20 Sep 2016 07:00
20 September 2016
Pittards plc
("Pittards" or "the Company")
Interim Results
for the six months ended 30 June 2016
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 2016.
The key highlights for the half year were as follows:
Financial Highlights:
• Revenue £13.4m (H1 2015: £15.6m)
• EBITDA £0.8m (H1 2015: £1.0m)
• Profit before tax of £0.3m (H1 2015: £0.6m)
• Basic earnings per share of 1.56p (H1 2015: 4.47p), impacted by the share issue in June 2015
• Net assets £24.8m (H1 2015: £23.8m)
Strategic Highlights:
• Development of strategic roadmap making good progress with a number of medium-term initiatives defined and prioritised investments made
• Board recruitment completed
Stephen Yapp, Chairman commented: "Pittards has traded profitably in a challenging first half in which we saw a continuation of the depressed demand for leather in similar market conditions to those at the end of 2015.
"We have made progress in identifying the Company's medium-term priorities and associated investment requirements, supported by an adequate cash position and solid balance sheet.
"The second half continues to benefit from a favorable currency impact and the Board remains confident that the Company can deliver full year results in line with our expectations and the actions identified will help to build a platform for future growth."
For further information please contact:
| Pittards plc | www.pittardsleather.com |
Stephen Yapp, Chairman
Reg Hankey, CEO | +44 (0) 1935 474 321 |
Matt O'Rourke, CFO | |
WH Ireland Limited | www.whirelandplc.com |
John Wakefield/Ed Allsopp | +44 (0) 117 945 3470
|
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
INTRODUCTION
In my first letter to you as the Chairman of Pittards plc, I am reassured by the fundamentals of its businesses and encouraged about the opportunities that lie ahead. The Company is in a transitional phase and continues to operate in an uncertain economic environment. Against this backdrop, it had a challenging first half of 2016 although we made progress in determining the medium-term priorities.
The key highlights for the half year were:
Financial Highlights:
• Revenue £13.4m (H1 2015: £15.6m)
• EBITDA £0.8m (H1 2015: £1.0m)
• Profit before tax of £0.3m (H1 2015: £0.6m)
• Basic earnings per share of 1.56p (H1: 2015 4.47p), impacted by the share issue in June 2015
• Net assets £24.8m (H1 2015: £23.8m)
Strategic Highlights:
• Development of strategic roadmap making good progress with a number of key medium-term initiatives defined and prioritised investments made
• Board recruitment completed
MARKET CONDITIONS
Volumes in the leather industry remain depressed reflecting reduced demand from China and Russia and high inventories following mild winters which all have a direct impact on our markets.
Global leather sales are estimated to be worth over $85bn (source: UKLF). Pittards is targeting the following core markets: performance gloves, footwear, lifestyle and interiors, which play to our sales and manufacturing strengths, optimise our supply chain and give us a balanced portfolio. Golf remains an important market for us with the golf markets (gloves and shoes) in the US and the Rest of the World each worth approximately $500m.
RESULTS
Revenue declined by 14% to £13.4m. This reflected weaker global demand which affected all divisions with the exception of the Ethiopia Consumer Division which grew revenue year on year due to increased production and sales of work and dress gloves.
Gross Margin at 22.7% improved by 1 percentage point year on year mainly due to favourable raw material prices and currency rates. EBITDA was down to £0.8m from £1.0m as a consequence of reduced volumes and our investment in people.
Profit before tax reduced to £0.3m (H1 2015: £0.6m) and basic earnings per share to 1.56p (H1 2015 4.47p), also impacted by the share issue in June 2015.
As at 30 June 2016, net debt was £8.2m (H1 2015: £6.9m) reflecting investment in: the final instalment to buy ETSC (which is a main supplier of Ethiopian skins) of approximately £0.3m, buying out the minority interest in the Ethiopian-based Pittards Global Sourcing for £0.2m and capital investment of £0.8m.
STRATEGIC UPDATE
Pittards, proud of its heritage, is aware of the need to evolve as a business to remain competitive as it develops the next phase of growth.
We aim to extend our competitive edge within the identified markets that play to our strengths via innovation, service, manufacturing and marketing initiatives. To facilitate this, we have updated the management structure and are recruiting to fill a small number of identified gaps.
The purchase of the freehold of the Yeovil site in 2015 secured the future of our UK manufacturing operations. As mentioned above, further investments were made in the first half to strengthen our Ethiopian operations and help modernise the UK Leather Division.
BOARD CHANGES
I was appointed Chairman on 16 May 2016 and would like to thank my predecessor Stephen Boyd for his valuable contribution during his time at the Company.
