TIDMLDSG
RNS Number : 3670T
Leeds Group PLC
05 January 2017
LEEDS GROUP PLC
Interim Results for the six months ended 30 November 2016
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 2016.
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 55% of
sales are to retailers, with remaining sales activities divided
between the wholesale and garment manufacturing sectors.
The Group achieved sales in the period of GBP21,057,000 (2015:
GBP18,489,000) and made a profit after tax of GBP848,000 (2015:
GBP692,000). Earnings per share were 3.1 pence (2015: 2.5 pence).
The weakness of sterling in recent months has had a material impact
upon the Group's results. Sales growth of 13.9% over the first half
of the previous financial year comprises a fall of 2.7% in sales at
constant exchange rates, disguised by the translation effect of
weaker sterling, which increased reported sales by 16.6%.
Similarly, the translation effect on the balance sheet has
increased net assets by GBP1,269,000 since the Group's year end on
31 May 2016. There has been a gain of some GBP300,000 in the value
of the Euro denominated parent company loan to Hemmers, and this
has been locked in by the use of derivatives. The Group's major
transactional currency exposure relates to the value of the Euro
against the US Dollar which, in contrast, has enjoyed a period of
relative stability.
In Euro terms, revenue at Hemmers fell by 2.9% to EUR22,521,000
(2015: EUR23,203,000). Growth was achieved in the retail and
garment manufacturing sectors but this was offset by reduced sales
into the wholesale sector, caused in part by an inability to keep
up with demand for double folded items, a problem now addressed
with the expansion of facilities in Nordhorn and the acquisition of
additional folding machines. The reduction in sales and an
increased cost base led to a fall on pre-tax profit to EUR734,000
(EUR1,227,000).
The KMR joint venture opened new shops in Berlin, Leipzig and
Chemnitz in the period, to bring the total number of stores to 19,
and also relocated shops in two other cities to more suitable
premises. A project is underway to implement common business
software across all shops and the costs associated with this
project and with the opening of new shops amounted to some
EUR150,000, leading to a pre-tax loss in the period, albeit a
little lower than had been budgeted. The business continues to
trade in line with the expectations of the Directors, with sales
25% greater than the equivalent period of last year.
External sales revenues and pre-tax profits at Chinoh-Tex were
little changed from last year. As well as its contribution to Group
pre-tax profit, 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.
The expansion of our facilities in Nordhorn is beginning to
deliver the expected operational benefits including: increased
double folding capacity as noted above; elimination of external
warehousing rental costs; creation of a suitable showroom and
bringing the KMR administration and warehousing in-house.
Group net debt, which has increased substantially because of the
recent property investments, was GBP5,549,000 at 30 November 2015
(30 November 2015: GBP579,000; 31 May 2016: GBP2,646,000). Net cash
outflow in the 6 months ended 30 November 2016 reflected the
seasonal increase in working capital and capital expenditure as the
Nordhorn factory extension was completed. Working capital is
expected to fall from its seasonally high level during the second
half-year.
In order to maximise funds available for future investments and
the investment in the Hemmers facility during the current year, the
Board does not propose an interim dividend. Given the global
economy with its uncertainties, the board is cautiously optimistic
for further growth in the second half of the year. As ever, I offer
thanks to our employees throughout the Group who have worked so
hard in the period.
Jan G Holmstrom, Chairman.
