Last checked at 22 Jan 2018 07:00
Leeds Group plc
("Leeds Group" or the "Company")
Interim Results for the six months ended 30 November 2017
Leeds Group is pleased to report the Company's interim results for the six months ended 30 November 2017.
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
I am pleased to present the interim report of Leeds Group plc ("the Group") for the six months ended 30 November 2017.
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 55% of sales are to retailers, with remaining sales activities divided between the wholesale and garment manufacturing sectors.
The Group achieved sales in the period of £22,180,000 (2016: £21,057,000) and made a profit after tax of £404,000 (2016: £848,000). The result for the period to 30 November 2016 was boosted by currency gains of £392,000 as compared to currency losses for the period to 30 November 2017 of £34,000. Earnings per share were 1.5 pence (2016: 3.1 pence).
Fabric sales at Hemmers, increased to €23,087,000 (2016: €22,521,000). Growth was achieved in the retail and garment manufacturing sectors but this was offset by reduced sales in the wholesale sector. Profit also increased to €722,000 (2016: €616,000).
The KMR joint venture in which we have a 50% share continues to trade in line with expectations. Sales increased to €5,334,000 (2016: €5,083,000). The operating loss was reduced to €126,000 (2016: €165,000) in the seasonally weaker first half. The business is expected to deliver an increased full year profit despite the costs associated with its continued growth. This has a consequential pull-through benefit for Hemmers.
Chinoh-Tex, Hemmers subsidiary based in Shanghai, achieved external sales revenue of €2,134,000 (2016: €2,872,000). The reduced turnover resulted in a pre-tax loss of €32,000 (2016: profit of €170,000). Trading has been difficult and therefore infrastructure and administrative costs are being reduced to align to this reduced demand. Though relatively small Chinoh-Tex also provides valuable assistance to its European parent in terms of purchasing, quality inspection and bulk shipping of material bought in China.
Group net debt was £6,347,000 at 30 November 2017 (30 November 2016: £5,549,000; 31 May 2017: £5,520,000). The increased net debt is partly because of the additional property investment made in Nordhorn last spring. Net cash outflow in the six months ended 30 November 2017 reflects the seasonal increase in working capital and working capital is expected to fall from this seasonally high level during the second half-year.
The Board of Directors do not propose an interim dividend, given the recent property investments at Hemmers in Nordhorn.
The Board remains confident, despite the disappointing first half, that the underlying trading result for the full year will be better than last year, partly backed by a strong order book at Hemmers.
As ever, I offer thanks to our employees throughout the Group for their great commitments.
Jan G Holmstrom
Chairman
22 January 2018
Unaudited Consolidated Statement of Comprehensive Income
for the 6 months ended 30 November 2017
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
Revenue |
22,180 |
21,057 |
41,053 |
Cost of sales |
(17,320)
|
(16,492) |
(32,468) |
Gross profit | 4,860 | 4,565 | 8,585 |
Distribution costs | (1,413) | (1,308) | (2,610) |
Administrative expenses | (2,684) | (2,036) | (4,398)
|
Profit from operations | 763 | 1,221 | 1,577 |
Finance expense | (88) | (83) | (163) |
Finance income |
- |
1 |
1 |
Share of post-tax (loss)/profit of joint venture |
(47)
|
(65) |
33 |
Profit before tax | 628 | 1,074 | 1,448 |
Tax expense |
(224)
|
(226) |
(334) |
Profit for the period attributable to the equity holders of the Parent Company |
404 |
848 |
1,114 |
Other comprehensive income: | |||
Translation differences on foreign operations | 143 | 1,269 | 1,707 |
