Half Yearly Report

RNS Number : 0871B
Leeds Group PLC
05 January 2015
 



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

 

 


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