Interim Results
Pittards PLC
31 August 2005
Pittards plc produces technically advanced leather for many of the world's
leading brands of gloves, shoes, luxury leathergoods and sports equipment.
31 August 2005
Interim results for the six months ended 30 June 2005
Chairman's Interim Statement
The strategy change for the Company, started just nine months ago, is
progressing well. The contract we have been awarded to manage Ethiopia's largest
tannery forms part of our drive to make our expanded operations internationally
competitive, whilst building on Pittards' pre-eminent position as a supplier of
high performance leather to the world's leading brands of gloves, shoes,
leathergoods and sports equipment. This programme will only start to show
through to profits in 2006. This year's trading is about rebuilding our sales,
reducing our UK cost base and, most importantly, generating cash to reduce our
bank borrowings.
The accompanying financial statements for the six months ended 30 June 2005
reflect the full adoption of FRS17, the accounting standard for retirement
benefits. The results for 2004 have been restated to accord with this change in
accounting policy.
The operating loss for the period was £0.4m, which compares with a similar loss
in the first half of 2004, and a loss of £3.5m in the six months ended 31
December 2004.
After bank interest of £0.3m (2004 - £0.3m) and net finance charges relating to
the pension scheme of £0.7m (2004 - £0.7m) the loss on ordinary activities
before taxation was £1.4m (2004 - £1.4m). This compares with a loss of £4.6m in
the six months ended 31 December 2004.
Turnover for the continuing activities was £32.3m, almost 90% of which was to
customers outside the United Kingdom. This was up by 7.7% in comparison with
sales by the continuing activities for the equivalent period of 2004, and by
13.5% against the second half. The turnover in 2004 includes that derived from
the trading of UK sheepskin pelts - an activity from which we withdrew in
October last year.
Net assets, before taking account of the deficit on the pension scheme, were
£17.0m as at 30 June 2005 (31 December 2004 - £18.3m restated). Total borrowings
were £11.1m, down from £11.7m at the end of last year, with gearing at 65% (31
December 2004 - 64%) before taking account of the pension scheme deficit.
The deficit on the pension scheme, calculated in accordance with FRS17, has
increased from £29.7m at 31 December 2004, to £34.4m. Scheme assets increased
from £48.6m to £51.0m, but the liabilities increased from £78.3m to £85.4m
largely as a result of the fall in corporate bond yields from 5.8% to 5.4%.
The effect of the implementation of FRS17, and the inclusion of the long term
potential pension liabilities on the balance sheet, is to create net liabilities
of £17.3m compared with net liabilities of £6.9m at the end of 2004 (as
restated), and to eliminate the Company's distributable reserves.
In accordance with the provisions of Section 263 of the Companies Act 1985,
dividends can only be made from a company's accumulated realised profits. As a
consequence of having no distributable reserves in its balance sheet, the
Company will effectively be prevented from paying dividends to ordinary
shareholders and to preference shareholders until such time that distributable
reserves are restored. The directors are currently unable to foresee when the
payment of dividends to either preference shareholders or ordinary shareholders
may be resumed.
Section 142 of the Companies Act 1985 requires the directors to convene a
general meeting of the Company if they become aware that the consolidated net
assets of the Company are less than half of the nominal value of its called up
share capital. As at 30 June 2005, the consolidated net liabilities of the
Company were £17.3m compared with the nominal value of its share capital of
£8.2m. The obligation to convene a general meeting under Section 142 arises as a
result of the implementation of FRS17, the potential effect of which on net
assets has been commented on in our last four Report & Accounts. The matter was
also discussed at our AGM in May this year. Nevertheless, the directors are
obliged under Section 142 to give notice that they are convening an
extraordinary general meeting of the Company to be held at the registered office
at Sherborne Road, Yeovil at noon on Thursday 22 September for the purpose of
considering whether any, and if so what, steps should be taken to deal with the
situation.
Pittards Yeovil (formerly the Glove Leather Division) returned a profit in the
first half of 2005 with sales up by 21% on the second half of last year, albeit
11% down on the first six months of 2004. Sales of leather for sports gloves -
particularly for golf - were strong.
The average number employed at Yeovil in the first half of 2005 was 257, down by
13% from the equivalent period of 2004.
