TIDMLDSG
RNS Number : 6841F
Leeds Group PLC
08 November 2022
Date: 8 November 2022
Leeds Group plc
("Leeds Group" or "the Group")
Final Results for the year ended 31 May 2022
Notice of AGM
Leeds Group announces the final results of the Group for the
year to 31 May 2022 and that its Annual General Meeting will be
held at 12 noon on 30 November 2022 at the Radisson Blu Hotel,
Chicago Avenue, Manchester Airport, M30 3RA.
Strategic Report
Chairman's Statement
It has been another challenging year for the Group. In our
interim report, we announced that the Covid-19 pandemic had
continued to impact the Group's trading activities in the first
half of the year. Despite the easing of the Covid-19 restrictions
in the second half of the year, the conflict in Ukraine has had a
major impact in both the global marketplace and in particular the
local German economy further affecting consumer confidence. The
wholesale trading in Hemmers and the retail chain business KMR
were, therefore, considerably affected in the last three months of
the financial year.
With the conflict in Ukraine continuing, the uncertainty in the
global markets remains and the impact on the German economy has
continued. We have reviewed all options available to both Hemmers
and KMR to meet these ongoing challenges. Following an independent
review, it was determined that the KMR business was not viable. On
7 October 2022, the German Courts accepted Hemmers' management
decision to place its subsidiary KMR into an insolvency
process.
We are now completely focused on ensuring the core Hemmers
business returns to profitability. A detailed restructuring plan
has been put in place which has the support of the Group's lenders.
Sales demand has improved, and the focus is to increase sales
within the wholesale markets. The Directors believe that the
outlook for the Company is positive, and the measures taken will
ensure Hemmers can operate efficiently and look to increase their
market share both in Germany and other European markets.
On behalf of shareholders, I want to thank all the management
and staff within the Group who have all continued with their best
efforts to work through difficult and challenging times.
Finance and Operating Review
Group result
Group revenue for the continuing operations in the year was
GBP29,590,000 (2021: GBP33,013,000). The effects of the Covid-19
pandemic have affected both Hemmers and KMR again this year
although to a lesser effect than 2021. The German government did
not provide the same levels of financial support as they did in
2021 as there were only local restrictions imposed rather than
country-wide lockdowns. Thus, the Group received government
assistance of GBP119,000 in the year as compared to GBP966,000
received in 2021. The Group has also been affected by the conflict
in Ukraine during the year. The reduced sales figures for the Group
have not generated enough contribution to cover the fixed overheads
and both Hemmers and KMR have, therefore, made losses after
interest for this financial year.
After the year end, management decided to place KMR into an
insolvency process. As a result of the insolvency, KMR will only
generate future losses and therefore, an impairment charge of
GBP1,662,000 has been recognised in this year's accounts with the
assets relating to the KMR retail shops being written down to a
GBPnil net book value. The Group's operating loss was GBP2,990,000
(2021: loss GBP280,000) and the Group's loss before tax was
GBP3,245,000 (2021: loss GBP508,000).
The tax charge in the year was GBP4,000 (2021: credit
GBP42,000). The tax charge relates to the planned liquidation of
Leeds Properties GmbH, which has been dormant for the last year. In
Germany, tax losses can only be carried back against profits made
in the previous two years so there is no relief for the current
year losses in both Hemmers and KMR.
The total loss per share was 11.9p (2021: loss per share
1.7p).
Hemmers
Hemmers is a global business engaged in designing, importing,
warehousing and wholesaling of fabrics from Germany. The market in
Germany has been affected by the ongoing Covid-19 pandemic and the
current conflict in Ukraine. Consumer confidence is low which has
again reduced demand. External sales for the year were therefore
lower than last year at GBP23,998,000 (2021: GBP27,669,000). The
gross contribution percentage increased to 34% (2021: 30%) as
prices have been increased to mitigate the fall in sales volumes.
