment of dividends in the future and we expect this restructuring to have taken place before year-end.

Our retail shop expansion at the Yeovil headquarters will be opening in the next few weeks and spearheading our entry into the consumer product arena, which is an important part of our strategy.  Daines and Hathaway, our premium leather goods branded subsidiary, is gaining ground in its sector with a number of new customers and a renewed presence in the USA.

Two exciting new ranges of leather garments, created by our Yeovil based design team, were launched at the PURE show in Olympia in August and are already gaining attention in the fashion world.

Our garment production unit in Ethiopia has just moved to larger rented premises pending the completion of the new factory we are building for garments and leather goods on the Addis ring-road. The neighbouring factory is nearing completion for leather goods and gloves production.  We are in the process of training glove makers there in order to service a new order for industrial gloving from a prominent US based wholesaler, which represents a major new opportunity for us.

Work on improving animal husbandry in Ethiopia to improve both skin quality and meat yield and quality continues with GIZ (the German agency for sustainable international development) and we are seeking two or more farms to establish our own flocks which would be bred and farmed in accordance with best practice.

We were delighted to be one of six finalists in the PricewaterhouseCooper West of England Business of the Year Awards in June at only our first attempt.  The judges were looking for performance against six criteria, including innovation, business management and contribution to the region and were very complimentary about our business.  We have also been shortlisted for two categories in the UK Fashion and Textiles Awards in their 25^th year celebrations which will take place in the presence of HRH the Princess Royal in October.

There is some uncertainty about the strength of global demand in the coming months and we continue to face inflationary pressures on raw materials.  However our order book remains strong, our relationships with key customers are good and our offshore presence enables us to manufacture in lower cost environments, all of which provide some resilience against adverse conditions.

SD Boyd - Chairman

For further information, please contact:

Stephen Boyd - Chairman -  Tel: [phone]

Jill Williams - Finance Director - Tel: [phone]

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the six months ended 30 June 2011

Year ended 31 December 2010			Note	Six months ended 30 June 2011		Six months ended 30 June 2010
£'000				£'000		£'000
36,086		Revenue		20,301		16,632
(27,343)		Cost of sales - trading		(15,269)		(12,801)
567		Cost of sales - release of impairment		-		-
9,310		Gross profit		5,032		3,831
(2,507)		Distribution costs		(1,852)		(1,381)
(3,494)		Administrative expenses		(1,844)		(1,520)
(12)		(Loss)/gain on foreign currency translation		(34)		149
3,297		Profit from trading activities		1,302		1,079
-		Gain on derivatives		-		5
3,297		Profit from operations before finance costs		1,302		1,084
(366)		Finance costs		(181)		(156)
2,931		Profit on continuing operations before taxation		1,121		928
731		Taxation	3	423		9
3,662		Profit on continuing operations after taxation attributable to the equity shareholders of the parent		1,544		937
		Profit attributable to:
3,662		Owners of the parent		1,548		937
-		Non controlling interest		(4)		-
		Profit per share attributable to equity shareholders of the parent	1
0.85p		- basic		0.35p		0.21p
0.84p		- diluted		0.35p		0.21p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ended 30 June 2011

Year ended 31 December 2010			Note	Six months ended 30 June 2011		Six months ended 30  June 2010
£'000				£'000		£'000
3,662		Profit on continuing operations after taxation attributable to the equity shareholders of the parent		1,544		937
		Other comprehensive income
(1,315)		Unrealised exchange loss on translation of overseas subsidiaries		(239)		(29)
552		Revaluation of land and buildings		-		-
(763)		Other comprehensive income, net of tax		(239)		(29)
2,899		Total comprehensive income attributable to the equity shareholders of the parent		1,305		908
		Total comprehensive income attributable to:
2,899		Owners of the parent		1,313		908
-		Non controlling interest		(8)		-

