7 Sep 2009 07:00
Pittards plc produces technically advanced leather for many of the world's leading brands of gloves, shoes, luxury leathergoods and sports equipment and for its own brands of quality leathergoods.
PITTARDS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
Chairman's Interim Statement
In the face of the worst global recession for decades I am very pleased to report that the first half of 2009 shows an improving picture and a return to profitability at the post tax level.
Our continued tight management of costs, coupled with a stronger US dollar resulted in a profit from operations of £0.426m, which was substantially better than the £0.102m achieved in 2008. After finance costs of £0.097m (2008 - £0.140m) the profit before taxation was £0.329m (2008 - loss of £0.038m).
Revenue for the six month period was £12.466m. This was less than the £13.170m earned in the same period in 2008 due to some loss of volume from customers who were themselves facing lower demand from their customers as a result of the 'credit crunch'. Selling prices were largely maintained due to the weaker pound improving competitiveness. Of this turnover 89% was exported, similar to 2008.
Income from sales of glove leather represented around 70% of turnover, slightly more than 2008, as dress glove leathers sold well following the cold winter in both Europe and USA. Golf leather sales have been more muted in the year to date as the major brands reduced their stock pipelines however we should benefit very quickly from any upturn in consumer demand as they are carrying very low back-up stocks, and the relationships remain strong.
Our major international brand customers in the shoe and leathergoods sector also downgraded their forecasts in the first half but there are signs of an upturn starting to appear in the golf sector and our leathers have been placed in new styles for the future, which will help volumes. Saddlery leather sales held up well in the period and we will be serving those customers directly from our Walsall base at Daines & Hathaway shortly. We continue to develop and expand our leathergoods range to attract new customers.
Production at our Taiwanese subcontracting partner has been similarly affected as the casual footwear market has also been quieter so far this year, however the new range launched at the Hong Kong Leather Fair for the Chinese premium domestic market was well received and looks promising as a new income stream.
We continue to increase the amount of product taken to the finished leather stage at ETSC, the tannery we manage in Ethiopia, and skill levels and tanning processes there continue to improve. This enables us to be competitively priced on leathers when we could not previously have reached the price point, which has been extremely useful in the current economic climate. At the time of writing, Pittards is in advanced dialogue with the government of Ethiopia about the future ownership of the ETSC tannery.
The Pittards retail shop at the Yeovil site has settled down well and we continue to add new lines of leather products to our range. We are keen to exploit our strategy to develop Pittards as a consumer brand in this way and we are looking into ways of designing more branded products with suitable partners. The Daines and Hathaway business which we purchased towards the end of last year is also developing well, despite the difficult economic backdrop. We have refreshed their classic range of premium leathergoods with exciting new leathers from the Pittards bovine range and are now building a prestigious new customer base in both the UK and USA.
Net assets at 30 June 2009 were £2.207m compared to £2.930m at 30 June 2008. The balance sheet is now recovering from the December 2008 level of £1.885m following the write-down of derivative financial instruments at that time. All the forward foreign exchange contracts outstanding at 31 December 2008 have now matured but this adversely impacted on borrowings during the first half.
Net borrowings at 30 June 2009 were £3.930m which was higher than £3.617m in June 2008. As noted above, the maturity of forward foreign exchange contracts had a draining effect on cash but this exercise is now complete and there are no contracts outstanding at
30 June 2009. The Company has also completely settled some legacy loans from the previous group structure therefore with the return to profitability the cash position should improve. The Company's bank remains supportive of the strategy being followed.
Our customers remain uncertain about demand for the second half which makes it very difficult for us to forecast the outlook for the rest of the year. However, we are aware that customer stocks of finished products have been greatly reduced therefore the pick-up, when it comes, should be swift, hence we are preparing ourselves to respond quickly to any upturn in orders. In the meantime we continue to seek cost reductions in all areas of the business, but without compromising our core strengths of innovation, quality and performance.
