REG - Pittards PLC - Final Results for the year ended 31 December 2021
23/03/2022 07:00
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RNS Number : 6678F Pittards PLC 23 March 2022
23 March 2022
Pittards PLC
Final Results for the year ended 31 December 2021
Return to full-year profitability; proposed final dividend; improved Order
Book for 2022
Pittards plc (AIM: PTD), the specialist producer of technically advanced leather and luxury
leather goods for retailers, manufacturers, and distributors, is pleased to
announce its audited Final Results for the year ended 31 December 2021.
Commenting on the results, Stephen Yapp, Chairman of Pittards, said: "Pittards
has acquitted itself robustly… with a return to full-year profitability.
The resilience of the Group was particularly evidenced by an increased sales
revenue to £19.7m….reflecting recovery in our core business and further
development of our new business sectors, including interiors and shoes,
resulting in a positive EBITDA of £1.4m and a profit before tax of £0.5m."
Highlights: Financial
· Revenues of £19.7m (2020: £15.2m)
· Gross margin of 28 per cent (2020: 21 per cent)
· EBITDA of £1.4m (2020: negative £1.2m)
· Profit before tax of £0.46m (2020: £2.28m loss), a
satisfactory recovery given the wider macro pressures in the second half
· Earnings/(loss) per share of 2.12p (2020: loss of 17.67p)
· Proposed final dividend of 0.5p per share making total
dividend of 1.0p per share for the year
· Net debt at year-end of £10.69m (2020: £10.12m)
· NAV at year-end of 101.9p per share (2020: 107.0p)
· Sales order book opened 2022 stronger than at the start
of each of the previous three years
Highlights: Operational
· Underlying stable profitability and return to pre covid
levels
· Second half remained profitable, despite logistic and
input cost challenges, and timing of price increases to customers
· Inventory increased by £0.3m, due to buffer stock from
Ethiopia to mitigate supply chain risk
· Q4-2021 sales orders resuming from both interiors and big
shoe markets
· Reduced risk in Ethiopia, whilst growing full shoe
production as a key development business
· Developing collaboration with Vivobarefoot, a key
international shoe customer
· Continued focus and investment in innovation to deliver
better technical performance, creating sustainable products across a broader
range of markets including big shoe, interiors, military
and equestrian
On current trading and outlook, Reg Hankey, CEO, added:
"We have started the current year with a better Order Book than for each of
the last three years and we believe that this higher level of demand is
sustainable. In addition to our traditional markets, which have recovered
well, we are now also well placed to respond to our new strategic market
sectors of interiors (automotive, aviation and mass transit), large shoe
brands and shoe production in Ethiopia which are set for faster growth than
2021.
"With a more efficient cost base we will also be able to respond more
positively to recovering demand in the global marketplace and the new capital
projects implemented during 2021 will allow us to grow capacity in a more
efficient way during 2022. We remain committed to a more balanced, agile
business with a broader range of customers, and we continue to believe that
opportunities outweigh risks to build on our 2021 performance in the current
year and beyond."
Certain information contained in this announcement would have constituted
inside information (as defined by Article 7 of Regulation (EU) No 596/2014)
("MAR") prior to its release as part of this announcement and is disclosed, in
accordance with the Company's obligations under Article 17 of MAR.
For further information, please contact:
Pittards PLC
+44 (0) 1935 474321
Web: www.pittards.com (http://www.pittards.com)
Stephen Yapp - Non-Executive Chairman
Reg Hankey - CEO
Richard Briere - CFO
WH Ireland
+44 (0)20 7220 1666
Web: www.whirelandcb.com (http://www.whirelandcb.com)
Mike Coe
Sarah Mather
Walbrook PR
+44 (0)20 7933 8780 or +44 (0)7768 807631
Email:- pittards@walbrookpr.com (mailto:pittards@walbrookpr.com)
Paul Vann
Nicholas Johnson
Chairman's statement for the year ended 31 December 2021
I can report that Pittards has acquitted itself robustly against the
strategies that we have in place, with a return to full year profit.
The resilience of the Group was particularly evidenced by an increased sales
revenue to £19.7m resulting in a positive EBITDA of £1.4m and profit before
tax of £0.5m, with returns on capital employed exceeding our weighted average
cost of capital.
Sales increased by 29%, reflecting recovery in our core business and further
development of our new business sectors, including interiors and shoes. The
second half financial performance was affected by challenges in the supply
chain, together with general inflationary pressures.
Throughout the year we have managed our inventory prudently, particularly in
the light of unrest in Ethiopia and delays in reliability of shipping. As a
result, we intentionally increased our raw material stocks in the UK to ensure
reliable supply for our customers.