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2011

	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 2010	4,298	5,184	8,158	6,475	(15,900)	(10)	(495)	-	-	7,710	24	7,734
Comprehensive income for the period
Retained profit for the period	-	-	-	-	937	-	-	-	-	937	-	937
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries	-	-	-	-	-	(29)	-	-	-	(29)	-	(29)
Total comprehensive income for the period	-	-	-	-	937	(29)	-	-	-	908	-	908
Transactions with owners
Proceeds from shares issued	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	(14,963)	(39)	(495)	-	-	8,656	24	8,680
Comprehensive income for the period
Retained profit for the period	-	-	-	-	2,725	-	-	-	-	2,725	-	2,725
Other comprehensive income
Gain on the revaluation of buildings	-	-	-	-	-	-	-	552	-	552	-	552
Unrealised exchange loss on  translation of foreign subsidiaries	-	-	-	-	-	(1,286)	-	-	-	(1,286)	-	(1,286)
Total comprehensive income for the period	-	-	-	-	2,725	(1,286)	-	552	-	1,991	-	1,991
Transactions with owners
Employee share option scheme - value of employee services	-	-	-	-	-	-	-	-	48	48	-	48
Proceeds from shares issued	6	4	-	-	-	-	-	-	-	10	-	10
Investment in Pittards Global Sourcing	-	-	-	-	-	-	-	-	-	-	26	26
Total transactions with owners	6	4	-	-	-	-	-	-	48	58	26	84
At 31 December 2010	4,331	5,199	8,158	6,475	(12,238)	(1,325)	(495)	552	48	10,705	50	10,755
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	(10,690)	(1,560)	(495)	552	48	12, 148	42	12,190

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2011

31 December 2010			Note	30 June 2011		30 June 2010
£'000				£'000		£'000
		ASSETS
		Non-current assets
4,987		Plant, property and equipment		5,181		4,848
115		Intangible assets		63		149
1,000		Deferred tax asset	4	1,514		-
2		Held to maturity financial assets		2		3
6,104		Total non-current assets		6,760		5,000
		Current assets
10,444		Inventories		10,787		11,154
3,751		Trade and other receivables		4,749		4,387
1,307		Cash and cash equivalents		789		729
15,502		Total current assets		16,325		16,270
21,606		Total assets		23,085		21,270
		LIABILITIES
		Current liabilities
(6,033)		Trade and other payables		(5,623)		(5,334)
(2,022)		Interest bearing loans and borrowings		(3,194)		(4,359)
(8,055)		Total current liabilities		(8,817)		(9,693)
		Non-current liabilities
(2,796)		Interest bearing loans and borrowings		(2,078)		(2,897)
(2,796)		Total non-current liabilities		(2,078)		(2,897)
(10,851)		Total liabilities		(10,895)		(12,590)
10,755		Net assets		12,190		8,680
		EQUITY
4,331		Called up share capital		4,410		4,325
5,199		Share premium account		5,250		5,195
8,158		Capital redemption reserve		8,158		8,158
6,475		Capital reserve		6,475		6,475
(495)		Shares held by ESOP		(495)		(495)
(12,238)		Retained earnings		(10,690)		(14,963)
(1,325)		Translation reserve		(1,560)		(39)
552		Revaluation reserve		552		-
48		Share option reserve		48		-
10,705		Total equity attributable to equity shareholders of the parent		12,148		8,656
50		Non controlling interest		42		24
10,755		Total equity		12,190		8,680

