Last checked at 10 Jan 2012 07:00
LEEDS GROUP PLC
Interim Results for the six months ended 30 November 2011
STATEMENT BY THE GROUP CHAIRMAN, KATHRYN DAVENPORT
I am pleased to report that Leeds Group plc ("the Group") made a profit after tax of £481,000 in the six month period ended 30th November 2011, compared with £124,000 in the corresponding period of last year and £483,000 in the eight months ended 31 May 2011. Earnings per share increased to 1.68 pence (2010: 0.43 pence) reflecting the increased profit and the reduced number of shares in issue.
Revenue at Hemmers Europe, the Group's German based operating subsidiary, was £13,908,000 (2010: £13,986,000). Sales volumes were 20% down on last year as a result of generally depressed levels of consumer spending and the high price of cotton goods, which has in the last few months begun to fall back closer to the levels before the extraordinary surge in the commodity price that began some fifteen months ago. We increased our fabric sales prices to preserve satisfactory rates of margin and this has resulted in revenue in line with that of the corresponding period of last year. This, together with reductions in distribution costs and other overhead expense, led to a profit before tax for Hemmers Europe of £706,000 (2010: £267,000). Of this profit improvement of £439,000, £329,000 was attributable to the change in the necessary IFRS adjustment on the marking to market of financial derivatives.
Total metres sold in the period by ChinohTex, the Chinese subsidiary of Hemmers, increased by 34% over the corresponding period last year, and in terms of RMB external and internal sales revenues grew by 22% and 38% respectively. Although profitability at ChinohTex remains modest it performs invaluable work to assist the European operation through its purchasing strengths and product inspection prior to shipment. The directors remain satisfied with the progress being made in China.
Net asset value per share (excluding shares held in treasury) at 30 November 2011 was 45.7 pence (2010: 43.7 pence) inclusive of goodwill. The seasonal growth in working capital of £841,000 was substantially lower than the previous year's figure of £1,577,000. The combination of profitable trading and excellent working capital control over the last twelve months has led to Group debt falling by £1,656,000 to £2,026,000 at 30 November 2011.
The Group continues to hold an investment in Dawson International Plc ("Dawson"). The Board noted the interim results for Dawson issued on 1 December 2011 showing profitable trading by the continuing operations and cash resources in excess of £5 million, but also showing a significant liability in two defined benefit pension schemes. The Leeds Group Board continues to believe that, subject to a satisfactory resolution of these pension issues, the current price of Dawson shares does not fully reflect its longer term value.
The Group lost a further appeal against the decision by Leeds City Council to classify the land owned by the Group at Haw Lane, Yeadon as a town or village green and is currently consulting its legal advisers to determine what further course of action may be open to have the land de-registered.
The Group has continued to use the authority granted to it to buy back shares into Treasury, although liquidity in Leeds Group shares has been limited and during the six month period, the Group purchased only 25,000 shares. In line with previous decisions, the Board does not propose an interim dividend.
The economic environment remains challenging, despite the recent fall in the cost of cotton goods. There is no doubt that our customers are buying less fabric than usual this year, although we see no evidence that we are losing significant volumes of business to competitors. It remains to be seen whether order levels pick up as the year progresses.
As ever, thanks are due to staff throughout the Group for their unstinting efforts in the period covered by this report.
