PTD.L Regulatory News (PTD)

13 Mar 2008 07:00

Pittards PLC13 March 2008 Pittards plc Pittards plc produces technically advanced leather for many of the world'sleading brands of gloves, shoes, luxury leathergoods and sports equipment. 12 March 2008 Results for the year ended 31 December 2007 Summary Year ended Year ended 31 December 2007 31 December 2006 (restated) £m £mRevenue 28.9 39.4Percentage export 90% 90%Operating loss before exceptional items (1.9) (1.4)Profit on sale of property 0.4 0.8Fundamental reorganisation (0.3) 0.2Write back of deficit on pension scheme - 26.9Operating (loss) profit (1.8) 26.5Finance costs and gains on derivatives (0.4) 0.9(Loss) profit on ordinary activities before tax (2.2) 27.4Net assets 2.8 5.0 Stephen Boyd, Chairman of Pittards, commented: "2007 has turned out to be a year of two very different halves." - ends - For further information, please contact: Reg Hankey, Chief Executive Pittards plc Tel: 01935 474321Jill Williams, Finance Director Pittards plc Tel: 01935 474321John Wakefield Blue Oar Securities Plc Tel:0117 933 0020 Preliminary announcement of results for the year ended 31 December 2007 Chairman's statement As noted in my interim statement in 2007, this is the first full year for whichwe have had to prepare our financial statements in accordance with InternationalFinancial Reporting Standards (IFRS). This is now compulsory for AIM listedcompanies but I will, as at the interim stage, comment on a UK GAAP basis toenable an effective year on year comparison to be made. 2007 has turned out to be a year of two very different halves. In the firsthalf we reported the successful integration of the Leeds business into theYeovil site and a small operating profit of £0.058m on a UK GAAP basis. In thesecond half we sustained a loss of £1.234m, due mainly to the weakness of the USDollar (which was in line with my concerns expressed at the 2007 AGM), resultingin an operating loss for 2007 of £1.176m. After bank interest of £0.466m (2006- £0.866m) the loss before taxation was £1.642m (2006 - £1.324m before anexceptional gain of £26.9m on the resolution of the pension deficit and otherexceptional items). Under IFRS accounting rules the operating loss of £1.176m translates into a lossof £1.783m for the year because under IAS 39 gains on derivative financialinstruments used to hedge 2007 foreign currency expenses (mainly dollar related)have been accounted for in the restated 2006 figures. Revenue for the year was £29.6m (IFRS £28.9m), a reduction of £10.6m from 2006's£40.2m, due in the main to the decision to close our Leeds factory in 2006,transferring some of the bovine production to Yeovil. The revenue derived fromselling away wet blue (part processed) hides from the tanning business was lostas we now only buy hides at the wet blue stage to fit our production, thusimproving cashflow in the business. Of this turnover 90% is derived from salesto customers overseas (2006 - 90%). Glove leather sales reduced by 10% compared to 2006, most of the shortfalloccurring in the first half due to the effect of the mild winter on sales ofdress gloves. Revenue was adversely impacted by the weaker dollar, particularlyin the second half. Sports glove sales were strong across all sectors includinggolf. Business in the military gloves sector remains steady. Sales of bovine leather for the shoe and leathergoods markets manufactured inYeovil represented 29% of turnover with sports footwear particularly strong andexceeding expectations. Saddlery sales have picked up steadily as productionfrom Yeovil has become established and quality expectations have been met. Weare now working on a new range of leathergoods leathers to be introduced at theHong Kong leather fair. In addition, bovine leather production at our Taiwanesepartner, Teh Chang, totalled just under 11/2m square feet for 2007, in line withexpectations. The relationship has settled down well and we look forward toprogressing this in 2008. In Ethiopia, Ethiopia Tannery Share Company (ETSC) is now producing significantquantities of finished leathers following the installation of new equipment anda training programme run by staff from Pittards Yeovil. The EthiopianGovernment has announced that increasingly prohibitive tariffs on the exportfrom Ethiopia of part processed hides and skins will shortly be introduced. Asa result of the development of our crust and finished leather capabilitieswithin Ethiopia this should represent a further opportunity for us. Newleathers including sheepskins for shoe uppers and linings and products utilisinglocal hides for gloves and linings have been developed. More products arescheduled to be transferred from Yeovil over the next few months. This transferof products is in line with our strategy to move production offshore where thecosts of manufacture are lower and in a currency which matches our predominantlydollar revenue. Our ongoing strategy to reduce our UK cost base in response to