LEEDS GROUP PLC

Interim / Quarterly Report • Jan 8, 2013

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RNS Number : 0034V

Leeds Group PLC

08 January 2013

8 January 2013

LEEDS GROUP PLC

HALF YEARLY REPORT

CHAIRMAN'S STATEMENT

I am pleased to present the interim report of Leeds Group plc ("the Group") for the six months ended 30 November 2012.

The Group made a loss after tax of £166,000 in the six month period, compared with a profit of £481,000 in the corresponding period of 2011. Profit after tax from trading operations was £579,000, up by 20% on last year but the overall result was severely influenced by the need to write off the Group's investment in Dawson International PLC ("Dawson") following that company's appointment of administrators in August 2012. The Group's investment in Dawson was carried in the balance sheet at 31 May 2012 at £745,000, and the write-off is not deductible for tax purposes.

The write-off represented a loss per share of 2.7p and as a consequence of this, the overall loss per share in the period was 0.6 pence (2011: earnings 1.7 pence).

Revenue at Hemmers Europe, the Group's German based operating subsidiary, was £14,615,000 (2011: £13,908,000).  Trading conditions were a little easier than in the previous year and sales volumes of 6.2 million metres represented growth of 12.5%. In Euro terms, revenues increased by 14.9% compared with 2011 which was sufficient to offset the effect of the declining value of the Euro against the US $ and to lead to a very small increase in the rate of gross margin. Overheads were once again well controlled and profit before tax for Hemmers Europe was £697,000 (2011: £706,000). In arriving at this profit figure, £46,000 was charged relating to the marking to market of financial derivatives (2011: credit £153,000).

External sales volumes and revenues at ChinohTex, the Chinese subsidiary of Hemmers, grew by more than 80% over the corresponding period last year. ChinohTex performs invaluable work to assist the European operation through its purchasing strengths, product inspection and consolidation of freight shipments, and has now begun moving towards being a valuable profit centre in its own right with pre-tax profit in the period of £189,000 (2011: £37,000).

Net asset value per share (excluding shares held in treasury) at 30 November 2012 was 45.2 pence (2011: 45.7 pence) inclusive of goodwill.  The seasonal growth in working capital of £353,000 was substantially lower than the previous year's figure of £841,000. The combination of profitable trading and excellent working capital control over the last six months has led to a continuing reduction in Group net debt which amounted to £1,004,000 at 30 November 2012 (November 2011: £2,026,000, May 2012 £1,300,000)

The Group has continued to use the authority granted to it to buy back shares into Treasury, although liquidity in Leeds Group shares has been limited and during the six month period, the Group purchased only 20,000 shares. The Directors do not propose an interim dividend.

Despite the improved performance in the first half of the current financial year, the economic environment remains uncertain. Sales in the seasonally quiet months of November and December have been in line with the expectations of the Board and we approach the first few busy months of 2013 with order books a little fuller than at this time last year. Nevertheless the seasonal nature of our businesses has led in recent years to first half trading profits running somewhat ahead of those of the second half.

As ever, thanks are due to staff throughout the Group for their unstinting efforts in the period covered by this report.

Kathryn Davenport

Chairman 

Enquiries:

Leeds Group plc Malcolm Wilson	Tel: 07801 224618
Cairn Financial Advisers LLP Tony Rawlinson	Tel: 020 7148 7900

Unaudited Consolidated Statement of Comprehensive Income

for the 6 months ended 30 November 2012

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year to 31 May 2012 £000
Revenue	16,201	14,755	28,364
Cost of sales	(12,631)	(11,415)	(22,080)
Gross profit	3,570	3,340	6,284
Distribution costs	(1,052)	(1,009)	(2,005)
Administrative expenses	(1,613)	(1,564)	(3,103)
Impairment of available-for-sale investment	(745)	-	(236)
## Profit from operations	160	767	940
Finance expense	(52)	(80)	(140)
Finance income	6	10	18
Profit before tax	114	697	818
Tax expense	(280)	(216)	(315)
## (Loss)/profit for the period, attributable to the equity holders of the Company	(166)	481	503
Other comprehensive income:
Translation differences on foreign operations	107	(183)	(805)
Unrealised loss taken to available-for-sale reserve	-	(421)	(152)
Other comprehensive income for the period	107	(604)	(957)
## Total comprehensive income for the period, attributable to the equity holders of the Company	(59)	(123)	(454)

The results shown in the income statement derive wholly from continuing operations.

