2000 Annual Report

Transcription

2000 Annual Report

3703 Pittards AR a/w5
20/3/01
5:26 pm
Page i
Pittards plc Sherborne Road, Yeovil, Somerset, BA21 5BA England
Telephone +44 (0)1935 474321
Group Facsimile +44 (0)1935 427145
Email [email protected]
Website www.pittardsleather.com
Global Challenge provides Pittards with an outstanding
opportunity to evaluate its products in a wide range of
conditions, considered to be the toughest ever in which to
test performance leathers.
Pittards plc Annual Report & Accounts
2000
20/3/01
5:26 pm
Page iii
Pittards plc Annual Report & Accounts 2000
In partnership with brands
Contents
29
Consolidated statement of recognised
Pittards aims to be the preferred supplier of high performance leather
gains and losses
to the world’s leading brands of gloves, shoes, luxury leathergoods and sports equipment.
2
Chairman’s statement
4
Operational and financial review
16
Directors, officers and advisers
29
Reconciliation of group shareholders’ funds
18
Directors’ report
30
Balance sheets
20
Report on directors’ remuneration
31
Consolidated statement of cash flows
We seek to achieve this aim by offering innovative leathers which are differentiated from
24
Corporate governance
32
Notes to the accounts
26
Statement of directors’ responsibilities
43
Analysis of shareholders
competing products by their performance properties, quality and consistency, and which
in relation to financial statements
43
Five year review
27
Report of the auditors
44
Notice of meeting
28
Consolidated profit and loss account
45
Financial calendar
are backed by the highest standards of customer service.
Results in brief
2000)
£’m)
1999)
£’m)
81.2)
62.1)
3.5)
2.2)
(0.5)
(0.4)
Profit before taxation
3.0)
1.8)
Net bank borrowings
5.9)
5.0)
26.3)
24.4)
Turnover)
Operating profit
Interest – net
Shareholders’ funds
Per ordinary share:
Pence per share
Earnings
12.7)
6.8)
Dividends
3.8)
3.6)
Net assets
106.9)
98.3)
1
2
20/3/01
5:26 pm
Page 2
3
Chairman‘s statement
Tax losses of approximately £3.1m brought forward from previous
price. When combined with resistance from customers to accept
the AGM in May. The awards will only vest in full if the target real
years have reduced the charge to corporation tax in the year to
price increases these factors have resulted in some reduction in
rate of growth in earnings per share of at least 5% per annum
£0.020m (1999 – £0.001m). After preference dividends, earnings
margin in the second half of the year. This in turn has stimulated
over the three years ending 31 December 2002 is satisfied.
were £2.699m (1999 – £1.473m) and earnings per share were
the development of new products – 38% of the Division’s sales
12.7p (1999 – 6.8p). The board is recommending a final dividend
were of products developed within the last two years – and has
of 2.7p (1999 – 2.6p) making a total for the year of 3.8p
intensified the focus on process improvement and cost reduction.
(1999 – 3.6p), an increase of 6%. Assuming a full tax charge the
proposed dividend is covered more than twice by earnings. If
approved at the Annual General Meeting the final dividend will
be paid on 11 May 2001 to shareholders on the register at the
close of business on 6 April 2001.
Your Company has made substantial further progress in the last
year. I am pleased to report an increase in profit before tax for
the year ended 31 December 2000, to £3.003m from £1.759m
for the previous year and an increase in earnings per share of
87% to 12.7p (1999 – 6.8p).
Strong international demand for leather in the sport and leisure
sectors continued into the second half. Group turnover in the
second six months was similar to the first and amounted to
£81.2m for the year as a whole, 31% ahead of sales for the
previous year. 75% of this turnover was generated outside the
United Kingdom (1999 – 67%) with export sales, at £60.9m, up
by 47% on the previous year. Much of the growth in turnover
was attributable to sales of products brought to market within
the last two years, and to the rapid development of new
accounts as we broaden our customer base. The special factors
which depressed sales in 1999 did not feature in 2000.
As I predicted in my interim statement, the operating profit of
£1.572m achieved in the second half did not match the £1.921m
achieved in the first. This was due primarily to the steady rise in
hide and skin prices throughout the year in response to
international demand, and to increases in fuel, chemical, and
other input costs. We managed to contain much of the impact of
higher costs and increased volumes on working capital and there
now holds 828,824 (3.8%) of shares in the Company on behalf
of employees. We welcome this development. Your company only
in demand for raw sheepskins from European manufacturers of
survives and grows on the dedication of its employees at all
wool-on garment leather pushed prices to levels that made
levels. This year, a period of increasing turnover and productivity,
fellmongering uneconomic in the third quarter. Although the
has amply demonstrated this commitment.
share (1999 – £24.5m and 98p). Funds generated from profitable
profit for the year as a whole.
particularly from Europe, where longer credit terms are the norm.
Borrowings rose by £0.9m to £5.9m but still represent only 22%
of shareholders’ funds (1999 – 20%).
The volume of leather sold by the Glove Leather Division
increased by 24% and the sales turnover by 29%. New products
boosted sales of golf glove leather as they rebounded from the
impact of destocking in the previous year. Further growth was
also achieved in the sales of glove leather for sporting
applications other than golf, such as baseball and motorcycling,
and for service and dress gloves. The additional commitment to
product development and innovation is delivering results, with
likely to follow suit. Whilst slowing economic activity has caused
many commodity prices to soften, concerns over BSE in Europe
the Company and we all miss her wise counsel and advice. Our
have underpinned raw material prices generally, and have pushed
deepest sympathy goes out to her husband David.
cattle hide prices higher still. Once a clear policy for dealing with
We are fortunate to have secured the services of Louise Cretton
(44) who will be joining us as a non-executive director in April.
She is a director of a company specialising in brand development,
market research and marketing strategy, and has worked as a
consultant to some of the world’s best known brands. She was
previously a board director of a leading international advertising
agency. We are confident she will contribute greatly to the
strategic direction of the Group.
As was announced last year, Steve Johnson took over the
management of the Shoe and Leathergoods Division and joined
the Group Board in April 2000, and Tony Marriott retired from
the Board in July 2000.
of 11%. Sales of upper leather for casual footwear and sports
During the year we published our 2000 Environmental Report
shoes showed the largest advances helped both by new products
which describes the environmental effects of our business and
and new business. The volume of leather supplied to
how we are addressing environmental management matters for
manufacturers of luxury leathergoods was also usefully ahead of
our different stakeholders. This has been extremely well received.
the previous year.
markedly and the economies of its principal trading partners are
director, died. Her loss was felt very deeply by her many friends in
generated by products developed within the last two years.
19%, with an underlying volume increase in finished leather sales
During the last few months the US economy has slowed down
Tragically during the year Mrs Gill Thwaites, a non-executive
almost a quarter of the Division’s total turnover in 2000
In the Shoe and Leathergoods Division sales turnover grew by
the incentive share schemes. The employee share ownership trust
faced some difficult trading conditions in the second half. A surge
Division incurred a small loss in the second half it recorded a
raw material costs, and the increased volume of business,
shares of the Company through the employee share schemes and
As I indicated at the interim stage, the Raw Materials Division
Net assets have risen to £26.3m equivalent to 107p per ordinary
trading were offset by higher working capital as a result of rising
An increasing number of our employees have an interest in the
BSE in Europe has emerged, we would expect hide prices to ease
back. Despite these issues, and until the recent outbreak of foot
and mouth disease in the United Kingdom, we were confident of
making further progress in the current year. However, the
necessary measures announced to bring foot and mouth under
control are inevitably impacting on our supplies of raw material in
the Shoe and Leathergoods and Raw Materials Divisions. We are
actively seeking alternative supplies of hides and skins to meet
the demand for our products.
Until the foot and mouth outbreak is contained, and the raw
material supply chain returns to normality, the trading outlook
will remain unclear. Nevertheless, we have started the year with
healthy order books, and our sales turnover in the first two
months is ahead of last year.
In June 2000, the Remuneration Committee made conditional
was only a modest increase in interest costs to £0.490m
Strong international demand and, latterly, BSE concerns in Europe
awards of incentive shares to more than 60 senior managers
(1999 – £0.473m).
have created a shortage of hides and fuelled the rise in their