On 1 June, Matthew O'Rourke was appointed CFO bringing with him a wealth of industry and financial experience. As previously announced, effective from that date, Jill Williams resigned from this role and became a non-executive director.
OUTLOOK
Pittards has traded profitably in a challenging first half in which we saw a continuation of the depressed demand for leather in similar market conditions to those at the end of 2015.
We have made progress in identifying the Company's medium-term priorities and associated investment requirements, supported by an adequate cash position and solid balance sheet.
The second half continues to benefit from a favourable currency impact and the Board remains confident that the Company can deliver full year results in line with our expectations and the actions identified will help to build a platform for future growth.
Stephen Yapp
Chairman
20 September 2016
Consolidated income statement (unaudited) for the six months ended 30 June 2016
Year ended 31 December 2015 £'000 |
Note | Six months ended 30 June 2016 £'000 | Six months ended 30 June 2015 £'000 | |
30,523 | Revenue | 13,373 | 15,623 | |
(23,902) | Cost of sales | (10,339) | (12,239) | |
6,621 | Gross profit | 3,034 | 3,384 | |
(1,919) | Distribution costs | (857) | (1,016) | |
(3,275) | Administrative expenses | (1,555) | (1,616) | |
(312) | Administrative expenses - exceptional restructuring costs | (98) | - | |
1,115 | Profit from operations before finance costs | 524 | 752 | |
(484) | Finance costs | (215) | (218) | |
24 | Finance income | 5 | 21 | |
655 | Profit before taxation | 314 | 555 | |
(184) | Taxation charge | 2 | (97) | (118) |
471 | Profit for the period after taxation | 217 | 437 | |
Profit attributable to: | ||||
474 | Owners of the parent | 217 | 442 | |
(3) | Non-controlling interest | - | (5) | |
471 | 217 | 437 | ||
Earnings per share attributable to equity shareholders of the parent | 1 | |||
3.98p | - basic | 1.56p | 4.47p | |
3.88p | - diluted | 1.51p | 4.47p |
Consolidated statement of comprehensive income (unaudited)
for the six months ended 30 June 2016
Year ended 31 December 2015 £'000 | Six months ended June 2016 £'000 | Six months ended June 2015 £'000 | |
471 | Profit for the period after taxation | 217 | 437 |
Other comprehensive income (expense) Items that will not be reclassified to profit or loss | |||
182 | Revaluation of land and buildings | - | - |
13 | Revaluation of land and buildings - unrealised exchange gain (loss) | 123 | (63) |
195 | 123 | (63) | |
Items that may be subsequently reclassified to profit or loss | |||
58 | Unrealised exchange gain (loss) on translation of overseas subsidiaries | 353 | (178) |
58 | 353 | (178) | |
253 | Other comprehensive income (expense) | 476 | (241) |
724 | Total comprehensive income for the period | 693 | 196 |
Total comprehensive income (expense) attributable to: | |||
717 | Owners of the parent | 693 | 207 |
7 | Non-controlling interest | - | (11) |
Consolidated statement of changes in equity (unaudited)
for the six months ended 30 June 2016
Share capital £'000 | Share premium £'000 | Capital reserve £'000 | Retained earnings £'000 | Translation reserve £'000 | Shares held by ESOP £'000 | Revaluation reserve £'000 | Total attributable to owners of the parent £'000 | Non-controlling interest £'000 | Total equity £'000 | |
At 1 January 2015 | 4,631 | - | 6,475 | 8,607 | (2,750) | (495) | 1,668 | 18,136 | 172 | 18,308 |
Comprehensive income for the period | ||||||||||
Profit for the period after taxation | - | - | - | 442 | - | - | - | 442 | (5) | 437 |
Other comprehensive income | ||||||||||
Unrealised exchange loss on translation of foreign subsidiaries | - | - | - | - | (178) | - | (57) | (235) | (6) | (241) |
Total other comprehensive income | - | - | - | - | (178) | - | (57) | (235) | (6) | (241) |
Total comprehensive income for the period | - | - | - | 442 | (178) | - | (57) | 207 | (11) | 196 |
Transactions with owners | ||||||||||
Proceeds from share issue | 2,313 | 2,984 | - | - | - | - | - | 5,297 | - | 5,297 |
