LEEDS GROUP PLC

Interim / Quarterly Report • Jan 23, 2023

National Storage Mechanism | Additional information

RNS Number : 4753N

Leeds Group PLC

23 January 2023

Issued on behalf of Leeds Group plc                                                               Embargoed: 7.00am

Date: 23 January 2023

Leeds Group plc 

("Leeds Group" or "the Group" or "the Company'') 

Unaudited Interim Results for the six months ended 30 November 2022

The unaudited interim results of Leeds Group for the six months ended 30 November 2022 are presented as follows:

This announcement contains inside information for the purposes of UK Market Abuse Regulation and has been arranged for release by Jan G Holmstrom, Chairman. The Directors of the Company accept responsibility for the content of this announcement.

Enquiries: 

Leeds Group plc                                  Cairn Financial Advisers LLP 

Dawn Henderson - 01937 547877      Sandy Jamieson / Liam Murray - 020 7213 0880

Chairman's Statement 

The continuing activities of the Group are that of a textile wholesaler and are conducted through its German trading subsidiary Hemmers-Itex Textil Import Export GmbH ("Hemmers"). Stoff-Ideen-KMR GmbH ("KMR"), a subsidiary of Hemmers, was placed into an insolvency process on 7 October 2022.

The Group's turnover in the first six months of the financial year is in line with last year at £15,575,000 (2021: £15,592,000): The Group made a reduced loss before tax of £224,000 (2021: loss of £487,000).

Hemmer's turnover increased slightly to £12,679,000 (2021: £12,668,000) and the company made a loss of £164,000 (2021: loss of £192,000). Trading is currently in line with forecast and the cost cutting measures taken last year are providing a good platform on which to rebuild a profitable business.

KMR's turnover decreased to £2,896,000 (2021: £2,924,000) and the company made a loss of £75,000 (2021: loss of £242,000). A property owned by KMR was sold in the period realising £517,000 and resulted in a gain of £138,000. Although in insolvency, KMR is still trading as it sells down the stock held in its shops.

Group net bank debt, as analysed in note 5, was £6,131,000 as at 30 November 2022 (30 November 2021: £5,877,000; 31 May 2022: £6,381,000). Cash at bank as at 30 November was £1,845,000, of which £1,677,000 related to KMR.  This will be used by the insolvency administrator to pay any outstanding KMR liabilities including £863,000 of bank debt.

The Board and the Hemmers management are committed to returning Hemmers to profitability and with the KMR insolvency, they can focus solely on achieving this goal.

Jan G Holmstrom

Chairman

23 January 2023

Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2022

	Unaudited 6 months to 30 November 2022 £000	Unaudited 6 months to 30 November 2021 £000	Audited Year to 31 May 2022 £000
Continuing operations Revenue	15,575	15,592	29,590
Cost of sales	(12,666)	(12,514)	(24,121)
Gross profit	2,909	3,078	5,469
Distribution costs	(1,363)	(1,250)	(2,483)
Impairment of assets	-	-	(1,662)
Administrative costs	(1,664)	(2,188)	(4,461)
Total administrative costs	(1,664)	(2,188)	(6,123)
Other income	75	-	147
Total loss from operations	(43)	(360)	(2,990)
Finance expense	(181)	(127)	(255)
Loss before taxation	(224)	(487)	(3,245)
Taxation	113	-	(4)
Loss for the period/year attributable to the equity holders of the Parent Company	(111)	(487)	(3,249)
Other comprehensive income/(loss) for the period/year	130	(101)	(135)
## Total comprehensive income/(loss) for the period/year attributable to the equity holders of the Company	19	(588)	(3,384)

Loss per share for profit attributable to the equity holders of the Company

	Unaudited 6 months to 30 November 2022	Unaudited 6 months to 30 November 2021	Audited Year to 31 May 2022
Basic and diluted total loss per share (pence)	0.4p	1.8p	11.9p

Consolidated Statement of Financial Position

at 30 November 2022

	Unaudited As at 30 November 2022 £000	Unaudited As at 30 November 2021 £000	Audited As at 31 May 2022 £000
Assets
Non-current assets
Property, plant and equipment	6,689	7,631	7,335
Right-of-use assets	173	2,175	170
Intangible assets	53	57	52
Total non-current assets	6,915	9,863	7,557
Current assets
Inventories	11,227	12,446	11,994
Trade and other receivables	3,472	3,755	2,864
Corporation tax recoverable	-	61	13
Cash and cash equivalents	1,845	216	471
Total current assets	16,544	16,478	15,342
Total assets	23,459	26,341	22,899
Liabilities
Non-current liabilities
Loans and borrowings	(697)	(987)	(836)
Lease liabilities	(953)	(1,006)	(1,165)
Total non-current liabilities	(1,650)	(1,993)	(2,001)
Current liabilities
Trade and other payables	(2,699)	(3,649)	(3,065)
Loans and borrowings	(7,279)	(5,102)	(5,671)
Lease liabilities	(635)	(1,524)	(885)
Provisions	-	(100)	(100)
Total current liabilities	(10,613)	(10,375)	(9,721)
Total liabilities	(12,263)	(12,368)	(11,722)
TOTAL NET ASSETS	11,196	13,973	11,177