There is no tax effect relating to other comprehensive income.

(Loss)/earnings per share for (loss)/profit attributable

to the equity holders of the Company

	6 months to 30 November 2012	6 months to 30 November 2011	Year to 31 May 2012
Basic and diluted (pence)	(0.6)p	1.7p	1.8p

Unaudited Consolidated Statement of Financial Position

at 30 November 2012

	As at 30 November 2012 £000	As at 30 November 2011 £000	As at 31 May 2012 £000
Assets
Non-current assets
Property, plant and equipment	1,854	2,058	1,890
Intangible assets	906	955	896
Available-for-sale investments	-	712	745
Total non-current assets	2,760	3,725	3,531
Current assets
Inventories	6,168	6,817	6,416
Trade and other receivables	7,176	7,253	6,689
Derivative financial assets	-	32	-
Cash and cash equivalents	2,042	1,859	1,967
Total current assets	15,386	15,961	15,072
Total assets	18,146	19,686	18,603
Liabilities
Non-current liabilities
Loans and borrowings	(1,795)	(2,019)	(1,836)
Deferred tax	(179)	(179)	(175)
Total non-current liabilities	(1,974)	(2,198)	(2,011)
Current liabilities
Trade and other payables	(2,114)	(2,345)	(2,339)
Loans and borrowings	(1,251)	(1,866)	(1,431)
Corporation tax liability	(200)	(181)	(200)
Derivative financial liabilities	(47)	-	-
Total current liabilities	(3,612)	(4,392)	(3,970)
Total liabilities	(5,586)	(6,590)	(5,981)
TOTAL NET ASSETS	12,560	13,096	12,622

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	(661)	(515)	(658)
Available-for-sale reserve	-	(269)	-
Foreign exchange reserve	1,204	1,719	1,097
Retained earnings	7,625	7,769	7,791
TOTAL EQUITY	12,560	13,096	12,622

Unaudited Consolidated Cash Flow Statement

for the 6 months ended 30 November 2012

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year  to 31 May 2012 £000
Cash flows from operating activities
(Loss)/profit for the period	(166)	481	503
Adjustments for:
Depreciation	122	118	229
Impairment of available-for-sale investment	745	-	236
Movement in derivative financial assets and liabilities	46	(153)	(118)
Translation gain/(loss) on cash and cash equivalents	2	6	(24)
Finance expense	52	80	140
Finance income	(6)	(10)	(18)
Loss on sale of property, plant and equipment	-	-	1
Income tax expense	280	216	315
Cash flows from operating activities before changes in working capital and provisions	1,075	738	1,264
Decrease in inventories	309	282	261
Increase  in trade and other receivables	(426)	(937)	(748)
Increase  in trade and other payables	(236)	(186)	(47)
Cash generated/(absorbed) by operating activities	722	(103)	730
Income taxes paid	(279)	(105)	(169)
Net cash flows from operating activities	443	(208)	561
Investing activities
Purchase of property, plant and equipment	(67)	(42)	(112)
Sale of property, plant and equipment	-	-	3
Bank interest received	6	10	18
Net cash used in investing activities	(61)	(32)	(91)
Financing activities
Purchase of treasury shares	(3)	(5)	(148)
Repayment of bank borrowings	(252)	(80)	(479)
Bank interest paid	(52)	(80)	(140)
Net cash used in financing activities	(307)	(165)	(767)
Net increase/(decrease) in cash and cash equivalents	75	(405)	(297)
Cash and cash equivalents at beginning of the period	1,967	2,264	2,264
Cash and cash equivalents at end of the period	2,042	1,859	1,967

