LEEDS
GROUP PLC
Annual Report and Accounts 2015
Contents
Financial Highlights
Directors
Group Information and Advisers
Chairman’s statement
Strategic Report
Directors’ Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Company Statement of Financial Position (prepared under UK GAAP)
Notes to the Financial Statements of the Company
Five Year Summary of Results and Capital Employed
Notice of Annual General Meeting
1
2
3
4
5
8
12
14
15
16
17
18
42
43
47
48
Financial Highlights
Leeds Group profit before was tax £1,571,000 (2014: £1,611,000).
Aggregate sales volumes of our two business sectors increased by
9% to 15.8 million metres (2014: 14.5 million metres).
Leeds Group sales revenue increased by 1.9% to £34,859,000
(2014: £34,210,000) with greater growth in subsidiaries’ revenue
disguised by sterling translation rates significantly stronger than
2014.
Hemmers sales were £31,151,000 (2014: £31,378,000) and pre-tax
profit was £1,443,000 (2014: £1,478,000).
Hemmers results in Euros were: sales up 8.7% to €40,735,000
(2014: €37,475,000) and PBT up 5.7% to €1,871,000 (2014:
€1,770,000).
ChinohTex external sales were £3,708,000 (2014: £2,832,000) and
pre-tax profit was £305,000 (2014: £129,000).
50% interest acquired in December 2014 in textile retailer Stoff-Ideen-
KMR GmbH at a cost of £575,000, including additional share capital of
£192,000 invested in May 2015.
Leeds Group finished the year with cash net of bank debt of
£596,000 (2014: £915,000).
Leeds Group net asset value per share (excluding treasury shares)
was 50.2 pence (2014: 50.7 pence).
Earnings per Leeds Group share were 3.8 pence (2014: 3.9 p).
In view of the investment in KMR and the planned expansion of the
Nordhorn facility, as last year the Directors do not propose a
dividend.
1
Directors
Jan G Holmstrom (Non-Executive Chairman)
Born 1953, Jan has worked in the financial services sector during his entire career, and has a wealth of
experience of working internationally e.g. in the UK, Hong Kong and Sweden. Jan is Chairman of Densitron
Technologies plc and of Johnson & Starley Limited. Jan is also a non-executive director of Browallia Holdings
Limited, an investment company owned by Peter Gyllenhammar. Jan joined the Board of Leeds Group in
November 2011 and was appointed Chairman in October 2014.
Jörg Hemmers (Executive Director)
Born 1967, Jörg has worked his whole life in the wholesale and retail textile business. He was one of the first in
the trade to realise the potential of sourcing products from China. Leeds Group acquired the Hemmers wholesale
operation in 1999 and appointed Jörg as Managing Director. Jörg retained a financial interest in the retail
operation until 2010, but focused entirely on profitable growth of the wholesale business. Amongst his
achievements is the successful integration in 2003 of the Leeds Group Itex business, based in Holland, to create
Hemmers/Itex GmbH and the successful start-up in 2007 of ChinohTex, a subsidiary based in Shanghai. Jörg
joined the Board of Leeds Group in March 2015.
Johan Claesson (Non-Executive Director)
Born 1951, Johan has been a major shareholder in Leeds Group since 1999, and has extensive business interests,
both private and in the public arena. Johan is Chairman of Claesson & Anderzén, a private property company.
Johan is also a non-executive director of K3 Business Technology Group plc (specialising in business software)
and NightHawk Energy plc (an oil exploration company). Johan joined the Board of Leeds Group in September
2004.
David Cooper (Independent Non-Executive Director)
Born 1958, David is a chartered accountant and member of the Institute of Chartered Accountants of Scotland.
Previously David was Group Finance Director and Company Secretary of AIM-listed Dawson International
PLC, gaining over 25 years’ experience in the global textiles industry. He now operates his own financial
consultancy business. David joined the Board of Leeds Group in October 2014.
2
Group Information and Advisers
Principal Trading Subsidiary Company
Hemmers-Itex Textil Import Export GmbH
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Principal activity
Import, sale & distribution of fabric
Incorporated in Germany
Subsidiary company of Hemmers-Itex Textil Import Export GmbH
Chinoh-Tex Ltd (incorporated in China)
Group Advisers
Solicitors
Walker Morris
Kings Court
12 Kings Street
Leeds
LS1 2HL
Financial Advisers
And Brokers
Auditors
Cairn Financial Advisers LLP
61 Cheapside
London
EC2V 6AX
BDO LLP
1 Bridgewater Place
Water Lane
Leeds
LS11 5RU
Tel: 0113 283 2500
Tel: 020 7148 7900
Tel: 0113 244 3839
Solicitors
Registrars
Principal Bankers
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Bank of Scotland
116 Wellington Street
Leeds
LS1 4LT
Tel: 08700 111111
Tel: 0871 664 0300*
Tel: 0113 388 3200
* Calls to the Capita shareholder helpline cost 10p a minute plus network extras. Lines are open 8.30am-5.30pm Mon-Fri.
3
Chairman’s Statement
I am pleased to present the results for the year ended 31 May 2015.
Results
In the year ended 31 May 2015 Leeds Group made a profit after tax of £1,053,000 (2014: £1,079,000). Pre-tax
profit fell by 2.5% to £1,571,000 (2014: £1,611,000), and was heavily influenced by the weakness of the Euro.
Net asset value per share at 31 May 2015 was 50.2p (2014: 50.7p), and earnings per share for the year were 3.8p
(2014: 3.9p). The Group closed the year with net cash of £596,000 (2014: £915,000).
Hemmers-Itex Textil Import Export GmbH (“Hemmers”)
Total fabric sales in the year by Hemmers, Leeds Group’s principal trading company, increased by 6.6% to
13.633 million linear metres (2014: 12.785 million). Revenue and pre-tax profit in Euro terms increased by 8.7%
and 5.7% respectively, but during the year the Euro weakened considerably, masking the improved performance
of Hemmers when translated to sterling. In sterling terms, revenue was £31,151,000 (2014: £31,378,000) and
pre-tax profit was £1,443,000 (£1,478,000).
The weakness of the Euro was a challenge throughout the year, as it leads to an increasing Euro cost of stock
purchases invoiced in US dollars. We have sought to mitigate this by the use of forward exchange contracts. Our
strategy continues to be to maintain margins by a combination of sales price increases and considerable effort to
uncover cheaper sources of supply that do not compromise quality.
In December 2014 Hemmers acquired a 50% interest in Stoff-Ideen-KMR GmbH (“KMR”), a chain of retail
fabric and haberdashery stores, at a cost of £383,000, and subsequently injected additional share capital of
£192,000 in May 2015. Our ambition is, together with our joint venture partner, to exploit this growth
opportunity.
ChinohTex, the Hemmers subsidiary based in Shanghai, made impressive progress in the year. External sales
volumes increased by 29.0% to 2.191 million linear metres (2014: 1.699 million). External sales revenue was
£3,708,000 (2014: £2,832,000) and pre-tax profit was £305,000 (2014: £129,000). In the main this growth was
achieved by large volume deliveries to customers in the EU although significant progress was also made in
Australia from a relatively low base. ChinohTex continues to provide valuable assistance to its European parent
in terms of purchasing, quality inspection and bulk shipping of material bought in China.
The launch of online sales systems in both Germany and China is imminent, and plans are well advanced for an
expansion of the facility in Nordhorn, Germany which, if approved, will be completed by this time next year.
Dividend
In view of the investment in KMR and the planned expansion of the Nordhorn facility, as last year the Directors
do not propose a dividend. The Board is of the view that this maximises the long-term value of the Group to the
benefit of all shareholders.
Employees
On behalf of shareholders, I thank the management and staff of Hemmers and ChinohTex for their continued
hard work and commitment that has produced such a highly satisfactory result.
Outlook
In the current year we believe potential growth opportunities exist for Hemmers in their traditional wholesale
business, and we shall be looking to add our expertise to that of our joint venture partner to develop our more
recent interest in retail. An initial project which is already at the detailed planning stage is to invest in modern IT
systems enabling improved stock control among other benefits.
Sales in the first two months of the current financial year have been in line with the expectations of the Board.
Board composition
I was delighted to welcome to the board both David Cooper on his appointment as an independent non-executive
director in October 2014, and Jörg Hemmers who was appointed as an executive director in March 2015.
Jan G Holmstrom
Chairman
30 July 2015
4
Strategic Report
Business review
The Companies Act 2006 requires the directors to set out in this report a fair review of the business of the
Group during the year ended 31 May 2015, including an analysis of the position of the Group at the end of the
year and a description of the principal risks and uncertainties facing the Group. This information includes a
discussion of the Key Performance Indicators used by the directors to monitor the business which are:
revenue
gross profit margin
fabric sales volumes, measured in linear metres
operating overheads and central costs
profit before tax
profit after tax
earnings per share
working capital levels
debt profile
net assets per share
Group result
Group revenue in the year was £34,859,000 (2014: £34,210,000), and pre-tax profit was £1,571,000 (2014:
£1,611,000). Both sales and profits were heavily influenced by the continuing depreciation of the Euro. A
weaker Euro increases the Euro cost of stock invoiced in US Dollars but this transaction effect was not
significant; margins were preserved close to their usual level by the combined effects of the stockholding period,
forward exchange contracts and sales price increases. The sales and pre-tax profits reported in sterling were
respectively £1,565,000 and £68,000 lower than would have been the case if translated from Euros at last year’s
rates, but the most significant profit effect was felt in the parent company which incurred an unrealised exchange
loss of £253,000 on its Group loan to Hemmers. The movement of exchange rates also gave rise to the negative
translation difference on opening net assets of £1,215,000 disclosed in other comprehensive income.
The tax charge in the year was £518,000 of which £35,000 was deferred tax relating to temporary differences on
goodwill and financial derivatives. Earnings per share were 3.8p (2014: 3.9p).
Hemmers Europe
This German-based business is engaged in the import, warehousing and wholesaling of fabrics.
Sales volumes increased in the year by 6.6% to 13.633 million linear metres (2014: 12.785 million) and this
growth was achieved predominantly in the German home market. In local currency, sales revenue and pre-tax
profit increased by 8.7% and 5.7% respectively.
As mentioned above, despite the weakness of the Euro gross margins were little changed at 22.2% (2014:
23.0%). As we have come to expect, our German management team maintained close control of overhead
expenditure that, in local currency, increased by 4.1% as a result of the sales volume increases and modest cost
inflation.
In December 2014 Hemmers acquired a 50% interest in Stoff-Ideen-KMR GmbH (“KMR”), a chain of retail
fabric and haberdashery stores, at a cost of €500,000 (£383,000). KMR will be operated as a joint venture and in
May 2015 each of the two joint venture partners subscribed for additional capital of €250,000 (£192,000)
bringing the total investment by Hemmers to €750,000 (£575,000). Additional information regarding KMR can
be found in note 14 to the consolidated financial statements
Largely as a result of the KMR investment bank debt increased in the year to £1,077,000 (2014: £446,000).
Hemmers China
Chinoh-Tex is a textile trading company based in Shanghai and has been trading for seven years. It purchases
fabric from Chinese suppliers and in 2015 sold to customers in 26 countries. External sales increased in the year
by 29.0% to 2.191 million linear metres (2014: 1.699 million). 60% of sales were made to EU countries, where
Germany, UK and Spain proved to be the biggest growth markets.
With the overwhelming majority of its sales invoiced in US Dollars, against which the Chinese Yuan is
effectively pegged, the performance of ChinohTex did not suffer any adverse currency effects.
Activity was again greater in the first half of the financial year than in the second, although not to the same
marked degree as 2014. External sales revenue grew by 31% to £3,708,000 (2014: £2,832,000) and gross margin
improved to 22% (2014: 19%) chiefly owing to a changed market mix. The improved volumes and margin drove
pre-tax profits up handsomely to £305,000 (2014: £129,000).
5
Strategic Report (continued)
Hemmers China (continued)
Importantly, ChinohTex continues to give valuable assistance to its European parent with the purchasing,
inspection and shipping of material.
