Half Yearly Report

RNS Number : 6976Z

Pittards PLC

22 September 2015

 

22 September 2015

Pittards Plc

("Pittards" or the "Company")

Half Yearly Report

Pittards plc, the global brand supplying premium leather and leather products, working with leading international brands, retailers and manufacturers today announces its results for the six months to 30 June 2015. 

Unaudited Interim results for the six months ended 30 June 2015

Summary

Year ended 31 December 2014			Six months ended 30 June 2015		Six months ended 30 June 2014
£'m			£'m		£'m
34.7		Revenue	15.6		17.4
2.0		Profit from operations before finance costs	0.8		0.5
1.6		Profit before taxation	0.6		0.3
7.6		Net debt	6.9		7.5
18.3		Net assets	23.8		16.8
		Per weighted average ordinary 50p share (pence)
12.06		Profit (basic)	4.42		3.07
197.99		Net assets	*171.37		181.71
42%		Gearing	29%		45%

*Based on 13,888,690 shares in issue at 30 June 2015

Highlights for the half year:

·      Profit before taxation up 72% to £0.6m (H1 2014: £0.3m)

·      EBITDA up 39% to £1.0m (H1 2014 £0.7m)

·      Basic earnings per share of 4.42p (H1 2014: 3.07p)

·      Gearing significantly reduced to 29% (H1 2014: 45%)

·      Successful completion of a placing and open offer raising £5.6m before expenses

·      Following the board restructuring, a new strategic review of the business commenced

Stephen Boyd, Chairman of Pittards, commented:

"During the first half of 2015, we delivered an improved profit in line with expectations; increased gross margins more than made up for lower sales volumes as we benefitted from more favourable currency movements.

 The current order book is below our expectations and reflects the lower level of demand that has become evident during July and August. This trend was confirmed at the major international trade fairs attended recently, where it was clear that activity levels in the leather industry are currently depressed and likely to remain so in the medium term.

Looking further forward, a number of new opportunities are starting to appear and these could begin to have an impact in the second half of 2016.

We are in the process of reviewing our strategy for the next three years to validate, and, where appropriate, reset our priorities. Consequently, we anticipate continuing to make substantial investments in people and training, during 2016, in order to facilitate the delivery of our strategic priorities to meet our customers' evolving needs and deliver superior shareholder value in the longer term.

For further information, please contact:
Pittards plc	www.pittardsleather.com
Stephen Boyd, Chairman	[phone]
Reg Hankey, CEO
Jill Williams, Finance Director
WH Ireland Limited	www.wh-ireland.co.uk
John Wakefield/Ed Allsopp	[phone]

Chairman's Statement

During the first half of 2015, we delivered an improved profit in line with expectations; increased gross margins more than made up for lower sales volumes as we benefitted from more favourable currency movements. Pittards remains a global brand dedicated to the manufacture of innovative, high performance leather and more recently the design and production of leather goods.

Turnover was down at £15.6m (2014 £17.4m) in the first half of 2014 due to reduced volume in the dress glove and military sectors although the gross margin improved from 19% to 22% reflecting more favourable exchange rates, in particular a stronger dollar.  

Profit before finance costs increased to £0.8m (2014 £0.5m) largely as a result of the improved gross margin and a reduction in administrative expenses to £1.6m (2014 £1.7m).

There was a small tax charge of £0.2m arising mainly from the reversal of timing differences affecting the deferred taxation asset.

Profit attributable to shareholders increased to £0.4m (2014 £0.3m) and basic earnings per share increased to 4.42pence per share (2014 3.07 pence per share).

Net assets increased from £18.3m at the end of December 2014 to £23.8m mainly as a result of the purchase of the freehold at Yeovil and the fundraising.

FUND RAISING

The successful fund raising in June 2015, which raised £5.3m net of expenses, was undertaken to finance the purchase of the freehold of the Group's UK manufacturing and head office site in Yeovil and to generate additional working capital.

Following the completion of the fundraising, the freehold of the UK site was successfully purchased for £3.8m inclusive of expenses. This purchase was financed by £1.7m of the funds raised and a ten year term loan of £2.1m from the Group's bankers. The interest and loan repayments will be slightly less than the rental of £0.272m per annum that was being paid previously.

