LEEDS GROUP PLC

Interim / Quarterly Report • Jan 17, 2022

National Storage Mechanism | Additional information

RNS Number : 5550Y

Leeds Group PLC

17 January 2022

Issued on behalf of Leeds Group plc                                                                                           Embargoed: 7.00am

Date: 17 January 2022

Leeds Group plc 

("Leeds Group" or the "the Group") 

Unaudited Interim Results for the six months ended 30 November 2021

The unaudited interim results of Leeds Group plc ("Leeds Group" or "the Group") for the six months ended 30 November 2021 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 activities of the Group are that of a wholesaler and retailer of fabrics and haberdashery and are 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.

As already communicated in our AGM statement of 23 November 2021, the ongoing Covid-19 pandemic continues to impact on the Group's trading activities. It had been expected that the early months of this financial year would be difficult but that there would then be a gradual return to more normal trading levels. However, the prolonged nature of the pandemic, exacerbated by the emergence of the Omicron variant in late November 2021, has impacted consumer confidence and caused many our customers to become overstocked and reduce demand while they correct that position. Although there have been no further country-wide lockdowns in Germany, the German government and other European governments have introduced restrictions to curb the spread of the new Omicron variant which directly impact retail operations. Sales at Hemmers and KMR have consequently reduced by 19% and 33% respectively compared with the previous year which is consistent with reductions being reported by competitors in our sector.

The Group turnover in the first six months of the financial year was £15,592,000 (2020: £19,956,000): Hemmer's turnover decreased to £12,668,000 (2020: £15,598,000) and KMR turnover decreased to £2,924,000 (2020: £4,358,000).

Hemmers and KMR management teams are monitoring and managing the Covid-19 market situation to ensure the cost base and inventories are aligned over time with the reduced turnover, however, the Group made a loss before tax of £487,000 (2020: profit of £735,000. Hemmers reported a loss of £192,000 (2020: profit of £729,000) and KMR a loss of £242,000 (2020: profit of £145,000).   Management will take further action in the second half of the year to reduce costs further and will also apply for further government financial support.

Group net bank debt, as analysed in note 4, was £5,877,000 as at 30 November 2021 (30 November 2020: £4,034,000; 31 May 2021: £3,952,000). Group debt increased in the first half of the year due to the reduced level of trading and seasonal increased stock levels.

The short-term business outlook remains difficult to predict because of the prolonged nature of the pandemic with new variants continuing to emerge. In the medium term we assume that increased immunity amongst the population will enable a return to more normal trading levels and profitability.

Jan G Holmstrom

Chairman

17 January 2022

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2021

	6 months to 30 November 2021 £000	6 months to 30 November 2020 £000	Year to 31 May 2021 £000
Continuing operations Revenue	15,592	19,956	33,013
Cost of sales	(12,514)	(15,371)	(26,700)
Gross profit	3,078	4,585	6,313
Distribution costs	(1,250)	(1,442)	(2,647)
Administrative costs	(2,188)	(2,293)	(4,912)
Other income	-	-	966
(Loss)/profit from operations	(360)	850	(280)
Finance expense	(127)	(115)	(228)
(Loss)/profit before tax	(487)	735	(508)
Taxation	-	-	42
(Loss)/profit for the period/year attributable to the equity holders of the Parent Company	(487)	735	(466)
Other comprehensive loss for the period/year	(101)	(63)	(556)
## Total comprehensive (loss)/profit for the period/year attributable to the equity holders of the Company	(588)	672	(1,022)

(Loss)/earnings per share for profit attributable to the equity holders of the Company

	6 months to 30 November 2021	6 months to 30 November 2020	Year to 31 May 2021
Basic and diluted total (loss)/earnings per share (pence)	(1.8)p	2.6p	(1.7)p