Holding Companies’ Costs
Costs of the holding companies in the year, net of interest receivable, amounted to £295,000 (2014: £102,000) as
follows:
Holding companies’ costs net of interest receivable
Unrealised exchange loss on Group loan
Total holding companies’ costs
Year ended
31 May 2015
£000
Year ended
31 May 2014
£000
42
253
295
61
41
102
Fixed Assets
Capital additions in the year amounted to £298,000 (2014: 221,000) and included expenditure on the Group’s
on-line sales platform which is about to go live. The net book amount of tangible fixed assets in the Consolidated
Statement of Financial Position is £1,760,000 (2014: £1,900,000).
Working Capital
Working capital comprises inventories, trade and other receivables, and trade and other payables and increased
in the year by £555,000 reflecting greater activity levels and the increased cost of imports priced in US Dollars.
The directors anticipate that working capital will now rise to its annual peak over the next few months.
Net Asset Value
Net assets decreased in the year by £206,000 as follows:
Net assets
£000
Per share
pence
At 31 May 2014
Profit after tax
Purchase of own shares for treasury (cost)
Purchase of own shares for treasury (reduced denominator)
Translation differences
At 31 May 2015
14,028
1,053
(44)
-
(1,215)
13,822
50.7
3.8
(0.1)
0.2
(4.4)
50.2
Debt Profile
The funding policy of the Group continues to be to match its funding requirement in trading subsidiaries in a
cost-effective fashion with an appropriate combination of short and longer-term debt. The warehouse constructed
in 2008 in Germany is financed by a 20-year loan at a fixed interest rate of 4.07%. Working capital finance,
when required, is via short term loans of three months currently attracting interest at approximately 1.25%.
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
As referred to in the Group result section above, foreign exchange risk arises when a member of the Group
enters into transactions denominated in a currency other than its functional currency. It is Group policy that
exposures should, wherever appropriate, be commercially hedged locally by entering into forward exchange
contracts with reputable banks
6
Strategic Report (continued)
Principal risks and uncertainties (continued)
Fire risk is mitigated by insurance, including consequential loss insurance to cover the loss of business
opportunity while replacement stocks are obtained. There is an adequate disaster recovery programme in place
with regard to essential computer systems. 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. The Directors therefore consider the principal operating risks of
operating in this market to be the financial risks identified in note 3 to the financial statements.
Jan G Holmstrom
30 July 2015
Chairman
7
Directors’ Report
The directors present their annual report and the audited financial statements for the year ended 31 May
2015.
Results and dividend
The results of the Group are set out in detail in the Strategic Report. The directors do not recommend the
payment of a dividend.
Principal activities
The principal activity of the Parent Company is that of an investment holding Company and the provision
of management services to subsidiaries. The principal activities of Group undertakings are set out in the
Strategic Report and in note 13 to the financial statements.
Directors and directors’ interests
The Directors who held office during the year were Ms Kathryn Davenport, Mr Johan Claesson, Mr
David Cooper, Mr Jörg Hemmers and Mr Jan G Holmstrom and their remuneration for the year is set out
in note 5 to the financial statements.
As she announced in her chairman’s statement in the last annual report, Kathryn Davenport resigned after
the Annual General Meeting on 21 October 2014. The Director retiring by rotation is Jan G Holmstrom
who, being eligible, offers himself for re-appointment at the forthcoming Annual General Meeting. David
Cooper and Jörg Hemmers, having been appointed in the year, will retire and offer themselves for re-
appointment at the forthcoming Annual General Meeting.
The directors who held office at the end of the year had the following interests in the ordinary shares of
the Company:
Number of shares
Interest at end of year
Beneficial
Non-beneficial
Interest at beginning of year
Beneficial
Non-beneficial
7,978,050
-
-
-
-
-
-
-
7,978,050
-
-
-
-
-
-
-
Johan Claesson
David Cooper
Jörg Hemmers
Jan Holmstrom
There are no outstanding share options granted to directors or employees of the Company.
No changes in directors’ share interests or share options have taken place between the end of the year and
30 July 2015.
Major shareholdings
The Company is aware of the following shareholders having 3% or more of the issued share capital at 30
July 2015:
% of issued share capital % of issued share capital excluding
shares held in treasury
Mr Johan Claesson and associates
Mr Peter Gyllenhammar and associates
Sunningdale Investments Ltd
25.25
21.31
7.09
28.83
24.33
8.13
Directors’ and officers’ liability insurance
The Group maintains directors’ and officers’ liability insurance that gives appropriate cover for any legal
actions brought against its directors or senior managers. This policy remained in force on the date on
which the financial statements of the Group were approved by the board.
8
Directors’ Report (continued)
Leeds Group plc Ordinary shares of 12 pence each
The market value of Leeds Group shares between 1 June 2014 and 31 May 2015 ranged between 30.5p
and 41.5p. The average market value for the year was 35.4p, and at 31 May 2015 the market value was
35.5p (31 May 2014: 30.5p).
Political and charitable contributions
The Group made no political contributions, nor any donations to UK charities in the years ended 31 May
2015 and 31 May 2014.
Creditor payment policy
It is Group policy to agree the terms of payment with suppliers when agreeing each transaction and to
abide by the terms of payment. At 31 May 2015, the amount of trade creditors shown in the consolidated
statement of financial position represents 26 days (2014: 23 days). There are no trade creditors shown in
the Company statement of financial position (2014: nil).
Going concern
After making enquiries, and notwithstanding the present uncertainties in the global economy, the directors
have a reasonable expectation that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. For this reason they have adopted the going concern basis
in preparing the financial statements.
Treasury shares
The Company bought back 125,999 of its own Ordinary Shares for treasury in the year at a cost of
£44,000. The directors intend to continue to buy back any shares which are available for purchase in the
future. The terms on which the Company may purchase its own shares for treasury are detailed in
Resolution 6 of the Notice of Annual General Meeting. In buying back the Company’s ordinary shares,
the Board is returning capital to those shareholders who wish to sell their shares whilst improving the net
asset value per share of the remaining shareholders.
Corporate Governance
The Board recognises its responsibility for the proper management of the Company and is
committed to maintaining a high standard of corporate governance. The Directors recognise the
importance of sound corporate governance commensurate with the size and nature of the Company
and the interests of its Shareholders. The Corporate Governance Code does not apply to companies
admitted to trading on AIM and there is no formal alternative for AIM companies.
The Quoted Companies Alliance has published a corporate governance code for small and mid-sized
quoted companies, which includes a standard of minimum best practice for AIM companies, and
recommendations for reporting corporate governance matters (the “QCA Code”). The Directors
comply with the QCA Code, to the extent they consider appropriate, having regard to the size and
resources of the Company.
The Board
The Board meets regularly to consider strategy, performance, corporate governance and the
framework of internal controls. To enable the Board to discharge its duties, all Directors receive
appropriate and timely information, and any briefing papers are distributed to all Directors in
advance of the Board meetings.
Procedures are in place to enable the Directors to obtain independent professional advice in the
furtherance of their duties, if necessary, at the Company’s expense.
The Audit Committee
The audit committee currently comprises the non-executive Directors, and meets not less than twice
a year. The audit committee receives and reviews reports from the Company’s auditor relating to the
annual accounts and to the internal control procedures in use throughout the Group. It is responsible
for ensuring that the financial performance of the Group is properly reported with particular regard
to legal requirements, accounting standards and the AIM Rules for Companies.
9
Directors’ Report (continued)
Corporate Governance (continued)
The Remuneration Committee
The remuneration committee comprises the non-executive Directors of the Company and meets not
less than once a year. It is responsible for determining and reviewing the terms and conditions of
service (including remuneration) of executive directors and officers of the Company.
Share Dealing Code
The Directors comply with Rule 21 of the AIM Rules relating to directors’ and applicable
employees’ dealings in the Company’s securities. Accordingly, the Company has adopted the Share
Dealing Code for directors and applicable employees and the Company takes all reasonable steps to
ensure compliance by its directors and applicable employees with the provisions of the AIM Rules
relating to dealings in securities.
The City Code on Takeovers and Mergers
The Company is subject to The City Code on Takeovers and Mergers.
Directors’ responsibilities
The directors are responsible for preparing the strategic report, the annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that
law the directors have elected to prepare the Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial
statements in accordance with United Kingdom Generally Accepted Accounting Practice. (United
Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of
the Group for that year. The directors are also required to prepare financial statements in accordance with
the rules of the London Stock Exchange for companies trading securities on the Alternative Investment
Market.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company, and enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company, and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Website publication
The directors are responsible for ensuring that the annual report and the financial statements are made
available on a website. Financial statements are published on the Company’s website in accordance with
legislation in the United Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's
website is the responsibility of the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
10
Directors’ Report (continued)
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves
aware of any information needed by the Group’s auditors for the purposes of their audit and to establish
that the auditors are aware of that information. The directors are not aware of any relevant audit
information of which the auditors are unaware.
In accordance with Section 489 of the Companies Act 2006, Resolution 3 is to be proposed at the
forthcoming Annual General Meeting for the re-appointment of BDO LLP as auditors of the Company, to
hold office from the conclusion of the meeting until the conclusion of the next annual general meeting of
the Company at which the accounts are laid.
By Order of the Board
Malcolm Wilson
Company Secretary
30 July 2015
Old Mills
Whitehall Grove
Drighlington
Bradford, BD11 1BY
11
Independent Auditor’s Report
to the Shareholders of Leeds Group plc
We have audited the financial statements of Leeds Group plc for the year ended 31 May 2015, which
comprise the Consolidated Statement of Financial Position and Company Balance Sheet, the Consolidated
Statement of Comprehensive Income, the Consolidated Cash Flow Statement, the Consolidated Statement
of Changes in Equity and the related notes. The financial reporting framework that has been applied in
the preparation of the Group financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been
applied in preparation of the Parent Company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and the Parent
Company’s affairs as at 31 May 2015 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the Parent Company’s financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements.
12
Independent Auditor’s Report
to the Shareholders of Leeds Group plc (continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Linda Cooper (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Leeds
30 July 2015
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
13
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2015
Note
6
4
7
7
14
8
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Profit from operations
Finance expense
Finance income
Share of post-tax profit of joint venture
Profit before tax
Tax expense
Profit for the year attributable to the equity
holders of the Parent Company
Other comprehensive income
Translation differences on foreign operations
Other comprehensive income for the year
Total comprehensive income for the year
attributable to the equity holders of the
Parent Company
Year ended
31 May 2015
£000
Year ended
31 May 2014
£000
34,859
(27,066)
7,793
(2,316)
(3,855)
1,622
(71)
7
13
1,571
(518)
1,053
(1,215)
(1,215)
34,210
(26,440)
7,770
(2,303)
(3,785)
1,682
(81)
10
-
1,611
(532)
1,079
(631)
(631)
(162)
448
The results shown in the consolidated statement of comprehensive income derive wholly from continuing
operations. There is no tax effect relating to other comprehensive income for the year.
Amounts included in other comprehensive income will not be reclassified subsequently as profit or loss.
Earnings per share attributable to
the equity holders of the Company
Note
Year ended
31 May 2015
Year ended
31 May 2014
Basic and diluted earnings per share (pence)
9
The notes on pages 18 to 41 form part of these financial statements.
14
£000
3.8p
£000
3.9p
Consolidated Statement of Financial Position
at 31 May 2015
Company number 00067863
Assets
Non-current assets
Property, plant and equipment
Goodwill
Investment in joint venture
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Non-current liabilities
Loans and borrowings
Deferred tax
Total non-current liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Corporation tax liability
Total current liabilities
Total liabilities
TOTAL NET ASSETS
Capital and reserves attributable to
equity holders of the Company
Share capital
Capital redemption reserve
Treasury share reserve
Foreign exchange reserve
Retained earnings
TOTAL EQUITY
Note
31 May 2015
£000
31 May 2014
£000
11
12
14
15
16
17
18
20
8
19
20
21
21
21
1,760
802
553
3,115
7,258
6,000
59
2,027
15,344
18,459
(665)
(244)
(909)
(2,666)
(766)
(296)
(3,728)
(4,637)
1,900
908
-
2,808
7,050
6,097
-
1,772
14,919
17,727
(813)
(239)
(1,052)
(2,062)
(44)
(541)
(2,647)
(3,699)
13,822
14,028
3,792
600
(725)
(51)
10,206
13,822
3,792
600
(681)
1,164
9,153
14,028
The financial statements on pages 14 to 41 were approved and authorised for issue by the board of
directors on 30 July 2015 and were signed on behalf of the board by:-
Jan G Holmstrom
Chairman
The notes on pages 18 to 41 form part of these financial statements.