Total transactions with owners | 2,313 | 2,984 | - | - | - | - | - | 5,297 | - | 5,297 |
At 30 June 2015 | 6,944 | 2,984 | 6,475 | 9,049 | (2,928) | (495) | 1,611 | 23,640 | 161 | 23,801 |
Comprehensive income for the period | ||||||||||
Profit for the period after taxation | - | - | - | 32 | - | - | - | 32 | 2 | 34 |
Other comprehensive income | ||||||||||
Gain on the revaluation of buildings | - | - | - | - | - | - | 172 | 172 | 10 | 182 |
Unrealised exchange gain on translation of foreign subsidiaries | - | - | - | - | 236 | - | 70 | 306 | 6 | 312 |
Total other comprehensive income | - | - | - | - | 236 | - | 242 | 478 | 16 | 494 |
Total comprehensive income for the period | - | - | - | 32 | 236 | - | 242 | 510 | 18 | 528 |
At 31 December 2015 | 6,944 | 2,984 | 6,475 | 9,081 | (2,692) | (495) | 1,853 | 24,150 | 179 | 24,329 |
Comprehensive income for the period | ||||||||||
Profit for the period after taxation | - | - | - | 217 | - | - | - | 217 | - | 217 |
Other comprehensive income | ||||||||||
Unrealised exchange gain on translation of foreign subsidiaries | - | - | - | - | 353 | - | 123 | 476 | - | 476 |
Total other comprehensive income | - | - | - | - | 353 | - | 123 | 476 | - | 476 |
Total comprehensive income for the period | - | - | - | 217 | 353 | - | 123 | 693 | - | 693 |
Transactions with owners | ||||||||||
Purchase of non-controlling interest | - | - | - | - | - | - | - | - | (179) | (179) |
Total transactions with owners | - | - | - | - | - | - | - | - | (179) | (179) |
At 30 June 2016 | 6,944 | 2,984 | 6,475 | 9,298 | (2,339) | (495) | 1,976 | 24,843 | - | 24,843 |
Consolidated balance sheet (unaudited)
as at 30 June 2016
31 December 2015
£'000 |
Note | 30 June 2016
£'000 | 30 June 2015
£'000 | |
ASSETS | ||||
Non-current assets | ||||
10,679 | Property, plant and equipment | 11,448 | 10,170 | |
273 | Intangible assets | 257 | 176 | |
1,586 | Deferred income tax asset | 3 | 1,394 | 1,363 |
12,538 | Total non-current assets | 13,099 | 11,709 | |
Current assets | ||||
18,872 | Inventories | 20,139 | 18,378 | |
4,017 | Trade and other receivables | 4,307 | 5,165 | |
485 | Cash and cash equivalents | 358 | 249 | |
26 | Current income tax recoverable | 54 | 38 | |
90 | Deferred income tax asset | 3 | 234 | 321 |
23,490 | Total current assets | 25,092 | 24,151 | |
36,028 | Total assets | 38,191 | 35,860 | |
LIABILITIES | ||||
Current liabilities | ||||
(92) | Deferred income tax liability | 3 | - | (62) |
(4,664) | Trade and other payables | (4,660) | (4,881) | |
- | Current income tax liability | (13) | - | |
(3,806) | Interest bearing loans, borrowings and overdrafts | (5,503) | (3,216) | |
(8,562) | Total current liabilities | (10,176) | (8,159) | |
Non-current liabilities | ||||
- | Deferred income tax liability | 3 | (106) | - |
(3,137) | Interest bearing loans, borrowings and overdrafts | (3,066) | (3,900) | |
(3,137) | Total non-current liabilities | (3,172) | (3,900) | |
(11,699) | Total liabilities | (13,348) | (12,059) | |
24,329 | Net assets | 24,843 | 23,801 | |
EQUITY | ||||
6,944 | Share capital | 6,944 | 6,944 | |
2,984 | Share premium | 2,984 | 2,984 | |
6,475 | Capital reserve | 6,475 | 6,475 | |
(495) | Shares held by ESOP | (495) | (495) | |
9,081 | Retained earnings | 9,298 | 9,049 | |
(2,692) | Translation reserve | (2,339) | (2,928) | |
1,853 | Revaluation reserve | 1,976 | 1,611 | |
24,150 | Total equity attributable to owners of the parent | 24,843 | 23,640 | |
179 | Non-controlling interest | - | 161 | |
24,329 | Total equity | 24,843 | 23,801 |
Statement of cash flows (unaudited)
for the six months ended 30 June 2016
Year ended 31 December 2015
£'000 |
Note | Six months ended 30 June 2016
£'000 | Six months ended 30 June 2015
£'000 | |
Cash flows from operating activities | ||||
962 | Cash generated from (used in) operations | 4 | (394) | (292) |
(183) | Tax paid | (53) | (202) | |
(447) | Interest paid | (212) | (191) | |
332 | Net cash generated from (used in) operating activities | (659) | (685) | |
Cash flows from investing activities | ||||
(4,350) | Purchases of property, plant and equipment | (736) | (3,978) | |
