24 Mar 2010 07:00
PITTARDS PLC
(AIM: PTD)
Preliminary announcement of results for the year ended 31 December 2009
|
| Year ended 31 December 2009 | Year ended 31 December 2008 | ||||
|
|
| £m |
|
| £m |
|
| Revenue |
| 24.6 |
|
| 26.8 |
|
| Percentage export |
| 88% |
|
| 91% |
|
| Profit from trading activities |
| 0.8 |
|
| 1.3 |
|
| Exceptional items |
| 1.0 |
|
| 0.1 |
|
| Loss on derivatives |
| - |
|
| (1.5) |
|
| Profit (loss) on operations before finance costs |
| 1.8 |
|
| (0.1) |
|
| Finance costs |
| (0.2) |
|
| (0.3) |
|
| Profit (loss) on continuing operations before taxation |
| 1.6 |
|
| (0.4) |
|
|
|
|
|
|
|
|
|
| Net assets |
| 6.5 |
|
| 1.9 |
|
Stephen Boyd, Chairman of Pittards, commented:
"In my half year statement I advised the Group's return to profitability at the post tax level, and I am delighted to report that this profitability carried through for the whole of 2009, despite the sustained global recession."
| Contacts: |
|
|
|
|
| Pittards plc | www.pittards.com |
| Stephen Boyd, Chairman | +44 (0) 7768 443 195 |
| Reg Hankey, Chief Executive | +44 (0) 1935 474 321 |
| Jill Williams, Finance Director | +44 (0) 1935 474 321 |
|
|
|
| WH Ireland Limited | www.wh-ireland.co.uk |
| John Wakefield / Marc Davies | +44 (0) 117 945 3470 |
About Pittards plc:
Pittards is a global brand supplying premium leather and leather products, working with leading international brands, retailers and manufacturers. Our future strategy is founded upon product innovation, targeted marketing and efficient logistics, together with the development of new raw material sources
Preliminary announcement of results for the year ended 31 December 2009
Chairman's statement
In my half year statement I advised the Group's return to profitability at the post tax level, and I am delighted to report that this profitability carried through for the whole of 2009, despite the sustained global recession.
The continued relative weakness of sterling, and our continued focus on costs helped us to achieve a profit from trading activities of £0.813m (2008: £1.355m) despite some loss of volume in the first half of the year. The Group also benefited from an exceptional gain of £0.999m arising from the acquisition of the Ethiopia Tannery Share Company (ETSC) on 29 December 2009, which led to a profit before finance costs of £1.827m (2008: loss of £0.071m). Finance costs of £0.208m were also lower than £0.296m incurred in 2008, due principally to the lower bank base rate, hence the profit before taxation was £1.619m for the year (2008: loss of £0.367m).
Revenue of £24.617m was lower than £26.785m sold in 2008 due to some loss of volume from customers feeling the effect of the recession and destocking whilst they assessed when demand was likely to pick up. Sales to customers outside the UK represented 88% of revenue, in line with recent years.
Sales derived from products made from skins, which include dress and sports gloves, were affected by reduced volumes in the first half of the year, but a second successive cold winter which started early in the season has helped volumes to recover.
Sales of hide based products were also subdued in the first half but were showing signs of recovery in the latter part of the year as consumer demand at retail started to pick up.
Negotiations with the Privatisation and Public Enterprises Supervisory Agency (PPESA) in Ethiopia were ongoing during 2009 culminating in an agreement for Pittards to buy the Ethiopia Tannery Share Company (ETSC) for £3.798m. Pittards had been managing this business under a five year management contract since August 2005 but it was felt that the true benefits of the relationship could only be realised via full ownership. During the last four years, Pittards assisted ETSC in taking product further down the value added chain and all production is now either crust or finished leather. This has involved extensive training of the workforce and improvements to factory organisation and layout. A down payment of 50% of the purchase price was made on 29 December 2009, therefore the investment in ETSC is reflected in the year end balance sheet but no income has been included in the 2009 figures. The balance of the consideration will be settled in three equal annual instalments over the next three years.
