Interim Results
Leeds Group PLC
14 May 2003
Issued on behalf of Leeds Group plc
Date: Wednesday, 14th May 2003
Embargoed: 7.00am
Leeds Group plc
Interim Results for the six months ended 31st March 2003
Profit before tax and exceptional items: £874,000 (2002: £195,000)
Earnings per share, before exceptional items: 2.2 pence (2002: 0.7
pence)
Sale of Nemesis SpA in March 2003 completes the withdrawal from
textile manufacturing. Exceptional loss on disposal of £4.9m plus
£7.9m of recycled goodwill.
The divestment programme has transformed textile division net debt of
£13.9m in March 2001 into a net cash surplus of £4.9m.
Board will shortly be seeking shareholder and court approval for a
reduction in the nominal value of the ordinary shares and a repayment
of capital to shareholders.
Positive outlook for the remainder of the year now that all seasonal
businesses have been divested.
'After three of the most difficult years in the Group's history, I am pleased to
report that the six months to 31st March 2003 were successful with significant
progress being achieved in our plans to re-focus the Group's activities.'
'The continuing businesses do not have the pronounced seasonality associated
with textile manufacture and although we do not anticipate that trading
conditions will improve dramatically in the short term, we do believe our
businesses can maintain their first half performance into the second half and
beyond. '
Bill Cran, Chairman
FULL STATEMENTS ATTACHED
Enquiries:
Leeds Group plc Citigate Dewe Rogerson Ltd
Malcolm Wilson, Group Managing Director Fiona Tooley
Today: 07801 224618 Today: 020 7282 8000
Thereafter: 0113 391 9000 Thereafter: 0121 455 8370
Mobile: 07785 703523
Dawn Bowler, Group Finance Director
Tel: 0113 391 9000
-2-
Leeds Group plc
Interim Results
STATEMENT BY THE CHAIRMAN, BILL CRAN
After three of the most difficult years in the Group's history, I am pleased to
report that the six months to 31st March 2003 were successful with significant
progress being achieved in our plans to re-focus the Group's activities. Profit
before tax and exceptional items increased substantially to £874,000 (2002:
£195,000).
The sale in March 2003 of Nemesis, our Italian fabric printing business, marked
the Group's final withdrawal from textile manufacture. As a consequence, the
Group has now been reclassified under the Speciality and Other Finance sector on
the Alternative Investment Market ('AIM').
Continuing Businesses
Profit before tax from continuing businesses was £560,000, almost four times the
£148,000 for 2002. The Group's continuing businesses comprise Leeds Leasing and
Hemmers-Itex, the fabric import and distribution business based in Germany. Both
businesses performed satisfactorily and profitability was boosted by a
significant reduction in unallocated central costs.
Leeds Leasing
As was indicated in the last Annual Report and Accounts, the transfer of certain
costs previously borne centrally has affected profits in Leeds Leasing, but it
is also true to say that the level of new business was short of our earlier
expectations. Pre-tax profit was £320,000 (2002: £451,000). Our customer base
faces many uncertainties at the present time, and in retrospect it is perhaps
unsurprising that new business was no greater than was achieved in the second
half of last year. Although the current high level of underwritten deals
awaiting completion suggests we could be more active in the second half, we
shall only write business that meets our requirements in terms of yield and our
strict underwriting criteria.
During the period, the Group completed the process of ring fencing Leeds
Leasing's debt which is now entirely without recourse to the parent Company. We
have also made good progress in our project to upgrade Leeds Leasing's computer
software and migrate to a more modern platform. The upgrade, which is on course
to be completed by the end of this financial year, will provide management
information of enhanced quality that will enable us to process all aspects of
lease administration much more efficiently.
Hemmers-Itex
Pre-tax profits in the first half of this year at Hemmers-Itex increased from
£117,000 in 2002 to £277,000. I am pleased to report that despite the closure of
the Itex operation in Holland, which was completed in November 2002, we have
successfully retained and are now servicing the vast majority of its customers
from our German facility. The integrated management information systems
installed in 2001 have played an important role in enabling us to handle a 50%
increase in throughput in Germany; even more important has been the willingness
and ability of our staff to rise to the challenge that this entailed.
Although consumer spending in Germany remains depressed, we are pleased to see
that our sales volumes are holding up. We have an excellent Winter Collection,
much of which is sourced from China, and which is attracting strong interest not
just from existing customers but also from large potential new customers. Since
the collection had been assembled by last Christmas, we do not believe the
recent outbreak of Severe Acute Respiratory Syndrome in the Far East will affect
our ability to meet our second half sales targets.
