LEEDS
GROUP PLC
Annual Report and Accounts 2018
Contents
Leeds Group 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 FRS 101 "Reduced Disclosure Framework")
Company Statement of Changes in Equity
Notes to the Financial Statements of the Company
Five Year Summary of Results and Capital Employed
Notice of Annual General Meeting
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13
18
19
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48
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54
Leeds Group plc (‘’Leeds Group’’)
Financial Highlights
12 months ended 31 May 2018
❑ Leeds Group profit before tax £885,000 (2017: £1,448,000).
❑ Leeds Group sales revenue increased by 1% to £41,538,000 (2017:
£41,053,000).
❑ Leeds Group finished the financial year with bank debt net of cash
£4,485,000 (2017: £5,520,000).
❑ Leeds Group net asset value per share (excluding treasury shares) 69.4p
(2017: 66.9p).
❑ Earnings per Leeds Group share 2.0p (2017: 4.1p).
❑ The Directors do not propose a dividend in 2018 (2017: nil).
1
Directors
Jan G Holmstrom (Non-Executive Chairman)
Jan has worked in the financial services sector during his entire career and has a wealth of experience working
internationally e.g. in the UK, Hong Kong and Sweden. Jan is Non-Executive Chairman of Johnson and Starley
Limited, Combat Heating Solutions Limited and a Non-Executive Director of International Fibres Group (Holdings)
Limited. Jan joined the Board of Leeds Group in November 2011 and was appointed Chairman in October 2014.
Jörg Hemmers (Executive Director)
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. Amongst his achievements is the successful integration in 2003 of
Leeds Group’s Itex business, based in Holland, to create Hemmers-Itex Textil Import Export GmbH and the
successful start-up in 2007 of Chinoh-Tex Ltd, a subsidiary based in Shanghai. Jörg joined the Board of Leeds Group
in March 2015.
Johan Claesson (Non-Executive Director)
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). Johan joined the
Board of Leeds Group in September 2004.
David Cooper (Independent Non-Executive Director)
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
Subsidiary Companies
Hemmers-Itex Textil Import Export GmbH
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Principal activity
Import, sale & distribution of fabric
Leeds Property GmbH
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Principal activity
Vehicle to hold the Group’s German property assets.
Chinoh-Tex Ltd
F2, Building1, 111 Shennan Road
Xinzhuang Industry Area
201108 Shanghai
China
Wholly owned subsidiary of Hemmers-Itex Textil Import Export GmbH.
Principal activity
Textile trading
Group Advisers
Solicitors
Walker Morris
Kings Court
12 Kings Street
Leeds
LS1 2HL
Tel: 0113 283 2500
Solicitors
DLA Piper UK LLP
Princes Exchange
Princes Square
Leeds
LS1 4BY
Tel: 08700 111111
Financial Advisers
Cairn Financial Advisers LLP
62-63 Cheapside
London
EC2V 6AX
Tel: 020 7213 0880
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Tel: 0871 664 0300*
Auditors
BDO LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0113 244 3839
Principal Bankers
Bank of Scotland
116 Wellington Street
Leeds
LS1 4LT
Tel: 0113 388 3200
* Calls to the Link shareholder helpline cost 12p per minute plus your phone company's access charge. If you are
outside the United Kingdom, please call +44 371 664 0300. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9.00 am – 5.30 pm, Monday to Friday excluding public holidays
in England and Wales.
3
Chairman’s Statement
I am pleased to present the results for the year ended 31 May 2018.
Results
The Group achieved sales for the year of £41,538,000 (2017: £41,053,000). Trading conditions have been difficult
with increased competition and pressure on margins and although sales are slightly higher than last year the Group
made a reduced profit after tax of £545,000 (2017: £1,114,000). Last year the Euro denominated Parent Company
loan to its subsidiary resulted in a currency gain of £310,000 whereas this year there was a £49,000 currency loss.
Net assets at 31 May 2018 increased by £686,000 to £18,988,000 (2017: £18,302,000) and thus the value per share
increased slightly to 69.4p (2017: 66.9p). Net bank debt decreased by £1,035,000 to £4,485,000 (2017: £5,520,000).
Hemmers-Itex Textil Import Export GmbH (“Hemmers”)
Fabric sales for the year at Hemmers, Leeds Group’s principal trading company, are in Euro terms slightly lower
than last year at €43,342,000 (2017: €44,182,000). In sterling terms, the revenue increased slightly to £38,299,000
(2017: £37,544,000) as a result of the weakening of sterling. The pre-tax profit in the current year of £1,123,000
(2017: £1,012,000) was higher than last year. Trading conditions continued to be challenging and so a strategic
review coupled with a comprehensive cost review was undertaken during the year to ensure increased profitability
for Hemmers in the coming year.
Chinoh Tex Ltd (“Chinoh-Tex”)
Chinoh-Tex, the Hemmers subsidiary based in Shanghai, achieved external sales revenue of £3,239,000 (2017:
£3,499,000). However, due to reduced gross margins, there was a pre-tax loss of £86,000 for the year (2017: profit
£47,000). Steps have been taken to reduce infrastructure and administrative costs to ensure profitability in the future.
Chinoh-Tex continues to provide valuable assistance to its European parent in terms of purchasing, quality
inspection and bulk shipping of fabrics bought in China.
Stoff-Ideen-KMR GmbH ("KMR")
KMR’s operating performance has been unsatisfactory which resulted in Hemmers incorporating a loss for its 50%
shareholding in KMR of £107,000 (2017: profit £33,000). On the 5 July 2018, Leeds Group announced that it had
reached an agreement to terminate the joint venture arrangement with KMR acquiring and cancelling the 50%
shareholding of our partner. Hemmers will retain its shareholding in KMR and thus become the sole owner. The
directors of Leeds Group believe that it is in the best interest of the Group to take full control of KMR going forward.
Dividend
The Directors do not propose a dividend considering the reduced trading result.
Employees
On behalf of shareholders, I want to thank the management and staff of Hemmers, Chinoh-Tex and KMR.
Outlook
The Board considers there are still potential growth opportunities for Hemmers, Chinoh-Tex and KMR despite a
competitive environment and given the steps taken to improve efficiencies, the directors believe that we are well
placed to return to previous profit levels for the Group.
At this early point in the current financial year, sales and profit are in line with the expectations of the Board.
Jan G Holmstrom
Chairman
9 August 2018
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 2018, 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:
• Sales volumes and revenue
•
•
gross profit margin
operating overheads and central costs
• profit before tax
• earnings per share
• working capital levels
Group result
Group revenue in the year was £41,538,000 (2017: £41,053,000), and pre-tax profit was £885,000 (2017:
£1,448,000). The trading profit for Hemmers improved this year, however, there were trading losses in Chinoh-Tex
and KMR. The main reason for the reduction in profit this year compared to last year is due to the differences arising
from retranslation of the intercompany loan between Hemmers and the Parent Company. The Parent Company has
previously granted a loan denominated in Euros to its German subsidiary Hemmers and, as sterling has weakened
during the financial year, an unrealised loss has arisen in the Parent Company and the Group accounts of £49,000
(2017: gain £310,000).
The tax charge in the year was £340,000 (2017: £334,000). Earnings per share were 2.0p (2017: 4.1p) as detailed
in note 9 to the financial statements.
Hemmers Europe
This German-based business is engaged in the import, warehousing and wholesaling of fabrics.
Fabric sales for the year at Hemmers, Leeds Group’s principal trading company, in Euro terms are slightly lower
than last year at €43,342,000 (2017: €44,182,000). In sterling terms, however, the revenue increased slightly to
£38,299,000 (2017: £37,544,000) as a result of the weakening of sterling. The pre-tax profit increased in the year to
£1,123,000 (2017: £1,078,000). This was due to an increase in gross margins to 22.1% (2017: 20.8%). Overhead
expenditure in local currency increased by 3.1% as a result of increased wages and administration costs. A strategic
review coupled with a comprehensive cost review was undertaken during the year to ensure the cost base for
Hemmers is aligned to the business activity thus producing increased profitability for Hemmers in the coming year.
In 2014, Hemmers acquired a 50% interest in KMR, a chain of retail fabric and haberdashery stores, at a cost of
£383,000. In 2015 and 2017 each of the two joint venture partners subscribed for additional capital, this is detailed
further in note 15 to the financial statements. KMR is operated as a joint venture. Since the investment, KMR has
operated profitability, however, this year the Group’s share of the post-tax loss of KMR in the year was £107,000
(2017: profit £33,000). As detailed in the Chairman’s statement and note 27 to the financial statements, since the
year end KMR has become a wholly owned subsidiary within the Group.
Hemmers bank debt, net of cash, decreased in the year to £4,963,000 (2017: £6,619,000). This bank debt is secured
on the assets of Hemmers.
Hemmers is working to focus on growing its business domestically and internationally in both its wholesale and
retail markets. The strategic review together with increased synergies with KMR is expected to increase profitability
for Hemmers and KMR in the coming year.
