Interim Results

RNS Number : 5236A

Pittards PLC

26 September 2022

 

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Pittards plc

("Pittards", the "Group" or the "Company" )

Interim results for the six months ended 30 June 2022

 ("First Half" or "H1 2022")

Positive trading momentum maintained

Continued growth in revenue and profitability, stable order book

Interim Dividend declared

Pittards plc, the specialist producer of technically advanced leather and luxury leather goods for retailers, manufacturers and distributors, today announces its interim results for the six month ended 30 June 2022.

Commenting on the results, Chairman, Stephen Yapp, said:

"I am pleased to report a solid performance in the First Half with profitability and EBITDA consistent with the achievement of market expectations for the year as a whole. This has been achieved against the backdrop of a turbulent global trading environment including inflation, increasing energy costs and supply chain reliability challenges. The whole team has responded with vigour and flexibility, and I thank them for their efforts."

"The Directors are pleased to declare an interim dividend of 0.5p per share, which we plan to pay in January 2023."

Highlights: Financial

·   Group revenues up 7% to £10.37m (H1 2021: £9.66m)

·   Gross margin of 30% (H1 2021: 28%)

·   EBITDA of £0.83m positive (H1 2021: £0.75m) an 11% improvement

·   Profit before taxation up 31% to £0.34m (H1 2021: £0.26m)

·   Net debt of £11.18 (H1 2021: £10:04m)

·   Earnings per share (basic) up 63% to 2.54 pence (H1 2021: 1.55 pence)

·   Interim dividend declared of 0.5 pence per share (H1 2021: 0.5 pence per share)

Highlights: Operational

·   Continued strengthening of the management team

·   Sales order book continues to be steady

·   Acquisition of Hill and Friends adds another luxury brand to portfolio

·   A diversified portfolio of products and markets enabling future growth opportunities

·   Ethiopian business steadily recovering post COVID-19

Commenting on the outlook for the Full Year, Reg Hankey, Chief Executive said:

"The Group is continuing to make good progress implementing its strategy. The global inflationary climate and complexity of supply chains, together with the current energy crisis, is making the trading environment more challenging. The close management of cash remains a priority under these circumstances."

"We continue to see more opportunities than risk in the current climate and are cautiously optimistic looking forward.  Our investment in staff and the strengthening of our management form a solid foundation for sustained growth and the delivery of strategic opportunities. Whilst the global economic and geo-political environment remains challenging, I am proud of our staff's dedication and commitment which reflects our heritage of 200 years ."

For further information, please contact:

Pittards plc	www.pittards.com
Stephen Yapp, Chairman Reg Hankey, CEO Alan Burgess, Group Finance Director	[phone]
WH Ireland Limited	www.whirelandcb.com
Mike Coe, Sarah Mather	[phone]
Walbrook PR	[e-mail]
Paul Vann, Joe Walker	[phone]/ [phone]

Chief Executive Officer's report

Overview

We have delivered against our key objectives in H1 2022, with solid financial results and clear strategic progress made.

The Group performed well in the First Half, with sales revenue of £10.4m, an increase of 7% compared to H1 2021 and a 4% rise compared to H2 2021.  PBT at £0.34m also improved over H1 2021 (£0.26m) and (H2 2021: -£0.16m).

This performance has been delivered against a backdrop of macroeconomic trading conditions that are very complex, particularly the unreliability of supply of materials into our businesses, together with increasing costs, requiring us to adjust processes and plans continuously.

Our agile and responsive team approach is well adapted to adjust to these challenging conditions, and we are nurturing many new opportunities, building upon our strategy which is serving us well.

90% of our sales revenue was from export markets and 80% of this revenue was denominated in $USD.  The continued strengthening of the $USD will be beneficial to our business in the medium term, but as reported in our full year 2021 accounts we have a hedging policy in place which protects the downside of currency appreciations but also delays the benefits of sterling weakness.

The current inflationary climate is predominantly driven by energy and shipping costs effecting businesses globally and as such we have been able to hold or increase selling prices generally.  Some local inflation is directly related to the weakness of the pound which will have some affect upon us until the increased revenue from sales comes through post hedging.