under the Long Term Incentive Plan approved by shareholders at
Robert C Tomkinson Chairman
4
20/3/01
5:26 pm
Page 4
Pittards produces high performance leather. It aims to be the
supply chain members – international brands and their
supplier of first choice to the world’s leading brands of gloves,
manufacturers, and key suppliers of hides, skins, chemicals and
shoes, luxury leathergoods and sports equipment. To meet this
other goods and services – the divisions seek constantly to
aim Pittards offers innovative leathers which are differentiated
produce innovative leathers better, faster and at lower cost, so
from competing products by their performance properties,
as to maximise added value.
quality and consistency, and which are backed by the highest
standards of customer service and environmental responsibility.
Glove Leather Division
The ‘Pittards’ brand derives its value from the Company’s
Many of the world’s best known brands of sport and dress
reputation for quality, innovation, technology and integrity.
gloves incorporate leather produced at the division’s factory in
Unusually for the leather industry, the brand is recognised not
Yeovil, Somerset. About two thirds of its production is for
only within the trade sector but increasingly amongst consumers.
gloves used in sports such as golf, baseball and American
In collaboration with some of its customers, the Company is
football. The other third is primarily for dress, military and public
promoting ‘Pittards World Class Leather’ in a campaign which
service gloves.
highlights the involvement of Pittards in partnerships with leading
consumer brands, and in the products that result from them.
Almost 90% of production is exported. The majority of sales,
and virtually all purchases of hair sheepskins and goatskins, the
Innovation is the key to the future growth of the Group.
principal raw materials, are denominated in US dollars.
In recent years, the resources committed to research and
This provides some protection from exchange rate fluctuations.
development have been increased, and the pace of new product
introductions has been accelerated. The intellectual property
Sales of golf glove leather in 2000 recovered strongly from the
depressed level of the previous year. FootJoy, the market leader
rights to these new developments are protected, and some of
in the golf sector, launched a number of new gloves featuring
the rights to more mature technologies are being licensed to
innovative Pittards leathers, the principal one being the Dry I.C.E.
selected third parties.
glove. The leather for this glove represents yet another
The Group operates through three Divisions – Glove Leather,
technological advance, in that it incorporates materials which
Shoe & Leathergoods and Raw Materials. Each division is focused
regulate the temperature inside the glove in both warm and cold
on a small number of carefully defined market segments and
conditions of play.
raw material types. Working in long term partnerships with other
‘ I have worn gloves with the Firebloc technology in the
leather. They are more flexible and water-resistant than
anything else I have worn. The result is tremendous dexterity
– and there’s no need to remove gloves to perform difficult
tasks. I can utilise the tools for the job more effectively for
more efficient performance.’
Edward Doherty, Boston firefighter, 17 years on the job
20/3/01
5:27 pm
Page 6
7
Franklin enjoyed a good second season with their baseball
damage. The division is supporting a project to raise awareness
batter’s glove, which features the division’s Armortan abrasion-
of the problem, and to seek practical and economic responses to
resistant and Microspike anti-microbial leathers. The division also
it. Meanwhile, the overseas technical development team
increased its sales of baseball leathers to both Nike and
continues to work with suppliers to improve the quality and
Rawlings.
consistency of the initial processing of raw material, and to
The outdoor sector was another area of growth through
premium brands such as Berghaus, DaKine and Kombi /Gordini
for mountaineering, snowboarding and ski gloves.
Sales of dress glove leather benefited from new products and a
cold winter in North America, while the newly developed Teflon®
leather was successfully launched in the UK with Marks and
Spencer. Elsewhere, close relationships with a number of
prestigious couture brands were established in the year and
significant efforts have been directed to the military and service
sectors with both the Ministry of Defence and overseas
procurement agencies.
Innovation and product development are key to the future
growth and prosperity of the business. Over 24% of the sales
turnover in 2000 was generated by products introduced in the
last two years; future developments will include further
enhancements of abrasion-resistance, water-repellency and flame
-retardance.
identify new raw material origins both for hairsheepskins and
goatskins.
Substantial benefits for both the business and the employees
continue to accrue from the ’20 Keys’ initiative – a continuous
improvement methodology – which is now entering its fifth year.
During the last twelve months efforts have been concentrated
on cost reduction by improved waste management. Employee
involvement in, and commitment to, the initiative continue with
enthusiasm. Large numbers of suggestions have resulted in
faster throughput, improved efficiency and a safer working
environment.
Shoe & Leathergoods Division
The Shoe & Leathergoods Division produces upper leather for
sale to manufacturers of sports and leisure footwear, high
specification leather for makers of sports equipment and luxury
leathergoods and a special range of leathers for saddlemakers.
More than 70% of the leather produced at its factory in Leeds is
The availability of hair sheepskins from Africa was reasonable,
exported. Its raw material, cattle hide, is sourced from the meat
but prices rose steadily during the year while the quality of skins
industries of the UK, Europe and the US.
generally continued to decline, largely as a result of parasitic
‘ I have worn the FootJoy Dry I.C.E. glove since its
introduction. The glove has a tremendous fit, provides an
excellent feel for the club – and it is cooler. As a wearer, the
overall performance benefits give me greater confidence.’
Davis Love III, winner; 2001 AT&T Pebble Beach National Pro-am.
Runner-up; 2001 Buick Invitational
8
20/3/01
5:27 pm
Page 8
International demand for footwear and leathergoods was
in the division. This has been a joint project between the two
strong in 2000, enabling further progress to be made towards
companies and represents a clear opportunity for the
achieving a more uniform distribution between the sectors
development of a whole new area of business.
served – footwear, sport and leathergoods – and to broaden the
customer base.
During the year, the division introduced further variations on its
strong but lightweight ‘Soccer-Lite’ leathers for the volume area
The Spanish brand Camper has rapidly become a world force
of the market. New leathers have been developed for game balls
in leisure footwear, distinctive for its style, aesthetics and
for American football, basketball and volleyball. Almost 40% of
individuality and the division is now their major supplier of
the finished leather sold in the year consisted of products
leather. Although some of our UK customers have increased their
brought to market over the last two years. The division is
resourcing of shoes offshore during the year, the division
currently developing leathers featuring high abrasion-resistance,
continues to supply them with premium leathers exported from
leather incorporating antibacterial properties, and temperature
the Leeds factory or with selected Pittards leathers manufactured
regulating leathers, all of which will be launched within the next
under licence in India.
twelve months.
In the sports sector the division continued to work closely with
The division is seeking to reduce costs. The technical team has
FootJoy for golf shoes and with Puma for soccer. New Balance is
concentrated on improving production processes in order to
a brand which has successfully combined high performance with
minimise rework and reject rates. Tighter controls on drying, and
‘street credibility’ in its training shoe range, in which Pittards
a team-based approach to identifying and resolving quality
leathers feature prominently. Among the division’s new
problems as they arise, should contribute to a reduction in costs.
customers in the sports sector are Merrell in outdoor leisure,
Investment for the current year will deliver faster, easier
Spalding for American footballs, basketballs and volleyballs, and
throughput through the factory, and lower labour costs.
Adidas for golf shoes. The division is currently working with a
One of the main challenges for the division has been the
major US brand to develop leathers for baseball balls and
relentless rise in raw hide prices over the year, which were
catchers’ mitts.
fuelled by increasing worldwide demand, particularly from the
Louis Vuitton remains the pre-eminent customer for
Far East and Italy. The impact has been mitigated to some
leathergoods leather. Over the last two years a vegetable tanned
extent by judicious use of hides from various sources and by
leather has been developed, a tannage not previously carried out
ensuring optimum utilisation. The division continually reviews
‘ I’ve got a pair of the Dubarry boots with Pittards WR100
leather and they are easily the best pair of boots I have had
