Pittards plc Annual Report and Accounts 2002

Transcription

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In partnership with brands
Contents
Pittards aims to be the preferred supplier of high performance leather to the world’s
and losses
leading brands of gloves, shoes, luxury leathergoods and sports equipment.
Chairman’s statement
6
Operational and financial review
18
Directors, officers and advisers
33
Reconciliation of Group shareholders’ funds
20
Directors’ report
34
Balance sheets
22
Report on directors’ remuneration
35
Consolidated statement of cash flows
We seek to achieve this aim by offering innovative leathers which are differentiated from
27
Corporate governance statement
36
Notes to the accounts
29
Statement of directors’ responsibilities
52
Analysis of shareholders
competing products by their performance properties, quality and consistency, and which
in relation to financial statements
52
Five year review
Independent auditor’s report to the
53
Notice of meeting
members of Pittards plc
54
Financial calendar
Consolidated profit and loss account
55
Form of Proxy
30
32
33
Consolidated statement of total recognised gains
2
are backed by the highest standards of customer service.
Results in brief
Turnover)
Operating profit (loss)
Exceptional costs
Interest – net
Profit (loss) before taxation
Net borrowings
Shareholders’ funds
2002)
£’m)
2001)
£’m)
(restated))
78.9)
83.0)
2.4)
(1.0)
–)
(1.1)
(0.4)
(0.5)
2.0)
(2.6)
7.1)
6.1)
22.6)
22.0)
Per ordinary share:
Earnings (loss)
Pence per share
5.4)
(10.4)
Dividends
2.85)
2.6)
Net assets
90.2)
88.4)
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Chairman‘s statement
The action taken to reduce our costs towards the end of 2001
The cost and availability of hair sheepskins, the Glove Leather
the Kinghorn site and pursuing its redevelopment were expensed
contributed to the recovery in operating profits to £2.4m from
Division’s principal raw material, were more stable in 2002 as
in the period.
the prior year’s loss of £2.1m, despite the downward pressure
normality returned to the market following the disruptions of the
on prices from international consumer markets. After interest
previous year.
costs of £0.4m (2001 – £0.5m), corporation tax of £0.7m
(2001 – tax credit £0.7m), and preference dividends of £0.3m,
earnings were £1.1m (2001 – loss £2.2m) representing 5.4p per
share (2001 – loss per share 10.4p).
Dividend
Shoe & Leathergoods Division
the Division incurred a small operating loss.
turnover for the year as a whole was down by 8% in 2002, in
terms of value. This reflects the fall in hide prices following the
the first half was initially exceptionally strong, notwithstanding the
of 2.85p (2001 – 2.60p) for the year, an increase of 9.6%. If
outbreak of foot and mouth disease early in the year until sales
In my statement covering the first six months trading I said that
approved at the Annual General Meeting the final dividend will be
volumes fell dramatically in the aftermath of September 11.
the interim profit represented the first stage of our recovery from
paid on 9 May 2003 to shareholders on the register at the close of
Virtually all major customers were affected. As in the Glove
an exceptionally difficult 2001, and that we expected to make
business on 11 April 2003. (Ex dividend date – 9 April 2003).
Leather Division, the recovery in 2002 has been led by increased
the year ended 31 December 2002, which compares to a profit at
demand from the sports sector, from both existing and new
the interim stage of £0.7m, and a loss of £2.6m, after
exceptional costs of £1.1m, for the previous year.
Results
2001 was one of the most difficult years in the Company’s
history. BSE in Europe and foot and mouth disease in the UK
disrupted the supply of hides and skins for much of the year, and
demand for leather slumped in the final quarter as confidence fell
in the aftermath of September 11. In contrast, 2002 was a
relatively stable year with a gradual and progressive improvement
in volumes, sales and profits throughout the period. Turnover for
We have adopted FRS 19, the accounting standard for deferred
taxation, this year. As a result the profit for the current period has
decreased by £0.2m and net assets as at 31 December 2001 have
been restated, and reduced by £0.6m, from £22.6m to £22.0m.
Net assets as at 31 December 2002 were £22.6m, equivalent to
90p per ordinary share. Total borrowings were £7.1m (2001 –
£6.1m). The increase is attributable mainly to rising working capital
needs as activity levels have increased, and to capital expenditure.
This represents year end gearing of 32%. (2001 – 27%).
Glove Leather Division
the year was £78.9m, 5% less than the £83.0m in 2001, but
The Glove Leather Division made a strong recovery in 2002 from
with sales in the second half more than 12% ahead of the
the disappointments of the previous year with sales turnover up
corresponding period of the previous year. The reduction in
by 8% in terms of value, and by 10% in volume. Sales of leather
overall turnover masks an underlying increase of 5% in the
for sports gloves bounced back strongly from the depressed levels
volume of finished leather sold by the Glove Leather and Shoe
of the previous year as a result both of increased sales to existing
and Leathergoods Divisions in the year and is primarily
customers, and of new programmes with new customers. By way
attributable to the closure of one of the two production units in
of contrast, dress glove leather sales slipped back from the
the Raw Materials Division at the end of 2001. A record 84% of
relatively buoyant levels of early 2001, partly as a result of some
turnover was shipped to customers outside the United Kingdom,
carry over of stock at retail from the previous season, resulting
compared to 81% in 2001.
from the mild winter.
pushed skin prices to a level which made fellmongering (the Raw
Materials Division’s principal activity) uneconomic. Consequently
which, together with the increased interim dividend makes a total
Net assets and borrowings
with relatively strong demand for double face (wool-on) material,
leather sold was slightly higher than in 2001, although sales
peaks reached in the previous year when demand for leather in
report that the Group achieved a profit before tax of £2.0m for
consequence of last year’s foot and mouth outbreak, coupled
In the Shoe & Leathergoods Division, the volume of finished
Your Board is recommending a maintained final dividend of 1.85p
further progress in the second half of the year. I am pleased to
The reduced availability and quality of UK sheepskins as a
customers. We also experienced strong and steady growth in
demand for our leather for luxury leathergoods, helped by the
introduction of a range of organic leathers. Demand for the
Division’s upper leathers for casual footwear reflected the generally
weak retail sales during the year in this segment of the market.
Pension Scheme
During the year, we undertook a review of how we could
continue to provide appropriate pension benefits for our
employees at a cost to the Group similar to that of the final salary
scheme, whilst reducing our exposure to the potentially volatile
impact on the value of the scheme when calculated in
accordance with FRS17. The review was completed in June and,
after consultation with the trustees of the scheme, and with our
employees, we made a number of changes to the Group’s
pension arrangements. The final salary pension scheme was
closed to new entrants with effect from 30 September 2002.
A defined contribution scheme was introduced from 1 October
which is offered to new employees and is optional for current
Supplies of cattle hides, the Division’s main raw material, which
members of the Pittards Pension Scheme. Members of the final
come mainly from the UK meat industry, have continued to
salary scheme ceased to accrue final salary benefit for future
improve since the end of the foot and mouth outbreak. Leather
service with effect from 30 September 2002 and, from 1 October,
prices have reduced in line with the lower cost of hides, and the
joined either a career average earnings plan, or, at their option,
Division’s contribution to group profit in the year was similar to
the defined contribution scheme. The costs of the new
that in the previous year.
arrangements are similar to the cost of the final salary pension
scheme, but as a consequence of these changes, there is a
Raw Materials Division
The Raw Materials Division’s facility at Kinghorn, Fife was closed
in December 2001. Sheepskin production has been consolidated
at the Division’s other Scottish factory at Langholm. Discussions
are continuing with local planners in Fife which should lead to
the redevelopment of approximately 10 acres of the 25 acre
Kinghorn site, forty minutes from the centre of Edinburgh and
with a book value of £0.3m, for housing. Once outline planning
consent has been obtained we intend to market the property.
The ongoing costs associated with maintaining the security of
reduction in the pension scheme’s liabilities, calculated in
accordance with FRS17. The date on which full adoption of FRS17
(or the equivalent international accounting standard) becomes
mandatory has been deferred until 2005. Companies will then be
required to reflect any defined benefit pension scheme deficits on
the balance sheet. Any deficit will affect both distributable
reserves and gearing levels. It is too early to say whether or not
this will have an effect on future dividend policy. The net pension
liability of the Group as at 31 December 2002 calculated in
accordance with FRS 17 is £10.5m (2001 – £6.6m).
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A full actuarial assessment of the pension scheme is due to be
carried out as at 6 April 2003. In view of the fall in investment
values since the last assessment at 6 April 2000, this is likely to lead
to a substantial increase in company contributions to the scheme.
Environmental Report
Prospects
We observed a gradual decline in business confidence in most of
our markets around the world towards the end of last year as the
prospect of renewed conflict in the Middle East loomed larger.
This has carried over into the current period, and all three of our
divisions have had a generally quiet start to the year. Global
In September 2002 we issued our second Environmental Report
economic activity looks fragile, and whilst the growing strength
which describes the environmental effects of our business and the
of the euro should create opportunities for us, further weakening
progress we are making in addressing environmental issues for
of the dollar against sterling would be a cause for concern.
our different stakeholders. Like the first Report, issued in 2000,
it was extremely well received by our customers, investors and
other stakeholders in our business. You can view or download a
copy of the report on our web-site (www.pittardsleather.com) or,
if you prefer, you can obtain a copy by forwarding your details to
the Company Secretary, at the registered office.
Higgs Report
We generally welcome the Higgs Report on Corporate
Governance and will be reviewing it in detail to see how it will
affect our Board practices. However, we do believe that certain of
Against this background we are continuing to broaden the product
and customer base of our business thus reducing our dependence
on any single market segment, raw material type or currency.
We are investing in new product and market development, and in
plant and equipment which, together with other initiatives, will
help us to reduce our lead times and our costs.
We believe this to be an appropriate response for our business in
these generally unsettled economic and political conditions.
Accordingly, we expect to continue to make progress, albeit
modest, this year.
its recommendations are unduly onerous for a small public
company like ourselves.
Employees
During the year, the Company issued 266,186 new ordinary
shares pursuant to the exercise, by employees, of share options
granted in 1999 under the savings related share option scheme.
Although this year has not been subject to the exceptional
problems of 2001, our staff have had to work equally hard to
recover the sales and profitability of the Group. This high level of
effort has been spread throughout all functions within Pittards
and without the dedication of our employees we would not have
won the HSBC Exporter of the Year award in 2002. I thank them.
Robert Tomkinson Chairman
6 March 2003
“
Pittards’ reputation is based
on the highest quality, softest leather
– they have a great name and are
probably the only leather manufacturer
a consumer could name.
Fownes Bros, New York, USA
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“
For my skiing I prefer the toughness
and versatility of the Ultimate Ski Glove from
Marmot, I like the grip and feel that the
Pittards leather gives and the knowledge
that whatever the conditions the leather will
stay soft, supple and comfortable.
Doug Coombs – heli-skier and mountain ski guide,
Valdez, Alaska
Pittards produces technically advanced leather with benefits such
as water repellency, flame retardance and abrasion resistance.
Our aim is to be the preferred supplier of high performance
leather to the world’s leading brands of gloves, luxury
leathergoods, shoes and sports equipment. We seek to grow our
business by offering innovative leathers differentiated from
competing products by their aesthetics, quality and consistency,
as well as performance, backed by the highest standards of
customer service.
Divisions
The Group operates through three divisions – Glove Leather,
Shoe & Leathergoods and Raw Materials – each focusing on
carefully defined market segments and raw material types.
Working in partnership with other members of the supply chain
– international brands and their manufacturers and key suppliers
of hides, skins, chemicals and other goods and services – the
divisions strive constantly to produce innovative leathers better,
faster and at lower cost, so as to maximise added value.
We operate in a global market, and one which is growing.
Worldwide leather usage grew from 14.1 billion square feet in
1990 to 18.4 billion square feet in 2002 – 30% in 10 years –
and is projected to expand by a further 14% to 21 billion square
feet by 2005.
Glove Leather Division
Based in Yeovil, Somerset, the division supplies lightweight
leathers to many of the world’s best known brands of sports
equipment and dress gloves. In 2002, almost 65% of sales were
The strategy to increase our share of this growing market has
to the sports sector, for gloves used in sports such as golf,
four key elements:
baseball, American football, and to the service sector for gloves
• to develop relationships with carefully chosen manufacturers,
distributors and retailers of gloves, shoes, luxury leathergoods
and sports equipment who are themselves market leaders
within their sectors.
• to seek out and develop relationships with dependable suppliers
of high quality raw and partly processed hides and skins.
• to offer performance benefits that the end user will perceive
and value.
• to develop the Pittards brand and communicate its values in all
that we do.