Our inventory value has increased during the First Half as replacement costs of materials have been higher than older stock.  However, overall, our older stocks and the overall volume of stock has reduced.

Net debt has increased marginally but is mitigated by inventory, capital expenditure, and movement in receivables and trade payables.

Our businesses in Ethiopia remain fully open and our shoe and glove production continues to develop.  The effects of COVID19 have eased although local economic challenges have resulted in limited access to hard currency.  We have been able to adjust our business model in order to mitigate this.  Our investment in Ethiopia is helping to counter the global pressures on energy costs, as most of Ethiopia's power generation is from hydroelectric green power.

Our consumer product range in the UK continues to develop with growing third-party opportunities, as well as for our own brands. We have delivered further organic growth and announced the acquisition of Hill and Friends, a luxury consumer brand to add to our growing portfolio of brands. This will support us in our planned development.

Sustainability underpins everything we do and is embedded in all aspects of our decision making.

We have been able to continue recruiting, retaining, and developing our staff base in support of our strategic plan.

Our sales order book has remained strong across both our core and new market sectors.

Key performance indicators 2 022
					First half 2022 v Second half 2021				First half 2022 v  First half 2021
					2022 H1	2021 H2	Change		2022 H1	2021 H1	Change
					£m	£m			£m	£m
Revenue					10.37	9.96	0.41		10.37	9.66	0.71
Gross profit					3.09	2.76	0.33		3.09	2.69	0.40
Gross margin					30%	28%	2%		30%	28%	2%
Profit / (Loss) before tax					0.34	0.16	0.18		0.34	0.26	0.08
EBITDA					0.83	0.66	0.17		0.83	0.75	0.08
Net assets					12.58	13.80	(1.23)		12.58	13.56	(0.98)
Inventory					16.06	15.32	0.74		16.06	14.97	1.09
Net debt					11.18	10.69	(0.49)		11.18	10.04	(1.14)
Net debt adjusted for treasury shares held					10.58	10.29	0.29		10.58	9.54	(1.04)
Gearing
·     Group					89%	78%	(11%)		89%	74%	(15%)
·     UK					55%	59%	4%		55%	49%	(6%)
Staff numbers					1,095	1,108	(13)		1,095	1,125	(30)
Basic earnings per share (in pence)					2.54	2.12	0.42		2.54	1.55	0.99
Net Asset per share (in pence)					97.12	101.92	(4.80)		97.12	104.64	(7.52)

Dividend

The Directors are declaring an interim dividend of 0.5 pence pe ordinary share in the capital of the Company, to be paid on 12 January 2023 to shareholders on the register at the close of business on Friday 16 December 2022.  The shares will go ex-dividend on Thursday 15 December 2022.

Outlook 

The Group continues to make good progress with its strategy. The global inflationary climate and complexity of supply chains, together with the current energy crisis, is making the trading environment more challenging. The close management of cash remains a priority under these circumstances.

We continue to see more opportunities than risk in the current climate and are cautiously optimistic looking forward.  Our investment in staff and the strengthening of our management will form a solid foundation for sustained growth and the delivery of strategic opportunities. 

Group Finance Director's report

Overview

Pittards performed very well in the First Half, with like for like growth of 7% compared to H1 2021 and revenue increased by 4% compared with H2 2021, approaching pre-COVID-19 levels. The financial strength of the Group reflects the benefits of the actions we took during the pandemic and a positive customer reaction to the Group's products and strategy.

Our careful planning and agile supply chains have enabled us to mitigate some of the difficulties in global logistics, utilising the vertical integration within the Group.

Profitability

Profit before tax in the First Half was £0.34m, improving on the £0.16m achieved in H2 2021. This was due to increases in volume combined with tight cost control. Gross margin increased to 30% (H1 2021: 28%), with EBITDA increased to £0.83m (H1 2021: £0.75m) an improvement of 11%.

Financial support and banking facilities

We have not sought any additional lending throughout the First Half and banking facilities remained sufficient to support planned growth.

Cost control and productivity

Headcount has stabilised at 1,095 as of 30 June 2022 (H1 2021: 1,125).