Other comprehensive income for the period | 143 | 1,269 | 1,707 |
Total comprehensive income for the period attributable to the equity holders of the Company |
547 |
2,117 |
2,821 |
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 2017 | 6 months to 30 November 2016 | Year to 31 May 2017 | |
Basic and diluted (pence) | 1.5p | 3.1p | 4.1p |
Unaudited Consolidated Statement of Financial Position
at 30 November 2017
As at 30 November 2017 £000 | As at 30 November 2016 £000 | As at 31 May 2017 £000 | |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 8,470 | 7,444 | 8,452 |
Intangible assets | 1,068 | 946 | 1,055 |
Investment in joint venture | 795 | 642 | 832 |
Total non-current assets | 10,333 | 9,032 | 10,339 |
Current assets | |||
Inventories | 10,948 | 10,030 | 10,123 |
Trade and other receivables | 6,820 | 7,633 | 6,753 |
Corporation tax recoverable | 245 | 82 | 313 |
Derivative financial asset | 4 | 102 | - |
Cash and cash equivalents | 1,286 | 1,681 | 1,567 |
Total current assets | 19,303 | 19,528 | 18,756 |
Total assets | 29,636 | 28,560 | 29,095 |
Liabilities | |||
Non-current liabilities | |||
Loans and borrowings | (3,885) | (4,205) | (3,984) |
Deferred tax | (280) | (256) | (275) |
Total non-current liabilities | (4,165) | (4,461) | (4,259) |
Current liabilities | |||
Trade and other payables | (2,874) | (3,445) | (3,383) |
Loans and borrowings | (3,748) | (3,025) | (3,103) |
Derivative financial liability | - | - | (48) |
Total current liabilities | (6,622) | (6,470) | (6,534) |
Total liabilities | (10,787) | (10,931) | (10,793) |
TOTAL NET ASSETS | 18,849 | 17,629 | 18,302 |
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 | (798) | (767) | (798) |
Foreign exchange reserve | 2,492 | 1,911 | 2,349 |
Retained earnings | 12,763 | 12,093 | 12,359 |
TOTAL EQUITY | 18,849 | 17,629 | 18,302 |
Unaudited Consolidated Cash Flow Statement
for the 6 months ended 30 November 2017
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
Cash flows from operating activities | |||
Profit for the period | 404 | 848 | 1,114 |
Adjustments for: | |||
Depreciation | 331 | 294 | 531 |
Amortisation of intangible assets | - | - | 4 |
Finance expense | 88 | 83 | 163 |
Finance income | - | (1) | (1) |
Movement in derivative financial assets | (52) | (145) | 4 |
Loss on sale of property, plant and equipment | - | - | 3 |
Share of post-tax loss/(profit) of joint venture | 47 | 65 | (33) |
Income tax expense | 224 | 226 | 334 |
Cash flows from operating activities before changes in working capital and provisions |
1,042 |
1,370 |
2,119 |
Increase in inventories | (716) | (1,434) | (1,271) |
Increase in trade and other receivables | (6) | (1,234) | (211) |
(Decrease)/increase in trade and other payables | (572) | 668 | 475 |
Cash (absorbed)/generated by operating activities | (252) | (630) | 1,112 |
Income taxes paid | (152) | (517) | (838) |
Net cash flows from operating activities | (404) | (1,147) | 274 |
Investing activities | |||
Purchase of property, plant and equipment | (251) | (1,248) | (2,280) |
Purchase of intangible assets | - | (84) | (83) |
Increase in joint venture investment | - | - | (68) |
Bank interest received | - | 1 | 1 |
Net cash used in investing activities | (251) | (1,331) | (2,430) |
Financing activities | |||
Purchase of treasury shares | - | - | (31) |
Net drawdown of bank borrowings | 464 | 2,511 | 2,191 |
Bank interest paid | (88) | (83) | (163) |
Net cash generated by financing activities | 376 | 2,428 | 1,997 |
Net decrease in cash and cash equivalents | (279) | (50) | (159) |
Translation (loss)/gain on cash and cash equivalents | (2) | 119 | 114 |
Cash and cash equivalents at beginning of the period | 1,567 | 1,612 | 1,612 |
Cash and cash equivalents at end of the period | 1,286 | 1,681 | 1,567 |
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 November 2017
