Half Yearly Report

Leeds

07/01/2016 07:00

RNS Number : 0136L

Leeds Group PLC

07 January 2016

LEEDS GROUP PLC

Interim Results for the six months ended 30 November 2015

STATEMENT BY THE GROUP CHAIRMAN, JAN G HOLMSTROM

I am pleased to present the interim report of Leeds Group plc ("the Group") for the six months ended 30 November 2015.

The business of Leeds Group is that of a wholesaler of fabrics and haberdashery, and is conducted by its German trading subsidiary Hemmers/Itex Textil Import Export GmbH ("Hemmers") and by Chinoh-Tex Limited, a subsidiary of Hemmers based in Shanghai. These trading companies sell both basic commodity fabrics and also fabrics from their own fashion collections. Approximately half of sales are to retailers, with remaining sales activities divided between wholesalers and the garment manufacturing sector.

The Group achieved sales in the period of 18,489,000 (2014: 18,581,000) and made a profit after tax of 692,000 (2014: 701,000). Earnings per share were 2.5 pence (2014: 2.5 pence). In the first half of the current financial year, the Euro was, on average, some 10% weaker than it was during the first half of the Group's previous financial year. Given that the Group's purchases are predominantly made in US Dollars while the vast majority of its sales are in Euros, our management team has done well to preserve historic rates of gross margin, and to deliver Group sales and pre-tax profit which, if translated to sterling at constant 2014 exchange rates, would show growth of 8.8% and 8.3% respectively.

In Euro terms, revenue at Hemmers increased by 11.7% to 23,203,000 (2014: 20,775,000) reflecting higher selling prices and volume growth into the retailer customer base. This volume growth was chiefly as a result of increasing the Hemmers share of the purchase requirements of Stoff-Ideen-KMR (KMR), the retail chain in which Hemmers acquired a 50% joint venture interest a year ago. Hemmers pre-tax profit increased by 15.1% to 1,227,000 (2014: 1,066,000).

The KMR joint venture opened new shops in Saarbrcken and in Bamberg in the period, to bring the total number of stores to 16, and the business continues to trade in line with the expectations of the Directors.

External sales revenues at ChinohTex were 9.8% down on last year at 1,881,000 (2014: 2,086,000) leading to a reduced pre-tax profit of 155,000 (2014: 193,000). Despite this setback, ChinohTex continues to perform invaluable work in support of its European parent operation through its purchasing strengths, its ability to inspect locally purchased product for quality issues and the consolidation of freight shipments that minimises the cost of shipping stock to Europe.

In the twelve month period since 30 November 2014 earnings per share has been 3.8 pence but the adverse translation differences on foreign operations have been 1,303,000, or 4.7 pence per share. Consequently net asset value per share (inclusive of goodwill and excluding shares held in treasury) at 30 November 2015 fell to 51.8 pence (2014: 52.7 pence).

Group net debt was 579,000 at 30 November 2015 (30November 2014: 881,000; 31 May 2015: net cash 596,000). Net cash outflow in the 6 months ended 30 November 2015 reflected the seasonal increase in working capital and capital expenditure. Although working capital is expected to fall from its seasonally high level during the second half-year, net debt will continue to rise as the project to expand the Hemmers facility in Nordhorn is brought to completion at a total cost of 3.5 million.

The Directors are currently of the view that shareholder value is best promoted by investing in the current business and by seeking new investment opportunities which increase earnings per share. In order to maximise funds available for this purpose and to reflect the investment in the Hemmers facility during the current year, the Board does not propose an interim dividend.

As ever, I offer thanks to our employees throughout the Group who have worked so hard in the period.

Jan G Holmstrom

Chairman

7 January 2016

Unaudited Consolidated Statement of Comprehensive Income

for the 6 months ended 30 November 2015

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Revenue
18,489
18,581
34,859
Cost of sales
(14,373)
(14,424)
(27,066)
Gross profit
4,116
4,157
7,793
Distribution costs
(1,169)
(1,196)
(2,316)
Administrative expenses
(1,916)
(1,902)
(3,855)
Profit from operations
1,031
1,059
1,622
Finance expense
(39)
(35)
(71)
Finance income
2
5
7
Share of post-tax profit of joint venture
20
-
13
Profit before tax
1,014
1,029
1,571
Tax expense
(322)
(328)
(518)
Profit for the period attributable to the equity holders of the Company
692
701
1,053
Other comprehensive income:
Translation differences on foreign operations
(257)
(169)
(1,215)
Other comprehensive income for the period
(257)
(169)
(1,215)
Total comprehensive income for the period attributable to the equity holders of the Company
435
532
(162)

The results shown in the income statement derive wholly from continuing operations.

There is no tax effect relating to other comprehensive income.

Earnings per share for profit attributable

to the equity holders of the Company

6 months to
30 November
2015
6 months to
30 November
2014
Year to
31 May
2015
Basic and diluted (pence)
2.5p
2.5p
3.8p

Unaudited Consolidated Statement of Financial Position

at 30 November 2015

As at
30 November
2015
000
As at
30 November
2014
000
As at
31 May
2015
000
Assets
Non-current assets
Property, plant and equipment
2,271
1,868
1,760
Intangible assets
784
888
802
Investment in joint venture
559
-
553
Total non-current assets
3,614
2,756
3,115
Current assets
Inventories
8,142
8,649
7,258
Trade and other receivables
6,255
7,440
6,000
Derivative financial asset
112
17
59
Cash and cash equivalents
2,875
1,726
2,027
Total current assets
17,384
17,832
15,344
Total assets
20,998
20,588
18,459
Liabilities
Non-current liabilities
Loans and borrowings
(2,380)
(766)
(665)
Deferred tax
(254)
(254)
(244)
Total non-current liabilities
(2,634)
(1,020)
(909)
Current liabilities
Trade and other payables
(2,847)
(2,871)
(2,666)
Loans and borrowings
(1,074)
(1,841)
(766)
Corporation tax liability
(204)
(341)
(296)
Total current liabilities
(4,125)
(5,053)
(3,728)
Total liabilities
(6,759)
(6,073)
(4,637)
TOTAL NET ASSETS
14,239
14,515
13,822

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
(743)
(726)
(725)
Foreign exchange reserve
(308)
995
(51)
Retained earnings
10,898
9,854
10,206
TOTAL EQUITY
14,239
14,515
13,822

Unaudited Consolidated Cash Flow Statement

for the 6 months ended 30 November 2015

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Cash flows from operating activities
Profit for the period
692
701
1,053
Adjustments for:
Depreciation
124
125
226
Finance expense
39
35
71
Finance income
(2)
(5)
(7)
Movement in derivative financial assets
(55)
(17)
(63)
Loss on sale of property, plant and equipment
-
-
2
Share of post-tax profit of joint venture
(20)
(13)
Income tax expense
322
328
518
Cash flows from operating activities before
changes in working capital and provisions
1,100
1,167
1,787
Increase in inventories
(1,070)
(1,736)
(1,063)
Increase in trade and other receivables
(382)
(1,381)
(495)
Increase in trade and other payables
277
827
1,003
Cash (absorbed)/generated by operating activities
(75)
(1,123)
1,232
Income taxes paid
(390)
(498)
(679)
Net cash flows from operating activities
(465)
(1,621)
553
Investing activities
Purchase of property, plant and equipment
(686)
(125)
(298)
Investment in joint venture
-
-
(575)
Bank interest received
2
5
7
Net cash used in investing activities
(684)
(120)
(866)
Financing activities
Purchase of treasury shares
(18)
(45)
(44)
Net drawdown of bank borrowings
2,098
1,765
717
Bank interest paid
(39)
(35)
(71)
Net cash generated by financing activities
2,041
1,685
602
Net increase/(decrease) in cash and cash equivalents
892
(56)
289
Translation (loss)/gain on cash and cash equivalents
(44)
10
(34)
Cash and cash equivalents at beginning of the period
2,027
1,772
1,772
Cash and cash equivalents at end of the period
2,875
1,726
2,027

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2015

Share capital
000
Capital redemption reserve
000
Treasury share
reserve
000
Foreign exchange reserve
000
Retained earnings
000
Total
equity
000
At 1 June 2015
3,792
600
(725)
(51)
10,206
13,822
Profit for the period
-
-
-
-
692
692
Other comprehensive income*
-
-
-
(257)
-
(257)
Transaction with shareholders:
Purchase of treasury shares
-
-
(18)
-
-
(18)
At 30 November 2015
3,792
600
(743)
(308)
10,898
14,239

Share capital
000
Capital redemption reserve
000
Treasury share
reserve
000
Foreign exchange reserve
000
Retained earnings
000
Total
equity
000
At 1 June 2014
3,792
600
(681)
1,164
9,153
14,028
Profit for the period
-
-
-
-
701
701
Other comprehensive income*
-
-
-
(169)
-
(169)
Transaction with shareholders:
Purchase of treasury shares
-
-
(45)
-
-
(45)
At 30 November 2014
3,792
600
(726)
995
9,854
14,515

Share capital
000
Capital redemption reserve
000
Treasury share
reserve
000
Foreign exchange reserve
000
Retained earnings
000
Total
equity
000
At 1 June 2014
3,792
600
(681)
1,164
9,153
14,028
Profit for the year
-
-
-
-
1,053
1,053
Other comprehensive income*
-
-
-
(1,215)
-
(1,215)
Transaction with shareholders:
Purchase of treasury shares
-
-
(44)
-
-
(44)
At 31 May 2015
3,792
600
(725)
(51)
10,206
13,822

*The components of other comprehensive income are disclosed as part of the consolidated statement of comprehensive income.

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


Interim results

for the 6 months ended 30 November 2015

Notes to the accounts

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 2015 and 30 November 2014 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 financial information for the year ended 31 May 2015 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2015 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 2015 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.

2. Ordinary shares of 12 pence each used in the calculation of earnings per share:

6 months to
30 November
2015
6 months to
30 November
2014
Year to
31 May
2015
27,532,496
27,617,479
27,583,006

3. Reconciliation of movements in net bank debt

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Increase/(decrease) in cash & cash equivalents
892
(56)
289
Translation (loss)/gain on cash and cash equivalents
(44)
10
(34)
Increase in loans
(2,098)
(1,765)
(717)
Translation gain on loans
75
15
143
Net cash outflow
(1,175)
(1,796)
(319)
Net cash at beginning of period
596
915
915
Net (bank debt)/cash at end of period
(579)
(881)
596

4. Analysis of net bank debt

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Cash
2,875
1,726
2,027
Loans repayable in less than one year
(1,074)
(1,841)
(766)
Loans repayable in more than one year
(2,380)
(766)
(665)
Net (bank debt)/cash at end of period
(579)
(881)
596

5. Segmental information

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
External revenue
Hemmers Europe
16,608
16,495
31,151
Hemmers China
1,881
2,086
3,708
Total Group external revenue
18,489
18,581
34,859

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Profit before tax
Hemmers Europe (local GAAP)
875
842
1,430
Share of post-tax profit of JV
20
-
13
IFRS adjustment - financial derivatives
55
17
63
IFRS adjustment - goodwill amortisation
-
54
58
Hemmers Europe (IFRS)
950
913
1,564
Hemmers China
155
193
305
Unrealised profit in stock
(9)
(6)
(3)
Holding companies
(82)
(71)
(295)
Group profit before tax
1,014
1,029
1,571

6 months to
30 November
2015
000
6 months to
30 November
2014
000
Year to
31 May
2015
000
Net assets
Hemmers Europe (local GAAP)
10,024
10,088
9,558
IFRS adjustment - financial derivatives
80
13
42
IFRS adjustment - goodwill amortisation
562
633
575
Hemmers Europe (IFRS)
10,666
10,734
10,175
Hemmers China
915
728
810
Unrealised profit in stock
(41)
(40)
(33)
Holding companies
2,699
3,093
2,870
Group net assets
14,239
14,515
13,822

Enquiries:
Leeds Group Plc
Cairn Financial Advisers LLP
Malcolm Wilson, Company Secretary
Tony Rawlinson / Avi Robinson
T: 077801 224 618
T: 020 7148 7900

This information is provided by RNS

The company news service from the London Stock Exchange

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