5
Strategic Report (continued)
Hemmers China
Chinoh-Tex is a textile trading subsidiary of Hemmers. It is based in Shanghai and has been trading for ten years. It
purchases fabric from Chinese suppliers and in 2018 sold to customers in 26 countries. 43% of sales were made to
EU countries (2017: 31%).
External sales revenue was slightly lower this year £3,239,000 (2017: £3,499,000), with a small fall in volumes,
however gross margins were reduced to 15% (2017: 18%). Whilst overhead spending remained at similar levels to
last year £650,000 (2017: £662,000) due to the reduced gross profit margins, Chinoh-Tex’s result for the year was
a pre-tax loss of £86,000 (2017: profit £47,000). A review has been undertaken to ensure the cost base is appropriate
for the level of business activity and therefore a return to profitability is expected in the current financial year.
Chinoh-Tex provides valuable assistance to its European parent with the purchasing, inspection and shipping of
material. Internal sales revenue, based on arms-length prices, amounted to £557,000 (2017: £511,000). This
relationship will be developed and improve profitability for both businesses.
Parent Company’s Costs
The Parent Company’s net cost in the year was as follows:
Parent Company’s costs net of interest receivable
Exchange (loss)/gain on Group loan
Net Parent Company’s (cost)/income
Year ended
31 May 2018
Year ended
31 May 2017
£000
17
(49)
(32)
£000
(10)
310
300
The Parent Company has previously granted a loan denominated in Euros to its subsidiary Hemmers and, as sterling
has weakened during the financial year, an unrealised loss has arisen in the Parent Company and the Group accounts
of £49,000 (2017: gain £310,000). Other costs increased as a result of the Parent Company de-registering for UK
VAT.
Fixed Assets
Capital additions in the year amounted to £400,000 (2017: £2,280,000). The net book amount of tangible fixed
assets in the Consolidated Statement of Financial Position is £8,319,000 (2017: £8,452,000).
During the financial year 2017, a subsidiary of the Group acquired a property which was presented within property,
plant and equipment in the Consolidated Statement of Financial Position. Although part of the property is occupied
by the subsidiary company, part of the property is rented out externally. Under International Financial Reporting
Standards, it is therefore more appropriate to present part of the value of this property as investment property. A
prior year adjustment has been made to reclassify £565,000 within non-current assets from property, plant and
equipment to investment property. Investment property is accounted for using the depreciated cost method, as such
this adjustment has no effect on profit, net assets, net debt or EPS in the prior year.
Working Capital
Working capital which comprises inventories, trade and other receivables, and trade and other payables decreased
in the year by £345,000 (2017: increased £1,007,000). There were no major changes to the working capital
requirements for the Group during the year.
Net Asset Value
Net assets increased in the year by £686,000 as follows:
At 31 May 2017
Profit after tax
Translation differences
At 31 May 2018
6
Net assets
£000
18,302
545
141
18,988
Per share
pence
66.9
2.0
0.5
69.4
Strategic Report (continued)
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. Property investments have been
financed partly by long term loans of fixed interest rates between 1.5% and 4.07% as detailed in note 21 to the
financial statements. Working capital finance, when required, is via short term loans of three months currently
attracting interest at approximately 2.5%.
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
Following the UK referendum result in favour of leaving the European Union (“EU”), the economic environment
has become much more uncertain. However, the business of Leeds Group is conducted entirely by subsidiaries
incorporated in Germany or China, and their exports to the UK account for approximately 3% of Group revenue.
For this reason, the Directors do not believe that a material risk to Leeds Group will arise from the terms on which
the UK will, in the future, have access to EU markets, and vice versa. Leeds Group has loans denominated in euros
which do carry a currency risk and may be affected by Brexit, however, the directors do not believe the impact
would have a material effect on the Group’s results as the subsidiary trades in Euros and the directors consider this
provides a natural hedge.
Of greater risk is the possibility of reduced demand owing to falling consumer confidence, although the business
has proved robust in earlier recessions with some evidence that reduced consumer spending on ready-made apparel
or furnishings generates increased demand for Hemmers fabrics that customers use to make equivalent goods in the
home.
The currency markets in particular dislike the current air of uncertainty surrounding the current negotiations with
regard to the UK leaving the EU and sterling has continued to weaken since the UK announced it was leaving the
UK. This benefits Leeds Group since, as the pound weakens, the value of the revenues, profits and net assets of
foreign subsidiaries are increased in sterling terms. This effect has been seen in both this year’s and last year’s
trading and Statement of Financial Position.
Most fabric purchased by Hemmers is paid for in US dollars, while the Euro is the principal currency in which
Hemmers sells its product. Thus the Euro/dollar rate is of greater significance to Leeds Group than the strength of
sterling. We shall continue to manage this transactional currency risk by a combination of forward exchange
contracts with reputable banks and sales price increases where necessary.
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.
Jan G Holmstrom
Chairman
9 August 2018
7
Directors’ Report
The directors present their annual report and the audited financial statements for the year ended 31 May 2018.
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 in 2018 (2017: £nil).
Directors and directors’ interests
The directors who held office during the year were Mr Johan Claesson, Mr David Cooper, Mr Jörg Hemmers
and Mr Jan Holmstrom and their remuneration for the year is set out in note 5 to the financial statements.
The directors retiring by rotation are Johan Claesson and Jan Holmstrom who, being eligible, 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 9
August 2018.
Major shareholdings
The Company is aware of the following shareholders having 3% or more of the issued share capital at 9
August 2018:
% 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
8.91
29.17
24.62
10.30
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.
Leeds Group plc Ordinary shares of 12 pence each
The market value of Leeds Group shares between 1 June 2017 and 31 May 2018 ranged between 27.0p and
41.0p. The average market value for the year was 35.1p, and at 31 May 2018 the market value was 28.5p (31
May 2017: 36.0p).
Political and charitable contributions
The Group made no political contributions, nor any donations to UK charities in the years ended 31 May
2018 and 31 May 2017.
8
Directors’ Report (continued)
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 2018, the amount of trade creditors shown in the consolidated statement
of financial position represents 28 days (2017: 32 days). There are no trade creditors shown in the Company
statement of financial position (2017: 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 directors intend to buy back 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 5 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
Leeds Group plc is a UK registered company and is quoted on AIM, the London Stock Exchange market for
smaller companies. It is regulated by UK and EU legislation and by the AIM rules for Companies. AIM
companies are not required to comply with the UK Corporate Governance Code. Leeds Group has instead
chosen to adopt the principles of the Corporate Governance Code for Small and Medium Sized Companies
issued by the Quoted Companies Alliance (“the QCA Code”) and will adhere to the AIM requirements
effective 28 September 2018.
The Board recognises its responsibility for the proper management of the Company and is committed to
maintaining a high standard of corporate governance which is appropriate to the size of the Company and the
interests of its Shareholders. Below we set out the measures in place to ensure that this is achieved.
he The Board
Director
Position
Jan Holmstrom
Johan Claesson
David Cooper
Jörg Hemmers
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Executive Director
Board
Meetings
Attended
4/4
4/4
4/4
4/4
Independent
No
No
Yes
No
Biographical details of each director are set out on page 2 of this annual report.
The Board meets formally at least three times a year. In addition, telephone Board meetings are convened
throughout the year as required to address any particular issues arising and to approve significant items of
expenditure. There were seven telephone Board meetings held during the year.
To enable the Board to discharge its duties, all directors receive appropriate and timely information including
monthly financial reporting packs and Board briefing packs which are issued in advance of all Board
meetings.
Each director has access to the advice of the Company Secretary who is responsible for ensuring that all Board
procedures are complied with and that the directors are kept aware of regulatory compliance developments.
Directors may also take independent legal or financial advice at the expense of the Company if this is necessary
for the proper performance of their duties. No such advice was sought during the year.
The Board is responsible for setting the overall strategy of the Group; reviewing and approving the annual
revenue and capital budgets; monitoring performance against budget and ensuring action is taken to mitigate
any adverse performance; establishing appropriate frameworks for Corporate Governance and internal
controls. Certain functions are delegated to Board committees which report back to the full Board.
9
Directors’ Report (continued)
The Board (continued)
Audit Committee
The audit committee comprises the three Non-Executive Directors of the Company, and is chaired by the
Group’s independent Non-Executive Director, Mr David Cooper. The audit committee meets not less than
twice a year, and receives and reviews reports from the Company’s auditors 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.
Remuneration Committee
The remuneration committee comprises the three Non-Executive Directors of the Company. It meets not less
than once a year. It is responsible for determining and reviewing the terms and conditions of service (including
remuneration) of the senior management of the trading subsidiary, Hemmers.
Financial control and non-financial risk assessment
The Board is responsible for the systems of internal control and for reviewing their effectiveness. The internal
controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance
against misstatement or loss. Due to the size of the Group it is not deemed necessary or cost effective to have
an internal audit function. The Board obtains assurance of internal financial control by establishing and
reviewing key policies and detailed monthly review of financial results compared with approved budgets.