However, with the decrease in sales levels, the gross profit has
fallen to GBP4,440,000 (2021: GBP4,580,000). Fixed overheads have
increased in the year due to increased salary costs and computer
depreciation with reduced government financial assistance of
GBP119,000 (2021: GBP274,000) thus Hemmers produced a loss before
interest of GBP415,000 (2021: profit GBP330,000).
Hemmers is completely focused on growing its business
domestically and internationally in its wholesale markets with a
more customer focused sales strategy. Our aim is for Hemmers to
continue to compete in the global marketplace gaining further
market share and, therefore, returning to profitability after
interest.
Hemmers bank debt, net of cash, increased in the year to
GBP5,643,000 (2021: GBP3,558,000) with the reduced level of sales
resulting in higher stock levels. The bank debt is secured on the
assets of Hemmers.
KMR
KMR is a retail trading business in Germany. KMR was badly
affected by the Covid-19 pandemic in 2021 resulting in the closure
of all its retail shops during countrywide lockdowns. In 2022,
various local restrictions were imposed by the German government,
but to a lesser extent than 2021. Therefore, the impact of the
Covid-19 pandemic on KMR was lower than 2021. Sales were slightly
higher than last year at GBP5,592,000 (2021: GBP5,344,000). The
gross contribution percentage decreased slightly to 53.5% (2021:
56%). Last year KMR received financial support from the German
government amounting to GBP692,000 as a result of the lockdowns,
however, this year KMR has received no financial support. As a
result of the insolvency process after the year end, KMR will only
generate future losses and therefore, an impairment provision of
GBP1,662,000 has been made in relation to the assets of KMR. This
has resulted in a loss before interest for the year of GBP2,277,000
(2021: loss GBP211,000) and a loss after interest of GBP2,370,000
(2021: loss GBP311,000).
KMR bank debt, net of cash, increased in the year to
GBP1,017,000 (2021: GBP749,000).
Fixed Assets
The net book amount of tangible fixed assets is GBP7,335,000
(2021: GBP7,750,000). Capital additions in the year amounted to
GBP447,000 (2021: GBP562,000).
The net book value of right-to-use assets is GBP170,000 (2021:
GBP2,453,000). These relate to car leases, of which there were
GBP45,000 additions during the year (2021: GBP184,000).
As a result of the decision by management to place KMR into
insolvency post year end (see note 6), KMR will only generate
future losses and therefore, an impairment charge of GBP1,662,000
(2021: GBP333,000) has been recognised in this financial year
relating to right-of-use assets GBP1,620,000 and leasehold
improvements GBP42,000. Thus, all the KMR assets relating to
leasehold shops have been written down to GBPnil in the year.
Working Capital and Cash Flow
Net debt increased from GBP3,952,000 to GBP6,381,000 in the
year. Net cash used in the year at average exchange rates was
GBP344,000 (2021: used GBP610,000). Working capital, which
comprises inventories, trade and other receivables and trade and
other payables, increased in the year by GBP1,139,000 (2021:
increased by GBP452,000) mainly due to increased stock levels as a
result of the reduced demand in the last three months of the
financial year. Loan repayments of GBP708,000 (2021: GBP771,000)
have been made this year. New loans taken out in the year
GBP2,835,000 (2021: GBP787,000) relating to short term debt. This
has arisen due to the reduced trading and increased stock
levels.
L ease liability repayments (including interest) of GBP1,059,000
(2021: GBP1,059,000) have been made in the year.
The Group continues to carefully monitor its working capital
requirements to ensure it operates within its current banking
facilities.
Net Asset Value
Net assets decreased in the year by GBP3,384,000 as follows:
Net assets Per share
GBP000 pence
At 31 May 2021 14,561 53.3
Loss after tax (3,249) (11.9)
Translation differences (135) (0.5)
At 31 May 2022 11,177 40.9
========================== =================== ===========
Debt Profile
The funding policy of the Group continues to match its funding
requirement in trading subsidiaries in a cost-effective fashion
with an appropriate combination of short and longer-term debt.
Property investments have been financed by long term loans at fixed
interest rates between 1.05% and 1.65%. Working capital finance,
when required, is via short term loans of three months currently
attracting interest at rates of between 1.5% and 3%. Bank debt in
the subsidiaries is secured by charges on inventories, receivables
and property and is without recourse to the Parent Company.