4 January 2017
Unaudited Consolidated Statement of Comprehensive Income
for the 6 months ended 30 November 2016
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
---------------------------------------- -------------- -------------- -----------
Revenue 21,057 18,489 36,272
Cost of sales (16,492) (14,373) (28,563)
---------------------------------------- -------------- -------------- -----------
Gross profit 4,565 4,116 7,709
Distribution costs (1,308) (1,169) (2,216)
Administrative expenses (2,036) (1,916) (3,949)
Profit from operations 1,221 1,031 1,544
Finance expense (83) (39) (92)
Finance income 1 2 4
Share of post-tax (loss)/profit
of joint venture (65) 20 51
Profit before tax 1,074 1,014 1,507
Tax expense (226) (322) (468)
---------------------------------------- -------------- -------------- -----------
Profit for the period attributable
to the equity holders of the Parent
Company 848 692 1,039
---------------------------------------- -------------- -------------- -----------
Other comprehensive income:
Translation differences on foreign
operations 1,269 (257) 693
Other comprehensive income for
the period 1,269 (257) 693
---------------------------------------- -------------- -------------- -----------
Total comprehensive income for
the period attributable to the
equity holders of the Company 2,117 435 1,732
======================================== ============== ============== ===========
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 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015
---------------------------- -------------- -------------- ---------
Basic and diluted (pence) 3.1p 2.5p 3.8p
============================ ============== ============== =========
Unaudited Consolidated Statement of Financial Position
at 30 November 2016
As at As at As at
30 November 30 November 31 May
2016 2015 2016
GBP000 GBP000 GBP000
--------------------------------- -------------- -------------- ---------
Assets
Non-current assets
Property, plant and equipment 7,444 2,271 5,864
Intangible assets 946 784 855
Investment in joint venture 642 559 640
Total non-current assets 9,032 3,614 7,359
--------------------------------- -------------- -------------- ---------
Current assets
Inventories 10,030 8,142 7,765
Trade and other receivables 7,633 6,255 5,779
Corporation tax recoverable 82 - -
Derivative financial asset 102 112 -
Cash and cash equivalents 1,681 2,875 1,612
Total current assets 19,528 17,384 15,156
--------------------------------- -------------- -------------- ---------
Total assets 28,560 20,998 22,515
================================= ============== ============== =========
Liabilities
Non-current liabilities
Loans and borrowings (4,205) (2,380) (3,843)
Deferred tax (256) (254) (230)
Total non-current liabilities (4,461) (2,634) (4,073)
--------------------------------- -------------- -------------- ---------
Current liabilities
Trade and other payables (3,445) (2,847) (2,283)
Loans and borrowings (3,025) (1,074) (415)
Derivative financial liability - - (40)
Corporation tax liability - (204) (192)
Total current liabilities (6,470) (4,125) (2,930)
--------------------------------- -------------- -------------- ---------
Total liabilities (10,931) (6,759) (7,003)
================================= ============== ============== =========
TOTAL NET ASSETS 17,629 14,239 15,512
================================= ============== ============== =========
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 (767) (743) (767)
Foreign exchange reserve 1,911 (308) 642
Retained earnings 12,093 10,898 11,245
TOTAL EQUITY 17,629 14,239 15,512
==================================== ======== ======== ========
Unaudited Consolidated Cash Flow Statement
for the 6 months ended 30 November 2016
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
------------------------------------------- -------------- -------------- ---------
Cash flows from operating activities
Profit for the period 848 692 1,039
Adjustments for:
Depreciation 294 124 300
Finance expense 83 39 92
Finance income (1) (2) (4)
Movement in derivative financial
assets (145) (55) 99
Loss on sale of property, plant
and equipment - - 1
Share of post-tax loss/(profit)
of joint venture 65 (20) (51)
Income tax expense 226 322 468
Cash flows from operating activities
before
changes in working capital and
provisions 1,370 1,100 1,944
Increase in inventories (1,434) (1,070) (44)
(Increase)/decrease in trade and
other receivables (1,234) (382) 538
Increase/(decrease) in trade and
other payables 668 277 (621)
Cash (absorbed)/generated by operating
activities (630) (75) 1,817
Income taxes paid (517) (390) (613)
Net cash flows from operating activities (1,147) (465) 1,204
=========================================== ============== ============== =========
Investing activities
Purchase of property, plant and
equipment (1,248) (686) (4,156)
Purchase of intangible assets (84) - -
Bank interest received 1 2 4
Net cash used in investing activities (1,331) (684) (4,152)
=========================================== ============== ============== =========
Financing activities
Purchase of treasury shares - (18) (42)
Net drawdown of bank borrowings 2,511 2,098 2,640
Bank interest paid (83) (39) (92)
Net cash generated by financing
activities 2,428 2,041 2,506
=========================================== ============== ============== =========
Net (decrease)/ increase in cash
and cash equivalents (50) 892 (442)
