Interim Results
Pittards PLC
05 September 2002
Pittards plc produces technically advanced leather for many of the world's
leading brands of gloves, shoes, luxury leathergoods and sports equipment.
5 September 2002
Interim Results for the six months ended 30 June 2002
Summary
Year ended Six months ended Six months ended
31 December 2001 30 June 2002 30 June 2001
£83.0m Turnover £36.2m £45.1m
81% Percentage export 83% 79%
(£2.59m) Profit (loss) before taxation £0.74m £0.08m
(10.4p) Earnings (loss) per share 1.9p (1.0p)
2.6p Ordinary dividend 1.0p 0.75p
28% Gearing 34% 29%
• Profit of £0.74m represents first stage of recovery from an
exceptionally difficult 2001.
• Volume of finished leather sold up 8% on second half of 2002 and on a
rising trend.
• A record 83% of turnover exported.
• Interim dividend up 33% at 1p, almost twice covered by earnings.
• Net assets - 89p per ordinary share.
Robert Tomkinson, Chairman of Pittards, commented:
'This profit of £0.74m for the six months to June represents the first stage of
our recovery from the exceptional difficulties of 2001. Demand for our products
is strong, largely as a result of important new business gains. By broadening
our product and customer base we have reduced our dependence on any single
market segment, raw material type or currency. Despite the generally uncertain
international economic outlook, we expect to report further progress in the
second half of the year.'
For further information, please contact:
John Pittard - Group Managing Director
John Buckley - Group Financial Director
Pittards plc Tel: 01935 474321
CHAIRMAN'S INTERIM STATEMENT
I am pleased to report a profit before tax of £0.743m for the six months ended
30 June 2002. This represents the first stage of our recovery from an
exceptionally difficult 2001 in which the pre tax profit for the first half was
just £0.079m, and the loss before exceptional costs for the year as a whole was
£1.539m.
Sales turnover for the period was £36.2m (2001 - £45.1m), a record 83% of which
was to customers outside the UK. Although the demand for finished leather was
less than in the relatively buoyant first half of 2001, the volume sold in the
first six months of 2002 was 8% higher than in the second half of last year and
is on a rising trend. Unit sales values reflect the easing in hide and skin
prices since the foot and mouth outbreak came to an end.
Each of our three divisions contributed to the operating profit of £0.920m (2001
- £0.350m).
We have adopted FRS 19, the accounting standard for deferred taxation, this
year. Whilst there is no impact on the profit and loss account for the current
period, opening net assets have reduced by £0.621m from £22.600m to £21.979m.
After taking account of interest of £0.177m, a tax charge of £0.223m and
preference dividends of £0.128m, earnings were £0.392m, equivalent to 1.9p per
ordinary share (2001 - 0.1p loss per share).
Net assets as at 30 June 2002 were £22.153m equivalent to 89p per ordinary
share, and bank borrowings were £7.551m, up from £7.143m at the same stage last
year. The higher borrowings, which are attributable to rising working capital
needs as activity levels increase, are expected to continue at this level during
the second half.
Sales turnover in the Glove Leather Division was 6% up compared to the first
half of last year on volume that was virtually unchanged. There was a marked
improvement in the volume of leather sold for sporting applications based both
on increased business with existing customers, and on new business with new
customers. Sales of leather for dress gloves have recovered well from the low
levels reached by the end of last year.
The cost of hair sheepskins, the Glove Leather Division's principal raw
material, has been more stable so far this year, after rising steadily
throughout most of 2001 and, after a problematic start, the supply has improved
as the current year has progressed.
The Division has made a solid contribution to the recovery in the Group's profit
so far in 2002, after breaking even in the corresponding period of last year.
The Shoe & Leathergoods Division suffered a substantial drop in sales in the
last three months of last year, as business confidence fell in the aftermath of
the September 11 attacks. Sales turnover in the current year has been similar
to that in the second half of last year, although volume is slightly better.
Compared to the first half of last year, turnover was down by 25% in terms of
overall value, and 18% in terms of volume. Sales of leather for luxury
leathergoods continued to be strong and were boosted by the addition of an
innovative organic range of leathers. Sales of performance leathers for sport
were lower than in the first half of last year, but were well ahead of the
second half and recent new business won should help to continue this trend.
Retail sales of casual footwear have been weak so far this year and the
Division's sales of upper leather to this sector have reflected this.
Supplies of cattle hides, the Division's main raw material, which come mainly
from the UK meat industry, have continued to improve since the end of the foot
and mouth outbreak last year. Leather prices have reduced to reflect the lower
cost of hides, and with the careful management of costs, the Division has made a
reasonable contribution to group profit so far this year, albeit slightly less
than in the first half of last year.