Capital and reserves attributable to equity holders of the Company
Share capital	3,279	3,279	3,279
Capital redemption reserve	1,113	1,113	1,113
Foreign exchange reserve	2,180	2,084	2,050
Retained earnings	4,624	7,497	4,735
TOTAL EQUITY	11,196	13,973	11,177

Consolidated Cash Flow Statement

for the six months ended 30 November 2022

	Unaudited 6 months to 30 November 2022 £000	Unaudited 6 months to 30 November 2021 £000	Audited Year to 31 May 2022 £000
Cash flows from operating activities
Loss for the period/year	(224)	(487)	(3,249)
Adjustments for:
Government assistance credit	-	-	(119)
Depreciation of property, plant and equipment	399	334	735
Impairment of property, plant and equipment	-	-	42
Depreciation of right-of-use assets	56	461	827
Impairment of right-of-use assets	-	-	1,620
Amortisation of intangible assets	-	-	5
Finance expense - interest on bank loans	153	89	179
Finance expense - interest on lease liabilities	28	38	76
Gain on sale of property	(138)	-	-
Taxation credit	-	-	4
Cash flows generated from operating activities before changes in working capital and provisions	274	435	120
Decrease/(increase) in inventories	947	(2,254)	(1,818)
(Increase) in trade and other receivables	(1,169)	(677)	(43)
Increase in trade and other payables	499	1,386	722
Cash generated from/(used in) operating activities	551	(1,110)	(1,019)
Taxation received	28	73	114
Net cash flows generated from/(used in) operating activities	579	(1,037)	(905)
Investing activities
Purchase of property, plant and equipment	(22)	(283)	(447)
Proceeds from sale of property	517	-
Net cash generated from/(used in) investing activities	495	(283)	(447)
Financing activities
Bank borrowings drawn	1,515	2,272	2,835
Bank borrowings repaid	(150)	(564)	(708)
Repayment of principal on lease liabilities	(542)	(519)	(983)
Repayment of interest on lease liabilities	(28)	(38)	(76)
Bank interest paid	(153)	(89)	(179)
Government assistance received	-	-	119
Net cash generated from financing activities	642	1,062	1,008
Net increase/(decrease) in cash and cash equivalents	1,716	(258)	(344)
Translation gain/(loss) on cash and cash equivalents	3	(2)	(2)
Cash and cash equivalents at beginning of period/year	126	472	472
Cash and cash equivalents at end of period/year	1,845	212	126
Cash on demand or on short term deposit	1,845	216	471
Bank overdrafts	-	(4)	(345)
Cash and cash equivalents at end of period/year	1,845	212	126

Consolidated Statement of Changes in Equity

for the six months ended 30 November 2022

Unaudited	Share capital £000	Capital redemption reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2022	3,279	1,113	2,050	4,735	11,177
Loss for the period	-	-	-	(111)	(111)
Other comprehensive income	-	-	130	-	130
At 30 November 2022	3,279	1,113	2,180	4,624	11,196

Unaudited	Share capital £000	Capital redemption reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2021	3,279	1,113	2,185	7,984	14,561
Loss for the period	-	-	-	(487)	(487)
Other comprehensive loss	-	-	(101)	-	(101)
At 30 November 2021	3,279	1,113	2,084	7,497	13,973

Audited	Share capital £000	Capital redemption reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2021	3,279	1,113	2,185	7,984	14,561
Loss for the year	-	-	-	(3,249)	(3,249)
Other comprehensive loss	-	-	(135)	-	(135)
At 31 May 2022	3,279	1,113	2,050	4,735	11,177

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 Interim Results

for the six months ended 30 November 2022

1.  General information

Leeds Group plc is an AIM listed public company, limited by shares and incorporated in England and Wales under the Companies Act and its number is 00067863. The address of the registered office is Craven House, 14-18 York Road, Leeds, Wetherby, LS22 6SL.

The interim results for the six months ended 30 November 2022 and 30 November 2021 are unaudited. The interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted in the United Kingdom ("UK adopted IFRS") using the accounting policies that are expected to apply in the preparation of the next annual financial statements. The Group has chosen not to comply with IAS 34 'Interim Financial Statement' in these interim financial statements.