(108) | Purchases of intangible assets | (1) | - | |
- | Purchase of investments | (191) | - | |
(4,458) | Net cash used in investing activities | (928) | (3,978) | |
Cash flows from financing activities | ||||
3,651 | Proceeds from borrowings | 340 | 3,922 | |
(1,733) | Repayment of bank loans | (376) | (957) | |
35 | New finance lease obligations | 337 | 35 | |
(42) | Repayment of obligations under finance leases | (13) | (20) | |
5,297 | Proceeds from share issue | - | 5,297 | |
7,208 | Net cash generated from financing activities | 288 | 8,277 | |
3,082 | Increase (decrease) in cash and cash equivalents | (1,299) | 3,614 | |
(4,551) | Cash and cash equivalents at beginning of period | (1,474) | (4,551) | |
(5) | Exchange (losses) gains on cash and cash equivalents | 8 | 14 | |
(1,474) | Cash and cash equivalents at end of period | (2,765) | (923) |
Notes (unaudited)
1. Earnings per share attributable to equity shareholders of the parent
In the period to 30 June 2016, no new shares were issued (June 2015: 4,626,651).
(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.
Year ended 31 December 2015
£'000 | Six months ended 30 June 2016
£'000 | Six months ended 30 June 2015
£'000 | |
474 | Profit attributable to equity holders of the company | 217 | 442 |
Shares '000 | Shares '000 | Shares '000 | |
11,900 | Weighted average number of ordinary shares in issue | 13,870 | 9,886 |
(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).
Year ended 31 December 2015
£'000 | Six months ended 30 June 2016
£'000 | Six months ended 30 June 2015
£'000 | |
474 | Profit attributable to equity holders of the company | 217 | 442 |
Shares '000 | Shares '000 | Shares '000 | |
12,201 | Weighted average number of ordinary shares in issue | 14,341 | 9,886 |
2. Taxation
Year ended 31 December 2015
£'000 | Six months ended 30 June 2016
£'000 | Six months ended 30 June 2015
£'000 | |
Analysis of the charge in the period The charge based on the profit for the year comprises: | |||
2 | Corporation tax on profit for the year | - | - |
30 | Foreign tax on profit for the year | 13 | 13 |
- | Foreign tax related to prior years | 27 | - |
32 | Total current tax | 40 | 13 |
Deferred tax | |||
(28) | Origination and reversal of temporary differences | 57 | 105 |
180 | Impact of change in UK tax rate | - | - |
152 | Total deferred tax | 57 | 105 |
184 | Income tax charge | 97 | 118 |
3. Deferred taxation
The Group has recognised and unrecognised deferred tax assets in respect of temporary differences and losses.
Year ended 31 December 2015
£'000 | Six months ended 30 June 2016
£'000 | Six months ended 30 June 2015
£'000 | |
Deferred tax assets | |||
1,586 | Deferred tax asset to be recovered after more than 12 months | 1,394 | 1,363 |
90 | Deferred tax asset to be recovered within 12 months | 234 | 321 |
1,676 | 1,628 | 1,684 | |
Deferred tax liabilities | |||
(92) | Deferred tax liability to be realised after more than 12 months | (106) | (62) |
- | Deferred tax liability to be realised within 12 months | - | - |
(92) | (106) | (62) | |
1,584 | Deferred tax assets (net) | 1,522 | 1,622 |
4. Cash used in operations
Year ended 31 December 2015 £'000
| Six months ended 30 June 2016 £'000 | Six months ended 30 June 2015 £'000 | |
655 | Profit before taxation | 314 | 555 |
Adjustments for: | |||
456 | Depreciation of property plant and equipment | 283 | 215 |
22 | Amortisation | 17 | 11 |
447 | Bank and other interest charges | 210 | 191 |
(47) | Other non-cash items in Income Statement | (10) | 7 |
1,533 | Operating cash flows before movement in working capital | 814 | 979 |
Movements in working capital (excluding exchange differences on consolidation) | |||
(1,003) | Increase in inventories | (651) | (835) |
911 | Decrease (increase) in trade and other receivables | (213) | (378) |
(479) | Decrease in trade and other payables | (344) | (58) |
962 | Cash used in operations
| (394) | (292) |
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 20 September 2016. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2015. 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.