in 100,000 nautical miles of ocean sailing’
Will Oxley, Skipper – Compaq NonStop
20/3/01
5:27 pm
Page 10
11
worldwide hide sources such as Australia, Europe, Indonesia and
satisfactory and for whom adequate credit cover can be
South America.
obtained.
Tony Marriott retired from his position as Divisional Managing
A shortage in the supply of good quality sheepskins in the first
Director in April 2000, and was succeeded by Steve Johnson.
half caused raw material prices to rise steeply. Pickled pelt prices
Steve previously held the position of Technical Director in the
obtainable from customers in Europe and the Far East did not
Glove Leather Division and, before assuming control, worked
fully compensate for the rise in raw material costs, a factor
alongside Tony at Leeds for three months to ensure a smooth
which put pressure on margins. Trading conditions in the third
hand-over. Tony’s contribution to the division, and indeed the
quarter were tougher still as the seasonal demand for UK
Group, was considerable.
sheepskins from double face (wool-on) garment leather
Keith Pollard, Production Director of the Division, retired in July
after 30 years of loyal service. Arthur Jones, who has been with
the company for ten years, took over as Divisional Production
Director, with particular responsibility for quality and area. Arthur
is charged in 2001 with bringing the ‘20 Keys’ improvement
project up to the same high standard as that achieved in our
Yeovil factory.
manufacturers in Turkey and Eastern Europe once again pushed
the price of sheepskins to a level that made it uneconomic to
process them in the division’s factories. Once this seasonal
demand abated in October, the division returned to profit, and
made a small profit on its sheepskin activities for the year as a
whole.
Production changes and some streamlining at the Langholm
sheepskin process facility showed significant reductions in costs
Raw Materials Division
during the year.
The division procures wool sheepskins and cattle hides from UK
The division further developed its facility at Kinghorn for
abattoirs and produces wet salted, pickled and wet blue
processing wet blue hides for sale to third parties, and enjoyed
sheepskins and wet salted and wet blue hides for sale to leather
strong demand from its customers – principally Italian upholstery
producers worldwide. Processing is carried out in two factories
tanners – for most of the year. The wet blue hide process is
(fellmongeries) in Langholm and Kinghorn, Scotland. Trading is
being improved to give a more consistent product, with help
on a back-to-back basis with customers whose business record is
from the Shoe & Leathergoods Division.
‘Brasher is delighted with the Pittards leather chosen for
the new Supalite boot. We believe that this lightweight,
soft yet hard wearing leather has significantly contributed
towards the boot's success and to achieving two awards
for innovation.’
Chris Macdonald, Marketing Manager, The Brasher Boot Company
12
20/3/01
5:27 pm
Page 12
Environmental Management
■
In September 2000 the Group published a 2000 Environmental
include environmental considerations in all investment
decisions.
Report which describes the environmental effects of the business
The policy is reviewed regularly to ensure its continued relevance
and how such issues are being addressed.
in the light of changing standards, new technology and
environmental thinking.
The environmental policy of the Group is to:
■
The Group integrates environmental goals with the requirements
meet and strive to better relevant environmental standards
of legislation, good practice and business strategy. For more than
and legislation
■
■
ten years, it has incorporated environmental objectives and
annually review environmental objectives and targets with a
targets into its business plans. Indeed, the way the Group
view to continually improving the Group’s environmental
implements its policy has led to business benefits, not only in the
performance.
form of cost savings through reduced wastage, but also by
use only those hides and skins which are by-products of the
meat, dairy and wool industries worldwide
■
communicate openly on the nature of our activities and report
progress on environmental plans and performance
■
■
A risk assessment methodology has been used at all four of the
Group’s production sites to identify, quantify and prioritise risks
management systems.
organise activities and operations in such a way that
Specific objectives and targets have been set for the three
aim to minimise waste through the careful use of all materials,
operating sites certified to ISO 14001 (Yeovil, Leeds and
supplies and energy
Langholm). Each site has an environmental management
use renewable or recyclable materials and components
wherever possible in operations
■
environmental management.
and improvement programmes within the environmental
environmental impacts are assessed and minimised
■
attracting customers with similarly responsible attitudes to
maintain a research and development activity, aimed at
evaluating and developing more efficient and more
programme of projects based on risk, cost benefit and ease of
implementation for the next ten years.
The Kinghorn operation plans to achieve ISO 14001
accreditation in 2001.
environmentally acceptable technology
‘ The XFL and all-weather balls are central to Spalding’s
progress in the football market. Pittards WR100 provides
the ideal performance benefits which have enabled
Spalding to market the superior product required.’
Tim Seitter, Marketing Director, Spalding Sports Worldwide
14
20/3/01
5:27 pm
Page 14
15
Financial Review
The Group’s principal financial instruments, other than
Earnings and dividends per share (pence)
Geographic spread of sales (£m)
derivatives, comprise bank loans and overdrafts, preference
Sales in the year were £81.2m compared with £62.1m in 1999.
The volume of finished leather was 17% higher than in the
previous year due to the generally strong international demand
for leather, particularly in the sport and leisure sectors. Some of
81.2
2000
2000
1.1
2.7
1999
1.0
2.6
1998 (0.5)
1.0
2.5
shares, finance and operating leases, and cash. The main
12.7
purpose of these instruments is to raise finance for the Group’s
62.1
1999
74.3
1998
this increased volume is attributable to the robust recovery in the
6.8
operations. Various other financial instruments such as trade
debtors and trade creditors arise directly from operations.
Derivative transactions (interest rate caps and forward currency
sales of golf glove leather after the destocking exercise which
Far East & rest of the world
depressed volumes in the Glove Leather Division in the second
North America
Europe
UK
Interim dividend
Final dividend
contracts) are entered into for the purpose of managing interest
Earnings per share
rate and currency risks arising from the Group’s operations and
and third quarters of 1999. Almost one third of finished leather
sales in the year were generated by products brought to market
within the last two years. Approximately 14% of the increase in
its sources of finance. It is Group policy, and has been
Operating profit (£m)
Shareholders’ funds (£m)
Gearing
hide and skin prices during the year, which increased by
3.5
2000
2000
5.9
26.3
22%
The main risks arising from the Group’s financial instruments are
between 20% and 30% according to raw material type.
1999
Sales to customers outside the UK were £60.9m, 75% of total
1998
2.2
1.0
1999
5.0
1998
5.0
24.4
23.7
20%
21%
Almost 60% of export sales were to the Far East and North
First half
Second half
The Group’s principal borrowings are in pounds sterling,
Nearly a third of the hides and skins purchased by the Group
Profit before tax (£m)
although foreign currency borrowings are used to manage
Net assets per share (pence)
timing differences in cash flows arising from trading activities.
against dollar receipts. Excess dollar receivables, and all
The debt is all floating rate. The Group’s policy is to use interest
3.0
2000
106.9
2000
currency accounts, forward contracts and, where appropriate,
options.
The operating profit for the year was £3.5m, of which £1.6m
1.8
1999
0.1
1998
1999
1998
98.4
95.2
First half
Overall, the average number employed in the Group in 2000
increased by 4% to 830 compared to 799 employed in the
previous year. Employment costs rose by 11% to £18.7m,
while finished leather production grew by 17% and sales
turnover by 31%.
Interest costs were £0.5m, similar to the previous year, and profit
before tax was £3.0m compared to £1.8m in 1999. Tax losses
interest rates when it believes that the risk justifies the cost.
At the year end no interest rate cap was in place.
continuity of funding and flexibility through the use of
Second half
overdrafts, banks loans and finance leases; no specific policy
second half were squeezed by the substantially higher hide and
skin prices.
rate caps to manage exposure to significant fluctuations in
The Group’s objective is to maintain a balance between
was earned in the second half on turnover which, at £40.7m,
was virtually unchanged from the first six months. Margins in the
Board reviews and agrees policies for managing each of these
remained unchanged throughout the period.
Bank borrowings
America and were predominantly denominated in US dollars.
transactions creating currency cash flows, are hedged by using
interest rate risk, liquidity risk and foreign currency risk. The
risks and they are summarised below. These policies have
turnover and 47% higher than the £41.5m achieved in 1999.