15
Consolidated Cash Flow Statement
for the year ended 31 May 2015
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Finance expense
Finance income
Movement in derivative financial asset
Loss/(profit) on sale of property, plant and equipment
Share of post-tax profit of joint venture
Income tax expense
Cash flows from operating activities before
changes in working capital and provisions
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Cash generated from operating activities
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Investment in joint venture
Bank interest received
Net cash used in investing activities
Financing activities
Purchase of treasury shares
Bank borrowings drawn down/(repaid)
Bank interest paid
Net cash generated/(used) in financing activities
Net increase/(decrease) in cash and cash equivalents
Translation loss on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
Year ended
31 May 2015
Year ended
31 May 2014
£000
1,053
226
71
(7)
(63)
2
(13)
518
1,787
(1,063)
(495)
1,003
1,232
(679)
553
(298)
-
(575)
7
(866)
(44)
717
(71)
602
289
(34)
1,772
2,027
£000
1,079
223
81
(10)
-
(1)
-
532
1,904
(849)
453
256
1,764
(199)
1,565
(221)
3
-
10
(208)
-
(1,786)
(81)
(1,867)
(510)
(52)
2,334
1,772
11
7
7
17
14
8
15
16
19
8
11
11
14
7
21
20
7
18
18
The notes on pages 18 to 41 form part of these financial statements.
16
Consolidated Statement of Changes in Equity
for the year ended 31 May 2015
Share
capital
£000
Capital
redemption
reserve
£000
Treasury
share
reserve
£000
Foreign
exchange
reserve
£000
Retained
earnings
£000
Total equity
£000
At 31 May 2013
3,792
600
(681)
1,795
8,074
13,580
Profit for the year
Other comprehensive income*
-
-
-
-
-
-
-
1,079
1,079
(631)
-
(631)
At 31 May 2014
3,792
600
(681)
1,164
9,153
14,028
Profit for the year
Other comprehensive income*
Transaction with Shareholders:
Purchase of treasury shares
-
-
-
-
-
-
-
-
(1,215)
(44)
-
-
1,053
1,053
-
-
(1,215)
(44)
At 31 May 2015
3,792
600
(725)
(51)
10,206
13,822
* 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.
The notes on pages 18 to 41 form part of these financial statements.
17
Notes
forming part of the financial statements for the year ended 31May 2015
1
Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the consolidated financial statements are set
out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.
The financial statements have been prepared under the historical cost convention subject to fair valuing of
financial instruments.
These financial statements have been prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the
International Accounting Standards Board (IASB) as adopted by European Union ("adopted IFRS"), and
with the Companies Act 2006 applicable to companies reporting under IFRS.
Changes in accounting policies
In the current year the following new and revised Standards and Interpretations have been adopted:
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities:
Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)
In the current year the following new and revised Standards and Interpretations have been adopted
which have not resulted in any significant impact on the results or net assets of the Group:
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
Recoverable amounts disclosures for non-financial assets (Amendments to IAS 36)
Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
The Group has decided against early adoption of the following new and amended IFRS, IAS and IFRIC
interpretations which are mandatory for future accounting periods and which are potentially relevant to
the Group:
Annual Improvements to IFRSs (2010-2012 Cycle) (effective 1 February 2015)
Annual Improvements to IFRSs (2011-2013 Cycle) (effective 1 January 2015)
The following new and amended IFRS, IAS and IFRIC interpretations are mandatory for future
accounting periods and are not expected at this stage to be relevant to the Group or have any anticipated
significant impact on the results or net assets of the Group:
IFRIC 21 Levies (effective 17 June 2014)
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) (effective 1 February 2015)
The following IFRS, IAS and IFRIC interpretations, which are potentially relevant to the Group, are
not currently endorsed for use in the EU but are expected to be mandatory for future accounting periods:
IFRS 14 Regulatory Deferral Accounts
Accounting for Acquisitions of Interests in Joint Operations: Amendments to IFRS 11
Clarification of Acceptable Methods of Depreciation and Amortisation: Amendments to IAS 16 and IAS 38
Amendments to IAS 16 and IAS 41: Agriculture: Bearer Plants
Equity Method in Separate Financial Statements (Amendments to IAS 27)
Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS
10 and IAS 28)
Annual Improvements to IFRSs (2012-2014 Cycle)
Disclosure Initiative: Amendments to IAS 1
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial instruments
Where future new and amended standards have been identified as potentially relevant management are
assessing their future impact.
18
Notes
forming part of the financial statements for the year ended 31May 2015
1
Accounting policies (continued)
Revenue
Revenue is shown in the consolidated statement of comprehensive income net of VAT and returns, and is
based on the fair value of consideration receivable by the Group in the ordinary course of its business for
the sale of fabric. Revenue on sale of goods is recognised in the consolidated statement of comprehensive
income when the significant risks and rewards of ownership have been transferred, which is typically upon
despatch of goods to the customer.
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these
elements of control. The consolidated financial statements present the results of the Company and its
subsidiaries ("the Group") as if they formed a single entity. Inter-company transactions and balances
between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase
method. In the consolidated statement of financial position, the acquired entity’s identifiable assets,
liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated statement of comprehensive income from the
date on which control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the interest in the fair value of
identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets
acquired, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the
consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the
consolidated statement of comprehensive income on the acquisition date.
Segment reporting
The board considers that the Group’s business comprises two operating segments, namely Hemmers
Europe and Hemmers China. The remainder of Group activities comprise holding companies.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker who is identified as the Board of Directors which is responsible for allocating
resources, assessing performance of the operating segments and making strategic decisions.
Impairment of non-financial assets (excluding inventories, investment properties and deferred tax
assets)
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are
undertaken annually at the end of the financial period. Other non-financial assets are subject to impairment
tests whenever events or changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value
in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is
carried out on the asset's cash-generating unit (i.e. the lowest Group of assets in which the asset belongs for
which there are separately identifiable cash flows). Goodwill is allocated on initial recognition to each of
the Group's cash-generating units that are expected to benefit from the synergies of the combination giving
rise to the goodwill.
19
Notes
forming part of the financial statements for the year ended 31May 2015
1
Accounting policies (continued)
Impairment charges are included in the administrative expenses line item in the consolidated statement of
comprehensive income, except to the extent they reverse gains previously recognised in the consolidated
statement of comprehensive income. An impairment loss recognised for goodwill is not reversed.
Foreign currency
The consolidated financial statements are presented in sterling, which is the functional currency of the
Parent Company and the presentational currency of the Group.
Transactions entered into by Group entities in a currency other than the currency of the primary economic
environment in which they operate (their "functional currency") are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the
date of the statement of financial position. Exchange differences arising on the retranslation of unsettled
monetary assets and liabilities are recognised immediately in the consolidated statement of comprehensive
income.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to
those ruling when the transactions took place. All assets and liabilities of overseas operations, including
goodwill arising on the acquisition of those operations, are translated at the rate ruling at the date of the
statement of financial position. Exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations at actual rate are recognised directly in equity (the
"foreign exchange reserve").
Exchange differences recognised in the income statement of Group entities' separate financial statements on
the translation of long-term monetary items forming part of the Group's net investment in the overseas
operation concerned are reclassified to the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange
reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of
comprehensive income as part of the profit or loss on disposal.
Financial assets
The Group classifies its financial assets into one of the three categories discussed below, depending on the
purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to
maturity.
The Group's accounting policy for each category is as follows:
(i) Fair value through profit or loss: This category comprises only in-the-money derivatives (see
financial liabilities section for out-of-the-money derivatives). They are carried in the statement of
financial position at fair value with changes in fair value recognised in the consolidated statement of
comprehensive income in the cost of sales line. Other than these derivative financial instruments,
the Group does not have any assets held for trading nor does it voluntarily classify any financial
assets as being at fair value through profit or loss.
(ii) Loans and receivables: Group loans and receivables comprise trade and other receivables and
cash and cash equivalents in the statement of financial position. These assets are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. They
arise principally through the provision of goods and services to customers (e.g. trade receivables),
but also incorporate other types of contractual monetary asset. They are initially recognised at fair
value, and subsequently carried at amortised cost using the effective interest rate less provision for
impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial
difficulties on the part of the counter-party or default or significant delay in payment) that the Group
will be unable to collect all of the amounts due under the terms receivable, the amount of such a
provision being the difference between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable. For trade receivables, which are
20
Notes
forming part of the financial statements for the year ended 31May 2015
1
Accounting policies (continued)
(ii) Loans and receivables (continued)
reported net, such provisions are recorded in a separate allowance account with the loss being
recognised within administrative expenses in the consolidated statement of comprehensive income.
On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset
is written off against the associated provision.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers
with which it has previously had a good trading history. Such renegotiations will lead to changes in
the timing of payments rather than changes to the amounts owed and, in consequence, the new
expected cash flows are discounted at the original effective interest rate.
Cash and cash equivalents include cash in hand, deposits held at call with banks, and bank
overdrafts. Cash and cash equivalents have maturities of three months or less. Bank overdrafts are
shown within loans and borrowings in current liabilities in the statement of financial position.
The Group does not engage in hedge accounting.
Financial liabilities
The Group classifies its financial liabilities into one of the two categories below, depending on the purpose
for which the liability was incurred. The Group's accounting policy for each category is as follows:
(i) Fair value through profit or loss: This category comprises only out-of-the-money derivatives
(see financial assets for in-the-money derivatives). They are carried in the statement of financial
position at fair value with changes in fair value recognised in the consolidated statement of
comprehensive income in the cost of sales line. Other than these derivative financial instruments,
the Group does not have any liabilities held for trading nor has it designated any financial
liabilities as being at fair value through profit or loss.
(ii) Other financial liabilities: Other financial liabilities include the following items, which are
initially recognised at fair value and subsequently carried at amortised cost using the effective
interest method:
Bank borrowings
Trade payables
Bill discounting facilities
Interest payable on bank borrowings is accounted for using the effective interest method.
Share capital
The Group’s ordinary shares are classified as equity instruments.
Retirement benefits
The Group operates no defined benefit pension schemes. The Group operates a defined contribution
pension scheme for its UK employees, and contributions are charged to the consolidated statement of
comprehensive income in the period to which they relate. The Group does not operate pension schemes in
either Germany or Holland where pension arrangements are provided by the state.
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an
"operating lease"), the total rentals payable under the lease are charged to the consolidated statement of
comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.
Taxation
The charge for taxation is based on the results for the year, and takes into account deferred taxation.
21
Notes
forming part of the financial statements for the year ended 31May 2015
1
Accounting policies (continued)
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
statement of financial position differs from its tax base, except for differences arising on:
the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination
and at the time of the transaction affects neither accounting or taxable profit; and
investments in subsidiaries where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will
be available against which the difference can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by the date of the statement of financial
position and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
the same taxable Group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis,
or to realise the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Dividends
Interim dividends are recognised when paid and final dividends are recognised when approved by the
shareholders at the AGM.
Property, plant and equipment
Other than freehold land, all items of property, plant and equipment are carried at depreciated cost.
Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and
equipment is to write off the carrying value of items on a straight line basis over their expected useful
economic lives as follows:
Land and buildings
Plant and machinery
8 - 33 years
5 – 15 years
Treasury shares
Consideration paid/(received) for the purchase/(sale) of treasury shares is recognised directly in equity. The
cost of treasury shares held is presented as a separate component of equity (the "treasury share reserve").
Any excess of the consideration received on the sale of treasury shares over the weighted average cost of
the shares sold is credited to the share premium account.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Weighted average cost is used to determine the cost of
ordinarily interchangeable items.