A remarkable contribution has been made by all our staff once again during
this year. We are pleased that our staff headcount has remained broadly the
same, and reflects a well-balanced, diverse team, both in Ethiopia and UK,
capable of meeting the challenges facing the business. I thank them all for
their considerable efforts.
The Board is confident in the Group's business strategy and is committed to
its future success, with Board members increasing their shareholding in
Pittards. The Board's collective shareholding rose to 7.6% at the end of 2021
(2020: 6.4%).
There were no changes to the Board during the year. As previously announced,
Richard Briere (CFO), will be stepping down in April 2022 after 3 years and we
thank him for his contribution.
In Q3, 2021 we undertook a further modest share buyback of 40,000 shares,
resulting in 974,210 shares now being held in treasury. Also, in Q4 2021, we
returned to the dividend list with a payment of 0.5p per share. A final
dividend of 0.5p per share is being proposed for 2021 making the total
dividend for the year 1.0p per share (2020: £ nil ). Subject to the approval
of shareholders at the AGM, to be held on 17 May 2022, the final dividend will
be paid on 5 August 2022 to shareholders on the register at the close of
business on 1 July 2022. The shares will go ex-dividend on 30 June 2022.
Outlook
In accordance with our strategic priorities, we are delivering a broader range
(including finished shoes and packs for automotive) of products to more
market segments ( including outdoor endurance, interiors and automotive )
therefore creating a more balanced portfolio. We continue to invest in new
leading-edge technology, investing £0.8m in 2021, and we have planned further
capital investments in 2022/23. Our focus continues, on growth, driven by
innovation and sustainable development.
We have entered 2022 with a much stronger order book than the previous year.
It remains too early to judge how strong the recovery will be, given the
heightened uncertainty caused by the conflict in Ukraine, inflationary
pressures, and continued supply chain challenges.
However, we remain cautiously optimistic that the group will see continued
growth in the year.
Stephen Yapp
Chairman
23 March 2022
Chief Executive Officer's report
Key performance indicators
Full year
2021 2020
£m £m
Revenue 19.66 15.23
Gross profit 5.46 3.17
Gross margin 28% 21%
Profit / (Loss) before tax 0.46 (2.28)
EBITDA 1.41 (1.16)
Net assets 13.07 13.80
Inventory 15.32 15.02
Net debt 10.69 10.10
Net debt adjusted for treasury shares held 10.29 9.80
CAPEX spend 0.78 0.25
Gearing 81.8% 73.2%
Staff numbers 1,108 1,096
Basic earnings / (loss) per share (in pence) 2.12 (17.67)
Net Asset per share (in pence) 101.92 107.00
CEO Highlights
· Profit before tax of £0.46m (£2.38m loss:
2020), a satisfactory recovery given the wider macro pressures in the second
half
· EBITDA £1.4m (2020: negative £1.1m)
· Sales order book opened 2022 stronger than the
start of each of the previous three years
· Inventory increased by £0.3m, due to buffer
stock from Ethiopia to mitigate supply chain risk
· Q4-2021 sales orders resuming from both interiors
and big shoe markets
· Reduced risk in Ethiopia, whilst growing full
shoe production as a key development business
· Developing relationship with Vivobarefoot, a key
shoe customer for our Ethiopian business
COVID-19 response
During the first quarter of 2021, together with many other businesses, we were
challenged with the renewed impact of a third lock down due to COVID-19. As
the global pandemic unfolded, this unusual situation continued to affect our
people, our customers and supply chains.
We continued with our responsive approach from 2020 to the challenges we faced
and reviewed this on a weekly basis. The key pillars of our plan focused on:
· Safety of people - Implementing best practice in line with
government advice
· Customer support - Continued to supply and ongoing dialogue
· Cash management - Strict daily control
· Cost control - Realignment of all costs
Chief Executive Officer's report
Performance review
Sales demand for leather and related goods continued to improve throughout the
year with full year revenue at £19.7m (2020: £15.2m).
The changing shape of the business is aligned with our strategic priorities to
achieve a more balanced customer and product portfolio, in particular the
inroads made via Ethiopia in shoe production and sales, together with UK
interiors and key shoe accounts. These remain priority development markets for
the Group with volumes increasing by 12%. We expanded our design and
production management functions to support a broader product offering.
Over the last two years we have established a more resilient business that is
more profitable at lower levels of activity than in 2019, and 2021 built on
this. Whilst costs overall rose as a result of increased production,
administrative costs reduced.
We continued to operate COVID safe working procedures in line with government
guidance throughout the year. We are fortunate in having relatively large
production facilities in both the UK and Ethiopia which enabled us to
implement socially distanced working practices.
