Final Results

Pittards

21/03/2017 07:00

RNS Number : 9962Z

Pittards PLC

21 March 2017

21 March 2017

Pittards plc

("Pittards" or "the Group")

Full year results for the year ended 31 December 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 year ended 31 December 2016.

Year ended 31 December 2016:

  Revenue 27.0m (2015: 30.5m)

  Underlying PBT 0.2m and LBT of 4.1m (2015 PBT: 0.7m) after an exceptional stock write-down of 4.3m

 Net assets 21.3m (2015: 24.3m), net assets per share 153.38p (2015: 204.45p)

 New management team in place from the final quarter of 2016

 Restructured operationally to become two reporting divisions: "UK" and "Ethiopia"

Stephen Yapp, Chairman commented: "We areputting in place the necessary pillars that will strengthen Pittards' position as a leading performance-leather expert, supported by scalable manufacturing operations and a highly capable management team.

"The restructuring and strengthening of the management team was completed in the final quarter of 2016 and strides have already been made to evolve and progress the strategic priorities and milestones for the next three years. Further updates on this will be given later this year.

"Whilst it is still early days, we are beginning to experience a more positive demand environment for leather. Together with the actions being identified and taken, the Board believe we will start to see a benefit in the latter part of 2017 and that the prospects for the future are promising."

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
WHIreland Limited
www.whirelandplc.com
Mike Coe/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

2016 was an active year for Pittards during which we have been primarily focused on the management team and structure to develop and implement a medium term strategic plan. As previously communicated, the financial performance during the year was overshadowed by challenging market conditions and political disruption in Ethiopia in the latter part of 2016.

The restructuring and strengthening of the management team was completed in the final quarter of the year and strides have already been made towards identifying the market priorities for the next three years. This will allow us to pursue growth opportunities both in existing core and new markets that are considered to be most aligned with our skills and expertise.

Year ended 31 December 2016:

  Revenue 27.0m (2015: 30.5m)

  Underlying PBT 0.2m and LBT of 4.1m (2015 PBT: 0.7m) after an exceptional stock write-down of 4.3m

 Net assets 21.3m (2015: 24.3m), net assets per share 153.38p (2015: 204.45p)

 New management team in place from the final quarter of 2016

 Restructured operationally to become two reporting divisions: "UK" and "Ethiopia"

Market conditions

The global leather market continues to be challenging for companies looking for growth against a backdrop of significant global change and weak consumer demand. Demand in our core markets of shoe, sport and dress gloves remains depressed and we now believe that after four years of contraction, the dress glove market has rebalanced at this lower level. Encouragingly though, we are beginning to see some signs that growth may return in some of our other markets during the latter part of 2017.

In line with an intention to broaden our market base, we are reviewing additional potential markets. Initial findings have identified both the interiors and general footwear markets as having the characteristics our capabilities can best leverage.

Financial review

Overall the Group had a difficult year financially with depressed leather volumes and a number of non-recurring items.

Revenue was down 11% to 27.0m as a consequence of reduced demand and the impact on the Ethiopian business of the political disruption. The political environment in Ethiopia has stabilised and our manufacturing production capabilities there are now returning to more normal levels.

Gross margin continued to improve at 24% pre-provision (2015: 22%) reflecting favourable currency improvements mainly US dollar-related.

The Board has conducted a detailed review of the stock holding and has decided to take a 4.3m provision reducing the year end stock to 17.4m. This provision takes into account: the impact of currency translation, slow moving stock and the potential strategic shift in the business moving towards a higher proportion of hide relative to skins business. The provision relates to low end dress and sport glove leather, with a write down of 1.3m in the UK and 3.0m in Ethiopia.

Underlying PBT for the year was 0.2m and after the exceptional stock write-down, the LBT for the year was 4.1m (2015 PBT: 0.7m)

Net debt increased by 3.6m to 10.1m. This reflects an increase in working capital and capital investment of 1.4m. The UK banking facilities were renewed in December 2016 with available Group banking facilities of 13.0m.

The Group's structure has been simplified into two divisions - UK and Ethiopia - and our focus during 2017 will be to develop and implement a range of key financial measures which both reflect the individual trading environments and deliver returns above the cost of capital.

Board changes

As previously announced, I was appointed Chairman on 16 May 2016 and on 1 June 2016 Matthew O'Rourke was appointed CFO and Jill Williams resigned from this role. She became a non-executive director on 1 January 2017.

Team

Throughout the past year, the Group has been in a transitional phase. To have executed the changes outlined internally, whilst adopting a 'business as usual' approach externally, is testament to the commitment and hard work of our 1600 employees to whom I would like to express my thanks.

