Last checked at 5 Jan 2015 07:00
LEEDS GROUP PLC
Interim Results for the six months ended 30 November 2014
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 2014.
The Group achieved sales in the period of £18,581,000 (2013: £18,461,000) and made a profit after tax of £701,000 (2013: £650,000) Earnings per share were 2.5 pence (2013: 2.3 pence). These reported sales and profit figures appear very similar to those of last year, but in reality the translation effect of a significantly weaker Euro disguises the very real progress that both of our overseas trading companies have made. As well as diminishing the translated sterling values of sales and profit, the weakness of the Euro gave rise to the negative translation difference on opening net assets of £169,000 disclosed in other comprehensive income.
In Euro terms, revenue at Hemmers Europe, the Group's German based operating subsidiary, increased by 7.4% to €20,775,000 (2013: €19,339,000). Sales volume increased by 8.2% to 6.9 million metres. The increase in overheads was restricted to 3.5% and consequently pre-tax profit increased by 10.1% to €1,066,000 (2013: €968,000).
External sales revenues in local currency and volumes at ChinohTex, the Chinese subsidiary of Hemmers, grew by 9.3% and 13.5% respectively over the corresponding period last year. As was also the case last year, additional employees were recruited and there were other overhead expense increases to support additional sales. Overall, pre-tax profits increased in the period by 9.0% to RMB 1,963,000 (2013: RMB 1,801,000). As well as this significant contribution to Group profits, ChinohTex also performs invaluable work to assist the European operation through its purchasing strengths, its ability to inspect local purchases for quality issues and the consolidation of freight shipments that minimises the cost of shipping stock to Europe.
Net asset value per share (excluding shares held in treasury) at 30 November 2014 was 52.7 pence (2013: 50.0 pence) inclusive of goodwill. Group net debt stood at £881,000 at 30 November 2014 (30 November 2013: £112,000) and is now expected to fall from its seasonally high level.
Following the half-year end, on 31 December 2014 our Hemmers subsidiary completed the purchase of 50% of the issued share capital of Stoff-Ideen-KMR (KMR) at a cost of €500,000 (approximately £400,000). KMR is a privately owned chain of 14 shops retailing fabric and haberdashery and in the calendar year 2013 achieved sales of €6,181,000 and pre-tax profit of €392,000. The board of KMR will comprise Mr Eric Maat, who owns the other 50% of the equity, and Mr Jörg Hemmers, managing director of Hemmers. We expect to be able to increase the proportion of KMR purchases sourced from Hemmers, and to achieve cost savings and efficiency gains by sharing warehouse facilities. KMR will be run as a joint venture for which Leeds Group will account under the equity method.
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 KMR during the current year, the Board does not propose an interim dividend.
Sales in the seasonally quiet month of December were in line with the expectations of the Board. We enter the traditionally busy first quarter of the New Year with order books significantly fuller than they were at this time last year. Nevertheless the seasonal nature of our businesses has led in recent years to first half profits running somewhat ahead of those of the second half.
I should like to offer thanks Kathryn Davenport, who stood down after three years as chairman at the last AGM, and to our employees throughout the Group who, as ever, have worked so hard in the period
Jan G Holmstrom
Chairman
5 January 2015
Unaudited Consolidated Statement of Comprehensive Income
for the 6 months ended 30 November 2014
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
Revenue |
18,581 |
18,461 |
34,210 |
Cost of sales |
(14,424) |
(14,339) |
(26,440) |
Gross profit |
4,157 |
4,122 |