Product development and innovation are key to attracting the
customers with whom we seek to do business. In recent years,
the resources committed to research and development have
been increased, and the pace of new product introductions has
been accelerated.
used by pilots, firefighters and in similar applications.
Performance properties such as perspiration, water, abrasion and
fire resistance are important differentiators in these markets.
Approximately 30% of sales are to manufacturers and
distributors of dress gloves where the emphasis is on aesthetics.
Most of the remaining production is supplied to manufacturers
of comfort shoes.
The division exports almost 95% of its production, and the great
majority of these sales is denominated in US dollars. Virtually all
purchases of raw material – hair sheepskins and goatskins – are
bought in US dollars, and this provides a valuable hedge against
exchange rate fluctuations.
Sales of glove leather for sport – particularly golf – staged a
strong recovery from the disappointments of the previous year.
The recovery was led by Titleist-FootJoy, who simultaneously
increased their share of the global golf glove market and the
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proportion of glove leather they buy from Pittards. This was
Capital expenditure in 2002 was directed towards improvements
supplemented by the successful launch by Callaway of a new
in productivity and efficiency, to supplement the gains achieved
range of golf gloves featuring the division’s leather. The leading
from waste elimination which was the focus of the ’20 Keys’
brands of baseball batting gloves, such as Franklin, continue to
continuous improvement project during the year.
incorporate Pittards abrasion resistant, carbon fibre glove
leathers in their premium ranges, and there was steady demand
from Nike for leather for wide receivers gloves used in American
Football. Useful progress was made across a number of more
specialised sporting applications, such as for outdoor and skiing
glove leathers from US brand Marmot.
The division produces upper leather for sports and leisure
footwear, high specification leather for luxury leathergoods and
a special range of leathers for saddle makers. More than 80% of
the leather produced at its Leeds factory is exported. In 2002,
Sales of dress glove leather were weaker than in the previous
approaching 40% of finished leather produced was for casual
year, due mainly to carry over stocks at retail at the beginning of
footwear, 30% was for sports footwear and 30% for
the year. These were the result of the drop in consumer
leathergoods and saddlery. The division also supplies suede and
confidence which followed the events of September 11, as well
operates a wet blue facility, marketing hides that are surplus to
as the relatively mild weather at the end of that year. Overall,
its own requirements via the Raw Materials Division.
dress glove leather sales have been reasonably steady, albeit at a
level below the buoyant level of sales achieved in early 2001.
During the year under review, the division sought to restore
stability to its business following the extremely turbulent
Sales of leather for softy shoes grew further in 2002 and
conditions it faced in 2001. In that year, demand for leather was
consolidated the substantial growth in turnover achieved in the
strong in the first half, notwithstanding the outbreak of foot and
previous year.
mouth disease (FMD) in the UK in February. From the end of
The intense competition for supplies of hairsheep and goatskins
that was such a damaging feature of the market in 2001 eased
during 2002. As a result, raw material prices retreated by around
“
Shoe & Leathergoods Division
20% from the highest levels reached during the previous year.
I work with Pittards
technicians to produce beautiful
leathers which reflect the cutting edge
of fashion but which are married with
Pittards performance tannages –
a truly compelling mix.
This, together with higher volumes, contributed to a strong
Alessandro Rossi-Stilista, Sinnalunga, Italy
and new origins are being evaluated, with the help of the
recovery in the profitability of the division. Much work is being
done to improve margins further, through improving the
division’s raw material utilisation.
Africa continues to be the principal source of suitable raw
material for the division, but other sources are being developed,
Overseas Technical Development team.
February, measures to contain the FMD outbreak severely
restricted supplies of cattle hides causing prices to rise to record
levels by April. Following September 11, there was a sharp
downturn in consumer confidence and virtually all the division’s
major customers were affected. By November, the UK ox hide
price had fallen to a 10-year low, but then gradually recovered.
In contrast, 2002 was characterised by a steady and progressive
recovery from the low levels of activity reached by the end of the
previous year, and, after a slow start, total finished leather sales
volume for the year as a whole exceeded that of 2001.
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Retail sales of casual footwear were generally flat during the
waste elimination, lead times, and health and safety, are being
year and the division’s sales of upper leather into this sector
delivered more reliably than ever before. The current emphasis is
reflected this. There were further closures of factories by UK
on further improving manpower efficiency, and achieving the full
shoe brands as the trend to offshore resourcing continues.
benefit from the capital investment programme. During the year
However, the division maintained its position as a major supplier
under review, the main emphasis was on waste elimination and
of upper leather to Camper, and achieved strong growth in
goal alignment. Out of this has come a major project which
Asian markets with important domestic footwear brands such as
enables the division to save waste disposal costs and fuel by
Kumkang in Korea.
converting some of the waste material recovered from hides into
The market for luxury leathergoods continues to be dominated
by Louis Vuitton. During the year, the division increased further
its share of their leather buy, and became one of the largest
The division procures wool sheepskins and cattle hides from UK
tanned leathers developed specifically for the leathergoods
abattoirs. It produces wet salted and pickled sheepskins for sale
market have enabled the division to bid for business with other
to leather producers worldwide. Processing is carried out at its
important luxury brands, at least one of which offers substantial
factory in Langholm, Scotland. The division also markets hides
volume opportunities.
which are surplus to the finished leather requirements of the
The division’s facility at Kinghorn, Fife, was closed in December
and Adidas for technically advanced upper leather for golf shoes,
2001, and sheepskin production was consolidated at Langholm
and with Puma for strong but light, waterproof leather for soccer
early in the year under review.
for their Manic and Manado soccer shoes during the second half
of the year.
The supply of sheepskins in 2002 was about 20% below normal
levels as a consequence of the actions taken in the previous year
to bring foot and mouth disease under control. Competition for
Strong demand for cattle hides for automotive upholstery,
the reduced supply was intense, from both domestic operators
particularly from China and Korea, kept the price of cattle
and overseas, particularly Turkey, and prices rose as a
hides, the division’s principal raw material, relatively firm.
consequence. Downward pressure at retail in leather garment
A deterioration in the quality of UK hides in the aftermath of
prices eliminated the margin on sales of pickled pelts, and the
FMD meant that supplies had to be supplemented from
division incurred an operating loss for the year.
alternative sources, at a cost. This, coupled with the constant
customer pressure on prices, led to a decline in margins.
Tony Daly, Technical and Quality Manager,
New Balance
Shoe & Leathergoods Division.
The division continued its successful programmes with FootJoy
shoes. In addition, it won a significant programme with Adidas
“
Raw Materials Division
suppliers of leather to this prestigious brand. The vegetable
The strongest growth in the year came from the sports sector.
We work closely with Pittards
on new product design and development.
tallow, fuel for the division’s boilers.
The division continued to attack costs and waste in many aspects
of its business. The main business improvement drivers identified
within the ’20 Keys’ initiative, which relate to quality, area,
A number of initiatives to reduce costs, and improve the quality
and flexibility of production were set in train during the year, the
benefits of which should start to show through in the current year.
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“
I was looking for soft lightweight
distinctive leathers. Pittards leathers, and in
particular Conquest, are simply the best. They
have helped us make some great casuals.
Ken Robbins, Designer, Merrell
Environmental Management
In September 2002, the Group published its second
environmental report. The report presents environmental data
for the Group covering the period 1997-2001, and provides an
update on the environmental objectives and targets set out in
the 2000 report. It also sets out the objectives and targets for
2002 to 2004.
The environmental policy is reviewed annually to ensure its
continued relevance in the light of changing standards, technology
and emerging concerns. The most recent review was carried out
during 2002. The environmental policy of the Group is to:
• meet and strive to better relevant environmental standards
and legislation
• annually review environmental objectives and targets with a
view to continually improving the Group’s environmental
performance
• use only those hides and skins which are by-products of the
meat, dairy and wool industries world-wide
• communicate openly on the nature of our activities and report
progress on environmental plans and performance
• organise activities and operations in such a way that
environmental impacts are assessed and minimised
• aim to minimise waste through the stringent use of all
materials, supplies and energy
• use renewable or recyclable materials and components
wherever practicable in operations
• maintain a research and development activity, aimed at
evaluating and developing more efficient and more
environmentally acceptable technology
• include environmental considerations in all investment
decisions.
During the year, work has continued on a number of projects
directed towards the ultimate goal of eliminating waste. These
include the evaluation of gasification technology, whereby
wastes are used to create energy, and the assessment of
advanced effluent treatment technology, whereby effluent is
cleaned up to a point where it may be reused in our
manufacturing operations.
Financial Review
Group turnover for the year was £78.9m. Compared to the
previous year, the volume of finished leather sold was up by 5%,
but the absence of any sales from the Raw Materials Division’s
unit at Kinghorn, which was closed at the end of 2001, meant
that overall turnover was down by 5% year on year. 2001 was
characterised by strong sales in the first half, and weak sales in
the second – particularly in the period after September 11.
Raw material prices were volatile as a result of the variations in
demand, and the impact on supplies of BSE in Europe and foot
and mouth disease in the UK. In contrast, 2002 was a year in
which business gradually improved during the first six months
after a slow start, and accelerated strongly in the second half.
Raw material prices were comparatively stable, albeit at levels
a little above Group expectations. Again in contrast to the
previous year, sales of glove and shoe leather for sporting
applications were relatively strong, as new programmes
with Callaway (for golf gloves) and Adidas (for soccer shoes)
came on stream. Sales of leather for dress gloves and casual
footwear, which had been exceptionally strong up to the final
quarter of 2001, were fairly lacklustre throughout 2002.
Sales of leather for luxury leathergoods continued to grow
steadily throughout 2002 (as they had in 2001) based mainly on
the Group’s strengthening relationship with Louis Vuitton.
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Exports from the UK represented 84% of total turnover
Interest costs in 2002 were £0.4m (2001 – £0.5m) as a result of
(2001 – 81%). Sales to customers in Europe were £31.4m and
lower average borrowings during the year, and lower interest rates.
were down on the previous year by 8%. The lower sales were
mainly attributable to the reduced availability of sheepskins in
the Raw Materials Division, many of which would have been
The profit before tax for the year was £2.0m (2001 – loss before
tax £2.6m).
sold to Italian and Spanish garment leather tanners. In contrast,
FRS19, the accounting standard for deferred taxation, was
sales to customers in North America and the Far East, which are
adopted this year. The tax charge of £0.6m (2001 restated – tax
predominantly denominated in US dollars, were, at £34.8m,
credit £0.7m) includes £0.2m in respect of deferred tax. Net
up 6% on the previous year. Approximately 30% of the hides
assets as at 31 December 2001 have been restated, and reduced
and skins bought by the Group are purchased in US dollars, and
by £0.6m from £22.6m to £22.0m, as a result of adopting the
are hedged against dollar receipts. Excess dollar receivables, and
standard.
all transactions creating currency cash flows, are hedged by
using currency accounts, forward contracts and, where
appropriate, options.
The measures taken towards the end of 2001 to reduce costs,
which included the closure of the unit at Kinghorn, and the loss
of approximately 100 jobs across the Group, contributed to an
improvement in gross profit from £9.3m, 11.2% of turnover, to
£12.6m, 16% of turnover. After distribution costs and
administrative costs of £10.2m (2001 – £11.4m), the operating
profit was £2.4m, (2001 – operating loss £2.1m).
The average number employed in the Group during the year was
751 (2001 – 816) and employment costs were £17.9m (2001 –
£18.6m); the production of finished leather increased by
approximately 5%.
“
I love my Louis Vuitton bag. The leather
improves with age, and complements any outfit –
formal or casual wear.
Camille Johnson, Account Manager in a Wakefield
advertising agency
There was a cash outflow for the year of £0.7m (2001 – outflow
£0.3m) and debt rose to £7.1m, including leasing, equivalent to
32% of shareholders’ funds.
The net cash inflow from operating activities was £2.2m
(2001 – £2.6m) after taking account of increased working capital
of £1.6m to fund the increased level of business (2001 –
decrease in working capital of £3.1m). Capital expenditure was
£1.8m (2001 – £1.0m) compared to depreciation of £1.6m.
During the year the Company issued 266,186 new ordinary
shares as a result of the exercise by employees of share options.
The options were granted in 1999 under the savings related
share option scheme. The ordinary shares in issue at
31 December 2002 were 22,064,416 (2001 – 21,798,230).
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Note 22 to these accounts contains the disclosures required for
The main risks arising from the Group’s financial instruments are
Geographic spread of sales (£m)
year 2 of the transitional period, by FRS17 – the accounting
standard for retirement benefits. During the year, the accounting
standards board announced that full adoption of FRS17, which
78.9
2002
83.0
2001
had been originally set for 2003, had been deferred to 2005,
and that the transitional arrangements had been extended.
