LEEDS GROUP PLC

Interim / Quarterly Report • Jan 7, 2016

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RNS Number : 0136L

Leeds Group PLC

07 January 2016

LEEDS GROUP PLC

Interim Results for the six months ended 30 November 2015

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 2015.

The business of Leeds Group is that of a wholesaler of fabrics and haberdashery, and is conducted by its German trading subsidiary Hemmers/Itex Textil Import Export GmbH ("Hemmers") and by Chinoh-Tex Limited, a subsidiary of Hemmers based in Shanghai. These trading companies sell both basic commodity fabrics and also fabrics from their own fashion collections. Approximately half of sales are to retailers, with remaining sales activities divided between wholesalers and the garment manufacturing sector.

The Group achieved sales in the period of £18,489,000 (2014: £18,581,000) and made a profit after tax of £692,000 (2014:  £701,000).  Earnings per share were 2.5 pence (2014: 2.5 pence). In the first half of the current financial year, the Euro was, on average, some 10% weaker than it was during the first half of the Group's previous financial year. Given that the Group's purchases are predominantly made in US Dollars while the vast majority of its sales are in Euros, our management team has done well to preserve historic rates of gross margin, and to deliver Group sales and pre-tax profit which, if translated to sterling at constant 2014 exchange rates, would show growth of 8.8% and 8.3% respectively.

In Euro terms, revenue at Hemmers increased by 11.7% to €23,203,000 (2014: €20,775,000) reflecting higher selling prices and volume growth into the retailer customer base. This volume growth was chiefly as a result of increasing the Hemmers share of the purchase requirements of Stoff-Ideen-KMR (KMR), the retail chain in which Hemmers acquired a 50% joint venture interest a year ago. Hemmers pre-tax profit increased by 15.1% to €1,227,000 (2014: €1,066,000).

The KMR joint venture opened new shops in Saarbrücken and in Bamberg in the period, to bring the total number of stores to 16, and the business continues to trade in line with the expectations of the Directors.

External sales revenues at ChinohTex were 9.8% down on last year at £1,881,000 (2014: £2,086,000) leading to a reduced pre-tax profit of £155,000 (2014: £193,000). Despite this setback, ChinohTex continues to perform invaluable work in support of its European parent operation through its purchasing strengths, its ability to inspect locally purchased product for quality issues and the consolidation of freight shipments that minimises the cost of shipping stock to Europe.

In the twelve month period since 30 November 2014 earnings per share has been 3.8 pence but the adverse translation differences on foreign operations have been £1,303,000, or 4.7 pence per share. Consequently net asset value per share (inclusive of goodwill and excluding shares held in treasury) at 30 November 2015 fell to 51.8 pence (2014: 52.7 pence). 

Group net debt was £579,000 at 30 November 2015 (30 November 2014: £881,000; 31 May 2015: net cash £596,000). Net cash outflow in the 6 months ended 30 November 2015 reflected the seasonal increase in working capital and capital expenditure. Although working capital is expected to fall from its seasonally high level during the second half-year, net debt will continue to rise as the project to expand the Hemmers facility in Nordhorn is brought to completion at a total cost of €3.5 million.

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 the Hemmers facility during the current year, the Board does not propose an interim dividend.

As ever, I offer thanks to our employees throughout the Group who have worked so hard in the period.

Jan G Holmstrom

Chairman 

7 January 2016

Unaudited Consolidated Statement of Comprehensive Income

for the 6 months ended 30 November 2015

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
Revenue	18,489	18,581	34,859
Cost of sales	(14,373)	(14,424)	(27,066)
Gross profit	4,116	4,157	7,793
Distribution costs	(1,169)	(1,196)	(2,316)
Administrative expenses	(1,916)	(1,902)	(3,855)
## Profit from operations	1,031	1,059	1,622
Finance expense	(39)	(35)	(71)
Finance income	2	5	7
Share of post-tax profit of joint venture	20	-	13
Profit before tax	1,014	1,029	1,571
Tax expense	(322)	(328)	(518)
## Profit for the period attributable to the equity holders of the Company	692	701	1,053
Other comprehensive income:
Translation differences on foreign operations	(257)	(169)	(1,215)
Other comprehensive income for the period	(257)	(169)	(1,215)
## Total comprehensive income for the period attributable to the equity holders of the Company	435	532	(162)

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 2015	6 months to 30 November 2014	Year to 31 May 2015
Basic and diluted (pence)	2.5p	2.5p	3.8p

Unaudited Consolidated Statement of Financial Position

at 30 November 2015

	As at 30 November 2015 £000	As at 30 November 2014 £000	As at 31 May 2015 £000
Assets
Non-current assets
Property, plant and equipment	2,271	1,868	1,760
Intangible assets	784	888	802
Investment in joint venture	559	-	553
Total non-current assets	3,614	2,756	3,115
Current assets
Inventories	8,142	8,649	7,258
Trade and other receivables	6,255	7,440	6,000
Derivative financial asset	112	17	59
Cash and cash equivalents	2,875	1,726	2,027
Total current assets	17,384	17,832	15,344
Total assets	20,998	20,588	18,459
Liabilities
Non-current liabilities
Loans and borrowings	(2,380)	(766)	(665)
Deferred tax	(254)	(254)	(244)
Total non-current liabilities	(2,634)	(1,020)	(909)
Current liabilities
Trade and other payables	(2,847)	(2,871)	(2,666)
Loans and borrowings	(1,074)	(1,841)	(766)
Corporation tax liability	(204)	(341)	(296)
Total current liabilities	(4,125)	(5,053)	(3,728)
Total liabilities	(6,759)	(6,073)	(4,637)
TOTAL NET ASSETS	14,239	14,515	13,822