In August 2005, the Division was awarded a contract by the Privatisation &
Public Enterprises Supervising Authority of Ethiopia to manage Ethiopia Tannery
Share Company ('ETSC'), the largest of the state owned tanneries in that
country. ETSC is a major supplier of hair sheepskins to Pittards Yeovil for the
production of gloving leather. As indicated in the Chairman's statement in the
2004 Report & Accounts, we are carrying out progressively more of our initial
processing closer to source. The principal objective of the contract, which is
for five years, is to increase ETSC's value added production and export revenues
through the provision of procurement, technical, managerial, selling, training
and marketing expertise, and the development and implementation of managerial
systems.
Pittards will be remunerated through a management fee, profit share and a
royalty in respect of a brand licence and technology transfer.
The contract provides Pittards and ETSC with expanded market and product
opportunities across a range of leathers for gloves, shoes and leathergoods.
Pittards Leeds (formerly the Shoe and Leathergoods Division) achieved similar
sales of finished leather in the period as in the second half of 2004 in terms
of both volume and value, although lower on both counts than the first half.
Sales of leather for sports and leisure footwear were ahead of both the first
and second halves of last year. These gains, however, were offset by a drop in
sales of leather for luxury leathergoods, which was largely the result of
difficulties we are encountering in sourcing sufficient quantities of hides of
the right quality. These sourcing issues had an adverse impact on margins in the
Division and despite the cost savings achieved, the operating loss for the
period was greater than for the first six months of last year, although less
than the loss incurred in the second half.
Outline planning consent was granted in July 2005 for residential development on
approximately 10 acres of our 25 acre former factory site at Kinghorn, Fife.
Conditional contracts for the sale of the site for a price of £3.15m (book value
- £0.8m) were exchanged on 24 December 2004. Completion is conditional upon the
purchaser being satisfied with the outline consent and attendant conditions.
When received, the proceeds of sale will be applied in the reduction of bank
borrowings.
Allowing for the fact that there are fewer working weeks in the period, we are
expecting sales to be similar in the second half to the first. In common with
most manufacturers in this country, we are experiencing higher chemical, fuel,
power and waste treatment costs which are eroding the benefits of the cost
savings we have achieved over the last twelve months. With these and other
pressures on our margins it is unlikely that we will show much improvement in
the second half on our performance in the first six months.
Stephen Boyd
Chairman
31 August 2005
PITTARDS plc
--------------
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
for the six months ended 30 June 2005
Year ended Six months Six months
31 December ended 30 June ended 30 June
2004 2005 2004
restated restated
£'000 Note £'000 £'000
73,154 Turnover 32,341 38,528
---------- --------- ---------
Operating loss on
ordinary
(3,959) activities before (400) (418)
---------- interest --------- ---------
(672) Bank and other interest (340) (280)
charges
(1,417) Net interest on pension scheme (712) (709)
---------- liabilities
--------- ---------
(2,089) Total finance charges (1,052) (989)
---------- --------- ---------
---------- --------- ---------
Loss on ordinary
(6,048) activities before (1,452) (1,407)
taxation
1,349 Taxation - 310
---------- --------- ---------
Loss on ordinary
(4,699) activities after (1,452) (1,097)
---------- taxation --------- ---------
Dividends
257 Preference - 129
- Ordinary - -
---------- --------- ---------
257 - 129
---------- --------- ---------
(4,956) Transferred from (1,452) (1,226)
---------- reserves --------- ---------
Loss per share 1
(23.4) - Basic (7.5) (5.8)
(23.4) - Diluted (7.5) (5.8)
PITTARDS plc
--------------
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES (UNAUDITED)
for the six months ended 30 June 2005
Year ended Six months Six months
ended ended
2004 30 June 2005 30 June 2004
£'000 Note £'000 £'000
Restated Restated
(4,699) Loss for period (1,452) (1,097)