Government grants
Government grants received on capital expenditure are generally deducted in arriving at the carrying
amount of the asset purchased. Grants for revenue expenditure are netted against the cost incurred by the
Group. Where retention of a government grant is dependent on the Group satisfying certain criteria, it is
initially recognised as deferred income. When the criteria for retention have been satisfied, the deferred
income balance is released to the consolidated statement of comprehensive income or netted against the
asset purchased.
22
Notes
forming part of the financial statements for the year ended 31May 2015
1 Accounting policies (continued)
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past
transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of
money and the risks specific to the liability.
Where the buyer has the right to return the goods the Group estimates the return rate based on past
experience with similar sales and recognises revenue on this transaction with a corresponding provision
against revenue for estimated returns.
Joint arrangements
The group is a party to a joint arrangement when there is a contractual arrangement that confers joint
control over the relevant activities of the arrangement to the group and at least one other party. Joint control
is assessed under the same principles as control over subsidiaries.
The group classifies its interests in joint arrangements as either:
Joint ventures: where the group has rights to only the net assets of the joint arrangement
Joint operations: where the group has both the rights to assets and obligations for the liabilities of
the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers:
The structure of the joint arrangement
The legal form of joint arrangements structured through a separate vehicle
The contractual terms of the joint arrangement agreement
Any other facts and circumstances (including any other contractual arrangements).
The Group accounts for its interests in joint ventures using the equity method. Any premium paid for an
investment in a joint venture above the fair value of the Group's share of the identifiable assets, liabilities
and contingent liabilities acquired is capitalised and included in the carrying amount of the investment in
joint venture. Where there is objective evidence that the investment in a joint venture has been impaired the
carrying amount of the investment is tested for impairment in the same way as other non-financial assets.
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities,
revenues and expenses in accordance with its contractually conferred rights and obligations.
2
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below:
(i) Impairment of goodwill
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The
recoverable amount is determined based on value in use calculations. The use of this method requires the
estimation of future cash flows and the choice of a discount rate in order to calculate the present value of
the cash flows. Actual outcomes may vary.
(ii) Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over their useful lives. Useful lives are based on the
management's estimates of the period that the assets will generate revenue, which are periodically reviewed
for continued appropriateness. Changes to estimates can result in significant variations in the carrying
value and amounts charged to the consolidated statement of comprehensive income in specific periods.
23
Notes
forming part of the financial statements for the year ended 31May 2015
2
Critical accounting estimates and judgements (continued)
(iii) Impairment of trade receivables
The management team of Hemmers-Itex manages the credit risk in its customer base by taking credit
references before dealing with new customers, by closely monitoring customer payments against agreed
terms, and by taking credit risk insurance wherever possible. Customers that are graded as “high risk” are
placed on a restricted customer list, and future sales are made on a prepayment basis with approval of the
Hemmers-Itex managing director. The main board directors review the Hemmers-Itex debtor profile on a
quarterly basis.
(iv) Inventory
The Company reviews the net realisable value of, and demand for, its inventory on a regular basis to
provide assurance that recorded inventory is stated at the lower of cost or net realisable value. Factors that
could impact estimated demand and selling prices include competitor actions, supplier prices and economic
trends.
(v) Classification of joint arrangements
For all joint arrangements structured in separate vehicles the Group must assess the substance of the joint
arrangement in determining whether it is classified as a joint venture or joint operation. This assessment
requires the Group to consider whether it has rights to the joint arrangement’s net assets (in which case it is
classified as a joint venture), or rights to and obligations for specific assets, liabilities, expenses, and
revenues (in which case it is classified as a joint operation). Factors the group must consider include:
Structure
Legal form
Contractual agreement
Other facts and circumstances
Upon consideration of these factors, the directors have determined that the joint arrangement in respect of
Stoff-Ideen-KMR GmbH is structured through a separate vehicle giving the Group rights to the net assets,
and is therefore classified as a joint venture.
3
Financial instruments - risk management
The Group is exposed through its operations to the following financial risks:
Credit risk
Market risk in the form of: -
o Fair value or cash flow interest rate risk
o Foreign exchange risk
o Other market price risk
Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. The following describes the Group’s objectives, policies and processes for managing those
risks and the methods used to measure them.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods.
24
Notes
forming part of the financial statements for the year ended 31May 2015
3
Financial instruments - risk management (continued)
Principal financial instruments
The principal financial instruments used by the Group, giving rise to financial instrument risk, are as
follows:
Trade receivables
Cash at bank
Bank overdrafts
Investments in quoted and unquoted securities (UK or overseas)
Trade and other payables
Fixed rate bank loans
Forward currency contracts
General objectives, policies and processes
The directors have overall responsibility for the determination of the Group’s risk management objectives
and policies and, whilst retaining ultimate responsibility for them, they have delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and policies to
the Hemmers-Itex management team and, to the limited extent that risk arises in the UK, to the company
secretary. The Board receives monthly reports through which it reviews the effectiveness of the processes
put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out
below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is
Group policy, implemented locally, to assess the credit risk of new customers before entering contracts.
Such credit ratings are taken into account by local business practices.
A credit policy has been established under which each new customer is analysed individually for
creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The
Group’s review includes external ratings, when available, and in some cases bank references. Purchase
limits are established for each customer, which represents the maximum open amount without requiring
approval from senior management. These limits are reviewed quarterly. Customers that fail to meet the
Group’s benchmark creditworthiness may transact with the Group on a prepayment basis.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions.
For banks and financial institutions, only independently rated parties with minimum rating “A” are
accepted.
The directors monitor the utilisation of the credit limits regularly and at the reporting date do not expect
losses from non-performance by the counterparties to exceed amounts that have been provided. Details of
the provisions held against trade receivables are given in note 16 to the financial statements.
Market risk
Market risk arises from the Group’s use of interest bearing, tradable and foreign currency financial
instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other
market factors (other price risk).
(i) Cash flow interest rate risk
The Group manages its cash flow interest rate risk by borrowing at fixed interest rates wherever possible.
Working capital is financed by short or medium term bank debt at fixed rates, leaving a small residual
overdraft at variable rates.
25
Notes
forming part of the financial statements for the year ended 31May 2015
3
Financial instruments - risk management (continued)
(i) Cash flow interest rate risk (continued)
The borrowings of overseas subsidiaries are denominated in Euros, their functional currency, in order to
avoid those subsidiaries being exposed to unnecessary foreign exchange risk. Bank borrowings or cash
deposits of the Parent Company are denominated in Sterling.
(ii) Foreign exchange risk
The Group has operations located in Germany and China whose functional currencies are, respectively, the
Euro and the RMB. Foreign exchange risk arises when these entities enter into transactions denominated in
a currency other than their functional currency, which almost invariably involves sales or purchases
denominated in US Dollars. It is Group policy that Euro / US Dollar exposures should be commercially
hedged locally by entering into forward contracts with reputable banks wherever appropriate. Exposure
and risk relating to RMB / US Dollar transactions is small and is not hedged.
At the date of the consolidated statement of financial position, a 10% strengthening of Sterling against the
Euro and the RMB, all other variables held constant, would have resulted in an estimated decrease of
£989,000 in the reported net asset value of the Group. A 10% weakening of Sterling against the Euro and
the RMB at the date of the statement of financial position, on the same basis, would have resulted in an
estimated increase of £1,207,000 in the reported net asset value of the Group.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The board monitors and manages the Group’s net indebtedness by reference to cash flow forecasts prepared
in their functional currencies by subsidiary companies. These forecasts are regularly updated, allowing the
board to ensure that the Group will always be able to meet its liabilities when they become due by
maintaining adequate cash balances and committed loan facilities. The Group also seeks to reduce liquidity
risk by fixing interest rates (and hence cash flows) on a portion of its long-term borrowings. This is further
discussed in the ‘interest rate risk’ section above.
Capital policy
The Group’s capital comprises equity as shown in the consolidated statement of financial position plus net
debt, which is set out in note 20 to the financial statements. The board’s objectives when managing capital
are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders, and to maintain a capital structure that optimises the cost
of capital. In order to maintain or adjust the capital structure the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares, sell assets or reduce debts.
26
Notes
forming part of the financial statements for the year ended 31May 2015
4
Profit from operations
Profit from operations is stated after charging/(crediting):
Auditors’ fees
Statutory audit services
- Audit of the Parent Company and the consolidated accounts
- Audit of subsidiary companies
Non-audit related services
- Tax compliance
Total auditor’s fees
Staff costs
Depreciation of property, plant and equipment
Operating lease expense
- Plant and machinery
- Property
Loss/(profit) on disposal of property, plant and equipment
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
16
28
4
48
4,201
226
116
207
2
16
30
4
50
4,097
223
106
239
(1)
5
Staff costs
The average number of persons employed in the year by the Group (including directors) was as follows:
Management
Sales and
customer service
Warehousing Administration
Group total
2015
2014
9
9
50
47
71
64
27
27
157
147
Staff costs, including directors, comprise
Wages, salaries and directors’ fees
Defined contribution pension cost
Employer’s national insurance contributions and similar taxes
Total staff costs
Year ended
31 May 2015
Year ended
31 May 2014
£000
3,484
4
713
4,201
£000
3,366
4
727
4,097
Included in employer’s national insurance contributions and similar taxes are the amounts paid by
Hemmers-Itex Textil Import / Export GmbH to fund employees’ pension entitlements provided by the
German state.
Executive director
Jörg Hemmers (appointed 30 Mar 2015)
Non -executive directors
Johan Claesson
David Cooper (appointed 21 Oct 2014)
Kathryn Davenport (resigned 21 Oct 2014)
Jan G Holmstrom
Salary &
Fees
Pension
Benefit
in kind
£000
£000
£000
Year
ended 31
May 2015
£000
Year ended
31 May
2014
£000
27
15
10
10
21
83
27
1
-
-
-
-
1
1
-
-
-
-
1
29
15
10
10
21
85
-
15
-
25
15
55
Notes
forming part of the financial statements for the year ended 31May 2015
5
Staff costs (continued)
Jörg Hemmers is managing director of Hemmers-Itex Textil Import / Export GmbH, a wholly owned
subsidiary of Leeds Group based in Germany. No recharge of his salary is made to the parent company.
The fees relating to Johan Claesson and Jan G Holmstrom are paid, respectively, to Johan & Marianne
Claesson Aktiebolag and Peter Gyllenhammar Aktiebolag who invoice the Company for the services of
these directors.
Outstanding share options granted to employees or directors at 31 May 2015 were nil (2014: nil).
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Group, and comprise the directors of the Group listed on page 2.
Salary and fees
Bonuses
Employer’s national insurance contributions and similar taxes
Total remuneration of key management personnel
6
Segmental information
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
224
47
9
280
273
14
12
299
The Group’s trading businesses are Hemmers-Itex Textil Import Export GmbH, and its subsidiary Chinoh-
Tex Limited. Hemmers is incorporated in Germany and is engaged in the import and distribution of fabric
from its principal place of business in Nordhorn, Germany. ChinohTex is incorporated in China and based
in Shanghai, buying fabric from Chinese manufacturers to be sold internationally.
The chief operating decision maker is the Board, which considers that the Hemmers business comprises
two operating segments, namely Hemmers Europe and Hemmers China. These two segments report to the
board under local GAAP, and the adjustments required to permit the Group to report under IFRS are made
centrally.
The following tables set out a segmental analysis of the Group’s operations. The Holding Companies are
not in themselves operating segments, but their net costs are shown in order that the segmental information
presented to the Board can be reconciled to the Consolidated Statement of Comprehensive Income.
Analysis of revenue by category
Year ended 31 May 2015
Hemmers
China
£000
Hemmers
Europe
£000
Group
Total
£000
Year ended 31 May 2014
Hemmers
Europe
£000
Hemmers
China
£000
Group
Total
£000
Sale of goods
31,151
3,708
34,859
31,378
2,832
34,210
Total revenue
31,151
3,708
34,859
31,378
2,832
34,210
Since sales to no customer amount to more than 5% of total revenue, the directors hold the opinion that the
Group is not reliant upon trade with any major customer.