Principal risks and uncertainties
The Board has identified the main categories of business risk in
relation to the Group's strategic aims and objectives, and has
considered reasonable steps to prevent, mitigate and manage these
risks. The principal risks identified are as follows:
Funding risk
The Group has a combination of short-term borrowing facilities
and longer-term loan agreements secured on Group assets. The Group
remains dependent upon the support of these funders and there is a
risk that failure in a company to meet banking covenants could have
implications for the Group. Borrowing facilities are monitored
regularly and the facilities agreed are more than needed for the
Group's requirements. The Group has close working relationships
with their current funders but believe alternative banking funders
could be secured if required.
Hemmers has a maximum working capital facility of EUR11m,
restricted to the borrowing base which is calculated as 70% of
eligible inventory and 80% of eligible debtors. In the financial
year 2022, this resulted in average availability of EUR7.8m (2021:
EUR7.7m) with a range of EUR6.5m to EUR8.8m (2021: EUR6.9m to
EUR8.3m) and minimum headroom of EUR3.2m (2021: EUR4.5m) in the
year. In the forecast period to 31 May 2024, the estimated
availability range is EUR7.9m to EUR9.4m and the minimum headroom
EUR2.4m. The only covenant on this facility is an equity ratio
which must exceed 30% of gross assets at the financial year end. At
31 May 2022, the ratio was 51% (2021: 60%). The facility is
uncommitted, but the bank is obliged to give reasonable notice of
any change. Hemmers also has another working capital facility of
EUR1m secured on working capital which was fully drawn at the year
end. The facilities are uncommitted, but the bank is obliged to
give reasonable notice of any change.
KMR has a fixed working capital loan facility of EUR1m which was
fully drawn at the year end and a EUR0.5m bank overdraft facility
secured on working capital, of which EUR0.4m was utilised as at 31
May 2022. The covenants on these facilities are (i) an equity ratio
which must exceed 35% of gross assets at the financial year end and
(ii) the ratio of working capital/bank facility should be a minimum
1.5x. At 31 May 2022, these ratios were 30.2% (2021: 55.5%) and
1.36 (2021: 1.54). The overdraft facility has now been withdrawn
and the overdraft repaid.
Considering the trading results in the first half of the current
financial year and the decision to put KMR into insolvency, the
Directors consider there will be sufficient headroom available on
the Hemmers working capital facility and, therefore, the Directors
are of the opinion that it is appropriate to apply the going
concern basis of preparation to the financial statements.
Market risk
There is always the ongoing threat of reduced market demand.
This has been seen this year and the Group continues to strive to
combat the reduced demand by looking at other markets both
domestically and internationally and looking at expanding its
product ranges. The commercial risks of operating in the highly
competitive European fabric market are limited by the fact that
Hemmers has a wide range of suppliers, and no customer accounts for
more than 5% of revenues.
Foreign exchange risk
Most fabric purchased by Hemmers is paid for in US dollars,
while the Euro is the principal currency in which Hemmers sells its
product. The Euro/dollar rate is of greater significance to Leeds
Group than the strength of Sterling. The Hemmers' management
continue to manage this transactional currency risk by a
combination of forward exchange contracts with reputable banks and
sales price increases where necessary.
Ukraine conflict
The Russian invasion of Ukraine has had a huge impact on global
economies with prices increasing especially utility prices. This
has in turn had an effect on consumer confidence which has resulted
in reduced demand in the KMR retail shops and therefore, the
decision was taken to place KMR into insolvency post year end.
Audit opinion
In auditing the financial statements for the year ended 31 May
2022, the Group Auditors have concluded that the Directors' use of
the going concern basis of accounting in the preparation of the
financial statements is appropriate. However, the Independent
Auditor's Report draws attention to note 2 in the financial
statements (note 1 below) which states that the Group and Parent
Company incurred substantial losses during the year and that the
Group and Parent Company's operational existence is dependent on
the continued support from the Group's bank facilities and the
eventual return to profitability. The impact of this gives rise to
a material uncertainty around the going concern of the Group. The
auditor's opinion is unqualified and not modified in respect of
this matter. An extract from the Independent Auditor's Report is
set out in note 7 below.