Assets and currency

At the end of the First Half, net assets stood at £12.58m (H2 2021: £13.80m). The reduction is predominantly due to the fair value of our hedging strategy, as of 30 June 2022, as a result of the weakening pound. Net debt increased by £0.49m to £11.18m (H2 2021: £10.69m). Our forward currency hedging strategy continues to the end of FY 2023 on a reducing percentage cover basis.

Energy costs

Escalating energy costs remain a challenge although we have some hedging in place which will help to mitigate energy cost increases.

Working capital

Inventory levels increased to £16.06m (H2 2021: £15.32m).  Despite a value increase in inventory, we have seen an overall reduction in the total amount of inventory held.  Due to higher input costs, we estimate that inventory will continue to increase in value per sq ft.

Net working capital remains steady at £14.75m (H2 2021: £14.79m), although this is affected by the recognition, at the half year, of USD forward hedging contracts. As a result of the progressive weakness of sterling, the fair value loss on future contracts is H1 2022: negative £0.934m (H2 2021: negative £0.381m).  In the fulness of time the extra revenue generated from the conversion of $USD sales will offset this.

Gearing

Group gearing was 89% (H2 2021: 78%), with UK gearing within covenant levels at 55% (H2 2021: 59%).

Consolidated Income Statement													Six months ended				Six months ended			Year ended
for the six months ended 30 June 2022													30/06/2022				30/06/2021			31/12/2021
													Unaudited				Unaudited			Audited
							Note						£'000				£'000			£'000
Revenue													10,370				9,659			19,655
Cost of sales													(7,280)				(6,965)			(14,198)
Gross profit													3,090				2,694			5,457
Distribution costs													(910)				(804)			(1,631)
Currency gains / (losses)													(108)				195			266
Administrative expenses													(1,452)				(1,582)			(3,176)
Profit / (Loss) before operations and finance costs													620				503			916
Finance costs													(283)				(239)			(459)
Profit / (Loss) before taxation													337				264			457
Taxation									3				(9)				(63)			(182)
Profit / (Loss) after taxation													328				201			275
Earnings per share									2
Basic													2.54p				1.55p			2.12p
Diluted													2.54p				1.55p			2.12p
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2022
												Six months ended				Six months ended				Year ended
												30/06/2022				30/06/2021				31/12/2021
												Unaudited				Unaudited				Audited
												£'000				£'000				£'000
Profit / (Loss) for the period after taxation												328				201				275
Other comprehensive (expense)/income
Revaluation of land and buildings												-				185				453
Revaluation of land and buildings - unrealised exchange (loss)												135				(372)				(517)
												135				(187)				(64)
Unrealised exchange (loss) on translation of overseas subsidiaries												(26)				(254)				(551)
Fair value (losses) on foreign currency cash flow hedges												(934)				(84)				(381)
												(960)				(338)				(932)
Other comprehensive (loss)												(825)				(525)				(996)
Total comprehensive (loss) for the period												(497)				(324)				(721)

Consolidated balance sheet   as at 30 June 2021							Note				Six months ended 30/06/2022 Unaudited				Six months ended 30/06/2021 Unaudited			Year ended 31/12/2021     Audited
											£'000				£'000			£'000
Assets
Non-current assets
Property, plant, and equipment											9,792				9,796			9,700
Intangible assets											55				72			63
Deferred tax asset								4			100				100			100
Total non-current assets											9,947				9,968			9,863
Current assets
Inventories											16,060				14,966			15,316
Trade and other receivables											3,379				3,111			3,304
Cash and cash equivalents											71				161			51
Total current assets											19,510				18,238			18,671
Total assets											29,457				28,206			28,534
Liabilities
Current liabilities
Trade and other payables											4,688				3,690			3,830
Interest bearing loans, borrowings, and overdrafts											8,573				7,489			7,783
Total current liabilities											13,261				11,179			11,613
Non-current liabilities
Deferred tax liability								4			939				758			900
Interest bearing loans, borrowings, and overdrafts											2,682				2,714			2,955
Total non-current liabilities											3,621				3,472			3,855
Total liabilities											16,882				14,651			15,468
Net assets											12,575				13,555			13,066
Equity
Share capital											6,944				6,944			6,944
Share premium											2,984				2,984			2,984
Capital reserve											6,475				6,475			6,475
Own Share Reserve											(379)				(355)			(375)
Share based payment reserve											62				59			56
Cash flow hedge reserve											(1,022)				209			(88)
Translation reserve											(5,499)				(5,176)			(5,473)
Revaluation reserve											1,170				912			1,035
Retained earnings											1,840				1,503			1,508
Total equity											12,575				13,555			13,066

