PTD.L Regulatory News (PTD)

7 Mar 2007 08:04

Pittards PLC07 March 2007 Pittards plc Sherborne Road, Yeovil, Somerset, England, BA21 5BA Telephone: +44(0)1935 474321 Facsimile: +44(0)1935 431820 http://www.pittardsleather.com E-mail: pittardsenquire@pittards.com Pittards plc produces technically advanced leather for many of the world'sleading brands of gloves, shoes, luxury leathergoods and sports equipment. 7 March 2007 Unaudited results for the year ended 31 December 2006 Summary Year ended Year ended 31 December 2006 31 December 2005 £m £mTurnover 40.2 62.1 ______ ______Percentage export 90% 90%Operating loss before exceptional items (0.5) (2.5)Write back of deficit on Group pension schemes 26.9 -Profit on disposal of fixed assets 0.8 2.2Fundamental reorganisation 0.3 (7.9) ______ ______Profit (loss) on ordinary activities before interest 27.5 (8.2)Bank interest (0.6) (0.8)Interest on pension liabilities (0.3) (1.4) ______ ______Profit (loss) on ordinary activities before tax 26.6 (10.4) ______ ______ Net assets before pension scheme liability 4.5 8.3Pension scheme liability - (32.9) ______ ______Net liabilities after pension scheme liability 4.5 (24.5) ______ ______ Stephen Boyd, Chairman of Pittards, commented: "2006 has been a year of exceptional events which has transformed the prospectsfor the business. - ends - For further information, please contact: Stephen Boyd, Chairman Pittards plc Tel: 01935 474321 Lindsey Blackford, Group Financial Director Pittards plc Tel: 1935 474321 Barrie Newton Corporate Synergy Plc Tel: 01225 424666 John Wakefield Corporate Synergy Plc Tel: 0117 933 0020 Preliminary announcement of results for the year ended 31 December 2006 Chairman's statement 2006 has been a year of exceptional events which has transformed the prospectsfor the business. During the year the operational structure of the business has been radicallyaltered with the closure of the Leeds site, the transfer of part of thatproduction capability to Yeovil, the establishment of a sub-contractorrelationship with Teh Chang providing off-shore manufacturing capability inTaiwan and the advancement of the management contract in Ethiopia. These are all steps in the process to change the strategic direction of theCompany from a UK leather manufacturer to a worldwide knowledge based brand withmajor influence over the key market supply chains. The financial position of the Group has also been improved by restructuring thebalance sheet with new capital raised and financial commitments reduced. Aspreviously reported, the Company entered into an agreement with the Board of thePension Protection Fund (PPF) and the Trustees of the pension schemes (Trustees)to resolve the deficit on the pension schemes, which at the end of 2005 was£32.9m on a FRS17 basis. This necessitated the Company going through the formalprocedure of a Company Voluntary Arrangement (CVA) and raising new capital. Fulldetails were set out in note 30 to the 2005 Annual Report and Accounts and thearrangements were approved by creditors and shareholders at meetings in Apriland May of 2006. At the beginning of the year the Group had net liabilities of £24.5m, includingnet debt of £7.4m. The agreement with the Trustees and the PPF, whilstcrystallising some obligations into a formal loan, eliminated the deficit on thepension scheme, and resulted in an exceptional profit of £26.9m in the year. Inaddition, the sale of the Leeds site in June raised £6.3m which was applied toreduce bank borrowings. As a result, at the end of the year the Group's balancesheet showed net assets of £4.5m and net debt of £5.0m. Cash and credit facilities remained tight throughout the year. The impact of theinclusion of the pension deficit in the 2005 Annual Accounts, the CVA andrelated uncertainties that followed through the second quarter of 2006 is stillbeing felt in the Group's credit rating. Operating profit has been depressed bythe need to focus on cash flow at the expense of margin throughout the year. The operating loss for the year from trading activities was £0.5m, of which£0.4m was reported for the six months to 30 June in the interim accounts. Thiscompares to a loss of £2.5m for 2005 and £4.0m for 2004. After taking account ofthe exceptional gains of £26.9m on the resolution of the pension deficit, £0.8mon the sale of the Leeds site and £0.2m on the release of excess provisions forthe reorganisation of the UK activities, the profit on ordinary activitiesbefore interest was £27.5m (2005 - loss of £8.2m). After bank interest of £0.6m(2005 - £0.8m) and net interest on pension scheme liabilities to date of closureof £0.3m (2005 - £1.4m) the profit on ordinary activities before tax was £26.6m(2005 - loss of £10.4m). Group turnover for the year was £40.2m, a significant reduction on the previousyear's £62.1m. This was a result of the strategic decision to cease productionat our Leeds site. There were two main factors: historically the business hadpurchased raw hides directly from the abattoirs, part processed them all andsold away those surplus to finished leather requirements. With the move ofbovine production to Yeovil, material is now purchased part processed, ratherthan as raw hides, eliminating the need to sell off hides unsuitable for ourproduction. Secondly, transfers to either Yeovil or Teh Chang are focused oncore production of fashion leisurewear shoe leathers, sport shoes and specificleathergoods products. The volume of glove leather sold increased by 13%, but the average selling priceof this leather was 2% down on the previous year. The increased volume waslargely in the dress glove market, where new strategic business was acquired ataggressive prices. Prices in sports glove leather, the majority of our glovesales, held up well despite downward market pressure and the continuing weaknessof the US dollar. The profitability of the operations during the year was inevitably impacted bydisruption caused by the significant physical changes that were taking place,both at Leeds and Yeovil and the need to work within tight cash constraints withlimited credit. The Leeds site continued to make and sell finished leather through to October2006, although production levels decreased significantly in the latter months asactivities were wound down, machinery began to be moved and the clean-up processstarted. The final handover of the Leeds factory took place just beforeChristmas. In Yeovil there was a major reorganisation of the production areas toaccommodate the bovine machinery. With the exception of the central dye-shop,there were changes in virtually all sections. Production was maintainedthroughout this complex operation, but inevitably productivity was affectedwhile employees learned the necessary skills to deal with the new raw materialand processes involved. The numbers employed in Yeovil are not significantlydifferent from 2005, despite the incorporation of the bovine activity and theadditional volumes produced. Significant quantities of skins were imported from Ethiopia by air rather thansea to reduce stock. This provided the desired improvement in cash flow, but hada negative impact on the operating profitability due to the increased cost ofairfreight. Production through Teh Chang in Taiwan developed in the second half of the yearwith sales approaching 0.5m square feet. This activity services the leisurefootwear market previously supplied from Leeds and is well placed to developmuch further in 2007. Progress continues to be made in managing Ethiopia Tannery Share Company (ETSC)in Ethiopia. We have worked with the local team to reorganise the factorylayout, improving the workflow and making room for new machinery arriving aroundthe year end. New incentive schemes for the workforce have been introduced intocertain areas of the process, which are having the desired impact onproductivity. In the six months to December 2006, turnover was 8% up on thebudget agreed with the Ethiopian government who own the tannery, and theprofitability was also improved. The plan for 2007 is to bring the quality oftheir finished leather to world class standards, thus opening up a range ofopportunities for ETSC and Pittards. Much research and development effort during the year has been focused onre-engineering processes to transfer production to different environments and ondifferent raw materials. However, we have maintained our product developments,for which we are renowned throughout the leather industry. This comes from ourworld class marketing skills as well as product design.We have very considerablystrengthened the R&D team in Yeovil with staff recruited during the year. Thereare some exciting new leathers in prospect in both our traditional markets andelsewhere, which will be launched in 2007. Whilst 2006 has been a year of restructuring and consolidation, we continue tolook for opportunities to advance the strategy. Discussions continue with otherpotential partners in Ethiopia and other Asian and African countries, with aview to increasing the influence of Pittards throughout the leather industry. In the short to medium term the continuing weakness of the US dollar remains athreat and the credit issues are only easing slowly. 