Final Results

RNS Number : 2794A

Pittards PLC

19 March 2013

 



PITTARDS plc

(AIM:PTD)

Preliminary announcement of results for the year ended 31 December 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 report its audited results for the year ended 31 December 2012.

	Year ended  31 December 2012			Year ended 31 December 2011
		£m			£m
Revenue		37.0			38.2
Percentage export		93%			93%
Profit on operation before restructuring costs		0.9			3.1
Profit on operations before finance costs		0.6			3.1
Finance costs		(0.3)			(0.3)
Profit before taxation		0.3			2.8
					Restated
Net assets		15.8			15.8

Financial highlights

-               Revenue down 3%

-               Profit from trading activities before restructuring costs £0.9m (2011: £3.1m)

-               Profit from trading after restructuring costs £0.6m

-               Cash generated by operating activities of £0.2m (2011: used £0.4m)

-               Net assets stable at £15.8m

-               Gearing now 36% (2011: 31%)

Stephen Boyd, Chairman of Pittards, commented:

"2012 proved to be a year of transition following the major structural changes to the business as we moved more of our core manufacturing to a lower cost location.  This was accelerated by the introduction of the crust tariff in Ethiopia in late 2011 and the necessary speed of change, coupled with changes to the Ethiopian customs system (which delayed receipt of key chemicals), presented a number of challenges.  These were however overcome with commitment and determination and the benefits will accrue during 2013 and beyond."

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]

Preliminary announcement of results

For year ended 31 December 2012

Chairman's statement

The year 2012 proved to be a year of transition following major structural changes to the business as we moved more of our core manufacturing to our lower cost operation, ETSC, in Ethiopia.  These changes were accelerated by the introduction of the crust tariff in Ethiopia in late 2011 and the necessary speed of change, coupled with changes to the Ethiopian customs system (which delayed receipt of key chemicals), presented a number of challenges.  These were however overcome with commitment and determination and the benefits will accrue during 2013 and beyond.

A disappointing profit of £0.9m (2011: £3.1m) was achieved before restructuring costs.  There was a significant global increase in hide and skin prices over the previous year, including Ethiopian sheepskins as highlighted in our interim statement, and this adversely impacted gross margins.  Prices did however progressively ease back in the second half which therefore yielded an improved performance compared to the first half.

Distribution costs of £2.4m showed improvement over 2011 (£2.8m) due in part to slightly reduced revenue but also reflecting the benefit of greater efficiencies in shipping leather direct from our Ethiopian factories to customers in the Far East, rather than via the UK.  Restructuring costs arising from the structural changes totalled £0.3m leading to a profit before finance costs of £0.6m (2011: £3.1m).  Finance costs of £0.335m were slightly higher than £0.292m in 2011 as the structural changes delayed some revenue income in the early part of the year and higher skin prices had to be financed but this is expected to improve in 2013.

The depreciation of the Ethiopian birr against sterling led to an unrealised exchange loss on translation of £0.776m in Other Comprehensive Income but this was partly offset by a revaluation gain of £0.266m on our three freehold properties in Ethiopia.

The small tax charge of £0.03m represents withholding tax suffered on payments of royalties from the Ethiopian business.  Revenue of £37.0m shows a 3% reduction against 2011 due to delays in shipments in the early part of the year  whilst we trained our Ethiopian workforce in taking leather to the finished stage and reorganised supply chains but revenue in the second half was actually 5% higher than in 2011 as we caught up the backlog of orders.  Our customers bore with us through the changes and have been more than satisfied with the consistent quality of leather being produced around the group.  The Yeovil factory has made good use of its extensive contacts for purchasing raw materials around the world.  We are gearing up to start production of aviation leathers in the Yeovil factory in the near future which will be a useful additional income stream, and will include new technically innovative products. We will be launching our new aviation products at the Aircraft Interiors Expo in Hamburg in April.

Net assets remained consistent at £15.8m at both 2012 and 2011 year ends, with similar values for inventory and assets.  Net debt rose slightly from £5.0m to £5.7m but the gearing ratio of 35.8% was in line with expectations (2011: 31.3%) and well within the target range for the business.  At the end of 2012 the Company's banking relationship transferred from RBS to Lloyds TSB and included an increase in facilities of £0.5m.  These enlarged facilities should enable the business to pursue opportunities for profitability more promptly.

As noted in previous statements we were working with our lawyers to restructure our balance sheet to enable the payment of dividends in the future and I am pleased to report that this process was completed and approved by the Companies Court on 27 February 2013.  It is therefore not yet reflected in the balance sheet but a proforma balance sheet is included in Note 29 to the accounts.  The Company is now in a position to be able to pay a dividend at such time as the Board considers it appropriate to do so from retained distributable reserves.