28
Notes
forming part of the financial statements for the year ended 31May 2015
6
Segmental information (continued)
Year ended
31 May 2015
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Holding
companies
£000
External revenue
Inter-segmental
revenue
Cost of sales
31,151
3,708
-
34,859
68
(24,303)
924
(3,815)
(992)
989
-
(27,129)
Gross profit
Distribution costs
Admin expenses
6,916
(2,082)
(3,177)
817
(234)
(278)
Profit from
operations
Finance expense
Finance income
Internal interest
Share of JV profit
1,657
(71)
-
(156)
13
305
-
-
-
-
(3)
-
-
(3)
-
-
-
-
7,730
(2,316)
(3,455)
1,959
(71)
-
(156)
13
-
-
-
-
-
(458)
(458)
-
7
156
-
Profit before tax
1,443
305
(3)
1,745
(295)
At 31 May 2015
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Holding
companies
£000
Property, plant &
equipment
Goodwill
Investment in JV
Inventories
Trade receivables
Other receivables
Derivative financial
asset
Cash & equivalents
1,678
-
553
7,107
4,522
742
-
354
82
-
-
184
238
480
-
595
-
-
-
(33)
-
-
-
-
1,760
-
553
7,258
4,760
1,222
-
949
-
-
-
-
-
18
-
1,078
Total assets
14,956
1,579
(33)
16,502
1,096
Group loans &
current accounts
Non-current
liabilities
Trade payables
Other payables
Corporation tax
Current loans &
borrowings
(1,629)
(204)
(665)
(1,364)
(705)
(269)
-
(418)
(132)
(15)
(766)
-
Total liabilities
(5,398)
(769)
-
-
-
-
-
-
-
(1,833)
1,833
(665)
(1,782)
(837)
(284)
(766)
-
(3)
(44)
(12)
-
IFRS adjustments
Financial
derivatives
£000
£000
Goodwill
IFRS adjustments
Financial
derivatives
£000
£000
Goodwill
Group
total
£000
34,859
-
(27,066)
7,793
(2,316)
(3,855)
1,622
(71)
7
-
13
-
-
-
-
-
58
58
-
-
-
-
58
1,571
Group
total
£000
1,760
802
553
7,258
4,760
1,240
59
2,027
-
802
-
-
-
-
-
-
802
18,459
-
-
(227)
-
-
-
(909)
(1,785)
(881)
(296)
-
(766)
-
-
63
63
-
-
63
-
-
-
-
63
-
-
-
-
-
-
59
-
59
-
(17)
-
-
-
-
(6,167)
1,774
(17)
(227)
(4,637)
Net assets
9,558
810
(33)
10,335
2,870
42
575
13,822
29
Notes
forming part of the financial statements for the year ended 31May 2015
6
Segmental information (continued)
Year ended
31 May 2014
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Holding
companies
£000
External revenue
Inter-segmental
revenue
Cost of sales
31,378
2,832
-
34,210
-
(24,142)
904
(3,194)
(904)
896
-
(26,440)
Gross profit
Distribution costs
Admin expenses
7,236
(2,130)
(3,390)
542
(173)
(240)
Profit from
operations
Finance expense
Finance income
Internal interest
1,716
(81)
-
(157)
Profit before tax
1,478
129
-
-
-
129
(8)
-
-
(8)
-
-
-
(8)
7,770
(2,303)
(3,630)
1,837
(81)
-
(157)
-
-
-
-
-
(269)
(269)
-
10
157
1,599
(102)
At 31 May 2014
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Holding
companies
£000
Property, plant &
equipment
Goodwill
Inventories
Trade receivables
Other receivables
Cash & equivalents
1,822
62
6,945
4,709
705
411
78
-
139
245
421
178
-
-
(34)
-
-
-
1,900
62
7,050
4,954
1,126
589
-
-
-
1
16
1,183
Total assets
14,654
1,061
(34)
15,681
1,200
IFRS
adjustment
Goodwill
Group total
£000
£000
-
-
-
-
-
114
114
-
-
-
114
34,210
-
(26,440)
7,770
(2,303)
(3,785)
1,682
(81)
10
-
1,611
IFRS
adjustment
Goodwill
Group total
£000
£000
-
846
-
-
-
-
846
1,900
908
7,050
4,955
1,142
1,772
17,727
Group loans &
current accounts
Non-current
liabilities
Trade payables
Other payables
Corporation tax
Current loans &
borrowings
(1,895)
(179)
(813)
(1,045)
(599)
(528)
-
(239)
(128)
-
(44)
-
Total liabilities
(4,924)
(546)
-
-
-
-
-
-
-
(2,074)
2,074
-
-
(813)
(1,284)
(727)
(528)
(44)
-
-
(51)
(13)
-
(239)
-
-
-
(1,052)
(1,284)
(778)
(541)
-
(44)
(5,470)
2,010
(239)
(3,699)
Net assets
9,730
515
(34)
10,211
3,210
607
14,028
Inter-segment sales are priced on an arms-length basis, and this policy has been applied consistently throughout the
years ended 31 May 2015 and 31 May 2014.
30
Notes
forming part of the financial statements for the year ended 31May 2015
6
Segmental information (continued) - Analysis of revenue by destination
Year ended 31 May 2015
Year ended 31 May 2014
Hemmers
Europe
£000
Hemmers
China
£000
1,087
20,205
8,215
29,507
1,070
324
822
1,059
2,205
157
Group
total
£000
1,411
21,027
9,274
31,172
1,227
Hemmers
Europe
£000
Hemmers
China
£000
1,343
19,228
8,976
29,547
1,278
163
328
1,034
1,525
-
Group
total
£000
1,506
19,556
10,010
31,072
1,278
UK
Germany
Rest of EU
Total EU
Rest of Europe
Total Europe
30,577
2,362
32,939
30,825
1,525
32,350
North America
Asia
Oceania
South America
Africa
251
102
106
113
2
669
295
350
11
21
920
397
456
124
23
164
193
110
80
6
762
369
165
7
4
926
562
275
87
10
Total revenue
31,151
3,708
34,859
31,378
2,832
34,210
Other information
Year ended 31 May 2015
Year ended 31 May 2014
Hemmers
Europe
£000
Hemmers
China
£000
Group
total
£000
Hemmers
Europe
£000
Hemmers
China
£000
Additions to property,
plant & equipment
Depreciation
284
208
14
18
298
226
141
216
80
7
Group
total
£000
221
223
7
Finance income and expense
Finance income
Interest received on bank deposits
Finance expense
Interest paid on bank overdrafts and loans
Net finance expense recognised in comprehensive income
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
7
(71)
(64)
10
(81)
(71)
31
Notes
forming part of the financial statements for the year ended 31May 2015
8 Tax expense
Current tax expense
UK corporation tax and income tax of overseas operations on profits for
the year
Adjustments for under provision in prior years
Total current tax expense
Deferred tax expense for the year
Total tax expense
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
483
-
483
35
518
498
2
500
32
532
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the UK applied to the profit for the year are as follows:
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
Profit before taxation
1,571
1,611
Expected tax charge based on the standard rate of corporation tax in the
UK of 20.83% (2014:22.67%)
Expenses not deductible for tax purposes
Unrelieved losses
Current tax underprovided in previous years
Different tax rates applied in overseas jurisdictions
Total tax expense (see above)
327
19
61
-
111
518
365
27
39
2
99
532
The Group has UK capital losses carried forward of £13,085,000 and unrelieved UK trading losses of
£1,461,000. No recognition has been made of deferred tax assets in respect of these losses carried forward as
the directors believe it unlikely that there will be suitable profits to reverse these temporary differences in the
foreseeable future.
The deferred tax liability relates to the IFRS adjustment to eliminate goodwill amortisation recorded in the
accounts of Hemmers under German GAAP, and the movement in the year is analysed as follows:
Deferred tax
£000
239
35
(30)
244
Liability at 31 May 2014
Charged in the year
Effect of movements in foreign exchange rates
Liability at 31 May 2015
32
Notes
forming part of the financial statements for the year ended 31May 2015
9 Earnings per share
Since there are no outstanding share options, there is no difference
between basic and diluted earnings per share.
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
Numerator
Profit for the year from continuing operations, being the earnings used in
earnings per share
£1,053,000
£1,079,000
Denominator
Weighted average number of shares used in earnings per share (excluding
treasury shares)
27,583,006
27,674,342
Basic and diluted earnings per share
3.8p
3.9p
10 Dividend
The directors have not proposed a dividend in respect of the year ended 31 May 2015 nor for the year ended
31 May 2014.
11 Property, plant and equipment
Cost
Balance at 31 May 2013
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2014
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2015
Accumulated depreciation
Balance at 31 May 2013
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2014
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2015
33
Land and
buildings
£000
Plant and
machinery
£000
1,995
1,417
13
-
(97)
1,911
95
(2)
(228)
1,776
208
(45)
(78)
1,502
203
(54)
(156)
1,495
Land and
buildings
£000
Plant and
machinery
£000
435
71
-
(23)
483
63
(2)
(60)
484
973
152
(43)
(52)
1,030
163
(52)
(114)
1,027
Total
£000
3,412
221
(45)
(175)
3,413
298
(56)
(384)
3,271
Total
£000
1,408
223
(43)
(75)
1,513
226
(54)
(174)
1,511
Notes
forming part of the financial statements for the year ended 31May 2015
11 Property, plant and equipment (continued)
Net book amount
At 31 May 2013
At 31 May 2014
At 31 May 2015
12 Goodwill
Balance at 31 May 2013
Effect of movements in foreign exchange rates
Balance at 31 May 2014
Effect of movements in foreign exchange rates
Balance at 31 May 2015
Land and
buildings
£000
Plant and
machinery
£000
1,560
1,428
1,292
444
472
468
Total
£000
2,004
1,900
1,760
£000
955
(47)
908
(106)
802
Goodwill arose in 1999 on the acquisition of the cash-generating unit Hemmers-Itex Textil Import Export
GmbH, whose recoverable amount has been determined from value-in-use calculations based on expected
cash flows. Principal assumptions underlying this calculation are the achievement of profit in 2016 broadly in
line with that actually achieved in 2015, and thereafter into perpetuity an annual growth rate of 4% in
revenue and profits, and 2% in working capital. Forecasted operating margins and expenses are based on past
experience and future expectations that reflect anticipated economic and market conditions, and a pre-tax
discount rate of 14% has been applied to anticipated cash flows. On this basis, the recoverable amount of the
cash-generating unit exceeds its carrying value with considerable headroom and in view of this excess, the
Directors do not consider the impairment calculation to be unduly sensitive to changes to the above
assumptions, and are of the opinion that no provision for impairment is required.
13 Subsidiaries
The subsidiaries of Leeds Group plc, all of which were wholly owned in both 2015 and 2014, and which
have been included in these consolidated statements, are as follows:
Name
Country of
incorporation Nature of business
*† CLG Holding B.V.
* Hemmers-Itex Textil Import Export GmbH. Germany
** Chinoh-Tex Ltd
Holland
China
Holding company
Import, sale, and distribution of textiles
Textile trading
* Wholly owned subsidiaries of Leeds Group plc.
† At 31 May 2015 CLG Holding B.V. was in the process of voluntary liquidation.
** Wholly owned subsidiary of Hemmers-Itex Textil Import Export GmbH.
34
Notes
forming part of the financial statements for the year ended 31May 2015
14 Investment in joint venture
Investment in shares in KMR at cost (December 2014)
Additional shares purchased (May 2015)
Share of post-tax profit of 5 months ended 31 May 2015
Effect of movements in foreign exchange rates
At 31 May 2015
31 May 2015
£000
31 May 2014
£000
383
192
13
(35)
553
-
-
-
-
-
On 31 December 2014 the Group’s subsidiary Hemmers-Itex Textil Import/Export GmbH (“Hemmers”)
completed its purchase of 50% of the issued share capital of Stoff-Ideen-KMR GmbH (“KMR”) at a cost of
£383,000. Completion documentation included revised articles of KMR providing for its two partners to
share joint control of the company, its assets and its operations. Leeds Group accounts for this joint venture
under the equity method.