North America
Europe
UK
2002
timing differences in cash flows arising from trading activities.
interest rates when it believes that the risk justifies the cost.
continuity of funding and flexibility through the use of
2001
37.9
(1.40)
2000
overdrafts, banks loans and finance leases; no specific policy
45.1
0.35
1.57
40.7
favoured, but the Group would take advantage of medium-term
1.92
40.5
fixed rate borrowings if there were compelling commercial
reasons to do so.
First half
Second half
The Group has transactional currency exposures, which arise
from sales or purchases by operating units in currencies other
than sterling. Forward currency contracts and options are used
to hedge net exposures to foreign currency fluctuations as they
Earnings and dividends per share (pence)
2002
2001
1.0
0.75
1.85
arise. No material foreign currency exposure arises from overseas
investments.
5.4
1.85
contracts) are entered into for the purpose of managing interest
rate and currency risks arising from the Group’s operations and
2000
1.1
2.7
8.1
its sources of finance. It is Group policy, and has been
throughout the period under review, that no trading in financial
instruments shall be undertaken.
Shareholders’ funds (2000 and 2001 restated)
Net assets per share (pence)
Interim dividend
Final dividend
Earnings per share (2000 and 2001 restated)
2001
2000
exists with regard to liquidity. Short-term, floating rate debt is
shares, finance and operating leases, and cash. The main
Derivative transactions (interest rate caps and forward currency
27%
25.0
90.2
The Group’s objective is to maintain a balance between
36.2
derivatives, comprise banks loans and overdrafts, preference
debtors and trade creditors arise directly from operations.
Borrowings
2002
42.7
1.47
0.92
will have an impact on distributable reserves and gearing levels.
operations. Various other financial instruments such as trade
22.0
At the year-end no interest rate cap was in place.
calculated under the standard) on the balance sheet. Any deficit
purpose of these instruments is to raise finance for the Group’s
5.9
rate caps to manage exposure to significant fluctuations in
Sales and operating profit (loss) (£m) – before exceptional costs
When the new standard is fully implemented, companies will be
The Group’s principal financial instruments, other than
6.1
2000
32%
The debt is all floating rate. The Group’s policy is to use interest
basis prescribed by FRS17 were £51.3m (2001 – £53.7m), giving
required to reflect pension scheme surpluses or deficits (as
2001
22.6
although foreign currency borrowings are used to manage
Far East & rest of the world
after three successive years of negative returns from equities,
a net deficit of £10.5m (2001 – £6.6m).
risks and they are summarised below. The policies have
7.1
The Group’s principal borrowings are in pounds sterling,
full actuarial valuation is due to take place as at 6 April 2003.
had fallen to £37.4m (2001 – £44.3m). Liabilities valued on the
Gearing
2002
remained unchanged throughout the period.
£50.6m and liabilities of £52.7m and was 96% funded. The next
At 31 December 2002 the market value of the scheme’s assets,
Board reviews and agrees policies for managing each of these
81.2
2000
The Group operates a defined benefit pension scheme which, at
the last full actuarial valuation on 6 April 2000, had assets of
Shareholders’ funds (£m)
interest rate risk, liquidity risk and foreign currency risk. The
Net assets per share (2000 and 2001 restated)
88.4
101.1
24%
6045 pp1-19 a/w
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Page 18
19
Directors
From left to right: Robert Tomkinson, John Pittard, John Buckley, Louise Cretton
R C Tomkinson
MA, FCA, FCT Chairman, non-executive
12 3
Robert Tomkinson (61) joined the Group as a non-executive director in
July 1997 and was appointed Chairman in October 1997 following his
retirement as Group Finance Director of Electrocomponents. He is
Chairman of KIG Holdings, a non-executive director of UGC (The
Unipart Group of Companies) and Barloworld of South Africa and
Chairman of the Council of the University of Buckingham.
From left to right: Reg Hankey, Steve Johnson, Robert Paisley, David Tebbs
J H Buckley
L M Cretton
J W W Pittard
Managing Director
23
John Pittard (58 ) joined the Pittard Group in 1963. He was appointed
Group Managing Director in 1980. He is a non-executive director of
the Shoe and Allied Trades Research Association and a member of the
South West Regional Council of the CBI and the CBI International
Advisory Board.
1
Member of the audit committee
2
Member of the remuneration committee
3
Member of the nomination committee
R H Hankey
LLB, FCA, MCT
John Buckley (55) was appointed Group Financial Director on joining
the Group in 1986 from a similar role in the food industry. He is a
member of the South West Regional Advisory Group of the London
Stock Exchange.
BA Hons non-executive
FSLTC, LCGI, FCMI, CDip AF
Reg Hankey (47) was appointed to the board in January 1998 having
become Chief Executive of the Glove Leather Division in December
1997. He joined the Group as Technical Director of the Glove Leather
Division in 1990. He is President and non-executive director of the
British Leather Confederation and non-executive Chairman of BLC
Leathersellers Research.
R Paisley
Robert Paisley (62) is Chief Executive of the Raw Materials Division, and
was appointed to the board in May 1997. He joined the Group in 1959.
E D B Tebbs
MA, MIEE, FBCS, FRSA, CEng non-executive
12
12
Louise Cretton (46) joined the Group as a non-executive director in
April 2001. She is CEO of brand development specialists Marketing
Insights and a director of Leapfrog Research & Planning, and a
former director of McCann Erickson. She also serves as a director of
the Bournemouth and Poole College of Further Education
Charitable Foundation.
S R Johnson
BA, FSLTC
Steve Johnson (46) was appointed to the board, and became Chief
Executive of the Shoe & Leathergoods Division on 3 April 2000. He
joined the Group in July 1998 as Technical Director of the Glove Leather
Division. He is a non-executive director of the British Leather
Confederation, and sits on the industrial liaison committee for the
British School of Leather Technology.
David Tebbs (64) joined the Group as a non-executive director in May
1998 and is now its senior independent director. He is Chairman of
Strathdon Investments, holds several non-executive directorships –
including Xansa and is a former director of the BIS Group. As principal
of David Tebbs Associates he works closely with clients to help their
strategic development.
Officers and advisers
Registered office Sherborne Road, Yeovil, Somerset BA21 5BA
Stockbrokers Rowan Dartington & Co Ltd, Colston Tower,
Colston Street, Bristol BS1 4RD
Financial advisers KPMG Corporate Finance, PO Box 695, 8 Salisbury
Square, London EC4Y 8BB
Auditors Ernst & Young LLP, Becket House, 1 Lambeth Palace Road,
London SE1 7EU
J Williams
LLB, ACA Company Secretary
Jill Williams (45) joined the Group as Finance and Planning Manager
in 1989. She was appointed Company Secretary in 1991 and Human
Resources Director in 2002. She is Chairman of the Somerset panel of
the Prince’s Trust – Business Division.
Registrars Northern Registrars, Northern House, Penistone Road,
Fenay Bridge, Huddersfield HD8 0LA
6045 pp20-48 a/w
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Page 20
Directors’ report
21
Directors’ report
The directors submit their report together with the audited financial statements for the year ended 31 December 2002.
Directors
The persons named on pages 18 and 19 are the present directors. EDB Tebbs and SR Johnson retire by rotation and offer themselves
Principal activities
The principal activities of the Group are the production of technically advanced leather for sale to manufacturers and distributors of
shoes, gloves, luxury leathergoods and sports equipment and the trading of hides and skins.
for re-election.
Directors’ interests
The directors at the end of the year and their interests in the shares of the Company were:
Results and dividends
At beginning of year or
Group results are summarised in the consolidated profit and loss account on page 32. For a review of operations and future
At end of year
date of appointment if later
Ordinary Shares of 25p
Ordinary Shares of 25p
developments, see pages 6 to 17.
An interim ordinary dividend of 1.00p has been paid in respect of 2002 (2001 – 0.75p per share). The directors recommend that a
final ordinary dividend of 1.85p per share (2001 – 1.85p per share) amounting to £408,000 (2001 – £403,000) be paid which, after
Beneficial
fully paid
preference dividends of £257,000 leaves a profit of £515,000 to be transferred to reserves. Subject to approval at the Annual General
Meeting, the final dividend will be paid on 9 May 2003 to shareholders on the register at close of business on 11 April 2003.
Options
Beneficial
fully paid
Nonbeneficial
fully paid
Options
2,549
68,366
–
–
66,667
–
Research and development
L M Cretton
–
–
–
–
–
–
The Group recognises the importance of continuous product and process development in maintaining its reputation for innovative
R H Hankey
59,832
–
20,000
57,283
–
22,549
high performance leathers. It works closely with both customers and suppliers to develop clearly differentiated products using
S R Johnson
advanced technology.
R Paisley
J W W Pittard
Substantial interests
In addition to those disclosed under directors’ interests, the Company has been notified of the following interests under section 211
Companies Act 1985 as at 6 March 2003:
Grainton Ltd
Pittards Employee Share Ownership Trust
J H Buckley
Nonbeneficial
fully paid
7,697
–
–
6,305
–
–
25,876
–
37,549
25,876
–
37,549
394,655
849,197
–
396,874
849,197
–
E D B Tebbs
22,450
–
–
22,450
–
–
R C Tomkinson
30,000
–
–
30,000
–
–
6,519,000
(29.55%)
No changes took place in the interests of directors in the shares of the Company between 31 December 2002 and 6 March 2003,
973,282
(4.41%)
except that R Paisley exercised his SAYE option over 2,549 ordinary shares which now form part of his beneficial holding. Details of
Creditor payment policy
The Group does not follow a particular code for the payment of suppliers. It is the Group’s policy in respect of major suppliers to settle
directors’ interests in the restricted share plan and the savings related share option scheme can be found on pages 23, 24 and 26
respectively.
terms of payment when the terms of each transaction are agreed, to ensure the supplier is made aware of the terms of payment and
Annual General Meeting
to abide by the terms of payment. For small local suppliers the policy is to pay within 45 days of invoice and for other suppliers to pay
An ordinary resolution (number 6) will be proposed enabling the directors to allot the whole of the unissued share capital of
within 60 days. Trade creditors at the year end represented 46 days’ purchases.
£1,358,896 (representing approximately 25% of the issued ordinary share capital) during the next five years.
Charitable donations
A special resolution (number 8) will be proposed which will enable the directors to make rights issues, and to allot unissued shares for
During the financial year the Group made contributions to UK charitable organisations of £39,000. No political donations were made
cash otherwise than to existing shareholders up to a nominal amount of £275,805 (being 5 per cent of the Company’s current issued
during the year.
share capital) as permitted by the London Stock Exchange regulations and Investment Protection Committee guidelines until the 2004
Employment of disabled persons
Every consideration is given to the employment, training and career development of the disabled and those who have become
disabled during employment, having regard to their particular aptitudes and abilities.
Employee consultation
The Group recognises the need for good communications with employees and places great importance on employee involvement.
Annual General Meeting. Other than the allotment of ordinary shares under the terms of the Group’s various employee share option
schemes, the directors have no present intention of exercising the authority to allot further relevant securities.
Auditors
Ernst & Young LLP have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at
the forthcoming Annual General Meeting.
Joint consultative committees have been active for many years and management training lays emphasis on the skills and attitudes
By order of the board
required for clear communications and consultation. Matters of particular interest or importance are communicated to all employees
J Williams
through special briefing meetings.
Secretary
6 March 2003
6045 pp20-48 a/w
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Page 22
23
Information not subject to audit
In determining the performance conditions the remuneration committee considered the guidelines published by institutional investors
The remuneration policy for directors and senior executives is set by the board and is described below. The remuneration of executive
directors is determined by the remuneration committee within the framework of this policy. The three non-executive directors, Robert
Tomkinson, David Tebbs and Louise Cretton, are the current members of the remuneration committee and were members throughout
the year ended 31 December 2002, together with John Pittard, the group managing director. John Pittard is not present when his own
salary is being discussed by the committee. The remuneration of non-executive directors is determined by the full board.
The full board and the remuneration committee have access to independent advice where they consider it appropriate, and, for
and their representative bodies. The committee has concluded that there is no reasonable comparator group against which the
Company’s performance can be measured. Growth in earnings per share is an objective against which annual budgets and long term
business plans are developed. The committee believe that the target growth levels are appropriate for a mature manufacturing
business in the current climate.
Total shareholder return
The following graph charts the total shareholder return (TSR) of the Company since 31 December 1997
guidance, use specific job matched remuneration surveys published by employee benefit consultants.
Pittards TSR vs FTSE All-Share Index
Remuneration policy
160
The policy is to reward executive directors competitively, and on the broad principle that their remuneration package should be based
around the median remuneration and benefits enjoyed by senior managers of manufacturing businesses of comparable size. Similarly,
140
Pittards
directors of fully listed companies of comparable size.