global conditionshas resulted in a restructuring within the Yeovil workforce. Agreement wasreached in December 2007 that up to 50 employees would leave the Company byvirtue of redundancy during the first quarter of 2008 and this programme is nowwell underway. Wherever possible we have accommodated volunteers to reduce theimpact on the workforce. The expected costs of the redundancy exercise havebeen provided for in the 2007 result. Net assets at 31 December 2007 were £2.884m (£2.808m under IFRS) compared to£4.486m in 2006 (IFRS £4.973m). This is principally due to the sale andleaseback of the Yeovil factory which was completed in July 2007. The factorywas sold for £3.1m which realised a net profit of £0.428m and the proceeds wereapplied to repay the loan plus accrued interest due to the trustees of thePittards pension schemes as part of the agreement reached with the PensionProtection Fund in 2006. The lease is for a term of 10 years at an annual rentof £254,000 and the initial rent free period of six months was beneficial forcashflow during 2007. Net borrowings at the year end were £3.5m, an improvement on £5.0m in 2006 whichincluded the Trustees' loan. The losses sustained in the second half due to theeffect of the weak dollar, and the continued phased settlement of closure costsfrom the Leeds operation have absorbed cash within the operation. However theCompany's bankers are supportive of the Company's strategy and have put in placean increased facility. As we announced last year, Lindsey Blackford resigned from the board on 1 June2007 and was replaced by Jill Williams as Finance Director on that date.Stephen Boyd changed from Executive to Non-Executive Chairman on 7 December 2007and Lars Fex resigned as a non-executive director. We are grateful to bothLindsey and Lars for their contributions to the board during their periods ofoffice. The loyalty and commitment of our employees is much appreciated by our board,particularly in the light of the significant strategic change arising from therelocation of bovine production from Leeds and the off-shoring programme. We remain committed to seeking new income streams to improve businessprofitability. We have progressed a collaborative alliance with Yarwood LeatherLtd where they use their marketing skills and connections within the aviationand other seating markets to introduce new performance leathers technicallydeveloped and supplied by Pittards. These markets take time to develop due tothe vigorous testing regimes but we have recently received our first sampleorders. I am also pleased to advise that on 30 January 2008 we signed a jointventure with Mr Teshome Kebede to form Pittards Global Sourcing Private LimitedCompany in Ethiopia, which will produce and source leather garments and otherleathergoods, utilising our extensive experience in the global leather market.We have also begun to operate at the retail level via a factory shop at theCompany's Yeovil premises where we believe we can further leverage the Pittardsbrand for high quality leather products. We continue to explore otherrelationships within the leather industry with potential partners. In the light of the continued uncertainty about the US dollar and the globaleconomic climate, we inevitably remain cautious in the short term but we arecommitted to the further development of our strategy to change the shape of thebusiness to make it more robust and enable a return to profitability. SD Boyd 12 March 2008 CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2007 2007 2006 (Restated) £'000 £'000Revenue 28,853 39,444Cost of sales (26,439) (34,866) Gross profit 2,414 4,578Distribution costs (2,108) (2,610)Administrative expenses (2,753) (3,523)Gain (loss) on foreign currency translation 160 (212)Other operating income 376 369 Operating loss before exceptional items (1,911) (1,398)Exceptional items- Profit on sale of property 428 770- (Provision) release of provision for fundamental reorganisation (300) 250- Write back of deficit on pension scheme - 26,913 Operating (loss) profit (1,783) 26,535Gain on derivatives classified as fair value through income statement 64 1,801Finance costs (466) (866) (Loss) profit before taxation (2,185) 27,470Taxation - (13) (Loss) profit for the year (2,185) 27,457 Distributable to:Equity shareholders - - (Loss) earnings per share- basic and diluted (1.0p) 18.9p There were no discontinued operations in 2007 or 2006. Accordingly the results relate to continuingoperations.