The Raw Material Division's sheepskin and hide processing facility at Kinghorn,
Fife was closed in December 2001. Sheepskin production has been consolidated at
the Division's other Scottish factory at Langholm, whilst Kinghorn's hide
processing activities have been transferred to the Shoe & Leathergoods
Division's factory in Leeds. Discussions are continuing with local planners in
Fife which should lead to the redevelopment of part of the 25 acre Kinghorn site
for housing.
Despite the reduced availability and quality of UK sheepskins as a consequence
of last year's foot and mouth outbreak, the Raw Materials Division made a modest
contribution to operating profits similar to that in the first half of 2001.
However, the ongoing costs associated with maintaining the security of the
Kinghorn site and pursuing its redevelopment have reduced the Division's
contribution to break even.
As announced with our results for 2001 in March, we have been reviewing how we
can continue to provide appropriate pension benefits for our employees at a cost
to the Group similar to that of the present final salary scheme, whilst reducing
our exposure to the potentially volatile impact on the value of the scheme when
calculated in accordance with FRS 17. The review was completed in June of this
year and, after consultation with the trustees of the scheme, and with our
employees, we are making a number of changes to the Group's pension
arrangements. The current pension scheme will close to new entrants with effect
from 30 September 2002. A defined contribution scheme is to be introduced from
1 October which will be offered to new employees and will be optional for
current members of the Pittards Pension Scheme. Current members will cease to
accrue final salary pension benefit for future service with effect from 30
September 2002 and, from 1 October, will join either a career average earnings
plan, or, at their option, the defined contribution scheme. The cost of the new
arrangements will be similar to the cost of the current pension scheme, but as a
consequence of these changes, it is expected that there will be a reduction in
the pension scheme's liabilities, calculated in accordance with FRS 17.
In September 2000 we issued our first Environmental Report. It was extremely
well received by our customers, investors and other stakeholders in our
business. We have now published our 2002 Environmental Report, which describes
the environmental effects of our business and the progress we are making in
addressing environmental issues for our different stakeholders. You can view or
download a copy of the report on our web-site (www.pittardsleather.com).
Although the substantial fall in equity markets around the world is dampening
down consumer confidence and spending in many of our markets, demand for our
products is strong, largely as a result of the important new business gains
referred to earlier. Our recent efforts to broaden the product and customer
base of our business are reducing our dependence on any single market segment,
raw material type or currency and despite the generally uncertain international
economic outlook we expect to report further progress in the second half of the
year. Accordingly, your board has declared an increased interim ordinary
dividend of 1.0p (2001 - 0.75p) per share, which is almost twice covered by
earnings, and will be paid on 4 November 2002 to shareholders on the register on
4 October 2002 (ex dividend date 2 October 2002).
Robert C Tomkinson
Chairman
PITTARDS plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
for the six months ended 30 June 2002
Note Six months Six months
Year ended ended ended
31 December 30 June 30 June
2001 2002 2001
(restated) (restated)
£'000 £'000 £'000
83,035 Turnover 36,247 45,096
(2,106) Operating profit (loss) 920 350
Profit (loss) on ordinary activities
(2,106) before interest 920 350
(484) Net interest payable (177) (271)
(2,590) Profit (loss) on ordinary activities 743 79
before taxation
678 Taxation (223) 32
Profit (loss) on ordinary activities after
(1,912) taxation 520 111
Dividends
270 Preference 128 142
567 Ordinary 218 164
837 346 306
(2,749) Retained profit (loss) 174 (195)
Earnings (loss) per share
(10.4p) - basic 1.9p (0.1p)
(10.4p) - diluted 1.9p (0.1p)
There were no discontinued activities in 2002 or 2001. The results relate
entirely to continuing operations
PITTARDS plc
CONSOLIDATED BALANCE SHEET (UNAUDITED)
as at 30 June 2002
31 December 30 June 30 June
2001 2002 2001
£'000 £'000 £'000
(restated) (restated)
16,825 Fixed assets 17,100 17,262
Current assets
11,242 Stocks 12,427 14,153
7,887 Debtors 10,009 12,368
363 Investments 327 272
24 Cash at bank & in hand 21 27
19,516 22,784 26,820
Creditors - amounts falling due within one
year
(6,114) Bank loans & overdrafts (7,551) (7,143)
(4,123) Trade creditors (5,482) (6,861)
(3,504) Other creditors (3,990) (3,995)
(13,741) (17,023) (17,999)