7,770 |
Distribution costs |
(1,196) |
(1,206) |
(2,303) |
Administrative expenses |
(1,902) |
(1,901) |
(3,785) |
Profit from operations |
1,059 |
1,015 |
1,682 |
Finance expense |
(35) |
(46) |
(81) |
Finance income |
5 |
6 |
10 |
Profit before tax |
1,029 |
975 |
1,611 |
Tax expense |
(328) |
(325) |
(532) |
Profit for the period attributable to the equity holders of the Company |
701 |
650 |
1,079 |
Other comprehensive income: |
|
|
|
Translation differences on foreign operations |
(169) |
(383) |
(631) |
|
|
|
|
Total comprehensive income for the period attributable to the equity holders of the Company |
532 |
267 |
448 |
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 2014 | 6 months to 30 November 2013 | Year to 31 May 2014 |
|
|
|
|
Basic and diluted (pence) | 2.5p | 2.3p | 3.9p |
Unaudited Consolidated Statement of Financial Position
at 30 November 2014
| As at 30 November 2014 £000 | As at 30 November 2013 £000 | As at 31 May 2014 £000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 1,868 | 1,937 | 1,900 |
Intangible assets | 888 | 927 | 908 |
|
|
|
|
Total non-current assets | 2,756 | 2,864 | 2,808 |
|
|
|
|
Current assets |
|
|
|
Inventories | 8,649 | 7,104 | 7,050 |
Trade and other receivables | 7,440 | 7,008 | 6,097 |
Derivative financial asset | 17 | - | - |
Cash and cash equivalents | 1,726 | 1,648 | 1,772 |
|
|
|
|
Total current assets | 17,832 | 15,760 | 14,919 |
|
|
|
|
Total assets | 20,588 | 18,624 | 17,727 |
|
|
|
|
Liabilities |
|
|
|
Non-current liabilities |
|
|
|
Loans and borrowings | (766) | (1,715) | (813) |
Deferred tax | (254) | (217) | (239) |
|
|
|
|
Total non-current liabilities | (1,020) | (1,932) | (1,052) |
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables | (2,871) | (2,323) | (2,062) |
Loans and borrowings | (1,841) | (45) | (44) |
Corporation tax liability | (341) | (440) | (541) |
Derivative financial liabilities | - | (37) | - |
|
|
|
|
Total current liabilities | (5,053) | (2,845) | (2,647) |
|
|
|
|
Total liabilities | (6,073) | (4,777) | (3,699) |
|
|
|
|
TOTAL NET ASSETS | 14,515 | 13,847 | 14,028 |
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 | (726) | (681) | (681) |
Foreign exchange reserve | 995 | 1,412 | 1,164 |
Retained earnings | 9,854 | 8,724 | 9,153 |
|
|
|
|
TOTAL EQUITY | 14,515 | 13,847 | 14,028 |
Unaudited Consolidated Cash Flow Statement
for the 6 months ended 30 November 2014
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
Cash flows from operating activities |
|
|
|
Profit for the period | 701 | 650 | 1,079 |
Adjustments for: |
|
|
|
Depreciation | 125 | 122 | 223 |
Movement in derivative financial assets and liabilities | (17) | 38 | - |
Finance expense | 35 | 46 | 81 |
Finance income | (5) | (6) | (10) |
Profit on sale of property, plant and equipment | - | (3) | (1) |
Income tax expense | 328 | 325 | 532 |
|
|
|
|
Cash flows from operating activities before changes in working capital and provisions |
1,167 |
1,172 |
1,904 |
|
|
|
|
Increase in inventories | (1,736) | (764) | (849) |
(Increase)/decrease in trade and other receivables | (1,381) | (322) | 453 |
Increase in trade and other payables | 827 | 441 | 256 |
|
|
|
|
Cash generated by operating activities | (1,123) | 527 | 1,764 |
Income taxes paid | (498) | (129) | (199) |
|
|
|
|
Net cash flows from operating activities | (1,621) | 398 | 1,565 |
|
|
|
|
Investing activities |
|
|
|
Purchase of property, plant and equipment | (125) | (113) | (221) |
Sale of property, plant and equipment | - | 3 | 3 |
Bank interest received | 5 | 6 | 10 |
|
|
|
|
Net cash used in investing activities | (120) | (104) | (208) |
|
|
|
|
Financing activities |
|
|
|
Purchase of treasury shares | (45) | - | - |
Net drawdown/(repayment) of bank borrowings | 1,765 | (907) | (1,786) |
Bank interest paid | (35) | (46) | (81) |
|
|
|
|
Net cash used in financing activities | 1,685 | (953) | (1,867) |
|
|
|
|
Net decrease in cash and cash equivalents |
(56) |