The identification and management of the principal operating risks facing Leeds Group are dealt with in note
3 to the financial statements.
The Company maintains appropriate insurance cover in respect of the operations of the Group and the actions
of its directors and officers.
Director Independence and Shareholder Communication
The Board considers that there is sufficient independence and expertise on the Board given the size and
complexity of the Group.
The principal forum for shareholder dialogue is the Annual General Meeting. Details of this year’s meeting
and business to be conducted there are set out on pages 54 to 58 of this report. Shareholders are encouraged to
attend the meeting and question the Board on any matters of interest or concern regarding the results and
prospects of the Group. In addition, shareholders may contact the Chairman or the Independent Non-Executive
Director during the course of the year to raise any questions they have which require more immediate attention.
Contact details may be obtained from the Company Secretary at the Company’s registered office. The
Chairman and Independent Non-Executive Director are responsible for bringing any such matters raised to the
attention of the Board.
Directors’ conflicts of interest and share dealings
The Board has effective procedures in place to identify, record and deal with conflicts of interest. Each director
is made aware of his responsibility to bring any potential conflict of interest to the attention of the Board.
The directors comply with Rule 21 of the AIM Rules for Companies and the EU Directive on Market Abuse
Regulation which came into effect on 3 July 2016 relating to directors’ and applicable employees’ dealings in
the Company’s securities.
Auditor Independence
The external auditors, BDO LLP (“BDO”) were first appointed in 2006. The Company is satisfied that there
are adequate safeguards in place to ensure that BDO maintain their objectivity and independence. Proposals
for any non-audit work must be approved by the audit committee. Periodic rotation of audit partners has now
become standard practise within the auditing profession.
Fees paid to BDO in respect of audit and non-audit services are set out in note 4 to the financial statements.
10
Directors’ Report (continued)
Compliance with QCA Code Principles
The Board considers that it follows the principles of the QCA code except as follows:
• The Company has only one independent Non-Executive Director rather than two as recommended by
the Code. The Board considers that this is appropriate given the current size and complexity of the
Group and is kept under review.
• The Company does not have a formal Board evaluation process.
• There is no Nominations Committee. The Board considers that a Nominations Committee is
unnecessary as the composition of the Board, succession planning for Board members and Board
vacancies are considered to be a matter for the Board as a whole.
• The Company does not have a Chief Executive Officer. The Board considers that this is appropriate
given the current size and complexity of the Group. The Managing Director of the principal trading
subsidiary is a member of the Board and the sole executive director. The Chairman does not act as
Chief Executive Officer.
• The Company does not publish a Corporate Social Responsibility Statement. The Board considers
that it complies with or exceeds all applicable legal, environmental and employment requirements in
all jurisdictions where it operates.
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. The Company financial statements are
prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP).
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;
and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
11
Directors’ Report (continued)
Directors’ responsibilities (continued)
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.
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 4 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
Dawn Henderson
Company Secretary
9 August 2018
Old Mills
Whitehall Grove
Drighlington
Bradford, BD11 1BY
12
Independent Auditor’s Report to the Shareholders of Leeds Group plc
Opinion
We have audited the financial statements of Leeds Group plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 May 2018 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position, the Consolidated Cash Flow Statement, the Consolidated
Statement of Changes in Equity, the Company Statement of Financial Position, the Company Statement of Changes
in Equity and notes to the financial statements, including a summary of significant accounting policies.
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 the preparation of the Parent Company financial statements
is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced
Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 May 2018 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 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report
to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertanties that may
cast significant doubt about the Group’s or the Parent Company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
13
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Valuation of inventories
As detailed in note 16 of the
consolidated financial statements,
the Group has £9.6m
(2017:
£10.1m) of inventories at the year
end.
Given the nature of the business,
these inventories comprise a wide
variety of different product types,
some of which may be held in stock
for a significant period before being
sold. This creates a risk that certain
items of inventory may be old and
therefore not sell at prices above
cost. As detailed in note 2 of the
Group
statements,
management therefore makes an
estimated
assessment
provision required to write down
inventory.
financial
the
of
the significant value of
Given
inventories on the Group statement
of
the
financial position, and
estimation
valuation, we
identified this as a key audit matter.
in
We obtained an understanding of the provisioning policy
implemented by management and determined that both
the approach and provisioning rates were consistent with
those applied in previous years.
We considered accuracy of management’s provisioning
policy in the prior year by comparing the loss arising from
negative margin sales in the current year with the
inventory provision at the prior year end.
Based on our knowledge of the business and discussions
with management we considered whether there were any
changes to the nature of the business that would render the
provisioning policy no longer appropriate but did not
identify any such factors.
We confirmed the numerical accuracy of the formulae
used in management’s provisioning calculation.
We identified slower-moving stock lines and confirmed
the adequacy of the provision in respect of these, in the
context of negative margins observed in the current year.
For a sample of stock items, we reviewed the post year
end sales prices achieved to assess the net realisable value
of the inventory and the adequacy of the provision
estimated by management.
the procedures performed we
Based on
found
management’s inventory provision assumptions and
application thereof to be appropriate.
14
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order
to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effects on the financial
statements as a whole.
The materiality for the Group financial statements as a whole was set at £210,000 (2017: £470,000). This was
determined with reference to a benchmark of revenue, of which this represents 0.5% (2017: 1.25%), which we
consider to be one of the principal considerations in assessing the financial performance of the business.
The materiality for the Parent Company financial statements was set at £98,000. This was determined with reference
to a benchmark of 1.5% of total assets.
Component materiality for the subsidiary considered a significant component was set at £195,000 (2017: £485,000).
This was determined on a consistent basis with Group materiality, representing 0.5% of revenue (2017: 1.25%).
Performance materiality has been set at 75% (2017: 75%) of the above materiality figures. This has been assessed
on criteria such as historic adjustment levels, complexity and controls of the Group.
We agreed with the Audit Committee that we would report to the Committee all individual audit differences in
excess of £8,400 (2017: £9,400). We also agreed to report differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements at the Group
level. This includes certain risks that arise in subsidiaries but have a potentially material impact at Group level.
There are four components within the Group, including the Parent Company. Financial information relating to the
Parent Company and one significant component was subject to a full scope audit by the Group audit team. Financial
information relating to one component, based in Germany, was subject to a full scope audit by a BDO member firm
acting as component auditor. The work of the component auditor was subject to review by the Group audit team.
For the remaining non-significant component, we performed analytical review procedures applying the Group
materiality level.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
15
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
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; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept, 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 11, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
16
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and
the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Linda Cooper (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds
United Kingdom
9 August 2018
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
17
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2018
Note
Year ended
31 May 2018
£000
Year ended
31 May 2017
£000
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other income
Profit from operations
Finance expense
Finance income
6
4
4
7
7
Share of post-tax (loss)/profit of joint venture
15
Profit before tax
Tax expense
8
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
41,538
(32,526)
9,012
(2,722)
(5,188)
50
1,152
(160)
-
(107)
885
(340)
545
141
141
41,053
(32,468)
8,585
(2,610)
(4,398)
-
1,577
(163)
1
33
1,448
(334)
1,114
1,707
1,707
686
2,821
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 may be reclassified subsequently as profit or loss.
Earnings per share attributable to the equity holders of the Company
Note
Year ended
31 May 2018
Year ended
31 May 2017
Basic and diluted earnings per share (pence)
9
2.0p
4.1p
The notes on pages 22 to 47 form part of these financial statements.
18
Consolidated Statement of Financial Position
at 31 May 2018
Company number 00067863
Assets
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Investment in joint venture
Total non-current assets
Current assets
Inventories
Trade and other receivables
Corporation tax recoverable
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
Derivative financial 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 2018
£000
Restated (note 26)
31 May 2017
£000
11
12
13
15
16
17
19
21
8
20
21
18
22
22
22
7,755
564
1,057
734
7,872
580
1,055
832
10,110
10,339
9,621
6,252
386
572
16,831
26,941
(3,708)
(277)
(3,985)
(2,619)
(1,349)
-
(3,968)
(7,953)
10,123
6,753
313
1,567
18,756
29,095
(3,984)
(275)
(4,259)
(3,383)
(3,103)
(48)
(6,534)
(10,793)
18,988
18,302
3,792
600
(798)
2,490
12,904
18,988
3,792
600
(798)
2,349
12,359
18,302
The financial statements on pages 18 to 47 were approved and authorised for issue by the Board of Directors on 9
August 2018 and were signed on behalf of the Board by:-
Jan G Holmstrom
Chairman
The notes on pages 22 to 47 form part of these financial statements.
