23 Mar 2015 07:00
PITTARDS plc
(AIM:PTD)
Preliminary announcement of results for the year ended 31 December 2014
Year ended 31 December 2014 | Year ended 31 December 2013 | |||||
£m | £m | |||||
Revenue | 34.7 | 35.8 | ||||
Profit on operations before finance costs | 2.0 | 2.0 | ||||
Finance costs | (0.4) | (0.3) | ||||
Profit before taxation | 1.6 | 1.7 | ||||
Net assets | 18.3 | 16.9 | ||||
Financial highlights
- Profit from trading activities before finance costs unchanged at £2.0m
- EBITDA up to £2.39m (2013: £2.36m)
- Profit before tax down slightly at £1.6m (2013: £1.7m)
- Exceptional Ethiopian tax charge of £0.19m settled in year
- Cash generated from operations of £0.7m (2013: used £0.7m)
- Net assets increased to £18.3m (2013: £16.9m)
- Gearing level at 42%
- Percentage of revenue outside the UK 91% (2013: 91%)
Stephen Boyd, Chairman of Pittards, commented:
The second half of 2014 was significantly more profitable than the first half leading to a full year result in line with expectations.
- ends -
For further information, please contact:
Stephen Boyd, Chairman Pittards plc Tel: 01935 474321
Reg Hankey, CEO Pittards plc Tel: 01935 474321
Jill Williams, Finance Director Pittards plc Tel: 01935 474321
John Wakefield WH Ireland Tel: 0117 945 3470
Preliminary announcement of results
For year ended 31 December 2014
Chairman's statement
The second half of 2014 was significantly more profitable than the first half leading to a full year result in line with expectations. Sterling strength, principally against the dollar in which a significant proportion of our sales are invoiced, was a major issue for the business until July when it peaked and then rapidly moved back to more acceptable levels.
Turnover for the year was £34.7m compared to £35.8m in 2013 and this shortfall was entirely attributable to the currency situation in the first half. Sales of industrial and dress gloves made by our Pittards Products Manufacturing (PPM) subsidiary in Ethiopia continued to grow during the year and our consumer product division in UK gained more traction. Sales of dress glove leather were adversely affected by another mild start to the winter in most regions as this sector is particularly weather sensitive. Military procurement was very patchy with few draw downs from contracts already in place for military leathers.
Gross margins of 20% were consistent year on year as whilst turnover was reduced by the strong pound in the first half we also benefitted when buying raw materials in dollars and euros. Cost reduction exercises implemented in the first half meant that distribution costs were £0.278m lower than in 2013 and administrative expenses remained virtually the same.
Profit from operations of £1.971m was therefore very similar to the prior year (£2.004m).As the Ethiopian consumer division grows we have taken out more funding for working capital in Ethiopia where interest rates are considerably higher. This has led to an increase in finance costs from £0.350m in 2013 to £0.427m in the current year therefore profit before tax was £1.589m (2013: £1.712m).
During the year the Ethiopian Revenue and Customs carried out their first four yearly taxation audit since the Ethiopia Tannery Share Company (ETSC) was acquired by Pittards in late 2009. This resulted in an additional corporation tax charge of £0.193m during the year so the total taxation charge for 2014 was £0.479m compared to £0.265m in 2013. It is expected that the taxation charge will revert to normal levels in 2015.
The Group's net assets rose from £16.9m to £18.3m in the year reflecting its continuing profitability but the slowdown in certain key sectors noted above meant that inventory rose further in the period. Gearing remained at 42%.
The Directors do not recommend payment of a dividend.
We continue to reinforce our global presence as both a premium leather brand and increasingly a premium leather goods brand by exhibiting at trade fairs around the world. This enables us to regularly meet with key customers such as FootJoy to whom we sell leathers for golf gloves, golf shoes and now golf accessories, Spanish designer casual shoe brand Camper and outdoor footwear specialists Berghaus (which incorporates Brasher Boot).
On the consumer side of the business we have forged a strong relationship with Wells Lamont (part of the Berkshire Hathaway group) in the industrial gloves sector and our Pittards consumer brand is gaining increasing recognition. We have ongoing third party manufacturing contracts with prestigious British brands including Jaguar and Jack Wills.
Our workforce now numbers c 1700 across both the UK and Ethiopia and we have been recognised for our UK apprenticeship scheme. My thanks go to each and every one of our employees for their continued efforts this year.
In late 2014 Peter Gyllenhammar, who injected £2m of new money into the restructured business in March 2006, sold the remainder of his holding. Our thanks go to Peter for his support through some difficult times.
Whilst there are global uncertainties in various areas of the world we have started 2015 with more favourable currency rates and stable raw material prices. Trading is currently in line with our expectations and we have identified a number of opportunities for expansion which we look forward to bringing to fruition.
