LEEDS GROUP PLC

Interim / Quarterly Report • Jan 5, 2015

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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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