REG - Leeds Group PLC - Half-year Report
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.
2. Ordinary shares of 12 pence each used in the calculation of earnings per share:
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR UAVSRRUUAOAR
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