-3-
Leeds Group plc
Interim Results
STATEMENT BY THE CHAIRMAN, BILL CRAN continued
Discontinued Businesses
Nemesis recorded higher sales than the comparable period last year and benefited
from favourable exchange rates that served to reduce the landed cost of cotton
cloth. Pre-tax profit up to the date of disposal totalled £314,000. This
represented a substantial improvement on the loss of £145,000 in 2002, but
nevertheless fell short of the levels of previous years, and the level required
to justify our continued ownership of Nemesis.
We have charged an exceptional loss on disposal of £12.8 million, but since this
includes recycled goodwill of £7.9 million, the reduction to shareholders funds
is restricted to £4.9 million, which, by coincidence, is also the value of the
reduction in the Group's debt that has been achieved through the Nemesis
divestment.
Trading Outlook
The continuing businesses do not have the pronounced seasonality associated with
textile manufacture and although we do not anticipate that trading conditions
will improve dramatically in the short term, we do believe our businesses can
maintain their first half performance into the second half and beyond.
Capital Reconstruction
We expect to write to shareholders shortly setting out the Board's proposals to
reduce the Group's capital. We intend to seek shareholder and court approval
for a reduction in the nominal value of the ordinary shares and a repayment of
capital to shareholders. At the same time, we would seek approval to use the
balance on the share premium account to offset the deficit on reserves, thereby
creating distributable reserves, so that, with the Group restored to profit, we
can introduce a progressive dividend policy in the future.
-4-
Leeds Group plc
Interim Results
Consolidated Profit and Loss Account
Restated
Six months to Six months to Twelve months to
31st March 31st March 30th September
2003 2002 2002
£000 £000 £000
Turnover
---------- ---------- -----------
Continuing operations 8,358 7,722 16,368
Discontinued operations 8,194 11,823 17,105
---------- ---------- -----------
16,552 19,545 33,473
Cost of sales (11,791) (14,304) (24,938)
---------- ---------- -----------
Gross profit 4,761 5,241 8,535
Distribution costs (653) (645) (1,158)
Administrative expenses (2,720) (3,640) (7,692)
Operating profit/(loss)
---------- ---------- -----------
Continuing operations 944 736 1,536
Discontinued operations 444 220 (531)
------ ----- ------
1,388 956 1,005
Exceptional items - - (1,320)
---------- ---------- -----------
1,388 956 (315)
Profit on sale of land and - - 295
buildings ---------- ---------- -----------
Loss on sale or termination of a
business operation (12,832) (4,731) (5,275)
---------- ---------- -----------
Loss on ordinary activities before (11,444) (3,775) (5,295)
interest
Net interest payable (514) (761) (1,318)
---------- ---------- -----------
Loss on ordinary activities before (11,958) (4,536) (6,613)
taxation
Taxation (73) 77 710
---------- ---------- -----------
Unrecovered loss (12,031) (4,459) (5,903)
Earnings/(loss) per share
before exceptional items 2.2 p 0.7 p (0.7)p
exceptional items (35.1)p (12.9)p (15.5)p
---------- ---------- -----------
after exceptional items (32.9)p (12.2)p (16.2)p
========== ========== ===========
Consolidated statement of total recognised gains and losses
Loss for the period (12,031) (4,459) (5,903)
Foreign currency translation 427 (96) 91
differences ---------- ---------- -----------
Total recognised gains and losses (11,604) (4,555) (5,812)
for the period ========== ========== ===========
-5-
Leeds Group plc
Interim Results
Consolidated Balance Sheet
Restated
As at As at As at
31st March 31st March 30th September
2003 2002 2002
£000 £000 £000
Fixed assets
Intangible assets 1,091 1,069 1,053
Tangible assets 437 11,494 5,894
---------- --------- -----------
1,528 12,563 6,947
Current assets
Stocks 3,746 7,394 7,235
---------- --------- -----------
Debtors 6,448 12,516 11,169
Deferred taxation 1,130 842 1,050
Finance lease debtors 18,196 18,471 18,335
---------- --------- -----------
Total debtors 25,774 31,829 30,554
Cash at bank and in hand 8,359 3,312 8,535
---------- --------- -----------
37,879 42,535 46,324
Creditors: amounts falling due within (15,981) (21,957) (24,844)
one year ---------- --------- -----------
Net current assets 21,898 20,578 21,480
Of which:
---------- --------- -----------
due within one year 9,597 9,406 8,820
due after more than one year 12,301 11,172 12,660
---------- --------- -----------
---------- --------- -----------
Total assets less current 23,426 33,141 28,427
liabilities
Creditors: amounts falling due after
more than one year (5,217) (9,946) (6,489)
---------- --------- -----------
Net assets 18,209 23,195 21,938
========== ========= ===========
Share capital and reserves:
