Interim Results

RNS Number : 5094Y

Pittards PLC

07 September 2009

 



Pittards plc produces technically advanced leather for many of the world's leading brands of gloves, shoes, luxury leathergoods and sports equipment and for its own brands of quality leathergoods.

PITTARDS PLC

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009

Chairman's Interim Statement

In the face of the worst global recession for decades I am very pleased to report that the first half of 2009 shows an improving picture and a return to profitability at the post tax level.

Our continued tight management of costs, coupled with a stronger US dollar resulted in a profit from operations of £0.426m, which was substantially better than the £0.102m achieved in 2008. After finance costs of £0.097m (2008 - £0.140m) the profit before taxation was £0.329m (2008 - loss of £0.038m).

Revenue for the six month period was £12.466m. This was less than the £13.170m earned in the same period in 2008 due to some loss of volume from customers who were themselves facing lower demand from their customers as a result of the 'credit crunch'. Selling prices were largely maintained due to the weaker pound improving competitiveness. Of this turnover 89% was exported, similar to 2008.

Income from sales of glove leather represented around 70% of turnover, slightly more than 2008, as dress glove leathers sold well following the cold winter in both Europe and USA. Golf leather sales have been more muted in the year to date as the major brands reduced their stock pipelines however we should benefit very quickly from any upturn in consumer demand as they are carrying very low back-up stocks, and the relationships remain strong.

Our major international brand customers in the shoe and leathergoods sector also downgraded their forecasts in the first half but there are signs of an upturn starting to appear in the golf sector and our leathers have been placed in new styles for the future, which will help volumes. Saddlery leather sales held up well in the period and we will be serving those customers directly from our Walsall base at Daines & Hathaway shortly. We continue to develop and expand our leathergoods range to attract new customers.  

Production at our Taiwanese subcontracting partner has been similarly affected as the casual footwear market has also been quieter so far this year, however the new range launched at the Hong Kong Leather Fair for the Chinese premium domestic market was well received and looks promising as a new income stream.

We continue to increase the amount of product taken to the finished leather stage at ETSC, the tannery we manage in Ethiopia, and skill levels and tanning processes there continue to improve. This enables us to be competitively priced on leathers when we could not previously have reached the price point, which has been extremely useful in the current economic climate.  At the time of writing, Pittards is in advanced dialogue with the government of Ethiopia about the future ownership of the ETSC tannery.

The Pittards retail shop at the Yeovil site has settled down well and we continue to add new lines of leather products to our range. We are keen to exploit our strategy to develop Pittards as a consumer brand in this way and we are looking into ways of designing more branded products with suitable partners. The Daines and Hathaway business which we purchased towards the end of last year is also developing well, despite the difficult economic backdrop. We have refreshed their classic range of premium leathergoods with exciting new leathers from the Pittards bovine range and are now building a prestigious new customer base in both the UK and USA.

Net assets at 30 June 2009 were £2.207m compared to £2.930m at 30 June 2008. The balance sheet is now recovering from the December 2008 level of £1.885m following the write-down of derivative financial instruments at that time. All the forward foreign exchange contracts outstanding at 31 December 2008 have now matured but this adversely impacted on borrowings during the first half.

Net borrowings at 30 June 2009 were £3.930m which was higher than £3.617m in June 2008. As noted above, the maturity of forward foreign exchange contracts had a draining effect on cash but this exercise is now complete and there are no contracts outstanding at 

30 June 2009. The Company has also completely settled some legacy loans from the previous group structure therefore with the return to profitability the cash position should improve. The Company's bank remains supportive of the strategy being followed.

Our customers remain uncertain about demand for the second half which makes it very difficult for us to forecast the outlook for the rest of the year. However, we are aware that customer stocks of finished products have been greatly reduced therefore the pick-up, when it comes, should be swift, hence we are preparing ourselves to respond quickly to any upturn in orders. In the meantime we continue to seek cost reductions in all areas of the business, but without compromising our core strengths of innovation, quality and performance.

SD Boyd - Chairman

For further information, please contact:

Stephen Boyd - Chairman - Tel: [phone] 

Jill Williams - Finance Director - Tel: [phone]

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  (UNAUDITED)

for the six months ended 30 June 2009

Year ended 31 December 2008			Note	Six months ended 30 June 2009		Six months ended 30 June 2008
£'000				£'000		£'000
26,387		Revenue		12,466		13,170
(21,948)		Cost of sales		(10,120)		(11,251)
4,439		Gross profit		2,346		1,919
(1,754)		Distribution costs		(927)		(942)
(2,088)		Administrative expenses		(1,181)		(970)
360		(Loss) gain on foreign currency translation		(16)		(110)
398		Other operating income		188		185
1,355		Profit from trading activities		410		82
		Release of provision for
-		fundamental reorganisation		-		13
		Excess of the acquirer's interest in the net fair value
93		of acquiree's identifiable net assets over cost		-		-
(1,519)		Gain (loss) on derivatives		16		7
(71)		Profit (loss) from operations before finance costs		426		102
(296)		Finance costs		(97)		(140)
(367)		Profit (loss) on continuing operations before taxation		329		(38)
(13)		Taxation		(5)		(11)
(380)		Profit (loss) on continuing operations after taxation attributable to the equity shareholders of the parent		324		(49)
		Other comprehensive income
(1,140)		Currency translation differences		(981)		76
573		Fair value gains net of tax on financial instruments		979		95
(567)		Other comprehensive income for the period		(2)		171
(947)		Total comprehensive income for the period attributable to the equity shareholders of the parent		322		122
		Profit (loss) per share attributable to equity shareholders of the parent	1
(0.17p)		- basic and diluted		0.15p		(0.02)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2009

