21 Mar 2016 07:00
21 March 2016
Pittards plc
("Pittards" or "the Company")
Preliminary Results
for the year ended 31 December 2015
Pittards plc, the specialist producer of technically advanced leather and luxury leather goods for sale to retailers, manufacturers and distributors today announces its results for the year ended 31 December 2015.
Results in brief
2015
£m | 2014
£m | |
Revenue | 30.5 | 34.7 |
Profit before exceptional restructuring costs and taxation | 1.0 | 1.6 |
Profit before taxation | 0.7 | 1.6 |
EBITDA | 1.6 | 2.4 |
Net debt | 6.5 | 7.6 |
Net assets | 24.3 | 18.3 |
Pence per share | ||
Per weighted average share | ||
Profit (basic) | 3.98 | 12.06 |
Net assets per share | 204.45 | 197.99 |
| ||
Gearing | 27% | 42% |
Strategic and operational highlights:
· Successful placing and open offer raised net £5.3m.
· Secured the purchase of the freehold of the Group's UK manufacturing and head office site in Yeovil.
· Board restructured.
Stephen Boyd, Chairman commented:
"2015 was a pivotal year for Pittards in which we made significant strategic and operational progress.
"Financially, we delivered a resilient performance and remained profitable despite a challenging macro environment throughout the year, which is testament to our tight cost controls.
"The Board's aim continues to be to deliver shareholder value. It is expected that the short term performance will reflect the reduced demand for leather. However, the Company now has the financial resources to invest in delivering its strategic priorities and the Board remains confident that the steps the Company is taking will enable it to better address challenges and grasp future growth opportunities."
For further information please contact:
Pittards plc | www.pittardsleather.com |
Stephen Boyd, Chairman | +44 (0) 1935 474 321 |
Reg Hankey, CEO | |
Jill Williams, Finance Director | |
WH Ireland Limited | www.wh-ireland.co.uk |
John Wakefield/Ed Allsopp | +44 (0) 117 945 3470 |
CHAIRMAN'S STATEMENT TO SHAREHOLDERS
2015 was a pivotal year for Pittards in which we made significant strategic and operational progress. Financially, we delivered a resilient performance and remained profitable despite a challenging macro environment throughout the year, which is testament to our tight cost controls.
The net £5.3m raised through a placing and open offer in June 2015 enabled the Company to take advantage of the opportunity to secure the freehold of the Group's UK manufacturing and head office site in Yeovil and removed previous investment constraints by generating more headroom within our banking facilities. It also refreshed our shareholder register.
RESULTS
Revenue was down 12% to £30.5m in part due the continued lack of demand for dress glove leathers as a consequence of the unprecedented fourth mild winter globally in the period leading up to Christmas. In addition military and sports leather demand was subdued. However, the UK Consumer division experienced a small improvement in turnover this year to £1.2m versus £1.05m in 2014. During the year we re-launched the website and opened a new shop towards the end of the year. The nascent success of both of these validates our strategy to raise the profile of our consumer brand.
The exceptional restructuring costs relate to the consolidation of the UK Consumer Division on the Yeovil site (including the costs of closing the Walsall site), the costs of restructuring the main board and some residual expenses relating to the purchase of the Ethiopian Leather Division business in 2009.
The tax charge reduced from £0.479m to £0.184m as there was a one-off charge in Ethiopia last year as explained in the 2014 Chairman's Statement. This year the charge mainly relates to deferred tax arising from a reduction in UK tax rate.
Post the fundraising, gearing has fallen to 27% from 42% in 2014. The Company ended the year with net debt reducing to £6.5m (2014: £7.6m) of which the mortgage relating to the purchase of the Yeovil factory was £2m (2014: nil).
MARKET CONDITIONS
In 2015, global economic activity remained subdued. Growth in emerging market and developing economies declined for the fifth consecutive year, while a modest recovery continued in advanced economies. According to the IMF's World Economic Outlook, global growth is projected to be up from 3.1% in 2015 to 3.4% in 2016 and 3.6 % in 2017 with the pickup projected to be more gradual in emerging market and developing economies.
The demand for leather has continued to be impacted by these trends and is currently muted. However, we are beginning to see the benefits from lower raw material prices.
TEAM
It has been a privilege to work within the Company and in my final letter as Chairman, I would like to express my gratitude to all staff and management for their support, advice and contribution during my 12 years in this role. The successes and progress made over recent years reflect the dedication and passion of Pittards' employees
BOARD CHANGES
There were a significant number of changes to the Board during the year.
Jan Holmstrom, who had been a non-executive director for 5 years, stepped down from the Board in May 2015. Louise Cretton joined the Board in August 2015, strengthening its marketing experience.
