RNS Number : 6277B
Leeds Group PLC
03 February 2020
 

Leeds Group plc 

("Leeds Group" or the "the Group") 

Interim Results for the six months ended 30 November 2019

 

The interim results of Leeds Group plc ("Leeds Group" or "the Group") for the six months ended 30 November 2019 are presented as follows:

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR) and has been arranged for release by Jan G Holmstrom, Chairman. 

 

Enquiries: 

Leeds Group plc                                  Cairn Financial Advisers LLP 

Dawn Henderson - 07747 777055      Tony Rawlinson / Liam Murray - 020 7213 0880 

 

Chairman's Statement 

 

The business of the Group is that of a wholesaler and retailer of fabrics and haberdashery and is conducted by its German trading subsidiary Hemmers/Itex Textil Import Export GmbH ("Hemmers") and Stoff-Ideen-KMR GmbH ("KMR"), a subsidiary of Hemmers also based in Germany. Chinoh-Tex, Hemmer's China based subsidiary, ceased trading in November 2019 and so is reported as a discontinued operation.

 

The Group achieved sales from continuing operations in the period of £18,600,000 (2018: £20,297,000).    Market conditions continue to be challenging throughout Europe with pricing pressure in all sectors.  The Group made a loss from continuing operations after tax of £712,000 (2018:  profit of £814,000).  The loss associated with the discontinued operation was £416,000.  The total Group loss after tax was £1,128,000 (2018: profit of £939,000). The loss per share was 4.1 pence (2018: Earnings per share 3.4 pence).

 

Sales at Hemmers decreased to £14,525,000 (2018: £16,640,000) with volumes down 11%. There has been an overall decline in the market with the result that competitors have been offering low prices in an effort to maintain market share, particularly in basic products.  The loss in the half year was £518,000 (2018: profit of £775,000) as more cost cutting measures have been implemented and redundancy costs of £509,000 were incurred. Management is focussed on aligning the business with future demand and competing in markets where it can make acceptable margins.

 

Sales at KMR increased to £4,075,000 (2018: £3,657,000) with the company reporting for six months compared with five months last year. There has been a similar level of operating loss this year compared to last year £251,000 (2018: £233,000) however, in January KMR sold some land adjacent to one of their shops achieving a profit on sale of approx. £75,000 which will be included in the second half results.

 

Chinoh-Tex ceased trading in November 2019. All the closure costs including redundancy costs have been included in the results to 30 November 2019.

 

Group net debt was £9,550,000 at 30 November 2019 (30 November 2018: £6,830,000; 31 May 2019: £5,879,000). The increase in net debt is mainly due to the implementation of a new accounting standard whereby operating leases are now included as a right of use asset with the corresponding financial liability recognised on the balance sheet. The Group has included leases of £3,143,000 on the balance sheet this financial year.

 

The Board continues to believe that the initiated cost reduction and efficiency programmes that are now in place will ensure costs are reduced to a level that are aligned to the reduced sales currently being experienced.  This should ensure both Hemmers and KMR can return to profitability in the next financial year.

 

I would like to offer thanks to our employees throughout the Group for their continued hard work and support.

 

 

 

Jan G Holmstrom,

Chairman

31 January 2020

 

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2019


6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000

Continuing operations

Revenue

 

18,600

 

20,297

 

38,905

Cost of sales

(15,039)

(15,214)

(30,364)





Gross profit

3,561

5,083

              8,541





Distribution costs

(1,561)

(1,645)

(3,229)





Impairment of goodwill

-

-

(982)

Administrative expenses

(2,741)

  (2,783)

(5,394)

Administrative costs

(2,741)

(2,783)

(6,376)





Other income

-

15

11





(Loss)/profit from operations

(741)

670

(1,053)





Finance expense

(139)

(92)

(194)

Share of post-tax loss of joint venture

-

(34)

(34)

Gain on termination of joint venture

-

118

-

Negative goodwill arising from acquisition

-

380

-





(Loss)/profit before tax

(880)

1,042

(1,281)





Taxation

168

(228)

(41)





(Loss)/profit from continuing operations

(712)

814

(1,322)





Discontinued operations

(Loss)/profit from discontinued operations

 

(416)

 

125

 

29

 




(Loss)/profit for the period attributable to the equity holders of the Parent Company

 

(1,128)

 

939

 

(1,293)





Other comprehensive (loss)/income for the period

(406)

95

   55





Total comprehensive (loss)/income for the period attributable to the equity holders of the Company

 

 

(1,534)

 

 

1,034

 

 

(1,238)

 

The prior year comparatives have been revised to include the result for operations discontinued in this financial year within the (loss)/profit from discontinued activities. Further analysis is detailed in note 4.