Our Design Centre in Yeovil continues to add to our range of premium leathergoods products branded as both Pittards and Daines & Hathaway and we are working on some exciting new collaborative ranges with UK retailers and plan to grow this area in 2013.

The workforce at our PPM glove making factories in Ethiopia is still growing and is becoming highly skilled such that we have now added dress glove making alongside the production of industrial gloves and we intend to further expand this side of the business.  We have received several distinguished visitors in recent months (including Mark Simmonds, UK Minister for Africa ), all of whom are very impressed with this development in our business.

Our increasing workforce of over 1,200 employees in UK and Ethiopia continues to integrate well and I thank them for their considerable efforts and achievements during this year of key transition.

Global economic uncertainty remains a concern for all businesses but we are confident that our strong customer relationships, investment in our brands and advances into new markets will stand us in good stead as we continue to develop the Pittards business.  With trading in the current year to date in  line with management expectations, we are optimistic that our core strategy will lead to improved performance in the near future.

Stephen Boyd

Chairman

18 March 2012

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2012

	Note	2012 £'000		2011 £'000
Continuing operations:
Revenue		37,029		38,194
Cost of sales		(30,590)		(29,328)
Gross profit		6,439		8,866
Distribution costs		(2,389)		(2,767)
Administrative expenses		(3,152)		(3,447)
Administrative expenses - adjustment to acquisition impairment	6	-		398
Administrative expenses - exceptional restructuring costs	6	(324)		-
Profit from operations before finance costs		574		3,050
Finance costs		(335)		(292)
Finance income		61		-
Profit before taxation		300		2,758
Taxation (charge) credit		(30)		879
Profit  for the year after taxation		270		3,637
Profit attributable to:
Owners of the parent		270		3,645
Non controlling interest		-		(8)
		270		3,637
Earnings per share attributable to equityholders of the company
Basic	3	0.06p		0.83p
Diluted	3	0.06p		0.82p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2012

		2012 £'000		2011 £'000
Profit for the year after taxation attributable to owners of the parent Other comprehensive income		270		3,637
Unrealised exchange loss on translation of overseas subsidiaries		(776)		(238)
Revaluation of land and buildings		266		848
Other comprehensive (expenses) income		(510)		610
Total comprehensive (expenses) income for the year		(240)		4,247
Total comprehensive (expenses) income attributable to:
Owners of the parent		(215)		4,084
Non controlling interest		(25)		163

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2012

		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
	Note	£'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	(11,164)	(1,553)	(495)	552	48	11,551	50	11,601
Restatement		-	-	-	-	(164)	-	-	-	-	(164)	-	(164)
At 1 January 2011 - restated		4,331	5,199	8,158	6,475	(11,328)	(1,553)	(495)	552	48	11,387	50	11,437
Comprehensive income for the year
Profit for the year after taxation		-	-	-	-	3,645	-	-	-	-	3,645	(8)	3,637
Other comprehensive income
Gain on the revaluation of buildings		-	-	-	-	-	-	-	677	-	677	171	848
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	(220)	-	(18)	-	(238)	-	(238)
Total other comprehensive (expenses)  income		-	-	-	-	-	(220)	-	659	-	439	171	610
Total comprehensive (expenses) income for the year		-	-	-	-	3,645	(220)	-	659	-	4,084	163	4,247
Transactions with owners
Proceeds from shares issued		79	51	-	-	-	-	-	-	-	130	-	130
Total transactions with owners		79	51	-	-	-	-	-	-	-	130	-	130
At 1 January 2012 - restated		4, 410	5,250	8,158	6,475	(7,683)	(1,773)	(495)	1,211	48	15,601	213	15,814
Comprehensive income for the year
Profit for the year after taxation		-	-	-	-	270	-	-	-	-	270	-	270
Other comprehensive income
Gain on the revaluation of buildings									262	-	262	4	266
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	(644)	-	(103)	-	(747)	(29)	(776)
Total other comprehensive (expenses)  income		-	-	-	-	-	(644)	-	159	-	(485)	(25)	(510)
Total comprehensive (expenses) income for the year		-	-	-	-	270	(644)	-	159	-	(215)	(25)	(240)
Transactions with owners
Proceeds from shares issued		221	-	-	-	-	-	-	-	-	221	-	221
Total transactions with owners		221	-	-	-	-	-	-	-	-	221	-	221
At 31 December 2012		4, 631	5,250	8,158	6,475	(7,413)	(2,417)	(495)	1,370	48	15,607	188	15,795