KMR is a retailer of fabric and haberdashery, operating a total of fourteen leased shops distributed
throughout five German states. Following the investment by Hemmers, KMR has changed its accounting
year to 31 May, and in May 2015 the joint venture partners subscribed equally to an increase in share capital
of £383,000 in total.
KMR has long been a customer of Hemmers, and this relationship continues on an arm’s length basis. In the
five months ended 31 May 2015 Hemmers sales to KMR amounted to £528,000. For the purposes of
reporting the Group’s share of the profit of the joint venture, the profit after tax reported by KMR is adjusted
for the movement in the period of the unrealised profit within KMR inventories purchased from Hemmers.
The unaudited accounts of KMR are summarised as follows:
Sales
Cost of sales
Gross margin
Overheads
Interest
Tax
Profit after tax
Property, plant and equipment
Current assets
Current liabilities
Net assets
15 Inventories
5 months ended
31 May 2015
£000
Year ended
31 Dec 2014
£000
2,346
(1,068)
1,278
(1,173)
(4)
(31)
5,518
(2,493)
3,025
(2,708)
(19)
(123)
70
175
5 months ended
31 May 2015
£000
118
1,953
(788)
Year ended
31 Dec 2014
£000
91
1,665
(897)
1,283
859
31 May 2015
£000
31 May 2014
£000
Finished goods and goods for resale
7,258
7,050
The amount of inventories recognised as an expense during the year was £24,439,000 (2014: £23,831,000).
35
Notes
forming part of the financial statements for the year ended 31May 2015
16 Trade and other receivables
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Other receivables
Prepayments
Total trade and other receivables
Net trade receivables
Other receivables
Cash and cash equivalents (note 18)
Total financial assets classified as loans and receivables
31 May 2015
£000
31 May 2014
£000
5,397
(637)
4,760
1,159
81
6,000
5,634
(679)
4,955
1,051
91
6,097
31 May 2015
£000
31 May 2014
£000
4,760
1,159
2,027
7,946
4,955
1,051
1,772
7,778
In the opinion of the directors, the book value of assets classified as loans and receivables approximates to
their fair value.
Management monitors trade receivable accounts, and provisions for bad and doubtful debts are raised where
it is deemed appropriate.
As at 31 May 2015 trade receivables of £3,968,000 were not due for payment (2014: £3,872,000).
As at 31 May 2015 trade receivables of £753,000 were past due but not impaired (2014: £1,018,000). They
relate to customers that have not been able to pay to agreed terms in what are difficult trading conditions but
that the directors regard as good for their debts. The ageing analysis of these receivables is as follows:
Up to 3 months overdue
Overdue by 3 to 6 months
Overdue by 6 to 12 months
Total trade receivables past due but not impaired
31 May 2015
£000
31 May 2014
£000
669
30
54
753
953
55
10
1,018
Concentrations of credit risk with respect to trade receivables are limited given that the Group’s customer
base is large and unrelated and, due to this, the directors believe there is no further credit risk provision
required in excess of the normal provision for bad and doubtful receivables set out above.
As at 31 May 2015 trade receivables of £676,000 were past due and impaired (2014: £744,000). The amount
of the provision was £637,000 (2014: £679,000). These receivables relate to customers who have not been
able to pay to agreed terms in what are difficult trading conditions. In determining the amount of the
impairment, the directors have taken into account their knowledge of the customer base, the extent to which
receivables relate to goods delivered on terms that include retention of title, and the extent to which credit
insurance is in place. The ageing of these receivables is as follows:
36
Notes
forming part of the financial statements for the year ended 31May 2015
16 Trade and other receivables (continued)
Overdue by 3 to 6 months
Overdue by 6 to 12 months
Overdue by more than 12 months
Total trade receivables past due and impaired
31 May 2015
£000
31 May 2014
£000
46
37
593
676
4
41
699
744
Movements on the Group provision for impairment of trade receivables are as follows:
At 1 June
Provided during the year
Receivables written off during the year
Effect of movements in foreign exchange rates
At 31 May
31 May 2015
£000
31 May 2014
£000
679
127
(92)
(77)
637
696
118
(102)
(33)
679
The movement on the provision for impaired receivables has been included in the administrative expenses
line in the consolidated statement of comprehensive income.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
The carrying values of the Group’s trade and other receivables are denominated in the following currencies:
Euro
Chinese Yuan
US Dollar
Sterling
Total trade and other receivables
31 May 2015
£000
31 May 2014
£000
5,153
486
307
54
6,000
5,274
307
88
428
6,097
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out
above.
17 Derivative financial instruments
Cash flow forward exchange contracts at fair value through profit and loss
Foreign exchange risk arises when individual Group operations enter into transactions denominated in a
currency other than their functional currency. Where the risk to the Group is considered to be significant, the
operation makes use of currency derivatives in order to provide an economic hedge over future transactions
and cash flows.
At 31 May 2015 the maximum notional principal amount of outstanding forward exchange contracts was
£3,453,000, and all these contracts reach maturity no later than 30 December 2015. (2014: no outstanding
contracts). These forward contracts, when marked to market as at 31 May 2015, gave rise to a financial
derivatives asset of €82,000 which, when translated into sterling at the average rate for the year, equates to
£63,000 for the purposes of the Consolidated Statement of Comprehensive Income and the Consolidated
Cash Flow Statement. For the purposes of the Consolidated Statement of Financial Position the financial
derivatives asset is translated at closing rate, and equates to £59,000 which, in the opinion of the Directors, is
the fair value of the derivative financial instruments.
37
Notes
forming part of the financial statements for the year ended 31May 2015
18 Cash and cash equivalents
31 May 2015
£000
31 May 2014
£000
Cash on demand or on short-term deposit
2,027
1,772
Cash and cash equivalents is held predominantly by the Parent Company and is deposited with Bank of
Scotland, earning interest at variable rates. In the opinion of the directors, the carrying value of cash and cash
equivalents approximates to its fair value.
19 Trade and other payables
Trade payables
Other tax and social security taxes
Accruals
Other payables
Total trade and other payables
31 May 2015
£000
31 May 2014
£000
1,785
48
344
489
2,666
1,284
48
348
382
2,062
Trade payables, other payables and accruals are non-interest bearing and principally comprise amounts
outstanding for trade purchases and continuing overhead expense. The average credit period taken is 26 days
(2014: 23 days). The Directors consider that the carrying amount of trade and other payables approximates to
their fair value.
20 Loans and borrowings
The book value of loans and borrowings are as follows:
31 May 2015
£000
31 May 2014
£000
Current
Secured bank loans and bill discounting facilities
Non - current
Secured bank loans
Total loans and borrowings
766
665
1,431
44
813
857
Since all short-term loans have less than three months to maturity, and the fixed interest rate attaching to
long-term loans is in line with market rates, it is the opinion of the directors that the fair value of loans and
borrowings approximates to their book values.
The Group’s loans and borrowings are exclusively within the accounts of Hemmers-Itex Textil Import Export
GmbH (Hemmers). They are denominated in Euros, and their principal terms are as follows:
Current loans and borrowings
At 31 May 2015 current loans and borrowings were €1,065,000 (2014: €54,000) and comprise discounted
bills amounting to €65,000 (2014: €54,000) and short-term loans of €1,000,000 (2014: €nil). The interest
rates agreed for the discounted bills are 1.4% (2014: 1.75%), and 1.25% for the short-term loans. Current
loans and borrowings are secured on the inventories and trade receivables of Hemmers-Itex Textil Import
Export GmbH.
The current loans and borrowings of €1,065,000 are drawn down by Hemmers-Itex Textil Import Export
GmbH against short term borrowing facilities of €7,500,000. Neither the Parent Company nor any of its
subsidiaries other than Hemmers have borrowing facilities. Following the recent review of bank facilities the
directors have a reasonable expectation that these facilities will remain available for the foreseeable future.
38
Notes
forming part of the financial statements for the year ended 31May 2015
20 Loans and borrowings (continued)
Non-current loans and borrowings
Non-current loans of €1,250,000 were drawn down in 2007 from each of Commerzbank and Kreissparkasse
to finance the warehouse extension in Nordhorn that was completed in 2008.
The Commerzbank loan was repaid early and in full during the year ended 31 May 2014.
The Kreissparkasse loan attracted payments of interest only until January 2011 when the first of 204 monthly
repayments of principal and interest was made. Interest is fixed at 4.07% except for the last 24 months of the
term, in which Hemmers may continue to pay at this fixed rate but also has the option to repay outstanding
principal early, or move to variable rates if advantageous to do so. The final repayment falls due in December
2027.
Non-current bank loans are secured on the inventories, trade receivables and freehold land and buildings of
Hemmers-Itex Textil Import Export GmbH.
The carrying values of assets that the Group has pledged as collateral for
liabilities or contingent liabilities are as follows:
31 May 2015
£000
31 May 2014
£000
Inventories
Trade receivables
Freehold land and buildings
7,107
4,522
1,264
6,945
4,709
1,392
Total carrying value of assets pledged as collateral
12,893
13,046
The maturity profile of anticipated cash flows, including interest, in
respect of loans and borrowings is as follows:
31 May 2015
£000
31 May 2014
£000
Not later than 1 year
Later than one year and not later than five years
Later than five years
Less interest included in the above
Total loans and borrowings
846
294
464
1,604
(173)
1,431
136
342
605
1,083
(226)
857
Reconciliation of movements in net debt
31 May 2015
£000
31 May 2014
£000
Increase/(decrease) in cash and cash equivalents in the year
Translation loss on cash and cash equivalents
(Increase)/decrease in loans
Translation gain on loans
(Increase)/decrease in net debt
Net cash/(debt) at the beginning of the year
Net cash at the end of the year
289
(34)
(717)
143
(319)
915
596
(510)
(52)
1,786
81
1,305
(390)
915
39
Notes
forming part of the financial statements for the year ended 31May 2015
20 Loans and borrowings (continued)
Classification of financial liabilities
31 May 2015
£000
31 May 2014
£000
Trade payables
Accruals
Other payables
Loans and borrowings
Total of financial liabilities at amortised cost
1,785
344
489
1,431
4,049
21 Share capital
Issued and fully paid
2015
Number
2015
£000
2014
Number
At beginning and end of the year
31,600,000
3,792
31,600,000
At 31 May 2015, no options over ordinary shares of the Company were outstanding (2014: nil).
1,284
348
382
857
2,871
2014
£000
3,792
The Group has made purchases of its own ordinary shares of 12 pence each to be held in treasury as follows:-
Shares purchased in year ended 30 September 2005
Shares purchased in year ended 30 September 2006
Shares purchased in year ended 30 September 2007
Shares purchased in year ended 30 September 2008
Shares purchased in year ended 30 September 2009
Shares purchased in year ended 30 September 2010
Shares purchased in eight months ended 31 May 2011
Shares purchased in year ended 31 May 2012
Shares purchased in year ended 31 May 2013
Shares purchased in year ended 31 May 2015
Number of
shares
450,000
1,390,000
3,325,618
1,633,643
550,000
340,000
250,000
865,000
120,000
125,999
Cost
£000
61
289
735
300
78
49
47
148
23
44
Total shares purchased
9,050,260
1,774
Shares cancelled in year ended 30 September 2007
Shares cancelled in year ended 30 September 2008
Shares cancelled in year ended 30 September 2009
Shares cancelled in year ended 30 September 2010
Shares cancelled in eight months ended 31 May 2011
Total shares cancelled
Shares held in treasury at 31 May 2015
Shares held in treasury at 31 May 2014
(1,698,603)
(1,800,000)
(625,000)
(375,000)
(500,000)
(319)
(399)
(140)
(82)
(109)
(4,998,603)
(1,049)
4,051,657
3,925,658
725
681
The cost of cancelled shares has been calculated on a “first in, first out” basis, and the nominal value of
cancelled shares is shown in the consolidated statement of financial position as the capital redemption
reserve, a component of equity. The cost of shares held in treasury is shown in the consolidated statement of
financial position as the treasury share reserve, again as a component of equity.
40
Notes
forming part of the financial statements for the year ended 31May 2015
22 Leases
The Group holds no assets under finance leases.