during the year were bought in US dollars, and were hedged
throughout the period under review, that no trading in financial
instruments shall be undertaken.
sales turnover was attributable to the steady rise in underlying
exists with regard to liquidity. Short-term, floating rate debt is
brought forward meant that there was virtually no tax charge in
the sales mix towards European customers expecting longer
favoured, but the Group would take advantage of medium-term
the year.
credit terms, absorbed £2.9m of increased working capital (1999
fixed rate borrowings if there were compelling commercial
– £1.6m). Capital expenditure was £1.2m (1999 – £0.5m), less
reasons to do so.
There was a cash outflow of £0.9m in the year (1999 – cash
generation of £0.1m) and net debt rose to £5.9m – 22% of
than the depreciation charge of £1.5m.
The Group has transactional currency exposures, which arise
shareholders’ funds (1999 – 20%). Cash generated from
During the year the Group purchased and cancelled 8,500 of its
from sales or purchases by operating units in currencies other
operations, and before working capital movements, was £5.0m
9.5% preference shares. The Employee Share Ownership Trust
than sterling. Forward currency contracts and options are used
(1999 – £3.7m).
purchased 674,444 ordinary shares on behalf of employees
to hedge net exposures to foreign currency fluctuations as they
participating in the restricted share plan and the long term
arise. No material foreign currency exposure arises from overseas
incentive plan.
investments.
The growing volume of sales, higher hide prices, and a shift in
16
20/3/01
5:27 pm
Page 16
17
Directors
R C Tomkinson
MA, FCA, FCT Chairman, non-executive
12 3
Robert Tomkinson (59) 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 a non-executive Deputy Chairman of Jardine Lloyd Thompson
Group, Chairman of KIG Holdings, a non-executive director of UGC
(The Unipart Group of Companies) and of Barloworld, and Chairman of
the Council of the University of Buckingham.
J W W Pittard
Managing Director
23
John Pittard (56) 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.
J H Buckley
R H Hankey
LLB, FCA, MCT
John Buckley (53) 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.
FSLTC, LCGI, FI Mgt, CDip AF
Reg Hankey (45) was appointed Chief Executive of the Glove Leather
Division in December 1997, and joined the board in January 1998.
He joined the Glove Leather Division as Technical Director in 1990
from a similar position within the leather industry. He is President
and a non-executive director of the British Leather Confederation,
non-executive Chairman of BLC Leathersellers Research and a
Governor of Yeovil College.
Officers and advisers
S R Johnson
BA, FSLTC
Steve Johnson (44) was appointed to the board as Chief Executive of
the Shoe & Leathergoods Division on 3 April 2000, having joined the
Group in July 1998 as Technical Director in 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.
R Paisley
E D B Tebbs
Robert Paisley (60) is Chief Executive of the Raw Materials Division,
and was appointed to the board in May 1997. He joined the Group
in 1959.
David Tebbs (62) 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 FI and AIT – 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.
MA, MIEE, FBCS, FRSA, CEng non-executive
12
Mrs J Williams
LLB, ACA Company Secretary
Jill Williams (43) joined the Group as Finance and Planning Manager
in 1989, and was appointed Company Secretary in 1991. She is
Chairman of the Somerset panel of the Prince’s Trust – Business
Division and a Governor of Strode College.
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
1
Member of the audit committee
2
Member of the remuneration committee
3
Member of the nomination committee
Auditors Ernst & Young, Becket House, 1 Lambeth Palace Road,
London SE1 7EU
Registrars Northern Registrars, Northern House, Woodsome Park,
Fenay Bridge, Huddersfield HD8 0LA
18
20/3/01
5:27 pm
Page 18
Directors’ report
Directors’ report
The directors submit their report together with the audited financial statements for the year ended 31 December 2000.
Directors
19
The persons named on pages 16 and 17 are the present directors. A G Marriott retired from the board on 4 July 2000.
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.
Mrs G L Thwaites died on 25 October 2000. J W W Pittard and R C Tomkinson retire by rotation and offer themselves for re-election:
Mr Pittard has a service contract which requires two years’ notice of termination.
Directors’ interests
Results and dividends
Group results are summarised in the consolidated profit and loss account on page 28. For a review of operations and future
The directors at the end of the year and their interests in the shares of the Company were:
developments, see pages 4 to 15.
AT BEGINNING OF YEAR OR
An interim ordinary dividend of 1.1p has been paid in respect of 2000 (1999 – 1.0p per share). The directors recommend that a final
ordinary dividend of 2.7p per share (1999 – 2.6p per share) amounting to £589,000 (1999 – £567,000) be paid which, after
preference dividends of £284,000, leaves a profit of £1,870,000 to be transferred to reserves. Subject to approval at the Annual
General Meeting, the final dividend will be paid on 11 May 2001 to shareholders on the register at close of business on 6 April 2001.
AT END OF YEAR
DATE OF APPOINTMENT IF LATER
Ordinary Shares of 25p
Ordinary Shares of 25p
Beneficial
fully paid
Nonbeneficial
fully paid
Options
Beneficial
fully paid
NonBeneficial
fully paid
Options
Research and development
J H Buckley
64,177
_
37,549
53,345
_
37,549
The Group recognises the importance of continuous product and process development in maintaining its reputation for innovative
R H Hankey
50,999
_
32,549
44,679
_
32,549
high performance leathers. It works closely with both customers and suppliers to develop clearly differentiated products using
S R Johnson
2,284
_
_
1,952
_
_
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 2001:
BFS Small Companies Dividend Trust plc
1,700,000
(7.80%)
Grainton Ltd
3,780,000
(17.34%)
828,824
(3.80%)
Pittards Employee Share Ownership Trust
25,375
_
37,549
12,192
_
40,402
394,879
849,197
65,000
381,390
849,197
65,000
E D B Tebbs
22,450
_
_
10,000
_
_
R C Tomkinson
30,000
_
_
20,000
_
_
No changes took place in the interests of directors in the shares of the Company between 31 December 2000 and 6 March 2001.
Details of directors’ interests in the restricted share plan and the savings related share option scheme can be found on pages 21 to 23.
Annual General Meeting
Creditor payment policy
An ordinary resolution (number 5) will be proposed enabling the directors to allot the whole of the unissued share capital of
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
£1,425,442 (representing approximately 26% of the issued ordinary share capital) during the next five years.
terms of payment when the terms of each transaction are agreed, to ensure the supplier is made aware of the terms of payment and
to abide by the terms of payment. For small local suppliers the policy is to pay within 45 days of invoice, and to pay other suppliers
within 60 days. Trade creditors at the year end represented 46 days’ purchases.
A special resolution (number 6) will be proposed which will enable the directors to make rights issues, and to allot unissued shares for
cash otherwise than to existing shareholders up to a nominal amount of £272,477 (being 5 per cent of the Company’s current issued
share capital) until the 2002 Annual General Meeting. Other than the allotment of ordinary shares under the terms of the Group’s
Charitable donations
various employee share option schemes, the directors have no present intention of exercising the authority to allot further relevant
During the financial year the Group made contributions to UK charitable organisations of £18,041. No political donations were made
securities.
during the year.
Auditors
Employment of disabled persons
Ernst & Young have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at the
Every consideration is given to the employment, training and career development of the disabled and those who have become
forthcoming Annual General Meeting.
disabled during employment, having regard to their particular aptitudes and abilities.
By order of the board
Employee consultation
J Williams
The Group recognises the need for good communications with employees and places great importance on employee involvement.
Secretary
Joint consultative committees have been active for many years and management training lays emphasis on the skills and attitudes
6 March 2001
required for clear communications and consultation.
Matters of particular interest or importance are communicated to all employees through special briefing meetings.
20
20/3/01
5:27 pm
Page 20
21
The remuneration committee, which is composed of the non-executive directors and the group managing director, makes recommendations
Incentive shares
to the board on the remuneration of executive directors and senior executives of the Company. The group managing director is not present
Under the amended restricted share plan, approved by shareholders at the Annual General Meeting in May 2000, the remuneration
when his own salary is being discussed. The remuneration of non-executive directors is determined by the full board.
committee may make conditional awards of incentive shares, the value of which is calculated as a percentage of the participant’s basic
Policy
The salaries of executive directors are determined after a review, normally carried out annually, of the performance of the individual.
