PTD.L Regulatory News (PTD)

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Pittards plc

("Pittards", the "Group" or the "Company" )

Interim results for the six months ended 30 June 2022

 ("First Half" or "H1 2022")

Positive trading momentum maintained

Continued growth in revenue and profitability, stable order book

Interim Dividend declared

Pittards plc, the specialist producer of technically advanced leather and luxury leather goods for retailers, manufacturers and distributors, today announces its interim results for the six month ended 30 June 2022.

Commenting on the results, Chairman, Stephen Yapp, said:

"I am pleased to report a solid performance in the First Half with profitability and EBITDA consistent with the achievement of market expectations for the year as a whole. This has been achieved against the backdrop of a turbulent global trading environment including inflation, increasing energy costs and supply chain reliability challenges. The whole team has responded with vigour and flexibility, and I thank them for their efforts."

"The Directors are pleased to declare an interim dividend of 0.5p per share, which we plan to pay in January 2023."

Highlights: Financial

· Group revenues up 7% to £10.37m (H1 2021: £9.66m)

· Gross margin of 30% (H1 2021: 28%)

· EBITDA of £0.83m positive (H1 2021: £0.75m) an 11% improvement

· Profit before taxation up 31% to £0.34m (H1 2021: £0.26m)

· Net debt of £11.18 (H1 2021: £10:04m)

· Earnings per share (basic) up 63% to 2.54 pence (H1 2021: 1.55 pence)

· Interim dividend declared of 0.5 pence per share (H1 2021: 0.5 pence per share)

Highlights: Operational

· Continued strengthening of the management team

· Sales order book continues to be steady

· Acquisition of Hill and Friends adds another luxury brand to portfolio

· A diversified portfolio of products and markets enabling future growth opportunities

· Ethiopian business steadily recovering post COVID-19

Commenting on the outlook for the Full Year, Reg Hankey, Chief Executive said:

"The Group is continuing to make good progress implementing its strategy. The global inflationary climate and complexity of supply chains, together with the current energy crisis, is making the trading environment more challenging. The close management of cash remains a priority under these circumstances."

"We continue to see more opportunities than risk in the current climate and are cautiously optimistic looking forward. Our investment in staff and the strengthening of our management form a solid foundation for sustained growth and the delivery of strategic opportunities. Whilst the global economic and geo-political environment remains challenging, I am proud of our staff's dedication and commitment which reflects our heritage of 200 years."

For further information, please contact:

Chief Executive Officer's report

Overview

We have delivered against our key objectives in H1 2022, with solid financial results and clear strategic progress made.

The Group performed well in the First Half, with sales revenue of £10.4m, an increase of 7% compared to H1 2021 and a 4% rise compared to H2 2021. PBT at £0.34m also improved over H1 2021 (£0.26m) and (H2 2021: -£0.16m).

This performance has been delivered against a backdrop of macroeconomic trading conditions that are very complex, particularly the unreliability of supply of materials into our businesses, together with increasing costs, requiring us to adjust processes and plans continuously.

Our agile and responsive team approach is well adapted to adjust to these challenging conditions, and we are nurturing many new opportunities, building upon our strategy which is serving us well.

90% of our sales revenue was from export markets and 80% of this revenue was denominated in $USD. The continued strengthening of the $USD will be beneficial to our business in the medium term, but as reported in our full year 2021 accounts we have a hedging policy in place which protects the downside of currency appreciations but also delays the benefits of sterling weakness.

The current inflationary climate is predominantly driven by energy and shipping costs effecting businesses globally and as such we have been able to hold or increase selling prices generally. Some local inflation is directly related to the weakness of the pound which will have some affect upon us until the increased revenue from sales comes through post hedging.

Our inventory value has increased during the First Half as replacement costs of materials have been higher than older stock. However, overall, our older stocks and the overall volume of stock has reduced.

Net debt has increased marginally but is mitigated by inventory, capital expenditure, and movement in receivables and trade payables.

Our businesses in Ethiopia remain fully open and our shoe and glove production continues to develop. The effects of COVID19 have eased although local economic challenges have resulted in limited access to hard currency. We have been able to adjust our business model in order to mitigate this. Our investment in Ethiopia is helping to counter the global pressures on energy costs, as most of Ethiopia's power generation is from hydroelectric green power.

Our consumer product range in the UK continues to develop with growing third-party opportunities, as well as for our own brands. We have delivered further organic growth and announced the acquisition of Hill and Friends, a luxury consumer brand to add to our growing portfolio of brands. This will support us in our planned development.

Sustainability underpins everything we do and is embedded in all aspects of our decision making.

We have been able to continue recruiting, retaining, and developing our staff base in support of our strategic plan.

Our sales order book has remained strong across both our core and new market sectors.

Dividend

The Directors are declaring an interim dividend of 0.5 pence pe ordinary share in the capital of the Company, to be paid on 12 January 2023 to shareholders on the register at the close of business on Friday 16 December 2022. The shares will go ex-dividend on Thursday 15 December 2022.

Outlook 

The Group continues to make good progress with its strategy. The global inflationary climate and complexity of supply chains, together with the current energy crisis, is making the trading environment more challenging. The close management of cash remains a priority under these circumstances.

We continue to see more opportunities than risk in the current climate and are cautiously optimistic looking forward. Our investment in staff and the strengthening of our management will form a solid foundation for sustained growth and the delivery of strategic opportunities. 

Group Finance Director's report

Overview

Pittards performed very well in the First Half, with like for like growth of 7% compared to H1 2021 and revenue increased by 4% compared with H2 2021, approaching pre-COVID-19 levels. The financial strength of the Group reflects the benefits of the actions we took during the pandemic and a positive customer reaction to the Group's products and strategy.

Our careful planning and agile supply chains have enabled us to mitigate some of the difficulties in global logistics, utilising the vertical integration within the Group.

Profitability

Profit before tax in the First Half was £0.34m, improving on the £0.16m achieved in H2 2021. This was due to increases in volume combined with tight cost control. Gross margin increased to 30% (H1 2021: 28%), with EBITDA increased to £0.83m (H1 2021: £0.75m) an improvement of 11%.

Financial support and banking facilities

We have not sought any additional lending throughout the First Half and banking facilities remained sufficient to support planned growth.

Cost control and productivity

Headcount has stabilised at 1,095 as of 30 June 2022 (H1 2021: 1,125).

Assets and currency

At the end of the First Half, net assets stood at £12.58m (H2 2021: £13.80m). The reduction is predominantly due to the fair value of our hedging strategy, as of 30 June 2022, as a result of the weakening pound. Net debt increased by £0.49m to £11.18m (H2 2021: £10.69m). Our forward currency hedging strategy continues to the end of FY 2023 on a reducing percentage cover basis.

Energy costs

Escalating energy costs remain a challenge although we have some hedging in place which will help to mitigate energy cost increases.

Working capital

Inventory levels increased to £16.06m (H2 2021: £15.32m). Despite a value increase in inventory, we have seen an overall reduction in the total amount of inventory held. Due to higher input costs, we estimate that inventory will continue to increase in value per sq ft.

Net working capital remains steady at £14.75m (H2 2021: £14.79m), although this is affected by the recognition, at the half year, of USD forward hedging contracts. As a result of the progressive weakness of sterling, the fair value loss on future contracts is H1 2022: negative £0.934m (H2 2021: negative £0.381m). In the fulness of time the extra revenue generated from the conversion of $USD sales will offset this.

Gearing

Group gearing was 89% (H2 2021: 78%), with UK gearing within covenant levels at 55% (H2 2021: 59%).