Gross margin was 28% (2020: 21%) with EBITDA recovering to £1.4m (2020:
negative £1.1m) and PBT of £0.46m (2020: £2.3m loss). Headcount rose
modestly to 1,108 (2020: 1,096) with the increase being centered on production
and technical staff.
In Ethiopia, the development of the COVID pandemic lags the UK. This coupled
with wider instability in the country, during 2021, meant we had a raised
level of supply chain risk. Although the Ethiopian factories remained open
throughout the period the board decided it was prudent to mitigate this risk
further through acquiring additional buffer stock of the unique sheepskins
that are used to make our technical glove leathers.
Overall inventories rose to £15.3m (2020: £15.0m) due to the increase in raw
materials explained above and offset by a reduction in older inventory of
approximately £1.0m.
Raw material prices have broadly stabilized, having peaked in Q3 2021. We have
successfully broadened our procurement strategy to achieve a more consistent
supply and purchase price from a broader supply base, reducing supply chain
risks.
Net debt at 31 December increased £0.58m, to £10.69m (2020: £10.11m),
mostly as a consequence of more bufffer material held in Yeovil.
US dollar rates moved slightly against us during 2021, although average
exchange rates were broadly unchanged on 2020. The Group has hedged between
40% and 60% of requirements, resulting in an average exchange rate of $1.355
through to June 2023. The average rate in 2021 for the Group was $1.37,
broadly unchanged on 2020.
During 2021, we invested £0.8m in machinery to improve our efficiency and
expand our capability and capacity.
Market view
We adapted our approach to customer engagement through the broader use of
virtual meetings, as the obvious travel inhibiting factors of the pandemic
remained throughout the year.
During the last two years, the overall demand for leather has been affected by
numerous global factors, principally COVID-19 lockdowns, China/US tariffs and
overall weakness in the global economy. Although Brexit had little impact on
the Group there have been some complications around logistics and
administration.
Given the increase in consumers' appetite for outdoor pursuits, including golf
and endurance sports, we have started to see some recovery in demand in these
market segments as social restrictions ease globally. Some of our other market
segments have been harder hit by the pandemic, most notably the aviation and
automotive industry, where global sales are down significantly since 2019
levels, albeit we continued to sell into these segments. Notwithstanding the
challenges faced by these industries, we have focused on innovation to deliver
better technical performance and create sustainable products across a broader
range of markets, including big shoe, interiors, military and equestrian.
We continue to develop our direct-to-consumer digital sales channels in the UK
and Ethiopia.
Operations
2021 was a challenging year for the Operations team as we increased sales by
29%, whilst managing efficiency and costs, together with training additional
new young members of our workforce to allow for further growth in the future.
Ben Johnson joined in December 2020 as the UK Director of Production. He and
his team have made substantial progress and have successfully installed a high
level of capital equipment during his first full year. The extra sheepskin
stocks from Ethiopia required additional processing in the UK, which added to
the complexity but benefitted from our investment in new machinery which
delivered improved quality and yield.
Investing in the next generation is an important part of our business. We were
approved for the UK Government's Kickstart scheme for 16-24 year olds, we
finished the year with a good outcome creating permanent jobs for over 10
Kickstart members. We also continue to recruit Apprentices into the
business, by adding two further.
The reliability of logistics, in particular, shipping, and transport, but also
stock shortages in the supply chains has meant continually replanning of the
production. Freight costs have increased dramatically adding £0.3m on a
like for like basis. The team continue to work on finding innovative solutions
to these challenges. These rising costs also apply to our competitors offering
some new opportunities as new supply chains develop.
In Ethiopia we have continued to broaden our manufacturing capability in
finished products and have increased sales in footwear alongside the
production of shoe leather. This has so far been focused upon producing
leather and shoes for Vivobarefoot and the local market.
During the year we responded to higher volumes by challenging how we work.
Processing is split between Ethiopia and the UK, and the UK has taken on a
higher proportion of the processing of our technical performance finished
leather.
Outlook for 2022
The global pandemic has had a big impact upon our business. Our resilience has
enabled us to come through one of the most serious set of circumstances we are
likely to face, and we have emerged a stronger business today.
Looking forward to 2022, we have started the year with a better order book
than each of the last three years and we believe that this higher level of
demand is sustainable. In addition to our traditional markets, which have
recovered well, we are also well placed to respond to our new strategic market
sectors of interiors (automotive, aviation and mass transit), larger shoe
brands and shoe production in Ethiopia which are set for faster growth than
2021.
We have during March 2022 signed a letter of intent with Vivobarefoot with
planned sales in excess of $2m USD. We aim to manufacturer and sell over 50%
more shoes to this customer compared to 2021, which assists in underpinning
our confidence to continue to grow back sales.