19
Consolidated Cash Flow Statement
for the year ended 31 May 2018
Note
Year ended
31 May 2018
£000
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of investment property
Amortisation of intangible assets
Finance expense
Finance income
Movement in fair value of derivatives
Loss on sale of property, plant and equipment
Share of post-tax loss/(profit) of joint venture
Income tax expense
Cash flows from operating activities before
changes in working capital and provisions
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/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
Purchase of investment property
Purchase of intangible assets
Increase in joint venture investment
Bank interest received
Net cash used in investing activities
Financing activities
Purchase of treasury shares
Bank borrowings drawn down
Bank borrowings repaid
Bank interest paid
Net cash (used)/generated in financing activities
Net decrease in cash and cash equivalents
Translation gain 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
11
11
13
7
7
18
15
8
16
17
20
8
11
12
13
15
7
22
21
21
7
19
19
The notes on pages 22 to 47 form part of these financial statements.
20
545
586
19
6
160
-
(48)
-
107
340
1,715
597
583
(835)
2,060
(411)
1,649
(400)
-
-
-
-
(400)
-
-
(2,102)
(160)
(2,262)
(1,013)
18
1,567
572
Year ended
31 May 2017
£000
1,114
531
-
4
163
(1)
4
3
(33)
334
2,119
(1,271)
(211)
475
1,112
(838)
274
(1,715)
(565)
(83)
(68)
1
(2,430)
(31)
2,191
-
(163)
1,997
(159)
114
1,612
1,567
Consolidated Statement of Changes in Equity
for the year ended 31 May 2018
Share
capital
£000
Capital
redemption
reserve
£000
Treasury
share
reserve
£000
Foreign
exchange
reserve
£000
Retained
earnings
Total equity
£000
£000
At 31 May 2016
3,792
600
(767)
642
11,245
15,512
Profit for the year
Other comprehensive income
Total comprehensive income
Transaction with Shareholders:
Purchase of treasury shares
-
-
-
-
-
-
-
-
-
-
-
-
1,114
1,707
-
1,114
1,707
1,707
1,114
2,821
(31)
-
-
(31)
At 31 May 2017
3,792
600
(798)
2,349
12,359
18,302
Profit for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
545
141
-
545
141
141
545
686
At 31 May 2018
3,792
600
(798)
2,490
12,904
18,988
The following describes the nature and purpose of each reserve within equity:
Reserve
Share capital
Description and purpose
The nominal value of issued ordinary shares in the Company.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury share reserve
Cost of own shares held in treasury.
Foreign exchange reserve
Gains/losses arising on retranslation of the net assets of overseas operations
into sterling.
Retained earnings
Cumulative net gains/losses recognised in the consolidated statement of
comprehensive income after deducting the cost of cancelled treasury shares.
The notes on pages 22 to 47 form part of these financial statements.
21
Notes
forming part of the financial statements for the year ended 31 May 2018
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 the European Union ("adopted IFRS"), and with the
Companies Act 2006 applicable to companies reporting under IFRS.
Changes in accounting policies
As of the date of these financial statements, the following standards were in issue but not yet effective. The
Group has not applied these standards in the preparation of these financial statements and has not adopted any
new or amended standards early.
IFRS 15, ‘Revenues from Contracts with Customers’ is effective for periods beginning on or after 1 January
2018. IFRS 15 introduces a five-step approach to the timing of revenue recognition based on performance
obligations in customer contracts. The Group has completed an assessment of IFRS 15 and it is expected that
adoption of the standard will not have any impact on the Group’s revenues, as the Group’s revenues relates to
the sale of fabric directly to retail stores and wholesale customers and thus revenue is recognised at the point
of sale.
IFRS 9 ‘Financial instruments’ replaces IAS 39 ‘Financial instruments: Recognition and Measurement’. The
standard is effective for accounting periods beginning on or after 1 January 2018. The standard covers three
elements:
– Classification and measurement:
Changes to a more principle based approach to classify financial assets as either held at amortised
cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss,
dependent on the business model and cash flow characteristics of the financial asset;
–
Impairment:
Moves to an impairment model based on expected credit losses based on a three stage approach;
and
– Hedge accounting:
The IFRS 9 hedge accounting requirements are designed to allow hedge accounting to be more
closely aligned with the Group’s underlying risk management. A new International Accounting
Standards Board (IASB) project is in progress to develop an approach to better reflect dynamic
risk management in entities’ financial statements.
The group will adopt IFRS 9 – Financial Instruments for the financial year starting 1 June 2018. The group
does not hold complex financial instruments and therefore the majority of changes to the standard do not change
the existing accounting for assets or liabilities held. However, the directors have concluded that the
measurement of the impairment of trade receivables will change with the use of the expected loss model
assessment - the directors are in the process of quantifying the financial impact but do not expect the effect to
be material. The group intends to quantify the potential impact of IFRS 9, finalise its approach to transition
and the use of practical expedients where available prior to the preparation of the interim report for the period
ended 30 November 2018.
22
Notes
forming part of the financial statements for the year ended 31 May 2018
1
Accounting policies (continued)
Changes in accounting policies (continued)
IFRS 16, ‘Leases’ is effective for periods beginning on or after 1 January 2019. The impact of the new standard
will bring operating lease arrangements on the balance sheet, with the right of use and corresponding financial
liability recognised on transition. Within the income statement rent expenses will be replaced by depreciation
and interest expenses. This will result in a decrease in operating expenses and an increase in finance costs.
The full impact of this IFRS has not yet been reviewed, and as a result it is not practical to quantify the effect
of the standard at this stage.
Revenue
Revenue is shown in the consolidated statement of comprehensive income net of VAT, rebates 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
delivery of goods to the customer. With regards to rebates these costs are calculated to reflect the expected
amount of customer claims in respect of these items. The statement of financial position includes an accrual
for claims yet to be received for rebates.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase
method. 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. Intercompany transactions and balances between Group companies are therefore
eliminated in full.
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. They are deconsolidated from the date on which control ceases.
Goodwill
Goodwill represents the excess of the consideration transferred for the business combination over the interest
in the fair value of identifiable assets, liabilities and contingent liabilities acquired.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the
consolidated statement of comprehensive income.
Trademarks
The cost of any trademarks purchased is capitalised as an intangible asset. Amortisation is provided on all
trademarks to write off the carrying value of items on a straight line basis over their expected useful economic
lives which equates to 20 years.
23
Notes
forming part of the financial statements for the year ended 31 May 2018
1
Accounting policies (continued)
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 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.
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.
24
Notes
forming part of the financial statements for the year ended 31 May 2018
1
Accounting policies (continued)
Financial assets
The Group classifies its financial assets into one of the two 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:
Fair value through profit or loss:
(i)
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.
Loans and receivables:
(ii)
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 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.
25
Notes
forming part of the financial statements for the year ended 31 May 2018
1
Accounting policies (continued)
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:
Fair value through profit or loss:
(i)
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
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 Germany or China
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.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an
"operating lease"), the total rentals receivable under the lease are charged to the consolidated statement of
comprehensive income on a straight-line basis over the lease term.
Taxation
The charge for taxation is based on the results for the year and takes into account deferred taxation.
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).
26
Notes
forming part of the financial statements for the year ended 31 May 2018
1
Accounting policies (continued)
Deferred taxation(continued)
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.
Share capital
The Group’s ordinary shares are classified as equity instruments.
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 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 equipment
8 - 33 years
5 - 15 years
Investment property
The Group applies the cost model to investment property. Investment property comprises property held by the
Group not occupied by the its trading subsidiaries for the purpose of earning rental income to cover costs.
Investment property is stated at depreciated cost. Depreciation is provided on the property to write off the
carrying value on a straight line basis over the expected useful life of 33 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.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and on short term deposit, together with other short term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of change in value.
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.
27
Notes
forming part of the financial statements for the year ended 31 May 2018
1 Accounting policies (continued)
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.
(iii) Impairment of trade receivables
The management team of Hemmers 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
Managing Director. Where there is objective evidence that a customer may fail to pay in full an amount that is
owed, an impairment charge is made based on the difference between the amount of the doubtful receivable
and the estimated amount (if any) that may prove collectible. The main Board directors review the Hemmers
debtor profile on a quarterly basis. A 1% increase in the bad debt provision would equate to £7,000. Further
information is shown in note 17 to the financial statements.
28
Notes
forming part of the financial statements for the year ended 31 May 2018
2
Critical accounting estimates and judgements (continued)
(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. A 1%
increase in the inventory provision would equate to £6,000.
(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
KMR is structured through a separate vehicle giving the Group rights to the net assets, and is therefore
classified as a joint venture.
Post year end, the Group acquired the remaining 50% of KMR as disclosed more fully in note 27 to the financial
statements. The consideration transferred was below the book value of the investment held by the Group at 31
May 2018. Following this, the directors have considered the book value of the assets acquired, and the expected
future trading profits of the entity. They have performed a discounted cash flow calculation, on a similar basis
to that performed in respect of the goodwill relating to the Hemmers subsidiary, and consider there is no
impairment of the JV investment at the balance sheet date.
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.
During the year the Group’s current bank debt decreased from £3,103,000 to £1,349,000 and the non-current
bank debt decreased from £3,984,000 to £3,708,000. Other than that, 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.
29
Notes
forming part of the financial statements for the year ended 31 May 2018
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
Trade payables
Fixed rate bank loans
Forward currency contracts
All financial assets are categorised as loans and receivables. All financial liabilities are measured at amortised
cost.