As previously announced, Stephen Yapp will become my successor as Chairman in May 2016. He joined the Board as a non-executive director in June 2015 bringing with him a wealth of experience of working as a plc Chairman, which will serve the Company well in the future.
In February 2016, Jill Williams announced her intention to resign as Group Finance Director after 8 years in the post and 26 years in the Company. Jill will remain until a suitable successor can be recruited to ensure an orderly transition. She will then become a non-executive director and the Board is delighted that her experience will be retained.
The Board restructuring is now complete and I am confident that this has the right mix of skills and experience to take the Company through its next phase of development.
OUTLOOK
The Board's aim continues to be to deliver shareholder value. It is expected that the short term performance will reflect the reduced demand for leather. However, the Company now has the financial resources to invest in delivering its strategic priorities and the Board remains confident that the steps the Company is taking will enable it to better address challenges and grasp future growth opportunities.
Stephen Boyd
Chairman
18 March 2016
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2015
Note |
2015
£'000 |
2014
£'000 | ||
Continuing operations: | ||||
Revenue | 30,523 | 34,729 | ||
Cost of sales | (23,902) | (27,696) | ||
Gross profit | 6,621 | 7,033 | ||
Distribution costs | (1,919) | (2,001) | ||
Administrative expenses | (3,275) | (3,061) | ||
Administrative expenses - exceptional restructuring costs | 3 | (312) | - | |
Profit from operations before finance costs | 1,115 | 1,971 | ||
Finance costs | (484) | (427) | ||
Finance income | 24 | 45 | ||
Profit before taxation | 655 | 1,589 | ||
Taxation | 6 | (184) | (479) | |
Profit for the year after taxation | 471 | 1,110 | ||
Profit attributable to: | ||||
Owners of the parent | 474 | 1,115 | ||
Non controlling interest | (3) | (5) | ||
471 | 1,110 | |||
Earnings per share attributable to the owners of the parent | ||||
Basic | 4 | 3.98p | 12.06p | |
Diluted | 4 | 3.88p | 12.06p | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
|
2015 £'000 |
2014 £'000 | ||
Profit for the year after taxation
Other comprehensive income | 471 | 1,110 | ||
Items that will not be reclassified to profit or loss | ||||
Revaluation of land and buildings | 195 | 245 | ||
195 | 245 | |||
Items that may be subsequently reclassified to profit or loss | ||||
Unrealised exchange gain on translation of overseas subsidiaries | 58 | 41 | ||
58 | 41 | |||
Other comprehensive income | 253 | 286 | ||
Total comprehensive income for the year |
724 |
1,396 | ||
Total comprehensive income (expense) attributable to: | ||||
Owners of the parent | 717 | 1,398 | ||
Non controlling interest | 7 | (2) | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
Share capital | Share premium account |
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 | |
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 1 January 2015 | 4,631 | - | 6,475 | 8,607 | (2,750) | (495) | 1,668 | 18,136 | 172 | 18,308 |
Comprehensive income for the year: | ||||||||||
Profit (loss) for the year after taxation | - | - | - | 474 | - | - | - | 474 | (3) | 471 |
Other comprehensive income: | ||||||||||
Gain on the revaluation of buildings | - | - | - | - | - | - | 172 | 172 | 10 | 182 |
Unrealised exchange gain on translation of foreign subsidiaries | - | - | - | - | 58 | - | 13 | 71 | 71 | |
Total other comprehensive income | - | - | - | - | 58 | - | 185 | 243 | 10 | 253 |
Total comprehensive income for the year | - | - | - | 474 | 58 | 185 | 717 | 7 | 724 | |
Transactions with owners | ||||||||||
Proceeds from shares issued | 2,313 | 2,984 | - | - | - | - | - | 5,297 | - | 5,297 |
Total transactions with owners | 2,313 | 2,984 | - | - | - | - | - | 5,297 | - | 5,297 |
At 31 December 2015 | 6,944 | 2,984 | 6,475 | 9,081 | (2,692) | (495) | 1,853 | 24,150 | 179 | 24,329 |
BALANCE SHEET
As at 31 December 2015
2015 | 2014 | ||
| |||
Note | £'000 | £'000 | |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 10,679 | 6,560 | |
Intangible assets | 273 | 187 | |
Deferred income tax asset | 6 | 1,586 | 1,636 |
Available for sale financial instruments | - | 2 | |
Total non-current assets | 12,538 | 8,385 | |
Current assets | |||
Inventories | 18,872 | 17,796 | |
Trade and other receivables | 4,017 | 4,896 | |
Cash and cash equivalents | 485 | 529 | |
Current income tax recoverable | 26 | - | |
Deferred income tax asset | 6 | 90 | 164 |
Total current assets | 23,490 | 23,385 | |
Total assets | 36,028 | 31,770 | |
LIABILITIES | |||
Current liabilities | |||
