LEEDS GROUP PLC

Interim / Quarterly Report • Jan 15, 2021

National Storage Mechanism | Additional information

RNS Number : 7530L

Leeds Group PLC

15 January 2021

Issued on behalf of Leeds Group plc                                                               Embargoed: 7.00am

Date: 15 January 2021

Leeds Group plc 

("Leeds Group" or the "the Group") 

Unaudited Interim Results for the six months ended 30 November 2020

The unaudited interim results of Leeds Group plc ("Leeds Group" or "the Group") for the six months ended 30 November 2020 are presented as follows:

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR) 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      Liam Murray/Sandy Jamieson - 020 7213 0880

Chairman's Statement 

The business of the Group is that of a wholesaler and retailer of fabrics and haberdashery and is conducted by its German trading subsidiary Hemmers/Itex Textil Import Export GmbH ("Hemmers") and Stoff-Ideen-KMR GmbH ("KMR"), a subsidiary of Hemmers also based in Germany. The Chinese subsidiary of Hemmers, Chinoh-Tex Ltd ("Chinoh-Tex") ceased trading in November 2019 and was liquidated in the financial year to 31 May 2020, as such it has been regarded as a discontinued operation in the previous year's figures within these financial statements.

The Group achieved sales from continuing operations in the period of £19,956,000 (2019: £18,600,000). Even though the Covid-19 situation is still impacting the global economy, sales for Hemmers and KMR in the first six months of the financial year have been higher than expected, with sales at Hemmers increasing to £15,598,000 (2019: £14,525,000) and KMR sales increasing to £4,358,000 (2019: £4,075,000). Since the half year end, there have been further countrywide restrictions imposed by the German government, which at present is expected to initially affect trading in both businesses from 16 December 2020 to 31 January 2021. KMR shops will be closed during this period and the business of Hemmers will be reduced, although online business will still be able to continue. Hemmers and KMR management will work hard to manage the situation and reduce all costs as far as possible given the reduced level of trading and both companies should benefit from any government financial support provided.

The Group made a profit from continuing operations after tax of £735,000 (2019: loss of £712,000). The earnings per share from continuing activities was 2.6 pence (2019: loss per share 2.6 pence). The profit for Hemmers for the half year was £729,000 (2019: loss of £515,000) and the profit for KMR for the half year was £145,000 (2019: loss of £251,000). The effect of prior year cost cutting measures is now evident with a reduction in costs. Management is focused on aligning the business with sales demand and competing in markets where it can make acceptable margins.

On 31 December 2020, the UK left the European Union having secured a deal acceptable to both the UK and the European Union. As advised in previous announcements, the Directors' do not believe this will impact the Group as the business of Leeds Group is conducted entirely by Hemmers and KMR both of which are incorporated in Germany, and their exports to the UK account for only approximately 3% of Group revenue.

Group net bank debt, as analysed in note 3, was £4,034,000 as at 30 November 2020 (30 November 2019: £6,843,000; 31 May 2020: £3,517,000). In accordance with the newly introduced IFRS 16 with regard to accounting for leases, right-of-use assets, finance lease liabilities of £1,968,000 have been recognised as at 30 November 2020. (30 November 2019: £2,707,000; 31 May 2020: £2,405,000).

I would like to thank all employees throughout the Group for their continued hard work and support.

Jan G Holmstrom

Chairman

15 January 2021

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2020

	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Continuing operations Revenue	19,956	18,600	35,067
Cost of sales	(15,371)	(15,039)	(29,039)
Gross profit	4,585	3,561	6,028
Distribution costs	(1,442)	(1,561)	(2,876)
Administrative costs	(2,293)	(2,741)	(4,908)
Profit/(loss) from operations	850	(741)	(1,756)
Finance expense	(115)	(139)	(260)
Profit/(loss) before tax	735	(880)	(2,016)
Taxation	-	168	(6)
Profit/(loss) from continuing operations	735	(712)	(2,022)
## Discontinued operations ## (Loss) from discontinued operations	-	(416)	(332)
Profit/(loss) for the period/year attributable to the equity holders of the Parent Company	735	(1,128)	(2,354)
Other comprehensive (loss)/income for the period/year	(63)	(406)	196
## Total comprehensive profit/(loss) for the period/year attributable to the equity holders of the Company	672	(1,534)	(2,158)

