PTD.L Regulatory News (PTD)

18 Mar 2005 07:00

Pittards PLC18 March 2005 Pittards plc Pittards plc produces technically advanced leather for many of the world'sleading brands of gloves, shoes, luxury leathergoods and sports equipment. 18 March 2005 Results for the year ended 31 December 2004 Summary Year ended Year ended 31 Dec 2004 31 Dec 2003 £m £m Turnover 73.2 85.4Percentage export 87% 86%Operating (loss) profit before exceptional anddiscontinuance costs (2.5) 1.5Exceptional and discontinuance costs (2.3) -Operating (loss) profit (4.8) 1.5(Loss) profit before tax (5.5) 1.0(Loss) earnings per share (20.8p) 2.1pOrdinary dividend - 1.5pNet assets per share 72p 93p Stephen Boyd, Chairman of Pittards, commented: "The international market for leather has remained depressed during the secondhalf of the year, and the weakness of the US dollar continues. During 2004 wehave suffered the costs of restructuring the business, and closing the lossmaking Raw Materials Division. The benefits from ongoing cost savings andefficiency improvements and from our investment in IT will be felt in 2005. Theinternational market for leather is not expected to recover before the secondquarter. However, with the exports still increasing, with a lower cost base farmore in line with current level of demand and with strong growth in areas of newproduct introductions, the Company is better placed to make progress in thefirst half of 2005." - ends - For further information, please contact: Stephen Boyd - ChairmanJohn Buckley - Group Financial DirectorPittards plc Tel: 01935 474321 Results for the year ended 31 December 2004 Chairman's statement In our interim statement, we announced a pre-tax loss of £1.2m. This wasslightly less than estimated in our July trading update which had made it clearthat we were experiencing harsh trading conditions as a result of the continuedweakness of the US dollar, destocking by customers and generally reduced demand. The view was expressed in the interim statement that with the benefit ofongoing cost savings and efficiency improvements, we could expect our continuingactivities to operate profitably in the second half of the year. However,towards the end of the year, the absence of any discernible recovery in theinternational market for leather made it necessary for us to issue anothertrading update to the effect that it was unlikely that the continuing activitieswould operate profitably in the second half of the year. In the event, with further substantial exceptional items having to be taken intoaccount, second half losses exceeded those recorded in the first half. Pre-taxlosses for the year as a whole have emerged at £5.5m after £2.5m of exceptionalcosts and costs on discontinued operations, none of which are recurring,principally relating to the closure of the Raw Materials Division. In thesecircumstances, the directors are unable to recommend the payment of a finalordinary dividend. Sales turnover for the year was £73.2m (2003 - £85.4m), 87% of which was tocustomers outside the UK (2003 - 86%). The international market for leatherremained depressed throughout the year and the volume of finished leather soldby us was 17% less than in 2003. The average sterling price per foot wasvirtually unchanged as the depreciation of the US dollar was broadly offset bydollar price increases, and by changes in the mix of business. The Raw Materials Division ceased the production of sheepskin pelts at itsLangholm factory on 8 October 2004. The sale of the factory for £0.12m wascompleted on 17 December 2004. The Division's loss for the year, including thecosts associated with the closure, was £1.7m and has been shown separately as 'discontinued' in the accompanying financial statements. Conditional contracts for the sale of the Raw Materials Division's remainingformer factory site at Kinghorn, Fife, for a price of £3.15m were exchanged on24 December 2004. Completion of the sale is conditional upon receipt of anoutline planning consent satisfactory to the purchaser. Approximately 10 acresof this 25 acre site are zoned for residential development in the Kirkcaldy AreaLocal Plan. An application for outline planning consent in conformity with theLocal Plan was submitted in August 2003. At the year-end, we thought itappropriate to obtain a professional