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
At 1 June 2017 | 3,792 | 600 | (798) | 2,349 | 12,359 | 18,302 |
Profit for the period | - | - | - | - | 404 | 404 |
Other comprehensive income | - | - | - | 143 | - | 143 |
At 30 November 2017 | 3,792 | 600 | (798) | 2,492 | 12,763 | 18,849 |
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
At 1 June 2016 | 3,792 | 600 | (767) | 642 | 11,245 | 15,512 |
Profit for the period | - | - | - | - | 848 | 848 |
Other comprehensive income | - | - | - | 1,269 | - | 1,269 |
At 30 November 2016 | 3,792 | 600 | (767) | 1,911 | 12,093 | 17,629 |
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
At 1 June 2016 | 3,792 | 600 | (767) | 642 | 11,245 | 15,512 |
Profit for the year | - | - | - | - | 1,114 | 1,114 |
Other comprehensive income | - | - | - | 1,707 | - | 1,707 |
Transaction with shareholders: | ||||||
Purchase of treasury shares | - | - | (31) | - | - | (31) |
At 31 May 2017 | 3,792 | 600 | (798) | 2,349 | 12,359 | 18,302 |
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 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 2017 and 30 November 2016 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 directors are in the process of assessing the potential impact of the following forthcoming accounting standards:
IFRS9 (Financial instruments)
IFRS 15 (Revenue from contracts with customers)
Any changes, as a result of these new standards, are expected to impact the comparative results shown in the 31 May 2019 financial statements.
The financial information for the year ended 31 May 2017 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2017 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 2017 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 2017 | 6 months to 30 November 2016 | Year to 31 May 2017 | |
27,350,843 | 27,435,843 | 27,422,227 |
3. Reconciliation of movements in net bank debt
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
Decrease in cash & cash equivalents | (279) | (50) | (159) |
Translation (loss)/gain on cash and cash equivalents | (2) | 119 | 114 |
Increase in loans | (464) | (2,511) | (2,191) |
Translation loss on loans | (82) | (461) | (638) |
Net cash outflow | (827) | (2,903) | (2,874) |
Net bank debt at beginning of period | (5,520) | (2,646) | (2,646) |
Net bank debt at end of period | (6,347) | (5,549) | (5,520) |
4. Analysis of net bank debt
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
Cash | 1,286 | 1,681 | 1,567 |
Loans repayable in less than one year | (3,748) | (3,025) | (3,103) |
Loans repayable in more than one year | (3,885) | (4,205) | (3,984) |
Net bank debt at end of period | (6,347) | (5,549) | (5,520) |
5. Segmental information
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
External revenue | |||
Hemmers Europe | 20,501 | 19,008 | 37,554 |
Hemmers China | 1,679 | 2,049 | 3,499 |
Total Group external revenue | 22,180 | 21,057 | 41,053 |
6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 | |
Profit before tax | |||
Hemmers Europe (local GAAP) | 722 | 616 | 1,012 |
Share of post-tax (loss)/profit of JV | (47) | (65) | 33 |
IFRS adjustment - financial derivatives | 4 | 89 | 44 |
Hemmers Europe (IFRS) | 679 | 640 | 1,089 |
Hemmers China | (29) | 143 | 47 |
Unrealised profit in stock | - | (2) | 12 |
Holding company | (22) | 293 | 300 |
Group profit before tax | 628 | 1,074 | 1,448 |
| 6 months to 30 November 2017 £000 | 6 months to 30 November 2016 £000 | Year to 31 May 2017 £000 |
Net assets | |||
Hemmers Europe (local GAAP) | 14,024 | 12,660 | 13,415 |
IFRS adjustment - financial derivatives | 3 | 33 | - |
IFRS adjustment - goodwill amortisation | 705 | 618 | 697 |
Hemmers Europe (IFRS) | 14,732 | 13,311 | 14,112 |
Hemmers China | 1,056 | 1,223 | 1,106 |
Unrealised profit in stock | (25) | (37) | (24) |
Holding company | 3,086 | 3,132 | 3,108 |
Group net assets | 18,849 | 17,629 | 18,302 |