5,775 Net current assets 5,761 8,821
22,600 Total assets less current liabilities 22,861 26,083
Creditors - amounts falling due after more
- than one year (87) -
(621) Provisions for liabilities and charges (621) (1,249)
21,979 22,153 24,834
Capital & reserves
8,151 Called up share capital 8,151 8,441
13,828 Reserves 14,002 16,372
21,979 Shareholders' funds 22,153 24,813
- Minority interest - 21
21,979 22,153 24,834
PITTARDS plc
SUMMARY CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30 June 2002
Note Six months Six months
Year ended ended ended
31 December 30 June 30 June
2001 2002 2001
£'000 £'000 £'000
2,595 Net cash inflow from operating 2 156 302
activities
Returns on investments and servicing of
(765) finance (300) (416)
- Taxation (14) -
Capital expenditure and financial
investment
(988) Purchase of tangible fixed assets (942) (485)
(94) Purchase of shares for ESOP (15) (94)
50 Sale of tangible fixed assets 86 -
Net cash outflow from capital
(1,032) expenditure and financial investment (871) (579)
(10) Acquisitions and disposals - -
(753) Equity dividends paid (403) (589)
35 (1,432) (1,282)
Financing
(291) Repurchase of preference shares - -
Repayment of finance leases and HP
- agreements (8) -
(291) Net cash outflow from financing (8) -
(256) Decrease in cash (1,440) (1,282)
Reconciliation of net cash flow to movement in net debt
(256) Decrease in cash (1,440) (1,282)
Movement in net debt resulting from cash
(256) flows (1,440) (1,282)
(5,834) Net debt at beginning of period (6,090) (5,834)
(6,090) Net debt at end of period (7,530) (7,116)
PITTARDS plc
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (UNAUDITED)
for the six months ended 30 June 2002
Six months Six months
Year ended ended ended
31 December 30 June 30 June
2001 2002 2001
£'000 £'000 £'000
(2,572) Profit (loss) on ordinary activities after 520 79
taxation
- Prior year adjustment (see note 4) (621) -
(2,572) (101) 79
CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS FUNDS (UNAUDITED)
for the six months ended 30 June 2002
Six months Six months
Year ended ended Ended
31 December 30 June 30 June
2001 2002 2001
£'000 £'000 £'000
26,289 At beginning of period as previously stated 22,600 26,289
(1,281) Prior year adjustment (see note 4) (621) (1,281)
25,008 At beginning of period as restated 21,979 25,008
(291) Repurchase of preference shares - -
11 Transfer from minority interest - -
(2,749) Retained profit (loss) for period 174 (195)
21,979 At end of period 22,153 24,813
NOTES
Six months Six months
ended ended
30 June 30 June
2002 2001
1. Earnings (loss) per ordinary share £'000 £'000
Profit on ordinary activities after taxation 520 111
Preference dividends (128) (142)
Earnings (loss) 392 (31)
Weighted average number of ordinary shares in issue '000 '000
(excluding the shares owned by the Pittards employee
share ownership trust)
Basic 20,931 20,992
Dilutive potential ordinary shares: 130 173
Employee share options 21,061 21,165
2. Reconciliation of operating profit (loss) to net cash flows from operating activities:
Six months Six months
Year ended ended Ended
31 December 30 June 30 June
2001 2002 2001
£'000 £'000 £'000
(2,106) Operating profit (loss) 920 350
1,677 Depreciation charges 766 752
(151) Amortisation of shares under RSP 46 18
78 Amounts written off current asset investments - -
(35) Profit on sale of tangible fixed assets (70) -
2,419 (Increase) decrease in stocks (1,185) (492)
3,199 (Increase) decrease in debtors (2,111) (1,282)
(2,486) Increase (decrease) in creditors 1,790 956
2,595 Net cash inflow from operating activities 156 302
3. The financial information contained in this interim statement does
not constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 December 2001. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
4. The interim financial information has been prepared on the basis of
the accounting policies set out in the Group's statutory accounts for the year
ended 31 December 2001, with the exception of the adoption of the new accounting
standard on deferred tax. Details of this change in accounting policy are set
out below.
FRS 19 (Deferred Tax) has been adopted in the current year. FRS 19 requires
that deferred tax be recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date. Previously deferred tax
was provided for on a partial provision basis, whereby provision was made on all
timing differences to the extent that they were expected to reverse in the
future without being replaced.
This change in accounting policy has resulted in a prior year adjustment. There
has been no impact on the current year profit and loss account (last half year
£32,000 credit, full year to 31 December 2001 £660,000 credit). Opening net
assets have reduced by £621,000 from £22,600,000 to £21,979,000. Prior year
comparatives have been restated accordingly.
5. 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.
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