TIDMPTD
RNS Number : 9957I
Pittards PLC
27 March 2018
27 March 2018
PITTARDS PLC
("Pittards" or "the Group")
Full Year Results for the year ended 31 December 2017
Pittards plc, the specialist producer of technically advanced
leather and luxury goods for retailers, manufacturers and
distributors today announces its results for the year ended 31
December 2017.
Year ended 31 December 2017:
-- Revenue GBP30.3m (2016: GBP27.0m)
-- Profit before tax GBP0.4m (2016: underlying profit before tax
GBP0.2m, loss before tax of GBP4.1m after exceptional stock write
down of GBP4.3m)
-- Gearing improved to 40% (2016: 48%), reduction in net debt
and increased bank facilities
-- Review of strategy completed
-- Pipeline of new business has reached the bulk sampling
stage.
Stephen Yapp, Chairman commented: "Fundamental changes were made
in 2017 including improving the operational and financial
performance of the business whilst establishing the clear strategic
priorities for the medium term and investing accordingly.
The Group has entered 2018 with a new divisional structure in
place, enhanced financial disciplines, reduced net debt and the
resources to support our growth ambitions. We are well placed to
leverage promising opportunities from existing and new customers
that will accelerate our performance and increase shareholder
value."
For further information, please contact:
Pittards plc www.pittards.com
Stephen Yapp, Chairman
Reg Hankey, CEO
Matthew O'Rourke, CFO +44 (0) 1935 474 321
WH Ireland Limited www.whirelandcb.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
for the year ended 31 December 2017
The Group's financial performance improved in 2017 with an
increase in underlying profit before tax, a reduction in the net
debt position and a heightened focus on reducing stock levels that
is starting to gain traction. In parallel to this, we completed the
reshaping of our operations into the two divisions "UK" and
"Ethiopia" with respective reporting and management structures and
clarified our strategic priorities for the medium term.
Our optimism for the future is supported by a pipeline of new
business that has reached the bulk sampling stage with new
customers within both our existing and target markets.
Highlights - Year ended 31 December 2017:
-- Revenue GBP30.3m (2016: GBP27.0m)
-- Profit before tax GBP0.4m (2016: underlying profit before tax
GBP0.2m, loss before tax of GBP4.1m after exceptional stock write
down of GBP4.3m)
-- Gearing improved to 40% (2016: 48%), reduction in net debt and increased bank facilities
-- Review of strategy completed
-- Pipeline of new business has reached the bulk sampling stage.
Strategic update
We have identified which markets present the best opportunities
for a balanced, market-led, client and product focused portfolio,
that will capitalise upon our production capabilities and
expertise, and will drive growth.
The foundations of our business remain the footwear and
performance glove markets. The global glove market, worth circa
$250m (source: 9Dimen/Industry), is seeing a shift towards casual
and active leather gloves which presents us with further
opportunities. The strength of our existing customer relationships
and expertise give us a competitive advantage.
We are also targeting new customers within our existing markets.
Footwear presents the biggest growth opportunity; lifestyle trends
are driving the growth of the Athleisure and Outdoor categories in
a combined market segment worth around $60 billion (source: SGI
2015 Wholesale). Our established UK footwear leather manufacturing
capability and expertise is well placed to meet the needs of
leading brands in this sector who are prioritising differentiation
and innovation. In addition, global companies are increasingly
looking to Ethiopia as a manufacturing location creating a further
opportunity for Pittards Ethiopia.
In order to build a balanced portfolio we are also working to
develop new customers in new markets. The interiors sector, which
has a global market value of around $39 billion (source:
Transparency Market Research 2016) is a target market for Pittards.
Interiors has increased its share of total leather usage from 7% in
1990 to 27% in 2015 (source: UKLF). Pittards is well placed with
its performance leathers to meet the needs of this market
place.
Financial review
The Group's financial performance improved year-on-year as we
implemented better disciplines, policies and procedures across the
business while investing to support our growth plans.
Revenue increased 12% to GBP30.3m with increased volumes in our
existing markets in both the UK and Ethiopia. Profit before tax for
the year improved to GBP0.4m as a result of higher turnover and
operational efficiencies. Alongside this we have strengthened our
senior management team and invested in modernising our drying
process.
The net assets reduction to GBP19.8m largely reflects movements
in foreign exchange, notably the Ethiopian Birr devaluation, which
the Board consider will improve the competitiveness of our
Ethiopian business.
Stock reduction remains a key priority. Stock levels reduced in
the year to GBP15.3m (2016: GBP17.4m) primarily due to movements in
foreign exchange. In addition, the initiatives and incentives now
in place are beginning to reduce slow moving stock across the Group
and we anticipate making further progress in 2018.
One of our key financial measures is the Return on Capital
Employed. This has increased in 2017 to 4.1% and our near term
objective is to deliver returns above our estimated Weighted
Average Cost of Capital of approximately 7%.
We have adequate funding to support our growth objectives; total
net debt decreased to GBP8.0m (2016: GBP10.1m) and we have
negotiated both an increase and improvement in our facilities from
GBP12.2m to GBP13.7m.
Dividends
The Board has decided not to pay a dividend with respect to the
year ended 31 December 2017; however, it is the Board's intention
to return to the dividend paying list as soon as it deems it
appropriate.
Board changes
As previously announced, Jill Williams stood down as
non-executive director on 31 December 2017. Jill had been a
director of the company for 10 years and the Board would like to
thank Jill for her contribution to the Group. There were no further
changes to the Board during the year which is positioned to support
the management team and drive the strategy to take Pittards into
its next stage of growth.
Team
I would like to thank all of our employees for their continued
hard work and understanding throughout this period of notable
change. They have contributed significantly to making 2017 a year
of great progress.
Outlook
The Group has entered 2018 with a new divisional structure in
place, enhanced financial disciplines, reduced net debt and the
resources to support our growth ambitions. We are well placed to
leverage promising opportunities from existing and new customers
that will accelerate our performance and increase shareholder
value.
CONSOLIDATED INCOME STATEMENT
for the YEARED 31 DECEMBER 2017
2017 2016
Continuing Operations Note GBP'000 GBP'000
Revenue 30,287 27,009
Cost of sales (23,194) (20,554)
Cost of sales - exceptional stock provision 2 - (4,307)
--------- ---------
Gross Profit 7,093 2,148
Distribution costs (2,443) (2,167)
Administrative expenses (3,716) (3,572)
--------- ---------
Profit/(loss) from operations before finance costs 934 (3,591)
Finance costs (521) (499)
Finance income - 19
--------- ---------
Profit/(loss) before taxation 413 (4,071)
Taxation 84 (75)
--------- ---------
Profit/(loss) for the year after taxation 497 (4,146)
--------- ---------
Earnings/(loss) per share
--------- ---------
Basic 3 3.58p (29.89p)
Diluted 3 3.49p (28.91p)
--------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 DECEMBER 2017
2017 2016
GBP'000 GBP'000
Profit/(loss) for the year after taxation 497 (4,146)
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of land and buildings 171 135
Revaluation of land and buildings - unrealised exchange (loss)/gain (625) 279
-------- --------
(454) 414
Items that may be subsequently reclassified to profit or
loss
Unrealised exchange (loss)/gain on translation of overseas
subsidiaries (1,655) 827
Other comprehensive (loss)/income (2,109) 1,241
-------- --------
Total comprehensive loss for the year (1,612) (2,905)
CONSOLIDATED statement of Changes in equity
for the year ended 31 DECEMBER 2017
Total
Shares Share equity
held based attributable
Share Share Capital by payment Translation Revaluation Retained to owners Non-controlling Total
Capital premium reserve ESOP reserve reserve reserve earnings of parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
At 1 January
2016 6,944 2,984 6,475 (495) - (2,692) 1,853 9,081 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
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
income/(loss)
for the
year - - - - - 827 414 (4,146) (2,905) - (2,905)
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
Shared based
payment
expense - - - - 29 - - - 29 - 29
Purchase
of
non-controlling
interest - - - - - - - - - (179) (179)
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
At 1 January
2017 6,944 2,984 6,475 (495) 29 (1,865) 2,267 4,935 21,274 - 21,274
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
Comprehensive
income for
the year:
Profit for
the year
after taxation - - - - - - - 497 497 - 497
Other
comprehensive
income:
Gain on
revaluation
of buildings - - - - - - 171 - 171 - 171
Unrealised
exchange
loss on
translation
of foreign
subsidiaries - - - - - (1,655) (625) - (2,280) - (2,280)
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
Total other
comprehensive
loss - - - - - (1,655) (454) - (2,109) - (2,109)
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
Total
comprehensive
(loss)/income
for the
year - - - - - (1,655) (454) 497 (1,612) - (1,612)
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
Share based
payment
expense - - - - 102 - - - 102 - 102
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
At 31 December
2017 6,944 2,984 6,475 (495) 131 (3,520) 1,813 5,432 19,764 - 19,764
--------- --------- --------- -------- --------- ------------- ------------- ---------- -------------- ----------------- --------
BALANCE SHEET
AS AT 31 DECEMBER 2017
2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 10,778 12,106
Intangible assets 209 243
Deferred income tax asset 1,901 1,800
---------- ---------