The strategic report was approved by the Board of Directors on 7
November and signed on its behalf by:
Jan G Holmstrom
Non-Executive Chairman
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2022
Year ended Year ended
31 May 2022 31 May 2021
GBP000 GBP000
------------------------------------------- -------------- --------------
Continuing operations
Revenue 29,590 33,013
Cost of sales (24,121) (26,700)
------------------------------------------- -------------- --------------
Gross profit 5,469 6,313
Distribution costs (2,483) (2,647)
------------------------------------------- -------------- --------------
Impairment of assets (1,662) (333)
Administrative costs (4,461) (4,579)
------------------------------------------- -------------- --------------
Total administrative costs (6,123) (4,912)
Other income 147 966
------------------------------------------- -------------- --------------
Loss from operations (2,990) (280)
Finance expense (255) (228)
Loss before tax (3,245) (508)
Tax (charge)/credit (4) 42
------------------------------------------- -------------- --------------
Loss for the year attributable to
the equity holders of the Parent
Company (3,249) (466)
------------------------------------------- -------------- --------------
Other comprehensive loss
Translation differences on foreign
operations (135) (556)
------------------------------------------- -------------- --------------
Total comprehensive loss for the
year attributable to the equity holders
of the Parent Company (3,384) (1,022)
=========================================== ============== ==============
There is no tax effect relating to other comprehensive income
for the year. Amounts included in other comprehensive income may be
reclassified subsequently as profit or loss.
Loss per share attributable to the equity holders of the
Company
Year ended Year ended
31 May 2022 31 May 2021
------------------------------- -------------- --------------
Basic and diluted total loss
per share (pence) 11.9p 1.7p
=============================== ============== ==============
Consolidated Statement of Financial Position
at 31 May 2022
31 May 2022 31 May 2021
GBP000 GBP000
----------------------------------- --------------- ---------------
Assets
Non-current assets
Property, plant and equipment 7,335 7,750
Right-of-use assets 170 2,453
Intangible assets 52 58
Total non-current assets 7,557 10,261
----------------------------------- --------------- ---------------
Current assets
Inventories 11,994 10,287
Trade and other receivables 2,864 2,867
Tax recoverable 13 136
Cash on demand and on short term
deposit 471 670
Total current assets 15,342 13,960
----------------------------------- --------------- ---------------
Total assets 22,899 24,221
=================================== =============== ===============
Liabilities
Non-current liabilities
Loans and borrowings (836) (1,498)
Lease liabilities (1,165) (1,856)
Total non-current liabilities (2,001) (3,354)
----------------------------------- --------------- ---------------
Current liabilities
Trade and other payables (3,065) (2,265)
Loans and borrowings (5,671) (2,926)
Lease liabilities (885) (1,015)
Provisions (100) (100)
Total current liabilities (9,721) (6,306)
----------------------------------- --------------- ---------------
Total liabilities (11,722) (9,660)
=================================== =============== ===============
TOTAL NET ASSETS 11,177 14,561
=================================== =============== ===============
Capital and reserves attributable
to
equity holders of the Company
Share capital 3,279 3,279
Capital redemption reserve 1,113 1,113
Foreign exchange reserve 2,050 2,185
Retained earnings 4,735 7,984
TOTAL EQUITY 11,177 14,561
==================================== ======== ========
The financial statements were approved and authorised for issue
by the Board of Directors on 7 November 2022 and were signed on
behalf of the Board by:-
Jan G Holmstrom
Non-Executive Chairman
Consolidated Cash Flow Statement
for the year ended 31 May 2022
Year ended Year ended
31 May 2022 31 May 2021
GBP000 GBP000
---------------------------------------- -------------- --------------
Cash flows from operating activities
Loss for the year (3,249) (466)
Adjustments for:
Government assistance credit (119) (966)
Depreciation of property, plant
and equipment 735 624
Impairment of property, plant and 42 -
equipment
Depreciation of right-of-use assets 827 1,062
