Half Yearly Report

RNS Number : 9607R

Pittards PLC

18 September 2014

 



Encs

Pittards plc

Sherborne Road, Yeovil,

Somerset, England, BA21 5BA

Telephone: [phone]

Facsimile: [phone]

http://www.pittardsleather.com

E-mail: [e-mail]

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.

Unaudited Interim results for the six months ended 30 June 2014

Summary

Year ended 31 December 2013			Six months ended 30 June 2014		Six months ended 30 June 2013
£'m			£'m		£'m
35.8		Revenue	17.4		18.4
1.9		Profit from operations before finance costs and fx	0.6		0.9
0.1		Gain (loss) on foreign currency translation	(0.1)		0.2
2.0		Profit from operations before finance costs	0.5		1.1
1.7		Profit before taxation	0.3		1.0
7.1		Net debt	7.5		6.7
16.9		Net assets	16.8		17.1
		Per weighted average ordinary 50p share (pence)
15.68		Profit (basic)	3.07p		10.12p
182.97		Net assets	181.71p		184.54p
42%		Gearing	45%		39%

Stephen Boyd, Chairman of Pittards, commented:

The increasing strength of sterling throughout the first six months of 2014 was a material issue for the business as a significant proportion of sales are invoiced in US dollars and euros. Underlying sales in foreign currencies were slightly increased and had the dollar and euro exchange rates been the same as those prevailing for the first half of 2013, the turnover would have been £18.7m. Although the strength of sterling was a major challenge in the first half of the year it has moderated in the last couple of months and we believe there are good opportunities for growth. With a good product base and tight control of costs we look forward to a stronger second half result.

- 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 2014

The increasing strength of sterling throughout the first six months of 2014 was a material issue for the business as a significant proportion of sales are invoiced in US dollar and euros. Turnover for the period was £17.4m, compared with £18.4m achieved in 2013. In fact, underlying sales in foreign currencies were slightly increased and had the dollar and euro exchange rates been the same as those prevailing for the first half of 2013, the turnover would have been £18.7m.

Improving sales in our industrial and dress glove manufacturing businesses in Ethiopia were offset by shortfalls in demand for dress glove leathers, which is very weather sensitive and suffered from a mild start to 2013/14 winter worldwide which impacted adversely on glove sales. The other shortfall was military leather, where draw downs from contracts already in place were slow.

Gross margins reduced from 21% to 19% year on year reflecting the reduction in sales due to the strength of sterling, partly offset by some benefit from raw materials purchased in dollars. In the light of this, cost savings were implemented. Distribution and administrative expenses were reduced by £0.331m compared to the prior year.

The profit from operations reduced to £0.504m from £1.099m in the prior year as a result of the above factors and the loss on foreign currency translation.

Net finance costs increased slightly from £0.165m to £0.204m as proportionately more of our borrowings were in Ethiopia where interest rates are substantially higher. This was because we decided to pay our suppliers of raw materials more quickly to secure supplies of suitable hides and skins at better prices, thus helping gross margin. This consequently affected gearing as trade payable balances reduced and borrowings increased and gearing increased from 42% at December 2013 to 45% at 30 June, which was nonetheless still within our target of less than 50%.

After a small tax charge of £0.038m (2013: £0.019m) made up of withholding tax on royalty receipts from Ethiopia and a deferred tax movement the profit after taxation was £0.284m (2013: £0.935m).

Net assets of £16.8m remained at a similar level to 2013 year end and the reduced dress glove leather sell through noted earlier meant that inventory levels were virtually unchanged.

Our global presence as one of the few branded leather producers around the world is reinforced as we continue to exhibit at all the major trade fairs and we were delighted to be visited on our stand at the All Africa Leather Fair in Addis Ababa in February by the new President of Ethiopia, HE Mulatu Teshome Wirtu.

The  recently created consumer product division in the UK has recently gained sterling denominated contracts from some prestigious British brands and is currently very busy, having started the year quietly. We have now launched our first Pittards England collection of handbags, available in both our shop and on line (www.pittardsonline.com) which has been well received and is increasingly being picked up in the fashion press.

Relationships with our key customer FootJoy remain strong and volumes of shoe leathers supplied to them have increased as their DNA golf shoe, which was launched in early 2014 and features Pittards Chromoskin leather system, has been a great success.

Our glove manufacturing in Ethiopia, though still relatively small, continues to build.

Although the strength of sterling was a major challenge in the first half of the year it has moderated in the last couple of months and we believe there are good opportunities for growth. With a good product base and tight control of costs we look forward to a stronger second half result.