Translation gain/(loss) on cash
and cash equivalents 119 (44) 27
Cash and cash equivalents at beginning
of the period 1,612 2,027 2,027
Cash and cash equivalents at end
of the period 1,681 2,875 1,612
=========================================== ============== ============== =========
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 November 2016
Share Capital Treasury Foreign Retained Total
capital redemption share exchange earnings equity
reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ---------- ------------- ---------- ----------- ----------- ---------
At 1 June 2016 3,792 600 (767) 642 11,245 15,512
Profit for the period - - - - 848 848
Other comprehensive
income - - - 1,269 - 1,269
At 30 November 2016 3,792 600 (767) 1,911 12,093 17,629
======================== ========== ============= ========== =========== =========== =========
Share Capital Treasury Foreign Retained Total
capital redemption share exchange earnings equity
reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ---------- ------------- ---------- ----------- ----------- ---------
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 Treasury Foreign Retained Total
capital redemption share exchange earnings equity
reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ---------- ------------- ---------- ----------- ----------- ---------
At 1 June 2015 3,792 600 (725) (51) 10,206 13,822
Profit for the year - - - - 1,039 1,039
Other comprehensive
income - - - 693 - 693
Transaction with
shareholders:
Purchase of treasury
shares - - (42) - - (42)
At 31 May 2016 3,792 600 (767) 642 11,245 15,512
======================= ========== ============= ========== =========== =========== =========
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
------------------------ -----------------------------------------------------
Capital redemption Amounts transferred from share capital on redemption
reserve of issued shares
Treasury share reserve Cost of own shares held in treasury
Foreign exchange Gains/(losses) arising on retranslation of
reserve 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 2016
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 2016
and 30 November 2015 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 2016 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 31 May
2016 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 2016 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 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015
-------------- -------------- ------------
27,435,843 27,532,496 27,506,459
============== ============== ============
3. Reconciliation of movements in net bank debt
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
------------------------------------ -------------- -------------- ---------
(Decrease)/increase in cash
& cash equivalents (50) 892 (442)
Translation gain/(loss) on cash
and cash equivalents 119 (44) 27
Increase in loans (2,511) (2,098) (2,640)
Translation (loss)/gain on loans (461) 75 (187)
Net cash outflow (2,903) (1,175) (3,242)
Net (bank debt)/cash at beginning
of period (2,646) 596 596
Net bank debt at end of period (5,549) (579) (2,646)
==================================== ============== ============== =========
4. Analysis of net bank debt
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
--------------------------------- -------------- -------------- ---------
Cash 1,681 2,875 1,612
Loans repayable in less than
one year (3,025) (1,074) (415)
Loans repayable in more than
one year (4,205) (2,380) (3,843)
Net bank debt at end of period (5,549) (579) (2,646)
================================= ============== ============== =========
5. Segmental information
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
------------------------------- -------------- -------------- ---------
External revenue
Hemmers Europe 19,008 16,608 32,775
Hemmers China 2,049 1,881 3,497
Total Group external revenue 21,057 18,489 36,272
=============================== ============== ============== =========
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
---------------------------------- -------------- -------------- ---------
Profit before tax
Hemmers Europe (local GAAP) 616 875 1,258
Share of post-tax (loss)/profit
of JV (65) 20 51
IFRS adjustment - financial
derivatives 89 55 (99)
Hemmers Europe (IFRS) 640 950 1,210
Hemmers China 143 155 267
Unrealised profit in stock (2) (9) 3
Holding company 293 (82) 27
Group profit before tax 1,074 1,014 1,507
================================== ============== ============== =========
6 months 6 months Year to
to to 31 May
30 November 30 November 2016
2016 2015 GBP000
GBP000 GBP000
------------------------------------------ -------------- -------------- ---------
Net assets
Hemmers Europe (local GAAP) 12,660 10,024 11,117
IFRS adjustment - financial
derivatives 33 80 (28)
IFRS adjustment - goodwill amortisation 618 562 613
Hemmers Europe (IFRS) 13,311 10,666 11,702
Hemmers China 1,223 915 1,003
Unrealised profit in stock (37) (41) (32)
Holding company 3,132 2,699 2,839
Group net assets 17,629 14,239 15,512
========================================== ============== ============== =========
Enquiries:
Leeds Group plc Cairn Financial Advisers LLP
Malcolm Wilson Tony Rawlinson / Liam Murray
07801 224618 020 7213 0880
This information is provided by RNS
The company news service from the London Stock Exchange
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