Last checked at 15 Jun 2011 07:00
LEEDS GROUP PLC
Interim Results for the six months ended 31st March 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 £627,000 in the six month period ended 31st March 2011, compared with £534,000 in the corresponding period of last year. It is particularly pleasing to report such positive news after a disappointing performance in the second half of the previous financial year. Earnings per share increased to 2.2 pence (2010: 1.8 pence) reflecting the increased profit and the reduced number of shares in issue.
Revenue at Hemmers Europe, the Group's German based operating subsidiary, increased to £14,641,000 (2010: £13,990,000). Sales volumes were marginally down on last year, and the increase in revenue reflects sales prices on average 10% higher than in 2010. There has been a substantial increase in the price of cotton goods, but our sales price increases have made it possible to preserve margins at close to last year's level. This, together with modest reductions in overhead expense, led to a profit before tax for Hemmers Europe of £947,000 (2010: £715,000), which included a gain on valuation of financial derivatives of £220,000 (2010: £193,000).
Although external revenue at Hemmers China was lower than last year, total revenue grew by 18% as Hemmers Europe sourced a substantially greater volume of its purchases from its Chinese operation. The directors remain satisfied with the progress being made in China.
Net asset value per share (excluding shares held in treasury) at 31st March 2011 was 46.6 pence (2010: 46.8 pence) inclusive of goodwill. During the period lower stockholding contributed to a reduction of £1,996,000 in the aggregate debt of Hemmers Europe and Hemmers China, whilst cash balances held by the holding company at the period end were £1,751,000 (2010: £2,025,000).
At 31st March 2011, the Group continues to hold an investment in Dawson International Plc ("Dawson"). The Board noted the interim results for Dawson issued in May 2011, which showed cash resources in excess of £11 million, but also a significant liability in a defined benefit pension scheme. Whilst Dawson has been active in restructuring itself during the last couple of years, the Leeds Group Board believes that any growth in the value of Dawson's shares will be subject to a satisfactory resolution of the pension scheme issues.
The Board is proceeding with 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 a charge of £125,000 relating to the costs of the action that is expected to be heard in the near future has been made in the accounts of the parent company.
The Company has continued to use the authority granted to it to buy back shares into Treasury, although liquidity in Leeds Group shares has been limited. During the six month period, the Company purchased 250,000 shares into Treasury, and cancelled a further 500,000 shares in order to comply with Companies Act 2006 requirements. In line with previous decisions, the Board does not propose an interim dividend.
The months of April and May represent the low point in the annual business cycle when losses are to be anticipated before activity picks up in June and July and reaches a crescendo in the very busy months of August, September and October. With this in mind, the Board has decided to change the Group's accounting reference date from 30 September to 31 May so that the work involved in stocktaking, accounts preparation and audit can be accommodated with significantly less disruption to sales activity. The next Annual Report will therefore cover the eight months ending 31 May 2011.
The economic environment remains challenging, and the large increase in the price of cotton goods has led to a current order book that is less full than twelve months ago. We have taken action on sales prices aimed at protecting margins: it remains to be seen whether order levels pick up as the year progresses and it becomes clearer to customers that current price levels are not a short term phenomenon that can be avoided by delaying orders.
As ever, thanks are due to staff throughout the Group for their unstinting efforts in the period covered by this report.