 

(Loss)/Earnings per share for profit attributable to the equity holders of the Company

 


6 months to

30 November

2019

6 months to

30 November

2018

Year to

31 May

2019





Basic and diluted (pence)

(4.1)p

3.4p

(4.7p)

 

Unaudited Consolidated Statement of Financial Position

at 30 November 2019


As at

30 November

2019

£000

As at

30 November

2018

£000

As at

31 May

2019

£000

Assets




Non-current assets




Property, plant and equipment

10,738

8,872

8,534

Investment property

965

560

1,009

Intangible assets

69

1,291

72





Total non-current assets

11,772

10,723

9,615





Current assets




Inventories

12,245

13,266

11,760

Trade and other receivables

4,486

6,168

4,382

Corporation tax recoverable

778

569

733

Derivative financial asset

5

27

-

Cash and cash equivalents

1,331

1,139

1,065





Total current assets

18,845

21,169

17,940





Total assets

30,617

31,892

27,555





Liabilities




Non-current liabilities




Loans and borrowings

(3,774)

(4,402)

(2,289)

Deferred tax

-

(279)

-





Total non-current liabilities

(3,774)

(4,681)

(2,289)





Current liabilities




Trade and other payables

(3,429)

(3,631)

(2,770)

Loans and borrowings

(7,107)

(3,567)

(4,655)

Provisions

(100)

-

(100)





Total current liabilities

(10,636)

(7,198)

(7,525)





Total liabilities

(14,410)

(11,879)

(9,814)





TOTAL NET ASSETS

16,207

20,013

17,741

 

Capital and reserves attributable to

equity holders of the company




Share capital

3,792

3,792

3,792

Capital redemption reserve

600

600

600

Treasury share reserve

(807)

(807)

(807)

Foreign exchange reserve

2,139

2,585

2,545

Retained earnings

10,483

13,843

11,611





TOTAL EQUITY

16,207

20,013

17,741

 

 

 

 

 

Unaudited Consolidated Cash Flow Statement

for the six months ended 30 November 2019


6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000

 

Cash flows from operating activities




 

(Loss)/profit for the period

(1,128)

939

(1,293)

Adjustments for:




Depreciation of property, plant and equipment

841

393

668

Depreciation of investment property

9

9

16

Amortisation of intangible assets

-

10

7

Finance expense

139

92

194

Movement in derivative financial assets

(5)

(28)

-

Share of post-tax loss of joint venture

-

34

34

Loss/(gain) on sale of fixed assets

5

-

(5)

Impairment of goodwill

-

-

982

Net goodwill arising from acquisition

-

(498)

(7)

Taxation (credit)/expense

(168)

231

43





Cash flows (used in)/generated from operating activities before changes in working capital and provisions

 

 

(307)

 

 

1,182

 

 

639

(Increase)/decrease in inventories

(944)

(761)

441

(Increase)/decrease in trade and other receivables

(159)

194

140

Increase/(decrease) in trade and other payables

888

(536)

450





Cash (used in)/generated from operating activities

 

(522)

 

79

 

1,670

Taxation received/(paid)

93

(276)

(430)





Net cash flows (used in)/generated from operating activities

 

(429)

 

(197)

 

1,240





Investing activities




Purchase of property, plant and equipment

(217)

(123)

(550)

(Purchase of)/proceeds from subsidiary net of debt

-

(1,865)

75

Proceeds from sale of fixed assets

6

-

6





Net cash used in investing activities

(211)

(1,988)

(469)





Financing activities




Purchase of treasury shares

-

(9)

(9)

Net drawdown/(repayment) of bank borrowings

1,533

2,868

(71)

Repayment of finance leases

(480)

-

-

Bank interest paid

(95)

(92)

(194)





Net cash generated from/(used in) financing activities

 

958

 

2,767

 

(274)





Net increase in cash and cash equivalents

318

582

497

Translation loss on cash and cash equivalents

(52)

(15)

(4)

Cash and cash equivalents at beginning of period

1,065

572

572





Cash and cash equivalents at end of period

1,331

1,139

1,065

 

 

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2019

 


Share capital

   

£000

Capital redemption reserve

£000

Treasury share reserve

£000

Foreign exchange reserve

        £000

Retained earnings

 

£000

Total equity

 

£000








At 1 June 2019

3,792

600

(807)

2,545

11,611

17,741

Loss for the period

-

-

-

-

(1,128)

 (1,128)

Other comprehensive loss

-

-

-

(406)

-

(406)








At 30 November 2019

3,792

600

(807)

2,139

10,483

16,207

 

 


Share capital

   

£000

Capital redemption reserve

£000

Treasury share reserve

£000

Foreign exchange reserve

        £000

Retained earnings

 

£000

Total equity

 