(670) Actuarial (loss)gain on pension (4,478) 45
scheme
-------- ---------- ---------
(5,369) Total recognised losses (5,930) (1,052)
-------- relating to the period ---------
Prior year adjustment - 4 (29,370)
FRS17
----------
Total recognised losses (35,300)
since last annual report ----------
PITTARDS plc
--------------
CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS FUNDS (UNAUDITED)
for the six months ended 30 June 2005
Year ended Six months Six months
ended ended
2004 30 June 2005 30 June 2004
£'000 £'000 £'000
22,381 At 1 January as previously 17,963 22,381
reported
(28,152) Prior year adjustment 4 (29,370) (28,152)
-------- ---------- ---------
(5,771) At 1 January as restated (11,407) (5,771)
(5,369) Total recognised losses (5,930) (1,052)
(257) Dividends - (129)
(15) Cost of own shares - (15)
purchased
5 Share based expense recognised in - 95
the profit & loss account
-------- ---------- ---------
(11,407) At end of period (17,337) (6,872)
-------- ---------- ---------
PITTARDS plc
---------------
CONSOLIDATED BALANCE SHEET (UNAUDITED)
as at 30 June 2005
31 December 30 June 30 June
2004 2005 2004
restated restated
£'000 £'000 £'000
Fixed assets
17,774 Tangible 16,973 18,373
-------- -------- --------
Current assets
748 Assets held for resale 789 536
10,171 Stocks 10,636 12,964
9,029 Debtors 7,952 10,338
23 Cash at bank & in hand 29 25
-------- -------- --------
19,971 19,406 23,863
-------- -------- --------
Creditors - Amounts falling
due within one year
(7,163) Bank loans & overdrafts (7,034) (7,140)
(4,509) Trade creditors (5,802) (5,528)
(3,386) Other creditors (2,568) (3,358)
-------- -------- --------
(15,058) (15,404) (16,026)
-------- -------- --------
4,913 Net current assets 4,002 7,837
-------- -------- --------
22,687 Total assets less current liabilities 20,975 26,210
Creditors - Amounts falling
(4,353) due after more than one year (3,947) (3,781)
- Provisions for liabilities and charges - (870)
-------- -------- --------
18,334 Net assets before pension scheme 17,028 21,559
liability
(29,741) Pension scheme liability (34,365) (28,431)
-------- -------- --------
(11,407) Net liabilities after pension scheme (17,337) (6,872)
-------- liability -------- --------
Capital & Reserves
8,227 Called up share capital 8,227 8,227
(495) Investment in own shares (495) (405)
(19,139) Reserves (25,069) (14,694)
-------- -------- --------
(11,407) Shareholders' funds (17,337) (6,872)
-------- -------- --------
PITTARDS plc
--------------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
for the six months ended 30 June 2005
Year ended Six months ended Six months ended
31 December 2004 30 June 2005 30 June 2004
Restated Restated
£'000 £'000 Note £'000 £'000 £'000 £'000
1,210 Net cash 2 1,127 1,235
inflow from
operating
activities
Returns on
investments and
servicing of
finance
(613) Interest (448) (274)
paid
(257) Preference - (129)
------ dividends
paid
------ ------
(870) Net cash outflow from (448) (403)
returns on investments
and servicing of
finance
Taxation
135 UK 127 (93)
corporation
tax received
(paid)
------ ------ ------
135 Net cash 127 (93)
inflow
(outflow)
from
taxation
Capital
expenditure
and
financial
investment
(1,281) Purchase of (268) (1,255)
tangible
fixed
assets
170 Sale of 44 11
------ tangible
fixed
assets
------ ------
(1,111) Net cash outflow from (224) (1,244)
capital expenditure and
financial investment
(110) Equity - (110)
dividends
paid
------- -------- ------
(746) Net cash 582 (615)
inflow
(outflow)
before
financing
Financing
(15) Purchase of - (15)
matching shares
under Restricted
Share Plan
4,499 New bank - 3,500
loans
(101) Repayment of (83) -
bank loans
(243) Capital (106) (70)
------ element of
finance
lease rental
repayments
------ ------
4,140 Net cash (outflow) (189) 3,415
------- inflow from
financing
-------- ------
3,394 Increase in 393 2,800
------- cash -------- ------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (UNAUDITED)
Year ended Six months Six months
ended ended
31 December 30 June 30 June
2004 2005 2004
£'000 £'000 £'000
3,394 Increase in 393 2,800
cash
243 Capital element of 106 70
finance lease
rental repayments
101 Repayment of 83 -
bank loans
(4,499) New bank - (3,500)
loans
-------
-------- ------
(761) Change in net debt 582 (630)
arising from cash
flows
(610) New hire - (120)
purchase
contracts
------- -------- ------
