Pittards Share Discussion Threads

[dorset64] 09/8/2023 07:47

Yeovil-headquartered Pittards looks set to appoint administrators after the producer of advanced and luxury leather goods pulled the plug on a key fundraising last month.In July, the company proposed a fundraise by way of management subscriptions and an open offer to raise up to approximately £1.85m.The fundraise was conditional on Pittards raising a minimum of £1.16m of additional capital, whether by way of the fundraise or from other sources of capital.It was also conditional on shareholders' approval at its general meeting on 27 July 2023.At the meeting, all the resolutions proposed to approve the resolutions required to implement the fundraising were duly passed.But Pittards said other conditions "have not been satisfied" and the board therefore took the decision to terminate the fundraising.Now, due to the group's current financial uncertainty and "in light of increased creditor pressure", following discussions with its advisers the board has "regrettably resolved to file a notice of intention" to appoint EY as administrator "as soon as reasonably practicable"."The board is taking this action to protect the interests of its creditors," it said, while noting that a sale process of the business and assets of the company has been initiated.

[clocktower] 08/8/2023 21:35

I doubt if they have 200 even In the UK based on the numbers they provided for Ethiopia and bearing in mind what total numbers they recorded as having in the 2021 accounts.

Well the PPF still had 6.5% shareholding in 2021 ( I have not checked on any recent changes) The pension arrangements for all the older pension claims sit with the PPF so that is not a issue as they took a 10% hit in 2006.

The changes also were not final salary but based on average salaries.

More recently I don’t think there was a formal company scheme but pensions were paid to providers on the directors behalf by the company as set out in the accounts.

In 2021 the CEO salary was over £200k plus pension payments. The old CFO around £137k the Chairman £70kk the others £40k a touch. For what I do not know other than for turning up six times a year.

In 2020 they spent £335k buying shares back to put in treasury and £40k in 2022 which were originally intended to enrich themselves but due to mismanagement were sold more recently I seem to recall.

£65k in dividends in 2022 .

Year after year they lost money on foreign exchange movements, which goes to show how poor the CFO was and how little knowledge he had about hedging as he made such a hash of it.

The whole bunch of them should have been removed from the board long ago. Still, a few big shareholders will be licking the wounds, one more than most.

Still, as usual it will be the workers that suffer most and get paid the least.

[smithie6] 08/8/2023 21:05

"due to the Group's current financial uncertainty "

should have said
"due to the Group's terrible current financial position & pile of bank debt ..."

[smithie6] 08/8/2023 21:02

staff pensions.
how does that normally work when go into admin. & then one assumes a winding up ?

[smithie6] 08/8/2023 21:01

it was over 2000 ppl in the UK !

you know how many it is now ?

[clocktower] 08/8/2023 20:18

I was thinking back to 2006 when Pittards had serious problems with its pension situation and to sort it out a CVA was the result and Peter Gyllenhammer paid £2 million for a 65% stake, most of which went to the PPF. Then further payments were to be made to the time of about #2.5 million of a number of years BUT there was also a deal that if the company was sold within 20:years the fund would receive a windfall, which I presume was secured on the factory, and there was an upper limit set.

So all these factors may still have an impact on the administration I guess, as
I cannot remember if it all got sorted in the following years.

If effect it went broke in 2006 but when you think going back in it’s hay day they employed over 2000 people in the UK.

[triskelion] 08/8/2023 17:00

Ah I just saw it at top


"...The board is taking this action to protect the interests of its creditors...."

[clocktower] 08/8/2023 15:41

So it's curtains for Pittards very sadly. Not unexpected though - Lloyds Bank plc will take a hit I expect.

Let us hope the staff pensions are safe and they are paid up to date without delay before the other creditors get a penny.

[clocktower] 08/8/2023 15:15

No I sold at a profit luckily Smithie6, well before the last CFO helped £1.5 million disappear.

I have been in and out of the shares over many years and even when the shares were £1.26p which tells you how long ago that was, and in and out at the right times but always followed the fortunes of the company, as I really wanted to see a good outcome for this very old established business that must have lots of first class long standing staff members in Yeovil.