Senior executive reward plan
The executive directors participate in the Pittards senior executive reward plan. None of the benefits under the plan are pensionable.
The plan is administered by the remuneration committee and is made up of two parts: the Pittards senior executive bonus plan and
the Pittards restricted share plan. The senior executive bonus plan is linked to formulae based on divisional and group pre-tax profit,
return on capital, wages, and turnover.
The participants’ bonus is divided into three parts. Two thirds of the bonus is paid in cash with the participants’ March salary. The
remaining third of the bonus will be paid in the form of awarded shares through the restricted share plan. The participant will receive
TSR performance (%)
the policy is to reward non-executive directors competitively based around the median remuneration enjoyed by non executive
FTSE All-Share Index
120
100
In drawing this graph it has been
assumed that all dividends paid have
been reinvested. The TSR level shown
at 31 December each year is the
average of the closing daily TSR levels
for the 30 day period up to and
including the date.
80
60
40
31 Dec 97
31 Dec 98
31 Dec 99
31 Dec 00
31 Dec 01
31 Dec 02
further shares (‘matching shares’) to match the shares he is paid as part of his bonus, again through the restricted share plan. These
matching shares will usually be given on a two for one basis.
The money that is to be used to purchase Pittards plc shares under the restricted share plan is paid to the trustees of the Pittards
employee share ownership trust. For awards prior to May 2000, the trustee holds the shares for a restricted period of up to five years.
Rebased to 100 on 31 December 1997
The comparator index selected is the FTSE all-share index
The number of shares which actually vest is determined by the Company’s performance during the restricted period. Matching shares
Service agreements
will only vest if the following performance conditions determined by the committee are satisfied:
RC Tomkinson, EDB Tebbs and LM Cretton hold letters of appointment dated between 1997 and 1999 for initial terms of three years,
• the Company’s earnings per share must increase by at least 10% per annum compound over the restricted period; and
• the Company’s return on assets must have reached at least 15% in one year of the restricted period; and
• the Company’s total net cash flow over the restricted period must be positive.
and with the option to renew for a further period of three years if both the director and Company agree. R Paisley has a service
contract granted in 1985 which is determinable at twelve months’ notice. JH Buckley, RH Hankey, SR Johnson and JWW Pittard hold
rolling service contracts granted between 1988 and 2000, requiring two years’ notice of termination. No directors are entitled to
compensation on termination, other than the notice provided for in the letters of appointment and service agreements. In order to
help retain the services of key individuals in this specialist and competitive industry, there are no current plans to reduce further the
The relevant figures included in the report and accounts for each year will be used to determine whether the performance conditions
notice period on existing contracts, and the Company applies the principle of mitigation to any payment of compensation on
have been achieved.
termination. Company policy is that service contracts entered into with directors after 1 January 2003 should contain notice periods of
If the first condition set out above has not been satisfied at the end of the restricted period, the restricted period will be extended for
up to two more years. If that performance condition has not been satisfied by the end of the fifth year after the shares were awarded
the matching shares will lapse and will be forfeit. The awarded shares will vest with the participant at the end of the restricted period.
Shareholders approved amendments to the restricted share plan at the Annual General Meeting in May 2000. The amended restricted
share plan was first applied to bonuses earned in respect of the year ended 31 December 2000, which were paid in March 2001.
The performance condition, which is measured over a period of three years, provides that awards of matching shares will vest if the
Company’s earnings per share has grown by at least 3% per annum above the rate of inflation during the performance period. 50%
of the matching shares will vest on achievement of this performance target. 75% of matching shares will vest on achievement of
growth in earnings per share of 4% per annum above the rate of inflation. Matching shares will vest in full if the Company’s earnings
per share have grown by at least 5% per annum above the rate of inflation. The awarded shares will vest with the participant at the
end of the restricted period.
not more than 12 months.
6045 pp20-48 a/w
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Page 24
Information subject to audit
Directors’ remuneration
Incentive shares
Under the restricted share plan the remuneration committee may make conditional awards of incentive shares, the value of which is
25
Salary
& fees
Benefits†
Annual
bonus
Deferred
bonus*
2002
Total
2001
Total
£’000
£’000
£’000
£’000
£’000
£’000
calculated as a percentage of the participant’s basic annual salary. The performance conditions which must be satisfied before 50% or
Executive
more of the incentive shares can vest, and the performance period are the same as those for the matching shares under the restricted
J H Buckley
83
15
3
1
102
91
share plan.
R H Hankey
79
12
5
3
99
90
In March 2002, the remuneration committee made conditional awards of incentive shares to more than 60 senior managers.
The interests of the executive directors in the incentive shares awarded under the restricted share plan were as follows:
Granted
during the year
Vested during
the year
At 31 December
2002
No. of shares
No. of shares
No. of shares
No. of shares
From
To
J H Buckley
23,212
13,557
–
36,769
July 2003
March 2005
R H Hankey
22,098
12,951
–
35,049
July 2003
March 2005
S R Johnson
21,092
12,787
–
33,879
July 2003
March 2005
R Paisley
21,799
12,529
–
34,328
July 2003
March 2005
J W W Pittard
32,733
19,118
–
51,851
July 2003
March 2005
Vesting date
Vested during
the year
Forfeited
during the year
At 31 December
2002
No. of shares
No. of shares
No. of shares
No. of shares
No. of shares
9
1
1
89
87
76
7
1
–
84
80
116
24
4
2
146
127
E D B Tebbs
21
–
–
–
21
19
L M Cretton
21
–
–
–
21
15
R C Tomkinson
58
–
–
–
58
55
620
564
Non-executive
Total
† Benefits receivable consist of provision of a car and of health insurance. The value of the car benefit is based on the taxable value,
and reflects the changes to the taxable value introduced in April 2002.
* The deferred bonus will be paid in the form of awarded shares, together with matching shares on a two for one basis made under
the terms of the plan.
The interests of the executive directors in matching shares under the Pittards senior executive reward plan in 2002 were as follows:
Granted
during the year
78
R Paisley
J W W Pittard
At 1 January
2002
At 1 January
2002
S R Johnson
Directors’ pensions
Vesting period
The pension entitlements of the directors are as follows:
From
To
J H Buckley
45,890
–
–
15,027
30,863
July 2001
May 2006
Acumulated accrued
benefits at
31 December 2002
R H Hankey
22,667
–
–
–
22,667
June 2002
May 2006
£’000
£’000
£’000
S R Johnson
12,608
2,783
–
–
15,391
June 2002
May 2006
R Paisley
27,720
–
–
–
27,720
July 2002
May 2006
J H Buckley
43
4
41
J W W Pittard
63,625
–
–
20,172
43,453
June 2001
May 2006
R H Hankey
16
2
4
S R Johnson
6
2
4
R Paisley
46
3
40
J W W Pittard
70
12
81
31 December 2002
31 December 2001
Movement, less
directors’ contributions
£’000
£’000
£’000
J H Buckley
537
513
19)
R H Hankey
82
96
(18)
The awards under the Pittards senior executive reward plan were made by the remuneration committee, in respect of 2002, at their
meeting on 3 March 2003. The amounts awarded under the bonus scheme, and due for payment at the end of March 2003, and the
amounts deferred and to be paid over to the trustees of the Pittards employee share ownership trust for the purchase of awarded
shares under the restricted share plan are included below:
Increase in accrued
benefits during
the year
Transfer value of increase,
before inflation,
less directors’ contributions
The transfer value of each director’s accrued benefits at the end of the financial year is as follows:
S R Johnson
28
26
(2)
R Paisley
600
571
25)
J W W Pittard
650
646
(1)
The pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year or date of
resignation. The increase in accrued pension during the year excludes any increase for inflation. The transfer value has been calculated
on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11 less directors’ contributions.
6045 pp20-48 a/w
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Page 26
Share options
The board supports the principles of corporate governance set out in the combined code prepared by the Hampel Committee.
Executive directors and other senior executives throughout the Group hold options under the Pittards senior executive share option
scheme established in May 1986. Invitations to subscribe for options are made at the discretion of the remuneration committee and
are intended to encourage wider share ownership amongst employees. No invitations were issued to directors during the year. The
27
The Company has been in full compliance with the provisions set out in Section 1 of the code throughout the year except where
noted below.
Pittards senior executive share option scheme came to an end in May 1996. The entitlement of directors to share options under this
Board
scheme was not subject to performance conditions. As outlined earlier in this report, the restricted share plan which succeeded the
The board currently comprises five executive and three independent non-executive directors (Robert Tomkinson, the chairman, who is
share option scheme does require performance conditions to be satisfied before matching and incentive shares granted under the plan
responsible for running the board, David Tebbs who is the senior independent director, and Louise Cretton). It carries ultimate
can vest.
responsibility for the conduct of the business. The current directors are listed on pages 18 and 19 together with brief details of their
Executive directors and employees throughout the Group hold options under the savings related share option scheme established in
June 1997. The options may be exercised wholly or in part after three years from the date of joining the scheme.
background. These details demonstrate a range of experience and, in the case of the non-executive directors, independence to bring
to the board’s deliberations on issues such as strategy, performance, resources and standards of conduct. An appropriate induction
and development programme is devised for all new appointments to the board. All directors are subject to re-election at least every
Share options granted to executive directors under the schemes are summarised below:
three years.
Exercise
price
Exercisable
from
Exercisable
to
Number of
options at
31 Dec 02
J H Buckley
38p
01.12.2002
01.06.2003
–
2,549
R H Hankey
62p
12.04.1999
12.04.2006
20,000
20,000
R H Hankey
38p
01.12.2002
01.06.2003
–
2,549
of the company secretary, Jill Williams, who is responsible to the board for ensuring that it follows established board procedures and
R Paisley
62p
12.04.1999
12.04.2006
35,000
35,000
complies with applicable regulations. The appointment and removal of the company secretary is a matter for the board as a whole.
R Paisley
38p
01.12.2002
01.06.2003
2,549
2,549
The mid market price of the shares at 31 December 2002 was 52.5p and the range during the year was 43.5p to 69.5p.
Options granted under the SAYE scheme in 1999 were exercised by JH Buckley and RH Hankey during the year, and by
R Paisley after the year end.
There have been no movements in directors’ executive share options since the year end.
On behalf of the board
Number of
options at
31 Dec 01
As noted in the report on directors’ remuneration, the Company complies with the provision of the combined code, which
recommends that directors’ contract periods should be set at one year or less except in respect of four of its current executive
directors.
The board has a formal schedule of matters specifically referred to it for decision. All directors have access to the advice and services
Regular meetings of the board take place every two months to review trading performance and funding, to monitor strategy and also
to receive regular and ad-hoc reports and presentations. To enable the board to discharge its duties, all directors receive appropriate
and timely information. The company secretary distributes briefing papers to all directors in advance of board meetings. Directors
have the facility to take independent professional advice should they wish to do so.
Committees of the board
The board has appointed an audit committee, a remuneration committee and a nomination committee each with a formal
constitution. The non-executive directors of the Company are members of the audit and remuneration committees. Membership of the
committees is set out on pages 18 and 19. John Pittard, group managing director, is a member of the remuneration committee and,
R C Tomkinson
with Robert Tomkinson, Chairman, a member of the nomination committee. The non-executive directors who represent a majority on
Chairman of the remuneration committee
the remuneration committee and one of whom must be the chairman of the committee, benefit from the advice of the group
6 March 2003
managing director concerning the other executive directors. Recommendations on remuneration are made by those members of the
committee who do not benefit personally from their proposals. The group managing director is not present when his own salary is
being discussed. Accordingly, the Company has been unable to comply with the provision of the combined code which recommends
that the remuneration committee is comprised only of non-executive directors. Further details of the Company’s policies on
remuneration, service contracts and compensation payments are given in the report on directors’ remuneration on pages 22 to 26.
The audit committee is responsible for reviewing a wide range of matters including the half year and annual financial statements
before their submission to the board and monitoring the controls which are in force to ensure the integrity of the information
reported to the shareholders. The audit committee advises the board on the appointment of external auditors and on their
remuneration both for audit and non-audit work, and discusses the nature, scope and results of the audit with external auditors. The
audit committee keeps under review the cost effectiveness and the independence and objectivity of the external and internal auditors.
All members of the board, including the members of the committees of the board, are normally available to answer questions from
shareholders at the AGM. Details of resolutions to be proposed at the Annual General Meeting on 30 April 2003 can be found in the
notice of the meeting on pages 53 and 54. The operational and financial review on pages 6 to 17 includes a detailed review of the
business and future developments.