Kathryn Davenport
Chairman
10 January 2012
Enquiries: |
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Leeds Group plc | Citigate Dewe Rogerson | Seymour Pierce Limited |
Kathryn Davenport, Chairman | Fiona Tooley | Sarah Jacobs |
Malcolm Wilson, Company Secretary | Tel: 0121 362 4035 or 07785 703523 | Tel: 020 7107 8008 |
Tel: 0113 285 4324 |
Unaudited Consolidated Statement of Comprehensive Income
for the 6 months ended 30 November 2011
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
Revenue |
14,755 |
14,669 |
19,019 |
Cost of sales |
(11,415) |
(11,555) |
(14,430) |
Gross profit |
3,340 |
3,114 |
4,589 |
Distribution costs |
(1,009) |
(1,082) |
(1,408) |
Administrative expenses |
(1,564) |
(1,620) |
(2,277) |
Profit from operations |
767 |
412 |
904 |
Finance expense |
(80) |
(181) |
(104) |
Finance income |
10 |
7 |
9 |
Profit before tax |
697 |
238 |
809 |
Tax expense |
(216) |
(114) |
(326) |
Profit for the period, attributable to the equity holders of the Company |
481 |
124 |
483 |
Other comprehensive income: |
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Translation differences on foreign operations |
(183) |
(119) |
134 |
Unrealised (loss)/gain taken to available-for-sale reserve |
(421) |
(486) |
162 |
Other comprehensive income for the period |
(604) |
(605) |
296 |
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Total comprehensive income for the period, attributable to the equity holders of the Company |
(123) |
(481) |
779 |
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 2011 | 6 months to 30 November 2010 | 8 months to 31 May 2011 |
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Basic and diluted (pence) | 1.68p | 0.43p | 1.67p |
Unaudited Consolidated Balance Sheet
at 30 November 2011
| As at 30 November 2011 £000 | As at 30 November 2010 £000 | As at 31 May 2011 £000 |
Assets |
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Non-current assets |
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Property, plant and equipment | 2,058 | 2,110 | 2,171 |
Intangible assets | 955 | 935 | 974 |
Available-for-sale investments | 712 | 809 | 1,133 |
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Total non-current assets | 3,725 | 3,854 | 4,278 |
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Current assets |
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Inventories | 6,817 | 6,751 | 7,219 |
Trade and other receivables | 7,253 | 7,730 | 6,424 |
Derivative financial assets | 32 | - | - |
Cash and cash equivalents | 1,859 | 2,345 | 2,264 |
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Total current assets | 15,961 | 16,826 | 15,907 |
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Total assets | 19,686 | 20,680 | 20,185 |
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Liabilities |
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Non-current liabilities |
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Loans and borrowings | (2,019) | (2,094) | (2,122) |
Deferred tax | (179) | - | (123) |
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Total non-current liabilities | (2,198) | (2,094) | (2,245) |
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Current liabilities |
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Trade and other payables | (2,345) | (1,791) | (2,547) |
Loans and borrowings | (1,866) | (3,933) | (1,916) |
Corporation tax liability | (181) | (123) | (133) |
Derivative financial liabilities | - | (115) | (120) |
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Total current liabilities | (4,392) | (5,962) | (4,716) |
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Total liabilities | (6,590) | (8,056) | (6,961) |
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TOTAL NET ASSETS | 13,096 | 12,624 | 13,224 |
Capital and reserves attributable to equity holders of the company |
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Share capital | 3,792 | 3,852 | 3,792 |
Capital redemption reserve | 600 | 540 | 600 |
Treasury share reserve | (515) | (572) | (510) |
Available-for-sale reserve | (269) | (172) | 152 |
Foreign exchange reserve | 1,719 | 1,528 | 1,902 |
Retained earnings | 7,769 | 7,448 | 7,288 |
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TOTAL EQUITY | 13,096 | 12,624 | 13,224 |
Unaudited Consolidated Cash Flow Statement
for the 6 months ended 30 November 2011
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
Cash flows from operating activities |
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Profit for the period | 481 | 124 | 483 |
Adjustments for: |
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Depreciation | 118 | 98 | 139 |
Movement in derivative financial assets and liabilities | (153) | 176 | (284) |
Translation gain/(loss) on cash and cash equivalents | 6 | (6) | 5 |
Finance expense | 80 | 181 | 104 |
Finance income | (10) | (7) | (9) |
Loss on sale of property, plant and equipment | - | 23 | 17 |
Income tax expense | 216 | 114 | 326 |
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Cash flows from operating activities before changes in working capital and provisions |
738 |
703 |
781 |
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Decrease/(increase) in inventories | 282 | 259 | 258 |
(Increase)/decrease in trade and other receivables | (937) | (2,072) | 901 |
(Decrease)/increase in trade and other payables | (186) | 236 | 1,051 |
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Cash (absorbed)/generated by operating activities | (103) | (874) | 2,991 |
Income taxes (paid)/recovered | (105) | 36 | (101) |
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Net cash flows from operating activities | (208) | (838) | 2,890 |
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Investing activities |
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Purchase of property, plant and equipment | (42) | (74) | (124) |
Sale of property, plant and equipment | - | 38 | 23 |
Bank interest received | 10 | 7 | 9 |
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Net cash used in investing activities | (32) | (29) | (92) |
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Financing activities |
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Purchase of treasury shares | (5) | - | (47) |
Proceeds from bank borrowings | - | 681 | - |
Repayment of bank borrowings | (80) | - | (2,575) |
Bank interest paid | (80) | (181) | (104) |
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Net cash used in financing activities | (165) | 500 | (2,726) |
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Net (decrease)/increase in cash and cash equivalents |
(405) |
(367) |
72 |
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Cash and cash equivalents at beginning of the period | 2,264 | 2,712 | 2,192 |
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Cash and cash equivalents at end of the period | 1,859 | 2,345 | 2,264 |
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 November 2011
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Available- for- sale reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
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At 1 June 2011 | 3,792 | 600 | (510) | 152 | 1,902 | 7,288 | 13,224 |
Total comprehensive income* | - | - | - | (421) | (183) | 481 | (123) |
Purchase of treasury shares | - | - | (5) | - | - | - | (5) |
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At 30 November 2011 | 3,792 | 600 | (515) | (269) | 1,719 | 7,769 | 13,096 |
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Available- for- sale reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
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At 1 June 2010 | 3,852 | 540 | (572) | 314 | 1,647 | 7,324 | 13,105 |
Total comprehensive income* | - | - | - | (486) | (119) | 124 | (481) |
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At 30 November 2010 | 3,852 | 540 | (572) | (172) | 1,528 | 7,448 | 12,624 |
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Available- for- sale reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
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At 1 October 2010 | 3,852 | 540 | (572) | (10) | 1,768 | 6,914 | 12,492 |
Total comprehensive income* | - | - | - | 162 | 134 | 483 | 779 |
Purchase of treasury shares | - | - | (47) | - | - | - | (47) |
Cancellation of treasury shares | (60) | 60 | 109 | - | - | (109) | - |
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At 31 May 2010 | 3,792 | 600 | (510) | 152 | 1,902 | 7,288 | 13,224 |
* The components of total comprehensive income are disclosed on page 2.
