LEEDS GROUP PLC

Interim / Quarterly Report • Jan 16, 2014

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RNS Number : 7599X

Leeds Group PLC

16 January 2014

LEEDS GROUP PLC

Interim Results for the six months ended 30 November 2013

STATEMENT BY THE GROUP CHAIRMAN, KATHRYN DAVENPORT

I am pleased to present the interim report of Leeds Group plc ("the Group") for the six months ended 30 November 2013.

The Group made a profit after tax of £650,000 in the period, compared with a loss of £166,000 in the corresponding period of 2012 which was severely influenced by the write off the Group's investment in Dawson International PLC that was carried in the balance sheet at 31 May 2012 at £745,000.

Earnings per share in the period were 2.3 pence (2012: loss 0.6 pence).

Sales were 14% higher than in the first half of last year. Growth of 8% was achieved by the subsidiaries in terms of their local currencies, and 6% was attributable to the translation effect as the average rate used to translate those sales to sterling was lower than in November 2012. Paradoxically, the value of sterling at 30 November 2013 was greater than at last year-end, giving rise to the negative translation difference on opening net assets of £383,000 disclosed in other comprehensive income.

Revenue at Hemmers Europe, the Group's German based operating subsidiary, increased by 12% to £16,441,000 (2012: £14,615,000), with half of the improvement coming from the translation impact. Trading conditions were much as in the previous year and sales volumes of 6.4 million metres represented growth of 3.8%. Revenue growth, in terms of Euro, was 6% and was, to a large extent, attributable to a new and successful relationship with a multinational customer that now offers under its own label a collection of fabrics supplied by Hemmers. Overheads were once again well controlled and profit before tax for Hemmers Europe was £840,000 (2012: £697,000).

External sales volumes and revenues in local currency at ChinohTex, the Chinese subsidiary of Hemmers, grew by 48% and 22% respectively over the corresponding period last year. The sales growth owed much to a successful entry into the Mexican market to which went a quarter of all sales in the period, albeit at relatively low margins. Overhead growth to support additional staff restricted pre-tax profit in the period to £188,000 (2012: £189,000). As well as this significant contribution to Group profits, ChinohTex also performs invaluable work to assist the European operation through its purchasing strengths, product inspection and consolidation of freight shipments.

Net asset value per share (excluding shares held in treasury) at 30 November 2013 was 50.0 pence (2012: 45.2 pence) inclusive of goodwill.  There was further reduction in Group net debt which stood at £112,000 at 30 November 2013 (30 November 2012: £1,004,000, 31 May 2013 £390,000).

The Directors intend to increase the value of the Group by making investments in businesses where they have relevant expertise but may not necessarily be operating in the textile industry and, in order to maximise funds available for this purpose, do not propose an interim dividend.

Despite the improved performance in the first half of the current financial year, the economic environment in many of the markets in which the Group operates remains fragile. Sales in the seasonally quiet month of December were broadly in line with the expectations of the Board and as we approach the traditionally busy first quarter of the New Year our order books are much as 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.

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

Kathryn Davenport

Chairman 

16 January 2014

Enquiries:
Leeds Group plc	Cairn Financial Advisers plc
Kathryn Davenport, Chairman  Tel: 01132859020	Tony Rawlinson Tel: 020 7148 7900
Malcolm Wilson, Company Secretary Tel: 07801224618	Tel: 020 7148 7900

Unaudited Consolidated Statement of Comprehensive Income

for the 6 months ended 30 November 2013

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year to 31 May 2013 £000
Revenue	18,461	16,201	31,140
Cost of sales	(14,339)	(12,631)	(24,350)
Gross profit	4,122	3,570	6,790
Distribution costs	(1,206)	(1,052)	(2,043)
Administrative expenses	(1,901)	(1,613)	(3,224)
Impairment of available-for-sale investment	-	(745)	(745)
## Profit from operations	1,015	160	778
Finance expense	(46)	(52)	(95)
Finance income	6	6	12
Profit before tax	975	114	695
Tax expense	(325)	(280)	(412)
## Profit/(loss) for the period attributable to the equity holders of the Company	650	(166)	283
Other comprehensive income:
Translation differences on foreign operations	(383)	107	698
## Total comprehensive income for the period attributable to the equity holders of the Company	267	(59)	981

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

There is no tax effect relating to other comprehensive income.

Earnings/(loss) per share for profit/(loss) attributable

to the equity holders of the Company

	6 months to 30 November 2013	6 months to 30 November 2012	Year to 31 May 2013
Basic and diluted (pence)	2.3p	(0.6)p	1.0p

Unaudited Consolidated Statement of Financial Position

at 30 November 2013

	As at 30 November 2013 £000	As at 30 November 2012 £000	As at 31 May 2013 £000
Assets
Non-current assets
Property, plant and equipment	1,937	1,854	2,004
Intangible assets	927	906	955
Total non-current assets	2,864	2,760	2,959
Current assets
Inventories	7,104	6,168	6,551
Trade and other receivables	7,008	7,176	6,920
Cash and cash equivalents	1,648	2,042	2,334
Total current assets	15,760	15,386	15,805
Total assets	18,624	18,146	18,764
Liabilities
Non-current liabilities
Loans and borrowings	(1,715)	(1,795)	(1,829)
Deferred tax	(217)	(179)	(219)
Total non-current liabilities	(1,932)	(1,974)	(2,048)
Current liabilities
Trade and other payables	(2,323)	(2,114)	(1,979)
Loans and borrowings	(45)	(1,251)	(895)
Corporation tax liability	(440)	(200)	(262)
Derivative financial liabilities	(37)	(47)	-
Total current liabilities	(2,845)	(3,612)	(3,136)
Total liabilities	(4,777)	(5,586)	(5,184)
TOTAL NET ASSETS	13,847	12,560	13,580