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2012

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Available- for- sale reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2012	3,792	600	(658)	-	1,097	7,791	12,622
Loss for the period	-	-	-	-	-	(166)	(166)
Other comprehensive income*	-	-	-	-	107	-	107
Purchase of treasury shares	-	-	(3)	-	-	-	(3)
At 30 November 2012	3,792	600	(661)	-	1,204	7,625	12,560

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Available- for- sale reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2011	3,792	600	(510)	152	1,902	7,288	13,224
Profit for the period	-	-	-	-	-	481	481
Other comprehensive income*	-	-	-	(421)	(183)	-	(604)
Purchase of treasury shares	-	-	(5)	-	-	-	(5)
At 30 November 2011	3,792	600	(515)	(269)	1,719	7,769	13,096

	Share capital £000	Capital redemption reserve £000	Treasury share reserve £000	Available- for- sale reserve £000	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2011	3,792	600	(510)	152	1,902	7,288	13,224
Profit for the period	-	-	-	-	-	503	503
Other comprehensive income*	-	-	-	(152)	(805)	-	(957)
Purchase of treasury shares	-	-	(148)	-	-	-	(148)
At 31 May 2012	3,792	600	(658)	-	1,097	7,791	12,622

* The components of other comprehensive income are disclosed on page 2.

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
Available-for-sale reserve	Gains/(losses) arising on financial assets classified as available-for-sale
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 2012 and 30 November 2011 are unaudited.

The financial information for the year ended 31 May 2012 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2012 have been filed with the Registrar of Companies.  The Independent Auditor's Report on the Annual Report and Financial Statement for the year ended 31 May 2012 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 2012	6 months to 30 November 2011	Year to 31 May 2012
	27,779,403	28,653,468	28,365,763

3.  Reconciliation of movements in net debt

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year to 31 May 2012 £000
Increase/(decrease)  in cash & cash equivalents	75	(405)	(297)
Repayment of bank borrowings	252	80	479
Foreign currency translation differences on loans	(31)	73	292
Decrease/(increase) in net debt	296	(252)	474
Net debt at beginning of period	(1,300)	(1,774)	(1,774)
Net debt at end of period	(1,004)	(2,026)	(1,300)

4.  Analysis of net debt

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year to 31 May 2012 £000
Cash	2,042	1,859	1,967
Overdrafts	-	-	-
Loans repayable in between  one and five years	(1,795)	(2,019)	(1,836)
Loans repayable in less than one year	(1,251)	(1,866)	(1,431)
Net debt at end of period	(1,004)	(2,026)	(1,300)

5.  Segmental information

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year to 31 May 2012 £000
External revenue
Hemmers Europe	14,615	13,908	26,606
Hemmers China	1,586	847	1,758
Total Group external revenue	16,201	14,755	28,364

	6 months to 30 November 2012 £000	6 months to 30 November 2011 £000	Year to 31 May 2012 £000
Profit before tax
Hemmers Europe (local GAAP)	689	493	807
IFRS adjustment - financial derivatives	(46)	153	118
IFRS adjustment - goodwill amortisation	54	60	116
Hemmers Europe (IFRS)	697	706	1,041
Hemmers China	189	37	93
Unrealised profit in stock	-	(8)	(5)
Impairment of available-for-sale investment	(745)		(236)
Holding companies	(27)	(38)	(75)
Group profit before tax	114	697	818

	As at 30 November 2012 £000	As at 30 November 2011 £000	As at 31 May 2012 £000
Net assets
Hemmers Europe (local GAAP)	8,432	8,239	7,889
IFRS adjustment - financial derivatives	(34)	23	-
IFRS adjustment - goodwill amortisation	489	431	444
Hemmers Europe (IFRS)	8,887	8,693	8,333
Hemmers China	410	226	273
Unrealised profit in stock	(28)	(33)	(28)
Holding companies	3,291	4,210	4,044
Group net assets	12,560	13,096	12,622

This information is provided by RNS

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