With a more efficient cost base we will also be able to respond more
positively to recovering demand in the global marketplace, and new capital
projects implemented during 2021 will allow us to grow capacity in a more
efficient way during 2022. Recruitment is expected to be significantly lower
in 2022 than 2021, given that the newly shaped team, is now established.
Our commitment to our sustainable and responsible supply chains are well
established and we will continue to build upon our continuous improvement
culture which is consistent with the aspirations of our growth customers.
Our employees have come through many challenges during 2021. By working
together and evolving our working practices we will continue to develop our
flexible approach allowing agile responses to our customers' needs.
Although there are still some unpredictable macro-economic factors,
specifically the instability in Europe, and inflationary cost pressures, our
confidence is growing as we build a better balanced business with a broader
range of customers. We are conscious of the unstable situation in Ukraine and
Russia, and specifically the sanctions environment. Our direct exposure to
those territories is not material. We do anticipate that there will be some
challenges arising in global markets more generally.
Whilst the reliability of global supply chains remains a doubt, we will
continue to focus on inventory levels and efficient use of working capital.
We remain committed to a more balanced, agile business and we continue to
believe that opportunities outweigh risks to build on our 2021 full year
performance.
Reg Hankey
Chief Executive Officer
23 March 2022
Chief Financial Officer's report
Financial review
Sales revenue increased to £19.7m (2020: £15.2m), despite periods of
substantial disruption, with gross profit rising strongly to £5.5m (2020:
£3.2m). We achieved improved gross margins, underpinned by the low-cost
facility in Ethiopia, greater operational efficiency through lower labour cost
per output and a broader product range with better margin contribution.
Cost savings remained a key feature of 2021, with annual cost savings of £2m
heading into 2021 compared to 2019 , whilst 2020 benefitted from furlough
support of £0.6m reducing our costs (2021: Nil). We are not reliant on any
form of cash deferment or subsidy during or at the end of the financial year.
We did claim £185k of kick start grant funds, to support the kick start
program, which reduced staff costs.
Overall inventory levels rose to £15.3m (2020: £15.0m) reflecting the
strategic increased purchases of raw material in the second half in the light
of challenging logistics, and unrest in Ethiopia, this was offset by a £1m
reduction in older slow moving stock. We are confident we will build on the
progress made in 2021 and 2020, as our newly aligned capacity plan and
reprocessing of existing stock to broaden utilisation of slower moving stock,
continues to take effect.
Working capital has also been adversely affected by the changing shape of the
business. Credit terms to new markets and customer mix have resulted in a
modest increase in debtor terms and similarly to balance working capital
creditors days which grew by 7 days .
Net debt was £10.69m ( £10.12m: 2020).
One of the Group's key financial measures is gearing. Our gearing rose to 81%
at the end of 2021 (2020: 73%) we remain committed to progressively reducing
gearing.
End of year financial position and commitments
Total net debt (including lease obligations and overdrafts) increased to
£10.69m as of 31 December 2021. Headroom on Group facilities was £2.6m
(£3.1m: 2020). The UK business achieved positive free cashflow being cashflow
from operations and after working capital excluding capital expenditure for
the year, despite rising inventory.
Net assets decreased from £13.9m to £13.1m, due to entirely to the
devaluation of the Ethiopian BIRR on Ethiopian held assets. The net assets of
the group include £2.4m of net assets that are held in Ethiopia.
The Group is actively seeking to mitigate foreign exchange risk as far as
practical, and US dollar remains a key risk which is managed. Due to economic
uncertainty, we eased the hedging strategy in 2021 by lowering US$ cover to
40% and extending it to June 2023.
We plan modest capital expenditure in 2022, of circa £0.4m across the Group
after a significant spend in 2021 of £0.8m, but these spends will be
carefully targeted with short payback, operational efficiencies and growth
prospects. We have not yet formally committed to this spend.
With the reduction in transit stock likely to materially reduce by the end of
the first half of 2022, we anticipate a modest fall in inventory levels and
improving cash headroom, as our purchasing commitment for inventory is
expected to be lower during the first half of 2022.
Gross margins
Gross margin increased to 28% (2020: 21%).
Business environment
The leather industry is a global business; wherever countries have meat and
dairy industries, hides and skins will be produced as by-products. Group
policy is to only process hides and skins that are a by-product of these
industries.
The Group operates in the UK, where it sources most of its hides, and in
Ethiopia, where it sources local hair sheep skins, goat skins and hides. The
Group exports on average 79% of its production into 39 countries over four
continents.
The demand for quality leathers that protect and enhance user experience,
especially in sports science, and consumer appetite for outdoor activities,
including golf and endurance, has helped the recovery in these core markets in
which we operate.