(1,371) Movement in 582 (750)
net debt
(10,308) Net debt at (11,679) (10,308)
beginning of
period
------- -------- ------
(11,679) Net debt at (11,097) (11,058)
======= end of ======== ======
period
Notes
1. Loss per ordinary share
Year ended Six months Six months
ended ended
31 December 30 June 2005 30 June 2004
2004
Restated £'000 Restated
£'000 £'000
(4,699) Loss on ordinary activities after (1,452) (1,097)
taxation
(257) Preference dividend (129) (129)
------- ------- -------
(4,956) Loss (1,581) (1,226)
--------- --------- ---------
Weighted average number of ordinary shares in issue
(excluding the shares owned by the Pittards employee share ownership trust)
'000's '000's '000's
-------- --------
21,156 Basic 21,152 21,185
-------- -------- --------
The weighted average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share is identical to that used for basic
earnings per ordinary share. This is because the exercise of share options and
vesting of conditional shares under the Restricted Share Plan would have the
effect of reducing the loss per ordinary share and is therefore not dilutive
under the terms of FRS22.
2. Reconciliation of operating loss to net cash flows from operating
activities:
Year ended Six months Six months
ended ended
31 December 30 June 30 June
2004 2005 2004
Restated Restated
£'000 £'000 £'000
(3,959) Operating loss (400) (418)
1,787 Depreciation charges 1,020 986
5 Amortisation of matching RSP shares - 95
144 Loss (profit) on sale of tangible fixed 5 (11)
assets
(534) Defined benefit operating profit charge (566) (421)
less contributions paid
(267) Increase in assets held for resale (41) (55)
3,557 (Increase) decrease in stocks (465) 764
946 Decrease (increase) in debtors 1,006 (291)
(469) Increase (decrease) in creditors 568 586
--------- ----------- -----------
1,210 Net cash inflow from operating 1,127 1,235
--------- activities ----------- -----------
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 2004. 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 2004, with the exception of the adoption of FRS17 'Retirement
Benefits'.
This requires that for the defined benefit schemes the amounts charged to
operating profit are the current service costs and gains or losses on
settlements and curtailments. Past service costs are recognised immediately in
the profit and loss account if the benefits have vested. If the benefits have
not vested immediately, the costs are recognised over the period until vesting
occurs. The interest cost and the expected return on assets are shown as a net
amount of other finance costs or credits adjacent to interest. Actuarial gains
and losses are recognised in the statement of total recognised gains and losses.
Defined benefit schemes are funded, with the assets of the scheme held
separately from those of the Group, in separate trustee administered funds.
Pension scheme assets are measured at fair value and liabilities are measured on
an actuarial basis using the projected unit method and discounted at a rate
equivalent to the current rate of return on a high quality corporate bond of
equivalent currency and term to the scheme liabilities. The actuarial valuations
are obtained at least triennially and are updated at each balance sheet date.
The resulting defined benefit asset or liability is presented separately on the
face of the balance sheet.
For defined contribution schemes the amount charged to the profit and loss
account in respect of pension costs and other post-retirement benefits is the
contribution payable in the period. Differences between contributions payable in
the year and contributions actually paid are shown as either accruals or
prepayments in the balance sheet
A prior year adjustment has been made to reflect this change. The operating loss
in the current half year has been reduced by £300,000 (2004 year - £869,000,
2004 half year - £479,000). The loss on ordinary activities before taxation in
the current year has been increased by £412,000 (2004 year - £548,000, 2004 half
year - £230,000). Opening net assets have been reduced by £29,370,000 from
£17,963,000 to net liabilities of £11,407,000. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
COMPANIES COVERED:
Latest directors dealings
- 2 days ago FRP Advisory Group
- 2 days ago Marks Electrical Group
- 2 days ago CLS Holdings
- 2 days ago QinetiQ Group
- 2 days ago Spectris