SD Boyd - Chairman
For further information, please contact:
Stephen Boyd - Chairman - Tel: 07768 443195
Jill Williams - Finance Director - Tel: 01935 474321
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the six months ended 30 June 2009
| Year ended 31 December 2008 | Note | Six months ended 30 June 2009 | Six months ended 30 June 2008 | |||
| £'000 | £'000 | £'000 | ||||
| 26,387 | Revenue | 12,466 | 13,170 | |||
| (21,948) | Cost of sales | (10,120) | (11,251) | |||
| 4,439 | Gross profit | 2,346 | 1,919 | |||
| (1,754) | Distribution costs | (927) | (942) | |||
| (2,088) | Administrative expenses | (1,181) | (970) | |||
| 360 | (Loss) gain on foreign currency translation | (16) | (110) | |||
| 398 | Other operating income | 188 | 185 | |||
| 1,355 | Profit from trading activities | 410 | 82 | |||
| Release of provision for | ||||||
| - | fundamental reorganisation | - | 13 | |||
| Excess of the acquirer's interest in the net fair value | ||||||
| 93 | of acquiree's identifiable net assets over cost | - | - | |||
| (1,519) | Gain (loss) on derivatives | 16 | 7 | |||
| (71) | Profit (loss) from operations before finance costs | 426 | 102 | |||
| (296) | Finance costs | (97) | (140) | |||
| (367) | Profit (loss) on continuing operations before taxation | 329 | (38) | |||
| (13) | Taxation | (5) | (11) | |||
| (380) | Profit (loss) on continuing operations after taxation attributable to the equity shareholders of the parent | 324 | (49) | |||
| Other comprehensive income | ||||||
| (1,140) | Currency translation differences | (981) | 76 | |||
| 573 | Fair value gains net of tax on financial instruments | 979 | 95 | |||
| (567) | Other comprehensive income for the period | (2) | 171 | |||
| (947) | Total comprehensive income for the period attributable to the equity shareholders of the parent | 322 | 122 | |||
| Profit (loss) per share attributable to equity shareholders of the parent | 1 | |||||
| (0.17p) | - basic and diluted | 0.15p | (0.02) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the six months ended 30 June 2009
| 31 December 2008 |
| 30 June 2009 |
| 30 June 2008 | ||
| £'000 |
| £'000 |
| £'000 | ||
| 2,808 | Total equity at beginning of period attributable to the equity shareholders of the parent | 1,861 |
| 2,808 | ||
| (1,140) | Currency translation differences | (981) | 76 | |||
| 573 | Fair value gains net of tax on financial instruments | 979 | 95 | |||
| (567) | Net (loss) gains recognised directly in equity | (2) |
| 171 | ||
| (380) | Profit (loss) for the period | 324 |
| (49) | ||
| 1,861 | Total equity at end of period attributable to the equity shareholders of the parent | 2,183 | 2,930 | |||
| 24 | Minority interest | 24 | - | |||
| 1,885 | Total equity at end of period | 2,207 |
| 2,930 |
CONSOLIDATED BALANCE SHEET (UNAUDITED)
as at 30 June 2009
| 31 December 2008 | 30 June 2009 | 30 June 2008 | |||
| £'000 |
| £'000 |
| £'000 | |
| ASSETS | |||||
|
| Non-current assets |
|
|
| |
| 2,149 | Plant, property and equipment | 1,969 |
| 2,249 | |
| 294 | Intangible assets | 244 |
| 343 | |
| 2,443 | Total non-current assets | 2,213 |
| 2,592 | |
| Current assets |
| ||||
| 4,409 | Inventories | 5,124 |
| 4,795 | |
| 3,602 | Trade and other receivables | 3,246 |
| 3,465 | |
| 77 | Cash and cash equivalents | 77 |
| 46 | |
| - | Derivative financial instruments | - |
| 51 | |
| 8,088 | Total current assets | 8,447 |
| 8,357 | |
| 10,531 | TOTAL ASSETS | 10,660 | 10,949 | ||
| LIABILITIES | |||||
| Current liabilities |
| ||||
| (4,131) | Trade and other payables | (4,334) |
| (4,393) | |
| (3,450) | Interest bearing loans and borrowings | (4,078) |
| (3,505) | |
| (995) | Derivative financial instruments | - |
| - | |
| - | Provisions | - |
| (9) | |
| (8,576) | Total current liabilities | (8,412) |
| (7,907) | |