Earnings/(loss) per share for profit attributable to the equity holders of the Company

	6 months to 30 November 2020	6 months to 30 November 2019	Year to 31 May 2020
Basic and diluted total earnings/(loss) per share (pence)	2.6p	(4.1)p	(8.6)p
Basic and diluted earnings/(loss) from continuing operations per share (pence)	2.6p	(2.6)p	(7.4)p
Basic and diluted (loss) from discontinued operations per share (pence)	-	(1.5)p	(1.2)p

Unaudited Consolidated Statement of Financial Position

at 30 November 2020

	As at 30 November 2020 £000	As at 30 November 2019 £000	As at 31 May 2020 £000
Assets
Non-current assets
Property, plant and equipment	8,104	8,043	8,183
Right-of-use assets	1,962	2,695	2,374
Investment property	-	965	-
Intangible assets	66	69	67
Total non-current assets	10,132	11,772	10,624
Current assets
Inventories	10,851	12,245	10,188
Trade and other receivables	3,862	4,486	3,464
Corporation tax recoverable	77	778	206
Derivative financial asset	-	5	-
Cash and cash equivalents	905	1,331	1,104
Total current assets	15,695	18,845	14,962
Total assets	25,827	30,617	25,586
Liabilities
Non-current liabilities
Loans and borrowings	(1,751)	(2,027)	(1,950)
Lease liabilities	(1,075)	(1,747)	(1,478)
Total non-current liabilities	(2,826)	(3,774)	(3,428)
Current liabilities
Trade and other payables	(2,532)	(3,429)	(2,877)
Loans and borrowings	(3,188)	(6,147)	(2,671)
Lease liabilities	(893)	(960)	(927)
Derivative financial liability	(33)	-	-
Provisions	(100)	(100)	(100)
Total current liabilities	(6,746)	(10,636)	(6,575)
Total liabilities	(9,572)	(14,410)	(10,003)
TOTAL NET ASSETS	16,255	16,207	15,583

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		(807)		(807)		(807)
Foreign exchange reserve		2,678		2,139		2,741
Retained earnings		9,992		10,483		9,257
TOTAL EQUITY		16,255		16,207		15,583

Unaudited Consolidated Cash Flow Statement

for the six months ended 30 November 2020

	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Cash flows from operating activities
Profit/(loss) for the period/year	735	(1,128)	(2,354)
Adjustments for:
Depreciation of property, plant and equipment	381	393	723
Depreciation of right-of-use assets	447	448	876
Depreciation of investment property	-	9	13
Amortisation of intangible assets	-	-	6
Finance expense - interest on bank loans	80	95	174
Finance expense - interest lease liabilities	35	44	86
Movement in derivative financial assets	33	(5)	-
(Gain)/loss on sale of fixed assets	(30)	5	(32)
Taxation (credit)/expense	-	(168)	6
Cash flows generated from/(used in) operating activities before changes in working capital and provisions	1,681	(307)	(502)
(Increase)/decrease in inventories	(713)	(944)	1,735
(Increase)/decrease in trade and other receivables	(416)	(159)	965
(Decrease)/increase in trade and other payables	(323)	888	38
Cash generated from/(used in) operating activities	229	(522)	2,236
Taxation received	134	93	519
Net cash flows generated from/(used in) operating activities	363	(429)	2,755
Investing activities
Purchase of property, plant and equipment	(347)	(217)	(560)
Proceeds from sale of fixed assets	38	6	1,317
Net cash (used in)/generated from investing activities	(309)	(211)	757
Financing activities
Bank borrowings drawdown/(repaid)	339	1,533	(2,378)
Repayment of principal on lease liabilities	(475)	(436)	(840)
Repayment of interest on lease liabilities	(35)	(44)	(86)
Bank interest paid	(80)	(95)	(174)
Net cash (used by)/generated from financing activities	(251)	958	(3,478)
Net (decrease)/increase in cash and cash equivalents	(197)	318	34
Translation (loss)/gain on cash and cash equivalents	(2)	(52)	5
Cash and cash equivalents at beginning of period/year	1,104	1,065	1,065
Cash and cash equivalents at end of period/year	905	1,331	1,104

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2020

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2020	3,792	600	(807)	2,741	9,257	15,583
Profit for the period	-	-	-	-	735	735
Other comprehensive loss	-	-	-	(63)	-	(63)
At 30 November 2020	3,792	600	(807)	2,678	9,992	16,255