annual salary. The performance conditions which must be satisfied before 50% or more of the incentive shares can vest, and the
performance period, are the same as those for the matching shares under the restricted share plan.
The committee seeks to reward directors competitively and on the broad principle that their remuneration package should be based
In June 2000, the remuneration committee made conditional awards of incentive shares to more than 60 senior managers.
around the median remuneration and benefits enjoyed by senior managers of manufacturing businesses of comparable size. For
The interests of the executive directors in the incentive shares awarded under the restricted share plan were as follows:
guidance the committee uses specific job matched remuneration surveys published by employee benefit consultants.
Bonus
At 1 January
2000
Granted
during the year
Vested during
the year
At 31 December
2000
The executive directors participate in the Pittards senior executive reward plan. The plan is administered by the remuneration committee
No. of shares
No. of shares
No. of shares
No. of shares
Vesting date
and is made up of two parts: the Pittards senior executive bonus plan and the Pittards restricted share plan. The senior executive bonus
J H Buckley
_
16,250
_
16,250
July 2003
plan is linked to formulae based on divisional and group pre-tax profit, return on capital, wages, and turnover.
R H Hankey
_
15,417
_
15,417
July 2003
The participants’ bonus is divided into three parts. Two thirds of the bonus is paid in cash with the participants’ March salary.
S R Johnson
_
14,583
_
14,583
July 2003
The remaining third of the bonus will be paid in the form of awarded shares through the restricted share plan. The participant will
R Paisley
_
15,333
_
15,333
July 2003
receive further shares (‘matching shares’) to match the shares he is paid as part of his bonus, again through the restricted share plan.
J W W Pittard
_
22,917
_
22,917
July 2003
These matching shares will usually be given on a two for one basis. Until the amendments to the restricted share plan, approved by
shareholders at the AGM in May 2000 and explained below, come into effect the plan operates as follows:
The interests of the executive directors in matching shares under the Pittards senior executive reward plan in 2000 were as follows:
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. The trustee holds the shares for a restricted period of up to five years. The number of shares which
actually vest is determined by the Company’s performance during the restricted period. Matching shares will only vest if the following
performance conditions determined by the committee are satisfied:
At 1 Jan 2000
Granted
during the year
Vested during
the year
Forfeited
during the year
As at
31 Dec 2000
No. of shares
No. of shares
No. of shares
No. of shares
No. of shares
Vesting period
From
To
J H Buckley
23,896
19,164
_
_
43,060
July 2001
May 2005
• the Company’s earnings per share must increase by at least 10% per annum compound over the restricted period; and
R H Hankey
11,458
8,641
_
_
20,099
June 2002
May 2005
• the Company’s return on assets must have reached at least 15% in one year of the restricted period; and
S R Johnson
3,904
663
_
_
4,567
June 2002
May 2005
• the Company’s total net cash flow over the restricted period must be positive.
A G Marriott
13,469
_
9,428
4,041
_
_
_
354
26,365
_
_
26,719
July 2002
May 2005
32,657
26,978
_
_
59,635
June 2001
May 2005
The relevant figures included in the report and accounts for each year will be used to determine whether the performance conditions
have been achieved.
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 will first apply to bonuses earned in respect of the year ended 31 December 2000, which are due for payment during
March 2001. The performance condition, which will be measured over a period of three years, provides that awards of matching
shares will vest if the Company’s earnings per share have 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.
R Paisley
J W W Pittard
22
20/3/01
5:27 pm
Page 22
23
The awards under the Pittards senior executive reward plan in respect of 2000 were made by the remuneration committee at their
Share options
meeting on 2 March 2001. The amounts awarded under the bonus scheme, and due for payment at the end of March 2001, and the
Executive directors and other senior executives throughout the Group hold options under the Pittards senior executive share option
amounts deferred and to be paid over to the trustees of the Pittards employee share ownership trust for the purchase of awarded
scheme established in May 1986. Invitations to subscribe for options are made at the discretion of the remuneration committee and
shares under the restricted share plan are included below:
are intended to encourage wider share ownership amongst employees. No invitations were issued to directors during the year.
The Pittards senior executive share option scheme came to an end in May 1996.
Directors’ remuneration
Executive
J H Buckley
Salary
& fees
Benefits
Annual
bonus
Deferred
bonus*
2000
Total
1999
Total
£’000
£’000
£’000
£’000
£’000
£’000
78
9
2
1
90
96
R H Hankey
74
12
1
1
88
S R Johnson
52
7
5
2
66
–
A G Marriott
54
1
7
–
62
116
R Paisley
74
4
1
–
79
94
J W W Pittard
110
12
2
1
125
Executive directors and employees throughout the Group hold options under the Pittards 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.
Share options granted to executive directors under the schemes are summarised below:
Exercise
price
Exercisable
from
Exercisable
to
Number of
options at
31 Dec 00
Number of
options at
31 Dec 99
J H Buckley
61p
10.05.1994
10.05.2001
35,000
35,000
J H Buckley
38p
01.12.2002
01.06.2003
2,549
2549
R H Hankey
61p
10.05.1994
10.05.2001
10,000
10,000
R H Hankey
62p
12.04.1999
12.04.2006
20,000
20,000
85
135
Non-executive
R H Hankey
38p
01.12.2002
01.06.2003
2,549
2,549
E D B Tebbs
18
–
–
–
18
18
A G Marriott
61p
10.05.1994
10.05.2001
50,000
50,000
G L Thwaites
15
–
–
–
15
18
A G Marriott
82p
01.07.2000
01.01.2001
-
2,853
R C Tomkinson
52
–
–
–
52
51
R Paisley
62p
12.04.1999
12.04.2006
35,000
35,000
595
613
R Paisley
82p
01.07.2000
01.01.2001
-
2,853
R Paisley
38p
01.12.2002
01.06.2003
2,549
2,549
J W W Pittard
61p
10.05.1994
10.05.2001
65,000
65,000
Total
* 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 restricted share plan.
The mid market price of the shares at 31 December 2000 was 58.5p and the range during the year was 39.5p to 62.5p.
Directors’ pensions
No share options were exercised by directors during the year.
Pension benefits earned by directors during the year and the accumulated total accrued pension at 31 December 2000
were as follows:
There have been no movements in directors’ executive share options since the year end, but options granted under the savings related
Increase in accrued
pension
Transfer value
of increase
Total accrued pension
at year end
share option scheme in 1997 lapsed on 1 January 2001.
Service agreements
2000
1999
J H Buckley, R H Hankey, S R Johnson and J W W Pittard hold service contracts requiring two years’ notice of termination. There are no
current plans to reduce the notice period as it is in line with the market, and the Company applies the principle of mitigation to any
£’000
£’000
£’000
£’000
J H Buckley
3
14
35
32
R H Hankey
2
13
12
10
S R Johnson
1
4
2
1
R Paisley
4
10
40
36
J W W Pittard
2
7
54
52
payment of compensation on termination.
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.
On behalf of the board
R C Tomkinson
Chairman of the remuneration committee
6 March 2001
24
20/3/01
5:27 pm
Page 24
The board supports the principles of corporate governance set out in the combined code prepared by the Hampel Committee.
Internal control
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.
Board
The board currently comprises five executive and, since the death of Gill Thwaites in October, two independent non-executive directors
(including the chairman, Robert Tomkinson, who is responsible for running the board and David Tebbs who is the senior independent
director). A third independent non-executive director, Louise Cretton, is joining the board in April 2001. The board carries ultimate
25
The directors acknowledge that they are responsible for the Group’s system of internal control and for reviewing its effectiveness.
The system is designed to manage rather than eliminate the risk of failure to achieve the group’s strategic objectives, and can only
provide reasonable not absolute assurance against material misstatement or loss.
An ongoing process, in accordance with the guidance of the Turnbull Committee on internal control, has been established for
identifying, evaluating and managing the significant risks faced by the Group. The process has been in place since May 2000 and up
to the date of approval of the financial statements. The board regularly reviews the process.
responsibility for the conduct of the business. The current directors are listed on pages 16 and 17 together with brief details of their
The Group’s key risk management processes and system of internal control procedures include holding risk management workshops
background. These details demonstrate a range of experience and, in the case of the non-executive directors, independence to bring
attended by executive board members and then discussed by the full board, which identify and prioritise the key risks for the Group
to the board’s deliberations on issues such as strategy, performance, resources and standards of conduct. An appropriate induction