| Non-current liabilities |
| ||||
| (70) | Interest bearing loans and borrowings | (41) |
| (112) | |
| (8,646) | TOTAL LIABILITIES | (8,453) | (8,019) | ||
| 1,885 | Net assets | 2,207 |
| 2,930 | |
| Equity |
| ||||
| 2,233 | Called up share capital | 2,233 |
| 2,233 | |
| 4,214 | Share premium account | 4,214 |
| 4,214 | |
| 8,158 | Capital redemption reserve | 8,158 |
| 8,158 | |
| 6,475 | Capital reserve | 6,475 |
| 6,475 | |
| (495) | Shares held by ESOP | (495) | (495) | ||
| (18,724) | Retained earnings | (18,402) |
| (17,655) | |
| 1,861 | Total equity attributable to equity shareholders of the parent | 2,183 |
| 2,930 | |
| 24 | Minority interest | 24 | - | ||
| 1,885 | 2,207 | 2,930 |
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30 June 2009
| Year ended 31 December 2008 | Six months ended 30 June 2009 | Six months ended 30 June 2008 | ||||
| £'000 |
| Note | £'000 |
| £'000 | |
| Cash flows from operating activities |
| |||||
| 784 | Cash generated from (used in) operations | 2 | 544 | (30) | ||
| (9) | Tax paid | (5) |
| (6) | ||
| (276) | Interest paid | (99) | (98) | |||
| 499 | Net cash generated from (used in) operating activities | 440 | (134) | |||
| Cash flows from investing activities | ||||||
| 17 | Proceeds on disposal of property, plant and equipment | - |
| 18 | ||
| (165) | Purchases of property, plant and equipment | (49) |
| (19) | ||
| 25 | Deferred payment on investment in a subsidiary | (25) | - | |||
| (123) | Net cash used in investing activities | (74) |
| (1) | ||
| Cash flows from financing activities |
| |||||
| (265) | Repayments of bank loans | (142) |
| (129) | ||
| Repayments of obligations under finance leases |
| |||||
| (82) | and hire purchase arrangements | (41) |
| (42) | ||
| - | New loans | 50 |
| - | ||
| (347) | Net cash used in financing activities | (133) |
| (171) | ||
| 29 | Increase (decrease) in cash and cash equivalents | 233 |
| (306) | ||
| (2,326) | Cash and cash equivalents at beginning of period | (2,648) |
| (2,326) | ||
| (351) | Exchange (losses) gains on cash and cash equivalents | (924) |
| 32 | ||
| (2,648) | Cash and cash equivalents at end of period | (3,339) |
| (2,600) |
NOTES (unaudited)
1. Profit (loss) per share attributable to equity shareholders of the parent
| Year ended 31 December 2008 | Six months ended 30 June 2009 | Six months ended 30 June 2008 | ||
| £'000 | £'000 | £'000 | ||
| (380) | Profit (loss) on ordinary activities after taxation | 324 |
| (49) |
Weighted average number of ordinary share in issue
(excluding the shares owned by the Pittards employee share ownership trust)
| Shares | Shares | Shares | ||
| '000 |
| '000 |
| '000 |
| 222,294 | Basic | 222,294 |
| 222,294 |
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 2009 or 2008.
2. Cash generated from (used in) operations
| Year ended 31 December 2008 | Six months ended 30 June 2009 | Six months ended 30 June 2008 | ||||
| £'000 | £'000 | £'000 | ||||
| (367) | Net profit (loss) before taxation | 324 | (38) | |||
| Adjustments for: | ||||||
| 496 | Depreciation | 230 | 240 | |||
| 73 | Amortisation | 49 | 49 | |||
| (791) | Foreign exchange loss (gain) | 16 | (51) | |||
| 1,519 | (Loss) gain on derivatives | (16) | 88 | |||
| 254 | Bank and other interest charges | 97 | 140 | |||
| (17) | Profit on sale of property, plant and equipment | - | (17) | |||
| (326) | Provision movement | - | (317) | |||
| 841 | Operating cashflows before movement in working capital | 700 | 94 | |||
| Working capital: | ||||||
| 1,245 | (Increase) decrease in inventories | (715) | 859 | |||
| (1,042) | Increase (decrease) increase in trade and other receivables | 356 | (571) | |||
| (260) | Decrease (increase) in payables | 203 | (412) | |||
| 784 | Cash generated from (used in) operations | 544 | (30) |