Leeds Group Regulatory News (LDSG)

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

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

Unaudited Consolidated Statement of Financial Position

Unaudited Consolidated Cash Flow Statement

Unaudited Consolidated Statement of Changes in Equity

The following describes the nature and purpose of each reserve within equity:

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:

3. Analysis of net bank debt

4. Segmental information

Chinoh-Tex, Hemmer's China based subsidiary, ceased trading in November 2019 and so is reported as a discontinued operation.

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.