 BALANCE SHEETS

As at 31 December 2012

			2012	2011
				restated
		Note	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment			6,165	6,441
Intangible assets			112	15
Investments in subsidiary undertakings			-	-
Deferred income tax asset			1,602	1,723
Available for sale financial instruments			5	15
Total non-current assets			7,884	8,194
Current assets
Inventories			14,287	14,360
Trade and other receivables			4,534	3,833
Cash and cash equivalents			817	1,142
Current income tax recoverable			30	-
Deferred income tax asset		5	403	282
Total current assets			20,071	19,617
Total assets			27,955	27,811
LIABILITIES
Current liabilities
Trade and other payables			(5,681)	(5,904)
Current income tax liability			-	(1)
Interest bearing loans, borrowings and overdrafts			(5,373)	(6,092)
Total current liabilities			(11,054)	(11,997)
Non-current liabilities
Interest bearing loans, borrowings and overdrafts			(1,106)	-
Total non-current liabilities			(1,106)	-
Total liabilities			(12,160)	(11,997)
Net assets			15,795	15,814
EQUITY
Share capital			4,631	4,410
Share premium account			5,250	5,250
Capital redemption reserve			8,158	8,158
Capital reserve			6,475	6,475
Shares held by ESOP			(495)	(495)
Retained earnings			(7,413)	(7,683)
Translation reserve			(2,417)	(1,773)
Revaluation reserve			1,370	1,211
Share options reserve			48	48
Total equity attributable to owners of the parent			15,607	15,601
Non-controlling interest			188	213
TOTAL EQUITY			15,795	15,814

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2012

		2012		2011
	Note	£'000		£'000
Cash flows from operating activities
Cash generated from (used in) operations	4	170		(412)
Tax paid		(69)		(187)
Interest paid		(343)		(247)
Net cash (used in) generated from operating activities		(242)		(846)
Cash flows from investing activities
Investment in subsidiaries		-		-
Proceeds on disposal of property, plant and equipment		-		-
Purchases of property, plant and equipment		(639)		(1,261)
Purchases of intangible assets		(103)		(6)
Investment in available for sale financial assets		-		(13)
Net cash used in investing activities		(742)		(1,280)
Cash flows from financing activities
Loan financing		1,638		-
Repayment of bank loans		(609)		(2,714)
Repayment of obligations under finance leases and hire purchase obligations		-		(23)
Share issue		221		130
Net cash generated from (used in) financing activities		1,250		(2,607)
Increase (decrease) in cash and cash equivalents		266		(4,733)
Cash and cash equivalents at beginning of the year		(3,412)		1,307
Exchange gains on cash and cash equivalents		41		14
Cash and cash equivalents at end of the year		(3,105)		(3,412)

Notes

1.         The figures for the years ended 31 December 2012 and 2011 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006.  The figures for the year ended 31 December 2012 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 2011, 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 18 March 2013.

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.

The consolidated financial statements have been prepared in accordance with the Companies Act 2006, applicable to companies reporting under IFRS.

The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2012 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.             Earnings per ordinary share

	2012	2011
	£'000	£'000
Analysis of the profit in the year
Profit for the year attributable to equityholders of the company	270	3,645
Weighted average number of ordinary shares in issue (excluding the shares owned by the Pittards Employee Share Ownership Trust)	'000's	'000's
Basic	442,031	440,098
Diluted	444,188	443,650
Basic earnings per ordinary share	0.06p	0.83p
Diluted earnings per ordinary share	0.06p	0.82p

4.             Cash generated from (used in) operations

	2012	2011
	£'000	£'000
Profit before taxation	300	2,758
Adjustments for:
Depreciation of property, plant and equipment	730	752
Amortisation	6	106
Profit on sale of plant and equipment	-	-
Bank and other interest charges	343	247
Other non-cash items in Income Statement	104	(252)
Dissolution of investments	-	-
Operating cash flows before movement in working capital	1,483	3,611
Movements in working capital (excluding exchange differences on consolidation):
(Increase) decrease in inventories	(440)	(4,195)
Increase in receivables	(1,039)	(197)
Increase (decrease) in payables	166	369
Cash generated from (used in) operations	170	(412)

5.             Taxation

The Group has recognised a deferred tax asset of £2.005m (2011: £2.005m)in respect of losses out of a total potential deferred tax asset of £2.716m (2011: £3.138m). The element of the deferred tax asset not yet recognised would be available to be utilised against future UK taxable profits. 

There was a small tax charge of £0.030m representing withholding tax on payments of royalties from Ethiopia.

6.             Administrative expenses

Exceptional restructuring costs

The imposition of the crust tariff in Ethiopia in 2011 necessitated a redundancy exercise for production staff in 2012 plus various other exceptional costs of reorganisation which totalled £0.324m.

Adjustment to acquisition impairment

In 2011 the remaining provisions of £0.398m established on the acquisition of ETSC were released to the Income Statement as not required.

7.             Copies of the 2012 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 16 May 2013.

 

END

 

 

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