Unaudited Consolidated Statement of Financial Position

at 30 November 2021

	As at 30 November 2021 £000	As at 30 November 2020 £000	As at 31 May 2021 £000
Assets
Non-current assets
Property, plant and equipment	7,631	8,104	7,750
Right-of-use assets	2,175	1,962	2,453
Intangible assets	57	66	58
Total non-current assets	9,863	10,132	10,261
Current assets
Inventories	12,446	10,851	10,287
Trade and other receivables	3,755	3,862	2,867
Corporation tax recoverable	61	77	136
Cash on demand and on short term deposit	216	905	670
Total current assets	16,478	15,695	13,960
Total assets	26,341	25,827	24,221
Liabilities
Non-current liabilities
Loans and borrowings	(987)	(1,751)	(1,498)
Lease liabilities	(1,006)	(1,075)	(1,856)
Total non-current liabilities	(1,993)	(2,826)	(3,354)
Current liabilities
Trade and other payables	(3,649)	(2,532)	(2,265)
Loans and borrowings	(5,102)	(3,188)	(2,926)
Lease liabilities	(1,524)	(893)	(1,015)
Derivative financial liability	-	(33)	-
Provisions	(100)	(100)	(100)
Total current liabilities	(10,375)	(6,746)	(6,306)
Total liabilities	(12,368)	(9,572)	(9,660)
TOTAL NET ASSETS	13,973	16,255	14,561

Capital and reserves attributable to equity holders of the company
Share capital	3,279	3,792	3,279
Capital redemption reserve	1,113	600	1,113
Treasury share reserve	-	(807)	-
Foreign exchange reserve	2,084	2,678	2,185
Retained earnings	7,497	9,992	7,984
TOTAL EQUITY	13,973	16,255	14,561

Unaudited Consolidated Cash Flow Statement

for the six months ended 30 November 2021

	6 months to 30 November 2021 £000	6 months to 30 November 2020 £000	Year to 31 May 2021 £000
Cash flows from operating activities
(Loss)/profit for the period/year	(487)	735	(466)
Adjustments for:
Government assistance credit	-	-	(966)
Depreciation of property, plant and equipment	334	381	624
Depreciation of right-of-use assets	461	447	1,062
Impairment of right-of-use assets	-	-	333
Amortisation of intangible assets	-	-	6
Finance expense - interest on bank loans	89	80	154
Finance expense - interest lease liabilities	38	35	74
Movement in derivative financial assets	-	33	-
Gain on sale of fixed assets	-	(30)	(14)
Taxation credit	-	-	(42)
Cash flows generated from operating activities before changes in working capital and provisions	435	1,681	765
Increase in inventories	(2,254)	(713)	(571)
(Increase)/decrease in trade and other receivables	(677)	(416)	718
Increase/(decrease) in trade and other payables	1,386	(323)	(599)
Cash (used in)/generated from operating activities	(1,110)	229	313
Taxation received	73	134	110
Net cash flows (used in)/generated from operating activities	(1,037)	363	423
Investing activities
Purchase of property, plant and equipment	(283)	(347)	(562)
Proceeds from sale of fixed assets	-	38	21
Net cash used in investing activities	(283)	(309)	(541)
Financing activities
Bank borrowings drawn	2,272	339	787
Bank borrowings repaid	(564)	-	(771)
Repayment of principal on lease liabilities	(519)	(475)	(985)
Repayment of interest on lease liabilities	(38)	(35)	(74)
Bank interest paid	(89)	(80)	(154)
Government assistance received	-	-	705
Net cash generated from/(used in) financing activities	1,062	(251)	(492)
Net decrease in cash and cash equivalents	(258)	(197)	(610)
Translation loss on cash and cash equivalents	(2)	(2)	(22)
Cash and cash equivalents at beginning of period/year	472	1,104	1,104
Cash and cash equivalents at end of period/year	212	905	472
Cash on demand or on short term deposit	216	905	670
Bank overdrafts	(4)	-	(198)
Cash and cash equivalents at end of period/year	212	905	472

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2021

	Share capital £000	Capital redemption reserve £000	Treasury share 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

	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 2020	3,792	600	(807)	2,741	9,257	15,583
Cancellation of treasury shares	(513)	513	807	-	(807)	-
Loss for the year	-	-	-	-	(466)	(466)
Other comprehensive income	-	-	-	(556)	-	(556)
At 31 May 2021	3,279	1,113	-	2,185	7,984	14,561

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 2021

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 2021 and 30 November 2020 are unaudited. The interim financial statements have been prepared using accounting policies consistent with International Accounting Standards in conformity with the Companies Act 2006. 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 2021 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2021 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 2021 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.  Accounting policies

Basis of preparation

This announcement has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and in conformity with the Companies Act 2006.

