TIDMPTD
RNS Number : 8618M
Pittards PLC
19 September 2019
19 September 2019
PITTARDS PLC
("Pittards" or "the Group")
Interim results for the six months ended 30 June 2019
Pittards plc, the specialist producer of technically advanced
leather and luxury leather goods for retailers, manufacturers and
distributors, today announces its results for the six months ended
30 June 2019.
Half year ended 30 June 2019
-- Revenue decreased by 16% to GBP12.1m (H1 2018: GBP14.5m)
-- EBITDA GBP0.8m (H1 2018: GBP0.8m)
-- Profit before tax increased to GBP0.2m (H1 2018: GBP0.1m)
-- Net assets GBP18.5m (31 December 2018: GBP18.5m)
-- Gross margin improved to 29.7% (31 December 2018: 25.1%)
-- Strategic initiatives progressing well particularly in the
interiors market and Ethiopian footwear manufacturing
Stephen Yapp, Chairman commented: "The themes outlined in our
2018 annual report have continued into the first half of 2019; we
have delivered a solid financial performance against ongoing
fluctuations in global trading and made important progress to
diversify our business.
"The improvement in profitability reflects the hard work to
enhance operational efficiencies, investments to broaden our
manufacturing capabilities and our focus on delivering a quality
service to core customers, whilst taking further steps to create a
more balanced portfolio.
"We enter the second half of the year with a good order book,
lower cost base and improved margins. Looking ahead, we are
increasingly optimistic about the pipeline of opportunities within
our core and targeted markets. Whilst this is set against an
uncertain economic outlook, we expect the second half to be
stronger than the first particularly in terms of profit and are
confident our ongoing investment plans and strategy will deliver
significant shareholder value as these fully mature."
For further information, please contact:
Pittards plc www.pittards.com
Stephen Yapp, Chairman
Reg Hankey, CEO
Richard Briere +44 (0) 1935 474 321
WH Ireland Limited www.whirelandcb.com
Mike Coe, Chris Savidge +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
for the SIX MONTHSED 30 JUNE 2019
The first half of 2019 experienced a continuation of the themes
outlined at the end of 2018; we delivered a solid financial
performance against ongoing fluctuations in global trading and made
further progress aligned with our strategic goals.
The improvement in profitability reflects the ongoing hard work
to enhance operational efficiencies, investments to broaden our
manufacturing capabilities and our focus on delivering a quality
service to core customers whilst taking further steps to create a
more balanced portfolio.
Half year ended 30 June 2019
-- Revenue decreased by 16% to GBP12.1m (H1 2018: GBP14.5m)
-- EBITDA GBP0.8m (H1 2018: GBP0.8m)
-- Profit before tax increased to GBP0.2m (H1 2018: GBP0.1m)
-- Net assets GBP18.5m (31 December 2018: GBP18.5m)
-- Gross margin improved to 29.7% (31 December 2018: 25.1%)
-- Strategic initiatives progressing well particularly in the
interiors market and Ethiopian footwear manufacturing
Financial review
Revenue for the first half decreased 16% to GBP12.1m within both
our UK and Ethiopian divisions as a result of a decrease in orders
from our core customers and destocking within their supply
chain.
Profit before tax for the first half was double the equivalent
period last year at GBP0.2m, a pleasing result given the reduction
in sales volumes.
Continuing the improvement from last year where they stood at
25.1% for the full year, gross margins rose significantly to 29.7%
helped by lower headcount in production, reduced raw material
prices and currency gains.
Our stock level increased by GBP0.4m to GBP16.7m, although this
was GBP0.2m lower than at the same point two years ago, and our
slower moving stock at GBP2.2m remained unchanged since the year
end. Despite pressure from lower volumes, and short-term timing
effects on key bulk orders, we are encouraged that new channels and
product ranges coupled with the more typical volumes we anticipate,
will make some inroads in the second half.
Net assets were unchanged at GBP18.5m (December 2018 GBP18.5m).
