Whilst announcing its preliminary results for the full year ended December 31, 2005, UK-based producer of technical leather Pittards PLC, stated that the company has suspended trading in its shares and intends entering into a Company Voluntary Arrangement (CVA) as it is currently unable to pay dividends to ordinary shareholders and to preference shareholders.

Stephen Boyd, chairman, commented, "The proposed CVA will allow the business and the company to continue without any interruption. All external creditors other than the pension fund will be paid in full and shareholders will have a continuing, albeit diluted, stake in the company.”

The company, which is currently undergoing reorganisation, including the closure of its Leeds factory and the relocation of its activities to Yeovil and overseas, revealed a pension scheme deficit of £32.9 million and due to this deficit, the directors have now proposed a Voluntary Arrangement under Part 1 of the Insolvency Act 1986, the terms of which have been approved by authorised representatives of the Pension Protection Fund (PPF). The Pensions Regulator has agreed to clearance in principle. It is expected that the pension schemes will meet the criteria for entry to the PPF introduced by the Pensions Act 2004, which will, within the limits of the schemes, enable members' benefits to be protected to the extent provided under PPF rules.

In addition to approval by the requisite majorities of shareholders and creditors, the arrangement also requires certain obligations to the trustees and the PPF to be fulfilled. These obligations include the payment of £1.6 million to the trustees.

Turnover for 2005 fell from £73.2 million in 2004 to £62.1 million although the operating loss was reduced to £2.5 million from £4 million in 2004. 

In terms of sales, glove leather sales were virtually unchanged in terms of volume, but the overall value fell by 2.5%. Sales of technically advanced leather for sports gloves were up by 7% in volume terms, and 3% in value compared with the previous year.

Mr Boyd added, The last 18 months have been extremely challenging as we have sought to adapt our business model to deal appropriately with the highly competitive international markets in which we operate. We have had to seek an alternative strategy to that of wholly UK-based manufacture, where the costs of regulation, employee benefits - particularly pensions - and latterly energy and waste, have spiralled upwards in a market where global overcapacity and a weaker dollar are forcing our net sterling prices down.”