LEEDS
GROUP PLC
Annual Report and Accounts 2021
Contents
SGroup Information and Advisors
SStrategic Reports
Chairman’s Statement
Finance and Operating Review
Governance
Board of Directors
Chairman’s Corporate Government Statement
Corporate Governance Report
Directors’ Report
FFinancial Statements
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
Appendix 1 - Five Year Summary of Results and Capital Employed
Notice of Annual General Meeting
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Group Information and Advisers
Subsidiary Companies
Wholly owned subsidiary companies of Leeds Group plc (‘‘Leeds Group’’ or ‘‘the Group’’):
Hemmers-Itex Textil Import Export GmbH
‘‘Hemmers’’
Twentestrasse 1
48527 Nordhorn
Germany
Leeds Property GmbH
‘‘Leeds Properties’’
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Director during the year
Jörg Hemmers
Principal activity
Import, sale & distribution of fabric
Principal activity
Dormant
Wholly owned subsidiary companies of Hemmers:
Stoff-Ideen-KMR GmbH
‘‘KMR’’
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Principal activity
Retail textile trading
Group Advisers
Solicitors
Financial Advisers
Auditors
Walker Morris LLP
33 Wellington Street
Leeds
LS1 4DL
Registrars*
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Cairn Financial Advisers LLP
107 Cheapside
London
EC2V 6EE
BDO LLP
29 Wellington Street
Leeds
LS1 4DL
Principal Bankers
Lloyds Banking Group
1 Lovell Park Road
Leeds
LS1 1 NS
* Calls to the Link Group shareholder helpline 0871 664 0300 are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.
Or you can contact them by e mail shareholderenquiries@linkgroup.co.uk,
1
Chairman’s Statement
Statement
As a result of the ongoing global pandemic, it has been another challenging year for the Group. In our interim report
we announced that sales for Hemmers and KMR in the first six months of the financial year had been higher than
expected. In subsequent trading updates on 17 February 2021 and 18 May 2021, we explained that since the half year
end, there had been further countrywide restrictions imposed by the German government which had adversely affected
trading activity in the second half of the financial year.
Both Hemmers-Itex Textil Import Export GmbH (‘Hemmers’) and Stoff-Ideen-KMR GmbH (‘KMR’) businesses
have been affected by the countrywide lockdowns imposed by the German government in response to the Covid-19
pandemic and further government-imposed restrictions placed on retail shops thereafter. Hemmer’s wholesale
business was also affected by lockdowns in its export markets though trading continued on a reduced basis. However,
all KMR’s retail shops were fully closed during the country-wide lockdowns which lasted until early March 2021 with
some shops remaining closed until the end of May 2021 due to localised lockdowns. The effect of the KMR shop
closures were partly mitigated by actions taken by management and by government financial aid. The Group operating
result showed a reduced loss of £280,000 compared to the previous year loss of £1,756,000.
Even though the lockdown has now been lifted, the Covid-19 pandemic is still having an impact in the global
marketplace, with sales levels for both Hemmers and KMR in the first quarter of the new financial year lower than
previous years but in line with expectations. The impact of Covid-19 on the Group is detailed further in the Finance
and Operating Review and Directors’ Report. The Directors are confident that both businesses are prepared to mitigate
the risk of a further wave of the pandemic and should restrictions be imposed again, the companies would take the
necessary actions and also apply for any available government financial support.
Following the prior year sales and cost reviews, the Directors believe that the Group is structured to align its costs
with sales activity and has a stronger management team with a competitive sales strategy. This strategy will potentially
return the Group to acceptable levels of profit in future years, assuming a return to a normal trading environment.
On behalf of shareholders, I want to thank the management and staff of Hemmers and KMR who have all continued
with their best efforts to work through difficult and challenging times in the face of the global pandemic.
Jan G Holmstrom
Non-Executive Chairman
15 October 2021
2
Finance and Operating Review
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 2021, 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 for the continuing operations in the year was £33,013,000 (2020: £35,067,000). The ongoing effects
of the Covid-19 pandemic affected both Hemmers and KMR. Although the German government provided financial
support to the Group amounting to £966,000, the reduced sales figures did not generate enough contribution to cover
the fixed overheads and, therefore, both Hemmers and KMR made a loss after interest. The Group’s operating loss
from continuing activities was £280,000 (2020: loss £1,756,000) and the Group’s loss before tax from continuing
activities was £508,000 (2020: loss £2,016,000).
The tax credit in the year was £42,000 (2020: charge £6,000). The total loss per share was 1.7p (2020: loss per share
8.6p).
Hemmers-Itex
Hemmers is a global business engaged in designing, importing, warehousing and wholesaling of fabrics from
Germany. The market in Germany has been affected by the Covid-19 pandemic, however Hemmers have positioned
themselves well in the marketplace and have managed to secure business from competitors. The strategic sales review
coupled with the comprehensive cost review undertaken last year has ensured the cost base for Hemmers is aligned to
the current sales levels and market conditions. Sales for the year were slightly higher than last year at £27,669,000
(2020: £27,060,000) due to exchange translation as sales volumes were in line with previous years but lower than
expectations. The gross contribution percentage decreased slightly to 30% (2020: 31%) due to the pressure on pricing
through competition however, with the increased level of sales, the gross contribution has increased to £4,580,000
(2020: £4,155,000). Due to the reduction in fixed overheads resulting from the prior year cost review and government
financial assistance of £274,000, Hemmers achieved a profit before interest of £330,000 (2020: loss £1,298,000).
Hemmers is completely focused on growing its business domestically and internationally in its wholesale markets
with a more customer focused sales strategy. We are confident that Hemmers will continue to compete in the global
marketplace regaining further market share thus returning to profitability after interest.
Hemmers bank debt, net of cash, increased in the year to £3,558,000 (2020: £3,184,000). The bank debt is secured
on the assets of Hemmers.
KMR
KMR is a retail trading business in Germany. KMR has been severely affected by the Covid-19 pandemic resulting in
the closure of all its retail shops during countrywide lockdowns. Also following the lifting of the second government-
imposed lockdown, local lockdowns were imposed due to the level of Covid-19 infections in certain areas. This
affected certain KMR retail shops for a further eleven weeks in this financial year. Sales were, therefore, significantly
lower than last year at £5,344,000 (2020: £8,007,000). The gross contribution percentage increased slightly to 56%
(2020: 53%) due to price increases. This lower level of trading, despite financial support from the German government
amounting to £692,000, has resulted in a loss before interest for the year of £211,000 (2020: loss £218,000). Improved
working efficiencies have been implemented during the year including the introduction of new working patterns
resulting in a reduced cost base. This is expected to eliminate the losses going forward and provide a better foundation
for improved results in the coming years.
KMR bank debt, net of cash, decreased in the year to £749,000 (2020: £979,000). The bank debt is secured on the
assets of KMR.
3
Finance and Operating Review (continued)
Fixed Assets
The net book amount of tangible fixed assets is £7,750,000 (2020: £8,183,000). Capital additions in the year amounted
to £562,000 (2020: £560,000).
The net book value of right-to-use assets is £2,453,000 (2020: £2,374,000). There were £750,000 of additional right-
of-use leases included as assets in the year although they relate to leases which were regarded as short-term leases in
2020 (2020: £258,000). An impairment charge of £333,000 has been recognised in the accounts in relation to these
assets.
Working Capital and Cash Flow
Net debt increased from £3,517,000 to £3,952,000 in the year. Net cash used in the year at average exchange rates
was £610,000 (2020: generated £34,000). Working capital, which comprises inventories, trade and other receivables
and trade and other payables, increased in the year by £452,000 (2020: decreased £2,738,000). Debtor and Trade
Creditor levels were lower at 31 May 2021 due to the reduced trading in March to May as a result of the effects of the
Covid-19 pandemic on trading. Loan repayments of £771,000 (2020: £2,378,000) have been made this year. Last
year the repayments were partly due to the sale of properties which generated £1,317,000 with the corresponding debt
being repaid. New loans taken out in the year £787,000 relating to short term debt. Lease liability repayments
(including interest) of £1,059,000 (2020: £926,000) have been made in the year.
The Group continues to carefully monitor its working capital requirements to ensure it operates within its current
banking facilities.
Net Asset Value
Net assets decreased in the year by £1,022,000 as follows:
At 31 May 2020
Loss after tax
Translation differences
At 31 May 2021
Debt Profile
Net assets
£000
15,583
(466)
(556)
14,561
Per share
pence
57.0
(1.7)
(2.0)
53.3
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 at fixed interest rates between 1.05% and 4.07%. Working capital finance, when
required, is via short term loans of three months currently attracting interest at rates of between 1.25% and 3%. Bank
debt in the subsidiaries is secured by charges on inventories, receivables and property and is without recourse to the
Parent Company.
Share Capital
During the year, the Company cancelled 4,279,157 ordinary shares that had been held in treasury following previous
purchases of the shares by the Company.
4
Finance and Operating Review (continued)
Impairment reviews
A cash generating unit is defined by IAS36 as the smallest identifiable group of assets that generates cash flows that
are largely independent of the cash inflows from other assets, or group of assets. As such, each store in KMR represents
its own cash generating unit. Following the implementation of IFRS16, the right-of-use assets relating to KMR’s retail
shops are now considered part of the cash generating units. Other immaterial assets are allocated to each store to
consider the wider asset portfolio of each store, where right-of-use assets remain the only material in scope assets to
consider in impairment testing. Although annual impairment reviews are not required on tangible assets, management
have performed an impairment review on these assets due to historic trading losses and the effects of the Covid-19
pandemic. Impairment tests have been performed by assessing relevant cash flows of each cash generating unit and
assessing this against the value of assets relating to that specific cash generating unit to consider recoverable amounts.
Following this review, an impairment charge of £333,000 has been recognised during this financial year see note 3.
Principal risks and uncertainties
The Board has identified the main categories of business risk in relation to the Group’s strategic aims and objectives,
and has considered reasonable steps to prevent, mitigate and manage these risks. The principal risks identified are as
follows:
Funding risk
The Group has a combination of short-term borrowing facilities and longer-term loan agreements secured on Group
assets. The Group remains dependent upon the support of these funders and there is a risk that failure in a company
to meet banking covenants could have implications for the Group. Borrowing facilities are monitored regularly and
the facilities agreed are more than needed for the Group’s requirements. The Group has close working relationships
with their current funders but believe alternative banking funders could be secured if required.
Hemmers has a maximum working capital facility of €11m, restricted to the borrowing base which is calculated as
70% of eligible inventory and 80% of eligible debtors. In the financial year 2021, this resulted in average availability
of €7.7m (2020: €8.8m) with a range of €6.9m to €8.3m (2020: €8.0m to €9.0m) and minimum headroom of €4.5m
(2020: €4.7m) in the year. In the forecast period to 31 May 2023, the estimated availability range is €6.9m to €8.8m
and the minimum headroom €3.4m. The only covenant on this facility is an equity ratio which must exceed 30% of
gross assets at the financial year end. At 31 May 2021, the ratio was higher than 60% (2020: 61%). The facility is
uncommitted, but the bank is obliged to give reasonable notice of any change.
KMR has a fixed working capital loan facility of €1m which was fully drawn at the year end and a €0.5m bank
overdraft facility secured on working capital, of which €0.2m was utilised as at 31 May 2021. The covenants on these
facilities are (i) an equity ratio which must exceed 35% of gross assets at the financial year end and (ii) the ratio of
working capital/bank facility should be a minimum 1.5x. At 31 May 2021, these ratios were 55.5% (2020: 39.5%)
and 1.54 (2020: 1.58). The facilities are uncommitted, but the bank is obliged to give reasonable notice of any change.
Considering the trading results in the first quarter of the current financial year, the likely ongoing impact of the Covid-
19 pandemic and the headroom available on the Hemmers working capital facility, the Directors are of the opinion
that it is appropriate to apply the going concern basis of preparation to the financial statements.
Market risk
There is always the ongoing threat of reduced market demand. This has been seen this year and the Group continues
to strive to combat the reduced demand by looking at other markets both domestically and internationally and looking
at expanding its product ranges. The commercial risks of operating in the highly competitive European fabric market
are limited by the fact that Hemmers has a wide range of suppliers, and no customer accounts for more than 5% of
revenues.
Foreign exchange risk
Most fabric purchased by Hemmers is paid for in US dollars, while the Euro is the principal currency in which
Hemmers sells its product. The Euro/dollar rate is of greater significance to Leeds Group than the strength of Sterling.
The Hemmers management continue to manage this transactional currency risk by a combination of forward exchange
contracts with reputable banks and sales price increases where necessary.
5
Finance and Operating Review (continued)
Covid-19
During the year, the global Covid-19 pandemic which resulted in lockdowns across the world, has affected both
businesses. This affected the last six weeks of the last financial year, late March 2020 to early May 2020 and twelve
weeks of this financial year from mid December 2020 to early March 2021. KMR, whose main business is retail
shops, was required to close all its shops during the two government-imposed lockdowns and, then some of its shops
were required to close due to further local lockdowns. The financial impact on all businesses was partly mitigated by
financial support from the German government. Financial support was provided to cover the wages of staff unable to
work due to the country wide lockdown. Additional support was provided based on reduced turnover of the combined
Hemmers and KMR group and additional compensation for certain seasonal goods sold at a loss. There is a risk that
if infections of Covid-19 are not controlled that a further country wide or local lockdown will be required. It is
expected that in this event, Government support would again be provided, and management have looked at further
measures to mitigate the risk having experienced this in the first and second waves of the pandemic.
The ongoing effects of the Covid-19 pandemic are still being experienced globally with markets not fully recovered
and supply chain issues. Although the Group is affected by these issues, we are currently managing delays in deliveries
effectively through good stock management and any increased costs associated with container shipments from the Far
East are being recovered through an increase in sales prices.
Brexit
Following the UK’s departure from the European Union (“EU”) on 31 December 2020, the Group has seen little
impact of this departure and the Directors do not expect this impact to change. The business of Leeds Group is
conducted entirely by subsidiaries incorporated in Germany, and their exports to the UK account for approximately
4% only of Group revenue.
Section 172 Report
Leeds Group is committed to acting ethically and with integrity throughout all its business dealings and relationships.
It is important to the company and its subsidiaries that trusted business relationships are established and maintained
with key stakeholders, customers and suppliers and that it invests in and supports all its employees equally.
The Directors have always acted in accordance with their lawful duties, which includes their duty to act in good faith
to promote the success of the Group for the benefits of its shareholders, having regard to its stakeholders and matters
set out in Section 172 (1) of the Companies Act 2006. Section 172 considerations are embedded throughout the
decision making of the Board. Issues, factors and risks which the Directors have considered when discharging their
duty under section 172 (1) are further detailed in the Chairman’s Statement, Directors’ Report and Corporate
Governance Report contained within these report and accounts.
As detailed in the Chairman’s Statement, the Directors are focused on developing the Hemmers and KMR businesses
in Germany. The year has been challenging with the Covid-19 pandemic, but the focus remains the same.
The two major shareholders are represented as non-executive members on the Board. The Board recognises the
importance of effective and transparent dialogue with shareholders and ensuring that non-management shareholders
understand and support the Group’s strategy and objectives. The Board meet quarterly on as formal basis, and ad hoc,
as necessary, throughout the year. The Board is more than happy to engage with shareholders at any time and answer
questions they may have. The AGM is a formal meeting at which to have this dialogue.
The Board looks to ensure the systems, processes and controls established to manage its businesses to the highest
standards. The supply chain is an integral part of trading business, and it is of paramount importance that best practice
in terms of anti-bribery and modern slavery are adhered to. All employees have therefore completed training to ensure
this is in place. The Board receives updates from the management team at Hemmers as to the relationships with key
customers and suppliers. Hemmers management regularly engage in dialogue with key suppliers and customers. All
operational staff are based in Germany, based either at Nordhorn or work within one of the KMR retail shops. Regular
dialogue is maintained with all staff and meetings are held regularly to ensure staff understand the strategy and
positions of the businesses. Staff are encouraged to discuss any concerns or issues they may have with their line
manager or Hemmers management are always available to meet staff if necessary.
Jan G Holmstrom
Non-Executive Chairman
15 October 2021
6
Board of Directors
Jan G Holmstrom (Non-Executive Chairman) (Age 68)
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, Dravo Limited and a Non-Executive Director of International Fibres
Group (Holdings) Limited, UIM Property Limited and Browallia Holdings Limited. Jan joined the Board of Leeds
Group in November 2011 and was appointed Chairman in October 2014.
Jörg Hemmers (Executive Director) (Age 54)
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. Jörg joined the Board
of Leeds Group in March 2015.
Johan Claesson (Non-Executive Director) (Age 70)
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 the Chairman of Catella AB, a public listed company and Chairman of Claesson &
Anderzén, a private property company. Johan joined the Board of Leeds Group in September 2004.
David Cooper (Independent Non-Executive Director) (Age 63)
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 is now Finance Manager and Company Secretary of Xelect Limited
which supplies genetic consultancy services to the aquaculture sector. David joined the Board of Leeds Group in
October 2014. David remains an independent director as he has no business relationship with any other directors or
shareholders in Leeds Group.
7
Chairman’s Corporate Governance Statement
As Chairman of the Board my role is to develop the strategy for the Company together with the Board of Directors,
monitor the ongoing performance of the companies within the Group to ensure that they are meeting our requirements
and identify potential acquisitions targets. In addition, my role also encompasses overseeing the functioning of the
Board and its effectiveness, also to ensure sound corporate governance practices are followed.
All the Directors believe strongly in the importance of good corporate governance for the creation of shareholder
value over the medium to long term and to engender trust and support amongst the Group’s wider stakeholders.
In accordance with the changes to AIM Rule 26 the Company is now applying the revised Quoted Companies Alliance
(‘QCA’) Corporate Governance Code (‘QCA Code’) published in April 2019.
I work with key executives throughout the organisation to instil good corporate governance practices in accordance
with the QCA Code.
The Board monitors our corporate governance practices and will always implement improvements which further
enhance performance and/or benefit stakeholders.
Jan G Holmstrom
Non-Executive Chairman
15 October 2021
8
Corporate Governance Report
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.
The Board considers it appropriate to adopt the principles of the Corporate Governance Code for Small and Medium
Sized Companies issued by the Quoted Companies Alliance (“the QCA Code”) published in April 2019. Below we set
out the extent of compliance with the ten principles of the QCA Code. Where there are any areas of non-compliance, the
steps taken or intended to take to move to full compliance are explained:
Extent of
compliance
Fully
compliant
1
Principle
Establish a
strategy and
business
model which
promotes
long-term
value for
shareholders
Fully
compliant
2
Seek to
understand
and meet
shareholder
needs and
expectations
Application
The Company’s strategy is shaped by the executive Board and is set out in the
Annual Report and on the ‘About Leeds Group PLC’ website page. The
company’s shares are traded on the AIM market of the London Stock
Exchange.
The Group is a textiles business which designs, sources, and sells fabric. It
sources mainly from the Far East and sells mainly to the European market into
three channels: Retail, Wholesale and Garment Manufacturing. To service these
markets, the Group has invested significantly in recent years in warehousing
and distribution facilities and into double folding plant and machinery to
provide a complete, rapid response, in-house service.
The Board believes that these investments promote long term value for
shareholders.
The strategic reports as presented by the Directors in the Annual Report, further
explains the Company’s business model and strategy. The reports also include
the key performance indicators used by the Board to monitor business
performance and the risks and uncertainties facing the business and how these
are addressed.
The Board is committed to communicating openly with shareholders to ensure
that its strategy and performance are clearly understood. The Board
communicates with shareholders through the Annual Report and the Interim
Statement, trading and other announcement made on RNS and at the Annual
General Meeting (‘AGM’) where the Board encourages investors to participate.
The Company also maintains a website https://www.leedsgroup.plc.uk which
contains information on the Group’s business, corporate information and
specific disclosures required under AIM Rules and the QCA Code.
In this way the Directors have developed a good understanding of the needs and
expectations of all elements of the Company’s shareholder base.
There have been no significant votes against resolutions at previous AGMs.
As the companies within the Group expand, we continually review the risks
and uncertainties facing the Group to ensure we identify any new key risks and
how we implement appropriate action to manage these risks.
9
Corporate Governance Report (continued)
3
4
Take into
account wider
stakeholder
and social
responsibilities
and their
implications
for long-term
success
Embed
effective risk
management,
considering
both
opportunities
and threats,
throughout the
organisation
Fully
compliant
The Board recognises its responsibility under UK law to promote the success of
the Group for the benefit of its stakeholders and understands that the business
has a responsibility towards its stakeholders including shareholders, employees,
customers, suppliers, regulators and to the local community.
The Board sets standards across the Group and monitors these at regular Board
meetings. The Board is very conscious that the tone and culture it sets impacts
all aspects of the Group and the way employees behave and operate.
The Board encourages open dialogue and commitment to providing the best
service possible to the Group’s customers and considerate interactions with
suppliers.
The Company monitors feedback from all its stakeholders as reported by the
Group companies and the Board uses this to develop future policy. Being a
participant in the textile industry, the Board is keenly aware of environmental
and labour considerations and is actively working to ensure that it is at the
forefront of meeting the standard expected over the coming years.
Fully
compliant
The Board has an active program of working with all the Group companies to
assist with achieving goals and to discuss and resolve any issues that arise.
The Board is responsible for the Group’s system of internal controls and for
reviewing its effectiveness. The system is designed to manage, rather than
eliminate, the risk of failure to achieve the Group’s strategic objectives and can
only provide reasonable but not absolute assurance against material
misstatement or loss.
The Board monitors financial controls through the setting and approval of
annual budgets throughout the Group and the regular review of monthly
management accounts which are produced within three weeks of the month
end.
Each Group company has defined authorisation levels for expenditure, the
placing of orders and signing authorities. The daily cash movements of the
Group companies are reconciled and monitored by their finance departments.
The Group’s cash flow is monitored by the Board.
Each year on behalf of the Board, the Company Secretary attends audit review
meetings at which the auditors present their findings including a comprehensive
review of risks/potential risks which cover both financial and non-financial
issues potentially affecting a Group company.
Group Board meetings are usually held in Germany at least twice a year which
include the Hemmers senior management team. However, due to the Covid-19
pandemic and the resulting travel restrictions, meetings have been held via the
internet this year.
10
Corporate Governance Report (continued)
5 Maintain the
Board as a
well-
functioning,
balanced team
led by the
chair
Fully
compliant
The purpose of the Board is to ensure that the business is managed for the long-
term benefit of all shareholders, whilst at the same time having regard for all
stakeholders.
The Board has a formal schedule of matters reserved for its decisions as set out
in Principle 10 below. There are at least four full Board meetings spread across
each year which tie in as far as possible with the Group’s financial reporting
calendar. At least two meetings will be based at Hemmers. Additional meetings
are held as required.
The full Board is responsible and accountable to the shareholders for the
management and success of the Group and to provide effective controls to
assess and manage risks in the Company.
The Board currently comprises the Non-Executive Chairman, two other Non-
Executive Directors, one of whom is an independent non-executive director and
one executive director who is managing director of the main operating
business, Hemmers.
The Non-Executive Directors are considered to be independent of the
management. However, the Non-Executive Chairman and one other Non-
Executive Director are representatives of significant shareholders and so do not
meet the definition of Independent Non-Executive Director.
Each is aware of his statutory responsibilities to act in the interests of all
shareholders, and they consider their interests to be aligned to promote the
long-term success of the company.
Thus, the Board only has one Independent Non-Executive Director rather than
two as recommended by the QCA code. The Directors believe that the current
Board structure has the necessary range of skills, objectivity and diversity to
manage what is a simple structure business and that to increase the number of
Independent Non-Executive Directors would add cost rather than benefit. The
Board continually keeps this position under review and has identified triggers
that it believes would lead to additional appointments. These include proposed
diversification into new business areas; a significant acquisition; significant
organic growth into new territories.
The Board has established procedures to identify and monitor potential or
actual conflicts of interest.
The Board is supported by the Audit, Remuneration and Nominations
Committees, each of which has access to information, resources and advice that
it deems necessary, at the Company’s cost, to enable the committee to
discharge its duties.
The Committees’ Terms on Reference are posted on the AIM rule 26 page of
Company’s website.
11
Corporate Governance Report (continued)
5 Maintain the
Board as a
well-
functioning,
balanced team
led by the
chair
(continued)
The Remuneration Committee comprises the Non-Executive Directors and is
chaired by the Chairman. The Remuneration Committee reviews and if
appropriate sanctions remuneration proposals made by the executive Directors.
No director is permitted to participate in discussions or decisions concerning
his own remuneration. The Remuneration Committee meets as and when
necessary.
The Nominations Committee comprises all members of the Board and is
chaired by the Chairman. The Nomination Committee reviews and, if
appropriate, approves recommendations for the appointment of additional
Directors or replacement of current Directors and for succession planning for
the Company.
The Board and its Committees receive appropriate and timely information and
minutes are kept of all relevant committee meeting matters.
Any director can challenge proposals with decisions being taken after
discussion. Any director can ask for a concern to be formally noted. Specific
actions arising from meetings are agreed by the Board or relevant committee
and then followed up by management.
Directors have access to advice or services needed to enable them to carry out
their roles and duties.
In 2020/21 all Directors attended the six internet Board meetings.
In 2020/21 all non-executive Directors attended the two audit committee
meetings and the one remuneration committee meeting.
All Directors are subject to reappointment by shareholders at the first Annual
General Meeting following their appointment and thereafter by rotation.
The Directors spend such time as is necessary to ensure that their roles and
duties are carried out effectively.
12
Corporate Governance Report (continued)
6
Ensure that
between them
the Directors
have the
necessary up-
to-date
experience,
skills and
capabilities
Fully
compliant
The skills and experience of the Board are set out in their biographical details
included within the Directors’ Report of the Company’s Annual Report. The
experience and knowledge of each of the Directors gives them the ability to
constructively challenge strategy and to scrutinise performance.
The Board comprises Directors with a range of different skills including
business and financial experience, IT experience and corporate finance
experience. All the Directors have considerable experience within the textile
and leather industry and therefore are well placed to offer challenge to the
Executive Director and Senior management of the textile trading companies.
In addition, the Company’s Non-Executive Directors have held senior
executive positions for a number of years in UK plc companies and therefore
are fully aware of their corporate responsibilities and the need to ensure
compliance with the AIM regulatory requirements.
The Directors of the Company and their responsibilities on the Board are:
Role of the Non-Executive Chairman – Jan Holmstrom:
The Non-Executive Chairman has overall responsibility for corporate
governance and in promoting high standards throughout the Company. As well
as leading and chairing the Board, the Non-Executive Chairman’s
responsibilities are:
• Committees are properly structured and operate with appropriate terms
of reference;
• The Company has a coherent strategy and sets objectives against this;
and
• There is effective communication between the Company and its
shareholders.
Jan Holmstrom has held a number of positions as Chairman of private and plc
companies and has considerable textile and corporate finance experience.
Role of the Group Finance Manager and Company Secretary – Dawn
Henderson:
The roles of Group Finance Manager and Company Secretary are combined.
The Board acknowledges the QCA guidelines on this matter and consider the
joint roles appropriate for the Company’s size.
The Group Finance Manager is responsible for providing financial oversight of
the Group, preparing the accounts, monitoring the performance of the Group
companies and reporting on financial matters to the Board. Providing financial
input on acquisitions.