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Page 28
29
Statement of directors’ responsibilities in relation to financial statements
Internal control
The following statement, which should be read in conjunction with the independent auditor’s report set out on pages 30 to 31, is
The directors acknowledge that they are responsible for the Group’s system of internal control and for reviewing its effectiveness. The
made with a view to distinguishing for shareholders the respective responsibilities of the directors and of the auditors in relation to the
system is designed to manage rather than eliminate the risk of failure to achieve the Group’s strategic objectives, and can only provide
financial statements.
reasonable not absolute assurance against material misstatement or loss.
The directors are required by the Companies Act 1985 to prepare financial statements for each financial year which give a true and
An ongoing process, in accordance with the guidance of the Turnbull Committee on internal control, has been established for
fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss for the
identifying, evaluating and managing the significant risks faced by the Group. The process has been in place since May 2000 and up
financial year.
to the date of approval of the financial statements. The board regularly reviews the process.
Following discussions with the auditors, the directors consider that in preparing the financial statements (on pages 32 to 51), which
The Group’s key risk management processes and system of internal control procedures include holding risk management workshops
are on the going concern basis, the Company has used appropriate accounting policies, consistently applied and supported by
attended by executive board members and then discussed by the full board, which identify and prioritise the key risks for the Group
reasonable and prudent judgements and estimates, and that all applicable accounting standards have been followed.
and determine a control strategy for each one. The risk and the related internal control strategies are reviewed at least annually by the
full board, and the effectiveness of the procedures is tested on a cyclical basis as part of the internal audit programmes.
An organisational structure has been established with clear operating procedures, lines of responsibility and delegated authority. In
particular, there are established procedures for:
• business planning and budgeting and for monitoring performance against budget
• capital investment including appraisal, authorisation, monitoring and post investment review
• financial reporting and variance analysis.
The board meets regularly and considers these areas, together with other significant business risks and issues.
The operation of the system of internal control is monitored in a number of ways:
• a programme of procedural tests is carried out by internal audit, involving at least one set of tests in each division during the course
of a year. A full report is made by the internal auditor on each operating unit tested, to the audit committee
• signed representations are provided to the audit committee by senior management in each unit concerning the operation of
internal financial controls within their area of responsibility
• consideration is given to the matters raised in the external auditor’s report to the board.
The board has reviewed the effectiveness of the systems of internal control in operation during the financial year through the
monitoring processes set out above.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing
the accounts.
The directors have responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the
financial position of the Company and which enable them to ensure that the financial statements comply with the Companies Act 1985.
The directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
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Page 30
Independent auditor’s report to the members of Pittards plc
Independent auditor’s report to the members of Pittards plc
We have audited the Group’s financial statements for the year ended 31 December 2002 which comprise the consolidated profit and
Opinion
loss account, consolidated balance sheet, company balance sheet, consolidated statement of cash flows, consolidated statement of
In our opinion:
total recognised gains and losses, reconciliation of group shareholders’ funds and the related notes 1 to 24. These financial statements
have been prepared on the basis of the accounting policies set out therein. We have also audited the information in the report on
directors’ remuneration that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
• the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2002
and of the profit of the Group for the year then ended; and
• the financial statements and the part of the report on directors’ remuneration to be audited have been properly prepared in
accordance with the Companies Act 1985.
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
Ernst & Young LLP
to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
Registered Auditor, London
have formed.
6 March 2003
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the report on directors’ remuneration and the financial statements in
accordance with applicable United Kingdom law and accounting standards are set out in the statement of directors’ responsibilities in
relation to financial statements on page 29 and although the directors have discussed the appropriateness of the accounting policies
with us, it is solely their responsibility to select the accounting policies to be applied in the preparation of the financial statements.
Our responsibility is to audit the financial statements and the part of the report on directors’ remuneration to be audited in accordance
with relevant legal and regulatory requirements, United Kingdom auditing standards and the listing rules of the financial services
authority.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements
and the part of the report on directors’ remuneration to be audited have been properly prepared in accordance with the Companies
Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the Company
has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if
information specified by law or the listing rules regarding directors’ remuneration and transactions with the Group is not disclosed.
We review whether the corporate governance statement reflects the Company’s compliance with the seven provisions of the combined
code specified for our review by the listing rules, and we report if it does not. We are not required to consider whether the board’s
statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate
governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements.
This other information comprises the directors’ report, unaudited part of the report on directors’ remuneration, chairman’s statement,
operational and financial review and corporate governance statement. We consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to
any other information.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards issued by the auditing practices board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of
the report on directors’ remuneration to be audited. It also includes an assessment of the significant estimates and judgements made
by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the report on directors’
remuneration to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the
report on directors’ remuneration to be audited.
31
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Page 32
33
Consolidated profit and loss account
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2002
)
Note)
2,3)
Turnover
Cost of sales
Gross profit
)
Distribution costs
)
2001)
£’000)
(restated)
)
)
78,887)
(66,296)
83,035)
(73,769)
)
12,591)
9,266)
)
Administrative expenses
2002)
£’000)
(4,765)
(4,826)
(5,433)
(6,546)
4
2,393)
(2,106)
Interest payable
5
(386)
(484)
2,007)
(2,590)
(609)
678)
1,398)
(1,912)
(883)
(837)
2002)
2001)
£’000)
£’000)
(restated)
Profit (loss) for the financial year
1,398)
(1,912)
Prior period adjustment (note 1a)
(621)
–)
777)
(1,912)
Total recognised gains and losses since last annual report
Reconciliation of Group shareholders’ funds
Profit (loss) on ordinary activities before taxation
Taxation
7
2002)
2001)
£’000)
£’000)
(restated)
Profit (loss) on ordinary activities after taxation
Dividends – equity and non-equity
8
Total recognised gains (losses)
Dividends
Transfer to (from) reserves
515)
(2,749)
Repurchase of preference shares
Issue of new shares
Earnings (loss) per share – basic
9
5.4p)
(10.4p)
Earnings (loss) per share – diluted
9
5.4p)
(10.4p)
Transfer from minority interest
Total movements during the year
1,398)
(1,912)
(883)
(837)
–)
(291)
102)
_)
–)
11)
617)
(3,029)
Shareholders’ funds at 1 January (originally £22,600,000 before deducting prior year adjustment of £621,000)
21,979)
25,008)
Shareholders’ funds at 31 December
22,596)
21,979)
There were no discontinued activities in 2002 or 2001. Accordingly the above results relate to continuing operations.
A statement of the movement on reserves can be found in note 20.
The notes on pages 36 to 51 form part of these financial statements
The notes on pages 36 to 51 form part of these financial statements
6045 pp20-48 a/w
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Page 34
Balance sheets
Consolidated statement of cash flows
as at 31 December 2002
Group
Note
Fixed assets
Tangible fixed assets
Investments
Current assets
Stocks
Debtors
Investments
Cash at bank and in hand
Creditors – amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Other creditors
10
11
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Capital reserve
Profit and loss account
Shareholders’ funds [including £2,701,500
(2001 – £2,701,500) attributable to non-equity interests]
The notes on pages 36 to 51 form part of these financial statements.
Approved by the board of directors on 6 March 2003
John Buckley
Group Financial Director
2001)
£’000)
(restated)
2002)
£’000)
2001)
£’000)
(restated)
17,056)
399)
16,825)
–)
47)
3,767)
45)
3,368)
17,455)
16,825)
3,814)
3,413)
Year ended
31 December 2002
Net cash inflow from operating activities
12
13
14
13,620)
10,741)
–)
22)
11,242)
7,887)
363)
24)
–)
22,178)
–)
18)
–)
18,789)
363)
19)
24,383)
19,516)
22,196)
19,171
Note
£’000)
£’000)
£’000
£’000)
)
2,229)
)
2,595)
(377)
(256)
)
)
(495)
(270)
)
)
)
(633)
(13)
)
–)
)
)
(13)
)
–)
(1,805)
(10)
134)
)
)
)
(988)
(94)
50)
)
)
)
)
(1,681)
–)
)
Returns on investments and servicing of finance
Interest paid
Preference dividends paid
Net cash outflow from returns on investments and servicing of finance
(6,768)
(7,198)
(4,189)
(6.114)
(4,123)
(3,504)
(6,768)
(201)
(3,072)
(6,114)
(106)
(1,246)
(18,155)
(13,741)
(10,041)
(7,466)
6,228)
5,775)
12,155)
23,683))
(230))
(857))
22,600))
–))
(621))
22,596)
21,979))
Net cash outflow from taxation
Capital expenditure and financial investment
Purchase of tangible fixed assets
Purchase of matching shares under restricted share plan
Sale of tangible fixed assets
Net cash outflow from capital expenditure and financial investment
15
16
17
18
19
20
20
20
20
20
Year ended
31 December 2001)
21(a)
Taxation
UK corporation tax paid
Net current assets
Total assets less current liabilities
Creditors – amounts falling due after more than one year
Provision for liabilities and charges
2002)
£’000)
Company
35
Acquisitions and disposals
Purchase of shares in subsidiary
(765)
(1,032)
(10))
)
Net cash outflow from acquisitions and disposals
)
–)
)
(10))
Equity dividends paid
)
(622)
)
(753)
11,705)
Net cash (outflow) inflow before financing
)
(720)
)
35)
15,969))
(230))
–))
15,118)
–)
–)
Financing
Issue of shares on exercise of options
Repurchase of preference shares
Capital element of finance lease rental repayments
102)
–)
(38)
)
)
)
–)
(291)
–)
)
)
15,739)
15,118)
Net cash inflow (outflow) from financing
)
64)
)
(291)
Decrease in cash
)
(656)
)
(256)
8,218)
3,654)
299)
4,649)
6,475)
(699)
8,151))
3,619))
299))
4,745))
6,475))
(1,310))
8,218)
3,654)
299)
–)
–)
3,568)
8,151)
3,619)
299)
–)
–)
3,049)
22,596)
21,979))
15,739)
15,118)
Reconciliation of net cashflow to movement in net debt
2002)
£’000)
2001)
£’000)
Decrease in cash
Capital element of finance lease rentals and hire purchase repayments
(656)
38)
(256)
–)
Change in net debt resulting from cashflows
New finance lease arrangements and hire purchase contracts
(618)
(358)
(256)
–)
Movement in net debt
Net debt at 1 January
21(b)
21(b)
(976)
(6,090)
(256)
(5,834)
Net debt at 31 December
21(b)
(7,066)
(6,090)
The notes on pages 36 to 51 form part of these financial statements.
6045 pp20-48 a/w
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Page 36
37
1. Accounting policies
(a) Basis of preparation and change in accounting policy
The financial statements are prepared under the historical cost convention modified by the revaluation of freehold property and in
accordance with applicable accounting standards.
(f) Stocks and work in progress
Stocks and work in progress are valued at the lower of cost and net realisable value. Raw materials are valued at purchase cost on a
first in first out basis or at net realisable value if lower. The cost of certain stages of work in progress and finished goods is calculated
by reference to selling price, less the appropriate margin for profit and the costs of selling expenses, administrative expenses and
process costs to completion.
In preparing the financial statements for the current year, the Group has adopted FRS19 ‘Deferred Tax’. The adoption of FRS19 has
resulted in a change in accounting policy for deferred tax. Deferred tax is recognised on a full provision basis in accordance with the
accounting policy described below. Previously, deferred tax was provided for on a partial provision basis, whereby provision was made
on all timing differences to the extent that they were expected to reverse in the future without replacement.
This change in accounting policy has resulted in a prior year adjustment for the Group. Shareholders’ funds at 1 January 2001 have
been decreased by £1,281,000 and the tax credit for the year ended 31 December 2001 has been increased by £660,000. The
deferred tax liability has been increased by £621,000 at 31 December 2001. Profit for the current year has been decreased by
£236,000 as a result of the change in accounting policy.
For the Company, shareholders’ funds have been increased by £518,000 at 1 January 2001 and the profit for the year ended
31 December 2001 has been decreased by £375,000. The deferred tax asset has been increased by £143,000 at 31 December 2001.
Profit for the Company for the current year has been decreased by £26,000 as a result of the change in accounting policy.
(b) Basis of consolidation
The Group financial statements consolidate the accounts of Pittards plc and all its subsidiary undertakings made up to 31 December
each year. No profit and loss account is presented for Pittards plc as provided by S.230 of the Companies Act 1985.
(c) Goodwill
Goodwill represents the excess of the cost of the investment in subsidiary undertakings over the fair value of their net separable assets
on acquisition. Prior to 31 December 1997 goodwill was charged directly to reserves on acquisition. Goodwill previously eliminated
against reserves has not been re-instated on implementation of FRS10.
Positive goodwill arising on acquisition since 1 January 1998 is capitalised, classified as an asset on the balance sheet and amortised
on a straight line basis over its useful economic life up to a presumed maximum of 20 years. It is reviewed for impairment at the end
of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the
carrying value may not be recoverable.