and determine a control strategy for each one. The risk and the related internal control strategies are reviewed at least annually by the
and development programme is devised for all new appointments to the board. All directors are subject to re-election at least every
full board, and the effectiveness of the procedures is tested on a cyclical basis as part of the internal audit programmes.
three years.
As noted in the report on directors’ remuneration, the Company does not comply with the provision of the combined code which
recommends that directors’ contract periods should be set at one year or less.
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
The board has a formal schedule of matters specifically referred to it for decision. All directors have access to the advice and services
• capital investment including appraisal, authorisation, monitoring and post investment review
of the company secretary, Jill Williams, who is responsible to the board for ensuring that it follows established board procedures and
• financial reporting and variance analysis.
complies with applicable regulations. The appointment and removal of the company secretary is a matter for the board as a whole.
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 16 and 17. John Pittard, group managing director, is a member of the remuneration committee and, with Robert
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 at least one operating unit
of 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.
Tomkinson, chairman, a member of the nomination committee. The non-executive directors who represent a majority on the
The board has reviewed the effectiveness of the systems of internal control in operation during the financial year through
remuneration committee and one of whom must be the chairman of the committee, benefit from the advice of the group managing
the monitoring processes set out above.
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 20 to 23.
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 for 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 2 May 2001 can be found in the
notice of the meeting on page 44. The operational and financial review on pages 4 to 15 includes a detailed review of the business and
future developments.
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.
26
20/3/01
5:27 pm
Page 26
Statement of directors’ responsibilities in relation to financial statements
Report of the auditors to the members of Pittards plc
The following statement, which should be read in conjunction with the report of the auditors set out on page 27, is made with
We have audited the financial statements on pages 28 to 42, which have been prepared under the historical cost convention as
a view to distinguishing for shareholders the respective responsibilities of the directors and of the auditors in relation to the financial
modified by the revaluation of freehold property and the accounting policies set out on pages 32 and 33.
statements.
Respective responsibilities of directors and auditors
The directors are required by the Companies Act 1985 to prepare financial statements for each financial year which give a true and
The directors are responsible for preparing the annual report. As described on page 26, this includes responsibility for preparing the
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
financial statements in accordance with applicable United Kingdom law and accounting standards. This responsibility also includes
financial year.
selecting accounting policies and then applying them consistently, and although the directors have discussed the appropriateness of
Following discussions with the auditors, the directors consider that in preparing the financial statements (on pages 28 to 42), which
are on the going concern basis, the Company has used appropriate accounting policies, consistently applied and supported by
reasonable and prudent judgements and estimates, and that all applicable accounting standards have been followed.
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.
27
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 responsibilities, as independent auditors, are established in the United Kingdom by statute, the Auditing
Practices Board, the Listing Rules of the Financial Services Authority and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance
with the Companies Act. 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 the information specified by law or the Listing Rules regarding directors’ remuneration and transactions with the
Company is not disclosed.
We review whether the corporate governance statement on pages 24 and 25 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
either the Company’s corporate governance procedures or its risk and control procedures.
We read the other information contained in the annual report, including the corporate governance statement, and consider whether it
is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with 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. 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 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.
Opinion
In our opinion 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 2000 and of the profit of the Group for the year then ended and have been properly prepared in accordance with the
Companies Act 1985.
Ernst & Young
Registered Auditor, London
6 March 2001
28
20/3/01
5:27 pm
Page 28
29
Consolidated profit and loss account
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2000
Note
2000)
£’000)
1999)
£’000)
2,3
81,195)
62,115)
Cost of sales
(67,694)
(51,312)
Gross profit
13,501)
10,803)
Distribution costs
(4,466)
(3,724)
Administrative expenses
(5,542)
(4,847)
Turnover
Operating profit
4
3,493)
2,232)
Interest payable
5
(490)
(473)
3,003)
1,759)
(20)
(1)
Profit on ordinary activities before taxation
Taxation
7
Profit on ordinary activities after taxation
Exchange difference on retranslation of net assets of subsidiary undertakings
Total recognised gains relating to the year
Dividends – equity and non-equity
8
Transfer to reserves
2,983)
1,758)
(1,113)
(1,070)
1,870)
688)
Earnings per share – basic
9
12.7p
6.8p
Earnings per share – diluted
9
12.6p
6.8p
There were no discontinued activities in 2000 or 1999. Accordingly the above results relate to continuing operations.
A statement of the movement on reserves can be found in note 19.
The notes on pages 32 to 42 form part of these financial statements
1999)
£’000)
2,983)
1,758)
–)
(2)
2,983)
1,756)
2000)
1999)
£’000)
£’000)
Reconciliation of group shareholders’ funds
Total recognised gains
2000)
£’000)
2,983)
1,756)
(1,113)
(1,070)
(9)
–)
1)
–)
Total movements during the year
1,862)
686)
Shareholders’ funds at 1 January
24,427)
23,741)
Shareholders’ funds at 31 December
26,289)
24,427)
Dividends
Repurchase of preference shares
Issue of new shares
The notes on pages 32 to 42 form part of these financial statements
30
20/3/01
5:27 pm
Page 30
Balance sheets
Consolidated statement of cash flows
as at 31 December 2000
Group
Note
Fixed assets
Tangible fixed assets
Investments in subsidiary undertakings
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
12
13
14
15
16
Net current assets
Total assets less current liabilities
Capital & reserves
Called up share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Capital reserve
Profit and loss account
Shareholders' funds [including £2,991,500
(1999 – £3,000,000) attributable to non-equity interests]
Minority interest – non-equity
The notes on pages 32 to 42 form part of these financial statements.
Approved by the board of directors on 6 March 2001
John Buckley
Group Financial Director
18
19
19
19
19
19
Company
2000)
£’000)
1999)
£’000)
2000)
£’000)
1999)
£’000)
17,529)
–)
17,850)
–
26)
3,368)
25)
3,368)
17,529)
17,850)
3,394)
3,393)
13,661)
11,086)
196)
32)
12,830)
8,027)
14)
22)
–)
18,195)
196)
22)
–)
16,649)
14)
12)
24,975)
20,893)
18,413
16,675
(5,866)
(6,283)
(4,045)
(4,982)
(5,676)
(3,637)
(5,866)
(94)
(2,234)
(4,982)
–)
(1,572)
(16,194)
(14,295)
(8,194)
(6,554)
8,781)
6,598)
10,219)
10,121)
26,310)
24,448)
13,613)
13,514)
8,441)
3,619)
9)
4,817)
6,464)
2,939)
8,449)
3,619)
–)
4,903)
6,464)
992)
8,441)
3,619)
9)
–)
–)
1,544)
8,449)
3,619)
–)
–)
–)
1,446)
26,289)
21)
24,427)
21)
13,613)
–)
13,514)
–)
26,310)
24,448)
13,613)
13,514)
31
Note
2000)
£’000)
1999)
£’000)
20(a)
2,195)
2,130)
Returns on investments and servicing of finance
Interest paid
Interest element of finance lease rental repayments
Preference dividends paid
(484)
–)
(284)
(441)
(9)
(285)
Net cash outflow from returns on investments and servicing of finance
(768)
(735)
Taxation
UK corporation tax paid
Overseas tax paid
–)
–)
(91)
(1)
Tax paid
–)
(92)
Capital expenditure and financial investment
Purchase of matching shares under restricted share plan
Purchase of shares under long term incentive plan
Purchase of tangible fixed assets
Sale of tangible fixed assets
(40)
(245)
(1,217)
16)
(16)
–
(497)
46)
Net cash outflow from capital expenditure and financial investment
(1,486)
(467)
Equity dividends paid
(807)
(763)
Net cash (outflow) inflow before financing
(866)
73)
Financing
Repayment of term loans
Issue of new shares
Capital element of finance lease rental repayments
–)
(9)
1)
–)
(4,198)
–)
–)
(44)
Net cash outflow from financing
(8)
(4,242)
Decrease in cash
(874)
(4,169)
Reconciliation of net cashflow to movement in net debt
Decrease in cash
Repayment of term loans
Capital element of finance lease rental repayments
(874)
–)
–)
(4,169)
4,198)
44)
20(b)
(874)
–)
73)
(2)