The following describes the nature and purpose of each reserve within equity:
Reserve | Description and purpose |
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Capital redemption reserve | Amounts transferred from share capital on redemption of issued shares |
Treasury share reserve | Cost of own shares held in treasury |
Available-for-sale reserve | Gains/(losses) arising on financial assets classified as available-for-sale |
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 |
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Interim results
for the 6 months ended 30 November 2011
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 2011 and 30 November 2010 are unaudited.
The financial information for the eight months ended 31 May 2011 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the eight months ended 31 May 2011 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statement for the eight months ended 31 May 2011 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 2011 | 6 months to 30 November 2010 | 8 months to 31 May 2011 |
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| 28,653,468 | 28,909,342 | 28,847,819 |
3. Reconciliation of movements in net debt
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
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(Decrease)/increase in cash & cash equivalents | (405) | (367) | 72 |
Proceeds from bank borrowings | - | (681) | - |
Repayment of bank borrowings | 80 | - | 2,575 |
Foreign currency translation differences on loans | 73 | 104 | (69) |
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(Increase)/decrease in net debt | (252) | (944) | 2,578 |
Net debt at beginning of period | (1,774) | (2,738) | (4,352) |
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Net debt at end of period | (2,026) | (3,682) | (1,774) |
4. Analysis of net debt
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
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Cash | 1,859 | 2,345 | 2,264 |
Overdrafts | - | - | - |
Loans repayable in less than one year | (1,866) | (3,933) | (1,916) |
Loans repayable in between one and five years | (2,019) | (2,094) | (2,122) |
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Net debt at end of period | (2,026) | (3,682) | (1,774) |
5. Segmental information
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
External revenue |
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Hemmers Europe | 13,908 | 13,986 | 18,138 |
Hemmers China | 847 | 683 | 881 |
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Total Group external revenue | 14,755 | 14,669 | 19,019 |
| 6 months to 30 November 2011 £000 | 6 months to 30 November 2010 £000 | 8 months to 31 May 2011 £000 |
Profit before tax |
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Hemmers Europe (local GAAP) | 493 | 386 | 520 |
IFRS adjustment - financial derivatives | 153 | (176) | 284 |
IFRS adjustment - goodwill amortisation | 60 | 57 | 79 |
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Hemmers Europe (IFRS) | 706 | 267 | 883 |
Hemmers China | 37 | 6 | 68 |
Unrealised profit in stock | (8) | (8) | 1 |
Holding companies | (38) | (27) | (143) |
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Group profit before tax | 697 | 238 | 809 |
| As at 30 November 2011 £000 | As at 30 November 2010 £000 | As at 31 May 2011 £000 |
Net assets |
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Hemmers Europe (local GAAP) | 8,239 | 7,499 | 7,963 |
IFRS adjustment - financial derivatives | 23 | (115) | (86) |
IFRS adjustment - goodwill amortisation | 431 | 475 | 397 |
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Hemmers Europe (IFRS) | 8,693 | 7,859 | 8,274 |
Hemmers China | 226 | 197 | 184 |
Unrealised profit in stock | (33) | (26) | (25) |
Holding companies | 4,210 | 4,594 | 4,791 |
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Group net assets | 13,096 | 12,624 | 13,224 |