Consolidated Statement of Changes in Equity
for the six months ended 30 June 2022
		Share capital	Share premium	Capital Reserve	Own share reserve	Share based payment         reserve	Cash flow hedge reserve	Translation reserve	Revaluation reserve	Retained Earnings	Total Equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 January 2021		6,944	2,984	6,475	(850)	47	293	(4,922)	1,099	1,788	13,858
Comprehensive income/(loss) for the year:
Profit for the period after taxation		-	-	-	-	-	-	-	-	201	201
Other comprehensive income/(loss):
Unrealised exchange gain/(loss) on translation of foreign subsidiaries		-	-	-	-	-	-	(254)	(372)	-	(626)
Fair value losses on foreign currency cash flow hedges		-	-	-	-	-	(84)	-	-	-	(84)
Total other comprehensive income/(loss)		-	-	-	-	-	(84)	(254)	(372)	201	(324)
Total comprehensive income/(loss) for the year		-	-	-	-	-	(84)	(254)	(372)	201	(324)
ESOP scheme closed		-	-	-	495	-	-	-	-	(486)	9
As at 30 June 2021		6,944	2,984	6,475	(355)	59	209	(5,176)	727	1,503	13,358
Comprehensive income/(loss) for the year:
Other comprehensive income/(loss):
Gain on the revaluation of buildings		-	-	-	-	-	-	-	453	74	527
Unrealised exchange gain/(loss) on translation of foreign subsidiaries		-	-	-	-	-	-	(297)	(145)	-	(442)
Fair value losses on foreign currency cash flow hedges		-	-	-	-	-	(297)	-	-	-	(297)
Total other comprehensive income/(loss)		-	-	-	-	-	(297)	(297)	308	74	(212)
Total comprehensive (loss) for the year		-	-	-	-	-	(297)	(297)	308	74	(212)
Purchase of own shares		-	-	-	(20)	-	-	-	-	(4)	(24)
Share-based payment expense		-	-	-	-	9	-	-	-	-	9
Dividends paid		-	-	-	-	-	-	-	-	(65)	(65)
As at 31 December 2021		6,944	2,984	6,475	(375)	56	(88)	(5,473)	1,035	1,508	13,066
Comprehensive income/(loss) for the year:
Profit for the period after taxation		-	-	-	-	-	-	-	-	328	328
Other comprehensive income/(loss):
Gain on the revaluation of buildings		-	-	-	-	-	-	-	-	-	-
Unrealised exchange gain/(loss) on translation of foreign subsidiaries		-	-	-	-	-	-	(26)	135	-	109
Fair value losses on foreign currency cash flow hedges		-	-	-	-	-	(934)	-	-	-	(934)
Total other comprehensive (loss)		-	-	-	-	-	(934)	(26)	135	-	(825)
Total comprehensive (loss) for the period		-	-	-	-	-	(934)	(26)	135	328	(497)
Share-based payment expense		-	-	-	-	6	-	-	-	-	6
As at 30 June 2022		6,944	2,984	6,475	(375)	62	(1,022)	(5,499)	1,170	1,836	12,575