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
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 into contracts.
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 17 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 of 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.
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.
30
Notes
forming part of the financial statements for the year ended 31 May 2018
3
Financial instruments - risk management (continued)
(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 £1,353,000 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
£1,651,000 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 21 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.
4
Profit from operations
Profit from operations is stated after charging:
Auditor’s 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
- Property, plant and equipment
- Investment property
Operating lease expense
- Plant and machinery
- Property
Operating lease income
- Property
Loss on disposal of property, plant and equipment
Loss/(gain) on foreign currency
31
Year ended
31 May 2018
Year ended
31 May 2017
£000
£000
21
34
7
62
17
33
5
55
6,496
5,761
586
19
168
94
50
-
49
531
-
134
87
-
3
(310)
Notes
forming part of the financial statements for the year ended 31 May 2018
5
Staff costs
The average monthly number of persons employed in the year by the Group (including directors) was as
follows:
Management
Sales and
customer service
Warehousing Administration
Group total
2018
2017
8
9
65
56
78
74
38
32
189
171
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 2018
Year ended
31 May 2017
£000
5,447
1
1,048
6,496
£000
4,800
3
958
5,761
Included in employer’s national insurance contributions and similar taxes are the amounts paid by Hemmers
to fund employees’ pension entitlements provided by the German state.
Executive director
Jörg Hemmers
Non -executive directors
Johan Claesson
David Cooper
Jan G Holmstrom
Salary &
Fees
Bonus
Taxes
£000
£000
£000
Year ended
31 May
2018
£000
Year ended
31 May
2017
£000
218
16
15
27
276
8
-
-
-
8
13
239
-
-
-
16
15
27
13
297
249
15
15
25
304
Jörg Hemmers is Managing Director of Hemmers, a wholly owned subsidiary of Leeds Group, and based in
Germany. No recharge of his salary is made to the Parent Company. The fees relating to Johan Claesson and
Jan Holmstrom are paid, respectively, to Johan & Marianne Claesson Aktiebolag and Somerset Aktiebolag
who invoice the Company for the services of these directors.
Outstanding share options granted to employees or directors at 31 May 2018 were nil (2017: 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
32
Year ended
31 May 2018
Year ended
31 May 2017
£000
£000
276
8
13
297
261
30
13
304
Notes
forming part of the financial statements for the year ended 31 May 2018
6
Segmental information
The Group’s trading businesses are Hemmers, and its subsidiary Chinoh-Tex. Hemmers is incorporated in
Germany and is engaged in the import and distribution of fabric from its principal place of business in
Nordhorn, Germany. Chinoh-Tex 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 Parent Company is not in
itself an operating segment, but its 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 2018
Hemmers
China
£000
Hemmers
Europe
£000
Total
Group
£000
Year ended 31 May 2017
Hemmers
Europe
£000
Hemmers
China
£000
Total
Group
£000
Sale of goods
38,299
3,239
41,538
37,554
3,499
41,053
Total revenue
38,299
3,239
41,538
37,554
3,499
41,053
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.
Year ended
31 May 2018
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Parent
Company
£000
IFRS adjustments
Financial
derivatives
£000
£000
Goodwill
Total
Group
£000
41,538
-
(32,526)
9,012
(2,722)
(5,188)
50
1,152
(160)
-
(107)
885
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
External revenue
Inter-segmental
revenue
Cost of sales
38,299
3,239
-
41,538
1
(29,839)
556
(3,231)
(557)
544
-
(32,526)
Gross profit/(loss)
Distribution costs
Admin expenses
Other income
8,461
(2,460)
(4,530)
50
564
(262)
(388)
-
Profit from
operations
Finance expense
Internal interest
Share of JV loss
Profit/(loss) before
tax
1,521
(160)
(238)
(107)
(86)
-
-
-
(13)
-
-
-
(13)
-
-
-
9,012
(2,722)
(4,918)
50
1,422
(160)
(238)
(107)
-
-
-
-
-
(270)
-
(270)
-
238
-
1,016
(86)
(13)
917
(32)
33
Notes
forming part of the financial statements for the year ended 31 May 2018
6
Segmental information (continued)
At 31 May 2018
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Parent
Company
£000
Financial
derivatives
£000
Goodwill
£000
Total
Group
£000
IFRS adjustments
Total assets
24,386
1,463
(37)
25,812
149
Total liabilities
(10,189)
(414)
-
(10,603)
2,927
Total net assets
14,197
1,049
(37)
15,209
3,076
-
-
-
980
26,941
(277)
(7,953)
703
18,988
Year ended
31 May 2017
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Parent
Company
£000
IFRS adjustments
Financial
derivatives
£000
£000
Goodwill
Total
Group
£000
41,053
-
(32,468)
8,585
(2,610)
(4,398)
1,577
(163)
1
-
33
1,448
Total
Group
£000
-
-
44
44
-
-
44
-
-
-
-
44
-
-
-
-
-
-
-
-
-
-
-
-
IFRS adjustments
Financial
derivatives
£000
£000
Goodwill
-
-
-
972
29,095
(275)
(10,793)
697
18,302
External revenue
Inter-segmental
revenue
Cost of sales
37,554
3,499
-
41,053
5
(29,739)
511
(3,301)
(516)
528
-
(32,512)
Gross profit
Distribution costs
Admin expenses
7,820
(2,309)
(4,123)
709
(301)
(361)
Profit from
operations
Finance expense
Finance income
Internal interest
Share of JV profit
1,388
(163)
-
(213)
33
Profit before tax
1,045
47
-
-
-
-
47
12
-
-
12
-
-
-
-
12
8,541
(2,610)
(4,484)
1,447
(163)
-
(213)
33
-
-
-
-
-
86
86
-
1
213
-
1,104
300
At 31 May 2017
Hemmers
Europe
£000
Hemmers
China
£000
Inter
segmental
£000
Total
Hemmers
£000
Parent
Company
£000
Total assets
26,137
1,727
(24)
27,840
283
Total liabilities
(12,722)
(621)
-
(13,343)
2,825
Total net assets
13,415
1,106
(24)
14,497
3,108
34
Notes
forming part of the financial statements for the year ended 31 May 2018
6
Segmental information (continued)
Analysis of revenue by destination
Year ended 31 May 2018
Year ended 31 May 2017
Hemmers
Europe
£000
Hemmers
China
£000
1,250
22,555
11,486
35,291
2,182
115
855
413
1,383
416
Total
Group
£000
1,365
23,410
11,899
36,674
2,598
Hemmers
Europe
£000
Hemmers
China
£000
1,071
23,816
10,119
35,006
2,005
162
42
867
1,071
257
Total
Group
£000
1,233
23,858
10,986
36,077
2,262
UK
Germany
Rest of EU
Total EU
Rest of Europe
Total Europe
37,473
1,799
39,272
37,011
1,328
38,339
North America
Asia
Oceania
South America
Africa
272
91
339
123
1
440
272
617
109
2
712
363
956
232
3
225
100
118
99
1
235
1,480
239
183
34
460
1,580
357
282
35
Total revenue
38,299
3,239
41,538
37,544
3,499
41,053
Other information
Year ended 31 May 2018
Year ended 31 May 2017
Hemmers
Europe
£000
Hemmers
China
£000
Group
total
£000
Hemmers
Europe
£000
Hemmers
China
£000
Additions
Property, plant &
equipment
Investment property
Depreciation
Property, plant &
equipment
Investment property
398
-
557
19
2
-
29
-
400
1,694
-
565
586
19
507
-
21
-
24
-
Group
total
£000
1,715
565
531
-
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
35
Year ended
31 May 2018
Year ended
31 May 2017
£000
£000
-
1
(160)
(160)
(163)
(162)
Notes
forming part of the financial statements for the year ended 31 May 2018
8 Tax expense
Current tax expense
UK corporation tax and income tax of overseas operations on profits for
the year
Adjustments for over provision in prior years
Total current tax expense
Deferred tax expense for the year
Total tax expense
Year ended
31 May 2018
Year ended
31 May 2017
£000
£000
340
-
340
-
340
331
(10)
321
13
334
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:
Profit before taxation
Expected tax charge based on the standard rate of
corporation tax in the UK of 19% (2017:20%)
Expenses not deductible for tax purposes
Income not subject to taxation
Unrelieved losses
Utilisation of past losses
Current tax over provision in previous years
Different tax rates applied in overseas jurisdictions
Total tax expense (see above)
Year ended
31 May 2018
Year ended
31 May 2017
£000
£000
885
168
20
-
43
-
-
109
340
1,448
290
3
(7)
2
(60)
(10)
116
334
The Group has UK capital losses carried forward of £13,140,000 and unrelieved UK trading losses of £1,129,000.
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 sufficient profits to reverse these temporary differences in the foreseeable
future.