Anti-bribery and corruption
Pittards is committed to conducting its business affairs to ensure that it
does not engage in or facilitate any form of bribery or corruption in any
parts of its supply chain or in interaction with other stakeholders regardless
of geographical location. Expected standards of behaviour are outlined in
the anti-bribery and corruption policy, which also provides guidance on the
giving and receiving of gifts and hospitality. We have not traded with
Russian companies during recent years, including the full year 2021 or so far
in 2022.
Principal risks and uncertainties
Risk management is an important part of the management process throughout the
Group, with regular reviews of the key risks identified and the adequacy of
the controls in place to mitigate the risks. The current risks considered to
be key to the Group are as follows:
Coronavirus (COVID-19)
The safety of our staff, customers and wider community remains our key
priority, and we will observe government guidance. The uncertainty of a lock
down appears more predictable now. The lockdown enforced in January 2021 did
not materially impede our progress. We have learnt a great deal about
operating the business through periods of disruption, and we maintain
contingency both in resources and available funding should further unforeseen
disruption arise.
Currency
The Group is subject to the current volatility in the currency markets,
particularly US dollar, Ethiopian Birr and Euro. The Group manages its
exposure by maintaining a natural hedge where possible, for the US dollar and
Euro. In 2021, the Group entered foreign forward currency contracts to hedge
against movements in the US dollar, adopting a cash flow hedging strategy, in
response to the anticipated continued volatile currency markets. The Group
has moderate forward cover of 40% through to June 2023 and will continue to
review strategy in this area in the light of certainty of future sales, mix of
business, customer sentiment and order flow.
Political
Globally the political environment has been variable during 2021. We view this
as short term in nature, and it has not impeded business operations. Despite
the unrest in Ethiopia during 2021 we continued to trade as normal with no
disruption to operations. In the UK, we now have more certainty regarding the
country's future relationship with the European Union. The Group's exposure to
Europe is supply driven, with some of its purchases derived from Europe. The
global situation has a less optimistic tone at the start of 2022, which has
naturally created uncertainty for all businesses, and ours is no exception,
although in the near-term we have not experienced any material impact to our
staff, business, or customers.
Supply
The availability of quality raw materials is paramount to the business. The
Group owns Ethiopia Tannery Share Company (which is a main supplier of
Ethiopian skins) and has strong relationships with other major suppliers of
skins and hides in Ethiopia, the UK and around the world.
Energy cost and waste management
The Group is exposed to price volatility in the supply of energy and an
increased burden of environmental costs. The Group uses industry experts to
obtain the best energy rates available and continuous improvements are sought
in reducing waste of all kinds from the business.
Working capital
The Group actively monitors its liquidity position to ensure it has enough
available funds and working capital to operate and meet its planned
commitments. The Group continues to have excellent working relationships with
its banking partners both in the UK and Ethiopia and has sufficient facility
levels to meet its planned requirements.
Through its activities, the Group is exposed to a variety of financial risks;
market (including currency, price, and interest rate), liquidity and credit.
Share buybacks and dividends
During November 2021, the company paid a dividend to all shareholders of 0.5p
per share, excluding ordinary shares held in treasury, and a final dividend
has been proposed of 0.5p per ordinary share and, if approved, will be
recorded within the financial statements for the year ended 31 December 2022.
The company purchased a further 40,000 of its own ordinary shares during
Q3-2021, with treasury shares rising to 974,210, representing 7% of the
issued share capital.
