PTD.L Regulatory News (PTD)

15 Sep 2006 07:30

Pittards PLC15 September 2006 Pittards plc produces technically advanced leather for many of the world'sleading brands of gloves, shoes, luxury leathergoods and sports equipment. 15 September 2006 Interim results for the six months ended 30 June 2006 Year ended Six months ended Six months ended31 December 2005 30 June 2006 30 June 2005 £62.1m Turnover £22.3m £32.3m 90% Percentage export 89% 89%(£2.5m) Operating loss before exceptional item (£0.4m) (£0.4m) - Exceptional item £26.9m -(£2.5m) Operating profit (loss) £26.5m (£0.4m)(£10.4m) Profit (loss) before taxation £26.9m (£1.5m)(50.4p) Earnings (loss) per share 39.7p (7.5p) - Ordinary dividend - -(128.7p) Assets (liabilities) per share 2.2p (94.7p) • Reorganisation proceeding at a pace o Fundamental reorganisation well underway, including the closure of the Leeds factory and relocation of its activities to Yeovil and overseas • Pension Scheme deficit of £32.9m has been resolved o Company voluntary arrangement completed o Equity fundraising achieved successfully o Shares relisted • Debt further significantly reduced o Leeds site already sold for £6.5m • Order book remains strong throughout restructuring • Development of Ethiopian Tannery moves into major capital investment programme Stephen Boyd, Chairman of Pittards, commented: "We have made tremendous progress so far this year, both developing and enacting our strategy, and removing the pension deficit problem. I would like to thank all our employees for their continued support and cooperation throughout this period. Whilst we still have much still to do, the determination and commitment of all employees gives great confidence for our future." -ends- For further information, please contact: Stephen Boyd - ChairmanLindsey Blackford - Group Finance DirectorPittards plcTel: 01935 474321 CHAIRMAN'S STATEMENT The focus of the first six months of 2006 has been to continue the processes begun in 2005 to restructure the company, principally the decision to close the Leeds factory and transfer production to Yeovil and a sub-contracting operating facility in Taiwan (Teh Chang). The development of Ethiopia Tannery Share Company (ETSC, the largest tannery in Ethiopia) which we have managed since August 2005 has progressed well, and is now moving into a major investment programme. At the same time we have taken the necessary steps to deal with the deficit on the defined benefit pension schemes. The operating loss for the period, before exceptional items, was £0.4m, almost identical to the first half of 2005, but follows a trading loss in the second half of 2005 of £2.1m. This result arose from a loss in the first quarter of 2006 followed by a small profit in the second quarter. An exceptional gain of £26.9m arose from the release of the deficit on the pension schemes (net of costs) following the agreement reached with the trustees of the pension schemes (the Trustees) and the Pension Protection Fund (PPF). Details of the agreement were set out in notices to shareholders dated 21 March 2006 and 19 April 2006 and agreed by resolutions at the extraordinary general meetings of ordinary and preference shareholders on 12 May 2006. As a result the operating profit for the period was £26.5m. The Leeds property was sold in June for £6.5m, realising a profit on disposal of £0.77m. We continue to occupy and operate from the site under licence until December 2006. The buyer requires minimal rectification work to the property, which has meant that £0.25m of provision for clean up costs could also be released, leading to a profit before interest and tax of £27.5m. After bank interest of £0.35m (2005 - £0.34m) and net finance charges relating to the pension scheme of £0.24m (2005 - £0.71m), the profit on ordinary activities before taxation was £26.9m. A loss of £1.0m before tax and all exceptional items was incurred (2005 - loss of £1.4m). Turnover for the six months was £22.3m, almost 90% of which was sold to customers outside the United Kingdom. This was down by 31% on the equivalent period in 2005 and 25% on the second half of 2005, reflecting the changes effected by the restructuring of the business. This has been most significant in the bovine business previously carried out in Leeds. The decision to cease production in Leeds was formally taken on 1 March 2006; since then the factory has