The deferred tax liability relates to a timing difference arising as a result of a difference in accounting under
German GAAP, and the movement in the year is analysed as follows:
Liability at 31 May 2017
Effect of movements in foreign exchange rates
Liability at 31 May 2018
36
Deferred tax
£000
275
2
277
Notes
forming part of the financial statements for the year ended 31 May 2018
9 Earnings per share and Net asset per share
Earnings per share
Year ended
31 May 2018
Year ended
31 May 2017
Numerator
Profit for the year from continuing operations, being the earnings used in
earnings per share
£545,000
£1,114,000
Denominator
Weighted average number of shares used in earnings per share (excluding
treasury shares)
27,350,843
27,422,227
Basic and diluted earnings per share
2.0p
4.1p
Since there are no outstanding share options, there is no difference between basic and diluted earnings per
share.
Net assets per share
Numerator
Net assets
Denominator
Number of shares (excluding treasury shares)
Net assets per share
10 Dividend
Year ended
31 May 2018
Year ended
31 May 2017
£18,988,000
£18,302,000
27,350,843
27,350,843
69.4p
66.9p
The directors have not proposed a dividend in respect of the year ended 31 May 2018 nor for the year ended 31
May 2017.
11 Property, plant and equipment
Cost
Balance at 31 May 2016
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2017
Additions
Effect of movements in foreign exchange rates
5,721
1,402
-
820
7,943
13
66
Restated
(note 26)
Freehold land and
buildings
£000
Restated
(note 26)
Plant and
equipment
£000
Restated
(note 26)
Total
£000
7,740
1,715
(32)
1,093
2,019
313
(32)
273
2,573
10,516
387
23
400
89
Balance at 31 May 2018
8,022
2,983
11,005
37
Notes
forming part of the financial statements for the year ended 31 May 2018
11 Property, plant and equipment (continued)
Accumulated depreciation
Balance at 31 May 2016
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2017
Depreciation charge for the year
Effect of movements in foreign exchange rates
Restated
(note 26)
Freehold land
and buildings
£000
Restated
(note 26)
Plant and
equipment
£000
592
241
-
89
922
261
5
1,284
290
(26)
174
1,722
325
15
Balance at 31 May 2018
1,188
2,062
Net book amount
At 31 May 2016
At 31 May 2017
At 31 May 2018
12 Investment property
5,129
7,021
6,834
735
851
921
Restated
(note 26)
Total
£000
1,876
531
(26)
263
2,644
586
20
3,250
5,864
7,872
7,755
Restated (note26)
Freehold land and buildings
£000
Cost
Balance at 31 May 2016
Additions
Effect of movements in foreign exchange rates
Balance at 31 May 2017
Effect of movements in foreign exchange rates
Balance at 31 May 2018
Accumulated depreciation
Balance at 31 May 2017
Depreciation charge for the year
Effect of movements in foreign exchange rates
Balance at 31 May 2018
Net book amount
At 31 May 2016
At 31 May 2017
At 31 May 2018
38
-
565
15
580
3
583
-
19
-
19
-
580
564
Notes
forming part of the financial statements for the year ended 31 May 2018
13
Intangible assets
Balance at 31 May 2016
Additions
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2017
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2018
Goodwill
£000
Trademarks
£000
855
-
-
117
972
-
8
980
-
83
(4)
4
83
(6)
-
77
Total
£000
855
83
(4)
121
1,055
(6)
8
1,057
Goodwill arose in 1999 on the acquisition of the cash-generating unit Hemmers, whose recoverable amount has
been determined from value-in-use calculations based on budgeted cash flows. Principal assumptions underlying
this calculation are the achievement of improved profit in 2019 reflecting planned volume growth and the cost
savings flowing from capital expenditure in previous years, and thereafter an annual growth rate into perpetuity
of 2% in revenue, profits and working capital reflecting the expected long term growth rate of the sector.
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 13% 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.
14 Subsidiaries
The subsidiaries of Leeds Group plc, all of which were wholly owned in both 2018 and 2017, and which have
been included in these consolidated statements, are as follows:
Name
Country of
incorporation Nature of business
* Hemmers-Itex Textil Import Export GmbH.
* Leeds Property GmbH.
** Chinoh-Tex Ltd.
Germany
Germany
China
Import, sale, and distribution of textiles
Property investment
Textile trading
* Wholly owned subsidiaries of Leeds Group plc.
** Wholly owned subsidiary of Hemmers-Itex Textil Import Export GmbH.
The registered addresses of these subsidiaries are shown on page 3.
39
Notes
forming part of the financial statements for the year ended 31 May 2018
15 Investment in joint venture
Balance at 31 May 2016
Share of post-tax profit
Additional capital investment
Effect of movements in foreign exchange rates
Balance at 31 May 2017
Share of post-tax loss
Effect of movements in foreign exchange rates
Balance at 31 May 2018
£000
640
33
68
91
832
(107)
9
734
The Group’s subsidiary Hemmers owns 50% of the issued share capital of KMR, at an investment cost of
£643,000. 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 leased shops in various German cities. KMR has long
been a customer of Hemmers, and this relationship continues on an arm’s length basis. In the year ended 31 May
2018, Hemmers sales to KMR amounted to £1,226,000 (2017 £1,673,000). For the purposes of reporting the
Group’s share of the profit/(loss) of the joint venture, the profit/(loss) after tax reported by KMR is adjusted for
the movement in the period of the unrealised profit within KMR inventories purchased from Hemmers.
Summarised accounts of KMR:
All values translated at closing rates.
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Interest
Tax
(Loss)/profit after tax
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Corporation tax
Total assets
Non-current loans and borrowings
Trade and other payables
Current loans and borrowings
Total liabilities
Unaudited
Year ended
31 May 2018
£000
Unaudited
Year ended
31 May 2017
£000
9,287
(6,712)
2,575
(1,282)
(1,458)
(44)
(1)
(210)
9,451
(6,763)
2,668
(1,210)
(1,347)
(35)
(31)
65
31 May 2018
£000
31 May 2017
£000
1,541
2,992
54
186
126
4,899
(1,310)
(1,274)
(615)
(3,199)
1,594
3,102
78
236
88
5,098
(1,938)
(1,265)
-
(3,203)
Total net assets
1,700
1,895
40
Notes
forming part of the financial statements for the year ended 31 May 2018
16 Inventories
Finished goods and goods for resale
9,621
10,123
The amount of inventories recognised as an expense during the year was £25,918,000 (2017: £28,025,000).
17 Trade and other receivables
31 May 2018
£000
31 May 2017
£000
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Other receivables
Prepayments
Total trade and other receivables
Net trade receivables
Cash and cash equivalents (note 19)
Total financial assets classified as loans and receivables
31 May 2018
£000
31 May 2017
£000
5,825
(708)
5,117
989
146
6,252
6,353
(975)
5,378
1,211
164
6,753
31 May 2018
£000
31 May 2017
£000
5,117
572
5,689
5,378
1,567
6,945
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 2018 trade receivables of £4,243,000 were not due for payment (2017: £4,841,000).
As at 31 May 2018 trade receivables of £753,000 were past due but not impaired (2017: £556,000). 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
Overdue more than 12 months
Total trade receivables past due but not impaired
31 May 2018
£000
31 May 2017
£000
609
56
43
45
753
445
48
1
62
556
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.
41
Notes
forming part of the financial statements for the year ended 31 May 2018
17 Trade and other receivables (continued)
As at 31 May 2018 trade receivables of £829,000 were past due and impaired (2017: £956,000). The amount of
the provision was £708,000 (2017: £975,000). 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:
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 2018
£000
31 May 2017
£000
72
117
640
829
-
-
956
956
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 2018
£000
31 May 2017
£000
975
(38)
(238)
9
708
921
44
(117)
127
975
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 2018
£000
31 May 2017
£000
5,243
433
471
105
6,252
5,908
264
517
64
6,753
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out
above.
42
Notes
forming part of the financial statements for the year ended 31 May 2018
18 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 2018 the maximum notional principal amount of outstanding forward exchange contracts taken out
in Euros was £nil (2017: £nil). The forward contracts gave rise to a financial derivatives liability of €nil (2017:
€nil). The movement in the profit and loss account for the year was €nil (2017: credit €52,000) which, translated
into sterling at the average rate for the year, equated to £nil (2017: £44,000). For the purposes of the consolidated
statement of financial position, the financial derivatives liability is translated at closing rate, and equates to £nil
(2017: £nil) which, in the opinion of the directors, is the fair value of the derivative financial instruments.
No other forward contracts were taken out during the year. Last year a forward contract was taken out to hedge
the loan from the Parent Company to Hemmers. The movement in the year of £48,000 is a credit to the profit
and loss account. As at 31 May 2018, the financial derivatives liability amounted to £nil (2017: £48,000) which,
in the opinion of the directors, is the fair value of the derivative financial instruments. Hedge accounting was
not applied.
19 Cash and cash equivalents
31 May 2018
£000
31 May 2017
£000
Cash on demand or on short-term deposit
572
1,567
Cash held by the Parent Company is deposited with Bank of Scotland, earning interest at variable rates. Cash
held by subsidiaries is mainly the excess of property related loans drawn down over amounts spent to date and
working capital required by the subsidiaries. In the opinion of the directors, the carrying value of cash and cash
equivalents approximates to its fair value.
20 Trade and other payables
Trade payables
Other tax and social security taxes
Accruals
Other payables
Total trade and other payables
31 May 2018
£000
31 May 2017
£000
1,526
67
430
596
2,619
2,494
71
379
439
3,383
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 28 days
(2017: 32 days). The directors consider that the carrying amount of trade and other payables approximates to
their fair value.
21 Loans and borrowings
The book value of loans and borrowings are as follows:
31 May 2018
£000
31 May 2017
£000
Current
Secured bank loans
Non - current
Secured bank loans
Total loans and borrowings
43
1,349
3,103
3,708
5,057
3,984
7,087
Notes
forming part of the financial statements for the year ended 31 May 2018
21 Loans and borrowings (continued)
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. They are denominated in
Euros, and their principal terms are as follows:
Current loans and borrowings
At 31 May 2018 current loans and borrowings of £1,349,000 (2017: £3,103,000) comprise short term loans of
£983,000 and instalments due on long term loans detailed below of £366,000. The interest rate on the short-term
loans is 2.5% (2017: 2.5%) and these loans are secured on the inventories and trade receivables of Hemmers.
The short term loans are drawn down by Hemmers against short term borrowing facilities of €11,000,000.
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.
Non-current loans and borrowings
A non-current loan was drawn down in 2007 from Kreissparkasse to finance the freehold extension of the
warehouse in Nordhorn. In 2016 further loans were drawn down and, in the year ended 31 May 2017, a further
loan was assumed from Kreissparkasse to finance the purchase of a further leased warehouse adjacent to the
original warehouse. Amounts outstanding at 31 May 2018 were:
Fixed
Interest
Rate
4.07%
3.40%
1.65%
1.05%
Loan 1
Loan 2
Loan 3
Loan 4
Non-current loans
Repayment
Profile
Final repayment
date
31 May 2018
£000
31 May 2017
£000
Equal monthly instalments
Single bullet repayment
Equal quarterly instalments
Equal quarterly instalments March 2027
September 2027
March 2020
September 2025
554
1,054
1,586
514
3,708
614
1,046
1,814
510
3,984
The carrying values of assets that the Group has pledged as collateral for
liabilities or contingent liabilities are as follows:
31 May 2018
£000
31 May 2017
£000
Inventories
Trade receivables
Freehold land and buildings
9,349
4,667
7,403
9,949
5,021
7,601
Total carrying value of assets pledged as collateral
21,419
22,571
The maturity profile of anticipated cash flows, including interest, in
respect of loans and borrowings is as follows:
31 May 2018
£000
31 May 2017
£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
44
1,440
2,801
1,272
5,513
(456)
5,057
3,219
2,803
1,599
7,621
(534)
7,087
Notes
forming part of the financial statements for the year ended 31 May 2018
21 Loans and borrowings (continued)
Reconciliation of movements in net debt
Decrease in cash and cash equivalents in the year
Translation gain on cash and cash equivalents
Decrease/(increase) in loans
Translation loss on loans
Decrease/(increase) in net debt
Net debt at the beginning of the year
31 May 2018
£000
31 May 2017
£000
(1,013)
18
2,102
(72)
1,035
(5,520)
(159)
114
(2,191)
(638)
(2,874)
(2,646)
Net debt at the end of the year
(4,485)
(5,520)
Classification of financial liabilities
31 May 2018
£000
31 May 2017
£000
Trade payables
Accruals
Other payables
Loans and borrowings
Total of financial liabilities at amortised cost
1,540
430
663
5,057
7,690
22 Share capital
Issued and fully paid
2018
Number
2018
£000
2017
Number
At beginning and end of the year
31,600,000
3,792
31,600,000
2,494
379
510
7,087
10,470
2017
£000
3,792
At 31 May 2018, no options over ordinary shares of the Company were outstanding (2017: nil). The are no rights,
preferences or restrictions attached to the ordinary shares.
The Group has made purchases of its own ordinary shares of 12 pence each to be held in treasury as follows:
Shares purchased as at 31 May 2018 and 31 May 2017
Number of
shares
9,247,760
Cost
£000
1,847
Shares cancelled as at 31 May 2018 and 31 May 2017
(4,998,603)
(1,049)
Shares held in treasury at 31 May 2018
Shares held in treasury at 31 May 2017
4,249,157
4,249,157
798
798
The cost of cancelled shares has been calculated on a “first in, first out” basis, and the nominal value of cancelled
shares (£599,832) 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.
45
Notes
forming part of the financial statements for the year ended 31 May 2018
23 Leases
The Group holds no assets under finance leases. The Group owns the freehold title to warehouse and office
facilites at Nordhorn, Germany. The Group occupies various warehouse and office premises in China under a
long-term which will expire in January 2020. 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 2018
£000
31 May 2017
£000
209
149
358
145
174
319
The Group holds an investment property which is leased to external tenants. The total future values of minimum
lease payments in respect of this operating lease is due as follows:
Not later than one year
24 Commitments
31 May 2018
£000
31 May 2017
£000
6
-
At 31 May 2018 capital commitments authorised and committed amounted to £nil (2017: £153,000). There were
no amounts authorised but not committed (2017: £nil).
25 Related party transactions
KMR paid £192,000 (2017: £128,000) in respect of warehouse rent and management fees to Hemmers during the
year. The directors consider that this transaction was made on an arm’s length basis.
26 Prior year adjustment
During the financial year 2017, a subsidiary of the Group acquired a property which was presented within property,
plant and equipment in the Consolidated Statement of Financial Position. Although part of the property is occupied
by the subsidiary company, part of the property is rented out externally. Under International Financial Reporting
Standards, it is therefore more appropriate to present part of the value of this property as investment property. A
prior year adjustment has been made to reclassify £565,000 within non-current assets from property, plant and
equipment to investment property. Investment property is accounted for using the depreciated cost method, as
such this adjustment has no effect on profit, net assets, net debt or EPS in the prior year.
46
Notes
forming part of the financial statements for the year ended 31 May 2018
27
Post Balance sheet event
On 5 July 2018, the joint venture between Hemmers and Mr Maat was terminated with KMR acquiring Mr
Maat’s 50% shareholding in KMR for a total consideration of £442,000 paid £221,000 cash and the balance
being three shops at an approximate value of £221,000. Hemmers will retain its shareholding in KMR and
therefore KMR will become a subsidiary of Hemmers effective 5 July 2018. The total consideration for KMR
will be £1,176,000. The net assets as at 5 July 2018 were as follows:
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Corporation tax
Total assets
Non-current loans and borrowings
Trade and other payables
Current loans and borrowings
Total liabilities
Total net assets
5 July 2018
£000
1,545
3,042
95
297
135
5,114
(1,315)
(1,534)
(620)
(3,469)
1,645
At the time of preparing these financial statements, the directors have not completed the initial accounting for
this business combination. As such, they are unable to disclose the fair value of assets and liabilities assumed
and have not calculated the value of the goodwill.
The consideration transferred was below the book value of the investment held by the Group at 31 May 2018.
Following this, the directors have considered the book value of the assets acquired, and the expected future
trading profits of the entity. They have performed a discounted cash flow calculation, on a similar basis to that
performed in respect of the goodwill relating to the Hemmers and consider there is no impairment of the JV
investment at the balance sheet date.
47
Company Statement of Financial Position at 31 May 2018
Prepared under FRS 101 "Reduced Disclosure Framework"
Company number 00067863
Note
31 May 2018
£000
31 May 2017
£000
Assets
Non-current assets
Investments in subsidiary undertakings
Amounts receivable from subsidiary undertakings
Total non-current assets
Current assets
Trade and other receivables
Cash at bank and in hand
Liabilities
Current liabilities
Trade and other payables
Total current assets
TOTAL NET ASSETS
Capital and reserves
Share capital
Capital redemption reserve
Treasury share reserve
Retained earnings
TOTAL EQUITY
4
5
5
6
7
3,370
2,977
6,347
9
140
149
(50)
99
6,446
3,792
600
(798)
2,852
6,446
3,370
2,928
6,298
20
263
283
(103)
180
6,478
3,792
600
(798)
2,884
6,478
The loss after tax of the company for the year was £32,000 (2017: profit £300,000).
The financial statements on pages 48 to 52 were approved and authorised for issue by the Board of Directors on 9
August 2018 and were signed on behalf of the Board by: -
Jan G Holmstrom
Chairman
The notes on pages 50 to 52 form part of these financial statements.
48
Company Statement of Changes in Equity
for the year ended 31 May 2018
At 31 May 2016
Profit for the year
Transaction with Shareholders:
Purchase of treasury shares
At 31 May 2017
Loss for the year
Share
capital
£000
Capital
redemption
reserve
£000
Treasury
share
reserve
£000
Retained
earnings
Total
equity
£000
£000
3,792
600
(767)
2,584
6,209
-
-
-
-
-
300
300
(31)
-
(31)
3,792
600
(798)
2,884
6,478
-
-
-
(32)
(32)
At 31 May 2018
3,792
600
(798)
2,852
6,446
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share capital
The nominal value of issued ordinary shares in the Company.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury share reserve
Cost of own shares held in treasury.