The Group raised the funds for this acquisition via a placing of 186.6m new ordinary shares at a price of 1.5pence which was approved by shareholders at a general meeting on 22 December 2009. At the same time £0.300m of loans were converted to equity, thus reducing finance costs for the future and improving the gearing position which is now below 100%.
Your board considers that the acquisition of ETSC should enhance the prospects of the Group, enabling more production to be transferred to a lower cost environment and the backfilling of the UK operation with higher margin premium products.
Progress with the development of the Pittards brand into finished product via the retail shop and the Daines & Hathaway premium leathergoods business was somewhat hampered by the recession but volumes are growing steadily and we continue to refresh the ranges and build the customer base.
Net assets at the end of 2009 improved to £6.519m from £1.885m in 2008. The main reason for the improvement was the acquisition of ETSC, which added £4.742m to net assets after impairment, but before consolidation adjustments to eliminate intercompany balances.
The net borrowings at year end of £6.209m were higher than 2008 borrowings of £3.443m as a result of consolidating ETSC's net borrowings and the deferred consideration of £1.899m (before discounting to net present value) arising from the acquisition, however the Group has continued to settle the residual loans and obligations relating to the Leeds factory which was closed in 2006. The Group's bankers remain supportive of the board's strategy and have increased facilities for 2010 by £0.5m over 2009 levels.
We are pleased to advise that Jan Holmstrom, Chief Executive of Browallia AB, will be joining the board as a non-executive director on 24 March 2010. Jan has a broad range of experience as a director of small-cap companies and we believe he has much to add to our strategic plans for the business.
As ever, our employees have demonstrated loyalty and flexibility throughout all the changes we have brought about in the business and I thank them for their contribution and commitment.
We believe that the acquisition of ETSC is a transformational deal for the Group which will enable us to benefit more fully from manufacturing in a lower cost environment. The board intends to follow up on other manufacturing and consultancy opportunities around the world to make best use of our expertise within the global leather industry.
The global turbulence of 2009 seems to be gradually coming to an end, and increased consumer confidence and the relative weakness of sterling bode well for 2010, but we are not complacent about the challenges ahead. Whilst there is much work to be done to benefit fully from the changes in 2009, we will continue to build upon our core values of quality, technical expertise, customer service and innovation within both existing and new markets.
Stephen Boyd Chairman
23 March 2010
PITTARDS plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
|
|
Note |
2009 £'000 |
2008 £'000 |
|
|
|
| Restated |
| Revenue |
| 24,617 | 26,785 |
| Cost of sales |
| (19,591) | (21,948) |
| Gross profit |
| 5,026 | 4,837 |
| Distribution costs |
| (1,808) | (1,754) |
| Administrative expenses |
| (2,439) | (2,088) |
| Gain on foreign currency translation |
| 34 | 360 |
| Profit from trading activities |
| 813 | 1,355 |
| Exceptional item |
| 999 | 93 |
| Gain (loss) on derivatives classified as fair value through income statement |
| 15 | (1,519) |
| Profit (loss) from operations before finance costs |
| 1,827 | (71) |
| Finance costs |
| (208) | (296) |
| Profit (loss) on continuing operations before taxation |
| 1,619 | (367) |
| Taxation |
| (10) | (13) |
| Profit (loss) for the year on continuing operations after taxation attributable to the equity shareholders of the parent |
|
1,609 |
(380) |
| Other comprehensive income |
|
|
|
| Currency translation differences |
| (10) | (1,140) |
| Fair value gains net of tax on financial instruments |
| - | 573 |
| Total comprehensive income for the year attributable to the equity shareholders of the parent |
|
1,599 |
(947) |
| Profit (loss) per share attributable to equity shareholders of the parent |
|
|
|
| Basic and diluted | 3 | 0.71p | (0.17p) |
There were no discontinued operations in 2009 or 2008. Accordingly the results relate to continuing operations.
As the Group only acquired ETSC on 29 December 2009, its results have not been reflected in the Group's Statement of Comprehensive Income for 2009.