Richard Briere
Chief Financial Officer
23 March 2022
Consolidated Income Statement
For the year ended 31 December 2021
2021 2020
Note £'000 £'000
Revenue 19,655 15,233
Cost of sales (14,198) (12,059)
Gross profit 5,457 3,174
Distribution costs (1,631) (1,632)
Currency gains / (losses) expensed 266 (48)
Administrative expenses (3,176) (3,268)
Profit/(Loss) before operations and finance costs 916 (1,774)
Finance costs (459) (508)
Profit/(Loss) before taxation 457 (2,282)
Taxation 3 (182) (144)
Profit / (Loss) after taxation 275 (2,426)
Earnings / (Loss) per share
Basic 4 2.12 (17.67)
Diluted 4 2.12 (17.67)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
£'000 £'000
Profit / (Loss) for the period after taxation 275 (2,426)
Other comprehensive income / (expense)
Revaluation of land and buildings 453 508
Revaluation of land and buildings - unrealised exchange (loss) (517) (575)
(64) (67)
Unrealised exchange (loss) on translation of overseas subsidiaries (551) (860)
Fair value (loss) on foreign currency cash flow hedges (381) 6
(932) (854)
Other comprehensive (loss) (996) (921)
Total comprehensive (loss) for the period (721) (3,347)
Balance sheets Group Company
As at 30 December 2021 2021 2020 2021 2020
Note £'000 £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 9,700 9,599 5,950 5,530
Intangible assets 63 75 63 75
Investment in Subsidiary undertakings - - 378 378
Loans receivable - - 1,607 1,765
Deferred income tax asset 100 100 100 100
Total non-current assets 9,863 9,774 8,098 7,848
Current assets
Inventories 15,316 15,021 12,454 10,916
Trade and other receivables 3,304 2,848 8,778 5,995
Cash and cash equivalents 51 85 8 8
Total current assets 18,671 17,954 21,240 16,919
Total assets 28,534 27,728 29,338 24,767
Liabilities
Current liabilities
Trade and other payables 3,830 2,863 6,289 2,730
Interest bearing loans, borrowings and overdrafts 5 7,783 6,909 6,226 4,881
Total current liabilities 11,613 9,772 12,515 7,611
Non-current liabilities
Deferred income tax liability 900 804 - -
Interest bearing loans, borrowings and overdrafts 6 2,955 3,294 2,338 2,391
Total non-current liabilities 3,855 4,098 2,338 2,391
Total liabilities 15,468 13,870 14,853 10,002
Net assets 13,066 13,858 14,485 14,765
Equity
Share capital 6,944 6,944 6,944 6,944
Share premium 2,984 2,984 2,984 2,984
Capital reserve 6,475 6,475 - -
Own shares reserve 7 (375) (850) (375) (850)
Share based payment reserve 56 47 56 47
Cash flow hedge reserve (88) 293 (88) 293
Translation reserve (5,473) (4,922) - -
Revaluation reserve 1,035 1,099 179 179
Retained earnings 1,508 1,788 4,785 5,168
Total equity 13,066 13,858 14,485 14,765
In accordance with the exemptions given by section 408 of the Companies Act
2006, the Company has not presented its own Statement of Comprehensive Income
or Income Statement. The Company made a profit of £0.2m (2020: loss of
£1.5m).
The financial statements were approved and authorised for issue by the Board
of directors on 23 March 2022 and signed on its behalf by:
Richard Briere - Chief Financial Officer Company Number -
0102384
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share capital Share premium Capital Reserve Own share reserve Share based payment reserve Cash flow hedge reserve Translation reserve Revaluation reserve Retained Earnings Total Equity
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2020 6,944 2,984 6,475 (495) 295 287 (4,062) 1,166 3,926 17,520
Comprehensive income/(loss) for the year:
Loss for the year after taxation - - - - - - - - (2,426) (2,426)
Other comprehensive (loss):
Gain on the revaluation of buildings - - - - - - - 522 - 522
Unrealised exchange gain/(loss) on translation of foreign subsidiaries - - - - - - (860) (589) - (1,449)
Fair value losses on foreign currency cash flow hedges - - - - - 6 - - - 6
Total other comprehensive (loss) - - - - - 6 (860) (67) - (921)
Total comprehensive income/(loss) for the year - - - - - 6 (860) (67) (2,426) (3,347)
Share-based payment expense - - - - 40 - - - - 40
Lapse of LTIP (288) 288 -
Purchase of own ordinary shares (355) - - - - - (355)
As at 1 January 2021 6,944 2,984 6,475 (850) 47 293 (4,922) 1,099 1,788 13,858
Comprehensive income/(loss) for the year:
Profit for the period after taxation - - - - - - - - 275 275
Other comprehensive income/(loss):
Gain on the revaluation of buildings - - - - - - - 453 - 453
Unrealised exchange gain/(loss) on translation of foreign subsidiaries - - - - - - (551) (517) - (1,068)
Fair value losses on foreign currency cash flow hedges - - - - - (381) - - - (381)
Total other comprehensive (loss) - - - - - (381) (551) (64) - (996)
Total comprehensive income/(loss) for the period - - - - - (381) (551) (64) 275 (721)
Share-based payment expense - - - - 9 - - - - 9
Purchase of own ordinary shares - - - (20) - - - - (4) (24)
Dividends paid to equity holders - - - - - - - - (65) (65)
ESOP scheme closed - - - 495 - - - - (486) 9
As at 30 December 2021 6,944 2,984 6,475 (375) 56 (88) (5,473) 1,035 1,508 13,066
Statement of cashflows
For the year ended 31 December 2021 Group Company
2021 2020 2021 2020
Note £'000 £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 8 181 549 (139) 218
Tax paid (83) 16 - -
Interest paid (447) (489) (194) (159)
Net cash (used in) from operating activities (349) 76 (333) 59
Cash flows from investing activities
Purchases of property, plant and equipment (372) (252) (325) (191)
Purchases of intangible assets (11) (12) (11) (12)
Proceeds from sale of plant 42 - 42 -
Net cash (used) in investing activities (341) (264) (294) (203)
Cash flows from financing activities
Proceeds from borrowings - 3,334 - 2,750
Repayment of bank loans (733) (1,951) (391) (1,209)
Repayment of obligations under finance leases (21) (71) (15) (71)
Payment of equity dividends (65) - (65) -
Purchase of own ordinary shares (20) (355) (20) (355)
Net cash (used) / generated in financing activities (839) 957 (491) 1,115
(Decrease) / Increase in cash and cash equivalents (1,529) 769 (1,118) 971
Cash and cash equivalents at beginning of year (5,077) (6,131) (4,586) (5,563)
Exchange gains/(losses) on cash and cash equivalents 238 285 (45) 6
Cash and cash equivalents at end of year (6,368) (5,077) (5,749) (4,586)
1. Basis of preparation
The consolidated financial statements have been prepared on a going concern
basis and in accordance with International Financial Reporting Standards
("IFRS") including International Accounting Standards ("IAS") and IFRS
Interpretations Committee ("IFRS IC") interpretations and with those parts of
the Companies Act 2006 applicable to companies reporting under accounting
standards as adopted for use in the EU.