However, when you pointed out the management were awarding themselves so many shares if they reached just 70p, rather than looking after the loyal staff in any share scheme, I was disgusted and have not invested since.

I just find it all so appalling the way people act in situation's like this. First they paid a dividend when the money should have paid off debt, secondly, they bought shares with company money, to keep in treasury, that also should have been used to reduced debt, as it is a way of tunneling money out of companies for the BoD's benefit. Nearly all share buy backs in cases like this are not in PI'S interests, still it was an opportunity to make money as well,if you caught the bus at the right time.

Plus, they should have set a priority of reducing the stock pile years ago, even if
if it meant taking a huge loss and coming back to shareholders for a raise when they were over £1 to rid themselves of debt.

They would rather keep drawing salaries than deal with problems, and the auditors and bankers should be brought to book.

[smithie6] 08/8/2023 09:12

btw
you didn't hold any shares during the big fall ?

(me neither, had some in the past but I gave up...& a little contact with the previous FD & I wasn't impressed, I sold soon afterwards.

[smithie6] 08/8/2023 09:07

fair/good points

Yeovil made or Ethiopia ?

[clocktower] 07/8/2023 13:45

How can anyone make money selling leather gloves at £5.75 a pair unless you sell millions.



Ok they sell more expensive ones also but I bought some on Amazon about a year or two ago as a bundle and the were dead cheap and I am still using the first pair, I gave away a couple of other pairs as they were cheap as chips but they were in a tan colour not like the one I have listed above.

[smithie6] 07/8/2023 10:49

Clocktower
your post about the info for paying for skins before you know what % will produce grade 1 leather after processing

bit late now
but if PTD kept buying raw skins that produced a high % that was not grade 1 & just added to PTD's unsellable stock mountain (!!)
could PTD not have said to where they bought raw skins

'look 'dude'
the last skins we bought from you produced too low a % of grade 1 leather & just added to our mountain of unsellable grade 2, 3 leather
so
either we will never buy any more skins from you, ever
or we first process the skins & then together we grade the resulting leather & we pay you according to the results of what % is grade 1 & what % is not grade 1.

Agreed ?"

[smithie6] 07/8/2023 07:24

you don't think the prices were not the problem here ?

I think a small/mini leather duffle bag was ~£400 !
...sure, beautiful looking but not many ppl have got that money just for a small posh bag. (I assume anyway)

& clearly they did not sell like hot cakes !

[smithie6] 07/8/2023 07:18

btw
...there is a sector of the leather mkt

the tough look, macho style
where they don't worry too much about the bag or briefcase having some marks, grade 2, 3 etc leather

some brands using thick leather, perhaps buffalo skin

....would surely last forever

(but yes, they surely buy their leather to their spec & their finish/colours
& surely wouldn't want PTD's leather mountain)

-----

btw
a briefcase, you use it a few times & it gets marked.

[smithie6] 07/8/2023 07:12

...very interesting post

thanks for sharing

[clocktower] 06/8/2023 11:54

I don’t think that you have grasped what sometrade said/meant Smithie6, my understanding from his/hers post is that they purchase skins be it goat/sheep/pig or cow hides by number/weight/size whatever, but it is not until the skins have been processed (hair removed etc and then graded can they see how good or bad a bundle and if say 60% of it is not grade 1 it becomes harder to sell, as most manufacturers would only demand grade 1 as the waste would be greater and if there are imperfections in the skin, like scratches from a cow rubbing itself on razor wire for example.

If you are buying a leather jacket for instance would you want a scar mark on the arm or back as by way of example, of course not, you would search for a near perfect one.