Called up equity share capital 9,150 9,150 9,150
Share premium account 15,832 15,832 15,832
Profit and loss account (6,773) (1,787) (3,044)
---------- --------- -----------
Equity shareholders' funds 18,209 23,195 21,938
========== ========= ===========
Reconciliation of movements in shareholders' funds
Loss for the period (12,031) (4,459) (5,908)
Goodwill written back 7,875 3,888 3,888
Exchange differences 427 (96) 91
---------- --------- -----------
Net transfer from shareholders' (3,729) (667) (1,924)
funds
Shareholders' funds at beginning of 21,938 23,862 23,862
the period ---------- --------- -----------
Shareholders' funds at end of the 18,209 23,195 21,938
period ========== ========= ===========
-6-
Leeds Group plc
Interim Results
Consolidated Cash Flow Statement
Six months to Six months to Twelve months to
31st March 31st March 30th September
2003 2002 2002
£000 £000 £000
Net cash inflow from operating 1,358 1,289 3,148
activities
Returns on investments and servicing (514) (761) (1,318)
of finance
Taxation 765 (173) (385)
Capital expenditure and financial 455 (52) 4,604
investment
Acquisitions and disposals 5,408 4,089 4,625
---------- ---------- ------------
Net cash inflow before financing 7,472 4,392 10,674
Financing (1,721) 66 (2,635)
---------- ---------- ------------
Increase in cash in the period 5,751 4,458 8,039
========== ========== ============
Reconciliation of net cash flow to movement
in net debt
Increase in cash in the period 5,751 4,458 8,039
Cash inflow/(outflow) from debt and 1,721 (66) 2,635
lease financing ---------- ---------- ------------
Change in net debt resulting from 7,472 4,392 10,674
cash flows
Translation difference (648) 153 (173)
---------- ---------- ------------
Movement in net debt in the period 6,824 4,545 10,501
Net debt at the beginning of the (15,195) (25,696) (25,696)
period ---------- ---------- ------------
Net debt at the end of the period (8,371) (21,151) (15,195)
========== ========== ============
Reconciliation of operating profit to
operating cash flows
Operating profit/(loss) 1,388 956 (315)
Depreciation and amortisation of 236 539 856
fixed assets
Impairment of tangible fixed assets - - 294
and goodwill
Amortisation of goodwill 57 40 86
(Profit)/loss on sale of tangible (3) 36 86
fixed assets
Decrease in stocks 1,395 1,489 1,822
(Increase)/decrease in debtors (1,492) 1,462 3,062
(Decrease) in creditors (362) (1,464) (1,110)
Decrease/(increase) in finance lease 139 (1,769) (1,633)
debtors ---------- ---------- ------------
Net cash inflow from operating 1,358 1,289 3,148
activities ========== ========== ============
-7-
Leeds Group plc
Interim Results
Notes to the accounts
1. The interim results, which are not audited, have been prepared on the basis
of the accounting policies set out in the 2002 Annual Report. The figures for
the year ended 30th September 2002 have been abridged from the Group's full
accounts, which have been filed with the Registrar of Companies and on which the
Company's auditors gave an unqualified report.
2. Earnings per share have been calculated on an average of 36,598,603 (2002:
36,598,603) ordinary shares of 25p in issue during the period.
3. Nemesis SpA was sold on the 12th March 2003 and the results for this company
have been shown as discontinued activities within the accounts. The loss on
termination of this business can be analysed as follows:
£000
Loss on sale 4,957
Goodwill written back 7,875
------
12,832
======
4. The comparative figures for March 2002 have been restated to reflect the
adoption of FRS 19 on deferred taxation.
5. The table below sets out a segmental analysis of the Group's operations.
Turnover Profit/(loss) before taxation
and exceptional items
Six Six Twelve Six Six Twelve
months to months to months to months to months to months to
31st 31st 30th 31st 31st 30th
March March September March March September
2003 2002 2002 2003 2002 2002
£000 £000 £000 £000 £000 £000
Leeds Leasing 1,696 1,713 3,634 740 912 1,891
Hemmers-Itex 6,662 6,009 12,734 461 310 570
Central costs - - - (257) (486) (925)
-------- -------- ---------- -------- -------- ----------
Continuing 8,358 7,722 16,368 944 736 1,536
operations
Discontinued
operations
in 2003 8,194 7,921 12,961 444 28 (696)
in 2002 - 3,902 4,144 - 192 165
-------- -------- ---------- -------- -------- ----------
8,194 11,823 17,105 444 220 (531)
-------- -------- ---------- -------- -------- ----------
16,552 19,545 33,473 1,388 956 1,005
======== ======== ==========
Interest
-------- -------- ----------
Leasing (420) (461) (872)
Textiles (94) (300) (446)
-------- -------- ----------
(514) (761) (1,318)
-------- -------- ----------
874 195 (313)
======== ======== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 5 hours ago Sage Group
- 5 hours ago Tullow Oil
- 5 hours ago Howden Joinery Group
- 5 hours ago BP
- 6 hours ago Technology Minerals