TIDMPTD
RNS Number : 7822B
Pittards PLC
25 September 2018
25 September 2018
PITTARDS PLC
("Pittards" or "the Group")
Interim results for the six months ended 30 June 2018
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 2018.
Half year ended 30 June 2018
-- Revenue increased 2% to GBP14.5m (H1 2017: GBP14.2m)
-- EBITDA increased to GBP0.8m (H1 2017: GBP0.7m)
-- Profit before tax GBP0.1m (H1 2017: GBP0.1m)
-- Net assets GBP20.1m (31 December: GBP19.8m)
-- Further progress developing targeted new business with orders
to produce bulk sampling.
Stephen Yapp, Chairman commented: "The first six months of 2018
has seen satisfactory trading alongside continued investment to
strengthen our operational capability and scalability.
The strategic priorities remain enhancing our offering to
existing customers whilst developing new customers in the interiors
and performance footwear markets. Good progress has been made in
these areas allowing us to look ahead with confidence."
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, 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 2018
The first six months' results show satisfactory trading and
progress in advancing our strategy. During this period we have
continued to invest in people and technology to augment our
operational capability. We have also made steady progress in
embedding a more efficient supply chain.
This investment in resource and operations enables us to enhance
our offering to existing customers and strengthen our capability
and scalability for serving the targeted interiors and performance
footwear markets.
Half year ended 30 June 2018
-- Revenue increased 2% to GBP14.5m (H1 2017: GBP14.2m)
-- EBITDA increased to GBP0.8m (H1 2017: GBP0.7m)
-- Profit before tax GBP0.1m (H1 2017: GBP0.1m)
-- Net assets GBP20.1m (31 December: GBP19.8m)
-- Further progress developing targeted new business with orders to produce bulk sampling.
Financial review
Revenue increased 2% to GBP14.5m, with increases in both the UK
and Ethiopia. Due principally to a change in mix, gross margin for
the first six months was 21.2%, down on the full year margin
achieved last year of 23.4%.
Profit before tax improved slightly year on year, to GBP0.1m,
against an unfavourable foreign exchange backdrop and continuing
investments to modernise our facilities and support potential
business opportunities. In line with prior years, full year profits
are anticipated to be weighted towards the second half of the
year.
Net assets overall remained at similar levels to that in
December. Inventory has increased by GBP0.4m since 31 December
2017, but is GBP1.2m lower than at the same time last year. The
increase since December is due to new product sampling, partially
offset by a reduction in slower moving stock, with inventory days
of sale improving year on year from 282 to 249 days. The increase
in net debt to GBP9.8m is primarily due to working capital timing
differences which we anticipate will have predominantly reversed by
the year end. It is also due to the investments made in new
business opportunities. As at 30 June 2018 the headroom in our
borrowing facilities was GBP3.6m.
Operational and strategic update
Globally, customers in our existing markets continue to
experience a challenging environment arising from the prevailing
uncertainty of geopolitical and market factors. Consequently, our
UK facilities were affected by a reduction in orders for hide
manufacturing towards the latter half of the period, although the
production of skins remained stable.
The new government and recent lifting of the state of emergency
are helpful to our Ethiopian Division, however, there are still
some political uncertainties which we are monitoring closely. The
manufacturing of utility and dress gloves remain our core finished
product and we have expanded the training of our staff to
accommodate our entrance into the casual shoes market, as we pursue
our strategy to have a more balanced product portfolio. Alongside
this, we continue to drive operational efficiencies through
investments in technology and improving our supply chain
management. Further investments are planned in the second half of
the year to support the new product ranges and ongoing
modernisation of our tannery.
The initiatives to reduce slower moving stock continue to gain
traction and now include a dedicated resource to identify
innovative solutions for better utilisation.
Encouragingly, our pipeline of opportunities within our target
markets progressed further, with a few customers entering the
significant final bulk sampling phase which typically precedes
larger and repeat volumes.
Outlook
As a large proportion of our production is exported, the
introduction of tariff barriers globally is likely to create
uncertainty which may have an effect on our core business in the
second half.
However, against this backdrop our strategic priorities remain
enhancing our offering to existing customers whilst developing new
customers in the interiors and performance footwear markets. Good
progress has been made in these areas allowing us to look ahead
with confidence.