Movement in net debt
Net debt at 1 January
20(b)
(874)
(4,960)
71)
(5,031)
Net debt at 31 December
20(b)
(5,834)
(4,960)
Net cash inflow from operating activities
Movement in net debt resulting from cash flows
Exchange difference
The notes on pages 32 to 42 form part of these financial statements.
20(b)
32
20/3/01
5:27 pm
Page 32
33
1. Accounting policies
(a) Accounting convention
The financial statements are prepared under the historical cost convention modified by the revaluation of freehold property and in
accordance with applicable accounting standards.
(i) 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
14 and 15. Financial instruments are accounted for as follows:
(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.
(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.
(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
Deferred taxation is provided on the liability method on all timing differences to the extent that they are expected to reverse in the
future without being replaced, calculated at the rate at which it is estimated that tax will be payable.
• 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.
(j) 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.
(k) 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.
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.
Rentals paid under operating leases are charged to income on a straight line basis over the term of the lease.
(l) Pensions
The expected cost of the Group’s pension schemes is charged to the profit and loss account over the service lives of the
relevant employees.
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.
3. Analysis of turnover
Turnover, all of which is derived from the Group’s principal activities,
analysed by geographical market:
– Continuing operations
– United Kingdom
– Other EC
– Other Europe
– North America
– Asia and other
2000
£’000
1999
£’000
20,345
22,840
2,430
5,040
30,540
20,644
14,144
1,208
4,347
21,772
81,195
62,115
34
20/3/01
5:27 pm
Page 34
4. Operating profit
2000)
£’000)
1999)
£’000)
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
71)
20)
1,499)
39)
(16)
284)
651)
79)
20)
1,461)
55)
(46)
255)
595)
5. Interest payable
£’000)
£’000)
490)
–)
464)
9)
490)
473)
Bank loans and overdrafts
Finance lease charges
6. Employees
The average number of persons, including directors,
employed during the year is analysed as follows:
Production
Sales and distribution
Administration/directors
Costs in respect of these employees:
Wages and salaries
Social security costs
Other pension costs
Number of employees)
731)
28)
71)
695)
29)
75)
830)
799)
£’000)
£’000)
16,159)
1,250)
1,352)
14,590)
1,112)
1,063)
18,761)
16,765)
Details of directors’ remuneration for each director, long term incentive payments, pension entitlements and share options are
included on pages 20 to 23.
7. Taxation
The charge based on the profit for the year comprises:
UK corporation tax
Overseas taxation
The current year UK corporation tax charge has been reduced due to the availability of brought forward losses.
35
£’000
£’000)
20)
–)
–)
1)
20)
1)
8. Dividends
2000)
£’000)
1999)
£’000)
240)
589)
218)
567)
829)
785)
)
284)
285)
1,113)
1,070)
9. Earnings per ordinary share
£’000)
£’000)
Preference dividends
2,983)
(284)
1,758)
(285)
Earnings
2,699)
1,473)
Weighted average number of ordinary shares in issue
(excluding the shares owned by the Pittards employee share ownership trust)
’000s)
’000s)
21,296)
21,798)
102)
21)
21,398)
21,819)
Equity interest:
Ordinary interim paid 1.1p per share (1999 – 1.0p)
Ordinary final proposed 2.7p per share (1999 – 2.6p)
Non-equity interest:
Preference payable 30 June and 31 December
Basic
Dilutive potential ordinary shares:
Employee share options
10. Tangible fixed assets
Group
Company
Freehold)
land &)
buildings)
Plant)
machinery &)
motor vehicles)
Total)
Plant)
machinery &)
motor vehicles)
Cost or valuation
£’000)
£’000)
£’000)
£’000)
At 1 January 2000
Additions
Disposals
10,426)
26)
–)
21,356)
1,191)
(209)
31,782)
1,217)
(209)
780)
12)
–)
At 31 December 2000
10,452)
22,338)
32,790)
792)
Depreciation
At 1 January 2000
Charge for year
Disposals
)
821)
158)
–)
13,111)
1,380)
(209)
13,932)
1,538)
(209)
755)
11)
–)
At 31 December 2000
979)
14,282)
15,261)
766)
Net book value
At 31 December 2000
9,473)
8,056)
17,529)
26
At 31 December 1999
9,605)
8,245)
17,850)
25
36
20/3/01
5:27 pm
Page 36
37
10. Tangible fixed assets (continued)
12. Stocks
2000)
£’000)
1999)
£’000)
Raw material and sundry stocks
Work in progress
Finished goods
3,918)
6,646)
3,097)
3,946)
6,342)
2,542)
13,661)
12,830)
Group
2000)
£’000)
The amounts showing at cost or valuation of tangible fixed assets comprise:
Cost
Valuation
)
)
1999)
£’000)
25,702)
7,088)
24,694
7,088
32,790)
31,782
The replacement cost of stocks is not considered to be materially different to the balance sheet value.
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 FRS15, ‘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)
4,798)
(781)
4,772)
(709)
4,017)
4,063)
13. Debtors
Trade debtors
Other debtors
Prepayments and accrued income
Amounts owed by Group undertakings
Included in plant and machinery are leased assets and assets being acquired under hire purchase agreements
with a net book value of £Nil (1999 – £39,000)
11. Investments in subsidiary undertakings
Group
Company
2000)
£’000)
1999)
£’000)
2000)
£’000)
1999)
£’000)
8,773)
1,542)
771)
–)
7,011)
586)
430)
–)
–)
320)
5)
17,870)
–)
109
26
16,514
11,086)
8,027)
18,195)
16,649
14. Investments
Group
Company
2000)
1999)
Cost
£’000)
£’000)
At 1 January
Disposal
6,208)
–)
6,290)
(82)
At 31 December
6,208)
6,208)
Provision
At 1 January
Disposal
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 pages 20 and 21.
2,840)
–)
2,922)
(82)
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
2,840)
2,840)
At 31 December 2000 the trust held a total of 828,824 shares (1999 – 172,872) with a market value at that date of £485,000
(1999 – £79,000).
Net book value
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
Pittards plc holds either directly or indirectly all the issued share capital and voting rights of its principal trading
subsidiary undertakings.
Own shares (held under restricted share plan)
2000)
£’000)
1999)
£’000)
2000)
£’000)
1999)
£’000)
196)
14)
196)
14)
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.
38
20/3/01
5:27 pm
Page 38
16. Other creditors
Group
Taxation and social security
Accruals
Other creditors
Proposed dividends
Corporation tax
Amounts owed to Group undertakings
Company
2000)
£’000)
1999)
£’000)
2000)
£’000)
1999)
£’000)
562)
2,034)
840)
589)
20)
–)
562)
1,778)
730)
567)
–)
–)
210)
271)
725)
589)
–)
439)
183)
196)
626)
567)
–)
–)
4,045)
3,637)
2,234)
1,572)
17. Provisions for liabilities and charges
Group
Group
Company
Provided
Not provided
Not provided
2000)
£’000)
1999)
£’000)
2000
£’000
1999)
£’000)
2000
£’000
1999)
£’000)
Capital allowances in advance of depreciation
Revaluation surplus and rolled over gains
Taxation losses
Other timing differences
–)
–)
–)
–)
–)
–)
–)
–)
2,224)
1,445)
(292)
(209)
2,101)
1,471)
(1,184)
(157)
(17)
–)
(292)
(209)
(22)
–)
(334)
(181)
Less: advance corporation tax
–)
–)
–)
–)
3,168)
(442)
2,231)
(442)
(518)
–)
(537)
–)
–)
–)
2,726)
1,789)
(518)
(537)
18. Share capital
2000 and 1999
Authorised:
Non-equity interests – cumulative preference shares (9.5%) of £1 each
Equity interests – ordinary shares of 25p each
Number)
£’000)
3,000,000)
27,500,000)
3,000)
6,875)
9,875)
Allotted, called up and fully paid:
Non-equity interests – cumulative preference shares (9.5%) of £1 each
Equity interests – ordinary shares of 25p each
18. Share capital (continued)
On 3 October 2000, 592 ordinary shares were issued at 38p per share for cash on the exercise of share options under the savings
related share option scheme.
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 8,500 preference
shares were bought back by the Company and cancelled.
The Company has granted options to certain directors and senior executives, of which the following remain exercisable:
Number of ordinary shares of 25p each
Exercise price
Exercise period
205,000
265,000
61p
62p
10 May 1994 to 10 May 2001
12 April 1999 to 12 April 2006
On 13 June 1997 the Company granted options to employees under the savings related share option scheme over 510,582 ordinary
shares of 25p each, at 82p per share, of which 5,230 remained exercisable at the year end. 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, of which 457,660 remain exercisable. These options may be exercised wholly or in part after three years from the date of an
employee joining the scheme.
Deferred taxation
Deferred taxation is made up as follows:
39
2000)
Number)
1999)
Number)
2000)
£’000)
1999)
£’000)
2,991,500)
21,798,230)
3,000,000)
21,797,638)
2,991)
5,450)
3,000)
5,449)
8,441)
8,449)
Share)
premium)
account)
Capital)
redemption)
reserve)
Revaluation)
reserve)
Capital)
reserve)
Profit)
& loss)
account)
Group
£’000)
£’000)
£’000)
£’000)
£’000)
Total)
£’000)
At 1 January 2000
Reserve transfer
Retained profit for the year
3,619)
–)
–)
–)
–)
9)
–)
–)
4,903)
–)
(86)
–)
6,464)
–)
–)
–)
992)
(9)
86)
1,870)
15,978)
–)
–)
1,870)
At 31 December 2000
3,619)
9)
4,817)
6,464)
2,939)
17,848)
Company
At 1 January 2000
Retained profit for the year
3,619)
–)
–)
–)
–)
9)
–)
–)
–)
–)
–)
–)
1,446)
107)
(9)
5,065)
107)
–)
At 31 December 2000
3,619)
9)
–)
–)
1,544)
5,172)
19. Reserves
The profit for the year dealt with in the accounts of the parent company amounts to £1,220,000 (1999 – £1,080,000).