focused on supplying those customers whose business was to be transferred either to the Yeovil site or to Teh Chang. This represents approximately two-thirds of the finished leather business. In addition, the factory has moved from sourcing raw hides to buying in part processed material (wet blue). This was essential to enable the successful transfer of bovine production to Yeovil. The response to this challenge and results achieved were first class. Historically sales from the Leeds factory included a significant element of sales of wet blue hides surplus to the requirements of the unit's finished leather production. This in itself accounts for over £4m of the reduction in turnover in the period Production is planned to continue in Leeds until October. This is a little behind our original timetable, but we had to delay starting the transition until after the pension scheme issues had been finally resolved and the Company Voluntary Arrangement with creditors was completed. The majority of the machinery required for bovine production in Yeovil has now been relocated and is in the process of being commissioned. The first full production batches of finished leather out of Teh Chang are currently being produced. Glove leather production in Yeovil has continued uninterrupted throughout the transfer process, despite the significant changes required to the factory layout. Sales of glove leather were up 16% in volume terms and 11% in value. Some of the sales volume growth was in traditional dress glove business at highly competitive prices. The strategic objective is that this business will ultimately be resourced through our Ethiopian cost competitive manufacturing facilities. Progress continues to be made with Ethiopia Tannery Share Company in Ethiopia. We are working to structure the production and develop further processing skills. The Ethiopian government, who owns ETSC, has shown its support for what we are doing with a commitment to significant capital investment in the plant. This will support the development of finished leather production, enabling us to extend the product offering under the Pittards brand, and generate added value export sales from Ethiopia. Net assets of the Group were £4.8m at 30 June 2006 (31 December 2005 - net liabilities of £24.5m). This reflects the agreements reached with the Trustees, the PPF and shareholders in respect of the deficit on the pension schemes. Total borrowings were £4.4m, which includes £3.2m of loan repayments secured on the Yeovil site, due to the Trustees under the terms of that agreement. Bank borrowings at £1.2m have fallen £6.2m since the beginning of the year, largely due to the receipt of the proceeds from the sale of the Leeds site. As part of the process of settlement of the pension issue, the Company's ordinary shares of 25p were converted to new 1p ordinary shares, the £1 preference shares were converted to new ordinary shares and new ordinary shares were issued to the Trustees and Forvaltnings AB Bronsstadet. Again, full details of the restructuring of the share capital of the Company were set out in the aforementioned notices to shareholders. Share capital has reduced as a result from £8.2m to £2.2m. Whilst demand for our leather has been stronger, the weak dollar continues to impact on selling prices. There is much work still to do to complete the transfer of production and products during the rest of 2006. We are therefore cautious about the outlook for the second half. We have made tremendous progress so far this year, both developing and enacting our strategy, and removing the pension deficit problem. I would like to thank all our employees for their continued support and cooperation throughout this period. Whilst we still have much still to do, the determination and commitment of all employees gives great confidence for our future. Stephen Boyd Chairman PITTARDS plc -------------- CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) for the six months ended 30 June 2006 Year ended Six months ended 30 June 2006 Six months 31 December ended 30 June 2005 Trading Exceptional Total 2005 (a) below £'000 Note £'000 £'000 £'000 £'000 62,089 Turnover 22,330 - 22,330 32,341 ---------- ------- -------- -------- --------- (2,534) Operating (loss) profit (402) 26,913 26,511 (400) -------- -------- 2,218 Profit on disposal of fixed assets 770 - (7,860) Costs of