Outlook

The restructuring and strengthening of the management team was completed in the final quarter of 2016 and strides have already been made to evolve and progress the strategic priorities and milestones for the next three years. Further updates on this will be given later this year.

Whilst it is still early days, we are beginning to experience a more positive demand environment for leather. Together with the actions being identified and taken, the Board believe we will start to see a benefit in the latter part of 2017 and that the prospects for the future are promising.

Consolidated income statement

for the year ended 31 December 2016

Continuing operations
Note
2016
000
2015
000
Revenue
27,009
30,523
Cost of sales
(20,554)
(23,902)
Cost of sales exceptional stock provision
3
(4,307)
-
Gross profit
2,148
6,621
Distribution costs
(2,167)
(1,919)
Administrative expenses
(3,572)
(3,275)
Administrative expenses exceptional restructuring costs
-
(312)
(Loss)/Profit from operations before finance costs
(3,591)
1,115
Finance costs
(499)
(484)
Finance income
19
24
(Loss)/Profit before taxation
(4,071)
655
Taxation
6
(75)
(184)
(Loss)/Profit for the year after taxation
(4,146)
471
(Loss)/Profit attributable to:
Owners of the parent
(4,146)
474
Non controlling interest
-
(3)
(4,146)
471
(Loss)/Earnings per share attributable to the owners of the parent
Basic
4
(29.89p)
3.98p
Diluted
4
(28.91p)
3.88p

Consolidated statement of comprehensive income

for the year ended 31 December 2016

2016
000
2015
000
(Loss)/Profit for the year after taxation
(4,146)
471
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of land and buildings
135
182
Revaluation of land and buildings unrealised exchange gain
279
13
414
195
Items that may be subsequently reclassified to profit or loss
Unrealised exchange gain on translation of overseas subsidiaries
827
58
827
58
Other comprehensive income
1,241
253
Total comprehensive (loss)/income for the year
(2,905)
724
Total comprehensive (loss)/income attributable to:
Owners of the parent
(2,905)
717
Non controlling interest
-
7

Consolidated statement of changes in equity

for the year ended 31 December 2016

Share
capital
000
Share
premium
000
Capital
reserve
000
Retained
earnings
000
Translation
reserve
000
Shares held
by ESOP
000
Revaluation
reserve
000
Share based payment reserve
000
Total equity
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 year:
Profit/(Loss) for the year after taxation
474
474
(3)
471
Other comprehensive income:
Gain on the revaluation of buildings
172
172
10
182
Unrealised exchange gain on translation of foreign subsidiaries
58
13
71
71
Total other comprehensive income
58
185
243
10
253
Total comprehensive income for the year
474
58
185
717
7
724
Transactions with owners:
Proceeds from shares issued
2,313
2,984
5,297
5,297
Total transactions with owners
2,313
2,984
5,297
5,297
At 1 January 2016
6,944
2,984
6,475
9,081
(2,692)
(495)
1,853
24,150
179
24,329
Comprehensive income for the year:
Loss for the year after taxation
(4,146)
(4,146)
(4,146)
Other comprehensive income:
Gain on the revaluation of buildings
135
135
135
Unrealised exchange gain on translation of foreign subsidiaries
827
279
1,106
1,106
Total other comprehensive income
827
414
1,241
1,241
Total comprehensive (expense)/income for the year
(4,146)
827
414
(2,905)
(2,905)
Share based payment expense
29
29
29
Purchase of non controlling interest
(179)
(179)
At 31 December 2016
6,944
2,984
6,475
4,935
(1,865)
(495)
2,267
29
21,274
21,274

Balance sheet

as at 31 December 2016

2016
000
2015
000
ASSETS
Non-current assets
Property, plant and equipment
12,106
10,679
Intangible assets
243
273
Investments in subsidiary undertakings
Deferred income tax asset
1,800
1,676
Total non-current assets
14,149
12,628
Current assets
Inventories
17,353
18,872
Trade and other receivables
4,388
4,017
Cash and cash equivalents
206
485
Current income tax recoverable
38
26
Total current assets
21,985
23,400
Total assets
36,134
36,028
LIABILITIES
Current liabilities
Trade and other payables
(4,362)
(4,664)
Interest bearing loans, borrowings and overdrafts
(6,781)
(3,806)
Total current liabilities
(11,143)
(8,470)
Non-current liabilities
Deferred income tax liability
(183)
(92)
Interest bearing loans, borrowings and overdrafts
(3,534)
(3,137)
Total non-current liabilities
(3,717)
(3,229)
Total liabilities
(14,860)
(11,699)
Net assets
21,274
24,329
EQUITY
Share capital
6,944
6,944
Share premium
2,984
2,984
Capital reserve
6,475
6,475
Shares held by ESOP
(495)
(495)
Share based payment reserve
29
Translation reserve
(1,865)
(2,692)
Revaluation reserve
2,267
1,853
Retained earnings
4,935
9,081
Total equity attributable to owners of the parent
21,274
24,150
Non-controlling interest
179
TOTAL EQUITY
21,274
24,329