So, I assume they have to try to get top dollar for grade 1 but if the competition in the market does not allow you to do that you are forced to match your competition, then you have a problem selling grade 2-3 etc as everyone wants the best for as little as possible but if there is next to no demand for the lower grades because there are fewer small craft businesses making things like wallets and purses or leather belts, watch straps, dog collars etc the factory gets stuck with an ever increasing amount of stock, which to not make them look like a bunch of incompetent twits do not devalue it but just keep it on their books at cost plus the cost of labour and treatment, to cover/ hide how badly the company has run since they started to build this pile of rotting skins.
However because of this they have been able to borrow more and more money because the auditors are so clueless and the bankers so hoodwinked as to not question the BoD, as they all want to keep drawing their salaries and perks, and while the bank continued to collect interest payments, due to the rates being low, nobody gave a toss I suggest.

You see they could never stop buying skins and processing them or the business would collapse as the customers would go elsewhere if they cannot buy grade 1 from Pittards.

Then to make matters worse the idiots did some sort of swaps with the US$ which cost £1.5 million that then made the bank sit up and start to question what has been going on. Obviously the bank has been trying to find ways of getting the money back, and keep them all wiping sweat of their eyebrows and from heads rolling but alas they could not find sufficient numbers of folks that wanted to lose even more money to keep them ticking along or found anyone willing to buy even part of that overvalued stock pile, which personally I guess may not even be worth 10p in the Pound which is what many liquidators would seek to get in a fire sale.

Unless the bank take a huge hair cut I cannot see them getting anything other than the assets of the two factories back, if forced into administration.

Very sad indeed but the Chairman has a lot to answer too.

[smithie6] 05/8/2023 21:53

Somertrade wrote

"Smithie6, the stock wasn't deliberately bought. It results from making leather some of which will, by the nature of the raw material, not be of the customer's required quality when finished (it's graded and sold by grades). The problems have been:
Over valuing stock that can't be sold at the prices they want, inflating the value of the company"

Don't think I agree.

So, let us say they bought £100k of raw skins to deliver finished leather product to company X to spec. 956 with the colour red.
Let us say the price is x 3 per m2 versus the raw skin cost.
They only deliver £50k worth since that is all the m2 that meets the spec.
The rest is put as stock. Unsold.
Cost £84k. Labour process say equal cost. So 'cost' was 168k. The value is claimed as 50% higher, so £168k+ £84k= £252k.
But the co. could not sell. (Each client has their own design, own preferences, with dimples, without dimples, gloss, satin, matt, ad infinitum. They don't make their luxury item in colour X & finish Z just because the leather place has loads of it left over.

So, £252k of stock created, apparently.
Costs were £168k & income from selling some was £50k.
Loss on the deal was 50k- 168k = £118k.

To get to have reported stocks of ~ £15 million (ref. the accounts) the above losing trade/process would have needed to have been repeated 59 times to have created such a high claimed value in stock.

Somertrade wrote
"the stock wasn't deliberately bought. "

I disagree.
My rough example shows or infers that the bad business process which built up the unwanted stock pile of £15 million was created by repeatedly doing a bad business process. The company repeatedly made bad deals which landed Pittards each time with more unwanted stock, & Pittards was unable imo to learn & stop doing it !!

What were the managers & dirs doing ?
playing golf, sleeping ?!

(Did sellers of stock sneak in during the middle of the night & add a few million £ of stock ...while keeping the security people out of the way ! ...& then post Pittards a bill the next day ?
Obviously no.
The process that led to the creation of a mountain of unused stock was done by Pittards.

And someone had to fund that £15 million of unwanted stock; bank debt & new share issues. Sadly in the current process we will perhaps see 70% of it either sold off at 20% -40% of the auditted 'value' or just written down to 20-50% of its auditted value. Producing a big hit to some large shareholders & the banks who provided the cash so that that mountain of stock could be created in the first place.

[somertrade] 04/8/2023 22:22

Dorset64, the details are on this site.

Somerset live (an online site) - never known for accuracy. Pittards are not a glove company. Traditionally they only ever made leather and avoided going into finished goods. (This strategy served them well for 180+ years). They make leather for, amongst other things, gloves. They only started making some gloves and other articles after the Ethiopian acquisitions some 10-12 years ago.