Impairment of right-of-use assets 1,620 333
Amortisation of intangible assets 5 6
Finance expense - interest on bank
loans 179 154
Finance expense - interest lease
liabilities 76 74
Gain on sale of property, plant
and equipment - (14)
Tax charge/(credit) 4 (42)
Cash from operating activities
before changes in working capital
and provisions 120 765
Increase in inventories (1,818) (571)
(Increase)/decrease in trade and
other receivables (43) 718
Increase/(decrease) in trade and
other payables 722 (599)
Cash (used in)/generated from
operating activities (1,019) 313
Tax received 114 110
Net cash flows (used in)/generated
from operating activities (905) 423
======================================== ============== ==============
Investing activities
Purchase of property, plant and
equipment (447) (562)
Proceeds from the sale of fixed
assets - 21
Net cash used in investing activities (447) (541)
======================================== ============== ==============
Financing activities
Bank borrowings drawn 2,835 787
Bank borrowings repaid (708) (771)
Repayment of principal on lease
liabilities (983) (985)
Repayment of interest on lease
liabilities (76) (74)
Bank interest paid (179) (154)
Government assistance received 119 705
Net cash generated from/(used
in) financing activities 1,008 (492)
======================================== ============== ==============
Net decrease in cash and cash
equivalents (344) (610)
Translation loss on cash and cash
equivalents (2) (22)
Cash and cash equivalents at the
beginning of the year 472 1,104
Cash and cash equivalents at the
end of the year 126 472
======================================== ============== ==============
Cash on demand or on short term
deposit 471 670
Bank overdrafts (345) (198)
=================================== ======= ========
Cash and cash equivalents at the
end of the year 126 472
=================================== ======= ========
Consolidated Statement of Changes in Equity
for the year ended 31 May 2022
Share Capital Treasury Foreign Retained
capital redemption share exchange earnings Total
reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ---------- ------------- ---------- ----------- ----------- -----------
At 31 May 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
loss - - - (556) - (556)
Total comprehensive
loss - - - (556) (466) (1,022)
----------------------------- ---------- ------------- ---------- ----------- ----------- -----------
At 31 May 2021 3,279 1,113 - 2,185 7,984 14,561
Loss for the year - - - - (3,249) (3,249)
Other comprehensive
loss - - - (135) - (135)
----------------------------- ---------- ------------- ---------- ----------- ----------- -------------
Total comprehensive
loss - - - (135) (3,249) (3,384)
----------------------------- ---------- ------------- ---------- ----------- ----------- -------------
At 31 May 2022 3,279 1,113 - 2,050 4,735 11,177
============================= ========== ============= ========== =========== =========== ===========
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share capital The nominal value of issued ordinary shares
in the Company.
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
1. Basis of preparation
The Group financial statements have been properly prepared in
accordance with UK adopted International Financial Reporting
Standards (UK adopted IFRS) and in accordance with the Companies
Act 2006.
Going Concern
When considering its opinion about the application of the going
concern basis of preparation of the financial statements the
Directors have given due consideration to:
-- The performance of the Group in the last financial year and
the robustness of forecasts for the next 24 months, which return
the Group to profit.
-- The impact of ongoing Ukraine conflict 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.
Financial performance and forecasts
Forecasts have been prepared for the 24-month period to May 2024
which indicate a return to modest profit over that period due to
cost reductions. These forecasts have been prepared in the
knowledge of current Ukraine conflict conditions. At the end of the
first half of the current financial year sales and profit were in
line with forecast. The Company has sensitised these forecasts for
a reduction in revenues for Hemmers and the banking facilities
remain adequate. The Directors are of the opinion that this is a
reasonable worst case, and the currently available facilities would
be sufficient in this scenario.