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 2023, 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 have been prepared for the period to 31 May 2024 which indicates a return to profit over the period. These forecasts are based on the current Covid-19 conditions and assume that there will be no protracted periods of country-wide lockdowns. Both Hemmers and KMR are located in Germany and have been affected by restrictions imposed by the German and other European governments. Management continues to work hard to manage the effects of the ongoing pandemic on both businesses. In the medium term we assume that increased immunity amongst the population will enable a return to more normal trading levels and profitability.

Bank debt has increased as expected in the first half of the year.  Both 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 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 working capital facilities, the Directors are of the opinion that it is appropriate to apply the going concern basis of preparation to the financial statements.

2.  (Loss)/earnings per share

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

	6 months to 30 November 2021	6 months to 30 November 2020	Year to 31 May 2021
Number of shares (basic and diluted)	27,320,843	27,320,843	27,320,843

3.  Segmental information

Group external revenue	6 months to 30 November 2021 £000	6 months to 30 November 2020 £000	Year to 31 May 2021 £000
Continuing operations Hemmers	12,668	15,598	27,669
KMR	2,924	4,358	5,344
Group external revenue	15,592	19,956	33,013

Group (loss)/profit before tax	6 months to 30 November 2021 £000	6 months to 30 November 2020 £000	Year to 31 May 2021 £000
Continuing operations Hemmers	(192)	621	(21)
KMR	(242)	145	(311)
Holding company	(53)	(31)	(176)
Group (loss)/profit before tax	(487)	735	(508)

Group net assets	As at 30 November 2021 £000	As at 30 November 2020 £000	As at 31 May 2021 £000
Continuing operations Hemmers	9,931	11,779	10,214
KMR	1,292	1,541	1,545
Holding company	2,750	2,935	2,802
Group net assets	13,973	16,255	14,561

4.  Analysis of net bank debt

	As at 30 November 2021 £000	As at 30 November 2020 £000	As at 31 May 2021 £000
Cash on demand and on short term deposit	216	905	670
Bank overdrafts	(4)	-	(198)
Current loans and borrowings	(5,102)	(3,188)	(2,926)
Non - current loans and borrowings	(987)	(1,751)	(1,498)
Net bank debt at end of period/year	(5,877)	(4,034)	(3,952)

Current loans and borrowings

At 30 November 2021 current loans and borrowings of £5,102,000 (2020: £3,188,000) comprise short term loans of £4,804,000 and instalments due on long term loans detailed below of £298,000. The interest rate on the short-term loans ranges from 1.5% to 3% (2020: 1.25% 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 £9.8m (€11.5m) and by KMR against short-term borrowing facilities of £0.9m (€1m).  

Non-current loans and borrowings

A non-current loan was drawn down in 2007 from Kreissparkasse to finance the freehold extension of the warehouse in Nordhorn. This has been repaid early during the first half of the year and refinanced by short term debt at lower interest rates. In 2016 and 2017 further loans were drawn down to finance developments at Nordhorn.

The Group's loans and borrowings are within the accounts of Hemmers. They are denominated in Euros, and their principal terms are as follows:

	Fixed interest rate	Repayment profile	Final repayment date	As at 30 November 2020 £000	As at 30 November 2020 £000	As at 31 May 2021 £000
Loan 1	4.07%	Equal monthly instalments	September 2027	-	400	353
Loan 2	1.65%	Equal quarterly instalments	September 2025	710	995	835
Loan 3	1.05%	Equal quarterly instalments	March 2026	277	356	310
Non-current loans				987	1,751	1,498

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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