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	(743)	(726)	(725)
Foreign exchange reserve	(308)	995	(51)
Retained earnings	10,898	9,854	10,206
TOTAL EQUITY	14,239	14,515	13,822

Unaudited Consolidated Cash Flow Statement

for the 6 months ended 30 November 2015

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year  to 31 May 2015 £000
Cash flows from operating activities
Profit for the period	692	701	1,053
Adjustments for:
Depreciation	124	125	226
Finance expense	39	35	71
Finance income	(2)	(5)	(7)
Movement in derivative financial assets	(55)	(17)	(63)
Loss on sale of property, plant and equipment	-	-	2
Share of post-tax profit of joint venture	(20)		(13)
Income tax expense	322	328	518
Cash flows from operating activities before changes in working capital and provisions	1,100	1,167	1,787
Increase in inventories	(1,070)	(1,736)	(1,063)
Increase in trade and other receivables	(382)	(1,381)	(495)
Increase in trade and other payables	277	827	1,003
Cash (absorbed)/generated by operating activities	(75)	(1,123)	1,232
Income taxes paid	(390)	(498)	(679)
Net cash flows from operating activities	(465)	(1,621)	553
Investing activities
Purchase of property, plant and equipment	(686)	(125)	(298)
Investment in joint venture	-	-	(575)
Bank interest received	2	5	7
Net cash used in investing activities	(684)	(120)	(866)
Financing activities
Purchase of treasury shares	(18)	(45)	(44)
Net drawdown of bank borrowings	2,098	1,765	717
Bank interest paid	(39)	(35)	(71)
Net cash generated by financing activities	2,041	1,685	602
Net increase/(decrease) in cash and cash equivalents	892	(56)	289
Translation (loss)/gain on cash and cash equivalents	(44)	10	(34)
Cash and cash equivalents at beginning of the period	2,027	1,772	1,772
Cash and cash equivalents at end of the period	2,875	1,726	2,027

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2015

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2015	3,792	600	(725)	(51)	10,206	13,822
Profit for the period	-	-	-	-	692	692
Other comprehensive income*	-	-	-	(257)	-	(257)
Transaction with shareholders:
Purchase of treasury shares	-	-	(18)	-	-	(18)
At 30 November 2015	3,792	600	(743)	(308)	10,898	14,239

	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)
Transaction with shareholders:
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 2014	3,792	600	(681)	1,164	9,153	14,028
Profit for the year	-	-	-	-	1,053	1,053
Other comprehensive income*	-	-	-	(1,215)	-	(1,215)
Transaction with shareholders:
Purchase of treasury shares	-	-	(44)	-	-	(44)
At 31 May 2015	3,792	600	(725)	(51)	10,206	13,822

*      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

Interim results

for the 6 months ended 30 November 2015

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 2015 and 30 November 2014 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 2015 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2015 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 2015 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 2015	6 months to 30 November 2014	Year to 31 May 2015
	27,532,496	27,617,479	27,583,006

3.  Reconciliation of movements in net bank debt

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
Increase/(decrease) in cash & cash equivalents	892	(56)	289
Translation (loss)/gain on cash and cash equivalents	(44)	10	(34)
Increase  in loans	(2,098)	(1,765)	(717)
Translation gain on loans	75	15	143
Net cash outflow	(1,175)	(1,796)	(319)
Net cash at beginning of period	596	915	915
Net (bank debt)/cash at end of period	(579)	(881)	596

4.  Analysis of net bank debt

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
Cash	2,875	1,726	2,027
Loans repayable in less than one year	(1,074)	(1,841)	(766)
Loans repayable in more than one year	(2,380)	(766)	(665)
Net (bank debt)/cash at end of period	(579)	(881)	596

5.  Segmental information

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
External revenue
Hemmers Europe	16,608	16,495	31,151
Hemmers China	1,881	2,086	3,708
Total Group external revenue	18,489	18,581	34,859

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
Profit before tax
Hemmers Europe (local GAAP)	875	842	1,430
Share of post-tax profit of JV	20	-	13
IFRS adjustment - financial derivatives	55	17	63
IFRS adjustment - goodwill amortisation	-	54	58
Hemmers Europe (IFRS)	950	913	1,564
Hemmers China	155	193	305
Unrealised profit in stock	(9)	(6)	(3)
Holding companies	(82)	(71)	(295)
Group profit before tax	1,014	1,029	1,571

	6 months to 30 November 2015 £000	6 months to 30 November 2014 £000	Year to 31 May 2015 £000
Net assets
Hemmers Europe (local GAAP)	10,024	10,088	9,558
IFRS adjustment - financial derivatives	80	13	42
IFRS adjustment - goodwill amortisation	562	633	575
Hemmers Europe (IFRS)	10,666	10,734	10,175
Hemmers China	915	728	810
Unrealised profit in stock	(41)	(40)	(33)
Holding companies	2,699	3,093	2,870
Group net assets	14,239	14,515	13,822

Enquiries:
Leeds Group Plc	Cairn Financial Advisers LLP
Malcolm Wilson, Company Secretary	Tony Rawlinson / Avi Robinson
T: 077801 224 618	T: 020 7148 7900

This information is provided by RNS

The company news service from the London Stock Exchange

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