Ukraine conflict
The Russian invasion of Ukraine has had a huge impact on global
economies with prices increasing especially utility prices. This
has in turn had an effect on consumer confidence which has resulted
in reduced demand in the KMR retail shops and therefore, the
decision was taken to place KMR into insolvency post year end.
Financing facilities
The operating businesses of the Group are Hemmers and KMR, both
located in Germany. The Parent Company, which has no borrowing
facilities, is located in the UK.
Hemmers has four sources of funding:
-- Term loans which have funded property purchases. These are
repayable in instalments over the term as detailed in note 5. They
are secured over the associated properties and that security could
be called in the event that the business defaulted on
repayment.
-- A maximum working capital facility of EUR11m, restricted to
the borrowing base which is calculated as 70% of eligible inventory
and 80% of eligible debtors. In the financial year 2022, this
resulted in average availability of EUR7.8m (2021: EUR7.7m) with a
range of EUR6.5m to EUR8.8m (2021: EUR6.9m to EUR8.3m) and minimum
headroom of EUR3.2m (2021: EUR4.5m) in the year. In the forecast
period to 31 May 2024, the estimated availability range is EUR7.9m
to EUR9.4m and the minimum headroom EUR2.4m. The only covenant on
this facility is an equity ratio which must exceed 30% of gross
assets at the financial year end. At 31 May 2022, the ratio was 51%
(2021: 60%). The facility is uncommitted, but the bank is obliged
to give reasonable notice of any change.
-- A further working capital facility of EUR1m secured on
working capital which was fully drawn at the year end. The
facilities are uncommitted, but the bank is obliged to give
reasonable notice of any change.
-- A EUR3m Parent Company loan which is currently subordinated to the working capital facility.
KMR has a fixed working capital loan facility of EUR1m which was
fully drawn at the year end and a EUR0.5m bank overdraft facility
secured on working capital, of which EUR0.4m was utilised as at 31
May 2022. The covenants on these facilities are (i) an equity ratio
which must exceed 35% of gross assets at the financial year end and
(ii) the ratio of working capital/bank facility should be a minimum
1.5x. At 31 May 2022, these ratios were 30.2% (2021: 55.5%) and
1.36 (2021: 1.54). The overdraft facility has now been withdrawn
and the overdraft repaid.
Considering the trading results in the first half of the
financial year to 31 May 2023 and the decision to put KMR into
insolvency, the Directors consider there will be sufficient
headroom available in the Hemmers working capital facility and,
therefore, the Directors are of the opinion that it is appropriate
to apply the going concern basis of preparation to the financial
statements.
However, the Directors acknowledge that the volatile global
situation could have an impact on the future trading result of
Hemmers and in turn could affect the ability of the Group to meet
its forecasts. This therefore gives rise to a material uncertainty
around the going concern of the Group.
2. Dividends
The Directors do not recommend the payment of a dividend in 2022
(2021: GBPnil).
3. Loss per share
Year ended Year ended
31 May 2022 31 May 2021
----------------------------------------- -------------- --------------
Numerator
Total loss for the year GBP3,249,000 GBP466,000
Denominator
Weighted average number of shares 27,320,843 27,320,843
Basic and diluted total loss per share 11.9p 1.7p
========================================= ============== ==============
Since there are no outstanding share options, there is no
difference between basic and diluted earnings per share.