31 December 2008				30 June 2009		30 June 2008
£'000				£'000		£'000
2,808		Total equity at beginning of period attributable to the equity shareholders of the parent		1,861		2,808
(1,140)		Currency translation differences		(981)		76
573		Fair value gains net of tax on financial instruments		979		95
(567)		Net (loss) gains recognised directly in equity		(2)		171
(380)		Profit (loss) for the period		324		(49)
1,861		Total equity at end of period attributable to the equity shareholders of the parent		2,183		2,930
24		Minority interest		24		-
1,885		Total equity at end of period		2,207		2,930

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2009

31 December 2008			30 June 2009		30 June 2008
£'000			£'000		£'000
		ASSETS
		Non-current assets
2,149		Plant, property and equipment	1,969		2,249
294		Intangible assets	244		343
2,443		Total non-current assets	2,213		2,592
		Current assets
4,409		Inventories	5,124		4,795
3,602		Trade and other receivables	3,246		3,465
77		Cash and cash equivalents	77		46
-		Derivative financial instruments	-		51
8,088		Total current assets	8,447		8,357
10,531		TOTAL ASSETS	10,660		10,949
		LIABILITIES
		Current liabilities
(4,131)		Trade and other payables	(4,334)		(4,393)
(3,450)		Interest bearing loans and borrowings	(4,078)		(3,505)
(995)		Derivative financial instruments	-		-
-		Provisions	-		(9)
(8,576)		Total current liabilities	(8,412)		(7,907)
		Non-current liabilities
(70)		Interest bearing loans and borrowings	(41)		(112)
(8,646)		TOTAL LIABILITIES	(8,453)		(8,019)
1,885		Net assets	2,207		2,930
		Equity
2,233		Called up share capital	2,233		2,233
4,214		Share premium account	4,214		4,214
8,158		Capital redemption reserve	8,158		8,158
6,475		Capital reserve	6,475		6,475
(495)		Shares held by ESOP	(495)		(495)
(18,724)		Retained earnings	(18,402)		(17,655)
1,861		Total equity attributable to equity shareholders of the parent	2,183		2,930
24		Minority interest	24		-
1,885			2,207		2,930

  CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

for the six months ended 30 June 2009

Year ended 31 December 2008				Six months ended 30 June 2009		Six months ended 30 June 2008
£'000			Note	£'000		£'000
		Cash flows from operating activities
784		Cash generated from (used in) operations	2	544		(30)
(9)		Tax paid		(5)		(6)
(276)		Interest paid		(99)		(98)
499		Net cash generated from (used in) operating activities		440		(134)
		Cash flows from investing activities
17		Proceeds on disposal of property, plant and equipment		-		18
(165)		Purchases of property, plant and equipment		(49)		(19)
25		Deferred payment on investment in a subsidiary		(25)		-
(123)		Net cash used in investing activities		(74)		(1)
		Cash flows from financing activities
(265)		Repayments of bank loans		(142)		(129)
		Repayments of obligations under finance leases
(82)		and hire purchase arrangements		(41)		(42)
-		New loans		50		-
(347)		Net cash used in financing activities		(133)		(171)
29		Increase (decrease) in cash and cash equivalents		233		(306)
(2,326)		Cash and cash equivalents at beginning of period		(2,648)		(2,326)
(351)		Exchange (losses) gains on cash and cash equivalents		(924)		32
(2,648)		Cash and cash equivalents at end of period		(3,339)		(2,600)

NOTES (unaudited)

1.    Profit (loss) per share attributable to equity shareholders of the parent

Year  ended 31 December 2008		Six months ended 30 June 2009		Six months ended 30 June 2008
£'000		£'000		£'000
(380)	Profit (loss) on ordinary activities after taxation	324		(49)

    Weighted average number of ordinary share in issue

    (excluding the shares owned by the Pittards employee share ownership trust)

Shares		Shares		Shares
'000		'000		'000
222,294	Basic	222,294		222,294

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. There is no dilution in 2009 or 2008.

2.     Cash generated from (used in) operations

Year ended 31 December 2008				Six months ended 30 June 2009		Six months ended 30 June 2008
£'000				£'000		£'000
(367)		Net profit (loss) before taxation		324		(38)
		Adjustments for:
496		Depreciation		230		240
73		Amortisation		49		49
(791)		Foreign exchange loss (gain)		16		(51)
1,519		(Loss) gain on derivatives		(16)		88
254		Bank and other interest charges		97		140
(17)		Profit on sale of property, plant and equipment		-		(17)
(326)		Provision movement		-		(317)
841		Operating cashflows before movement in working capital		700		94
		Working capital:
1,245		(Increase) decrease in inventories		(715)		859
(1,042)		Increase (decrease) increase in trade and other receivables		356		(571)
(260)		Decrease (increase) in payables		203		(412)
784		Cash generated from (used in) operations		544		(30)

3.        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 240 of the Companies Act 1985 or Section 434 of the Companies Act 2006.  The directors approved and authorized this interim statement on 7 September 2009.  The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2008. Those accounts, upon which the auditor issued an unqualified opinion with an emphasis of matter paragraph regarding going concern, have been delivered to the Registrar of Companies.  The auditor's report did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

 

4.        Pittards plc is a public limited company incorporated in the United Kingdom under the Companies Acts 1985 and 2006. The Company is domiciled in the United Kingdom and is quoted on the Alternative Investment Market ('AIM').

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.

 

 

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. 

 

 

END

 

 

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