2006 saw a great deal of achievement in setting the Group on a fresh path. Thereis still much work to be done to realise the potential of the strategy, but thedevelopment of Pittards as a market leader of the leather industry remains oncourse. S.D.BOYD7 March 2007 PITTARDS plc CONSOLIDATED PROFIT AND LOSS ACCOUNT - UNAUDITEDfor the year ended 31 December 2006 2006 2005 Trading Exceptional Total (a) below Note £'000 £'000 £'000 £'000 Turnover 40,172 - 40,172 62,089Cost of sales (34,866) - (34,866) (55,211) ______________________________ _______ Gross profit 5,306 - 5,306 6,878Distribution costs (2,610) - (2,610) (4,221)Administrative expenses (3,523) 26,913 23,390 (5,324)Other operating income 369 - 369 133 ______________________________ _______ Operating (loss) profit (458) 26,913 26,455 (2,534) ____________________ Profit on disposal of fixed assets 770 2,218Fundamental reorganisation 250 (7,860) _______ _______ Profit (loss) on ordinary activitiesbefore interest 27,475 (8,176)Bank and other interest charges (628) (804)Net interest on pension schemeliabilities (238) (1,424) _______ _______ Profit (loss) on ordinary activitiesbefore taxation 26,609 (10,404)Taxation (13) (7) _______ _______ Profit (loss) on ordinary activitiesafter taxation 26,596 (10,411) ======= ======= Earnings (loss) per share - basicand diluted 2 18.3p (50.4p) _____________________________________________________________________________________________ There were no discontinued activities in 2006 or 2005. Accordingly the results relate tocontinuing activites (a) The exceptional profit relates to the write back (after costs) of the deficit on theGroup's pension schemes following agreement with its Trustees and the Pension ProtectionFund. Full details are set out in Note 30 to the 2005 annual report and accounts PITTARDS plc CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES- UNAUDITEDfor the year ended 31 December 2006 2006 2005 £'000 £'000 Profit (loss) for period 26,596 (10,411)Actuarial loss recognised on the pension scheme - (2,712) _______ _______ Total recognised profits (losses) 26,596 (13,123) ======= ======= PITTARDS plc CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS' FUNDS- UNAUDITEDfor the year ended 31 December 2006 2006 2005 £'000 £'000 At 1 January (24,530) (11,407)Total recognised profits (losses) 26,596 (13,123)Net proceeds on issue of shares 2,420 - _______ _______ At end of period 4,486 (24,530) ======= ======= PITTARDS plc CONSOLIDATED BALANCE SHEET- UNAUDITEDas at 31 December 2006 2006 2005 Note £'000 £'000Fixed assetsTangible fixed assets 6,235 12,482 ___________ __________ Current assetsStocks 6,086 7,251Debtors 3,509 5,378Cash at bank and in hand 21 27 ___________ __________ 9,616 12,656 ___________ __________ Creditors - amounts falling due within one yearBank loans and overdrafts (971) (6,221)Trade creditors (3,137) (3,663)Other creditors (3,733) (2,517) ___________ __________ (7,841) (12,401) ___________ __________ Net current assets 1,775 255 ___________ __________ Total assets less current liabilities 8,010 12,737 Creditors - amounts falling dueafter more than one year (3,004) (1,100) Provisions for liabilities and charges (520) (3,306) ___________ __________ Net assets before pension scheme liability 4,486 8,331 Pension scheme liability - (32,861) ___________ __________ Net assets (liabilities) after pension schemeliability 4,486 (24,530) =========== ==========Capital and reservesCalled up share capital 4 2,233 8,227Share premium account 4,214 3,659Capital redemption reserve 8,158 299Revaluation reserve 2,335 4,348Capital reserve 6,475 6,475Profit and loss account (18,434) (47,043)Own shares (495) (495) ___________ __________ Shareholders' funds 4,486 (24,530) =========== ========== PITTARDS plc CONSOLIDATED STATEMENT OF CASH FLOWS- UNAUDITEDfor the year ended 31 December 2006 2006 2005 Note £'000 £'000 £'000 £'000Net cash (outflow) inflow fromoperating activities 3 (2,433) 2,304 Returns on investments and servicingof financeInterest paid (629) (894) ______ ______Net cash outflow from returns on investmentsand servicing of finance (629) (894) TaxationOverseas tax paid (11) -UK corporation tax received - 127 ______ ______Net cash (outflow) inflow fromtaxation (11) 127 Capital expenditure and financial investmentPurchase of tangible