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2019	3,792	600	(807)	2,545	11,611	17,741
Loss for the period	-	-	-	-	(1,128)	(1,128)
Other comprehensive loss	-	-	-	(406)	-	(406)
At 30 November 2019	3,792	600	(807)	2,139	10,483	16,207

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2019	3,792	600	(807)	2,545	11,611	17,741
Loss for the year	-	-	-	-	(2,354)	(2,354)
Other comprehensive income	-	-	-	196	-	196
At 31 May 2020	3,792	600	(807)	2,741	9,257	15,583

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 2020

1.  Basis of preparation

This announcement has been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRS"), and with the Companies Act 2006 applicable to companies reporting under IFRS.

Going Concern

When considering its opinion about the application of the going concern basis of preparation of the interim results, the Directors have given due consideration to the historic performance of the Group, the robustness of forecasts prepared for the period to 31 May 2022, the ongoing impact of the Covid-19 pandemic 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 were prepared for the period to 31 May 2022 which indicate a return to profit over the period. These forecasts were prepared in the knowledge of current Covid-19 conditions and assumed that there would be no protracted period of total lockdown. Both Hemmers and KMR are located in Germany and both businesses responded well to the Covid-19 outbreak in March 2020, KMR was directly impacted by the first countrywide lockdown measures put in place in Germany with all stores having to close. After the first lockdown, KMR stores performed ahead of both last year and forecast. Hemmers saw significantly reduced demand during the first lockdown but like KMR, has traded strongly in the first half of the current year, ahead of last year and forecast. Since the countrywide lockdown on 16 December 2020, KMR stores have closed again and Hemmers have again seen reduced trading. Hemmers and KMR management are now working hard to manage the effects on the businesses of the second lockdown in the same way as they did during the first lockdown and will again benefit from any government financial support provided.

Bank debt has reduced in the first half and the businesses are trading within their banking facilities. The Directors have prepared sensitivities on these forecasts and will continually review the current situation with regard to the Covid-19 pandemic, but the Directors are of the currently available facilities will be sufficient for all the various scenarios.

Considering the progress made to restructure the Group, the trading results in the first half of the current financial year, the likely ongoing impact of the Covid-19 pandemic and the headroom available on the Hemmers working capital facility, the Directors are of the opinion that it is appropriate to apply the going concern basis of preparation to the financial statements.

2.  Profit/(loss) per share

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

	6 months to 30 November 2020	6 months to 30 November 2019	Year to 31 May 2020
Number of shares (basic and diluted)	27,320,843	27,320,843	27,320,843

3.  Analysis of net bank debt

	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Cash	905	1,331	1,104
Loans repayable in less than one year	(3,188)	(6,147)	(2,671)
Loans repayable in more than one year	(1.751)	(2,027)	(1,950)
Net bank debt at end of period/year	(4,034)	(6,843)	(3,517)

4.  Segmental information

Chinoh-Tex, Hemmer's China based subsidiary, ceased trading in November 2019 and, therefore, has been reported as a discontinued operation.

Group external revenue	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Continuing operations Hemmers	15,598	14,525	27,060
KMR	4,358	4,075	8,007
	19,956	18,600	35,067
Discontinued operations Chinoh-Tex	-	493	488
Group external revenue	19,956	19,093	35,555

Group profit/(loss) before tax	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Continuing operations Hemmers	729	(515)	(1,593)
KMR	145	(251)	(331)
Holding company	(139)	(114)	(92)
	735	(880)	(2,016)
Discontinued operations Chinoh-Tex	-	(416)	(332)
Group profit/(loss) before tax	735	(1,296)	(2,348)

Group net assets	6 months to 30 November 2020 £000	6 months to 30 November 2019 £000	Year to 31 May 2020 £000
Continuing operations Hemmers	11,779	11,180	11,211
KMR	1,729	1,865	1,394
Holding company	2,747	2,956	2,978
	16,255	16,001	15,583
Discontinued operations Chinoh-Tex	-	206	-
Group net assets	16,255	16,207	15,583

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.

6.  Other information

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 2020 and 30 November 2019 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 Group has chosen not to comply with IAS 34 'Interim Financial Statement' in these interim financial statements.

The financial information for the year ended 31 May 2020 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2020 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 2020 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.

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