Smithie6, the stock wasn't deliberately bought. It results from making leather some of which will, by the nature of the raw material, not be of the customer's required quality when finished (it's graded and sold by grades). The problems have been:
Over valuing stock that can't be sold at the prices they want, inflating the value of the company.

Buying Ethiopian Tannery resulting in them having to try and sell all leather produced from purchased skins and hides, rather than buying the better end as before. (Counter to this, if they hadn't done this they might not have been able to purchase the materials to make finished leather).

Keeping 'Yes' people, and those who were cheaper. Relying on agency staff (a false economy, more expensive ultimately). They got rid of those who knew what they were doing.

[smithie6] 04/8/2023 21:51

meijiman

"Yes that's the sad part. Good products and a superb loyal workforce. Lions led by donkeys springs to mind here."

not so sure the products are 'good'
have you seen the prices !!
very expensive.
anyone can set up a website & try to sell a few bags at very high prices but you need skilled dirs &, managers & decision makers (& designers) if you are going to pay for a big building, heating, expensive dirs & a lot staff,

and clearly Pittards did not have that, well not sufficiently to compete well, been on downhill slope for last 20 years, just look at the share price chart.

some possible causes of failure

- ok, not having a clue, springs to mind !....such as buying different small product companies. Did any of them produce even a glimmer of action or did those buys just indicate that the dirs were completely clueless & phps that buying something might give the impression they were showing some initiative !!
..& phps keep the big shareholders away for a while

-----

the never ending (claimed) humungus value in stock....which the dirs were never ever to make the slightest dent in reducing it...
...if you can not control your stock then it shows that the dirs. don't have a clue.
(if you ain't selling it then you put a block on buying !, dirs are supposed to direct ...& monitor the incoming data & make prudent decisions...
....if the millions spent on that stock had not been spent would the co. now be sitting on a good chunk of cash & not be teetering on the edge of administration ? I think so.

How did big shareholders allow the MD to stay in place year after year as the sh. price just relentlessly ground downwards...

the shareholders are also to blame there, they kept voting for the poorly performing dirs to stay !!

-----

morals.
imo the morals of the dirs to vote themselves 5% of the co. if the sh. price went up, after being the ones that got the share price down that low to start with.
disgraceful imo.
but hey, a fair % of dirs of AIM are not famed for having morals.
======

as is often the case the CEO/MD has surely done very nicely, despite the ship probably going down with him at the helm for many years (15-20 ?)
(15 years x say 200k = £3 million !!
surely has a big f off house, & all the other stuff to go with it. :-( )

[dorset64] 02/8/2023 10:05

Report in local rag suggesting that Pittards have stopped the open offer and fundraising as they couldn’t raise enough or anywhere near the amount they needed……




However, in an update to investors, bosses at the firm said they had decided to "terminate" fundraising after the amount accumulated, around £330,000, was deemed "not sufficient". The board said the company was now considering its options, which include "an orderly sale" of the business and its assets.

Trading in the company's shares on the stock market are currently suspended while the results of its previous financial year have been delayed. In a previous statement the company’s leadership said: "Should the company be unable to raise a minimum if £1.6m of additional capital the company would be unable to continue to trade and would most likely be placed into administration in which case the prospects for recovery of value, if any, by shareholders would be uncertain."

[somertrade] 29/7/2023 14:16

Marcus Fysh is the local MP. Currently deselected for next General Election so likely sulking. I doubt he's particularly aware of what's going on, IMO he's seemed rather out of touch with things in the constituency.
Many years ago Pittards had several rounds of redundancies, in many cases getting rid of people who had experience and knew the product, in favour of those whose faces fitted, were cheaper, but had little knowledge or experience.
Many of the Directors from that time are still there, including the CEO.
Go figure...

[triskelion] 28/7/2023 12:00

Wonder if the local MP has anything to say about this and if he/she has been approached??

[meijiman] 28/7/2023 07:22

Yes that's the sad part. Good products and a superb loyal workforce. Lions led by donkeys springs to mind here.