Statement of cashflows for the period ended 30 June 2022											Six months ended				Six months ended			Year ended
											30/06/2022				30/06/2021			31/12/2021
											Unaudited				Unaudited			Audited
							Note				£'000				£'000			£'000
Cash flows from operating activities
Cash generated from / (used in) operations							5				(204)				978			181
Tax (paid)											-				(83)			(83)
Interest (paid)											(283)				(256)			(447)
Net cash generated from / (used in) operating activities												(487)		639					(349)
Cash flows from investing activities
Purchases of property, plant, and equipment												(128)		(828)					(372)
Purchases of intangible assets												(1)		(12)					(11)
Proceeds from sale of plant												-		44					42
Net cash (used) in investing activities												(129)		(796)					(341)
Cash flows from financing activities
Proceeds from borrowings												-		-					-
Repayment of bank loans												(200)		(481)					(733)
Repayment of obligations under finance leases												-		(21)					(21)
Payment of equity dividends												-		-					(65)
Purchase of own ordinary shares												-		-					(20)
Net cash (used) / generated in financing activities												(200)		(502)					(839)
(Decrease) / Increase in cash and cash equivalents												(816)		(659)					(1,529)
Cash and cash equivalents at beginning of year												(6,060)		(5,077)					(5,077)
Exchange gains/(losses) on cash and cash equivalents												(41)		41					238
Cash and cash equivalents at end of year												(6,917)		(5,695)					(6,368)

Note 1 - Basis of preparation

The financial information set out in the interim statements for the six months ended 30 June 2022 and the comparative figures are unaudited and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. 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 International Financial Reporting Standards (IFRS).

The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2021. 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.

These financial statements have been prepared using the same accounting policies and methods of computation as the most recent statutory accounts for the financial year ended 31 December 2021.

These financial statements are presented in sterling, being the functional currency of the primary economic environment in which the Group operates.

Pittards plc is a public limited company incorporated and domiciled under the Companies Act 2006 in England. It is quoted on the Alternative Investment Market ("AIM").

The directors approved and authorised the interim statement for issue on 23 September 2022.

Note 2 -  Earnings per share

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 held in treasury.

a) Basic earnings per share

Six months ended

Six months ended

Year ended

30/06/22

30/06/21

31/12/21

Earnings per share

Unaudited

Unaudited

Audited

Basic

2.54p

1.55p

2.12p

Weighted average number of ordinary shares in issue (000)

12,914

12,954

12,946

b) Diluted earnings per share

Six months ended

Six months ended

Year ended

30/06/22

30/06/21

31/12/21

Earnings per share

Unaudited

Unaudited

Audited

Diluted

2.54p

1.55p

2.12p

Weighted average number of ordinary shares in issue (000)

12,914

12,954

12,946

Note 3 - Taxation						Six months ended		Six months ended		Year ended
						30/06/22		30/06/21		31/12/21
						Unaudited		Unaudited		Audited
Analysis of the charge in the period
The charge based on the profit for the period comprises:
Foreign tax on profit for the period						9		63		10
Foreign tax related to prior years						-		-		148
Total current tax						9		63		158
Deferred tax
Origination and reversal of temporary differences						-		-		24
Total deferred tax						-		-		24
Income tax charge						9		63		182
Note 4 Deferred taxation						Six months ended		Six months ended		Year ended
						30/06/22		30/06/21		31/12/21
						Unaudited		Unaudited		Audited
Deferred tax asset						100		100		100
Deferred tax (liabilities)						(939)		(758)		(900)
Deferred tax (liabilities) - net						(839)		(658)		(800)

Note 5 - Cash generated / (used) in operations						Six months ended		Six months ended			Year ended
						30/06/2022		30/06/2021			31/12/2021
						Unaudited		Unaudited			Audited
						£'000		£'000			£'000
Profit / (Loss) before taxation						337		264			457
Adjustments for:
Depreciation of property, plant, and equipment						197		234		475
Amortisation of intangibles						9		15		23
Bank and other interest charges						189		256		447
Share based payment expense						6		12		9
Other non-cash items in Income Statement						(159)		(135)		(556)
Operating cash flows before movement in working capital						579		646		855
Movements in working capital (excluding exchange differences on consolidation):
(Increase) / Decrease in inventories						(597)		(91)		(1,100)
(Increase) / Reduction in receivables						(75)		(378)		(507)
Increase / (Reduction) in payables						(111)		801		933
Cash generated / (used) in operations						(204)		978		181

 

END

 

 

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