The development of the Group's business has been constrained for a number of years by a lack of fixed and working capital. The funds raised in excess of that required for the purchase of the freehold will be used to invest in developing the Group's business.

BORROWINGS

Following the fundraising, the Group has a combination of long and short term facilities of £8.6m from its main UK bankers. The Group has adequate facilities to develop its business and at 30 June 2015, £3.6m of the Group's UK facilities was drawn down.

NON-EXECUTIVE DIRECTORS

The Board has been strengthened by the appointment of Louise Cretton, who previously served as a non-executive director of the Company from April 2001 to December 2013, and the appointment of Stephen Yapp as non-executive directors. These appointments extend the Board's skill set and provide a better balance for pursuing our objective of creating shareholder value over the medium term.

Jan Holmstrom, who had been a non-executive director for 5 years stepped down from the Board on 4 June. I would like to take this opportunity to thank Jan for his contribution to the Group.

As previously announced, I will be retiring as Chairman at the Annual General Meeting in May 2016 and it is intended that Stephen Yapp will succeed me in this role.

MARKET CONDITIONS

Looking ahead, the indications are that the world market for finished leather products will be suppressed in the short term, impacted by slower growth in emerging markets notably China and Russia and the risk of wider economic uncertainty causing further financial market volatility. Nevertheless, according to the World Economic Outlook, the underlying drivers for a gradual acceleration in economic activity in advanced economies including lower fuel prices, easy financial conditions and confidence remain intact.

OUTLOOK

Following the successful fund raising, we are investing to drive our business forward in the longer term and have taken the opportunity to close a location in Walsall and relocate production to our newly acquired site in Yeovil.

The current order book is below our expectations and reflects the lower level of demand that has become evident during July and August. This trend was confirmed at the major international trade fairs attended recently, where it was clear that activity levels in the leather industry are currently depressed and likely to remain so in the medium term.

As a result of the factors explained above, sales and profits in the second half are expected to be below market expectations.

Looking further forward, a number of new opportunities are starting to appear and these could begin to have an impact in the second half of 2016.

We are in the process of reviewing our strategy for the next three years to validate, and, where appropriate, reset our priorities. Consequently, we anticipate continuing to make substantial investments in people and training, during 2016, in order to facilitate the delivery of our strategic priorities to meet our customers' evolving needs and deliver superior shareholder value in the longer term.

SD Boyd

Chairman

PITTARDS PLC

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the six months ended 30 June 2015

Year ended 31 December 2014			Note	Six months ended 30 June 2015		Six months ended 30 June 2014
£'000				£'000		£'000
34,729		Revenue		15,623		17,434
(27,696)		Cost of sales		(12,239)		(14,182)
7,033		Gross profit		3,384		3,252
(2,001)		Distribution costs		(1,016)		(1,043)
(3,061)		Administrative expenses		(1,616)		(1,705)
1,971		Profit from operations before finance costs		752		504
(427)		Finance costs		(218)		(204)
45		Finance income		21		22
1,589		Profit before taxation		555		322
(479)		Taxation charge	2	(118)		(38)
1,110		Profit for the period after taxation		437		284
		Profit attributable to:
1,115		Owners of the parent		442		286
(5)		Non controlling interest		(5)		(2)
1,110				437		284
		Earnings per share attributable to equity shareholders of the parent	1
12.06p		- basic		4.42p		3.07p
12.06p		- diluted		4.26p		3.07p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ended 30 June 2015

Year ended 31 December 2014				Six months ended 30 June 2015		Six months ended 30  June 2014
£'000				£'000		£'000
1,110		Profit for the period after taxation		437		284
		Other comprehensive income (expense)
		Items that will not be reclassified to profit or loss
245		Revaluation of land and buildings		-		-
245				-		-
		Items that may be subsequently reclassified to profit or loss
41		Unrealised exchange (loss) gain on translation of overseas subsidiaries		(241)		(401)
41				(241)		(401)
286		Other comprehensive (expense) income		(241)		(401)
1,396		Total comprehensive income (expense)  for the period		196		(117)
		Total comprehensive income (expense) attributable to:
1,398		Owners of the parent		207		(105)
(2)		Non controlling interest		(11)		(12)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2015