SD Boyd

Chairman

17 September 2014

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the six months ended 30 June 2014

Year ended 31 December 2013			Note	Six months ended 30 June 2014		Six months ended 30 June 2013
£'000				£'000		£'000
35,813		Revenue		17,434		18,431
(28,487)		Cost of sales		(14,182)		(14,600)
7,326		Gross profit		3,252		3,831
(2,279)		Distribution costs		(1,043)		(1,227)
(3,121)		Administrative expenses		(1,599)		(1,747)
78		Administrative expenses  -gain (loss) on foreign currency translation		(106)		242
2,004		Profit from operations before finance costs		504		1,099
(350)		Finance costs		(204)		(165)
58		Finance income		22		20
1,712		Profit before taxation		322		954
(265)		Taxation charge	2	(38)		(19)
1,447		Profit for the period after taxation		284		935
		Profit attributable to:
1,449		Owners of the parent		286		935
(2)		Non controlling interest		(2)		-
1,447				284		935
		Earnings per share attributable to equity shareholders of the parent	1			Restated (Note 1)
15.68p		- basic		3.07p		10.12p
15.68p		- diluted		3.07p		10.12p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ended 30 June 2014

Year ended 31 December 2013			Note	Six months ended 30 June 2014		Six months ended 30  June 2013
£'000				£'000		£'000
1,447		Profit for the period after taxation		284		935
		Other comprehensive income (expense)
		Items that will not be reclassified to profit or loss
139		Revaluation of land and buildings		-		-
139				-		-
		Items that may be subsequently reclassified to profit or loss
(469)		Unrealised exchange (loss) gain on translation of overseas subsidiaries		(401)		327
(469)				(401)		327
(330)		Other comprehensive (expense) income		(401)		327
1,117		Total comprehensive income (expense)  for the period		(117)		1,262
		Total comprehensive income (expense) attributable to:
1,131		Owners of the parent		(105)		1,254
(14)		Non controlling interest		(12)		8

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2014

		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 2013		4,631	5,250	8,158	6,475	(7,413)	(2,417)	(495)	1,370	48	15,607	188	15,795
Comprehensive income for the period
Profit for the year after taxation		-	-	-	-	935	-	-	-	-	935	-	935
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	258	-	61	-	319	8	327
Gain on the revaluation of buildings		-	-	-	-	-	-	-	-	-	-	-	-
Total comprehensive income for the period		-	-	-	-	935	258	-	61	-	1,254	8	1,262
Transactions with owners
Proceeds from shares issued		-	-	-	-	-	-	-	-	-	-	-	-
Reserves transfer		-	(5,250)	(8,158)	-	13,408	-	-	-	-	-	-	-
Total transactions with owners		-	(5,250)	(8,158)	-	13,408	-	-	-	-	-	-	-
At 30 June 2013		4,631	-	-	6,475	6,930	(2,159)	(495)	1,431	48	16,861	196	17,057
Comprehensive income for the period
Profit for the year after taxation		-	-	-	-	514	-	-	-	-	514	(2)	512
Other comprehensive income
Unrealised exchange loss on  translation of foreign subsidiaries		-	-	-	-	-	(632)	-	(153)	-	(785)	(11)	(796)
Gain (loss) on the revaluation of buildings		-	-	-	-	-	-	-	148	-	148	(9)	139
Total comprehensive income for the period		-	-	-	-	514	(632)	-	(5)	-	(123)	(22)	(145)
Transactions with owners
Reserves transfer		-	-	-	-	48	-	-	-	(48)	-	-	-
Total transactions with owners		-	-	-	-	48	-	-	-	(48)	-	-	-
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 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

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2014

31 December 2013			Note	30 June 2014		30 June 2013
£'000				£'000		£'000
		ASSETS
		Non-current assets
6,095		Plant, property and equipment		5,857		6,246
164		Intangible assets		198		135
1,194		Deferred income tax asset	3	1,438		1,567
2		Available for sale financial instruments		1		2
7,455		Total non-current assets		7,494		7,950
		Current assets
15,441		Inventories		15,682		15,597
5,312		Trade and other receivables		6,558		6,497
522		Cash and cash equivalents		362		675
84		Current income tax recoverable		84		75
606		Deferred income tax asset	3	342		433
21,965		Total current assets		23,028		23,277
29,420		Total assets		30,522		31,227
		LIABILITIES
		Current liabilities
(27)		Deferred income tax liability		(25)		-
(4,868)		Trade and other payables		(5,796)		(6,829)
(6,196)		Interest bearing loans, borrowings and overdrafts		(6,865)		(6,478)
(11,091)		Total current liabilities		(12,686)		(13,307)
		Non-current liabilities
(1,417)		Interest bearing loans, borrowings and overdrafts		(1,041)		(863)
(1,417)		Total non-current liabilities		(1,041)		(863)
(12,508)		Total liabilities		(13,727)		(14,170)
16,912		Net assets		16,795		17,057
		EQUITY
4,631		Share capital		4,631		4,631
6,475		Capital reserve		6,475		6,475
(495)		Shares held by ESOP		(495)		(495)
7,492		Retained earnings		7,778		6,930
(2,791)		Translation reserve		(3,104)		(2,159)
1,426		Revaluation reserve		1,348		1,431
-		Share options reserve		-		48
16,738		Total equity attributable to owners of the parent		16,633		16,861
174		Non-controlling interest		162		196
16,912		Total equity		16,795		17,057