The information in this preliminary statement has been extracted from the
audited financial statements for the years ended 31 December 2021 and 2020 and
as such, does not constitute statutory accounts within the meaning of s434 of
the Companies Act 2006. A full annual report for the year ended 31 December
2020 on which the auditor has issued an unqualified audit report, has been
delivered to the Registrar of Companies. The Group's annual report for 2021,
on which the auditors have issued an unqualified audit report, will be
delivered to the Registrar of Companies in due course. 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.
2. Business segments information
2021 UK Ethiopia Consolidation
Division Division adj Total
£'000 £'000 £'000 £'000
Revenue from customers 18,227 4,956 (3,528) 19,655
Inter-segmental trading - (3,528) 3,528 -
18,227 1,428 - 19,655
Gross profit 4,528 902 27 5,457
Profit/ (Loss) before tax 367 (536) 626 457
Assets 29,426 8,460 (9,352) 28,534
Liabilities (14,941) (6,071) 5,544 (15,468)
Net assets 14,485 2,389 (3,808) 13,066
2020 UK Ethiopia Consolidation Total
Division Division adj Total
£'000 £'000 £'000 £'000
Revenue from customers 13,622 4,062 (2,451) 15,233
Inter-segmental trading (171) (2,280) 2,451 -
13,451 1,782 - 15,233
Gross profit 3,023 413 (262) 3,174
(Loss) before tax (955) (1,327) - (2,282)
Assets 31,506 9,219 (12,997) 27,728
Liabilities (14,894) (6,703) 7,727 (13,870)
Net assets 16,612 2,516 (5,270) 13,858
Geographical analysis of revenue (based on the customer's country of domicile)
2021 UK Ethiopia
Division Division Total
£'000 £'000 £'000
UK 2,422 361 2,783
Europe 450 313 763
North America 126 - 126
Far East and Rest of World 15,229 754 15,983
18,227 1,428 19,655
2020 UK Ethiopia Total
Division Division Total
£'000 £'000 £'000
UK 1,995 141 2,136
Europe 1,172 458 1,630
North America 97 34 131
Far East and Rest of World 10,187 1,149 11,336
13,451 1,782 15,233
3. Taxation 2021 2020
£'000 £'000
(a) Analysis of the credit)/charge in the year
The (credit)/charge based on the (loss)/profit for the year comprises:
Corporation tax on profit for the year - -
Foreign tax on profit for the year 10 79
Foreign tax related to prior years 148 65
Total current tax 158 144
Deferred tax
Origination and reversal of temporary differences 24 -
Total deferred tax 24 -
Income tax (credit)/charge 182 144
The Group's profits/losses for the year are taxed at the standard rate of
corporation tax in the UK of 19% (2020: 19%) and Ethiopia of 30% (2020: 30%).
The tax assessed in each year differs from the standard rate of corporation
tax for the relevant year. The group retains taxable losses in the UK of
£13.8m to utilise in future periods. The differences are explained below:
2021 2020
£'000 £'000
(b) Factors affecting the tax charge for the year
(Loss)/profit on ordinary activities before tax 457 (2,282)
Tax calculated at domestic tax rates applicable to profits in the respective 13 (579)
countries
Impact of tax losses not recognised 160 575
Foreign tax related to prior years(1) 148 64
Expenses not deductible for tax purposes(2) 77 102
Allowable tax deductions(3) (207) (81)
Foreign tax paid 13 88
Double tax relief (22) (15)
Deferred tax impact of property valuation - (10)
Total tax charge /(credit) for the year ( Note 3(a) ) 182 144
1 Foreign tax in prior years relates to a historic tax charge imposed on PPM
and withholding tax paid.