(659) |
(510) |
|
|
|
|
Translation gain/(loss) on cash and cash equivalents | 10 | (27) | (52) |
|
|
|
|
Cash and cash equivalents at beginning of the period | 1,772 | 2,334 | 2,334 |
|
|
|
|
Cash and cash equivalents at end of the period | 1,726 | 1,648 | 1,772 |
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 November 2014
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) |
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 2013 | 3,792 | 600 | (681) | 1,795 | 8,074 | 13,580 |
Profit for the period | - | - | - | - | 650 | 650 |
Other comprehensive income* | - | - | - | (383) | - | (383) |
|
|
|
|
|
|
|
At 30 November 2013 | 3,792 | 600 | (681) | 1,412 | 8,724 | 13,847 |
Share capital
£000 | Capital redemption reserve £000 | Treasury share reserve £000 | Foreign exchange reserve £000 | Retained earnings
£000 | Total equity
£000 | |
|
|
|
|
|
|
|
At 1 June 2013 | 3,792 | 600 | (681) | 1,795 | 8,074 | 13,580 |
Profit for the period | - | - | - | - | 1,079 | 1,079 |
Other comprehensive income* | - | - | - | (631) | - | (631) |
|
|
|
|
|
|
|
At 31 May 2014 | 3,792 | 600 | (681) | 1,164 | 9,153 | 14,028 |
* 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 |
|
|
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 2014 and 30 November 2013 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 2014 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2014 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 2014 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 2014 | 6 months to 30 November 2013 | Year to 31 May 2014 |
|
|
|
|
| 27,617,479 | 27,674,403 | 27,674,342 |
3. Reconciliation of movements in net bank debt
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
|
|
|
|
Decrease in cash & cash equivalents | (56) | (659) | (510) |
Translation gain/(loss) on cash and cash equivalents | 10 | (27) | (52) |
Net drawdown/(repayment) of bank borrowings | (1,765) | 907 | 1,786 |
Translation gain on loans | 15 | 57 | 81 |
|
|
|
|
(Increase)/decrease in net debt | (1,796) | 278 | 1,305 |
Net cash/(bank debt) at beginning of period | 915 | (390) | (390) |
|
|
|
|
Net (bank debt)/cash at end of period | (881) | (112) | 915 |
4. Analysis of net bank debt
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
|
|
|
|
Cash | 1,726 | 1,648 | 1,772 |
Loans repayable in less than one year | (1,841) | (45) | (44) |
Loans repayable in more than one year | (766) | (1,715) | (813) |
|
|
|
|
Net (bank debt)/cash at end of period | (881) | (112) | 915 |
5. Segmental information
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
External revenue |
|
|
|
Hemmers Europe | 16,495 | 16,441 | 31,378 |
Hemmers China | 2,086 | 2,020 | 2,832 |
|
|
|
|
Total Group external revenue | 18,581 | 18,461 | 34,210 |
| 6 months to 30 November 2014 £000 | 6 months to 30 November 2013 £000 | Year to 31 May 2014 £000 |
Profit before tax |
|
|
|
Hemmers Europe (local GAAP) | 842 | 819 | 1,478 |
IFRS adjustment - financial derivatives | 17 | (38) | - |
IFRS adjustment - goodwill amortisation | 54 | 59 | 114 |
|
|
|
|
Hemmers Europe (IFRS) | 913 | 840 | 1,592 |
Hemmers China | 193 | 188 | 129 |
Unrealised profit in stock | (6) | (9) | (8) |
Holding companies | (71) | (44) | (102) |
|
|
|
|
Group profit before tax | 1,029 | 975 | 1,611 |
| As at 30 November 2014 £000 | As at 30 November 2013 £000 | As at 31 May 2014 £000 |
Net assets |
|
|
|
Hemmers Europe (local GAAP) | 10,088 | 9,443 | 9,730 |
IFRS adjustment - financial derivatives | 13 | (27) | - |
IFRS adjustment - goodwill amortisation | 633 | 580 | 607 |
|
|
|
|
Hemmers Europe (IFRS) | 10,734 | 9,996 | 10,337 |
Hemmers China | 728 | 595 | 515 |
Unrealised profit in stock | (40) | (36) | (34) |
Holding companies | 3,093 | 3,292 | 3,210 |
|
|
|
|
Group net assets | 14,515 | 13,847 | 14,028 |
Enquiries: |
|
Leeds Group plc | Cairn Financial Advisers LLP |
Malcolm Wilson, Company Secretary Tel: 07801224618 | Tony Rawlinson / Avi Robinson Tel: 020 7148 7900 |