Net debt was unchanged at GBP9.8m compared with the same time last
year although it was up GBP2.1m on December 2018 due to timing
differences in working capital during the summer. We anticipate
these timing differences will reverse by year end.
The tax charge for the period was GBP0.05m due to profits in
Ethiopia. Generally, the Group enjoys a favourable tax position
with significant prior year tax losses unutilised and anticipates
minimal tax payments for the year ahead.
Operational and strategic update
Persistent global uncertainty continued to impact customers in
our existing and target markets in the first half of the year and
consequently, volumes in both our UK and Ethiopia divisions were
depressed. Against this backdrop, we have delivered a stable
financial performance, and ensured that the quality of service was
maintained for all customers.
In the UK Division, the automotive market is gaining traction;
automotive customers have increased their orders on an incremental
steady basis signifying that we are now establishing ourselves as a
manufacturer of this specialist upholstery, where both our quality
and price point are positioning us attractively for future
growth.
The aviation markets are engaging with us directly and we are at
various stages of the protracted sampling process with a number of
potential customers. We have entered the bulk sampling stage with a
big shoe provider and are actively in dialogue with others, again
with our offering well placed to compete.
Alongside with its core gloving products, our Ethiopian
operation has now established itself as a shoe manufacturer for
Soul of Africa and Vivo Barefoot. Whilst a nascent market for us,
it is growing on a steady basis. Accordingly, in the first half we
invested in a new manufacturing production line, for which training
is well progressed, and further modest investments are anticipated
in the second half. Together with our own shoe manufacturing brand
NTOTO, these products are helping to achieve our objective of a
more balanced portfolio.
Board changes
As previously announced Richard Briere joined the Board as CFO
on 19(th) March 2019.
Outlook
The outcome of Brexit remains uncertain and could lead to a
short-term impact to the movement of products, the quantum or
timing of which is too speculative to judge accurately. However,
with 90% of the Group's sales outside Europe and dual manufacturing
production in our UK and Ethiopia divisions, we are optimistic that
whilst the lack of clarity persists any risk can be managed within
our existing model.
We enter the second half of the year with a good order book,
lower cost base and improved margins. Looking ahead, we are
increasingly optimistic about the pipeline of opportunities within
our core and targeted markets. Whilst this is set against an
uncertain economic outlook, we expect the second half to be
stronger than the first particularly in terms of profits and are
confident our ongoing investment plans and strategy will deliver
significant shareholder value as these fully mature.
CONSOLIDATED INCOME STATEMENT
for the SIX MONTHSED 30 JuNE 2019
Six months ended Six months Year ended
ended
30-Jun-19 30-Jun-18 31-Dec-18
Note GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Revenue 12,132 14,505 28,469
Cost of sales (8,528) (11,426) (21,318)
Gross profit 3,604 3,079 7,151
Distribution costs (1,119) (1,070) (2,209)
Administrative expenses (1,975) (1,578) (3,950)
Profit from operations
before finance costs 510 431 992
Finance costs (286) (344) (647)
Finance income - 9 9
Profit before taxation 224 96 354
Taxation 4 (53) 29 (2,283)
------------------- ---------------- ----------------
Profit for the period
after taxation 171 125 (1,929)
Earnings per share 3
Basic 1.23p 0.90p (13.91p)
Diluted 1.22p 0.90p (13.76p)
------------------- ---------------- ----------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the SIX MONTHS Ended 30 JUNE 2019
Six months ended Six months Year ended
ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Profit for the period
after taxation 171 125 (1,929)
Other comprehensive income
Items that will not be
reclassified to profit
or loss
Revaluation of land and
buildings - - 219
Revaluation of land and
buildings - unrealised
exchange gain/(loss) (47) 29 49
------------------- --------------- ----------------
(47) 29 268
Items that may be subsequently
reclassified to profit
or loss
Unrealised exchange gain/(loss)