fixed assets (550) (290)Sale of assets held for resale - 3,000Sale of tangible fixed assets 6,830 13 ______ ______Net cash inflow (outflow) from capital expenditureand financial investment 6,280 2,723 ______ ______ Net cash inflow before financing 3,207 4,260FinancingProceeds of share issue 2,420 -Repayment of bank loans (230) (3,511)Repayment of loan from Trustees ofpension schemes (300) -New loans received 300Capital element of finance lease rentalsand hire purchase repayments (135) (195) ______ ______Net cash inflow (outflow) fromfinancing 2,055 (3,706) ______ ______ Increase in cash 5,262 554 ====== ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTfor the year ended 31 December 2006 2006 2005 £'000 £'000 Increase in cash 5,262 554Repayment of bank loans 230 3,511Repayment of loan from Trustees ofpension schemes (300) -Capital element of finance lease rentalsand hire purchase repayments 135 195New loans received (300) - ______ _______ Change in net debt arising from cash flows 5,627 4,260Conversion of pension deficit to loan (3,175) - ______ _______ Movement in net debt 2,452 4,260Net debt at 1 January (7,419) (11,679) ______ _______ Net debt at 31 December (4,967) (7,419) ====== ======= Notes 1. The figures for the year ended 31 December 2006 are unaudited and do notconstitute full accounts within the meaning of Section 240 of the Companies Act1985. The figures for the year ended 31 December 2005, set out above, areextracted from the full accounts for that year. A full Report and Accounts for2005 including an unqualified report from the auditors, has been filed with theRegistrar of Companies. 2. Earnings (loss) per ordinary share 2006 2005 £'000 £'000Profit (loss) from continuing operations after tax 26,596 (10,411)Less: preference share dividends ((a) below) - (257) ____________ ___________Profit (loss) from continuing operations attributableto ordinary shareholders 26,596 (10,668) ____________ ___________ (a) There is no preference share dividend accrued in the earnings calculation in2006 as the preference shares were converted to ordinary shares on 19 May 2006 Weighted average number of ordinary shares in issue(excluding the shares owned by the Pittards Employee ShareOwnership Trust) 2006 2005 '000's '000'sBasic 145,484 21,156 _________ ________ The total number of ordinary shares in issue at 1 January 2006 was 22,102,365.On 19 May 2006 the number of ordinary shares in issue became 223,244,477following the capital reorganisation.In 2006 and 2005 the weighted average number of ordinary shares for the purposeof calculating the diluted earnings per ordinary share is identical to that usedfor basic earnings per ordinary shares. Basic and diluted earnings (loss) per ordinary share 2006 2005Earnings (loss) from continuing operations 18.3p (50.4p) _________ ________ 3. Note to the statement of cashflows Reconciliation of operating profit (loss) to net cash flows from operatingactivities 2006 2005 £'000 £'000Operating profit (loss) 26,456 (2,534)Depreciation charges 741 2,010Defined benefit cost less contribution paid (29,924) (1,016)(Profit) loss on sale of tangible fixed assets (200) 5Increase in assets held for resale - (34)Provision utilised (1,650) -Decrease in stocks 1,165 1,920Decrease in debtors 3,142 3,537Decrease in creditors (1,163) (1,584) _________ ________Net cash (outflow) inflow from operating activities (2,433) 2,304 _________ ________ 4. Share capital Ordinary New ordinary Preference Deferred Total shares (25p) shares (1p) shares ordinary shares £'000 £'000 £'000 £'000 £'000 At 1 January 2006 5,526 - 2,701 - 8,227Conversion of ordinary shares to new ordinary shares (5,526) 221 - 5,305 -Conversion of preference shares to ordinary shares - 147 (2,701) 2,554 -Issue of new ordinary shares - 1,865 - - 1,865Redemption of deferred ordinary shares - - - (7,859) (7,859) ___________________________________________________________At 31 December 2006 - 2,233 - - 2,233 ___________________________________________________________ Full details of the capital reorganisation set out above are given in Note 30 ofthe 2005 Annual Report and Accounts. 5. Copies of the 2006 Annual Report and Accounts will be posted to shareholdersin April. Further copies may be obtained by contacting the Company Secretary atPittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA. The annual generalmeeting is to be held at the registered office on 2 May 2007. This information is provided by RNS The company news service from the London Stock Exchange