STATEMENT OF CASH FLOWS (UNAUDITED)

for the six months ended 30 June 2014

Year ended 31 December 2013				Six months ended 30 June 2014		Six months ended 30 June 2013
£'000			Note	£'000		£'000
		Cash flows from operating activities
(685)		Cash used in operations	4	(158)		(449)
(63)		Tax paid		(10)		(64)
(334)		Interest paid		(193)		(133)
(1,082)		Net cash used in operating activities		(361)		(646)
		Cash flows from investing activities
(358)		Purchases of property, plant and equipment		(192)		(225)
(57)		Purchases of intangible assets		(41)		(26)
(415)		Net cash used in investing activities		(233)		(251)
		Cash flows from financing activities
1,265		Loan financing		733		-
(1,092)		Repayment of bank loans		(431)		(710)
-		New finance lease obligations		-		68
(38)		Repayment of obligations under finance leases		(23)		(13)
198		Net cash generated from (used in) financing activities		279		(655)
(1,299)		Decrease in cash and cash equivalents		(315)		(1,552)
(3,105)		Cash and cash equivalents at beginning of period		(4,388)		(3,105)
16		Exchange gains (losses) on cash and cash equivalents		16		(12)
(4,388)		Cash and cash equivalents at end of period		(4,687)		(4,669)

NOTES (unaudited)

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

On 15 January 2014 the shareholders approved a 1:50 share consolidation which changed the structure of the share capital from 463,101,933 1p shares to 9,262,039 50p shares. The new holdings have been reflected in this report.

(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 2013		Six months ended 30 June 2014		Six months ended 30 June 2013
£'000		£'000		£'000
1,449	Profit attributable to equity holders of the company	284		935
		Shares '000		Shares '000
9,243	Weighted average number of ordinary shares in issue	9,243		9,243

(b)           Diluted

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

2.     Taxation

Year ended 31 December 2013				Six months ended 30 June 2014		Six months ended 30 June 2013
£'000				£'000		£'000
		Analysis of the charge in the period The charge based on the profit  for the year comprises:
-		Corporation tax on profit for the year		-		-
36		Foreign tax		18		19
36		Total current tax		18		19
		Deferred Tax
40		Origination and reversal of temporary differences		20		-
189		Impact of change in UK tax rate		-		-
229		Total deferred tax		20		-
265		Income tax charge		38		19

NOTES (unaudited) continued

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 2013 £'000			30 June 2014 £'000	30 June 2013 £'000
		Deferred tax assets
1,194		Deferred tax asset to be recovered after more than 12 months	1,438	1,567
606		Deferred tax asset to be recovered within 12 months	342	433
1,800		Total	1,780	2,000
		Deferred tax liabilities
-		Deferred tax liability to be realised after more than 12 months	-	-
(27)		Deferred tax liability to be realised within 12 months	(25)	-
(27)		Total	(25)	-
1,773		Deferred tax asset (net)	1,755	2,000

4.     Cash used in operations

Year ended 31 December 2013				Six months ended 30 June 2014		Six months ended 30 June 2013
				£'000		£'000
1,712		Profit before taxation		322		954
		Adjustments for:
355		Depreciation of property plant and equipment		192		353
5		Amortisation		6		3
(44)		Other non-cash items in Income Statement		(17)		3
334		Bank and other interest charges		193		133
2,362		Operating cash flows before movement in working capital		696		1,446
		Movements in working capital (excluding exchange differences on consolidation)
(1,541)		Increase in inventories		(593)		(1,021)
(963)		Increase in trade and other receivables		(1,474)		(1,822)
(543)		Increase in trade and other payables		1,213		948
(685)		Cash used in operations		(158)		(449)

NOTES (unaudited) continued

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 18 September 2014.The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2013.  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 LRMATMBTBBJI