Stephen Boyd
Chairman
20 March 2015
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2014
Note |
2014
£'000 |
2013
£'000 | ||
Continuing operations: | ||||
Revenue | 34,729 | 35,813 | ||
Cost of sales | (27,696) | (28,487) | ||
Gross profit | 7,033 | 7,326 | ||
Distribution costs | (2,001) | (2,279) | ||
Administrative expenses | (3,061) | (3,043) | ||
Profit from operations before finance costs | 1,971 | 2,004 | ||
Finance costs | (427) | (350) | ||
Finance income | 45 | 58 | ||
Profit before taxation | 1,589 | 1,712 | ||
Taxation | 5 | (479) | (265) | |
Profit for the year after taxation | 1,110 | 1,447 | ||
Profit attributable to: | ||||
Owners of the parent | 1,115 | 1,449 | ||
Non controlling interest | (5) | (2) | ||
1,110 | 1,447 | |||
Earnings per share attributable to the owners of the parent | ||||
Basic | 3 | 12.06p | 15.68p | |
Diluted | 3 | 12.06p | 15.68p | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
|
2014 £'000 |
2013 £'000 | ||
Profit for the year after taxation
Other comprehensive income (expense) | 1,110 | 1,447 | ||
Items that will not be reclassified to profit or loss | ||||
Revaluation of land and buildings | 245 | 139 | ||
245 | 139 | |||
Items that may be subsequently reclassified to profit or loss | ||||
Unrealised exchange gain (loss) on translation of overseas subsidiaries | 41 | (469) | ||
41 | (469) | |||
Other comprehensive income (expenses) | 286 | (330) | ||
Total comprehensive income for the year |
1,396 |
1,117 | ||
Total comprehensive income (expenses) attributable to: | ||||
Owners of the parent | 1,398 | 1,131 | ||
Non controlling interest | (2) | (14) | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share capital | Share premium account | Capital redemption reserve | Share options reserve |
Capital reserve | (Accumulated losses) Retained earnings |
Translation reserve | Shares held by ESOP | Revaluation reserve | Total equity 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 | 48 | 6,475 | (7,413) | (2,417) | (495) | 1,370 | 15,607 | 188 | 15,795 |
Comprehensive income for the year: | ||||||||||||
Profit (loss) for the year after taxation | - | - | - | - | - | 1,449 | - | - | - | 1,449 | (2) | 1,447 |
Other comprehensive income: | ||||||||||||
Gain (loss) on the revaluation of buildings | - | - | - | - | - | - | - | - | 148 | 148 | (9) | 139 |
Unrealised exchange loss on translation of foreign subsidiaries | - | - | - | - | - | - | (374) | - | (92) | (466) | (3) | (469) |
Total other comprehensive (expense) income | - | - | - | - | - | - | (374) | - | 56 | (318) | (12) | (330) |
Total comprehensive income (expense) for the year | - | - | - | - | - | 1,449 | (374) | - | 56 | 1,131 | (14) | 1,117 |
Transactions with owners | ||||||||||||
Reserves transfer | - | (5,250) | (8,158) | (48) | - | 13,456 | - | - | - | - | - | - |
Total transactions with owners | - | (5,250) | (8,158) | (48) | - | 13,456 | - | - | - | - | - | - |
At 1 January 2014 | 4,631 | - | - | - | 6,475 | 7,492 | (2,791) | (495) | 1,426 | 16,738 | 174 | 16,912 |
Comprehensive income for the year: | ||||||||||||
Profit (loss) for the year after taxation | - | - | - | - | - | 1,115 | - | - | - | 1,115 | (5) | 1,110 |
Other comprehensive income: | ||||||||||||
Gain on the revaluation of buildings | - | - | - | - | - | - | - | - | 242 | 242 | 3 | 245 |
Unrealised exchange gain on translation of foreign subsidiaries | - | - | - | - | - | - | 41 | - | - | 41 | - | 41 |
Total other comprehensive income | - | - | - | - | - | - | 41 | - | 242 | 283 | 3 | 286 |
Total comprehensive income (expense) for the year | - | - | - | - | - | 1,115 | 41 | - | 242 | 1,398 | (2) | 1,396 |
At 31 December 2014 | 4,631 | - | - | - | 6,475 | 8,607 | (2,750) | (495) | 1,668 | 18,136 | 172 | 18,308 |
BALANCE SHEET
As at 31 December 2014
|
2014 |
2013 | |
Note | £'000 | £'000 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 6,560 | 6,095 | |
Intangible assets | 187 | 164 | |
Deferred income tax asset | 5 | 1,636 | 1,194 |
Available for sale financial instruments | 2 | 2 | |
Total non-current assets | 8,385 | 7,455 | |
Current assets | |||
Inventories | 17,796 | 15,441 | |
Trade and other receivables | 4,896 | 5,312 | |
Cash and cash equivalents | 529 | 522 | |
Current income tax recoverable | - | 84 | |
Deferred income tax asset | 5 | 164 | 606 |
Total current assets | 23,385 | 21,965 | |
Total assets | 31,770 | 29,420 | |
LIABILITIES | |||
Current liabilities | |||
Deferred income tax liability | (64) | (27) | |
Trade and other payables | (5,097) | (4,868) | |
Current income tax liability | (171) | - | |
Interest bearing loans, borrowings and overdrafts | (6,877) | (6,196) | |
Total current liabilities | (12,209) | (11,091) | |
Non-current liabilities | |||
Interest bearing loans, borrowings and overdrafts | (1,253) | (1,417) | |