on translation of overseas
subsidiaries (159) 172 389
Fair value losses on
foreign currency cash
flow hedges (19) - (52)
------------------- --------------- ----------------
(178) 172 337
Other comprehensive (loss)/income (225) 201 605
------------------- --------------- ----------------
Total comprehensive (loss)/income
for the period (54) 326 (1,324)
------------------- --------------- ----------------
CONSOLIDATED statement of Changes in equity
for the six monthsED 30 JUNE 2019
Note Share Share Capital Shares Share Cash Translation Revaluation Retained Total
capital premium reserve held based flow reserve reserve earnings equity
by payment hedge
ESOP reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
At 1 January
2018 6,944 2,984 6,475 (495) 131 - (3,520) 1,813 5,432 19,764
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Opening balance
adjustment - - - - - - - - (26) (26)
At 1 January
2018 (restated) 6,944 2,984 6,475 (495) 131 - (3,520) 1,813 5,406 19,738
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Comprehensive -
income for the
period
Profit for the
period after
taxation - - - - - - - - 125 125
Other
comprehensive
income
Unrealised - - - - - - 172 29 - 201
exchange
loss on
translation
of foreign
subsidiaries
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total other - - - - - - 172 29 - 201
comprehensive
loss
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total comprehensive
(loss)/income
for the period - - - - - - 172 29 125 326
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Share based - - - - 58 - - - - 58
payment
expense
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
At 30 June
2018 6,944 2,984 6,475 (495) 189 - (3,348) 1,842 5,531 20,122
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Comprehensive
income for the
period
Profit for the
period after
taxation - - - - - - - - (2,054) (2,054)
Other
comprehensive
income
Gain on the
revaluation
of buildings - - - - - - - 219 - 219
Unrealised - - - - - - 217 20 - 237
exchange
loss on
translation
of foreign
subsidiaries
Fair value - - - - - (52) - - - (52)
losses
on foreign
currency
cash flow
hedges
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total other - - - - - (52) 217 239 - 404
comprehensive
expense
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total - - - - - (52) 217 239 (2,054) (1,650)
comprehensive
(loss)/income
for the period
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Share based - - - - 14 - - - 43 57
payment
expense
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
At 31 December
2018 6,944 2,984 6,475 (495) 203 (52) (3,131) 2,081 3,520 18,529
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Comprehensive
income for the
period
Profit for the
period after
taxation - - - - - - - - 171 171
Other
comprehensive
income
Unrealised - - - - - - (164) (47) - (211)
exchange
gain on
translation
of foreign
subsidiaries
Fair value - - - - - (19) - - - (19)
losses
on foreign
currency
cash flow
hedges
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total other - - - - - (19) (164) (47) - (230)
comprehensive
income
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Total - - - - - (19) (164) (47) 171 (59)
comprehensive
income for the
period
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
Share based - - - - 42 - - - - 42
payment
expense
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
At 30 June
2019 6,944 2,984 6,475 (495) 245 (71) (3,295) 2,034 3,691 18,512
--------------------------------------- -------------------------------- --------------------------------- --------------------------------- --------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- --------------------------------- ---------------------------------
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2019
30-Jun-19 30-Jun-18 31-Dec-18
Note GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Property, plant and
equipment 10,970 10,760 11,006
Intangible assets 121 178 147
Deferred income tax
asset 5 - 1,967 -
-------------------- ---------------- -----------------
Total non-current assets 11,091 12,905 11,153
Current assets
Inventories 16,749 15,701 16,306
Trade and other receivables 4,695 4,682 3,306
Cash and cash equivalents 367 91 598
Current income tax - - -
recoverable
-------------------- ---------------- -----------------
Total current assets 21,811 20,474 20,210
-------------------- ---------------- -----------------