If a subsidiary, associate or business is subsequently sold or closed, any goodwill arising on acquisition that was written off to reserves
or that has not been amortised through the profit and loss account is taken into account in determining the profit or loss on sale or
closure.
(d) Land and buildings
The Group’s freehold land and buildings were valued on the basis of open market value for existing use in 1990. On adoption of
FRS15, ‘Tangible Fixed Assets’, the Group has followed the transitional provision to retain the book value of revalued property, but not
to adopt a policy of revaluation in the future. These values are retained subject to the requirement to test assets for impairment in
accordance with FRS11.
(e) Depreciation
Depreciation of tangible fixed assets is provided at the following annual rates, based on cost or valuation less estimated residual value
based on prices prevailing at the date of acquisition or revaluation, to write off each asset evenly over the term of its useful life.
Freehold buildings
Plant, machinery and motor vehicles
1.25 – 2%
10 – 25%
No depreciation is provided in respect of freehold land.
The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the
carrying value may not be recoverable.
(g) Research and development
Research and development expenditure is written off as incurred, except that development expenditure incurred on a specific project is
carried forward when its future recoverability can be foreseen with reasonable assurance. Any expenditure carried forward is amortised
in line with anticipated sales from the related project.
(h) Deferred taxation
FRS19 ‘Deferred Tax’ has been adopted in the current year. FRS19 requires that deferred tax be recognised in respect of all timing
differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date
that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions:
• provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on
disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there
is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available
evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and
charged to tax only where the replacement assets are sold;
• provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and
joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable;
• deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be
suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing
differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
(i) Investments
Employee share ownership trust
The assets of the employee share ownership trust are fully consolidated within the accounts of the company. Shares held in the trust
are included in fixed asset investments and are amortised over the vesting period under the terms of the restricted share plan. Shares
surplus to the requirements of the restricted share plan are recorded at cost less any provision to reflect a permanent diminution in
value. Any such provision is charged to the profit and loss account.
(j) Financial instruments
The Group uses financial instruments, in particular forward currency contracts, to manage the financial risks associated with its
underlying business activities and the financing of the activities. The Group does not undertake any trading activity in financial
instruments. A discussion of how the Group manages its financial risks is included in the Operational and Financial Review on pages
16 and 17. Financial instruments are accounted for as follows:
• forward exchange contracts are used to hedge foreign currency exposures arising on anticipated sales and purchases in foreign
currencies. These forward contracts are revalued to the rates of exchange at the balance sheet date and any aggregate gains and
losses arising on revaluation are included in ‘Other debtors/creditors’. At maturity, or when the contract ceases to be a hedge, gains
or losses, after taking account of gains and losses arising on hedging activities, are taken to the profit and loss account.
• interest rate caps are used to hedge the Group’s exposure to interest fluctuations. Premiums are recognised in the Group’s balance
sheet as a prepayment and amortised over the period of the cap.
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(k) Foreign currency
Transactions in foreign currency are recorded at the rate ruling at the date of the transaction or at the contracted rate if the
transaction is covered by a forward foreign currency contract. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet date or if appropriate at the forward contract rate. Differences, after
taking account of gains and losses arising on hedging activities, are taken to the profit and loss account.
5. Interest payable
(l) Leasing and hire purchase commitments
Assets obtained under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over their
useful lives.
(m) Pensions
The Group operates two pension schemes. Under the defined benefit scheme the expected cost is charged to the profit and loss
account over the service lives of the relevant employees. Under the defined contribution scheme contributions are charged in the
profit and loss account as they become payable in accordance with the rules of the scheme.
Costs in respect of these employees:
Wages and salaries
Social security costs
Other pension costs
2. Turnover
Turnover represents the amount derived from the provision of goods and services which fall within the Group’s ordinary activities
stated net of value added tax.
4. Operating profit (loss)
This is stated after charging (crediting)
Auditors’ remuneration
– audit services
– non-audit services
Depreciation of owned assets
Depreciation of assets held under finance leases and hire purchase contracts
Profit on sale of fixed assets
Operating lease rentals
Research and development expenditure
Exceptional costs (a)
(a) Exceptional costs relate to the reorganisation in 2001 of the Raw Materials Division, including the costs
of closure of the operating facility at Kinghorn, Fife.
2001)
£’000)
373)
13)
484)
–)
386)
484)
Number of employees)
The average number of persons, including directors,
employed during the year is analysed as follows:
Production
Sales and distribution
Administration/directors
Rentals paid under operating leases are charged to income on a straight line basis over the term of the lease.
Turnover, all of which is derived from the Group’s principal activities,
analysed by geographical market:
United Kingdom
Other EC
Other Europe
North America
Asia and other
2002)
£’000)
6. Employees
The interest element of the rental obligation is charged to profit and loss account over the period of the lease and represents a
constant proportion of the balance of capital repayments outstanding.
3. Analysis of turnover
Bank loans and overdrafts
Finance leases and hire purchase contracts
2002
£’000
2001
£’000
12,699
27,571
3,824
4,928
29,865
16,057
30,574
3,498
6,533
26,373
78,887
83,035
£’000)
£’000)
654)
24)
73)
713)
27)
76)
751)
816)
£’000)
£’000)
15,520)
1,096)
1,327)
16,007)
1,225)
1,340)
17,943)
18,572)
Details of directors’ remuneration for each director, long term incentive payments, pension entitlements and share options are
included on pages 22 to 26.
7. Taxation
(a) Analysis of the charge in the year
The (charge) credit based on the profit for the year comprises:
UK corporation tax on profits (losses) of the period (note 7b)
Deferred tax – originating and reversal of timing differences (note 18)
£’000
£’000)
(restated)
(373))
(236))
18)
660)
(609))
678)
b) Factors affecting the charge for the year
79)
23)
1,543)
21)
(107)
254)
698)
–)
39
79)
17)
1,677)
–)
(35)
305)
658)
1,051)
)
Profit (loss) on ordinary activities before tax
Tax at 30% (2001: 30%)
Effect of:
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Other timing differences
Adjustments in respect of previous periods
Tax losses
Current tax (charge) credit for the period (note 7a)
2,007)
(2,590)
(594))
777)
(83))
167))
137))
–))
–))
(131)
(40)
(11)
(32)
(545)
(373)))
18)
)
6045 pp20-48 a/w
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Page 40
8. Dividends
2002)
£’000)
2001)
£’000)
Equity interest:
Ordinary interim paid 1.00p per share (2001 – 0.75p)
Ordinary final proposed 1.85p per share (2001 – 1.85p)
218)
408)
164)
403)
626)
)
257)
567)
Non-equity interest:
Preference payable 30 June and 31 December
883)
837)
270)
10. Tangible fixed assets
Group
Plant)
machinery &)
motor vehicles)
Total)
Plant)
machinery &)
motor vehicles)
£’000)
£’000)
£’000)
£’000)
10,472)
27)
(586)
–)
23,113)
2,135)
–)
(675)
33,585)
2,162)
(586)
(675)
823)
18)
–)
(36)
9,913)
24,573)
34,486)
805)
1,123)
159)
(245)
–)
15,637)
1,405)
–)
(649)
16,760)
1,564)
(245)
(649)
778)
16)
–)
(36)
Cost or valuation
At 1 January 2002
Additions
Transfer to assets held for resale
Disposals
)
£’000)
)
£’000)
(restated)
Company
Freehold)
land &)
buildings)
At 31 December 2002
9. Earnings (loss) per ordinary share
41
Profit (loss) on ordinary activities after taxation
Preference dividends
1,398)
(257)
(1,912)
(270)
Depreciation
At 1 January 2002
Charge for year
Transfer to assets held for resale
Disposals
Earnings (loss)
1,141)
(2,182)
At 31 December 2002
1,037)
16,393)
17,430)
758)
Weighted average number of ordinary shares in issue
(excluding the shares owned by the Pittards employee share ownership trust)
’000s)
’000s)
Net book value
At 31 December 2002
8,876)
8,180)
17,056)
47)
At 31 December 2001
9,349)
7,476)
16,825)
45)
2002)
£’000)
2001)
£’000)
27,718)
6,768)
26,497)
7,088)
34,486)
33,585)
Basic
20,943)
)
20,980)
In 2002, the number of dilutive potential ordinary shares was 15,000 relating to Employee Share Options. This gives a total weighted
average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share for 2002 of 20,958,000.
Group
In 2001, the weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share is
identical to that used for basic earnings per ordinary share. This is because the exercise of share options would have the effect of
reducing the loss per ordinary share and is therefore not dilutive under the terms of FRS14.
The amounts shown at cost or valuation of tangible fixed assets comprise:
Cost
Valuation
)
)
The majority of the Group’s properties were professionally valued as at 31 December 1990 at their open market value for existing use
by King Sturge & Co, Chartered Surveyors. The Group has adopted FRS 15, Tangible Fixed Assets and has followed the transitional
provision to retain the book value of land and buildings. The historical cost of freehold properties included at valuation is as follows:
Cost
Depreciation
£’000)
£’000)
4,249)
(759)
4,818)
(853)
3,490)
3,965)
Included in plant and machinery are leased assets and assets being acquired under finance leases and hire purchase agreements with a
net book value of £445,000 (2001 - £nil).
In accordance with FRS11 ‘Impairment of Fixed Assets and Goodwill’ the carrying values of the assets in the Shoe & Leathergoods
Division have been compared to their recoverable amounts represented by their value in use to the Group.
6045 pp20-48 a/w
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Page 42
43
10. Tangible fixed assets (continued)
12. Stocks
2002)
£’000)
2001)
£’000)
Raw material and sundry stocks
Work in progress
Finished goods
Land and buildings held for resale
3,674)
6,637)
2,968)
341)
2,151)
5,361)
3,730)
–)
13,620)
11,242)
The value in use was derived at 31 December 1999 from discounted cash flow projections using a nominal discount rate of 16.31%
on a pre-tax basis. Based on the cash flow projections at that time no impairment was deemed to have occurred. The projections have
been updated for the subsequent actual cash flows. Had the actual cash flows been reflected in the calculation an impairment of
£1,128,000 would have been recognised.
The calculation has been reperformed at 31 December 2002 using a nominal discount rate of 15.11% on a pre-tax basis. The revised
cash flow projections indicate that the impairment has reversed.
11. Investments
Group
Company
The replacement cost of stocks is not considered to be materially different to the balance sheet value.
Own shares)
£’000)
Own shares)
£’000)
Subsidiaries)
£’000)
Total)
£’000)
Cost
At 1 January 2002
Transfer from current assets
)
–)
491)
)
–)
491)
)
6,208)
–)
)
6,208)
491)
At 31 December 2002
491)
491)
6,208)
6,699)
Provision/amortisation
At 1 January 2002
Transfer from current assets
)
–)
92)
)
–)
92)
)
2,840)
–)
)
2,840)
92)
At 31 December 2002
92)
92)
2,840)
2,932)
Net book value
At 31 December 2002
)
399)
)
399)
)
3,368)
)
3,767)
At 31 December 2001
–)
–)
3,368)
3,368)
The principal trading subsidiary undertakings are as follows:
Principal activities
Directly owned:
Pittards Group Limited
Leather production, fellmongering and hides and skins trading
Owned through subsidiary undertaking:
Booth International Limited
Trading in skins
13. Debtors
Trade debtors
Other debtors
Prepayments and accrued income
Amounts owed by Group undertakings
Deferred tax asset (note 18)
Group
2002)
£’000)
2001)
£’000)
2002)
£’000)
2001)
£’000)
(restated))
8,923)
686)
1,132)
–)
–)
6,834)
659)
394)
–)
–)
–)
135)
445)
21,481)
117)
–)
80)
85)
18,481)
143)
10,741)
7,887)
22,178)
18,789)
£’000)
£’000)
£’000)
£’000)
–)
363)
–)
363)
14. Investments
Own shares (held under restricted share plan)
15. Bank loans and overdrafts
The bank loans and overdrafts are secured by way of a fixed and floating charge over the assets of the Company and its principal
trading subsidiary undertakings. The Company has cross guarantee arrangements in respect of bank lending with certain of its
subsidiary undertakings.
16. Other creditors
Pittards plc holds either directly or indirectly all the issued share capital and voting rights of its principal trading
subsidiary undertakings.
The Pittards employee share ownership trust holds Pittards plc ordinary shares to meet potential obligations under the restricted share
plan scheme. Shares are held in trust until such time as they may be transferred to employees in accordance with the terms of the
scheme, details of which are given on page 22.