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	(681)	(661)	(681)
Foreign exchange reserve	1,412	1,204	1,795
Retained earnings	8,724	7,625	8,074
TOTAL EQUITY	13,847	12,560	13,580

Unaudited Consolidated Cash Flow Statement

for the 6 months ended 30 November 2013

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year  to 31 May 2013 £000
Cash flows from operating activities
Profit/(loss) for the period	650	(166)	283
Adjustments for:
Depreciation	122	122	215
Impairment of available-for-sale investment	-	745	745
Movement in derivative financial assets and liabilities	38	46	-
Finance expense	46	52	95
Finance income	(6)	(6)	(12)
Profit on sale of property, plant and equipment	(3)	-	(1)
Income tax expense	325	280	412
Cash flows from operating activities before changes in working capital and provisions	1,172	1,073	1,737
(Increase)/decrease in inventories	(764)	309	268
(Increase)/decrease  in trade and other receivables	(322)	(426)	190
Increase/(decrease)  in trade and other payables	441	(236)	(511)
Cash generated by operating activities	527	720	1,684
Income taxes paid	(129)	(279)	(334)
Net cash flows from operating activities	398	441	1,350
Investing activities
Purchase of property, plant and equipment	(113)	(67)	(209)
Sale of property, plant and equipment	3	-	2
Bank interest received	6	6	12
Net cash used in investing activities	(104)	(61)	(195)
Financing activities
Purchase of treasury shares	-	(3)	(23)
Repayment of bank borrowings	(907)	(252)	(724)
Bank interest paid	(46)	(52)	(95)
Net cash used in financing activities	(953)	(307)	(842)
Net (decrease)/increase in cash and cash equivalents	(659)	73	313
Translation (loss)/gain on cash and cash equivalents	(27)	2	54
Cash and cash equivalents at beginning of the period	2,334	1,967	1,967
Cash and cash equivalents at end of the period	1,648	2,042	2,334

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 November 2013

	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 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	Foreign exchange reserve         £000	Retained earnings £000	Total equity £000
At 1 June 2012	3,792	600	(658)	1,097	7,791	12,622
Profit for the period	-	-	-	-	283	283
Other comprehensive income*	-	-	-	698	-	698
Purchase of treasury shares	-	-	(23)	-	-	(23)
At 31 May 2013	3,792	600	(681)	1,795	8,074	13,580

*       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 2013

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 2013 and 30 November 2012 comply with IAS 34 and are unaudited.

The financial information for the year ended 31 May 2013 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 May 2013 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 2013 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 2013	6 months to 30 November 2012	Year to 31 May 2013
	27,674,342	27,779,403	27,775,274

3.  Reconciliation of movements in net bank debt

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year to 31 May 2013 £000
(Decrease)/increase  in cash & cash equivalents	(659)	73	313
Translation (loss)/gain on cash and cash equivalents	(27)	2	54
Repayment of bank borrowings	907	252	724
Translation gain/(loss) on loans	57	(31)	(181)
Decrease in net debt	278	296	910
Net bank debt at beginning of period	(390)	(1,300)	(1,300)
Net bank debt at end of period	(112)	(1,004)	(390)

4.  Analysis of net bank debt

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year to 31 May 2013 £000
Cash	1,648	2,042	2,334
Loans repayable in less than one year	(45)	(1,251)	(895)
Loans repayable in more than one year	(1,715)	(1,795)	(1,829)
Net bank debt at end of period	(112)	(1,004)	(390)

Interim results

for the 6 months ended 30 November 2013

Notes to the accounts (continued)

5.  Segmental information

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year to 31 May 2013 £000
External revenue
Hemmers Europe	16,441	14,615	28,209
Hemmers China	2,020	1,586	2,931
Total Group external revenue	18,461	16,201	31,140

	6 months to 30 November 2013 £000	6 months to 30 November 2012 £000	Year to 31 May 2013 £000
Profit before tax
Hemmers Europe (local GAAP)	819	689	1,056
IFRS adjustment - financial derivatives	(38)	(46)	-
IFRS adjustment - goodwill amortisation	59	54	109
Hemmers Europe (IFRS)	840	697	1,165
Hemmers China	188	189	261
Unrealised profit in stock	(9)	-	2
Impairment of available-for-sale investment	-	(745)	(745)
Holding companies	(44)	(27)	12
Group profit before tax	975	114	695

	As at 30 November 2013 £000	As at 30 November 2012 £000	As at 31 May 2013 £000
Net assets
Hemmers Europe (local GAAP)	9,443	8,432	9,165
IFRS adjustment - financial derivatives	(27)	(34)	-
IFRS adjustment - goodwill amortisation	580	489	554
Hemmers Europe (IFRS)	9,996	8,887	9,719
Hemmers China	595	410	491
Unrealised profit in stock	(36)	(28)	(27)
Holding companies	3,292	3,291	3,397
Group net assets	13,847	12,560	13,580

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