Total assets 32,902 33,379 31,363
-------------------- ---------------- -----------------
LIABILITIES
Current liabilities
Trade and other payables (4,069) (3,261) (4,350)
Interest bearing loans,
borrowings and overdrafts (8,491) (7,609) (7,756)
-------------------- ---------------- -----------------
Total current liabilities (12,560) (10,870) (12,106)
Non-current liabilities
Deferred income tax
liability 5 (49) (154) (162)
Interest bearing loans,
borrowings and overdrafts (1,781) (2,233) (566)
-------------------- ---------------- -----------------
Total non-current liabilities (1,830) (2,387) (728)
-------------------- ---------------- -----------------
Total liabilities (14,390) (13,257) (12,834)
-------------------- ---------------- -----------------
Net assets 18,512 20,122 18,529
-------------------- ---------------- -----------------
EQUITY
Share capital 6,944 6,944 6,944
Share premium 2,984 2,984 2,984
Capital reserve 6,475 6,475 6,475
Shares held by ESOP (495) (495) (495)
Share based payment
reserve 245 189 203
Cash flow hedge reserve (71) - (52)
Translation reserve (3,295) (3,348) (3,131)
Revaluation reserve 2,034 1,842 2,081
Retained earnings 3,691 5,531 3,520
-------------------- ---------------- -----------------
Total equity 18,512 20,122 18,529
-------------------- ---------------- -----------------
CONSOLIDATED STATEMENT of cash flows
for the SIX MONTHS ended 30 JUNE 2019
Six months Six months Year ended
ended ended
30-Jun-19 30-Jun-18 31-Dec-18
Note GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Cash flows from operating
activities
Cash (used in)/generated from
operations 6 (814) (1,107) 1,583
Tax paid (350) (26) (11)
Interest paid (254) (330) (634)
-------------------- ---------------- ----------------
Net cash (used in)/generated
from operating activities (1,418) (1,463) 938
-------------------- ---------------- ----------------
Cash flows from investing
activities
Purchases of property, plant
and equipment (491) (245) (588)
Purchases of intangible assets - - -
Net cash used in investing
activities (491) (245) (588)
-------------------- ---------------- ----------------
Cash flows from financing
activities
Proceeds from borrowings 809 1 -
Repayment of bank loans (472) (662) (1,304)
New finance lease obligations 200 41 41
Repayment of obligations under
finance leases (90) (41) (85)
-------------------- ---------------- ----------------
Net cash used in financing
activities 447 (661) (1,348)
-------------------- ---------------- ----------------
(Decrease)/increase in cash
and cash equivalents (1,462) (2,369) (998)
-------------------- ---------------- ----------------
Cash and cash equivalents
at beginning of period (3,695) (2,698) (2,698)
Exchange gains on cash and
cash equivalents (3) - 1
-------------------- ---------------- ----------------
Cash and cash equivalents
at end of period (5,160) (5,067) (3,695)
-------------------- ---------------- ----------------
NOTES TO THE CONSOLIDATED ACCOUNTS (UNAUDITED)
1. Basis of preparation
The financial information set out in the interim statements for
the six months ended 30 June 2019 and the comparative figures are
unaudited and do not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. As permitted, this interim
report has been prepared in accordance with UK AIM listing rules
and not in accordance with IAS 34 Interim Financial Reporting,
therefore it is not fully in compliance with International
Financial Reporting Standards (IFRS).
The financial information for the full preceding year is
extracted from the statutory accounts for the financial year ended
31 December 2018. Those accounts, upon which the auditor issued an
unqualified opinion, have been delivered to the Registrar of
Companies. The auditor's report did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
These financial statements are presented in sterling, being the
functional currency of the primary economic environment in which
the Group operates.
Pittards plc is a public limited company incorporated and
domiciled under the Companies Act 2006 in England. It is quoted on
the Alternative Investment Market ("AIM").
The directors approved and authorised the interim statement for
issue on 19 September 2019.
2. New standards
The Group has adopted IFRS 16 Leases from 1 January 2019, using
the modified retrospective method. Applying this method, the
comparative information for the 2018 fiscal year has not been
restated.
