PTD.L Regulatory News (PTD)

Pittards plc

("Pittards" or "the Group")

Results for the six months ended 30 June 2017

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 six months ended 30 June 2017.

Half year highlights:

· Revenue up 6% to £14.2m (H1 2016: £13.4m)

· Gross profit margin improved to 23.6% (H1 2016: 22.7%)

· Profit before tax £0.1m (2016 pre-exceptional costs - H1 2016 PBT: £0.4m, H2 2016 LBT: £0.2m)

· EBITDA £0.7m (2016 pre-exceptional costs - H1 2016: £0.9m, H2 2016: £0.4m)

· Net assets £20.7m (31 December 2016: £21.3m)

· Net debt down by £1m to £9.1m (31 December 2016: £10.1m)

· Increased level of sampling activity for both existing core and new customers

Stephen Yapp, Chairman commented: "We have continued to make solid operational and strategic progress whilst delivering a profitable first half performance which improved upon the previous six months.

Recent discussions and heightened sampling activity demonstrate that our strategic roadmap for developing an increasingly diversified business model will provide not only revenue and profit growth but a more balanced business positioned to take advantage of the changing landscape.

Consequently, the Board remain confident that the positive trading momentum we are beginning to experience will continue into the second half of 2017 and anticipates full year trading will be ahead of the prior year."

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This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Chairman's statement

The first half of 2017 has built upon the strategic and operational progress made at the end of last year. The final phase of the review is now refining the identified priorities in our core and target markets, investing accordingly and making operational improvements to drive future growth. These will be underpinned by our continued commitment to innovation and valued customer relationships.

I am cognisant that developing the strategic roadmap could have distracted us from the day job. Therefore, it is encouraging that the business also retained its operational focus, remained profitable and improved its financial performance in comparison with the previous six months.

Half year ended 30 June 2017:

· Revenue up 6% to £14.2m (H1 2016: £13.4m)

· Gross profit margin improved to 23.6% (H1 2016: 22.7%)

· Profit before tax £0.1m (2016 pre-exceptional costs - H1 2016 PBT: £0.4m, H2 2016 LBT: £0.2m)

· EBITDA £0.7m (2016 pre-exceptional costs - H1 2016: £0.9m, H2 2016: £0.4m)

· Net assets £20.7m (31 December 2016: £21.3m)

· Net debt down by £1m to £9.1m (31 December 2016: £10.1m)

· Increased level of sampling activity for both existing core and new customers

Strategic update

We have identified our priority markets for growth as being performance gloves, footwear, lifestyle and interiors. There are nascent signs that we have reached the bottom of the prolonged downward trend experienced in recent years and consumer demand for our technically advanced leathers within these markets has started to recover.

The respective objectives in these markets are being refined and our initial thoughts have been endorsed in advanced customer discussions. This has been further evidenced by an increase in sampling activity which typically occurs towards the end of what can be a protracted two to three year negotiation process.

Financial review

Revenue was up 6% to £14.2m as a consequence of increased sales activity in the UK division. The UK has seen sales increases in most market sectors and in particular the shoe market. In Ethiopia, orders in our core market for work gloves increased and in line with our targeted new market, we have delivered some small but strategically important initial orders for men's footwear.

The gross margin improved to 23.6% reflecting a favourable currency improvement, principally against the US dollar and improved raw material prices. Costs for both distribution and administration increased by £0.5m, impacted predominantly by foreign exchange movements along with investment in key people.

Profit before tax for the half year at £0.1m, compares favourably to the second of half 2016 loss of £0.2m (excluding exceptional costs).

Stock levels stabilised over the first half in line with our ongoing reduction and realignment programme.

Net debt reduced by £1m to £9.1m from 31 December 2016, due to a £0.3m cash improvement, £0.3m of loan repayments and a £0.4m foreign exchange movement on Ethiopian balances. The decrease in net assets from £21.3m to £20.7m largely reflects a weaker Ethiopian birr impacting the value of the Ethiopian net assets.

Board changes

Jill Williams will step down as a non-executive director on 31 December 2017. The Board would like to thank Jill for her contribution and support over the past 28 years at Pittards and recently throughout the transitional phase and wish her well for the future

Outlook

Recent discussions and heightened sampling activity demonstrate that our strategic roadmap for developing an increasingly diversified business model will provide not only revenue and profit growth but a more balanced business positioned to take advantage of the changing landscape.

Consequently, the Board remain confident that the positive momentum we are beginning to experience will continue into the second half of 2017 and anticipates full year trading will be ahead of the prior year.

Consolidated income statement (unaudited)

for the six months ended 30 June 2017

Consolidated statement of comprehensive income (unaudited)

for the six months ended 30 June 2017

Consolidated statement of changes in equity (unaudited)

for the six months ended 30 June 2017

Consolidated balance sheet (unaudited)

as at 30 June 2017

Statement of cash flows (unaudited)

for the six months ended 30 June 2017

Notes to the consolidated accounts (unaudited)

1. Earnings per share attributable to equity shareholders of the parent

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year excluding the shares owned by the Pittards employee share ownership trust.

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by the shares issued under the 2015 Long Term Incentive Plan (LTIP).

2. Taxation

3. Deferred taxation 

4. Cash used in operations

5. Basis of preparation

The financial information contained in this interim statement has not been audited or reviewed by the Company's auditor and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The directors approved and authorised this interim statement for issue on 26 September 2017. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2016. Those accounts, upon which the auditor issued an unqualified opinion, have been delivered to the Registrar of Companies. The auditor's report did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Pittards plc is a public limited company incorporated and domiciled under the Companies Act 2006 in England. It is quoted on the Alternative Investment Market ("AIM").

These financial statements are presented in sterling as that is considered to be the functional currency of the primary economic environment in which the Group operates.

As permitted this interim report has been prepared in accordance with UK AIM listing rules and not in accordance with IAS 34 "Interim Financial Reporting" therefore it is not fully in compliance with IFRS.

6. Availability of interim report

The interim report will be available at the Company's website www.pittards.com, in accordance with AIM Rule 20.