The Group recognises the cost of the scheme through an annual amortisation charge based on management’s estimate of the likely
level of vesting of shares, apportioned over the period of service to which the award relates.
At 31 December 2002 the trust held a total of 973,282 shares (2001 – 973,087) with a market value at that date of £511,000
(2001 – £414,000).
Company
Taxation and social security
Accruals
Other creditors
Proposed dividends
Corporation tax
Obligation under finance leases and hire purchase contracts (note 17)
Amounts owed to Group undertakings
)
£’000)
£’000)
£’000)
£’000)
706)
1,843)
780)
408)
362)
90)
–)
421)
1,990)
688)
403)
2)
–)
–)
359)
215)
568)
408)
357)
90)
1,075)
181)
96)
566)
403)
–)
–)
–)
4,189)
3,504)
3,072)
1,246)
6045 pp20-48 a/w
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Page 44
17. Creditors – amounts falling due after more than one year
Group
19. Share capital (continued)
Company
2002)
£’000)
2001)
£’000)
2002)
£’000)
2001)
£’000)
Obligations under finance lease and hire purchase contracts
230)
–)
230)
–)
The obligations under finance leases and hire purchase contracts are:
Amounts payable:
Within one year (note 16)
In two to five years
90)
230)
–)
–)
90)
230)
–)
–)
320)
)–)
320)
–)
Allotted, called up and fully paid:
Non-equity interests – cumulative preference shares (9.5%) of £1 each
Equity interests – ordinary shares of 25p each
2002)
Number)
2001)
Number)
2002)
£’000)
2001)
£’000)
2,701,500)
22,064,416)
2,701,500)
21,798,230)
2,701)
5,517)
2,701)
5,450)
8,218)
8,151)
The preference shares are non-voting unless their dividend is more than six months in arrears. On a winding-up they rank in priority to
the ordinary shares and are entitled to repayment at par plus a premium which is calculated as the greater of (i) 5p and (ii) a sum
equal to the excess over par of the average daily market valuation during the preceding six months. During the year the Company
issued a total of 266,186 ordinary shares at 38p per share for cash on exercises of SAYE share options.
18. Provisions for liabilities and charges
The Company has granted options to certain directors and senior executives, of which the following remain exercisable:
Deferred taxation
Number of ordinary shares of 25p each
Exercise price
Exercise period
245,000
62p
12 April 1999 to 12 April 2006
Deferred taxation is made up as follows:
45
Group
Group
Company
Provided
Not provided
Provided
2002)
£’000)
2001)
£’000)
(restated)
2002)
£’000)
2001)
£’000)
(restated)
2002)
£’000)
2001)
£’000)
(restated))
Capital allowances in advance of depreciation
Revaluation surplus and rolled over gains
Taxation losses
Other timing differences
1,886)
–)
(469))
(118))
2,103)
–)
(819))
(221))
–)
1,424)
(170)
–)
–)
1,424)
(170)
–)
(9)
–)
–)
(108)
(12)
–)
–)
(131)
Less: advance corporation tax
1,299)
(442))
1,063)
(442))
1,254)
–)
1,254)
–)
(117)
–)
(143)
–)
857))
621)
1,254)
1,254)
(117)
(143)
)Group)
)£’000)
Company)
£’000)
–)
)621)
–)
(143)
)621)
(143)
236)
26)
)857)
(117)
)
)
Provision (asset) at start of year as previously stated
Prior year adjustment on implementation of FRS19
)
)
Provision (asset) at start of year (restated)
Deferred tax charge in the profit and loss account
for the year (note 7a) )
)
Provision (asset) at end of year
))
)
236
19. Share capital
Authorised:
Non-equity interests – cumulative preference shares (9.5%) of £1 each
Equity interests – ordinary shares of 25p each
2002 and 2001
Number)
£’000)
3,000,000)
27,500,000)
3,000)
6,875)
9,875)
On 12 October 1999 the Company granted options to employees under the savings related share option scheme over 492,325
ordinary shares of 25p each, at 38p per share. The scheme matured on 1 December 2002 and by the year end options over 266,186
shares had been exercised; options over 45,061 shares remained exercisable. These options may be exercised wholly or in part after
three years from the date of an employee joining the scheme.
Share)
premium)
account)
Capital)
redemption)
reserve)
Revaluation)
reserve)
Capital)
reserve)
Profit)
& loss)
account)
Group
£’000)
£’000)
£’000)
£’000)
£’000)
Total)
£’000)
At 1 January 2002 as previously stated
Prior year adjustment (note 1a)
3,619)
–)
299)
–)
4,745)
–)
6,475)
–)
(689)
(621)
14,449)
(621)
At 1 January 2002 restated
Reserve transfer
Premium on issue of shares
Retained profit for the year
3,619)
–)
35)
–)
299)
–)
–)
–)
4,745)
(96))
–)
–)
6,475)
–)
–)
–)
(1,310)
96)
–)
515)
13,828)
–)
35)
515)
At 31 December 2002
3,654)
299)
4,649)
6,475)
(699)
14,378)
At 1 January 2002 as previously stated
Prior year adjustment (note 1a)
3,619)
–)
299)
–)
–)
–)
–)
–)
2,906)
143)
6,824)
143)
At 1 January 2002 restated
Retained profit for the year
Premium on issue of shares
3,619)
–)
35)
299)
–)
–)
–)
–)
–)
–)
–)
–)
3,049)
519)
–)
6,967)
519)
35)
At 31 December 2002
3,654)
299)
–)
–)
3,568)
7,521)
20. Reserves
Company
6045 pp20-48 a/w
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47
20. Reserves (continued)
22. Pension arrangements (continued)
The profit for the year dealt with in the accounts of the parent company amounts to £1,402,000 (2001 – £2,490,000).
At the date of the latest actuarial valuation, the market value of the assets was £50,566,000 and the scheme had an estimated deficit
of £2,096,000. The actuarial value of the assets was sufficient to cover 96% of the value of the benefits that had accrued to
members. The employer’s contribution rate has been increased to take account of the deficit disclosed by the valuation.
The cumulative amount of goodwill written off at 31 December 2002 is £93,000 (2001 – £93,000) in respect of subsidiary undertakings still within the Group. No disclosure is being made for the cumulative goodwill written off in respect of undertakings acquired
prior to 1 January 1989 because, in the opinion of the directors, the information cannot be obtained without unreasonable expense.
21. Notes to the cashflow statement
2002)
£’000)
2001)
£’000)
2,393)
1,564)
92)
(118)
(107)
(2,037)
(2,854)
3,296)
(2,106)
1,677)
(151)
78)
(35)
2,419)
3,199)
(2,486)
2,229)
2,595)
Cash flows)
Other)
At 31 December)
£’000)
£’000)
£’000)
2002)
£’000)
24)
(6,114)
–)
(2)
(654)
–)
–)
–)
(320)
22)
(6,768)
(320)
(6,090)
(656)
(320)
(7,066)
(a) Reconciliation of operating profit (loss) to net cash inflow from operating activities
Depreciation charges
Amortisation of shares under restricted share plan
Amounts written (back to) off current asset investments
Profit on sale of tangible fixed assets
(Increase) decrease in stocks
(Increase) decrease in debtors
Increase (decrease) in creditors
At 31 December 2002 there was a creditor in the balance sheet of £152,000 (2001 - £328,000)
(b) FRS 17 Retirement Benefits
The valuation used for FRS 17 disclosure was carried out at 31 December 2002. The financial assumptions used to calculate scheme
liabilities under FRS 17 are:
Valuation method
Discount rate
Inflation rate
Rate of increase in salaries
Rate of increase for pensions in payment and deferred pensions
2002
Projected unit method
6.00%
2.25%
3.25%
2.25%
2001
Projected unit method
6.00%
2.50%
3.75%
2.50%
The assets in the scheme and the expected rate of return were:
Net cash inflow from operating activities
(b) Analysis of changes in net debt
At 1 January)
2002)
Cash in hand and at bank
Overdraft
Finance lease and hire purchase obligations
22. Pension arrangements
The Group has continued to account for pensions in accordance with SSAP 24 and the disclosures given in (a) are those required by
that standard. FRS 17 Retirement Benefits was issued in November 2000, but will not be mandatory for the Group until the year ended
31 December 2005. Prior to this, phased transitional disclosures are required from 31 December 2001. These disclosures, to the extent
not given in (a) below, are set out in (b).
(a) Pittards pension schemes
(1) Defined contribution scheme
The Group operates a defined contribution scheme, where assets are held separately from those of the Group in an independently
administered fund. The required contributions outstanding at the year end included in ‘Other creditors’ (note 16) are £3,000
(2001 – £nil).
(2) Defined benefit scheme
The Group operates a defined benefit pension scheme, whose assets are held in a separate trustee administered fund.
The total pension cost for the Group was £1,319,000 (2001 – £1,340,000). This has been assessed in accordance with the advice of
a qualified actuary using the projected unit method. The latest actuarial assessment of the main scheme was made on 6 April 2000.
The assumptions which have the most significant effect on the results of the valuation are those relating to the rate of return on
investments and rates of increase in salaries and pensions. It was assumed that the investment return would be 6.5% per annum and
that salary increases would average 4.5% per annum. Pensions have been assumed to increase at the rate of 3% on the excess over
the guaranteed minimum pension.
Long-term rate of
return expected
at 31 December
2002
Value at
31 December
2002
7.00%
4.50%
4.00%
28,386)
6,726)
2,271)
Long-term rate of)
return expected)
at 31 December)
2001)
Value at)
31 December)
2001)
7.00%)
6.00%)
5.00%)
33,945)
7,711)
2,602)
£’000
Equities
Bonds
Others
£’000)
Total market value of assets
Present value of scheme liabilities
37,383)
(52,347)
44,258)
(53,742)
Deficit in the scheme
Related deferred tax asset
(14,964)
4,489)
(9,484)
2,845)
Net pension liability
(10,475)
(6,639)
Net assets
Net assets excluding pension liability (restated)
Pension liability
22,596)
(10,475)
21,979)
(6,639)
Net assets including pension liability
12,121)
15,340)
Reserves
Profit and loss reserves excluding pension liability (restated)
Pension liability
(699)
(10,475)
(1,310)
(6,639)
Profit and loss reserves including pension liability
(11,174)
(7,949)
)
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22. Pension arrangements (continued)
23. Financial commitments
On full compliance with FRS17, on the basis of the above assumptions, the amounts that would have been charged to the
consolidated profit and loss account and consolidated statement of total recognised gains and losses (STRGL) for the year ended
31 December 2002 are as set out below:
Authorised future capital expenditure amounted to:
)
Analysis of the amount charged to operating profit
2002)
£’000)
Current service cost of defined benefit schemes
1,777)
Analysis of the amounts included as other finance income
Expected return on pension scheme assets
Interest on pension scheme liabilities
2,934)
(3,169)
Net finance charge
(235)
49
Group
2002)
£’000)
2001)
£’000)
Contracted
96)
113)
The annual commitment under non-cancellable operating leases, was as follows:
Leases expiring:
– within one year
– between two and five years
)
77)
89)
)
40)
173)
166)
213)
All of the above relates to plant and machinery.
24. Derivatives and other financial instruments
Amount recognised in the statement of total recognised gains and losses (STRGL)
Actual return less expected return on pension scheme assets
Experience gains arising on the scheme liabilities
Changes in assumptions underlying the present value of the scheme liabilities
Actuarial loss recognised in STRGL
(10,248)
5,913)
(1,301)
(5,636)
Movement in deficit during the year
Deficit in scheme at beginning of the year
(9,484)
Movement in year:
Current service cost
Contributions
Other finance expense
Actuarial loss in STRGL
)
(1,777)
2,168)
(235)
(5,636)
Deficit in scheme at end of the year
(14,964)
History of experience gains and losses
Difference between actual and expected returns on assets
% of scheme assets
Experience gains on the scheme liabilities
% of scheme liabilities
Total actuarial loss recognised in STRGL
% of scheme liabilities
(10,248)
(27.4%)
5,913)
11.3%)
(5,636)
(10.8%)
An explanation of the Group’s objectives, policies and strategies for the role of derivatives and other financial instruments in creating
and changing the risks of the Group in its activities can be found on pages 12 to 17. As permitted by FRS 13, short term debtors and
creditors have been excluded from the disclosures other than the currency and hedging disclosures. The disclosures take into account
forward currency contracts, currency options and underlying currency transactions which they are designed to hedge.