2 Expenses not deductible for tax purposes largely relate to depreciation,
for which capital allowances are received.
3 Allowable tax deductions relate to capital allowances received.
(c) Factors that may affect future tax charges
The main rate of corporation tax remains at 19%. All UK deferred tax assets
have been measured using the rate in place at the time they expect to be
realised or settled.
4a. Earnings per share
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 held in treasury under
own share reserve, by the company not carry voting or dividend rights.
Earnings per share 2021 2020
Weighted average number of ordinary shares in issue Basic 000s 12,946 13,733
Weighted average number of ordinary shares in issue Diluted 000s 12,946 13,789
Basic (loss)/earnings per ordinary 50p share pence 2.12 (17.67)
Diluted (loss)/earnings per ordinary 50p share pence 2.12 (17.67)
4b. Dividends
2021 2020
£'000 £'000
Ordinary dividends paid during the year
Interim dividends of 0.5p per share 65 -
The Directors are proposing a final dividend for the 2021 year of 0.5pence per
share, (2020: £nil) in respect of the financial period ended 30 December
2021.
5. Interest-bearing loans, borrowings and overdrafts - current Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Secured:
Overdrafts 6,419 5,162 5,757 4,594
Loans 1,263 1,698 375 275
Obligations under leases 101 49 94 12
7,783 6,909 6,226 4,881
The Company's overdraft and loan facilities are provided by Lloyds Bank.
During the year, £0.4m of new hire purchases from Lloyds Bank was drawn
down. .
6. Interest-bearing loans, borrowings and overdrafts - non current Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Secured:
Loans 2,647 3,288 2,030 2,388
Obligations under leases 308 6 308 3
2,955 3,294 2,338 2,391
Repayable as follows:-
1-5 Years 2,955 3,194 2,338 2,291
After more than 5 years - 100 - 100
2,955 3,294 2,338 2,391
The fair value of the Group's loan and overdraft facilities is materially the
same as book value, and the secured facilities are supported by fixed and
floating charges over the assets of the Group, principally property, plant and
equipment, inventory and receivables.
7. Reserves
The share premium account represents the difference between the issue price
and the nominal value of shares issued. The capital reserve relates to
goodwill arising on previous acquisitions written off directly to reserves.
The Pittards' Employee Share Ownership trust held Pittards' plc ordinary
shares to meet potential obligations under the restricted share plan scheme.
Shares were held in trust until such time as they may be transferred to
employees in accordance with the terms of the scheme. There are no further
awards in the scheme which could vest in the participants. At 31 December
2021, the trust held nil, 50p shares (2020: 19,026) with a market value at
that date of £Nil (2020: £8,942).
Own shares reserve comprises Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Own share reserve comprises
ESOP - 495 - 495
Ordinary own shares held in treasury 375 355 375 355
375 850 375 850
During the year the ESOP trust scheme was dissolved and remaining assets
disbursed by the trustees, which amount to cash of £1,320 and 19,126 of
ordinary shares.
The cash flow hedge reserve represents the fair value of forward currency
contracts held under hedge accounting at the end of the year. See note 26
for further details.
The translation reserve represents the cumulative net unrealised exchange loss
arising from the translation of overseas subsidiaries.
The revaluation reserve represents the revaluation of the buildings at Yeovil,
ETSC, PPM and GS undertaken annually.
The retained earnings reserve represents all other net gains and losses, and
transactions with owners including dividends not recognised elsewhere.
8. Cash generated from / (used in) operations
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Profit / (Loss) before taxation 457 (2,282) 172 (1,460)
Adjustments for:
Depreciation of property, plant and equipment 475 616 320 341
Amortisation of intangibles 23 51 23 51
Bank and other interest charges 447 489 233 174
Share based payment expense 9 40 9 40
Other non-cash items in Income Statement (556) 1,302 122 370
Operating cash flows before movement in working capital 855 216 879 (484)
Movements in working capital (excluding exchange differences on
consolidation):
(Increase) / Decrease in inventories (1,100) 513 (1,538) 451
(Increase) / Decrease in receivables (507) 501 (2,858) 293
Increase / (Decrease) in payables 933 (681) 3,382 (42)
Cash generated /(used in) from operations 181 549 (135) 218
Additional information
· Copies of the full 2021 Annual Report will be available on the
company's website within 7 working days at www.pittards.com
(http://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 17 May
2022 at 12pm.
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