PTD.L Regulatory News (PTD)

22 September 2015

Pittards Plc

("Pittards" or the "Company")

Half Yearly Report

Pittards plc, the global brand supplying premium leather and leather products, working with leading international brands, retailers and manufacturers today announces its results for the six months to 30 June 2015. 

Unaudited Interim results for the six months ended 30 June 2015

Summary

*Based on 13,888,690 shares in issue at 30 June 2015

Highlights for the half year:

· Profit before taxation up 72% to £0.6m (H1 2014: £0.3m)

· EBITDA up 39% to £1.0m (H1 2014 £0.7m)

· Basic earnings per share of 4.42p (H1 2014: 3.07p)

· Gearing significantly reduced to 29% (H1 2014: 45%)

· Successful completion of a placing and open offer raising £5.6m before expenses

· Following the board restructuring, a new strategic review of the business commenced

Stephen Boyd, Chairman of Pittards, commented:

"During the first half of 2015, we delivered an improved profit in line with expectations; increased gross margins more than made up for lower sales volumes as we benefitted from more favourable currency movements.

 The current order book is below our expectations and reflects the lower level of demand that has become evident during July and August. This trend was confirmed at the major international trade fairs attended recently, where it was clear that activity levels in the leather industry are currently depressed and likely to remain so in the medium term.

Looking further forward, a number of new opportunities are starting to appear and these could begin to have an impact in the second half of 2016.

We are in the process of reviewing our strategy for the next three years to validate, and, where appropriate, reset our priorities. Consequently, we anticipate continuing to make substantial investments in people and training, during 2016, in order to facilitate the delivery of our strategic priorities to meet our customers' evolving needs and deliver superior shareholder value in the longer term.

Chairman's Statement

During the first half of 2015, we delivered an improved profit in line with expectations; increased gross margins more than made up for lower sales volumes as we benefitted from more favourable currency movements. Pittards remains a global brand dedicated to the manufacture of innovative, high performance leather and more recently the design and production of leather goods.

Turnover was down at £15.6m (2014 £17.4m) in the first half of 2014 due to reduced volume in the dress glove and military sectors although the gross margin improved from 19% to 22% reflecting more favourable exchange rates, in particular a stronger dollar.

Profit before finance costs increased to £0.8m (2014 £0.5m) largely as a result of the improved gross margin and a reduction in administrative expenses to £1.6m (2014 £1.7m).

There was a small tax charge of £0.2m arising mainly from the reversal of timing differences affecting the deferred taxation asset.

Profit attributable to shareholders increased to £0.4m (2014 £0.3m) and basic earnings per share increased to 4.42pence per share (2014 3.07 pence per share).

Net assets increased from £18.3m at the end of December 2014 to £23.8m mainly as a result of the purchase of the freehold at Yeovil and the fundraising.

FUND RAISING

The successful fund raising in June 2015, which raised £5.3m net of expenses, was undertaken to finance the purchase of the freehold of the Group's UK manufacturing and head office site in Yeovil and to generate additional working capital.

Following the completion of the fundraising, the freehold of the UK site was successfully purchased for £3.8m inclusive of expenses. This purchase was financed by £1.7m of the funds raised and a ten year term loan of £2.1m from the Group's bankers. The interest and loan repayments will be slightly less than the rental of £0.272m per annum that was being paid previously.

The development of the Group's business has been constrained for a number of years by a lack of fixed and working capital. The funds raised in excess of that required for the purchase of the freehold will be used to invest in developing the Group's business.

BORROWINGS

Following the fundraising, the Group has a combination of long and short term facilities of £8.6m from its main UK bankers. The Group has adequate facilities to develop its business and at 30 June 2015, £3.6m of the Group's UK facilities was drawn down.

NON-EXECUTIVE DIRECTORS

The Board has been strengthened by the appointment of Louise Cretton, who previously served as a non-executive director of the Company from April 2001 to December 2013, and the appointment of Stephen Yapp as non-executive directors. These appointments extend the Board's skill set and provide a better balance for pursuing our objective of creating shareholder value over the medium term.

Jan Holmstrom, who had been a non-executive director for 5 years stepped down from the Board on 4 June. I would like to take this opportunity to thank Jan for his contribution to the Group.

As previously announced, I will be retiring as Chairman at the Annual General Meeting in May 2016 and it is intended that Stephen Yapp will succeed me in this role.

MARKET CONDITIONS

Looking ahead, the indications are that the world market for finished leather products will be suppressed in the short term, impacted by slower growth in emerging markets notably China and Russia and the risk of wider economic uncertainty causing further financial market volatility. Nevertheless, according to the World Economic Outlook, the underlying drivers for a gradual acceleration in economic activity in advanced economies including lower fuel prices, easy financial conditions and confidence remain intact.

OUTLOOK

Following the successful fund raising, we are investing to drive our business forward in the longer term and have taken the opportunity to close a location in Walsall and relocate production to our newly acquired site in Yeovil.

The current order book is below our expectations and reflects the lower level of demand that has become evident during July and August. This trend was confirmed at the major international trade fairs attended recently, where it was clear that activity levels in the leather industry are currently depressed and likely to remain so in the medium term.

As a result of the factors explained above, sales and profits in the second half are expected to be below market expectations.

Looking further forward, a number of new opportunities are starting to appear and these could begin to have an impact in the second half of 2016.

We are in the process of reviewing our strategy for the next three years to validate, and, where appropriate, reset our priorities. Consequently, we anticipate continuing to make substantial investments in people and training, during 2016, in order to facilitate the delivery of our strategic priorities to meet our customers' evolving needs and deliver superior shareholder value in the longer term.

SD Boyd

Chairman

PITTARDS PLC

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

for the six months ended 30 June 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ended 30 June 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ended 30 June 2015

CONSOLIDATED BALANCE SHEET (UNAUDITED)

as at 30 June 2015

STATEMENT OF CASH FLOWS (UNAUDITED)

for the six months ended 30 June 2015

NOTES (unaudited)

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

On 5th June 2015 4,626,651 new Pittards shares were issued as a result of a Placing and Open Offer, taking the total share capital of the Company to 13,888,690 shares. These new shares are reflected in the weighted average number of shares presented below.

(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 not presented as there are no outstanding warrants or share options that could have a dilutionary effect.

2. Taxation

3. Deferred taxation

The Group has recognised and unrecognised deferred tax assets in respect of temporary differences and losses.

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 21 September 2015. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2014. 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 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.

The report containing the interim financial information is to be sent direct to shareholders. Copies of the report are available to the public from the registered office of Pittards plc. The address of the registered office is: Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA.