REG - Leeds Group PLC - Final Results & Notice of AGM
24/10/2023 07:00
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RNS Number : 0284R Leeds Group PLC 24 October 2023
Date: 24 October 2023
Leeds Group plc
("Leeds Group" or "the Group")
Final Results for the year ended 31 May 2023
and Notice of AGM
Leeds Group announces its audited final results of the Group for the year to
31 May 2023 and that its Annual General Meeting will be held at 2.15pm on 22
November 2023 at the Radisson Blu Hotel, Chicago Avenue, Manchester Airport,
M30 3RA.
Strategic Report
Chairman's Statement
It has been yet another challenging year for the Group.
The textile markets in Germany and other European countries have, over the
past few years been negatively affected by the Covid-19 pandemic and the
consequences of the Russian armed aggression in Ukraine. Both situations
severely affected consumer confidence which has now been further impacted by
high inflation and increased interest rates. Margins are low at the commodity
end of the market and it is clear that the market as a whole would benefit
from some degree of consolidation. Against this background, Group trading has
continued to struggle.
As previously communicated it became clear to Hemmers management last autumn,
that its retail subsidiary KMR could not continue to operate and Hemmers'
management made the decision to place it into an insolvency process, which was
accepted by the German Courts on 7 October 2022. The insolvency process is
ongoing. Full control passed to the insolvency administrator on 1 January 2023
and at that point KMR ceased to be a subsidiary within the Group. However,
Hemmers are still exposed to a loan guarantee in relation to KMR and this has
been provided for in the financial statements.
The Group's focus is now solely to return Hemmers to profitability. Hemmers
management will continue to assess the cost base to make sure it aligns with
the reduced sales levels and look to make efficiencies wherever they can to
ensure Hemmers is as competitive as it can be in the marketplace. The
Directors will continue to look at all options available to the Group to
maximise shareholder value.
Finance and Operating Review
Group highlights
· Group revenue for all operations in the year was £27,817,000
(2022: £29,590,000).
· Group operating loss was £509,000 (2022: loss £2,990,000 which
included an impairment charge of £1,662,000).
· The interest charge was £384,000 (2022: £255,000) reflecting
higher interest rates.
· Group loss before tax was £893,000 (2022: loss
£3,245,000).
· The tax credit in the year was £53,000 (2022: charge £4,000).
· Total loss per share was 3.1p (2022: loss per share 11.9p).
Hemmers
Hemmers is an international business engaged in designing, importing,
warehousing, and wholesaling of fabrics from its base in Germany. The
markets in Germany and other European countries have over the past few years
been affected by the Covid-19 pandemic and the conflict in Ukraine and more
recently by high inflation and high interest rates. Management have made
significant reductions in the cost base and will continue to align costs with
sales levels and look to make efficiencies wherever they can to ensure Hemmers
is as competitive as it can be in the marketplace.
External sales increased slightly in the year to £24,290,000 (2022:
£23,998,000). The gross contribution percentage increased to 35% (2022:
34%) and the gross profit increased to £5,156,000 (2022: £4,440,000).
Hemmers reported a loss before interest of £248,000 (2022: loss £415,000)
after exceptional consultancy charges of £403.000. External interest has
increased to £337,000 (2022: £162,000) due to increased interest rates.
Hemmers bank debt, net of cash, increased in the year to £6,046,000 (2022:
£5,643,000). The bank debt is secured on the assets of Hemmers.
KMR
On 7 October 2022, the German Courts accepted Hemmers' management decision to
place its subsidiary KMR into an insolvency process. As a result of the
insolvency, an impairment charge of £1,662,000 was recognised in last year's
accounts with the assets relating to the KMR retail shops being written down
to a £nil net book value. Full control passed to the insolvency administrator
on 1 January 2023 and at that point KMR ceased to be a subsidiary within the
Group. The results for KMR are only consolidated for the 7 months to 31
December 2022 and are reported as a discontinued operation in these financial
statements.
The loss for the 7-month period before interest for the year was £32,000
(2022: loss £2,277,000 for 12 months) and the loss after interest was
£79,000 (2022: loss £2,370,000). During the year, KMR's freehold property
was sold for £521,000 realising a profit on sale of £139,000. The Group made
a net gain of £138,000 on the transfer of its assets to the insolvency
administrator.
Fixed Assets
The net book amount of tangible fixed assets is £6,487,000 (2022:
£7,335,000). Capital additions in the year amounted to £51,000 (2022:
£447,000). During the year, KMR's freehold property was sold for £521,000
realising a profit on sale of £139,000.
The net book value of right-to-use assets is £207,000 (2022: £170,000).
These relate to car leases, of which there were £142,000 additions during the
year (2022: £45,000).
Working Capital and Cash Flow
Net debt decreased from £6,381,000 to £5,812,000 in the year. Net cash
generated in the year at average exchange rates was £1,892,000 (2022: used
£344,000). Working capital, which comprises inventories, trade and other
receivables and trade and other payables, decreased in the year by £2,239,000
(2022: increased by £1,139,000) mainly due to lower levels of stock as there
was no KMR stock this year. Loan repayments of £539,000 (2022: £708,000)
have been made this year. There were no new loans taken out in the year (2022:
£2,835,000).
Lease liability repayments (including interest) of £698,000 (2022:
£1,059,000) were made in the year.
The Group continues to carefully monitor its working capital requirements to
ensure it operates within its current banking facilities.
Net Asset Value
Net assets decreased in the year by £738,000 as follows:
Net assets Per share
£000 pence
At 31 May 2022 11,177 40.9
Loss after tax (840) (3.1)
Translation differences 102 0.4
At 31 May 2023 10,439 38.2
Debt Profile
The funding policy of the Group continues to match its funding requirements in
a cost-effective fashion with an appropriate combination of short and
longer-term debt. Property investments have been financed by long term loans
at fixed interest rates between 1.05% and 1.65%. Working capital finance,
when required, is via short term loans of three months currently attracting
interest at rates of between 1.5% and 3%. Bank debt in the subsidiary is
secured by charges on inventories, receivables and property and is without
recourse to the Parent Company.
Principal risks and uncertainties
The Board has identified the main categories of business risk in relation to
the Group's strategic aims and objectives, and has considered reasonable steps
to prevent, mitigate and manage these risks. The principal risks identified
are as follows:
Funding risk
The Group has a combination of short-term borrowing facilities and longer-term
loan agreements secured on Group assets. The Group remains dependent upon the
support of these funders and there is a risk that failure in a company to meet
banking covenants could have implications for the Group. Borrowing facilities
are monitored regularly and the facilities agreed are more than needed for the
Group's requirements. The Group has close working relationships with their
current funders but believe alternative banking funders could be secured if
required.
Hemmers has a maximum working capital facility of €11m, restricted to the
borrowing base which is calculated as 70% of eligible inventory and 80% of
eligible debtors. In the financial year 2023, this resulted in average
availability of €8.4m (2022: €7.7m) with a range of €7.2m to €10.0m
(2022: €6.5m to €8.8m) and minimum headroom of €1.0m (2022: €3.2m) in
the year. In the forecast period to 31 May 2025, the estimated availability
range is €7m to €8.8m and the minimum headroom €0.3m. The facility is
committed until 31 May 2024. Hemmers also has another working capital facility
of €1m secured on working capital which was fully drawn at the year end. The
facilities are uncommitted, but the bank is obliged to give reasonable notice
of any change.
The Directors consider that there will be sufficient headroom available within
the Hemmers working capital facility and, therefore, the Directors are of the
opinion that it is appropriate to apply the going concern basis of preparation
to the financial statements.
However, the Directors acknowledge that the volatile global situation could
have an impact on the future trading result of Hemmers and in turn could
affect the ability of the Group to meet its forecasts and therefore comply
with banking covenants in downside scenarios. In addition, the Group has
borrowing facilities which are due for renewal within one year of the date of
approval of these financial statements, which the Group relies on to operate
as a going concern. The Directors will look to renew the existing facilities
when they are due for renewal, although acknowledge the conditions noted above
give rise to a material uncertainty around the going concern of the Group.
Market risk
There is always the ongoing threat of reduced market demand. This has been
seen this year and the Group continues to strive to combat the reduced demand
by looking at other markets both domestically and internationally and looking
at expanding its product ranges. The commercial risks of operating in the
highly competitive European fabric market are limited by the fact that Hemmers
has a wide range of suppliers, and no customer accounts for more than 5% of
revenues.
Foreign exchange risk
Most fabric purchased by Hemmers is paid for in US dollars, while the Euro is
the principal currency in which Hemmers sells its product. The Euro/dollar
rate is of greater significance to Leeds Group than the strength of Sterling.
The Hemmers' management continue to manage this transactional currency risk by
a combination of forward exchange contracts with reputable banks and sales
price increases where necessary.
Audit Opinion
As set out in note 7 of this announcement below, the Independent Auditor's
Report on the Annual Report and Financial Statements for the year ended 31 May
2023 was qualified on the basis that they were unable to obtain sufficient
audit evidence in respect of the subsidiary KMR and its performance, as stated
within the Consolidated Statement of Comprehensive Income under discontinued
operations. Except for the qualification noted above the Independent Auditor's
Report on the Annual Report and Financial Statements for the year ended 31 May
2023 did not contain a statement under section 498(2) of the Companies Act
2006 or section 498(3).
In auditing the financial statements for the year ended 31 May 2023, the Group
Auditors have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, the Independent Auditor's Report draws attention to note 2 in the
Group financial statements (note 1 of this announcement below) which states
that the Group and Parent Company incurred substantial losses during the year
and that the Group and Parent Company's operational existence is dependent on
the continued support from the Group's bank facilities and the eventual return
to profitability. The impact of this gives rise to a material uncertainty
around the going concern of the Group. The auditor's opinion is unqualified
and not modified in respect of this matter.
The strategic report was approved by the Board of Directors on 23 October 2023
and signed on its behalf by:
Jan G Holmstrom
Non-Executive Chairman
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2023
Year ended 31 May 2023 Year ended 31 May 2022
Discontinued Continuing Total Discontinued Continuing Total
operations operations operations operations
£000 £000 £000 £000 £000 £000
Revenue 3,527 24,290 27,817 5,592 23,998 29,590
Cost of sales (3,249) (19,134) (22,383) (4,551) (19,570) (24,121)
Gross profit 278 5,156 5,434 1,041 4,428 5,469
Distribution costs (690) (1,513) (2,203) (1,082) (1,401) (2,483)
Impairment of assets
Gain on discontinued operations
Administrative costs - - - (1,662) - (1,662)
138 - 138 - - -
225 (4,274) (4,049) (606) (3,855) (4,461)
Total administrative costs 363 (4,274) (3,911) (2,268) (3,855) (6,123)
Other income 17 154 171 32 115 147
Loss from operations (32) (477) (509) (2,277) (713) (2,990)
Finance expense (47) (337) (384) (93) (162) (255)
Loss before tax (79) (814) (893) (2,370) (875) (3,245)
Tax credit/(charge) - 53 53 - (4) (4)
Loss for the year attributable to the equity holders of the Parent Company
(79) (761) (840) (2,370) (879) (3,249)
Other comprehensive profit/(loss)
Translation differences on foreign operations
15 87 102 (22) (113) (135)
Total comprehensive loss for the year attributable to the equity holders of
the Parent Company
(64) (674) (738) (2,392) (992) (3,384)
There is no tax effect relating to other comprehensive income/(loss) for the
year. Amounts included in other comprehensive income/(loss) may be
reclassified subsequently as profit or loss.
Loss per share attributable to the equity holders of the Company
Year ended Year ended
31 May 2023 31 May 2022
Basic and diluted total loss per share (pence) 3.1p 11.9p
Consolidated Statement of Financial Position
at 31 May 2023
31 May 2023 31 May 2022
£000 £000
Assets
Non-current assets
Property, plant, and equipment 6,487 7,335
Right-of-use assets 207 170
Intangible assets 46 52
Total non-current assets 6,740 7,557
Current assets
Inventories 8,218 11,994
Trade and other receivables 3,199 2,864
Tax recoverable - 13
Cash on demand and on short term deposit 234 471
Total current assets 11,651 15,342
Total assets 18,391 22,899
Liabilities
Non-current liabilities
Loans and borrowings (544) (836)
Lease liabilities (112) (1,165)
Total non-current liabilities (656) (2,001)
Current liabilities
Trade and other payables (1,353) (3,065)
Loans and borrowings (5,502) (5,671)
Lease liabilities (97) (885)
Provisions (344) (100)
Total current liabilities (7,296) (9,721)
Total liabilities (7,952) (11,722)
TOTAL NET ASSETS 10,439 11,177
Capital and reserves attributable to
equity holders of the Company
Share capital 3,279 3,279
Capital redemption reserve 1,113 1,113
Foreign exchange reserve 2,152 2,050
Retained earnings 3,895 4,735
TOTAL EQUITY 10,439 11,177
The financial statements were approved and authorised for issue by the Board
of Directors on 23 October 2023 and were signed on behalf of the Board by:-
Jan G Holmstrom
Non-Executive Chairman
Consolidated Cash Flow Statement
for the year ended 31 May 2023
Year ended Year ended
31 May 2023 31 May 2022
£000 £000
Cash flows from operating activities
Loss for the year (840) (3,249)
Adjustments for:
Government assistance credit (59) (119)
Depreciation of property, plant, and equipment 608 735
Impairment of property, plant, and equipment - 42
Depreciation of right-of-use assets 103 827
Impairment of right-of-use assets - 1,620
Amortisation of intangible assets 6 5
Finance expense - interest on bank loans 347 179
Finance expense - interest lease liabilities 37 76
Gain on sale of property, plant, and equipment (142) -
Loss on sale of right-of-use assets 3 -
Gain on discontinued operations (138) -
Tax (credit)/charge (53) 4
Cash from operating activities before changes in working capital and
provisions
(128) 120
Decrease/(increase) in inventories 2,744 (1,818)
(Increase) in trade and other receivables (404) (43)
(Decrease)/increase in trade and other payables (101) 722
Cash generated from/(used in) operating activities 2,111 (1,019)
Tax (paid)/received (32) 114
Net cash flows generated from/(used in) operating activities 2,079 (905)
Investing activities
Purchase of property, plant, and equipment (51) (447)
Proceeds from the sale of fixed assets 521 -
Net cash generated from/(used in) investing activities 470 (447)
Financing activities
Bank borrowings drawn - 2,835
Bank borrowing disposed of 868 -
Bank borrowings repaid (539) (708)
Repayment of principal on lease liabilities (661) (983)
Repayment of interest on lease liabilities (37) (76)
Bank interest paid (347) (179)
Government assistance received 59 119
Net cash (used in)/generated from financing activities (657) 1,008
Net increase/(decrease) in cash and cash equivalents 1,892 (344)
Translation loss on cash and cash equivalents (3) (2)
Cash and cash equivalents at the beginning of the year 126 472
Cash and cash equivalents disposed of (1,781) -
Cash and cash equivalents at the end of the year 234 126
Cash on demand or on short term deposit 234 471
Bank overdrafts - (345)
Cash and cash equivalents at the end of the year 234 126
Consolidated Statement of Changes in Equity
for the year ended 31 May 2023
Share capital Capital redemption reserve Foreign exchange reserve Retained earnings Total
£000 £000 equity
£000 £000
£000
At 31 May 2021 3,279 1,113 2,185 7,984 14,561
Loss for the year - - - (3,249) (3,249)
Other comprehensive loss - - (135) - (135)
Total comprehensive loss - - (135) (3,249) (3,384)
At 31 May 2022 3,279 1,113 2,050 4,735 11,177
Loss for the year - - - (840) (840)
Other comprehensive income - - 102 - 102
Total comprehensive income/(loss) - - 102 (840) (738)
At 31 May 2023 3,279 1,113 2,152 3,895 10,439
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital The nominal value of issued ordinary shares in the Company.
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
1. Basis of preparation
The Group financial statements have been properly prepared using the
recognition and measurement principles of United Kingdom adopted International
Financial Reporting Standards ("UK adopted IFRS").
Going Concern
When considering its opinion about the application of the going concern basis
of preparation of the financial statements the Directors have given due
consideration to:
· The performance of the Group in the last financial year and the
robustness of forecasts for the next 24 months, which return the Group to
profit.
· The financing facilities available to the Group and the circumstances
in which these could be limited or withdrawn.
Financial performance and forecasts
Forecasts have been prepared for the 24-month period to May 2025 which
indicate a return to modest profit over that period. The Company has
sensitised these forecasts for a reduction in revenues for Hemmers and the
banking facilities remain adequate. The Directors are of the opinion that
this is a reasonable worst case, and the currently available facilities would
be sufficient in this scenario.
For purposes of the going concern assessment, the Group make estimates of
likely future cash flows which are based on assumptions given the
uncertainties involved. The key assumptions include (i) No significant
deterioration in general market conditions; (ii) No significant customer loss;
(iii) No significant increase in raw material prices (iii) Continued support
of lenders. These assumptions are made by management based on recent
performance, external forecasts and management's knowledge and expertise of
the cashflow drivers. Management continually monitors the Group's cash
balances and forecasts cash flows, including stress testing in respect of the
timing of those cash flows.
Financing facilities
The operating business of the Group, Hemmers which is located in Germany.
The Parent Company, which has no borrowing facilities, is located in the UK.
Hemmers has four sources of funding:
· Term loans which have funded property purchases. These are repayable
in instalments over the term as detailed in note 6. They are secured over the
associated properties and that security could be called in the event that the
business defaulted on repayment.
· A maximum working capital facility of €11m, restricted to the
borrowing base which is calculated as 70% of eligible inventory and 80% of
eligible debtors. In the financial year 2023, this resulted in average
availability of €8.4m (2022: €7.7m) with a range of €7.2m to €10.0m
(2022: €6.5m to €8.8m) and minimum headroom of €1.0m (2022: €3.2m) in
the year. In the forecast period to 31 May 2025, the estimated availability
range is €7m to €8.8m and the minimum headroom €0.3m. The covenants on
this facility are an equity ratio which must exceed 50% of gross assets at the
financial year end and profit for the previous six months to exceed
€121,000. At 31 May 2023, the ratio was 52% and the previous six months
profit was €347,000. The facility is committed until 31 May 2024.
· A further working capital facility of €1m secured on working
capital which was fully drawn at the year end. The facilities are uncommitted,
but the bank is obliged to give reasonable notice of any change.
· A €3m Parent Company loan which is currently subordinated to the
working capital facility.
The Directors consider there will be sufficient headroom available in the
Hemmers working capital facility and, therefore, the Directors are of the
opinion that it is appropriate to apply the going concern basis of preparation
to the financial statements.
However, the Directors acknowledge that the volatile global situation could
have an impact on the future trading result of Hemmers and in turn could
affect the ability of the Group to meet its forecasts and therefore comply
with banking covenants in downside scenarios. In addition, the Group has
borrowing facilities which are due for renewal within one year of the date of
approval of these financial statements, which the Group relies on to operate
as a going concern. The Directors will look to renew the existing facilities
when they are due for renewal, although acknowledge the conditions noted above
give rise to a material uncertainty around the going concern of the Group.
2. Dividends
The Directors do not recommend the payment of a dividend in 2023 (2022:
£nil).
3. Loss per share
Year ended 31 May 2023
Loss per share Discontinued Continuing Total
operations operations Group
Numerator
Total loss for the year £79,000 £761,000 £840,000
Denominator
Weighted average number of shares 27,320,843 27,320,843 27,320,843
Basic and diluted loss per share 0.3p 2.8p 3.1p
Year ended 31 May 2022
Loss per share Discontinued Continuing Total
operations operations Group
Numerator
Total loss for the year £2,370,000 £879,000 £3,249,000
Denominator
Weighted average number of shares 27,320,843 27,320,843 27,320,843
Basic and diluted loss per share 8.7p 3.2p 11.9p
Since there are no outstanding share options, there is no difference between
basic and diluted earnings per share.
4. Discontinued operations
On 7 October 2022, the German Courts accepted Hemmers' management decision to
place its subsidiary KMR into an insolvency process. The insolvency process
is ongoing although full control passed to the insolvency administrator on 1
January 2023 and at that point KMR ceased to be a subsidiary within the Group.
The gain has arisen due to the assets being transferred to the insolvency
administrator and any IFRS adjustments reversed. There was no tax impact on
the gain which arose on transfer.
KMR balance sheet at insolvency date IFRS adj Total
£000
£000 £000
Fixed assets (136) 133 (3)
Current assets less current liabilities 254 (213) 41
Finance lease liability - 1,360 1,360
Provision - (347) (347)
118 933 1,051
Cash (1,781) - (1,781)
Loan 868 - 868
Net cash effect (913) - (913)
(Loss)/gain on transfer (795) 933 138
5. Segmental information
Year ended 31 May 2023 Discontinued operations Continuing operations Total
KMR Hemmers Inter segmental Parent Company Group
£000 £000
£000 £000 £000
External revenue 3,527 24,290 - - 27,817
Inter-segmental revenue 3 416 (419) - -
Cost of sales (3,252) (19,550) 419 - (22,383)
Gross profit 278 5,156 - - 5,434
Distribution costs (690) (1,513) - - (2,203)
Admin expenses 363 (4,171) 127 (229) (3,911)
Other income 17 280 (127) - 171
Operating loss (32) (248) - (229) (509)
Finance expense (47) (337) - - (384)
Internal interest - (208) - 208 -
Loss before tax (79) (793) - (21) (893)
At 31 May 2023 Discontinued operations Continuing operations Total
KMR Hemmers Adj Parent Company Group
£000
£000 £000 £000 £000
Total assets - 15,572 - 2,819 18,391
Total liabilities - (7,852) - (100) (7,952)
Total net assets - 7,720 - 2,719 10,439
Year ended 31 May 2022 Discontinued operations Continuing operations Total
KMR Hemmers Inter segmental Parent Company Group
£000 £000
£000 £000 £000
External revenue 5,592 23,998 - - 29,590
Inter-segmental revenue - 1,069 (1,069) - -
Cost of sales (4,551) (20,627) 1,057 - (24,121)
Gross profit/(loss) 1,041 4,440 (12) - 5,469
Distribution costs (1,082) (1,401) - - (2,483)
Admin expenses (2,268) (3,763) 194 (286) (6,123)
Other income 32 309 (194) - 147
Operating loss (2,277) (415) (12) (286) (2,990)
Finance expense (93) (162) - - (255)
Internal interest - (204) - 204 -
Loss before tax (2,370) (781) (12) (82) (3,245)
At 31 May 2022 Discontinued operations Continuing operations Total
KMR Hemmers Adj Parent Company Group
£000 £000
£000 £000 £000
Total assets 2,819 17,392 (123) 2,811 22,899
Total liabilities (3,540) (8,091) - (91) (11,722)
Total net (liabilities)/assets (721) 9,301 (123) 2,720 11,177
6. Loans and borrowings
The book value of loans and borrowings are as follows:
31 May 2023 31 May 2022
£000 £000
Current
Secured bank loans 5,502 5,671
Non - current
Secured bank loans 544 836
Total loans and borrowings 6,046 6,507
Current loans and borrowings
At 31 May 2023 current loans and borrowings of £5,502,000 (2022: £5,671,000)
comprise short term loans of £5,201,000 (2022: £5,373,000) and instalments
due on long term loans detailed below of £301,000 (2022: £298,000). The
interest rate on the short-term loans ranges from 1.5% to 3% (2022: 1.25% to
3%) and these loans are secured on working capital of Hemmers. The short-term
loans are drawn down by Hemmers against short-term borrowing facilities of up
to a maximum of £10.3m (€12m). At 31 May 2023, the total borrowing facility
available totalled £7.1m (€8.2m) of which £5.2m (€6m) has been utilised
including any overdrafts, therefore the headroom within the facility was
£1.9m (€2.2m). Neither the Parent Company nor its subsidiary Hemmers have
any other borrowing facilities. The bank borrowing facilities are reviewed
annually every May and remain in place for Hemmers for the forthcoming year.
Non-current loans and borrowings
Non-current loans were drawn down in 2016 and 2017 to finance developments at
the Hemmers warehouses in Nordhorn.
The Group's loans and borrowings are within the accounts of Hemmers. They are
denominated in Euros, and their principal terms are as follows:
Fixed Repayment Final repayment date 31 May 2023 31 May 2022
interest profile £000 £000
rate
Loan 1 1.65% Equal quarterly instalments September 2025 358 590
Loan 2 1.05% Equal quarterly instalments March 2026 186 246
Non-current loans 544 836
7. Other information
The financial information in this financial results announcement has been
prepared by the Directors using the recognition and measurement principles of
United Kingdom adopted International Financial Reporting Standards ("UK
adopted IFRS"). The financial information for the year ended 31 May 2023 does
not constitute the statutory accounts of the Company for 2022 and 2023 but are
extracted from the audited accounts.
The statutory accounts for the year ended 31 May 2023 and 31 May 2022 have
been reported on by MHA, Statutory Auditor. The Independent Auditor's Report
on the Annual Report and Financial Statements for 2023 is qualified and for
2022 unqualified and did not draw attention to any matters by way of emphasis.
Both the Financial Statements for 2023 and 2022 did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditor's
Report on the Annual Report and Financial Statements for the year ended 31 May
2023 was qualified on the basis that they were unable to obtain sufficient
audit evidence in respect of the subsidiary KMR and its performance, as stated
within the Consolidated Statement of Comprehensive Income under discontinued
operations. Except for the qualification noted above the Independent Auditor's
Report on the Annual Report and Financial Statements for the year ended 31 May
2023 did not contain a statement under section 498(2) of the Companies Act
2006 or section 498(3).
In auditing the financial statements for the year ended 31 May 2023, the Group
Auditors have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, the Independent Auditor's Report draws attention to note 2 in the
Group financial statements (note 1 above) which states that the Group and
Parent Company incurred substantial losses during the year and that the Group
and Parent Company's operational existence is dependent on the continued
support from the Group's bank facilities and the eventual return to
profitability. The impact of this gives rise to a material uncertainty around
the going concern of the Group. The auditor's opinion is unqualified and not
modified in respect of this matter. An extract from the Independent Auditor's
Report is set out below:
We draw your attention to note 2 in the financial statements which states that
the Group and Parent Company incurred substantial losses during the year and
that the Group and Parent Company's operational existence is dependent on the
continued support from the Group's bank facilities and the eventual return to
profitability.
The impact of this together with other matters set out in the note, indicate
that a material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern. Our opinion is not modified in
respect of this matter. In auditing the financial statements, we have
concluded that the Directors' use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of
the Directors' assessment of the Group and Parent Company's ability to
continue to adopt the going concern basis of accounting included:
Our evaluation of the Directors' assessment of the Group's and the Parent
Company's ability to continue to adopt the going concern basis of accounting
included:
· The consideration of inherent risks to the Group's operations and
specifically its business model.
· The evaluation of how those risks might impact on the Group's
available financial resources.
· Review of the mathematical accuracy of the cashflow forecast
model prepared by management and corroboration of key data inputs to
supporting documentation for consistency of assumptions used with our
knowledge obtained during the audit.
· Challenging management for reasonableness of assumptions in
respect of the timing and quantum of cash receipts and payments included in
the cash flow model.
· Holding discussions with management regarding future financing
plans, corroborating these where necessary and assessing the impact on the
cash flow forecast.
· Review of the Group's external debt exposure to determine if any
future repayments have been included within the Group's cash flow projections.
· Holding discussions with management and completing reviews of any
events after the reporting period to identify if these may impact on the
Group's ability to continue as a going concern.
The statutory accounts for the year ended 31
May 2022 have been filed with the Registrar of Companies. The statutory
accounts for the year ended 31 May 2023 will be delivered to the Registrar of
Companies following the Annual General Meeting. The Annual Report and
Financial Statements giving notice of the 2023 Annual General Meeting, have
been today published on the Group's website at www.leedsgroup.plc.uk
(http://www.leedsgroup.plc.uk) and have been sent to those shareholders who
have elected to receive a hard copy of the Annual Report and Financial
Statements by the post.
The Annual General Meeting will be held at
2.15pm on 22 November 2023 at the Radisson Blu Hotel, Chicago Avenue,
Manchester Airport, M30 3RA.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and has been arranged for release by Jan G Holmstrom,
Non-Executive Chairman. The Directors of the Company are responsible for the
release of this announcement.
Enquiries:
Leeds Group plc
Cairn Financial Advisers LLP (nominated adviser)
Dawn Henderson - 01937 547877
Liam Murray/Sandy
Jamieson - 020 7213 0880
Note:
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 a guarantee 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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