Total non-current liabilities | (1,253) | (1,417) | |
Total liabilities | (13,462) | (12,508) | |
Net assets | 18,308 | 16,912 | |
EQUITY | |||
Share capital | 4,631 | 4,631 | |
Capital reserve | 6,475 | 6,475 | |
Shares held by ESOP | (495) | (495) | |
Retained earnings | 8,607 | 7,492 | |
Translation reserve | (2,750) | (2,791) | |
Revaluation reserve | 1,668 | 1,426 | |
Total equity attributable to owners of the parent | 18,136 | 16,738 | |
Non-controlling interest | 172 | 174 | |
TOTAL EQUITY | 18,308 | 16,912 | |
STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
| |||
2014 | 2013 | ||
Note | £'000 | £'000 | |
Cash flows from operating activities | |||
Cash generated from (used in) operations | 4 | 744 | (685) |
Tax paid | (151) | (63) | |
Interest paid | (451) | (334) | |
Net cash generated from (used in) operating activities | 142 | (1,082) | |
Cash flows from investing activities | |||
Purchases of property, plant and equipment | (607) | (358) | |
Purchases of intangible assets | (35) | (57) | |
Net cash used in investing activities | (642) | (415) | |
Cash flows from financing activities | |||
Proceeds from borrowings | 1,063 | 1,265 | |
Repayment of bank loans | (680) | (1,029) | |
Repayment of obligations under finance leases and hire purchase obligations | (45) | (38) | |
Net cash generated from financing activities | 338 | 198 | |
Decrease in cash and cash equivalents | (162) | (1,299) | |
Cash and cash equivalents at beginning of the year | (4,388) | (3,105) | |
Exchange gains on cash and cash equivalents | (1) | 16 | |
Cash and cash equivalents at end of the year | (4,551) | (4,388) | |
Notes
1. The figures for the years ended 31 December 2014 and 2013 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The figures for the year ended 31 December 2014 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. A full Report and Accounts for the year ended 31 December 2013, on which the auditor has issued an unqualified audit report has been delivered to the Registrar of Companies. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts.
This preliminary announcement was approved by the board of directors and authorised for issue on 20 March 2015.
2. Basis of preparation
The consolidated financial statements have 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 consolidated financial statements have been prepared in accordance with the Companies Act 2006, applicable to companies reporting under IFRS.
The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2014 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').
3. Earnings per ordinary share
2014 | Restated 2013 | |
£'000 | £'000 | |
Analysis of the profit in the year | ||
Profit for the year attributable to owners of the parent | 1,115 | 1,449 |
Weighted average number of ordinary shares in issue (excluding the shares owned by the Pittards Employee Share Ownership Trust) | '000's | '000's |
Basic | 9,243 | 9,243 |
Diluted | 9,243 | 9,243 |
Basic earnings per ordinary 50p share | 12.06p | 15.68p |
Diluted earnings per ordinary 50p share | 12.06p | 15.68p |
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.
4. Cash generated from (used in) generated from operations
2014 | 2013 | |
£'000 | £'000 | |
Profit before taxation | 1,589 | 1,712 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 407 | 355 |
Amortisation | 12 | 5 |
Bank and other interest charges | 451 | 334 |
Other non-cash items in Income Statement | (31) | (44) |
Operating cash flows before movement in working capital | 2,428 | 2,362 |
Movements in working capital (excluding exchange differences on consolidation): | ||
Increase in inventories | (2,328) | (1,541) |
Decrease (increase) in receivables | 437 | (963) |
Increase (decrease) in payables | 207 | (543) |
Cash generated from (used in) operations | 744 | (685) |
Notes - continued
5. Taxation
The Group has recognised a deferred tax asset of £1.800m (2013: £1.800m) in respect of losses out of a total potential deferred tax asset of £1.990m (2013: £2.271m). The element of the deferred tax asset not yet recognised would be available to be utilised against future UK taxable profits.
There was a tax charge of £0.479m (2013: £0.265m) representing corporation tax payable in Ethiopia and withholding tax on payments of royalties from Ethiopia. This included an amount of £0.193m payable in respect of prior years following a four year audit.
6. Copies of the 2014 Annual Report and Accounts will be posted to shareholders in April and will be available on the Company's website at www.pittardsleather.com. Further copies may be obtained by contacting the Company Secretary at Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA. The annual general meeting is to be held at the registered office on 12 May 2015.