open market valuation of the site. Thevaluation has not been incorporated in the balance sheet as the asset isdisclosed as a Current Asset to which the alternative valuation rules permittedby FRS 15 'Accounting for Fixed Assets' do not apply. Had the Group been permitted to show the asset at its open market value forredevelopment, a surplus of £2.1m, net of selling costs of £0.1m, would havebeen transferred to reserves, increasing shareholders' funds to £20.1m. Net assets, as at 31 December 2004, were £18.0m, equivalent to 72.1p perordinary share. Total borrowings rose to £11.7m (2003 - £10.3m) and gearingrose to 65% (2003 - 46%). This was primarily as a result of the degree to whichthe unwinding of working capital in both the continuing and discontinuedbusinesses fell short of the operating losses and exceptional costs for theyear. The project to implement a new enterprise resource planning computersystem which began in mid-2003 was completed towards the end of the year. Weare starting to see the benefits of enhanced planning and resource allocationinformation as we move into 2005. More than three quarters of the Glove Leather Division's sales are denominatedin US dollars. The sterling value of turnover in the year fell by 13%, and theunderlying volume by 10%. Strong growth was achieved in sales to the militaryand service sectors, based on the introduction of our technically advancedCustom Image Generation leathers, and also to the golf market based on newproduct introductions with Titleist FootJoy. However, the loss in volume salesof leather for dress gloves, baseball batters' gloves and for comfort shoes morethan offset these achievements as the Division lost ground to competitors whowere largely unaffected by the weakness of the US dollar and who pricedaccordingly. The Division has been vigorously addressing its cost base. Although its rawmaterial purchases are denominated in US dollars, the majority of its othercosts, particularly payroll, are in sterling. During the year, management hasreduced the numbers employed at all levels within the Yeovil business from 297to 255 (14%) through a combination of natural wastage and redundancy. The Shoe and Leathergoods Division suffered an 11% drop in turnover comparedwith 2003, with finished leather sales volumes down by 22%. The volumeshortfall arose mainly in the leisure footwear sector where two significantcustomers - one European and one Asian - undertook substantial destockingexercises at different stages during the year. Sales to the sports footwear andleathergoods sectors held up well, but with some sacrifice to margin, as aresult of the dollar's devaluation. The Division has been attacking its costbase in Leeds, and has reduced the numbers employed throughout the business from375 to 333 (11%) during the course of the year. The Company's entire issued ordinary share capital and preference share capitalwere admitted to trading on AIM with effect from 30 September 2004. Thetransfer from the Official List of the London Stock Exchange has reduced boththe burden and the cost of compliance to a level more appropriate to the size ofthe Company. John Pittard decided to relinquish his responsibilities as Chief Executive ofthe Group with effect from 1 September 2004, and resigned from the Board.Robert Paisley, Managing Director of the Raw Materials Division also resignedfrom the Board on 1 September 2004, following the Board's decision to close thatDivision. John Pittard and Robert Paisley have each completed more than fortyyears of dedicated and loyal service and we thank them both for theirconsiderable contribution to the Group during that time. Robert Tomkinson, who had been Chairman since 1997, retired from the Board on 6December 2004. We thank him for his contribution over the last seven years. I joined the Group as of 1 September 2004 as Deputy Executive Chairman and wasappointed Chairman on 6 December, following Robert Tomkinson's retirement. Although the international market for leather is not expected to recover muchbefore the second quarter, we have entered 2005 with a cost base more in linewith the current depressed level of demand. The total number of employees inearly 2005 is less than 600, and compares with 770 twelve months ago. We havemade substantial savings in central overheads, some