£000








At 1 June 2018

3,792

600

(798)

2,490

12,904

18,988

Profit for the period

-

-

-

-

939

939

Other comprehensive income

-

-

-

95

-

95

Transaction with shareholders:







Purchase of treasury shares

-

-

(9)

-

-

(9)








At 30 November 2018

3,792

600

(807)

2,585

13,843

20,013

 

 


Share capital

   

£000

Capital redemption reserve

£000

Treasury share reserve

£000

Foreign exchange reserve

        £000

Retained earnings

 

£000

Total equity

 

£000








At 1 June 2018

3,792

600

(798)

2,490

12,904

18,988

Loss for the year

-

-

-

-

(1,293)

(1,293)

Other comprehensive income

-

-

-

55

-

55

Transaction with shareholders:







Purchase of treasury shares

-

-

(9)

-

-

(9)








At 31 May 2019

3,792

600

(807)

2,545

11,611

17,741

 

 

The following describes the nature and purpose of each reserve within equity:

 

Reserve

Description and purpose



Capital redemption reserve

Amounts transferred from share capital on redemption of issued shares

Treasury share reserve

Cost of own shares held in treasury

Foreign exchange reserve

Gains/(losses) arising on retranslation of the net assets of overseas operations into sterling

Retained earnings

Cumulative net gains/(losses) recognised in the consolidated statement of comprehensive income after deducting the cost of cancelled treasury shares



 

                                                                                  

Notes to the Interim Results

for the six months ended 30 November 2019

 

1.   The financial information in this report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The interim results for the six months ended 30 November 2019 and 30 November 2018 are unaudited. The interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as endorsed by the European Union. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements. The Group has chosen not to comply with IAS 34 'Interim Financial Statement' in these interim financial statements.

The financial information for the year ended 31 May 2019 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2019 have been filed with the Registrar of Companies.  The Independent Auditor's Report on the Annual Report and Financial Statements for the year ended 31 May 2019 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The directors have adopted the following accounting standards which became effective for periods beginning on or after 1 January 2019:

IFRS 16 (Leases)

The Group has applied the modified retrospective approach with opening balance adjustments being recognised on 1 June 2019.  The impact of introducing the standard has been to bring operating lease arrangements on balance sheet except those with a lease term of under 12 months or where the underlying asset is of low value, with the right of use asset and corresponding financial liability recognised on balance sheet.  Within the income statement, the rent expense has been replaced by depreciation and interest expenses. An asset and liability of £3,143,000 was recognised as at 1 June 2019.  It is expected that the lease costs will reduce by £960,000. Depreciation will increase by £896,000 and the interest charge will increase by £88,000.

 


6 months to

30 November

2019

6 months to

30 November

2018

Year to

31 May

2019






27,320,843

27,350,679

27,330,788

 

 

3.  Analysis of net bank debt


6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000





Cash

1,331

1,139

1,065

Loans repayable in less than one year

(7,107)

(3,567)

(4,655)

Loans repayable in more than one year

(3,774)

(4,402)

(2,289)





Net bank debt at end of period

(9,550)

(6,830)

(5,879)

 

 

 

 

 

4.  Segmental information

 

Chinoh-Tex, Hemmer's China based subsidiary, ceased trading in November 2019 and so is reported as a discontinued operation.

                                          

Group external revenue

 

6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000

Continuing operations

Hemmers

 

14,525

 

16,640

 

30,939

KMR

4,075

3,657

7,966






18,600

20,297

38,905

Discontinued operations

Chinoh-Tex

 

493

 

1,583

 

2,366





Group external revenue

19,093

21,880

41,271

 

 

Group (loss)/profit before tax

6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000

Continuing operations

Hemmers

 

(518)

 

775

 

239

KMR

(251)

(233)

(486)

Share of post-tax loss of JV

-

(34)

(34)

Unrealised profit in stock

3

16

(21)

Holding company

(114)

20

3

IFRS adjustment - goodwill

-

498

(982)






(880)

1,042

(1,281)

Discontinued operations

Chinoh-Tex

 

(416)

 

128

 

31





Group (loss)/profit before tax

(1,296)

1,170

(1,250)

 

Group net assets

 

6 months to

30 November

2019

£000

6 months to

30 November

2018

£000

Year to

31 May

2019

£000

Continuing operations

Hemmers

 

11,497

 

14,162

 

12,200

KMR

1,865

1,743

2,159

Unrealised profit in stock

(317)

(21)

(331)

Holding company

2,956

2,999

3,070






16,001

18,883

17,098

Discontinued operations

Chinoh-Tex

 

206

 

1,130

 

643





Group net assets

16,207

20,013

17,741

 

 

 

 

5.  Forward-Looking Statements

 

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

 

 


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