Interest rate risk profile of financial liabilities
Fixed rate)
Floating rate)
Total) financial liabilities) financial liabilities)
2002
£’000)
£’000)
£’000)
Sterling
US dollar
Euro
Other
7,270)
1,476)
925)
118)
2,701)
–)
–)
–)
4,569)
1,476)
925)
118)
9,789)
2,701)
7,088)
Fixed rate)
Floating rate)
Total) financial liabilities) financial liabilities)
2001
£’000)
£’000)
£’000)
Sterling
US dollar
Euro
Other
6,003)
2,611)
61)
140)
2,701)
–)
–)
–)
3,302)
2,611)
61)
140)
8,815)
2,701)
6,114)
Fixed rate financial liabilities represent £2,701,500 of irredeemable preference shares (2001 - £2,701,500 ), with a fixed coupon of
9.5%. The floating rate financial liabilities comprise bank loans and overdrafts and obligations under finance lease and hire purchase
contracts that bear interest at rates based on the lending bank’s base rate. At 31 December 2002 the Group has no interest rate caps
in place (2001 - nil).
The Group has no financial assets apart from cash at bank and in hand which does not earn interest.
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51
24. Derivatives and other financial instruments (continued)
24. Derivatives and other financial instruments (continued)
Currency exposures
As explained on pages 16 and 17, the Group’s objective is to hedge completely all known currency exposures arising from trading
activities. After taking into account the effect of forward currency contracts entered into to manage these exposures the Group has no
transactional exposures that give rise to net currency gains and losses to be recognised in the profit and loss account. As at
31 December, the Group also held open various forward foreign currency contracts taken out to hedge expected future currency sales
and purchases.
Hedges
The Group’s policy is to hedge transactional currency exposures and currency exposures on future expected sales and purchases.
Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on financial instruments used for hedging are as follows:
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities at 31 December was as follows:
In
In
In
In
one year or on demand
more than one year, but not more than two
more than two years, but not more than five
more than five years
Borrowing facilities
The Group has excess on demand overdraft facilities available at 31 December, as follows:
Expiring in one year or less
Fair values of financial assets and financial liabilities
Primary financial instruments:
Short term borrowings and current portion of long term borrowings
Long term borrowings
Non-equity shares
Cash at bank and in hand
Derivative financial instruments held to hedge currency
exposure on expected future sales and purchases:
Forward currency contracts
2002)
£’000)
2001)
£’000)
6,858)
90)
140)
2,701)
6,114)
–)
–)
2,701)
9,789)
8,815)
2002)
£’000)
2001)
£’000)
3,232)
3,886)
Book value)
Fair value)
Book value)
Fair value)
2002)
£’000)
2002)
£’000)
2001)
£’000)
2001)
£’000)
(6,858)
(230)
(2,701)
22)
(6,858)
(230)
(2,647)
22)
(6,114)
–)
(2,701)
24)
(6,114)
–)
(2,769)
24)
–)
329)
–)
183)
Market values have been used to determine the fair value of forward currency contracts and listed shares.
Gains)
£’000)
Losses)
£’000)
Total)
£’000)
288)
31)
(31)
(60)
257)
(29)
319)
(91)
228)
of which:
Gains and losses expected to be recognised in the profit and loss account in 2003
319)
(91)
228)
Gains and losses included in the profit and loss account that arose in previous years
268)
(7)
261)
2001
Gains and losses unrecognised at 31 December 2001
Gains and losses deferred at 31 December 2001
183)
85)
–)
(7)
183)
78)
268)
(7)
261)
of which:
Gains and losses expected to be recognised in the profit and loss account in 2002
268)
(7)
261)
Gains and losses included in the profit and loss account that arose in previous years
532)
(157)
375)
2002
Gains and losses unrecognised at 31 December 2002
Gains and losses deferred at 31 December 2002
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Analysis of shareholders
53
Notice of meeting
as at 31 December 2002
Notice is hereby given that the 94th Annual General Meeting of Pittards plc will be held at the registered office at 12 noon on
Ordinary shares
Category:
Individuals
Trust and investment companies
Banks and nominee companies
Pension funds
Size of holding
Up to 999 shares
1,000 to 9,999 shares
10,000 to 49,999
50,000 shares and over
Number of)
holders)
% held)
Number of)
shares held)
% held)
1,821)
8)
4)
2)
99.24)
0.44)
0.22)
0.10)
13,546,442)
7,747,697)
130,334)
639,943)
61.39)
35.11)
0.59)
2.91)
1,835)
100.00)
22,064,416)
100.00)
654)
938)
186)
57)
35.64)
51.12)
10.14)
3.10)
256,639)
2,715,497)
3,229,257)
15,863,023)
1.16)
12.31)
14.63)
71.90)
1,835)
100.00)
22,064,416)
100.00)
Wednesday 30 April 2003 for the following purposes:
Ordinary resolutions
1
To receive the annual statement of accounts for the year ended 31 December 2002 and the directors’ and auditors’
reports thereon.
2
To receive and approve the report on directors’ remuneration for the year ended 31 December 2002
3
To declare a dividend.
4
To re-elect the following directors retiring by rotation:
(i) E D B Tebbs
(ii) S R Johnson
5
To appoint the auditors and to authorise the directors to determine their remuneration.
Special business
6
To consider and, if thought fit, resolve that: the directors be generally and unconditionally authorised, in accordance with Section
80 of the Companies Act 1985, to exercise all powers of the Company to allot relevant securities (as defined for the purposes of
that section) up to a maximum nominal amount of £1,358,896 and this authority shall expire on the day five years after the
passing of this resolution and the Company may, before this authority expires, made an offer or agreement which would or might
require relevant securities to be allotted after it expires and all previous authorities under Section 80 of the Companies Act 1985
Five year review
shall cease to have effect.
7
Year ended 31 December
Turnover
Percentage
Profit (loss)
Profit (loss)
Profit (loss)
outside United Kingdom
on ordinary activities before interest
on ordinary activities before taxation
on ordinary activities after taxation
Dividends:
Preference
Ordinary
Shareholders’ funds
Earnings (loss) per ordinary share (basic)
Dividends per ordinary share
To consider and, if thought fit, resolve that in accordance with Article 5 of the Articles of Association of the Company and Section
2002)
£’000)
)
2001)
£’000)
(restated))
2000)
£’000)
(restated))
1999)
£’000)
note (a))
1998)
£’000)
note (a))
166 of the Companies Act 1985, the Company be hereby granted general and unconditional authority to make market purchases
78,887)
84%)
2,393)
2,007)
1,398)
83,035)
81%)
(2,106))
(2,590))
(1,912))
81,195)
75%)
3,493)
3,003)
2,000)
62,115)
67%)
2,232)
1,759)
1,758)
74,320)
65%)
1,016)
85)
184)
(a) be limited to 2,206,441 Ordinary Shares of 25p each (10% of the issued Ordinary Shares) and 405,225 Cumulative Preference
257)
626)
22,596)
5.4p)
2.85p)
270)
567)
21,979)
(10.4p))
2.6p)
284)
829)
25,008)
8.1p)
3.8p)
285)
785)
24,427)
6.8p)
3.6p)
285)
763)
23,741)
(0.5p)
3.5p)
(as defined in Section 163 of the Companies Act 1985) of any of its own shares on such terms and in such manner as the board
of directors of the Company may from time to time determine provided that the authority conferred by this Resolution shall:
Shares of £1 each (15% of the issued Cumulative Preference Shares)
(b) in relation to Ordinary Shares not permit the price (exclusive of expenses) to be paid per share to be more than 5% above the
average of the middle market quotations for an Ordinary Share as derived from the London Stock Exchange Daily Official List
for the 5 business days before the purchase is made or to be less than 25p, and in relation to Cumulative Preference Shares
not permit the price (exclusive of expenses) to be paid per share to be more than 5% above the average of the middle market
quotations for a Cumulative Preference Share as derived from the London Stock Exchange Daily Official List; and
(c) expire on the date falling 15 months after the passing of this Resolution or the date of the next Annual General Meeting of
the Company, whichever is the earlier, except in relation to the purchase of shares the contract for which was concluded
before the expiration of the said period and which is executed wholly or partly after such date.
(a) These results have not been restated for the change in accounting policy described in note 1(a) to the accounts. Accordingly the tax
Special resolution
charge and balance sheet have been prepared under Statement of Standard Accounting Practice 15 (Deferred taxation).
8
To consider and, if thought fit, resolve that:
(i) The directors be given power to allot for cash equity securities (as defined for the purposes of Section 89 of the Companies
Act 1985) pursuant to the general authority conferred on them under Section 80 of that Act as if Section 89(1) of that Act did
not apply to the allotment but this power shall be limited:
(a) to the allotment of equity securities in connection with an offer or issue to or in favour of ordinary shareholders on the
register on a date fixed by the directors where the equity securities respectively attributable to the interests of all those
shareholders are proportionate (as nearly as practicable) to the respective numbers of ordinary shares held by them on that
6045 pp20-48 a/w
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9:53 am
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Perf indication - DO NOT PRINT
54
Form of Proxy
Notice of meeting
For use by ordinary shareholders at the Annual General Meeting.
I / We
date but the directors may make such exclusions or other arrangements as they consider expedient in relation to fractional
Block letters please
entitlements, legal or practical problems under the laws in any territory or the requirements of any relevant regulatory body or
of
stock exchange; and
(b) to the allotment (other than under (a) above) of equity securities having, in the case of relevant shares (as defined for the
purposes of Section 89), a nominal amount not exceeding in aggregate £275,805;
(ii) this power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this
being (a) member(s) of Pittards plc, hereby appoint 1Robert Charles Tomkinson or failing him, John William Wreford
Pittard, directors of the Company, as my/our proxy to vote for me /us and on my /our behalf at the Annual General
Meeting of the Company, to be held on 30 April 2003, and at any adjournment thereof, on the resolutions set out
in the notice of meeting.
resolution and the Company may, before this power expires, make an offer or agreement which would or might require equity
Please indicate with an “X” in the appropriate spaces how you wish your vote to be cast.
securities to be allotted after it expires.
Ordinary Resolutions
By order of the board
J Williams
For
1
To receive the report and accounts
2
To receive and approve the report on directors’ remuneration
6 March 2003
3
To declare a dividend
Note:
4
To re-elect the following directors retiring by rotation:
Secretary
Yeovil, Somerset
A member entitled to attend and vote at the above meeting may appoint a proxy, who need not be a member, to attend and vote instead of him/her. The register of
i
E D B Tebbs
directors’ holdings and copies of directors’ contracts of service will be available for inspection at the registered office of the Company during the usual business hours
ii
S R Johnson
Against
from the date of this notice until the date of the Annual General Meeting and at the place of the Annual General Meeting from at least fifteen minutes prior to and
5
until the conclusion of the meeting.
To appoint the auditors and to authorise the directors to determine
their remuneration
Special Business
Financial calendar
Annual General Meeting
Announcement of half year results for 2003
Announcement of 2003 results
7
To grant the Company authority to make market purchases of its own
shares subject to the limitations outlined in the Notice of Meeting.
Special Resolution
9 May 2003
8
September 2003
Payment of interim dividend for 2003 to shareholders registered on 3 October 2003
(ex dividend date 1 October 2003)
To authorise the directors to allot relevant securities as defined by
section 80 of the Companies Act 1985, subject to the limitations
outlined in the Notice of Meeting.
30 April 2003
Payment of final dividend for 2002 to shareholders registered on 11 April 2003
(ex dividend date 9 April 2003)
6
To authorise the directors to allot for cash equity securities as defined
by section 89 of the Companies Act 1985, subject to the limitations
outlined in the Notice of Meeting.
Dated this
day of
3 November 2003
March 2004
2003
Holding of shares
(for company use only)
Signature(s)2
Notes:
1
2
The names printed above may be deleted and other name(s) inserted. A proxy need not be a member of the Company. If you do
not indicate how you wish your proxy to use your vote on any particular matter, the proxy will exercise his discretion both as to
how he votes and whether or not he abstains from voting.
In the case of a corporation, this proxy requires to be given either under the common seal or under the hand of an officer or
attorney so authorised. In the case of joint holdings, the first named on the register of members, whether in person or by proxy,
will be accepted to the exclusion of the votes of other joint holders.
N.B. – This proxy, to be valid, must be lodged at the transfer office of the Company, together with any power of attorney under which it is signed,
not less than forty-eight hours before the meeting.
6045 pp20-48 a/w
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Gt Britain, Channel Islands, N Ireland
or the Isle of Man
BUSINESS REPLY SERVICE
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Designed and produced by Robson Dowry Associates Limited. Printed in England by Pims Print.
In keeping with Pittards’ environmental policy this report has been printed on an environmentally responsible paper using at least fifty per cent recycled fibre.
All the virgin pulp is obtained from farmed forests using crop replantation procedures. No elemental chlorine is used in the bleaching process and the paper
manufacturing has been managed to minimise the emission of pollutants.

Pittards plc Annual Report and Accounts 2002

Transcription

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