Retained earnings
Cumulative net gains/losses recognised in the Company’s profit and loss
account after deducting the cost of cancelled treasury shares.
The notes on pages 50 to 52 form part of these financial statements.
49
Notes
forming part of the financial statements of the Company for the year ended 31 May 2018
1 Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with FRS 100 and FRS 101, and the Company takes
advantage of all of the available disclosure exemptions permitted by FRS 101 in the financial statements, the most
significant of which are summarised below.
• certain disclosures regarding the company's capital;
• certain disclosures regarding financial instruments;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management personnel; and
• disclosure of related party transactions with other wholly owned members of Leeds Group.
Investments
Investments in subsidiary undertakings are stated at cost less any impairment for permanent diminution in value.
Financial assets
The Company classifies its financial assets as either fair value through the profit and loss or loans and receivables.
The Company's accounting policy for each category is as follows:
Fair value through profit or loss:
(i)
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 Company 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.
Loans and receivables:
(ii)
Company loans and receivables include amounts receivable from Group undertakings 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 are initially recognised at fair value, and
subsequently carried at amortised cost using the effective interest rate less provision for impairment.
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.
Financial liabilities
The Company classifies its financial liabilities into one of the two categories below, depending on the purpose for
which the liability was incurred. The Company's accounting policy for each category is as follows:
Fair value through profit or loss:
(i)
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 Company 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 accrual, which are initially recognised at fair value and subsequently carried
at amortised cost using the effective interest method.
50
Notes
forming part of the financial statements for the year ended 31 May 2018
1 Accounting policies (continued)
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.
Foreign Currency
The financial statements are presented in UK pounds sterling, which is the company's functional currency.
Transactions entered into by the Company in a currency other than sterling are recorded at the rates ruling when
the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the
reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are
recognised immediately in profit or loss.
Dividends
Interim dividends are recognised when paid and final dividends are recognised when approved by the shareholders
at the AGM.
2 Statement of Comprehensive Income
A separate statement of comprehensive income for the Company is not presented, in accordance with Section 408
of the Companies Act 2006. The loss for the year for the Company dealt with in the consolidated financial
statements of the Company was £32,000 (2017: profit £300,000).
The remuneration of the Auditors is disclosed in note 4 to the consolidated financial statements.
3 Staff costs
The average monthly number of persons employed in the year by the Company (including directors) was 4
(2017: 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 2018
Year ended
31 May 2017
£000
£000
100
1
3
104
100
3
4
107
The remuneration of the directors is disclosed in note 5 to the consolidated financial statements.
Outstanding share options granted to employees or directors at 31 May 2018 were nil (2017: nil).
4 Investments in subsidiary undertakings
Cost
Accumulated
impairment
Net carrying
amount
£000
£000
£000
At 31 May 2018 and 31 May 2017
3,370
-
3,370
Details of subsidiary undertakings are given in the Group Information section on page 3 and in note 14 to the
consolidated financial statements.
51
Notes
forming part of the financial statements of the Company for the year ended 31 May 2018
5 Trade and other receivables
Prepayments and accrued income
Amounts receivable from subsidiary undertakings
Total trade and other receivables
31 May 2018
£000
31 May 2017
£000
9
2,977
2,986
20
2,928
2,948
No impairment loss was recognised in the year in respect of debtors. (2017: nil). The amounts receivable from
subsidiary undertaking relates to long term loans with details as follows:
Fixed
Interest
Rate
Repayment
Profile
31 May 2018
£000
31 May 2017
£000
Loan 1
Loan 2
8%
8%
Repayable on demand
Repayable on demand
2,635
342
2,613
315
6 Trade and other payables
Accruals and deferred income
Derivative financial liability
Total trade and other payables
7 Share capital
Issued and fully paid
31 May 2018
£000
31 May 2017
£000
50
-
50
2018
Number
2018
£000
2017
Number
55
48
103
2017
£000
3,792
At beginning and end of the year
31,600,000
3,792
31,600,000
At 31 May 2018, no options over ordinary shares of the Company were outstanding (2017: nil).
Details of the shares held in treasury are disclosed in note 22 to the consolidated financial statements.
8 Commitments
The Company holds no assets under finance leases and has no commitments under operating leases.
There were no contracted capital commitments for the Company in either period.
52
Five Year Summary of Results and Capital Employed
Year ended
31 May
2018
£000
Year ended
31 May
2017
£000
Year ended
31 May
2016
£000
Year ended
31 May
2015
£000
Year ended
31 May
2014
£000
41,538
(32,526)
41,053
(32,468)
36,272
(28,563)
34,859
(27,066)
34,210
(26,440)
9,012
(7,860)
8,585
(7,008)
7,709
(6,165)
7,793
(6,171)
7,770
(6,088)
1,152
(160)
(107)
885
(340)
1,577
(162)
1,544
(88)
1,622
(64)
1,682
(71)
33
51
13
-
1,488
(334)
1,507
(468)
1,571
(518)
1,611
(532)
545
1,114
1,039
1,053
1,079
10,110
16,831
10,339
18,756
7,359
15,156
3,115
15,344
2,808
14,919
Results
Revenue
Cost of sales
Gross profit
Operating expenses
Profit from operations (excluding
impairment charges)
Net finance expense
Share of post-tax (loss)/profit of
joint venture
Profit before tax
Tax expense
Profit after tax
Assets
Non-current assets
Current assets
Total assets
26,941
29,095
22,515
18,459
17,727
Non-current liabilities
Current liabilities
(3,985)
(3,968)
(4,259)
(6,534)
(4,073)
(2,930)
(909)
(3,728)
(1,052)
(2,647)
Total liabilities
(7,953)
(10,793)
(7,003)
(4,637)
(3,699)
Total net assets
18,988
18,302
15,512
13,822
14,028
Financed by
Total equity
Key Statistics
18,988
18,302
15,512
13,822
14,028
Basic and diluted earnings per share
2.0p
4.1p
3.8p
3.8p
3.9p
Net assets per share
69.4p
66.9p
56.5p
50.2p
50.7p
53
Notice of Annual General Meeting
The one hundred and eighteenth annual general meeting of the Leeds Group plc (“the Company”) will be held at 12
noon on 22 October 2018 at the offices of BDO LLP at Central Square, 29 Wellington Street, Leeds, LS1 4DL 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.
To receive the report of the directors, the financial statements for the year ended 31 May 2018 and the report of
the auditors thereon.
To re-appoint Mr Johan Claesson as a director.
To re-appoint Mr Jan Holmstom 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 6 will be proposed as an ordinary
resolution and resolutions 5 and 7 will be proposed as special resolutions:
5.
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:
5.1
5.2
5.3
5.4
the maximum number of ordinary shares authorised to be purchased by this resolution is 715,000 being
2.26 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:
5.2.1
5.2.2
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.
54
Notice of Annual General Meeting (continued)
Special business (continued)
6.
7.
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
£1,095,000. 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 6 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:
7.1
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
7.2
otherwise than pursuant to sub-paragraph 7.1 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
Dawn Henderson
Company Secretary
Old Mills
Whitehall Grove
Drighlington
Bradford
BD11 1BY
9 August 2018
55
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 close of business on 18 October 2018 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, Link Asset Services, PXS,
34 Beckenham Road, Beckenham, BR3 4TU not later than 12 noon on 18 October 2018.
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 Link 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 Link 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 Link Asset Services at PXS, 34 Beckenham
Road, Beckenham, BR3 4TU no later than 12 noon on 18 October 2018. 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
56
Notice of Annual General Meeting (continued)
Notes (continued)
8.
9.
As at 9 August 2018 (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 4,249,157 shares held in treasury, representing approximately 13.45 per cent of the total issued share
capital. Thus the total voting rights in the Company as at 9 August 2018 are 27,350,843.
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.
57
Explanation of resolutions
Resolution number 1
The directors must present to shareholders the report of the directors and the financial statements for the year ended 31
May 2018. That report and those financial statements, and the report of the Company's auditors on those financial
statements, are set out on pages 8 to 52 of this document.
Resolution numbers 2 and 3
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 Johnn Claesson and Mr Jan Holmstom are the directors subject
to retirement by rotation. Resolutions numbers 2 and 3 propose the re-appointment of Mr Claesson and Mr Holmstrom
respectively.
Resolution number 4
The auditors of the Company must be re-appointed at each meeting at which the financial statements are presented.
Resolution 4 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 auditor’s remuneration.
Resolution number 5
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 715,000 ordinary shares, being
approximately 2.26 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 5 to purchase
ordinary shares, the Company will consider exercising the option of holding those ordinary shares in treasury.
Resolution number 6
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 £1,095,000 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.
Resolution number 7
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.
58
59
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