of which were made possibleby the transfer to AIM. We shall be carrying out progessively more of ourinitial processing closer to source. Our investment in research and developmentcontinues to support our strategy to provide customers with innovative leatherswhich are differentiated from competing products by their performance,properties, quality and consistency. The investment in an integrated ITinfrastructure will enhance our ability to allocate our resources effectivelyand to provide our customers with the highest standards of service. Stephen BoydChairman18 March 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2004 Year ended Year ended Continuing Discontinued 31 Dec 31 Dec Trading Exceptional Total 2004 2003 Note (a) Note (b) Note £'000 £'000 £'000 £'000 £'000 £'000 Turnover 58,478 - 58,478 14,676 73,154 85,429Cost of sales (50,755) - (50,755) (14,703) (65,458) (71,523) Gross profit 7,723 - 7,723 (27) 7,696 13,906Distribution costs (4,845) - (4,845) (573) (5,418) (6,056)Administrative expenses (5,370) (802) (6,172) (934) (7,106) (6,340) Operating profit (2,492) (802) (3,294) (1,534) (4,828) 1,510 Interest payable (672) (486) Profit on ordinary activities (5,500) 1,024before taxationTaxation 1,349 (323) Profit on ordinary activities (4,151) 701after taxationDividends - equity and 2 (257) (588)non-equityTransfer to reserves (4,408) 113 Earnings per share - basic 3 (20.8p) 2.1p - diluted 3 (20.8p) 2.0p (a) Continuing operations - exceptional relates to redundancy and other related costs of reorganising the continuing operations of the business. (b) Discontinued operations comprises the results of the Raw Materials Division. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES for the year ended 31 December 2004 Year ended Year ended 31 Dec 31 Dec 2004 2003 £'000 £'000 (Loss) profit for period (4,151) 701 Due to the implementation of UITF 38 - Accounting for ESOP Trusts, net assets have reduced by £342,000 as explained in Note 1. CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS' FUNDS for the year ended 31 December 2004 Year ended Year ended 31 Dec 31 Dec 2004 2003 Note £'000 £'000 At 1 January as previously reported 22,723 22,596 Prior year adjustment 1 (342) (399) At 1 January as restated 22,381 22,197 Total recognised gains & losses (4,151) 701 Dividends (257) (588) Cost of own shares purchased (15) (51) Share based expense recognised in the profit & loss 5 108 account Issue of new shares - 14 At end of period 17,963 22,381 CONSOLIDATED BALANCE SHEET as at 31 December 2004 31 Dec 31 Dec 2004 2003 Restated Note £'000 £'000 Fixed assets Tangible fixed assets 17,774 17,984 Current assets Assets held for resale 4 748 481 Stocks 10,171 13,728 Debtors 9,029 9,941 Cash at bank & in hand 23 22 19,971 24,172 Creditors - amounts falling due within one year Bank loans & overdrafts (7,163) (9,937) Trade creditors (4,509) (5,270) Other creditors (3,757) (3,126) (15,429) (18,333) Net current assets 4,542 5,839 Total assets less current liabilities 22,316 23,823 Provisions for liabilities & charges - (1,180) Creditors - amounts falling due after more than one year (4,353) (262) 17,963 22,381 Capital & Reserves Called up share capital 8,227 8,227 Own shares (495) (485) Reserves 10,231 14,639 Shareholders' funds (including £2,701,500 attributable to non-equity interests) 17,963 22,381 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2004 Year ended Year ended 31 Dec 2004 31 Dec 2003 Restated Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 5 1,210 1,228 Returns on investments and servicing of finance Interest paid (613) (478) Preference dividends paid (257) (257) Net cash outflow from returns on investments and servicing of (870) (735) finance Taxation UK corporation tax paid - (454) UK corporation tax received 135 - Net cash outflow from taxation 135 (454) Capital expenditure and financial investment Purchase of tangible fixed assets (1,281) (2,425) Sale of tangible fixed assets 170 14 Net cash outflow from capital expenditure and financial (1,111) (2,411) investment Equity dividends paid (110) (629) Net cash outflow before financing (746) (3,001) Financing Issue of shares on exercise of options - 14 Purchase of matching shares under Restricted Share Plan (15) (51) New bank loans 4,499 - Repayment of bank loans (101) - Capital