The Group owns the freehold title to the warehouse completed in 2008 at Nordhorn, Germany, and occupies
leased properties in Germany and China. The lease on the German property runs until April 2020, and the
lease on the Chinese property falls due for renewal in January 2017. The Group holds operating leases in
respect of plant and machinery used in Germany.
The total future values of minimum lease payments in respect of all operating leases are due as follows:
Not later than one year
Later than one year and not later than five years
Total future values of minimum lease payments
31 May 2015
£000
31 May 2014
£000
273
719
992
340
209
549
23 Pension Scheme
The Group operates a defined contribution pension scheme for its employees in the UK, to which the Group
contributed as follows:
UK defined contribution scheme
Total pension charge for the year
31 May 2015
£000
31 May 2014
£000
4
4
4
4
At 31 May 2015 there were employer’s pension contributions outstanding of £nil (2014: £nil).
Pension provision in Germany is by state schemes and the contributions made by Hemmers to those state
schemes are included in the amount disclosed in note 5 to the accounts as employer’s national insurance
contributions and similar taxes.
24 Commitments
The Group had no capital commitments at 31 May 2015 or 31 May 2014.
25 Related party transactions
Mr Jörg Hemmers is an executive director of Leeds Group plc and managing director of Hemmers-Itex Textil
Import Export GmbH (“Hemmers GmbH”), and is considered to be part of the key management of the
Group. During the year ended 31 May 2015 Hemmers GmbH paid rental of €230,000 (2014: €230,000) in
respect of a warehouse to a company in which Mr Hemmers has a financial interest.
In December 2014 Hemmers GmbH acquired a 50% interest in Stoff-Ideen-KMR GmbH (“KMR”), a chain
of retail shops which sources its product in part from Hemmers GmbH. Details of this investment and of
sales made by Hemmers GmbH to KMR are disclosed in note 14 to the consolidated accounts.
The directors consider that all the above transactions have been made on an arm’s length basis.
41
Company Balance Sheet at 31 May 2015
(prepared under UK GAAP)
Company number 00067863
Note
31 May 2015
£000
31 May 2014
£000
Fixed assets
Investments
Total fixed assets
Current assets
Debtors
Cash at bank and in hand
4
5
Creditors – amounts falling due within one year
6
Net current assets
NET ASSETS
Capital and reserves
Called up equity share capital
Capital redemption reserve
Treasury share reserve
Profit & loss account
CAPITAL AND RESERVES
3,367
3,367
1,851
1,051
2,902
(46)
2,856
3,407
3,407
2,091
1,111
3,202
(47)
3,155
6,223
6,562
7
8
9
10
11
3,792
600
(725)
2,556
6,223
3,792
600
(681)
2,851
6,562
The financial statements on pages 42 to 46 were approved and authorised for issue by the board of
directors on 30 July 2015 and were signed on behalf of the board by: -
Jan G Holmstrom
Chairman
The notes on pages 43 to 46 form part of these financial statements.
42
Notes
forming part of the financial statements of the Company for the year ended 31May 2015
1 Accounting policies
Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act 2006. They
have been prepared under the historical cost convention and in accordance with applicable UK Accounting
Standards.
The principal accounting policies are summarised below. They have been applied consistently throughout the
year and the preceding period.
Investments
Investments in subsidiary undertakings and investments in other entities are stated at cost less any impairment
for permanent diminution in value.
Leases
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Company (an
"operating lease"), the total rentals payable under the lease are charged to the profit and loss account on a
straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of
the rental expense over the lease term on a straight-line basis.
Dividends
Dividends are recognised when they become legally payable.
2 Profit after tax
As permitted by section 408 of the Companies Act 2006 the Company has elected not to present its own profit
and loss account for the year. The loss after tax recognised in the profit and loss account for the Company was
£295,000 (2014: profit £404,000). Included in the profit after tax for the year ended 31 May 2014 was a partial
release of the provision against the Company’s investment in its subsidiary CLG Holding BV amounting to
£575,000. This profit was eliminated on consolidation and did not form part of the profit of the Group.
The Company audit fee for the year ended 31 May 2015 amounted to £16,000 (2014: £16,000).
3 Staff costs
The average number of persons employed in the year by the Company (including directors) was 4 (2014: 4).
Staff costs, including directors, comprise
Wages and salaries
Defined contribution pension cost
Employer’s national insurance contributions and similar taxes
Total staff costs
Year ended
31 May 2015
Year ended
31 May 2014
£000
£000
96
4
4
104
96
4
6
106
The remuneration of the directors is disclosed in note 5 to the consolidated accounts
Outstanding share options granted to employees or directors at 31 May 2015 were nil (2014: nil).
43
Notes
forming part of the financial statements of the Company for the year ended 31May 2015
4 Investments
Investments in subsidiary undertakings
Total investments
Investments in subsidiary undertakings
Cost
Provision
Net book amount
31 May 2015
£000
31 May 2014
£000
3,367
3,367
3,407
3,407
31 May 2015
£000
31 May 2014
£000
4,599
(1,232)
4,639
(1,232)
3,367
3,407
Details of subsidiary undertakings are given in the Group Information section on page 3 and in note 13 to the
consolidated financial statements.
During the year ended 31 May 2014, the voluntary liquidation of the Company’s subsidiary CLG Holding
BV (“CLG”) was begun. In the year ended 31 May 2015, CLG repaid capital to the Company of £40,000,
(2014: £1,102,000). Once the final liability to Dutch tax is agreed the liquidation can be completed and it is
anticipated that a further repayment of capital of approximately £14,000 will be made, which is the carrying
value of the investment in the Company’s books at 31 May 2015.
5 Debtors
Other debtors
Prepayments and accrued income
Amounts receivable from subsidiary undertakings
Total debtors
6 Creditors
Accruals and deferred income
Total creditors
31 May 2015
£000
31 May 2014
£000
2
16
1,833
1,851
1
16
2,074
2,091
31 May 2015
£000
31 May 2014
£000
46
46
47
47
44
Notes
forming part of the financial statements of the Company for the year ended 31May 2015
7 Share capital
Issued and fully paid
2015
Number
2015
£000
2014
Number
At beginning and end of the year
31,600,000
3,792
31,600,000
At 31 May 2015, no options over ordinary shares of the Company were outstanding (2014: nil).
Details of the shares held in treasury are disclosed in note 21 to the consolidated accounts.
2014
£000
3,792
8 Capital redemption reserve (CRR)
The CRR is the nominal value of shares bought for treasury and
subsequently cancelled
31 May 2015
£000
31 May 2014
£000
At the beginning and the end of the year
600
600
9 Treasury share reserve
At 31 May 2014 / 2013
Purchase of own shares for treasury
At 31 May 2014 / 2013
10 Retained earnings
At 31 May 2014 / 2013
(Loss)/profit for the year
Purchase of own shares for treasury
At 31 May 2014 / 2013
11 Reconciliation of movements in shareholders’ funds
(Loss)/profit for the year
Other net recognised gains and losses - purchase of own shares
Net reduction in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
45
2015
£000
681
44
725
2015
£000
2,170
(295)
(44)
1,831
2014
£000
681
-
681
2014
£000
1,766
404
-
2,170
31 May 2015
£000
31 May 2014
£000
(295)
(44)
(339)
6,562
6,223
404
-
404
6,158
6,562
Notes
forming part of the financial statements of the Company for the year ended 31May 2015
11 Commitments
The Company holds no assets under finance leases.
The Company leases the property it occupies in Drighlington at an inclusive rent of £9,000 per annum. The
lease may be terminated by either party following three months’ notice in writing.
The annual lease commitments in respect of non-cancellable operating leases for land and buildings, based on
date of expiry, are as follows:
Within one year
31 May 2015
£000
31 May 2014
£000
2
2
2
2
There were no contracted capital commitments for the Company in either period.
12 Related party transactions
The Company has taken advantage of the exemption permitted under FRS8 not to disclose transactions with
wholly-owned subsidiaries.
46
Five Year Summary of Results and Capital Employed
Year ended
31 May
2015
£000
Year ended
31 May
2014
£000
Year ended
31 May
2013
£000
Year ended
31 May
2012
£000
8 months
ended
31 May
2011
£000
34,859
(27,066)
34,210
(26,440)
31,140
(24,350)
28,364
(22,080)
19,019
(14,430)
7,793
(6,171)
7,770
(6,088)
6,790
(5,267)
6,284
(5,108)
4,589
(3,685)
1,622
1,682
1,523
1,176
-
(64)
13
-
(71)
-
1,571
(518)
1,611
(532)
(745)
(83)
-
695
(412)
(236)
(122)
-
818
(315)
904
-
(95)
-
809
(326)
1,053
1,079
283
503
483
3,115
15,344
2,808
14,919
2,959
15,805
3,531
15,072
4,278
15,907
Results
Revenue
Cost of sales
Gross profit
Operating expenses
Profit from operations (excluding
impairment charges)
Impairment of available-for-sale
investments
Net finance expense
Share of post-tax profit of joint
venture
Profit before tax
Tax expense
Profit after tax
Assets employed
Non-current assets
Current assets
Total assets
18,459
17,727
18,764
18,603
20,185
Non-current liabilities
Current liabilities
(909)
(3,728)
(1,052)
(2,647)
(2,048)
(3,136)
(2,011)
(3,970)
(2,245)
(4,716)
Total liabilities
(4,637)
(3,699)
(5,184)
(5,981)
(6,961)
Net assets
13,822
14,028
13,580
12,622
13,224
Financed by
Equity
13,822
14,028
13,580
12,622
13,224
Key Statistics
Basic and diluted earnings per share
3.8p
3.9p
1.0p
1.8p
1.7p
Net assets per share
50.2p
50.7p
49.1p
45.4p
46.1p
47
Notice of Annual General Meeting
The one hundred and fifteenth annual general meeting of the Leeds Group plc (“the Company”) will be held at 12
noon on Tuesday 13 October 2015 at the offices of BDO LLP at 1 Bridgewater Place, Water Lane, Leeds, LS11
5RU for the following purposes:
Ordinary business
To consider, and if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:
1.
2.
3.
4.
5.
To receive the report of the directors, the financial statements for the year ended 31 May 2015 and the report
of the auditors thereon.
To re-appoint Mr Jan G Holmstrom as a director.
To re-appoint Mr David Cooper as a director.
To re-appoint Mr Jörg Hemmers as a director.
To re-appoint BDO LLP as auditors of the Company from the conclusion of this meeting until the conclusion
of the next general meeting at which the financial statements are laid before the Company and to authorise
the directors to fix their remuneration.
Special business
To consider and, if thought fit, pass the following resolutions, of which resolution 7 will be proposed as an ordinary
resolution and resolutions 6 and 8 will be proposed as special resolutions:
6.
That in accordance with Article 21.1 of the Articles of Association of the Company and Part 18 of the
Companies Act 2006 (“the Act”) the Company be and is hereby granted general and unconditional authority
(pursuant to section 701 of the Act) to make one or more market purchases (as defined in section 693(4) of
the Act) of any of its own ordinary shares of 12 pence each on such terms and in such manner as the board of
directors of the Company may from time to time determine provided that:
6.1
6.2
6.3
6.4
the maximum number of ordinary shares authorised to be purchased by this resolution is 860,000
being 2.72 per cent of the issued ordinary share capital at the date of this notice;
the maximum price that may be paid for such an ordinary share (exclusive of expenses) is an amount
equal to but not more than the higher of:
6.2.1
6.2.2
105 per cent of the average middle market quotations for an ordinary share in the Company
taken from the AIM appendix to The London Stock Exchange Daily Official List for the five
business days immediately preceding the date of purchase; and
the higher of the price of the last independent trade and the highest current independent bid
on the London Stock Exchange for an ordinary share in the Company at the time the
purchase is carried out;
the minimum price that may be paid for such an ordinary share (exclusive of expenses) is 5 pence
per share; and
unless previously revoked or varied, the authority conferred by this resolution shall expire on the
conclusion of the next annual general meeting of the Company held after the passing of this
resolution or the date which falls 15 months from the date of passing of this resolution (whichever
shall first occur) except that the Company may, before such expiry, enter into a contract for the
purchase of its own ordinary shares which may be completed by or executed wholly or partly after
the expiration of this authority and may purchase ordinary shares in pursuance of any such contract
as if the authority conferred by this resolution 4 had not expired.