Kathryn Davenport
Chairman
14 June 2011
Enquiries: |
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Leeds Group plc | Citigate Dewe Rogerson | Seymour Pierce Limited |
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Kathryn Davenport, Chairman | Fiona Tooley | Sarah Jacobs |
07921 261254 | Tel: 0121 362 4035 or 07785 703523 | Tel: 020 7107 8000 |
Malcolm Wilson, Company Secretary | ||
Tel: 07801 224618 |
Unaudited Consolidated Statement of Comprehensive Income
for the 6 months ended 31 March 2011
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
Revenue |
15,315 |
14,829 |
27,655 |
Cost of sales |
(11,415) |
(10,892) |
(21,378) |
Gross profit |
3,900 |
3,937 |
6,277 |
Distribution costs |
(1,162) |
(1,124) |
(2,064) |
Administrative expenses |
(1,772) |
(1,969) |
(3,632) |
Profit from operations |
966 |
844 |
581 |
Finance expense |
(78) |
(108) |
(289) |
Finance income |
7 |
8 |
15 |
Profit before tax |
895 |
744 |
307 |
Tax expense |
(268) |
(210) |
(176) |
Profit for the period, attributable to the equity holders of the parent |
627 |
534 |
131 |
Other comprehensive income: |
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Translation differences on foreign operations |
275 |
(189) |
(498) |
Unrealised loss taken to available-for-sale reserve |
- |
- |
(324) |
Other comprehensive income for the period |
275 |
(189) |
(822) |
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Total comprehensive income for the period |
902 |
345 |
(691) |
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 31 March 2011 | 6 months to 31 March 2010 | 12 months to 30 September 2010 |
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Basic and diluted (pence) | 2.2p | 1.8p | 0.5p |
Unaudited Consolidated Balance Sheet
at 31 March 2011
| As at 31 March 2011 £000 | As at 31 March 2010 £000 | As at 30 September 2010 £000 |
Assets |
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Non-current assets |
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Property, plant and equipment | 2,219 | 2,322 | 2,197 |
Intangible assets | 987 | 994 | 959 |
Available-for-sale investments | 971 | 1,295 | 971 |
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Total non-current assets | 4,177 | 4,611 | 4,127 |
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Current assets |
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Inventories | 6,205 | 5,900 | 7,377 |
Trade and other receivables | 7,707 | 6,946 | 7,240 |
Derivative financial assets | - | 4 | - |
Cash available on demand | 2,332 | 2,533 | 2,192 |
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Total current assets | 16,244 | 15,383 | 16,809 |
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Total assets | 20,421 | 19,994 | 20,936 |
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Liabilities |
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Non-current liabilities |
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Loans and borrowings | (2,161) | (2,224) | (2,150) |
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Total non-current liabilities | (2,161) | (2,224) | (2,150) |
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Current liabilities |
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Trade and other payables | (1,884) | (1,568) | (1,469) |
Loans and borrowings | (2,628) | (2,655) | (4,394) |
Corporation tax liability | (215) | (19) | (29) |
Derivative financial liabilities | (186) | - | (402) |
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Total current liabilities | (4,913) | (4,242) | (6,294) |
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Total liabilities | (7,074) | (6,466) | (8,444) |
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TOTAL NET ASSETS | 13,347 | 13,528 | 12,492 |
Capital and reserves attributable to equity holders of the company |
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Share capital | 3,792 | 3,852 | 3,852 |
Capital redemption reserve | 600 | 540 | 540 |
Treasury share reserve | (510) | (572) | (572) |
Available-for-sale reserve | (10) | 314 | (10) |
Foreign exchange reserve | 2,043 | 2,077 | 1,768 |
Retained earnings | 7,432 | 7,317 | 6,914 |
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TOTAL EQUITY | 13,347 | 13,528 | 12,492 |
Unaudited Consolidated Cash Flow Statement
for the 6 months ended 31 March 2011
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
Cash flows from operating activities |
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Profit for the period | 627 | 534 | 131 |
Adjustments for: |
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Depreciation | 114 | 122 | 221 |
Foreign exchange differences | (220) | (193) | 228 |
Translation gain/(loss) on cash and cash equivalents | 13 | 3 | (19) |
Finance expense | 78 | 108 | 289 |
Finance income | (7) | (8) | (15) |
Loss on sale of property, plant and equipment | 17 | - | 10 |
Income tax expense | 268 | 210 | 176 |
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Cash flows from operating activities before changes in working capital and provisions |
890 |
776 |
1,021 |
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Decrease/(increase) in inventories | 1,339 | 621 | (1,088) |
Increase in trade and other receivables | (266) | (108) | (642) |
Increase in trade and other payables | 361 | 238 | 214 |
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Cash generated from operating activities | 2,324 | 1,527 | (495) |
Income taxes paid | (88) | (186) | (147) |
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Net cash flows from operating activities | 2,236 | 1,341 | (642) |
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Investing activities |
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Purchase of property, plant and equipment | (118) | (143) | (224) |
Sale of property, plant and equipment | 23 | - | 21 |
Bank interest received | 7 | 8 | 15 |
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Net cash used in investing activities | (88) | (135) | (188) |