fundamental reorganisation 250 - --------- ------- ---------- (8,176) Profit (loss) on ordinary activities before interest 27,531 (400) (804) Bank and other interest charges (351) (340) (1,424) Net interest on pension scheme liabilities (238) (712) --------- ------- ---------- (10,404) Profit (loss) on ordinary activities before taxation 26,942 (1,452) (7) Taxation (13) - --------- ------- ---------- (10,411) Profit (loss) on ordinary activities after taxation 26,929 (1,452) --------- ------- ---------- (50.4) Earnings (loss) per share Basic 1 39.7 (7.5) (50.4) Diluted 1 39.7 (7.5) There were no discontinued activities in 2006 or 2005. Accordingly the results relate to continuing activities. (a) The exceptional profit relates to the write back (after costs) of the deficit on the Group's pension schemes following agreement with its Trustees and the Pension Protection Fund. Full details of the agreement are set out in Note 30 of the 2005 Annual Report and Accounts. PITTARDS plc -------------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (UNAUDITED) for the six months ended 30 June 2006 Year ended Six months Six months ended ended 31 December 30 June 30 June 2005 2006 2005 £'000 £'000 £'000 (10,411) Profit (loss) for period 26,929 (1,452) (2,712) Actuarial loss recognised on the pension scheme - (4,478) --------- ----------- ---------- (13,123) Total recognised profits (losses) 26,929 (5,930) --------- ----------- ---------- CONSOLIDATED STATEMENT OF MOVEMENT ON SHAREHOLDERS' FUNDS (UNAUDITED) for the six months ended 30 June 2006 Year ended Six months Six months ended ended 31 December 30 June 30 June 2005 2006 2005 £'000 £'000 £'000 (11,407) At beginning of period (24,530) (11,407) (13,123) Total recognised profits (losses) 26,929 (5,930) - Net proceeds on issue of shares 2,420 - --------- ----------- ---------- (24,530) At end of period 4,819 (17,337) --------- ----------- ---------- PITTARDS plc --------------- CONSOLIDATED BALANCE SHEET (UNAUDITED) as at 30 June 2006 31 December 30 June 30 June 2005 Note 2006 2005 £'000 £'000 £'000 Fixed assets 12,482 Tangible fixed assets 5,999 16,973 --------- -------- -------- Current assets - Assets held for resale - 789 7,251 Stocks 5,991 10,636 5,378 Debtors 5,009 7,952 27 Cash at bank and in hand 84 29 --------- -------- -------- 12,656 11,084 19,406 --------- -------- -------- Creditors - amounts falling due within one year (6,221) Bank loans and overdrafts (236) (7,034) (3,663) Trade creditors (3,298) (5,802) (2,517) Other creditors (3,428) (2,568) --------- -------- -------- (12,401) (6,962) (15,404) --------- -------- -------- 255 Net current assets 4,122 4,002 --------- -------- -------- 12,737 Total assets less current liabilities 10,121 20,975 Creditors - amounts falling (1,100) due after more than one year (3,487) (3,947) (3,306) Provisions for liabilities and charges (1,815) - --------- -------- -------- 8,331 Net assets before pension scheme liability 4,819 17,028 (32,861) Pension scheme liability - (34,365) --------- -------- -------- (24,530) Net assets (liabilities) after pension scheme liability 4,819 (17,337) --------- -------- -------- Capital & Reserves 8,227 Called up share capital 3 2,233 8,227 3,659 Share premium account 4,214 3,659 299 Capital redemption reserve 8,158 299 4,348 Revaluation reserve 4,293 4,403 6,475 Capital reserve 6,475 6,475 (47,043) Profit and loss account (20,059) (39,905) (495) Own shares (495) (495) --------- -------- -------- (24,530) Shareholders' funds 4,819 (17,337) --------- -------- -------- PITTARDS plc -------------- CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) for the six months ended 30 June 2006 Year ended Six months ended Six months ended31 December 2005 30 June 2006 30 June 2005£'000 £'000 Note £'000 £'000 £'000 £'000 2,304 Net cash (outflow) inflow from operating activities 2 (2,258) 1,127 Returns on investments and servicing of finance(894) Interest paid (338) (448)------- ------ ------ Net cash outflow from returns on investments (894) and servicing of finance (338) (448) Taxation 127 UK corporation tax received - 127 ------- ------ ------ 127 Net cash inflow from taxation - 127 Capital expenditure and financial investment(290) Purchase of tangible fixed assets (6) (268)3,000 Sale of assets held for resale - - 13 Sale of tangible fixed assets 6,412 44------- ------ ------ Net cash inflow (outflow) from