Statement of cash flows

for the year ended 31 December 2016

Note
2016
000
2015
000
Cash flows from operating activities
Cash (used in)/generated from operations
5
(1,336)
962
Tax paid
(81)
(183)
Interest paid
(480)
(447)
Net cash (used in)/generated from operating activities
(1,897)
332
Cash flows from investing activities
Purchases of property, plant and equipment
(1,181)
(4,350)
Purchases of intangible assets
(5)
(108)
Purchase of investments
(192)
Net cash used in investing activities
(1,378)
(4,458)
Cash flows from financing activities
Proceeds from borrowings
2,364
3,651
Repayment of bank loans
(1,658)
(1,733)
New finance lease obligations
374
35
Repayment of obligations under finance leases and hire purchase obligations
(88)
(42)
Proceeds from share issue (net of costs)
5,297
Net cash generated from financing activities
992
7,208
(Decrease)/increase in cash and cash equivalents
(2,283)
3,082
Cash and cash equivalents at beginning of the year
(1,474)
(4,551)
Exchange gains/(losses) on cash and cash equivalents
19
(5)
Cash and cash equivalents at end of the year
(3,738)
(1,474)

Notes

1. The figures for the years ended 31 December 2016 and 2015 do not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The figures for the year ended 31 December 2016 have been extracted from the statutory accounts for that year which have yet to be delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report. A full Report and Accounts for the year ended 31 December 2015, on which the auditor has issued an unqualified audit report has been delivered to the Registrar of Companies. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts.

The preliminary announcement was approved by the board of directors and authorised for issue on 20 March 2017.

2. Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the European Union (IFRS) and IFRS IC interpretations in issue at the balance sheet date.

The consolidated financial statements have been prepared in accordance with the Companies Act 2006, applicable to companies reporting under IFRS.

The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2016 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards (IFRS).

3. Exceptional items

2016
000
2015
000
Cost of sales exceptional stock provision
4,307
Administrative expenses exceptional restructuring costs
312
4,307
312

The Board have conducted a detailed review of the stock holding and have decided to take a 4.307m provision reducing the year end stock to 17.353m. This takes into account: the impact of currency translation, slow moving stock and the potential strategic shift in the business moving towards a higher proportion of hide business. The provision relates to low end dress and sport glove leather, with a write down of 1.271m in the UK and 3.036m in Ethiopia.

4. (Loss)/Earnings per ordinary share

2016
000
2015
000
Analysis of the (loss)/profit in the year:
(Loss)/Profit for the year attributable to owners of the parent
(4,146)
474
Weighted average number of ordinary shares in issue
(excluding the shares owned by the Pittards Employee Share Ownership Trust)
000s
000s
Basic
13,870
11,900
Diluted
14,341
12,201
Basic (loss)/earnings per ordinary 50p share
(29.89p)
3.98p
Diluted (loss)/earnings per ordinary 50p share
(28.91p)
3.88p

5. Cash (used in)/generated from operations

Group
2016
000
2015
000
(Loss)/Profit before taxation
(4,071)
655
Adjustments for:
Depreciation of property, plant and equipment
605
456
Amortisation
35
22
Bank and other interest charges
480
447
Share based payment expense
29
-
Other non-cash items in Income Statement
(61)
(47)
Operating cash flows before movement in working capital
(2,983)
1,533
Movements in working capital (excluding exchange differences on consolidation):
Decrease/(increase) in inventories
2,912
(1,003)
(Increase)/decrease in receivables
(194)
911
(Decrease)/increase in payables
(1,071)
(479)
Cash (used in)/generated from operations
(1,336)
962

6. Taxation

The Group has recognised a deferred tax asset of 1.800m (2015: 1.676m) in respect of losses out of a total potential deferred tax asset of 1.800m (2015: 1.676m).

The tax charge reduced to 0.075m (2015: 0.184m), mainly as a result of the creation of tax losses following the performance during the year, offset by a historic tax charge in Ethiopia.

7. Copies of the 2016 Annual Report and Accounts will be posted to shareholders in April and will be available on the Companys website at www.pittards.com. Further copies may be obtained by contacting the Company Secretary at Pittards plc, Sherborne Road, Yeovil, Somerset, BA21 5BA. The annual general meeting is to be held at the registered office on 16 May 2017 at 12pm.

This information is provided by RNS

The company news service from the London Stock Exchange

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