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Financing activities |
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Purchase of treasury shares | (47) | (49) | (49) |
Proceeds from bank borrowings | - |
| 790 |
Repayment of bank borrowings | (1,883) | (1,086) | - |
Bank interest paid | (78) | (108) | (289) |
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Net cash used in financing activities | (2,008) | (1,243) | 452 |
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Net increase/(decrease) in cash and cash equivalents |
140 |
(37) |
(378) |
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Cash and cash equivalents at beginning of the period | 2,192 | 2,570 | 2,570 |
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Cash and cash equivalents at end of the period | 2,332 | 2,533 | 2,192 |
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 31 March 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 October 2010 | 3,852 | 540 | (572) | (10) | 1,768 | 6,914 | 12,492 |
Total comprehensive income* | - | - | - | - | 275 | 627 | 902 |
Purchase of treasury shares | - | - | (47) | - | - | - | (47) |
Cancellation of treasury shares | (60) | 60 | - | - | - | - | - |
Cost of shares cancelled | - | - | 109 | - | - | (109) | - |
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At 31 March 2011 | 3,792 | 600 | (510) | (10) | 2,043 | 7,432 | 13,347 |
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 2009 | 3,897 | 495 | (605) | 314 | 2,266 | 6,865 | 13,232 |
Total comprehensive income* | - | - | - | - | (189) | 534 | 345 |
Purchase of treasury shares | - | - | (49) | - | - | - | (49) |
Cancellation of treasury shares | (45) | 45 | - | - | - | - | - |
Cost of shares cancelled | - | - | 82 | - | - | (82) | - |
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At 31 March 2010 | 3,852 | 540 | (572) | 314 | 2,077 | 7,317 | 13,528 |
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 2009 | 3,897 | 495 | (605) | 314 | 2,266 | 6,865 | 13,232 |
Total comprehensive income* | - | - | - | (324) | (498) | 131 | (691) |
Purchase of treasury shares | - | - | (49) | - | - | - | (49) |
Cancellation of treasury shares | (45) | 45 | - | - | - | - | - |
Cost of shares cancelled | - | - | 82 | - | - | (82) | - |
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At 30 September 2010 | 3,852 | 540 | (572) | (10) | 1,768 | 6,914 | 12,492 |
* 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 |
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Interim results
for the 6 months ended 31 March 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 31 March 2011 and 31 March 2010 are unaudited.
The financial information for the year ended 30 September 2010 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 30 September 2010 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for the year ended 30 September 2010 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 31 March 2011 | 6 months to 31 March 2010 | 12 months to 30 September 2010 |
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| 28,877,474 | 29,158,573 | 29,033,616 |
3. Reconciliation of movements in net debt
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
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Increase/(decrease) in cash & cash equivalents | 140 | (37) | (378) |
Proceeds from bank borrowings | - | - | (790) |
Repayment of bank borrowings | 1,883 | 1,086 | - |
Foreign currency translation differences on loans | (128) | 127 | 338 |
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Net decrease/(increase) in net debt | 1,895 | 1,176 | (830) |
Net debt at beginning of period | (4,352) | (3,522) | (3,522) |
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Net debt at end of period | (2,457) | (2,346) | (4,352) |
4. Analysis of net debt
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
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Cash | 2,332 | 2,533 | 2,192 |
Loans repayable in less than one year | (2,628) | (2,655) | (4,394) |
Loans repayable in between one and five years | (2,161) | (2,224) | (2,150) |
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Net debt at end of period | (2,457) | (2,346) | (4,352) |
Interim results
for the 6 months ended 31 March 2011
Notes to the accounts (continued)
5. Segmental information
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
External revenue |
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Hemmers Europe | 14,641 | 13,990 | 26,301 |
Hemmers China | 674 | 839 | 1,354 |
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Total Group external revenue | 15,315 | 14,829 | 27,655 |
| 6 months to 31 March 2011 £000 | 6 months to 31 March 2010 £000 | 12 months to 30 September 2010 £000 |
Profit before tax |
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Hemmers Europe (local GAAP) | 669 | 462 | 506 |
IFRS adjustment - financial derivatives | 220 | 193 | (228) |
IFRS adjustment - goodwill amortisation | 58 | 60 | 118 |
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Hemmers Europe (IFRS) | 947 | 715 | 396 |
Hemmers China | 66 | 115 | 75 |
Unrealised profit in stock | (3) | 13 | 5 |
Holding companies | (115) | (99) | (169) |
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Group profit before tax | 895 | 744 | 307 |
| As at 31 March 2011 £000 | As at 31 March 2010 £000 | As at 30 September 2010 £000 |
Net assets |
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Hemmers Europe (local GAAP) | 8,161 | 7,696 | 7,507 |
IFRS adjustment - financial derivatives | (186) | 4 | (402) |
IFRS adjustment - goodwill amortisation | 541 | 423 | 468 |
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Hemmers Europe (IFRS) | 8,516 | 8,123 | 7,573 |
Hemmers China | 185 | 188 | 150 |
Unrealised profit in stock | (29) | (20) | (26) |
Holding companies | 4,675 | 5,237 | 4,795 |
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Group net assets | 13,347 | 13,528 | 12,492 |