Revenue from consultancy was shown as Other Operating Income in 2008. This has been classified as revenue in 2009 and the 2008 comparative restated.
PITTARDS plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
|
| Share capital | Share premium account | Capital redemption reserve |
Capital reserve |
Retained earnings | Shares held by ESOP | Total attributable to owners of the parent
| Minority interest | Total equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2008 | 2,233 | 4,214 | 8,158 | 6,475 | (17,777) | (495) | 2,808 | - | 2,808 |
| Comprehensive income for the period |
|
|
|
|
|
|
|
|
|
| Retained loss for the year | - | - | - | - | (1,140) | - | (1,140) | - | (1,140) |
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
| Currency translation differences | - | - | - | - | (380) | - | (380) | - | (380) |
| Fair value gains net of tax on financial instruments |
- |
- |
- |
- |
573 |
- |
573 |
- |
573 |
| Investment in subsidiary |
- |
- |
- |
- |
- |
- |
- |
24 |
24 |
| Comprehensive income for the period |
- |
- |
- |
- |
(947) |
- |
(947) |
24 |
(923) |
| At 1 January 2009 | 2,233 | 4,214 | 8,158 | 6,475 | (18,724) | (495) | 1,861 | 24 | 1,885 |
| Comprehensive income for the year |
|
|
|
|
|
|
|
|
|
| Retained profit for the year | - | - | - | - | 1,609 | - | 1,609 | - | 1,609 |
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
| Currency translation differences | - | - | - | - | (10) | - | (10) | - | (10) |
| Total comprehensive income for the period |
- |
- |
- |
- |
1,599 |
- |
1,599 |
- |
1,599 |
| Transactions with owners |
|
|
|
|
|
|
|
|
|
| Issue of shares | 2,065 | 1,033 | - | - | - | - | 3,098 | - | 3,098 |
| Cost of share issue | - | (63) | - | - | - | - | (63) | - | (63) |
| Total transactions with owners | 2,065 | 970 | - | - | - | - | 3,035 | - | 3,035 |
| At 31 December 2009 | 4,298 | 5,184 | 8,158 | 6,475 | (17,125) | (495) | 6,495 | 24 | 6,519 |
PITTARDS plc
CONSOLIDATED BALANCE SHEET
As at 31 December 2009
|
|
| 2009 | 2008 | |
|
|
| £'000 | £'000 | |
|
|
|
|
| |
| ASSETS |
|
|
| |
| Non-current assets |
|
|
| |
| Property, plant and equipment |
| 3,923 | 2,149 | |
| Intangible assets |
| 197 | 294 | |
| Held to maturity financial assets |
| 3 | - | |
| Total non-current assets |
| 4,123 | 2,443 | |
| Current assets |
|
|
| |
| Inventories |
| 10,180 | 4,409 | |
| Trade and other receivables |
| 3,395 | 3,602 | |
| Cash and cash equivalents |
| 833 | 77 | |
| Total current assets |
| 14,408 | 8,088 | |
| Total assets |
| 18,531 | 10,531 | |
| LIABILITIES |
|
|
| |
| Current liabilities |
|
|
| |
| Trade and other payables |
| (4,970) | (4,131) | |
| Interest bearing loans and borrowings |
| (5,651) | (3,450) | |
| Derivative financial instruments |
| - | (995) | |
| Total current liabilities |
| (10,621) | (8,576) | |
| Non-current liabilities |
|
|
| |
| Interest bearing loans and borrowings |
| (1,391) | (70) | |
| Total non-current liabilities |
| (1,391) | (70) | |
| Total liabilities |
| (12,012) | (8,646) | |
| Net assets |
| 6,519 | 1,885 | |
| EQUITY |
|
|
| |
| Called up share capital |
| 4,298 | 2,233 | |
| Share premium account |
| 5,184 | 4,214 | |
| Capital redemption reserve |
| 8,158 | 8,158 | |
| Capital reserve |
| 6,475 | 6,475 | |
| Shares held by ESOP |
| (495) | (495) | |
| Retained earnings |
| (17,125) | (18,724) | |
| Total equity attributable to equity shareholders of the parent |
| 6,495 | 1,861 | |
| Minority interest |
| 24 | 24 | |
| TOTAL EQUITY | 6,519 | 1,885 | ||
PITTARDS plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2009
|
|
| 2009 | 2008 |
|
| Note | £'000 | £'000 |
|
|
|
|
|
| Cash flows from operating activities |
|
|
|
| Cash generated from operations | 4 | 1,359 | 784 |
| Tax paid |
| (10) | (9) |
| Interest paid |