The cumulative amount of goodwill written off at 31 December 2000 is £93,000 (1999 – £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.
40
20/3/01
5:27 pm
Page 40
20. Notes to the cashflow statement
(a) Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Depreciation charges
Amortisation of matching shares under restricted share plan
Amortisation of shares under long term incentive plan
Profit on sale of tangible fixed assets
Increase in stocks
Increase in debtors
Increase(decrease) in creditors
Net cash inflow from operating activities
(b) Analysis of changes in net debt
At 1 January)
2000)
£’000)
1999)
£’000)
3,493)
1,538)
21)
82)
(16)
(831)
(3,059)
967)
2,232)
1,516)
25)
–)
(46)
(601)
(886)
(110)
2,195)
2,130)
Cash flows)
At 31 December)
2000)
Cash in hand and at bank
Overdraft
41
23. Derivatives and other financial instruments
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 14 to 15. As permitted by FRS13, 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)
2000
£’000)
£’000)
£’000)
Sterling
US dollar
Euro
Other
6,908)
1,558)
239)
152)
2,991)
–)
–)
–)
3,917)
1,558)
239)
152)
8,857)
2,991)
5,866)
6,039)
1,426)
513)
4)
3,000)
–)
–)
–)
3,039)
1,426)
513)
4)
7,982)
3,000)
4,982)
2000)
£’000)
£’000)
£’000)
22)
(4,982)
10)
(884)
32)
(5,866)
(4,960)
(874)
(5,834)
1999
Sterling
US dollar
Euro
Other
21. Pension arrangements
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 £1,352,000 (1999 – £1,063,000). 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.
Fixed rate financial liabilities represent £2,991,500 of irredeemable preference shares (1999 – £3,000,000), with a fixed coupon of
9.5%. The floating rate financial liabilities comprise bank loans and overdrafts that bear interest at rates based on the lending bank’s
base rate. At 31 December 2000 the Group has no interest rate caps in place (1999 – nil).
The Group has no financial assets apart from cash at bank and in hand which does not earn interest.
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.
Currency exposures
As explained on pages 14 and 15, 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.
At 31 December 2000 creditors included £433,000 (1999 – £480,000) which represented the excess of accumulated pension costs
over the amounts funded.
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities at 31 December was as follows:
22. Financial commitments
Authorised future capital expenditure amounted to:
1999)
£'000)
5,866)
2,991)
4,982)
3,000)
8,857)
7,982)
2000)
£’000)
1999)
£'000)
3,134)
3,236)
Group
2000)
£’000)
1999)
£’000)
Contracted
115)
161)
The annual commitment under non-cancellable operating leases, was as follows:
Leases expiring:
– within one year
– between two and five years
)
39)
222)
)
16)
207)
261)
223)
All of the above relates to plant and machinery.
2000)
£’000)
In one year or on demand
In 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
42
20/3/01
5:27 pm
Page 42
43
Analysis of shareholders
as at 31 December 2000
23. Derivatives and other financial instruments (continued)
Fair values of financial assets and financial liabilities
Primary financial instruments:
Short term borrowings
Non-equity shares
Cash at bank and in hand
Book value)
Fair value)
Book value
Fair value
2000)
£’000)
2000)
£’000)
1999)
£'000
1999)
£'000)
(5,866)
(2,991)
32)
(5,866)
(3,066)
32)
(4,982)
(3,000)
22)
(4,982)
(3,075)
22)
Derivative financial instruments held to hedge currency
exposure on expected future sales and purchases:
Forward currency contracts
–)
485)
–)
48)
Market values have been used to determine the fair value of forward currency contracts and listed shares.
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:
2000
Gains and losses unrecognised at 31 December 2000
Gains and losses deferred at 31 December 2000
Gains)
£’000c
Losses)
£’000)
Total)
£’000)
490)
42)
(5)
(152)
485)
(110)
532)
(157)
375)
532)
(157)
375)
Gains and losses included in the profit and loss account that arose in previous years
111)
(99)
12)
51)
60)
(3)
(96)
48)
(36)
111)
(99)
12)
111)
(99)
12)
22)
(132)
(110)
of which:
Gains and losses expected to be recognised in the profit and loss account in 2000
Gains and losses included in the profit and loss account that arose in previous years
Number of)
holders)
% of holders)
Number of)
shares held)
% held)
1,811)
13)
10)
5)
3)
98.32)
0.70)
0.54)
0.27)
0.17)
12,167,233)
7,918,419)
625,000)
927,593)
159,985)
55.82)
36.32)
2.87)
4.25)
0.74)
1,842)
100.00)
21,798,230)
100.00)
679)
888)
214)
61)
36.86)
48.21)
11.62)
3.31)
266,256)
2,715,091)
3,789,200)
15,027,683)
1.23)
12.46)
17.38)
68.93)
1,842)
100.00)
21,798,230)
100.00)
2000)
£’000)
1999)
£’000)
1998)
£’000)
1997)
£’000)
1996)
£’000)
Turnover
Percentage outside United Kingdom
Profit on ordinary activities before interest
Profit on ordinary activities before taxation
81,195)
75%)
3,493)
3,003)
2,983)
62,115)
67%)
2,232)
1,759)
1,758)
74,320)
65%)
1,016)
85)
184)
101,573)
61%)
3,768)
2,631)
2,331)
109,063)
61%)
4,687)
3,633)
3,159)
Dividends:
Preference
Ordinary
Shareholders’ funds
Earnings (loss) per ordinary share (basic)
Dividends per ordinary share (net)
284)
829)
26,289)
12.7p)
3.8p)
285)
785)
24,427)
6.8p)
3.6p)
285)
763)
23,741)
(0.5p)
3.5p)
285)
763)
24,602)
9.4p)
3.5p)
285)
707)
23,305)
13.3p)
3.25p)
Category:
Individuals
Trust and investment companies
Banks and nominee companies
Pension funds
Insurance companies
Size of holding
Up to 999 shares
1,000 to 9,999 shares
10,000 to 49,999
50,000 shares and over
Five year review
Year ended 31 December
of which:
Gains and losses expected to be recognised in the profit and loss account in 2001
1999
Gains and losses unrecognised at 31 December 1999
Gains and losses deferred at 31 December 1999
Ordinary shares
44
20/3/01
5:27 pm
Page 44
Notice of meeting
45
Notice of meeting
Notice is hereby given that the 92nd Annual General Meeting of Pittards plc will be held at the registered office at 12 noon on
(b) to the allotment (other than under (a) above) of equity securities having, in the case of relevant shares (as defined for the
Wednesday, 2 May 2001 for the following purposes:
purposes of section 89), a nominal amount not exceeding in aggregate £272,477;
(ii) this power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this
Ordinary resolutions
resolution and the Company may, before this power expires, make an offer or agreement which would or might require equity
1
securities to be allotted after it expires.
To receive the annual statement of accounts for the year ended 31 December 2000 and the directors’ and auditors’ reports
thereon.
By order of the board
2
To declare a dividend.
3
To re-elect the following directors retiring by rotation:
Secretary
(i) Mr JWW Pittard
Yeovil, Somerset
(ii) Mr R C Tomkinson
6 March 2001
To appoint the auditors and to authorise the directors to determine their remuneration.
Note:
4
J Williams
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
Special Business
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
5
To consider and, if thought fit, resolve that: the directors be generally and unconditionally authorised, in accordance with section
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
80 of the Companies Act 1985, to exercise all powers of the Company to allot relevant securities (as defined for the purposes of
until the conclusion of the meeting.
that section) up to a maximum nominal amount of £1,425,442 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
shall cease to have effect.
6
Financial calendar
To consider and, if thought fit, resolve that in accordance with article 5 of the Articles of Association of the Company and section
166 of the Companies Act 1985, the Company be hereby granted general and unconditional authority to make market purchases
(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:
(a) be limited to 2,179,823 ordinary shares of 25p each (10% of the issued ordinary shares) and 448,725 cumulative
preference 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
Annual General Meeting
Payment of final dividend for 2000 to shareholders registered on 6 April 2001
(ex dividend date 4 April 2001)
Announcement of half year results for 2001
11 May 2001
September 2001
Payment of interim dividend for 2001 to shareholders registered on 5 October 2001
(ex dividend date 3 October 2001)
Announcement of 2001 results
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.
Special resolution
7
2 May 2001
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
Designed and produced by Robson Dowry Associates Limited. Printed in England by Hampton Printing (Bristol) Limited.
shareholders are proportionate (as nearly as practicable) to the respective numbers of ordinary shares held by them on that
Front and back cover images: Mark Pepper / Marinepics.
date but the directors may make such exclusions or other arrangements as they consider expedient in relation to fractional
entitlements, legal or practical problems under the laws in any territory or the requirements of any relevant regulatory body or
In keeping with Pittards’ environmental policy this report has been printed on an environmentally responsible paper using at least fifty per cent recycled fibre.
stock exchange; and
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.
5 November 2001
March 2002

2000 Annual Report

Transcription

Similar documents

Sutura, Inc.

Notes to the Company Accounts

lien / unlien stocks

2015 Agriculture Federal Credit Union (AgFed) Board of Directors

sanbonani holiday spa share block limited

2 March 2016 Dear Shareholder Notice of the Annual

X monitor /

1997 Annual Report

PDF

Principles governing the provision of our homes