4. Segmental information
Year ended Hemmers KMR Inter segmental Parent Total
31 May 2022 GBP000 Company Group
Continuing operations GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- ----------- ----------------- ---------- ------------
External revenue 23,998 5,592 - - 29,590
Inter-segmental revenue 1,069 - (1,069) - -
Cost of sales (20,627) (4,551) 1,057 - (24,121)
Gross profit/(loss) 4,440 1,041 (12) - 5,469
Distribution costs (1,401) (1,082) - - (2,483)
Admin expenses (3,763) (2,268) 194 (286) (6,123)
Other income 309 32 (194) - 147
Operating loss (415) (2,277) (12) (286) (2,990)
Finance expense (162) (93) - - (255)
Internal interest (204) - - 204 -
Loss before tax (781) (2,370) (12) (82) (3,245)
========================== =========== =========== ================= ========== ============
At 31 May 2022 Hemmers KMR Adj Parent Total
Continuing operations Company Group
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---------- --------- --------- ---------- -----------
Total assets 17,392 2,819 (123) 2,811 22,899
Total liabilities (8,091) (3,540) - (91) (11,722)
Total net assets 9,301 (721) (123) 2,720 11,177
========================= ========== ========= ========= ========== ===========
Year ended Hemmers KMR Inter segmental Parent Total
31 May 2021 GBP000 Company Group
Continuing operations GBP000 GBP000 GBP000 GBP000
-------------------------- ---------- --------- ----------------- ---------- ----------
External revenue 27,669 5,344 - - 33,013
Inter-segmental revenue 1,071 1 (1,072) - -
Cost of sales (24,160) (3,602) 1,062 - (26,700)
Gross profit/(loss) 4,580 1,743 (10) - 6,313
Distribution costs (1,499) (1,148) - - (2,647)
Admin expenses (3,212) (1,498) 187 (389) (4,912)
Other income 461 692 (187) - 966
Operating profit/(loss) 330 (211) (10) (389) (280)
Finance expense (128) (100) - - (228)
Internal interest (213) - - 213 -
Loss before tax (11) (311) (10) (176) (508)
========================== ========== ========= ================= ========== ==========
At 31 May 2021 Hemmers KMR Adj Parent Total
Continuing operations Company Group
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- --------- --------- --------- ---------- ---------
Total assets 15,803 5,688 (174) 2,904 24,221
Total liabilities (5,589) (3,969) - (102) (9,660)
Total net assets 10,214 1,719 (174) 2,802 14,561
========================= ========= ========= ========= ========== =========
5. Loans and borrowings
The book value of loans and borrowings are as follows:
31 May 2022 31 May
GBP000 2021
GBP000
Current
Secured bank loans 5,671 2,926
Non - current
Secured bank loans 836 1,498
Total loans and borrowings 6,507 4,424
============================= ============= =========
Current loans and borrowings
At 31 May 2022 current loans and borrowings of GBP5,671,000
(2021: GBP2,926,000) comprise short term loans of GBP5,373,000
(2021: GBP2,562,000) and instalments due on long term loans
detailed below of GBP298,000 (2021: GBP364,000). The interest rate
on the short-term loans range from 1.5% to 3% (2021: 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 GBP10.2m (EUR12m) and by
KMR against short-term borrowing facilities of GBP0.9m (EUR1m). KMR
also has an overdraft facility of GBP0.4m (EUR0.5m) which has now
been repaid. At 31 May 2022, the total borrowing facility available
totalled GBP9.2m (EUR10.9m) of which GBP5.7m (EUR6.7m) has been
utilised including any overdrafts, therefore the headroom within
the facility was GBP3.5m (EUR4.1m). Neither the Parent Company nor
any of its subsidiaries other than Hemmers and KMR have borrowing
facilities. The bank borrowing facilities are reviewed annually
every May and remain in place for Hemmers for the forthcoming
year.
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. 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 Repayment Final repayment 31 May 31 May 2021
interest profile date 2022 GBP000
rate GBP000
Loan September
1 4.07% Equal monthly instalments 2027 - 353
Loan Equal quarterly September
2 1.65% instalments 2025 590 835
Loan Equal quarterly
3 1.05% instalments March 2026 246 310
Non-current loans 836 1,498
================================================= ================= ========= =============
Loan 1 was repaid earlier as it attracted a high interest
rate.
6. Post Balance Sheet Events
Sale of property
On 4 October 2022, the freehold property held by KMR was sold
for EUR600,000 (GBP510,000). The net book value as at 31 May was
EUR440,000 (GBP374,000).
KMR
Since the year end, the conflict in Ukraine remains and the
uncertainty in global markets continues. The impact on the German
economy has deepened and this has affected consumer confidence in
Germany. KMR has seen reduced sales demand and has continued to
make losses despite cost cutting measures. Following an independent
review undertaken in September 2022, management have decided that
the KMR business is unsustainable. On 6 October 2022, KMR was
placed into an insolvency process which was accepted by the German
courts on 7 October 2022.