CONSOLIDATED INCOME STATEMENT
for the SIX MONTHSED 30 JuNE 2018
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Note
Revenue 14,505 14,229 30,287
Cost of sales (11,426) (10,866) (23,194)
Gross profit 3,079 3,363 7,093
Distribution costs (1,070) (1,064) (2,443)
Administrative expenses (1,578) (1,938) (3,716)
--------------- --------------- -------------
Profit from operations before
finance costs 431 361 934
Finance costs (344) (276) (521)
Finance income 9 - -
--------------- --------------- -------------
Profit before taxation 96 85 413
Taxation 4 29 (45) 84
--------------- --------------- -------------
Profit for the period after
taxation 125 40 497
--------------- --------------- -------------
Earnings per share 3
--------------- --------------- -------------
Basic 0.90p 0.29p 3.58p
Diluted 0.90p 0.28p 3.49p
--------------- --------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the SIX MONTHS Ended 30 JUNE 2018
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Profit for the period after taxation 125 40 497
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of land and buildings - - 171
Revaluation of land and buildings - unrealised exchange
gain/(loss) 29 (213) (625)
----------------- ----------------- ------------------
29 (213) (454)
Items that may be subsequently reclassified to profit or
loss
Unrealised exchange gain/(loss) on translation of overseas
subsidiaries 172 (489) (1,655)
Other comprehensive income/(loss) 201 (702) (2,109)
----------------- ----------------- ------------------
Total comprehensive income/(loss) for the period 326 (662) (1,612)
----------------- ----------------- ------------------
CONSOLIDATED statement of Changes in equity
for the six monthsED 30 JUNE 2018
Shares Share
held based
Share Share Capital by payment Translation Revaluation Retained Total
Note capital premium reserve ESOP reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
At 1 January
2017 6,944 2,984 6,475 (495) 29 (1,865) 2,267 4,935 21,274
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Comprehensive
income for the
period
Profit for the
period after
taxation - - - - - - - 40 40
Other
comprehensive
income
Unrealised
exchange loss
on
translation
of foreign
subsidiaries - - - - - (489) (213) - (702)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total other
comprehensive
loss - - - - - (489) (213) - (702)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total
comprehensive
(loss)/income
for the
period - - - - - (489) (213) 40 (662)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Shared based
payment
expense - - - - 54 - - - 54
At 30 June
2017 6,944 2,984 6,475 (495) 83 (2,354) 2,054 4,975 20,666
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Comprehensive
income for the
period
Profit for the
period after
taxation - - - - - - - 457 457
Other
comprehensive
income
Gain on the
revaluation
of buildings - - - - - - 171 - 171
Unrealised
exchange loss
on
translation
of foreign
subsidiaries - - - - - (1,166) (412) - (1,578)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total other
comprehensive
loss - - - - - (1,166) (241) - (1,407)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total
comprehensive
(loss)/income
for the
period - - - - - (1,166) (241) 457 (950)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Share based
payment
expense - - - - 48 - - - 48
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
At 31 December
2017 6,944 2,984 6,475 (495) 131 (3,520) 1,813 5,432 19,764
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Opening
balance
adjustment 2 - - - - - - - (26) (26)
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
At 1 January
2018 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
exchange gain
on
translation
of foreign
subsidiaries - - - - - 172 29 - 201
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total other
comprehensive
income - - - - - 172 29 - 201
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Total
comprehensive
income for
the period - - - - - 172 29 125 326
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
Share based
payment
expense - - - - 58 - - - 58
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
At 30 June
2018 6,944 2,984 6,475 (495) 189 (3,348) 1,842 5,531 20,122
--------- --------- --------- -------- -------- ------------- ------------- ---------- --------
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2018
30 June 2018 30 June 2017 31 December 2017
Note GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Assets
Non-current assets
Property, plant and equipment 10,760 11,534 10,778
Intangible assets 178 227 209
Deferred income tax asset 5 1,967 1,761 1,901
------------- ------------- -----------------
Total non-current assets 12,905 13,522 12,888
Current assets
Inventories 15,701 16,956 15,332
Trade and other receivables 4,682 4,208 3,991
Cash and cash equivalents 91 469 327
Current income tax recoverable - 46 41
------------- ------------- -----------------
Total current assets 20,474 21,679 19,691
------------- ------------- -----------------
Total assets 33,379 35,201 32,579
------------- ------------- -----------------
Liabilities
Current liabilities
Trade and other payables (3,261) (4,772) (4,358)
Interest bearing loans, borrowings and overdrafts (7,609) (7,560) (5,641)
------------- ------------- -----------------
Total current liabilities (10,870) (12,332) (9,999)
------------- ------------- -----------------
Non-current liabilities
Deferred income tax liability 5 (154) (178) (140)
Interest bearing loans and borrowings (2,233) (2,025) (2,676)
------------- ------------- -----------------
Total non-current liabilities (2,387) (2,203) (2,816)
------------- ------------- -----------------
Total liabilities (13,257) (14,535) (12,815)
------------- ------------- -----------------
Net assets 20,122 20,666 19,764
------------- ------------- -----------------
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 189 83 131
Translation reserve (3,348) (2,354) (3,520)
Revaluation reserve 1,842 2,054 1,813
Retained earnings 5,531 4,975 5,432
------------- ------------- -----------------
Total equity 20,122 20,666 19,764
------------- ------------- -----------------
CONSOLIDATED STATEMENT of cash flows
for the SIX MONTHS ended 30 JUNE 2018
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
Note GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Cash flows from operating activities
Cash (used in)/generated from operations 6 (1,107) 1,191 2,299
Tax paid (26) - (48)
Interest paid (330) (276) (516)
----------------- ----------------- ------------------
Net cash (used in)/generated from operating
activities (1,463) 915 1,735
----------------- ----------------- ------------------
Cash flows from investing activities
Purchases of property, plant and equipment (245) (289) (696)
Purchases of intangible assets - (2) (2)
Net cash used in investing activities (245) (291) (698)
----------------- ----------------- ------------------
Cash flows from financing activities
Proceeds from borrowings 1 737 1,096
Repayment of bank loans (662) (834) (1,072)
New finance lease obligations 41 - -
Repayment of obligations under finance leases (41) (41) (84)
----------------- ----------------- ------------------
Net cash used in financing activities (661) (138) (60)
----------------- ----------------- ------------------
(Decrease)/increase in cash and cash equivalents (2,369) 486 977
----------------- ----------------- ------------------
Cash and cash equivalents at beginning of the period (2,698) (3,738) (3,738)
Exchange gains on cash and cash equivalents - 21 63
----------------- ----------------- ------------------
Cash and cash equivalents at end of the period (5,067) (3,231) (2,698)
----------------- ----------------- ------------------
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 2018 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 2017. 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 25 September 2018.