capital 2,723 expenditure and financial investment 6,406 (224) ------- ------ ------ 4,260 Net cash inflow before financing 3,810 582 Financing - Net proceeds of share issue 2,420 -(3,511) Repayment of bank loans (105) (83) Capital element of finance lease rental and(195) hire purchase payments (75) (106)------- ------ ------ (3,706) Net cash inflow (outflow) from financing 2,240 (189) ------- ------ ------ 554 Increase in cash 6,050 393 ------- ------ ------ PITTARDS plc -------------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (UNAUDITED) Year ended Six months Six months ended ended 31 December 30 June 2006 30 June 2005 2005 £'000 £'000 £'000 554 Increase in cash 6,050 393 Capital element of finance lease rental and 195 hire purchase payments 75 106 3,511 Repayment of bank loans 105 83 ------- ------ ------- 4,260 Change in net debt arising from cash 6,230 582 flows - New other loans (3,175) - ------- ------ ------- 4,260 Movement in net debt 3,055 582 (11,679) Net debt at beginning of period (7,419) (11,679) ------- ------ ------- (7,419) Net debt at end of period (4,364) (11,097) ======= ======= ======== PITTARDS plc NOTES (unaudited) 1. Earnings (loss) per ordinary share Year ended Six months Six months ended ended 31 December 30 June 2006 30 June 2005 2005 £'000 £'000 £'000 (10,411) Profit (loss) on ordinary activities after taxation 26,929 (1,452) (257) Preference dividend ((a) below) - (129) --------- ------- ------- (10,668) Earnings (loss) 26,929 (1,581) ---------- -------- --------- (a) There is no preference dividend accrual in the earnings calculation in 2006 as the preference shares were converted to ordinary shares on 19 May 2006. Weighted average number of ordinary shares in issue excluding the shares owned by the Pittards employee share ownership trust) '000s '000s '000s 21,156 Basic 67,825 21,152 -------- -------- -------- The total number of ordinary shares in issue at 1 January 2006 was 22,102,365. On 19 May 2006 the number of ordinary shares in issue became 223,244,477 following the capital reorganisation. 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. There is no dilution in 2006 and in 2005 the exercise of share options and vesting of conditional shares under the Restricted Share Plan would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of FRS22. 2. Reconciliation of operating profit (loss) to net cash flows from operating activities: Year ended Six Months ended Six months ended 31 December 30 June 30 June 2005 2006 2005 £'000 £'000 £'000 (2,534) Operating profit (loss) 26,511 (400) 2,010 Depreciation charges 432 1,020 5 Profit (loss) on sale of tangible fixed assets (3) 5 (1,016) Defined benefit operating profit (credit) charge less contributions paid (29,924) (566) - Reorganisation costs (723) - (34) Increase in assets held for resale - (41) 1,920 Decrease (increase) in stocks 1,260 (465) 3,537 Decrease in debtors 774 1,006 (1,584) (Decrease) increase in creditors (585) 568 --------- ----------- ----------- 2,304 Net cash (outflow) inflow from operating activities (2,258) 1,127 --------- ----------- ----------- PITTARDS plc NOTES (unaudited) - continued 3. Share capital New Deferred Ordinary Ordinary Preference ordinary Total Shares Shares Shares shares (25p) (1p) £'000 £'000 £'000 £'000 £'000 At 1 January 2006 5,526 - 2,701 - 8,227 Conversion of ordinary shares to new ordinary shares (5,526) 221 - 5,305 - Conversion of preference shares to ordinary shares - 147 (2,701) 2,554 - Issue of new ordinary shares - 1,865 - - 1,865 Redemption of deferred ordinary shares - - - (7,859) (7,859) ------- ------- ------- ------- ------ At 30 June 2006 - 2,233 - - 2,233 ------- ------- ------- ------- ------ Full details of the capital reorganisation set out above are given in Note 30 of the 2005 Annual Report and Accounts. 4. The financial information contained in this interim statement has not been audited or reviewed by the Company's auditors and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the full preceding year is extracted from the statutory accounts for the financial year ended 31 December 2005. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 5. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 31 December 2005. 6. 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. This information is provided by RNS The company news service from the London Stock Exchange