As the KMR business will not generate any future profit, the
right-to-use assets and any leasehold improvements have been
impaired in these financial statements with a provision of
GBP1,662,000. Thus, all assets relating to the leased retail shops
have been written down to a GBPnil valuation. The right-to-use
lease liability of GBP1,879,000 remains in these accounts but the
full liability may not be payable.
7. Other information
The financial information set out above does not constitute the
Company's statutory accounts for 2022 or 2021.
Statutory accounts for the year ended 31 May 2022 have been
reported on by MHA MacIntyre Hudson, Statutory Auditor and for the
year ended 31 May 2021 have been reported on by BDO LLP, Statutory
Auditor. The Independent Auditor's Report on the Annual Report and
Financial Statements for both 2022 and 2021 was unqualified.
In auditing the financial statements for the year ended 31 May
2022 , the Group Auditors have concluded that the Directors' use of
the going concern basis of accounting in the preparation of the
financial statements is appropriate. However, the Independent
Auditor's Report draws attention to note 2 in the Group financial
statements (note 1 above) which states that the Group and Parent
Company incurred substantial losses during the year and that the
Group and Parent Company's operational existence is dependent on
the continued support from the Group's bank facilities and the
eventual return to profitability. The impact of this gives rise to
a material uncertainty around the going concern of the Group. The
auditor's opinion is unqualified and not modified in respect of
this matter. An extract from the Independent Auditor's Report is
set out below:
Material uncertainty related to going concern
We draw your attention to note 2 in the financial statements
which states that the Group and Parent Company incurred substantial
losses during the year and that the Group and Parent Company's
operational existence is dependent on the continued support from
the Group's bank facilities and the eventual return to
profitability.
The impact of this together with other matters set out in the
note, indicate that a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going
concern. Our opinion is not modified in respect of this matter. In
auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the Group and Parent
Company's ability to continue to adopt the going concern basis of
accounting included:
-- The consideration of inherent risks to the Group's operations
and specifically its business model.
-- The evaluation of how those risks might impact on the Group's
available financial resources.
-- Review of the mathematical accuracy of the cashflow forecast
model prepared by management and corroboration of key data inputs
to supporting documentation for consistency of assumptions used
with our knowledge obtained during the audit.
-- Challenging management's assumptions in respect of the timing
and quantum of cash receipts and payments included in the cash flow
model to ensure these are reasonable.
-- Where additional resources may be required the reasonableness
and practicality of the assumptions made by the Directors when
assessing the probability and likelihood of those resources
becoming available.
-- Holding discussions with management regarding future
financing plans, corroborating these where necessary and assessing
the impact on the cash flow forecast.
-- Evaluating the accuracy of historical forecasts against
actual results to ascertain the accuracy of management's
forecasts.
-- Review of correspondence and documentation from the Group's
finance provider to ascertain their intent to maintain the current
facilities.
-- Review of the independent report prepared by the Group's
insolvency practitioner to determine the future implications on the
Group's operations.
Statutory accounts for the year ended 31 May 2021 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 May 2022 will be delivered to the Registrar in
due course. The Annual Report and Accounts giving notice of the
2022 Annual General Meeting, have been today published on the
Group's website at www.leedsgroup.plc.uk . and have been sent to
those shareholders who have elected to receive a hard copy of the
Annual Report and Accounts by the post.
The Annual General Meeting will be held at 12 noon on 30
November 2022 at the Radisson Blu Hotel, Chicago Avenue, Manchester
Airport, M30 3RA.
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and has been arranged for release
by Jan G Holmstrom, Non-Executive Chairman. The Directors of the
Company are responsible for the release of this announcement.
Enquiries:
Leeds Group plc Cairn Financial Advisers LLP (nominated
adviser)
Dawn Henderson - 01937 547877 Liam Murray/Sandy Jamieson - 020
7213 0880
Note:
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.
This information is provided by RNS, the news service of the
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END
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