2. Opening balance adjustment
The Group has adopted IFRS 9 Financial Instruments (IFRS 9) and
IFRS 15 Revenue from contracts with customers (IFRS 15) from 1
January 2018. The modified retrospective approach has been applied
in both instances, with an adjustment made to opening retained
earnings to reflect the brought forward position at the start of
the year.
1 January
2018
GBP'000
IFRS 9 adjustment 17
IFRS 15 adjustment 9
----------
26
----------
Under IFRS 9, the impairment of financial assets is now provided
for on an expected loss basis, rather than incurred loss, resulting
in an increase in the accounts receivable provisions of GBP0.017m
as at 1 January 2018. The impact on the current period is to
increase the accounts receivable provisions by GBP0.006m.
Following the adoption of IFRS 15, any variable consideration,
such as early payment discount, is considered as part of the
initial recognition of revenue for the transaction and therefore
shown as a reduction in total revenue, rather than a separate cost
disclosed within distribution costs. An opening provision against
accounts receivable in relation to variable consideration as at 1
January 2018 of GBP0.009m has been recognised. The impact on the
current period is a reduction in revenue of GBP0.026m, a reduction
in distribution costs of GBP0.019m and therefore an increase in the
accounts receivable provisions of GBP0.007m.
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 ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Profit for the period after taxation 125 40 497
Shares '000s Shares '000s Shares '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. The 2015 Long Term
Incentive Plan (LTIP) lapsed in the period, with no shares
issued.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Profit for the period after taxation 125 40 497
Shares '000s Shares '000s Shares '000s
Weighted average number of ordinary shares in issue 13,879 14,304 14,224
----------------- ----------------- ------------------
4. Taxation
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Analysis of the charge in the period
The charge based on the profit for the period comprises:
Foreign tax on profit for the period 15 - 32
Foreign tax related to prior years 9 - -
----------------- ----------------- ------------------
Total current tax 24 - 32
----------------- ----------------- ------------------
Deferred tax
Origination and reversal of temporary differences (53) 45 (128)
Impact of change in UK tax rate - - 12
----------------- ----------------- ------------------
Total deferred tax (53) 45 (116)
----------------- ----------------- ------------------
Income tax (credit)/charge (29) 45 (84)
----------------- ----------------- ------------------
5. Deferred taxation
30 June 2018 30 June 2017 31 December
2017
GBP'000 GBP'000 GBP'000
Deferred tax asset 1,967 1,761 1,901
Deferred tax liability (154) (178) (140)
------------- ------------- ------------
Deferred tax asset (net) 1,813 1,583 1,761
------------- ------------- ------------
The Group has unrecognised deferred tax assets of GBP0.311m.
6. Cash (used in)/generated from operations
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
GBP'000 GBP'000 GBP'000
Profit before taxation 96 85 413
Adjustments for:
Depreciation of property, plant and equipment 339 319 604
Amortisation of intangibles 31 18 36
Bank and other interest charges 335 276 521
Share based payment expense 58 54 102
Other non-cash items in Income Statement 125 87 (133)
----------------- ----------------- ------------------
Operating cash flows before movement in working capital 984 839 1,543
Movements in working capital (excluding exchange
differences on consolidation):
(Increase)/decrease in inventories (275) (618) (749)
(Increase)/decrease in receivables (620) 29 (47)
(Decrease)/increase in payables (1,196) 941 1,552
----------------- ----------------- ------------------
Cash (used in)/generated from operations (1,107) 1,191 2,299
----------------- ----------------- ------------------
7. Availability of interim report
The interim report will be available on the Company's website
www.pittards.com, in accordance with AIM Rule 20.
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 PGURABUPRGBC
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