Half Yearly Report

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 Saarbrücken 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 (30 November 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

 


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