| (208) | (276) |
| Net cash generated from operating activities |
| 1,141 | 499 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Proceeds on disposal of property, plant and equipment |
| 12 | 17 |
| Purchases of property, plant and equipment |
| (129) | (165) |
| Acquisition of subsidiary, net of cash acquired |
| (2,165) | - |
| Deferred payment on investment in a subsidiary |
| - | 25 |
| Net cash used in investing activities |
| (2,282) | (123) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Repayment of bank loans |
| (442) | (265) |
| Repayment of obligations under finance leases and hire purchase obligations |
| (84) | (82) |
| Share issue |
| 3,035 | - |
| Net cash generated from (used in) financing activities |
| 2,509 | (347) |
| Increase in cash and cash equivalents |
| 1,368 | 29 |
| Cash and cash equivalents at beginning of the year |
| (2,648) | (2,326) |
| Exchange losses on cash and cash equivalents |
| (957) | (351) |
| Cash and cash equivalents at end of the year |
| (2,237) | (2,648) |
Notes
1. The figures for the years ended 31 December 2009 and 2008 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The figures for the year ended 31 December 2009 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 2008, on which the auditor has issued an unqualified audit report, but included an Emphasis of Matter paragraph, 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 23 March 2010.
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.
These financial statements are presented in sterling as that is the functional currency of the primary economic environment in which the Group operates.
The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2009 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. Profit (loss) per ordinary share
|
| 2009 | 2008 |
|
| £'000 | £'000 |
| Profit (loss) from continuing operations attributable to ordinary shareholders |
1,609 |
(380) |
| Weighted average number of ordinary shares in issue (excluding the shares owned by the Pittards Employee Share Ownership Trust) | '000's | '000's |
| Basic | 227,387 | 222,294 |
|
|
|
|
| In 2009 and 2008 the weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share is identical to that used for basic earnings per ordinary share. | ||
|
|
|
|
| Basic and diluted profit (loss) per ordinary share from continuing operations | 0.71p | (0.17p) |
4. Note to the cashflow statement
|
| 2009 | 2008 |
|
|
| Restated |
|
| £'000 | £'000 |
| Profit (loss) before taxation | 1,619 | (367) |
| Adjustments for: |
|
|
| Depreciation of property, plant and equipment | 460 | 496 |
| Amortisation | 97 | 73 |
| Profit on sale of plant and equipment | - | (17) |
| (Gain) loss on derivatives | (15) | 944 |
| Foreign exchange loss | (28) | (216) |
| Bank and other interest charges | 208 | 254 |
| Provision movement | - | (326) |
| Gain on bargain purchase | (999) | - |
| Operating cash flows before movement in working capital | 1,342 | 841 |
| Working capital: |
|
|
| (Increase) decrease in inventories | (1,349) | 1,245 |
| Decrease (increase) in receivables | 2,253 | (1,042) |
| Decrease in payables | (887) | (260) |
| Cash generated from operations | 1,359 | 784 |
The figures for 2008 in respect of foreign exchange adjustments have been amended as follows to reflect the removal of £0.575m of realised loss on derivatives now considered to have been a cash movement:
|
| £'000 |
| Loss on derivatives as previously disclosed | 1,519 |
| Cash movement on derivatives | (575) |
| Loss on derivatives restated | 944 |
|
|
|
| Foreign exchange gain as previously disclosed | (791) |
| Cash movement on derivatives | 575 |
| Foreign exchange gain restated | (216) |
5. Copies of the 2009 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 2010.