(a) The results for 2006 have been restated on an IFRS basis. CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2007 2007 2006 (Restated) £'000 £'000 Total equity at beginning of year (as previously stated) 4,486 (24,530)Impact of transition to IFRS 487 (374) Total equity at beginning of year (restated) 4,973 (24,904)(Loss) profit for the year (2,185) 27,457Net proceeds of share issue - 2,420Issue of warrants 20 - Total equity at end of year attributable to equity shareholders of the 2,808 4,973parent CONSOLIDATED BALANCE SHEETas at 31 December 2007 2007 2006 (Restated) £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 2,481 5,744Intangible assets 367 491Total non-current assets 2,848 6,235 Current assetsInventories 5,654 6,086Trade & other receivables 2,909 3,509Derivative financial instruments - 438Cash & cash equivalents 13 21Total current assets 8,576 10,054Total assets 11,424 16,289LIABILITIESCurrent liabilitiesTrade & other payables (4,758) (5,808)Interest bearing loans & borrowings (3,187) (1,984)Derivative financial instruments (51) -Provisions (326) (520)Total current liabilities (8,322) (8,312)Non-current liabilitiesInterest bearing loans & borrowings (294) (3,004)Total non-current liabilities (294) (3,004)Total liabilities (8,616) (11,316)Net assets 2,808 4,973EQUITYCalled up share capital 2,233 2,233Share premium account 4,214 4,214Capital redemption reserve 8,158 8,158Revaluation reserve - 2,335Capital reserve 6,475 6,475Shares held by ESOP (495) (495)Retained earnings (17,777) (17,947)Total equity attributable to equity shareholders of the parent 2,808 4,973 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2007 2007 2006 (Restated) Note £'000 £'000Cash flows from operating activities Cash used in operations 4 (1,187) (2,271)Tax paid - (11)Interest paid (466) (629) Net cash used in operating activities (1,653) (2,911)Cash flows from investing activitiesProceeds on disposal of property, plant and equipment 3,170 6,830Purchases of property, plant and equipment (108) (550) Net cash generated from investing activities 3,062 6,280 Cash flows from financing activitiesRepayments of bank loans (251) (230)Repayments of loan from Trustees of pension scheme (2,875) (300)Repayments of obligations under finance leases and hire purchase arrangements (195) (135)Net proceeds on issue of shares - 2,420New other loans 200 300 Net cash (used in) generated from financing activities (3,121) 2,055 (Decrease) increase in cash and cash equivalents (1,712) 5,424 Cash and cash equivalents at beginning of year (705) (5,967)Effect of foreign exchange rates 91 (162) Cash and cash equivalents at end of year (2,326) (705) Notes 1. The figures for the year ended 31 December 2007 and 2006 do not constitute statutory accounts within the meaning of S.240 of the Companies Act 1985. The figures for the year ended 31 December 2007 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. The figures for the year ended 31 December 2006 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report, having been restated under International Financial Reporting Standards. No statement has been made by the auditor under Section 237(2) or (3) of the Companies Act 1985 in respect of either of these sets of accounts. This announcement was approved by the board of directors on 12 March 2008. 2. The consolidated financial statements have, for the first time, 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 information in this preliminary announcement has been extracted from the audited financial statements for the year ended 31 December 2007 and as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"). These financial statements are presented in sterling as that is the currency ofthe primary economic environment in which the Group operates. 3. (Loss) earnings per ordinary share 2007 2006 £'000 £'000Analysis of the (loss) earnings in the year(Loss) profit from continuing operations attributable to ordinary (2,185) 27,457shareholdersWeighted average number of ordinary shares in issue (excluding the shares '000's '000'sowned by the Pittards Employee Share Ownership Trust)Basic 222,294 145,484 In 2007 and 2006 the weighted average number of ordinary shares for thepurpose of calculating the diluted earnings per ordinary share isidentical to that used for basic earnings per ordinary share. Basic and diluted (loss) earnings per ordinary share from continuing (1.0p) 18.9poperations 4. Note to the statement of cashflows 2007 2006 £'000 £'000(Loss)/profit before taxation (2,185) 27,470Adjustments for:Depreciation and amortisation 776 741Profit on sale of fixed assets (excluding properties) (450) (1,050)(Gain) on derivatives (64) (1,801)Foreign exchange loss 462 969Bank and other interest charges 466 628Issue of warrants 20 -Net interest on pension scheme liabilities - 238Provision movement (194) (1,820)Defined benefit cost less contributions paid - (29,924)Working capital:- decrease in inventories 432 1,165- decrease in receivables 600 2,142- decrease in payables (1,050) (1,029)Cash used in operations (1,187) (2,271) 5. Copies of the 2007 Annual Report and Accounts will be posted toshareholders in April. Further copies may be obtained by contacting the CompanySecretary at Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA. Theannual general meeting is to be held at the registered office on 7 May 2008. This information is provided by RNS The company news service from the London Stock Exchange