		Share capital	Share premium	Capital reserve	Retained earnings	Translation reserve	Shares held by ESOP	Revaluation reserve	Total attributable to owners of the parent	Non-controlling interest	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2014		4,631	-	6,475	7,492	(2,791)	(495)	1,426	16,738	174	16,912
Comprehensive income for the period
Profit for the year after taxation		-	-	-	286	-	-	-	286	(2)	284
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	(313)	-	(78)	(391)	(10)	(401)
Total other comprehensive income		-	-	-	286	(313)	-	(78)	(391)	(10)	(401)
Total comprehensive income for the period		-	-	-	286	(313)	-	(78)	(105)	(12)	(117)
At 30 June 2014		4,631	-	6,475	7,778	(3,104)	(495)	1,348	16,633	162	16,795
Comprehensive income for the period
Profit for the year after taxation		-	-	-	829	-	-	-	829	(3)	826
Other comprehensive income
Gain on the revaluation of buildings		-	-	-	-	-	-	320	320	3	323
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	354	-	-	354	10	364
Total other comprehensive income		-	-	-	-	354	-	320	674	13	687
Total comprehensive income for the period		-	-	-	829	354	-	320	1,503	10	1,513
At 31 December 2014		4,631	-	6,475	8,607	(2,750)	(495)	1,668	18,136	172	18,308
Comprehensive income for the period
Profit for the year after taxation		-	-		442	-	-	-	442	(5)	437
Other comprehensive income
Gain on the revaluation of buildings		-	-		-	-	-	-	-	-	-
Unrealised exchange loss on  translation of foreign subsidiaries		-	-		-	(178)	-	(57)	(235)	(6)	(241)
Total other comprehensive income		-	-		-	(178)	-	(57)	(235)	(6)	(241)
Total comprehensive income for the period		-	-		442	(178)	-	(57)	207	(11)	196
Transactions with owners
Proceeds from share issue		2,313	2,984	-	-	-	-	-	5,297	-	5,297
Total transactions with owners		2,313	2,984	-	-	-	-	-	5,297	-	5,297
At 30 June 2015		6,944	2,984	6,475	9,049	(2,928)	(495)	1,611	23,640	161	23,801

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2015

31 December 2014			Note	30 June 2015		30 June 2014
£'000				£'000		£'000
		ASSETS
		Non-current assets
6,560		Plant, property and equipment		10,170		5,857
187		Intangible assets		176		198
1,636		Deferred income tax asset	3	1,363		1,438
2		Available for sale financial instruments		-		1
8,385		Total non-current assets		11,709		7,494
		Current assets
17,796		Inventories		18,378		15,682
4,896		Trade and other receivables		5,165		6,558
529		Cash and cash equivalents		249		362
-		Current income tax recoverable		38		84
164		Deferred income tax asset	3	321		342
23,385		Total current assets		24,151		23,028
31,770		Total assets		35,860		30,522
		LIABILITIES
		Current liabilities
(64)		Deferred income tax liability		(62)		(25)
(5,097)		Trade and other payables		(4,881)		(5,796)
(171)		Current income tax liability		-		-
(6,877)		Interest bearing loans, borrowings and overdrafts		(3,216)		(6,865)
(12,209)		Total current liabilities		(8,159)		(12,686)
		Non-current liabilities
(1,253)		Interest bearing loans, borrowings and overdrafts		(3,900)		(1,041)
(1,253)		Total non-current liabilities		(3,900)		(1,041)
(13,462)		Total liabilities		(12,059)		(13,727)
18,308		Net assets		23,801		16,795
		EQUITY
4,631		Share capital		6,944		4,631
-		Share premium		2,984		-
6,475		Capital reserve		6,475		6,475
(495)		Shares held by ESOP		(495)		(495)
8,607		Retained earnings		9,049		7,778
(2,750)		Translation reserve		(2,928)		(3,104)
1,668		Revaluation reserve		1,611		1,348
18,136		Total equity attributable to owners of the parent		23,640		16,633
172		Non-controlling interest		161		162
18,308		Total equity		23,801		16,795