Deferred income tax liability | (92) | (64) | |
Trade and other payables | (4,664) | (5,097) | |
Current income tax liability | - | (171) | |
Interest bearing loans, borrowings and overdrafts | (3,806) | (6,877) | |
Total current liabilities | (8,562) | (12,209) | |
Non-current liabilities | |||
Interest bearing loans, borrowings and overdrafts | (3,137) | (1,253) | |
Total non-current liabilities | (3,137) | (1,253) | |
Total liabilities | (11,699) | (13,462) | |
Net assets | 24,329 | 18,308 | |
EQUITY | |||
Share capital | 6,944 | 4,631 | |
Share premium | 2,984 | - | |
Capital reserve | 6,475 | 6,475 | |
Shares held by ESOP | (495) | (495) | |
Retained earnings | 9,081 | 8,607 | |
Translation reserve | (2,692) | (2,750) | |
Revaluation reserve | 1,853 | 1,668 | |
Total equity attributable to owners of the parent | 24,150 | 18,136 | |
Non-controlling interest | 179 | 172 | |
TOTAL EQUITY | 24,329 | 18,308 | |
STATEMENT OF CASH FLOWS
for the year ended 31 December 2015
2015 | 2014 | |||
Note | £'000 | £'000 | ||
Cash flows from operating activities | ||||
Cash generated from operations | 5 | 962 | 744 | |
Tax paid | (183) | (151) | ||
Interest paid | (447) | (451) | ||
Net cash generated from operating activities | 332 | 142 | ||
Cash flows from investing activities | ||||
Purchases of property, plant and equipment | (4,350) | (607) | ||
Purchases of intangible assets | (108) | (35) | ||
Net cash used in investing activities | (4,458) | (642) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings | 3,651 | 1,063 | ||
Repayment of bank loans | (1,733) | (680) | ||
New finance lease obligations | 35 | - | ||
Repayment of obligations under finance leases and hire purchase obligations | (42) | (45) | ||
Proceeds from share issue (net of costs) | 5,297 | - | ||
Net cash generated financing activities | 7,208 | 338 | ||
Increase (decrease) in cash and cash equivalents | 3,082 | (162) | ||
Cash and cash equivalents at beginning of the year | (4,551) | (4,388) | ||
Exchange gains on cash and cash equivalents | (5) | (1) | ||
Cash and cash equivalents at end of the year | (1,474) | (4,551) |
Notes
1. The figures for the years ended 31 December 2015 and 2014 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The figures for the year ended 31 December 2015 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 2014, 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 18 March 2016.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the European Union ("IFRS") and IFRIC interpretations in issue at the balance sheet date.
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 2015 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. Exceptional items
2015 | 2014 | |
| £'000
| £'000 |
Administrative expenses - exceptional restructuring costs | 312 | - |
The exceptional restructuring costs relate to the consolidation of the UK Consumer Division on the Yeovil site (including the costs of closing the Walsall site), the costs of restructuring the main board and some residual expenses relating to the purchase of the Ethiopian Leather Division business in 2009.
4. Earnings per ordinary share
2015 |
2014 | |
£'000 | £'000 | |
Analysis of the profit in the year | ||
Profit for the year attributable to owners of the parent | 474 | 1,115 |
Weighted average number of ordinary shares in issue (excluding the shares owned by the Pittards Employee Share Ownership Trust) | '000's | '000's |
Basic | 11,900 | 9,243 |
Diluted | 12,201 | 9,243 |
Basic earnings per ordinary 50p share | 3.98p | 12.06p |
Diluted earnings per ordinary 50p share | 3.88p | 12.06p |
Notes - continued
5. Cash generated from operations
2015 | 2014 | |
£'000 | £'000 | |
Profit before taxation | 655 | 1,589 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 456 | 407 |
Amortisation | 22 | 12 |
Bank and other interest charges | 447 | 451 |
Other non-cash items in Income Statement | (47) | (31) |
Operating cash flows before movement in working capital | 1,533 | 2,428 |
Movements in working capital (excluding exchange differences on consolidation): | ||
Increase in inventories | (1,003) | (2,328) |
Decrease in receivables | 911 | 437 |
(Decrease) increase in payables | (479) | 207 |
Cash generated from operations | 962 | 744 |
6. Taxation
The Group has recognised a deferred tax asset of £1.676m (2014: £1.800m) in respect of losses out of a total potential deferred tax asset of £1.676m (2014: £1.990m).
There was a tax charge of £0.184m (2014: £0.479m) representing a deferred tax charge arising from changes to the UK tax rate and withholding tax on payments of royalties from Ethiopia.
7. Copies of the 2015 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 16 May 2016.