Total non-current assets 12,888 14,149
Current assets
Inventories 15,332 17,353
Trade and other receivables 3,991 4,388
Cash and cash equivalents 327 206
Current income tax recoverable 41 38
---------- ---------
Total current assets 19,691 21,985
---------- ---------
Total assets 32,579 36,134
---------- ---------
Liabilities
Current liabilities
Trade and other payables (4,358) (4,362)
Interest bearing loans, borrowings and overdrafts (5,641) (6,781)
---------- ---------
Total current liabilities (9,999) (11,143)
---------- ---------
Non-current liabilities
Deferred income tax liability (140) (183)
Interest bearing loans, borrowings and overdrafts (2,676) (3,534)
---------- ---------
Total non-current liabilities (2,816) (3,717)
---------- ---------
Total liabilities (12,815) (14,860)
---------- ---------
Net assets 19,764 21,274
---------- ---------
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 131 29
Translation reserve (3,520) (1,865)
Revaluation reserve 1,813 2,267
Retained earnings 5,432 4,935
---------- ---------
Total equity 19,764 21,274
---------- ---------
STATEMENT of cash flows
for the year ended 31 DECEMBER 2017
2017 2016
Note GBP'000 GBP'000
Cash flows from operating activities
Cash generated from/(used in) operations 4 2,299 (1,336)
Tax paid (48) (81)
Interest paid (516) (480)
-------- --------
Net cash generated from/(used in) operating activities 1,735 (1,897)
-------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (696) (1,181)
Purchases of intangible assets (2) (5)
Purchase of investments - (192)
-------- --------
Net cash used in investing activities (698) (1,378)
-------- --------
Cash flows from financing activities
Proceeds from borrowings 1,096 2,364
Repayment of bank loans (1,072) (1,658)
New finance lease obligations - 374
Repayment of obligations under finance leases (84) (88)
-------- --------
Net cash (used in)/generated from financing activities (60) 992
-------- --------
Increase/(decrease) in cash and cash equivalents 977 (2,283)
-------- --------
Cash and cash equivalents at beginning of the year (3,738) (1,474)
Exchange gains on cash and cash equivalents 63 19
-------- --------
Cash and cash equivalents at the end of the year (2,698) (3,738)
-------- --------
NOTES TO THE FINAnCIAL STATEMENTS for the year ended 31 DECEMBER
2017
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 2017 and 2016 and as such, does not constitute statutory
accounts within the meaning of s434 of the Companies Act 2006. A
full annual report and accounts for the year ended 31 December
2016, on which the auditor has issued an unqualified audit report,
has been delivered to the Registrar of Companies. The Group's
annual report and accounts for 2017, 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.
The preliminary announcement was approved by the board of
directors and authorised for issue on 26 March 2018.
2. Exceptional items
2017 2016
GBP'000 GBP'000
Cost of sales - exceptional stock provision - (4,307)
--------- --------
In 2016, the Board conducted a detailed review of the stock
holding and recognised a provision of GBP4.307m. This took 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 related to low
end dress and sport glove leather, with a write down of GBP1.271m
in the UK and GBP3.036m in Ethiopia.
3. Earnings/(loss) per ordinary share
2017 2016
GBP'000 GBP'000
Analysis of the profit/(loss) in the year:
Profit/(loss) for the year 497 (4,146)
-------- ---------
Weighted average number of ordinary shares in issue (excluding
the shares owned by Pittards Employee Share Ownership Trust) '000s '000s
Basic 13,870 13,870
Diluted 14,224 14,341
-------- ---------
Basic earnings/(loss) per ordinary 50p share 3.58p (29.89p)
Diluted earnings/(loss) per ordinary 50p share 3.49p (28.91p)
-------- ---------
4. Cash generated from/(used in) operations
2017 2016
GBP'000 GBP'000
Profit/(loss) before taxation 413 (4,071)
Adjustments for:
Depreciation of property, plant and equipment 604 605
Amortisation 36 35
Bank and other interest charges 521 480
Share based payment expense 102 29
Other non-cash items in Income Statement (133) (61)
-------- --------
Operating cash flows before movement in working capital 1,543 (2,983)
-------- --------
Movements in working capital (excluding exchange differences
on consolidation):
(Increase)/decrease in inventories (749) 2,912
Increase in receivables (47) (194)
Increase/(decrease) in payables 1,552 (1,071)
-------- --------
Cash generated from/(used in) operations 2,299 (1,336)
-------- --------
5. Taxation
The group has recognised a deferred tax asset of GBP1.901m
(2016: GBP1.800m) in respect of losses out of a total potential
deferred tax asset of GBP1.901m (2016: GBP1.800m).
6. Additional Information
Copies of the 2017 Annual Report and Accounts will be posted to
shareholders in April and will be available on the company's
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 15 May 2018 at 12pm.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR VQLFLVXFXBBX
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