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 June 2011

Year ended 31 December 2010				Six months ended 30 June 2011		Six months ended 30 June 2010
£'000			Note	£'000		£'000
		Cash flows from operating activities
3,401		Cash (used in) generated from operations	2	(300)		(118)
(80)		Tax paid		-		-
(284)		Interest paid		(181)		(133)
3,037		Net cash (used in) generated from operating activities		(481)		(251)
		Cash flows from investing activities
10		Proceeds on disposal of property, plant and equipment		-		-
(675)		Purchases of property, plant and equipment		(644)		(260)
(17)		Deferred payment on investment in a subsidiary		-		-
(682)		Net cash used in investing activities		(644)		(260)
		Cash flows from financing activities
2,500		Loan financing		-		2,500
(1,340)		Repayment of bank loans		(300)		(686)
(47)		Repayment of obligations under finance leases		(17)		(29)
		and hire purchase arrangements
48		Share issue		130		38
1,161		Net cash (used in) generated from financing activities		(187)		1,823
3,516		(Decrease)  increase in cash and cash equivalents		(1,312)		1,312
(2,237)		Cash and cash equivalents at beginning of period		1,307		(2,237)
28		Exchange (losses) gains on cash and cash equivalents		(55)		154
1,307		Cash and cash equivalents at end of period		(60)		(771)

NOTES (unaudited)

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

In the period to 30 June 2011 options over 7,913,332 (June 2010: 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 2010		Six months ended 30 June 2011		Six months ended 30 June 2010
£'000		£'000		£'000
3,662	Profit attributable to equity holders of the company	1,544		937
Shares '000		Shares '000		Shares '000
430,591	Weighted average number of ordinary shares in issue	440,098		429,439

(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 2011.  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 2010		Six months ended 30 June 2011		Six months ended 30 June 2010
3,662	Profit attributable to equity holders of the company	1,544		937
3,662	Profit used to determine diluted earnings per share	1,544		937
Shares '000		Shares '000		Shares '000
430,591	Weighted average number of ordinary shares in issue	440,098		429,439
	Adjustments for:
5,649	Share options	1,982		5,591
436,240	Weighted average number of ordinary shares for diluted earnings per share	442,080		435,030

2.             Cash (used in) generated from operations

Year ended 31 December 2010				Six months ended 30 June 2011		Six months ended 30 June 2010
£'000				£'000		£'000
2,931		Profit before taxation		1,121		928
		Adjustments for:
759		Depreciation		374		428
99		Amortisation		52		49
(7)		Profit on sale of plant and equipment		-		-
(12)		Foreign exchange loss (gain)		34		(180)
-		Gain on derivatives		-		(5)
284		Bank and other interest charges		181		156
48		Share based payments		-		-
4,102		Operating cash flows before movement in working capital		1,762		1,376
		Working capital:
(1,138)		Increase in inventories		(514)		(975)
(671)		Increase in trade and other receivables		(1,139)		(1,176)
1,108		(Decrease) increase in trade and other payables		(409)		657
3,401		Cash (used in)  generated from operations		(300)		(118)

3.             Taxation

Year ended				Six months ended		Six months ended
31 December 2010				30 June 2011		30 June 2010
£'000				£'000		£'000
		Current tax		-		-
-		UK taxation		-		-
269		Foreign taxation		91		9
(1,000)		Deferred tax		(514)		-
(731)		Tax (credit) charge		(423)		9

4.             Deferred 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 £0.5m of the deferred tax asset in the current period in view of the Group's continued profitability (£1.0m was recognised in the year ending 31 December 2010).

The analysis of the deferred tax assets is as follows:

Year ended			Six months ended	Six months ended
31 December 2010			30 June 2011	30 June 2010
(1,000)		Recognised	(1,514)	-
(3,599)		Unrecognised	(2,401)	(4,853)
(4,599)		Total	(3,915)	(4,853)

5.             Fair value restatement

100% of the shares of Ethiopian Tannery Share Company (ETSC) were acquired on 29 December 2009. The fair value of the acquired assets at the end of 2009 was provisional pending full surveys of the property and inventory and quantification of certain liabilities not yet recognised in ETSC's balance sheet.

As reported at 31 December 2010 the fair values originally stated for certain assets and liabilities were adjusted to take account of new information that came to light in the year post acquisition.

There have been no further restatements or revisions to fair values from those reported at 31 December 2010.

6.             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 14 September 2011.  The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2010.  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 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.

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.  The address of the registered office is: Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA.

 

END

 

 

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