48
Notice of Annual General Meeting (continued)
Special business (continued)
7.
8.
That the directors be and hereby are generally and unconditionally authorised for the purposes of section 551
of the Act to exercise all powers of the Company to allot shares in the Company and to grant rights to
subscribe for, or to convert any security into shares in the Company (Rights) up to an aggregate nominal
amount of £1,100,000. The authority conferred by this resolution shall expire on the conclusion of the next
annual general meeting of the Company held after the passing of this resolution or the date which falls 15
months from the date of passing of this resolution (whichever shall first occur), except that the Company
may, before such expiry, make an offer or agreement which would or might require shares to be allotted or
Rights to be granted after such expiry, and the directors may allot shares and grant Rights in pursuance of
such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This
authority is in substitution for all previous authorities granted to the directors to allot shares and grant Rights,
but without prejudice to the allotment or grant of Rights already made or to be made pursuant to such
authorities.
That, subject to the passing of resolution 7 above, the directors be and hereby are empowered pursuant to
sections 570 and 573 of the Act to allot equity securities (within the meaning of section 560 of the Act)
wholly for cash pursuant to the authority conferred by the previous resolution or where the allotment
constitutes an allotment of equity securities by virtue of section 560(3) of the Act as if section 561 of the Act
did not apply to any such allotment, provided that this power shall be limited to the allotment of equity
securities:
8.1
in connection with an offer of such securities by way of a rights issue, open offer or other pre-
emptive issue or offer to holders of ordinary shares in proportion (as nearly as may be practicable) to
their respective holdings of such shares, but subject to such exclusions or other arrangements as the
directors may deem necessary or expedient in relation to fractional entitlements, treasury shares,
record dates or any legal, regulatory or practical problems under the laws of any territory, or the
requirements of any recognised regulatory body or stock exchange in any territory or any other
matter whatever; and
8.2
otherwise than pursuant to sub-paragraph 6.1 above up to an aggregate nominal amount of £189,000.
The authority conferred by this resolution shall expire on the conclusion of the next annual general meeting
of the Company held after the passing of this resolution or the date which falls 15 months from the date of
passing of this resolution (whichever shall first occur), except that the Company may, before such expiry
make an offer or agreement which would or might require equity securities to be allotted after such expiry
and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that
the power conferred by this resolution has expired.
By Order of the Board
Malcolm Wilson
Company Secretary
Old Mills
Whitehall Grove
Drighlington
Bradford
BD11 1BY
30 July 2015
49
Notice of Annual General Meeting (continued)
Notes
1.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 (as amended) and section 360B
of the Companies Act 2006 (the Act”), only those shareholders registered in the register of members of the
Company at 6.00 pm on 11 October 2015 as holders of ordinary shares of 12p each in the capital of the
Company shall be entitled to attend and vote at the meeting in respect of the number of shares registered in
their name at that time. Changes to entries in the register of members of the Company after that time shall be
disregarded in determining the rights of any person to attend and vote at the meeting.
2.
3.
4.
A member entitled to attend and vote may appoint a proxy to attend, speak and to vote in his or her stead. A
member may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by that member. A proxy need not be a member
of the Company. A form of proxy has been inserted into this annual report and accounts and contains notes
for its completion.
To be valid, the form of proxy and any power of attorney or the authority under which it is signed (or a
notarially certified copy of it) must be completed and lodged at the Registrars of the Company, Capita Asset
Services, PXS, 34 Beckenham Road, Beckenham, BR3 4TU not later than 12.00 noon on 11 October 2015.
Completion and return of a form of proxy does not preclude a member from subsequently attending and
voting at the meeting. If a member appoints a proxy or proxies and then decides to attend the annual general
meeting in person and vote using his poll card, then the vote in person will override the proxy vote(s). If the
vote in person is in respect of the member's entire holding, then all proxy votes will be disregarded. If,
however, the member votes at the meeting in respect of less than the member's entire holding, then if the
member indicates on his polling card that all proxies are to be disregarded, that shall be the case; but if the
member does not specifically revoke proxies, then the vote in person will be treated in the same way as if it
were the last received proxy and earlier proxies will only be disregarded to the extent that to count them
would result in the number of votes being cast exceeding the member's entire holding. If you do not have a
proxy form and/or believe that you should have one or if you require additional forms, please contact the
Company at its registered office.
5.
To change your proxy instructions simply submit a new proxy appointment using the methods set out above.
Note that the cut-off time for receipt of proxy appointments (see note 3 above) also applies in relation to
amended instructions; any amended proxy appointment received after the relevant cut-off time will be
disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions
using another hard-copy proxy form, please contact Capita Asset Services, PXS, 34 Beckenham Road,
Beckenham, BR3 4TU.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for
the receipt of proxies will take precedence.
6.
In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy
notice clearly stating your intention to revoke your proxy appointment to Capita Asset Services. In the case
of a member which is a company, the revocation notice must be executed under its common seal or signed on
its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other
authority under which the revocation notice is signed (or a duly certified copy of such power or authority)
must be included with the revocation notice. The revocation notice must be received by Capita Asset
Services at PXS, 34 Beckenham Road, Beckenham, BR3 4TU no later than 12 noon on 11 October 2015. If
you attempt to revoke your proxy appointment but the revocation is received after the time specified then,
subject to paragraph 4 above, your proxy appointment will remain valid.
7.
Copies of the following documents will be available for inspection at the registered office of the Company
during normal business hours until the date of the annual general meeting and on that day, at the place of the
meeting from at least 15 minutes prior to the meeting until its conclusion:
a.
b.
Directors' letters of appointment
Current articles of association
50
Notice of Annual General Meeting (continued)
Notes (continued)
8.
9.
As at 28 July2015 (being the last practicable business day prior to the publication of this notice) the
Company’s issued share capital consisted of 31,600,000 ordinary shares of 12 pence each, with one voting
right per share. There are 4,051,657 shares held in treasury, representing approximately 12.71 per cent of the
total issued share capital. Therefore the total voting rights in the Company as at 28 July 2015 are 27,548,343.
If a corporation is a member of the Company, it may by resolution of its directors or other governing body
authorise one or more persons to act as its representative or representatives at the Meeting and any such
representative or representatives shall be entitled to exercise on behalf of the corporation all the powers that
the corporation could exercise if it were an individual member of the Company.
Corporate representatives should bring with them either an original or certified copy of the appropriate board
resolution or an original letter confirming the appointment, provided it is on the corporation's letterhead and
is signed by an authorised signatory and accompanied by evidence of the signatory's authority.
10. A member may not use any electronic address (within the meaning of section 333(4) of the Act) provided in
this notice of meeting (or in any related or accompanying document, including the form of proxy) to
communicate with the Company for any purposes other than those expressly stated.
11.
Section 311A of the Act requires a traded company to make available on its website
a. notice of its Annual General Meeting
b. details of its issued share capital and of its members’ voting rights
c. members’ statements, members’ resolutions and members’ matters of business received by the
company after the date on which notice of its meeting was first given.
Although the Company, as an AIM quoted company, is not required to comply with the requirements of
Section 311A of the Act, it has nevertheless elected to do so. The Annual Report and Accounts, including the
notice of the Company’s AGM, can be found at the Company’s website www.leedsgroup.plc.uk. The
necessary details of its issued share capital and of its members’ voting rights are shown in note 8 above.
Upon receipt of any of the items detailed in c. above, the Company will promptly make them available on the
Documentation and Notifications page of its website.
51
Explanation of resolutions
Resolution number 1
The directors must present to shareholders the report of the directors and the accounts for the Company for the year
ended 31 May 2015. That report and those accounts, and the report of the Company's auditors on those accounts,
are set out on pages 8 to 47 of this document.
Resolution number 2
At each annual general meeting, one third of the directors of the Company for the time being (other than those
appointed since the last annual general meeting) are required to retire. If the number of relevant directors is not a
multiple of three, the number nearest to but not less than one third of the directors are required to retire. Any retiring
director is eligible for re-appointment. At this annual general meeting, Mr Jan G Holmstrom is the only director
subject to retirement by rotation. Resolution number 2 proposes the re-appointment of Mr Holmstrom.
Resolution number 3
Mr David Cooper was appointed as a director during the year and, in accordance with the articles of association, is
required to retire and offer himself for re-appointment if he so wishes. Resolution number 3 proposes the re-
appointment of Mr Cooper.
Resolution number 4
Mr Jörg Hemmers was appointed as a director during the year and, in accordance with the articles of association, is
required to retire and offer himself for re-appointment if he so wishes. Resolution number 4 proposes the re-
appointment of Mr Hemmers.
Resolution number 5
The auditors of the Company must be re-appointed at each meeting at which accounts are presented. Resolution 5
proposes the re-appointment of BDO LLP, who have indicated their willingness to be so re-appointed. The
resolution also follows past practice in giving the directors authority to agree the remuneration to be paid to the
auditors.
Resolution number 6
The directors are seeking authority to enable the Company to purchase ordinary shares in the capital of the Company
by utilising some of the Company's available distributable profits. The directors would only consider effecting
purchases under this authority, if granted, where to do so would improve the Company's earnings per share and
would be in the best interests of shareholders generally. The authority would allow purchases of up to 860,000
ordinary shares, being approximately 2.72 per cent of the Company's ordinary share capital in issue as at the date of
this notice, at a minimum price per ordinary share of 5 pence and a maximum price per ordinary share of the higher
of 5 per cent above the average of the middle market quotations for an ordinary share as derived from the AIM
appendix of the London Stock Exchange Daily Official List for the five business days immediately preceding the
day on which any purchases are made and the higher of the last independent trade and the highest current
independent bid on the London Stock Exchange at the time the purchase is carried out. This authority expires at the
conclusion of the next annual general meeting of the Company or 15 months from the date of passing of the
resolution, whichever is the earlier.
Companies are permitted to retain any of their own shares that they have purchased as treasury stock, as an
alternative to cancelling them. Shares held in treasury may be subsequently cancelled, sold for cash or used to
satisfy share options and share awards under employee share schemes and provide the Company with additional
flexibility in the management of its capital base. Accordingly, if the directors exercise the authority granted by
resolution 4 to purchase ordinary shares, the Company will consider exercising the option of holding those ordinary
shares in treasury.
Resolution number 7
The directors are seeking authority to allot shares in the Company and to grant rights to subscribe for or to convert
any security into shares in the Company (Rights) up to an aggregate nominal amount of £1,100,000 being an
amount representing approximately 33 per cent of the Company's current issued share capital (excluding treasury
shares). It is not the directors' current intention to allot shares or to grant Rights pursuant to this resolution. This
authority expires at the conclusion of the next annual general meeting of the Company or 15 months from the date of
passing of the resolution, whichever is the earlier.
52
Explanation of resolutions (continued)
Resolution number 8
This resolution disapplies the statutory pre-emption rights which would otherwise apply on an issue of shares for
cash and is limited to allotments in connection with a rights issue or other pre-emptive offer where the securities
attributable to the interests of all shareholders are proportionate (as nearly as may be) to the number of shares held
and otherwise up to a further nominal amount of £189,000, being approximately 5 per cent of the Company's current
issued share capital (including treasury shares). This disapplication of the statutory pre-emption rights expires at the
conclusion of the next annual general meeting of the Company or 15 months from the date of passing of the
resolution, whichever is the earlier. This authority also covers the sale of treasury shares for cash.
It is the Company's intention to adhere to the provisions in the Pre-Emption Group's Statement of Principles
regarding cumulative usage of authorities within a three year rolling period where the principles provide that usage
in excess of 7.5 per cent should not take place without prior consultation with shareholders.
53
LEEDS
GROUP PLC
Registered in England and Wales
Registered Number 00067863
Registered Office
Old Mills
Whitehall Grove
Drighlington
Bradford
BD11 1BY
Tel: 0113 285 4324
Email: admin@leedsgroup.plc.uk
Website: www.leedsgroup.plc.uk