STATEMENT OF CASH FLOWS (UNAUDITED)

for the six months ended 30 June 2015

Year ended 31 December 2014				Six months ended 30 June 2015		Six months ended 30 June 2014
£'000			Note	£'000		£'000
		Cash flows from operating activities
744		Cash generated from (used in) operations	4	(292)		(158)
(151)		Tax paid		(202)		(10)
(451)		Interest paid		(191)		(193)
142		Net cash generated from (used in) operating activities		(685)		(361)
		Cash flows from investing activities
(607)		Purchases of property, plant and equipment		(3,978)		(192)
(35)		Purchases of intangible assets		-		(41)
(642)		Net cash used in investing activities		(3,978)		(233)
		Cash flows from financing activities
1,063		Proceeds from borrowings		3,922		733
(680)		Repayment of bank loans		(957)		(431)
		New finance lease obligations		35		-
(45)		Repayment of obligations under finance leases		(20)		(23)
-		Proceeds from share issue		5,297		-
338		Net cash generated from financing activities		8,277		279
(162)		(Decrease) increase in cash and cash equivalents		3,614		(315)
(4,388)		Cash and cash equivalents at beginning of period		(4,551)		(4,388)
(1)		Exchange (losses) gains on cash and cash equivalents		14		16
(4,551)		Cash and cash equivalents at end of period		(923)		(4,687)

NOTES (unaudited)

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

On 5^th June 2015 4,626,651 new Pittards shares were issued as a result of a Placing and Open Offer, taking the total share capital of the Company to 13,888,690 shares. These new shares are reflected in the weighted average number of shares presented below.

(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 2014		Six months ended 30 June 2015		Six months ended 30 June 2014
£'000		£'000		£'000
1,115	Profit attributable to equity holders of the company	437		284
		Shares '000		Shares '000
9,243	Weighted average number of ordinary shares in issue	9,886		9,243

(b)           Diluted

Diluted earnings per share is not presented as there are no outstanding warrants or share options that could have a dilutionary effect.

2.     Taxation

Year ended 31 December 2014				Six months ended 30 June 2015		Six months ended 30 June 2014
£'000				£'000		£'000
		Analysis of the charge in the period The charge based on the profit  for the year comprises:
217		Corporation tax on profit for the year		-		-
32		Foreign tax on profit for the year		13		18
193		Foreign tax related to prior years		-		-
442		Total current tax		13		18
		Deferred Tax
(49)		Origination and reversal of temporary differences		105		20
86		Impact of change in UK tax rate		-		-
37		Total deferred tax		105		20
479		Income tax charge		118		38

3.     Deferred taxation

The Group has recognised and unrecognised deferred tax assets in respect of temporary differences and losses.

Year ended			Six months ended	Six months ended
31 December 2014 £'000			30 June 2015 £'000	30 June 2014 £'000
		Deferred tax assets
1,636		Deferred tax asset to be recovered after more than 12 months	1,363	1,438
164		Deferred tax asset to be recovered within 12 months	321	342
1,800		Total	1,684	1,780
		Deferred tax liabilities
(64)		Deferred tax liability to be realised after more than 12 months	(62)	-
-		Deferred tax liability to be realised within 12 months	-	(25)
(64)		Total	(62)	(25)
1,736		Deferred tax asset (net)	1,622	1,755

4.     Cash used in operations

Year ended 31 December 2014				Six months ended 30 June 2015		Six months ended 30 June 2014
				£'000		£'000
1,589		Profit before taxation		555		322
		Adjustments for:
407		Depreciation of property plant and equipment		215		192
12		Amortisation		11		6
(31)		Other non-cash items in Income Statement		7		(17)
451		Bank and other interest charges		191		193
2,428		Operating cash flows before movement in working capital		979		696
		Movements in working capital (excluding exchange differences on consolidation)
(2,328)		Increase in inventories		(835)		(593)
437		Increase (decrease) in trade and other receivables		(378)		(1,474)
207		Increase (decrease) in trade and other payables		(58)		1,213
744		Cash used in operations		(292)		(158)

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 21 September 2015.  The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2014.  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 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.

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

 

 

IR LBMJTMBATBAA