The information presented for the year ended 31 May 2022 does not constitute the Company's statutory accounts. The financial statements for the year ended 31 May 2022 have been filed with the Registrar of Companies and the Independent Auditor's Report was unqualified however drew attention to a material uncertainty regarding the going concern of the Group. The Independent Auditor's Report did not refer to any matters in respect of s498(2) and (3) of the Companies Act 2006.

The Group's financial statements for the year ended 31 May 2022 included a post balance sheet event note explaining that KMR was placed into an insolvency process, which was accepted by the German courts on 7 October 2022. Under German law, there was an initial period of three months where KMR was operated as a trading entity under the joint control of the KMR management and the insolvency administrator. Following this period, the administrator has assumed full responsibility for the operations of KMR and will look to realise its assets and pay any liabilities due in accordance with German insolvency law.

2.  Accounting policies

Going Concern

When considering its opinion about the application of the going concern basis of preparation of the financial statements, the Directors have given due consideration to:

·      The performance of the Group in the last financial year and the robustness of forecasts for period to 31 May 2024, which return the Group to profit.

·      The impact of the ongoing Ukraine conflict on the business, its suppliers and its customers.

·      The financing facilities available to the Group and the circumstances in which these could be limited or withdrawn.

Forecasts have been prepared for the period to May 2024 which indicate a return to modest profit over that period due to cost reductions. These forecasts have been prepared in the knowledge of current Ukraine conflict conditions and the continuing impact on the German and global economies.  Considering the trading results in the first half of the current financial year and the decision to put KMR into insolvency, the Directors consider there will be sufficient headroom available on the Hemmers working capital facility and, therefore, the Directors are of the opinion that it is appropriate to apply the going concern basis of preparation to the financial statements.

2.  Loss per share

Ordinary shares of 12 pence each used in the calculation of earnings per share:

	Unaudited 6 months to 30 November 2022 £000	Unaudited 6 months to 30 November 2021 £000	Audited Year to 31 May 2022 £000
Number of shares (basic and diluted)	27,320,843	27,320,843	27,320,843

3.  Segmental information

Group external revenue	Unaudited 6 months to 30 November 2022 £000	Unaudited 6 months to 30 November 2021 £000	Audited Year to 31 May 2022 £000
Continuing operations Hemmers	12,679	12,668	23,998
KMR	2,896	2,924	5,592
Group external revenue	15,575	15,592	29,590

Group loss before tax	Unaudited 6 months to 30 November 2022 £000	Unaudited 6 months to 30 November 2021 £000	Audited Year to 31 May 2022 £000
Continuing operations
Hemmers	(164)	(192)	(793)
Holding company	15	(53)	(82)
KMR	(75)	(242)	(2,370)
Group loss before tax	(224)	(487)	(3,245)

Group net assets	Unaudited As at 30 November 2022 £000	Unaudited As at 30 November 2021 £000	Audited As at 31 May 2022 £000
Continuing operations
Hemmers	9,604	9,931	9,301
Holding company	2,770	2,750	2,720
KMR	(1,178)	1,292	(844)
Group net assets	11,196	13,973	11,177

4.  Analysis of net bank debt

	Unaudited As at 30 November 2022 £000	Unaudited As at 30 November 2021 £000	Audited As at 31 May 2022 £000
Cash on demand and on short term deposit	1,845	216	471
Bank overdrafts	-	(4)	(345)
Current loans and borrowings	(7,279)	(5,102)	(5,671)
Non - current loans and borrowings	(697)	(987)	(836)
Net bank debt at end of period/year	(6,131)	(5,877)	(6,381)

Current loans and borrowings

At 30 November 2022, current loans and borrowings of £7,279,000 (2021: £5,102,000) comprise short term loans of £6,976,000 and instalments due on long term loans detailed below of £303,000. The interest rate on the short-term loans ranges from 1.5% to 3% (2021: 1.5% to 3%) and these loans are secured on working capital of Hemmers and KMR.  The short-term loans are drawn down by Hemmers against short-term borrowing facilities of up to a maximum of £9.9m (€11.5m) and by KMR against short-term borrowing facilities of £0.9m (€1m).  

Non-current loans and borrowings

The Group's non-current loans and borrowings are within the accounts of Hemmers and are denominated in Euros as follows:

	Fixed interest rate	Repayment profile	Final repayment date	Unaudited As at 30 November 2022 £000	Unaudited As at 30 November 2021 £000	Audited As at 31 May 2022 £000
Loan 1	1.65%	Equal quarterly instalments	September 2025	479	710	590
Loan 2	1.05%	Equal quarterly instalments	March 2026	218	277	246
Non-current loans				697	987	836

5.  Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

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