element of finance lease rental repayments (243) (131) Net cash inflow (outflow) from financing 4,140 (168) Increase (decrease) in cash 3,394 (3,169) Reconciliation of net cashflow to movement in net debt Increase (decrease) in cash 3,394 (3,169) Repayment of bank loans 101 - Capital element of finance lease rentals and hire purchase repayments 243 131 New bank loans (4,499) - Change in net debt resulting from cash flows (761) (3,038) New finance lease arrangements and hire purchase contracts (610) (204) Movement in net debt (1,371) (3,242) Net debt at 1 January (10,308) (7,066) Net debt at 31 December (11,679) (10,308) Notes 1. The figures for the year ended 31 December 2004 are unaudited and do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2003, set out above, are extracted from the full accounts for that year with the exception of a restatement relating to the change in accounting policy set out below. A full Report and Accounts for 2003 including an unqualified report from the auditors, has been filed with the Registrar of Companies. In preparing the financial statements for the current year the Group has adopted Urgent Issues Task Force Abstract 38 'Accounting for ESOP Trusts'. This requires that the cost of own shares, previously reported as a fixed asset investment, be shown as a deduction from shareholders' funds. A prior year adjustment has been made to reflect this change. There has been no impact on the prior or current year profit & loss account. The Group's opening net assets have been reduced by £342,000 from £22,723,000 to £22,381,000. The Company's opening net assets have been reduced by £342,000 from £15,111,000 to £14,769,000. Prior year comparatives have been restated accordingly. 2. Dividends 2004 2003 £'000 £'000 Equity:Ordinary interim - nil per share (2003 - 1.00p) - 221Ordinary final proposed - nil per share (2003 - 0.50p) - 110Total ordinary for year - nil per share (2003 - 1.50p) - 331Non-equity:Preference paid 30 June and 31 December 257 257 257 588 3. Earnings per ordinary share Basic earnings per ordinary share are based on the loss on ordinary activitiesafter taxation and preference dividends of £4,408,000 (2003 - profit £444,000)and 21,156,000 ordinary shares, being the weighted average number of ordinaryshares in issue during the year after excluding the shares owned by the PittardsEmployee Share Ownership Trust. In 2004, the number of dilutive potential ordinary shares was nil (2003 -25,000) relating to employee share options, and nil (2003 - 453,000) relating toemployee long term incentive plans. This gives a total weighted average numberof ordinary shares for the purpose of calculating the diluted earnings perordinary share for 2004 of 21,156,000 (2003 - 21,672,000). 4. Assets held for resale Assets held for resale are carried at the lower of cost and net realisablevalue. A full valuation of the property was carried out by Jones Lang LaSalle(Scotland) Ltd, Chartered Surveyors, at 31 December 2004. In their opinion theopen market value for redevelopment at that date was £3,000,000 compared withthe net book amount of £748,000. The valuation has not been incorporated in thebalance sheet as the asset is disclosed as a Current Asset to which thealternative valuation rules permitted by FRS 15 'Accounting for Fixed Assets' donot apply. Had the Group been permitted to show the asset at its open market value forredevelopment a surplus of £2,172,000, net of selling costs of £80,000, wouldhave been transferred to reserves, increasing shareholders' funds to£20,135,000. 5. Note to the statement of cashflows Reconciliation of operating profit to net cash flows from operating activities 2004 2003 restated £'000 £'000 Operating (loss) profit (4,828) 1,510 Depreciation charges 1,787 1,684 Share based expense 5 108 Loss on sale of tangible fixed assets 144 3 Increase in assets held for resale (267) (140) Decrease (increase) in stocks 3,557 (449) Decrease in debtors 946 893 Decrease in creditors (134) (2,381) Net cash inflow from operating activities 1,210 1,228 6. Copies of the 2004 Annual Report and Accounts will be posted to shareholders in early April. 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 5 May 2005. This information is provided by RNS The company news service from the London Stock Exchange