At 1 January 2019, the Group recognised right-of-use assets of
GBP200k and lease liabilities of GBP200k. The Group has decided not
to apply the new guidance to leases whose term will end within
twelve months of the date of initial application. In such cases,
the leases will be accounted for as short-term leases and the lease
payments associated with them will be recognised as an expense from
short-term leases. The following reconciliation to the opening
balance for the lease liabilities as at 1 January 2019 is based
upon the operating lease obligations as at 31 December 2018:
Consolidated
01-Jan-19
GBP'000
Operating lease obligations
at 31 December 2018 260
Minimum lease payments (notional
amount) on finance lease liabilities
at 31 December 2018 200
Relief option for short-term
leases (3)
Relief option for leases of
low-value assets (25)
Other (26)
-----------------
Gross lease liabilities at
31 December 2018 406
Discounting (13)
-----------------
Lease liabilities at 1 January
2019 393
Present value of finance lease
liabilities as at 31 December
2018 (193)
-----------------
Additional lease liabilities
as a result of the initial
application of IFRS 16 as
at 1 January 2019 200
-----------------
The lease liabilities were discounted at the borrowing rate as
at 1 January 2019. The weighted average discount rate was
6.63%.
3. Earnings per Ordinary Share
a) Basic
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 owned by the Pittards Employee Share Ownership
Trust.
Six months Six months ended Year ended
ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Profit for the period after taxation 171 125 (1,929)
'000s '000s '000s
Weighted average number of ordinary
shares in issue 13,870 13,870 13,870
----------- ----------------- --------------
b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares by the shares issued
under the 2017 Save As You Earn (SAYE) scheme.
Six months Six months Year ended
ended ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Profit for the period after taxation 171 125 (1,929)
'000s '000s '000s
Weighted average number of ordinary
shares in issue 14,025 13,879 14,023
----------- ----------- --------------
4. Taxation
Six months Six months Year ended
ended ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Analysis of the charge in the
period
The charge based on the profit
for the period comprises:
Corporation tax on profit for
the year - - 263
Foreign tax on profit for the
period 90 15 89
Foreign tax related to prior years 75 9 10
-------------------- -------------------- -----------------
Total current tax 165 24 362
-------------------- -------------------- -----------------
Deferred tax
Origination and reversal of temporary
differences (112) (53) 26
Impact of change in UK tax rate - - (6)
Derecognition of deferred tax
asset - - 1,901
-------------------- -------------------- -----------------
Total deferred tax (112) (53) 1,921
-------------------- -------------------- -----------------
Income tax (credit)/charge 53 (29) 2,283
-------------------- -------------------- -----------------
5. Deferred taxation
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Deferred tax asset - 1,967 -
Deferred tax liabilities (49) (154) (162)
--------------------- ------------------ ---------------
Deferred tax asset (net) (49) 1,813 (162)
--------------------- ------------------ ---------------
The Group has unrecognised deferred tax assets of GBP1.9m.
6. Cash (used in)/generated from operations
Six months ended Six months Year ended
ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
Profit before taxation 224 96 354
Adjustments for:
Depreciation of property, plant
and equipment 357 339 705
Amortisation of intangibles 26 31 62
Bank and other interest charges 286 335 638
Share based payment expense 42 58 115
Other non-cash items in Income
Statement 165 125 194
-------------------- ------------------- ---------------
Operating cash flows before movement
in working capital 1,100 984 2,068
Movements in working capital (excluding
exchange differences on consolidation):
(Increase)/decrease in inventories (581) (275) (710)
(Increase)/decrease in receivables (1,377) (620) 792
(Decrease)/increase in payables 44 (1,196) (567)
-------------------- ------------------- ---------------
Cash (used in)/generated from
operations (814) (1,107) 1,583
-------------------- ------------------- ---------------
7. Availability of interim report
The interim report will be available on the Company's website
www.pittards.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGUQWBUPBGAR
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