The Company Secretary is responsible for providing clear and timely
information flow to the Board and its Committees and supports the Board on
matters of corporate governance and risk. The Company Secretary has direct
access to the Chairman on matters of Corporate Governance.
Dawn Henderson is a qualified Chartered Accountant who qualified with
KPMG in 1988. She has held various Finance Director and Company
Secretary roles both within the private and plc environment.
13
Corporate Governance Report (continued)
6
Ensure that
between them
the Directors
have the
necessary up-
to-date
experience,
skills and
capabilities
(continued)
Fully
compliant
Role of the Independent Non-Executive Director – David Cooper:
The role of the Independent Non-Executive Director is to contribute
independent thinking and judgement through the application of their external
experience and knowledge, scrutinise the performance of the Executive
Director, provide constructive challenge and ensure that the Company is
operating within the governance and risk framework approved by the Board.
David Cooper is a qualified Chartered Accountant with considerable corporate
and accounting experience and has also worked in the textile industry for many
years.
Role of the Non-Executive Director – Johan Claesson:
The role of the Non-Executive Director is to scrutinise the performance of the
Executive Director, provide constructive challenge and ensure that the
Company is operating within the governance and risk framework approved by
the Board.
Johan Claesson has held a number of positions as Non-Executive Director of
private and plc companies and has also worked in the textile industry for many
years. He also has considerable experience in the IT and property.
Each director is responsible for maintaining the level of skill set required by the
role and this is achieved by continuing professional education, technical
updates from professional bodies and advisors and an active role assisting the
existing Group companies.
Whenever required the Directors seek legal, regulatory and audit advice from
external advisors.
The Board is well placed to implement the Company’s strategy.
7
8
Evaluate
Board
performance
based on clear
and relevant
objectives,
seeking
continuous
improvement
Promote a
corporate
culture that is
based on
ethical values
and
behaviours.
Partially
compliant
There is no formal performance evaluation process in place currently. The
Directors will consider what performance evaluation framework is required for
the Group.
Responsibility for succession planning lies with the Nomination Committee.
The Committee is satisfied that the Board has the skills it presently requires.
The Board has considered the critical functions within each of the businesses to
ensure adequate cover exists for each position which would enable contingency
and succession to be managed in an appropriate timescale.
Fully
compliant
The Board recognises that its decisions will impact the corporate culture of the
Group as a whole and that this will affect the performance of the business. The
Board is also very conscious that the tone and culture that it sets will greatly
impact all aspects of the Group and the way employees behave and operate.
The importance of sound ethical values and behaviors is crucial to the ability of
the Group to successfully achieve its corporate objectives. Senior management
regularly visit group companies and employees are invited to other group
company offices.
The Board has regular interaction with Group company employees and
monitors corporate culture in this way. Additionally, it ensures its sound
ethical practices and behaviors are deployed at Group company meetings.
14
Corporate Governance Report (continued)
9 Maintain
Governance
structures and
processes that
are fit for
purpose and
support good
decision
making by the
Board
10 Communicate
how the
company is
governed and
is performing
by maintaining
a dialogue
with
shareholders
and other
relevant
stakeholders
Fully
compliant
The roles and responsibilities of each Director are set out in the response to
Principle 6.
The terms of reference of the Board committees are set out in response to
Principle 5.
There are a wide range of matters reserved for the Board. These include
strategy, finance, corporate governance, approval of significant capital
expenditure, appointment of key personnel and compliance with legal and
regulatory requirements.
The Company’s governance framework is reviewed to maintain the highest
levels of business performance.
Fully
compliant
The Board recognises that meaningful engagement with its shareholders is
integral to the continued success of the Group. The Board are kept informed of
the views of the shareholders through reports from the Independent Non-
Executive Director and Company Secretary.
The Board believes that the Annual Report, and the Interim Report published at
the half-year, play an important part in presenting all shareholders with an
assessment of the Group’s position and prospects. All reports and press releases
are published on the Group’s website.
The Annual General Meeting is the principal opportunity for private
shareholders to meet and discuss the Group’s business with the Directors.
There is an open question and answer session during which shareholders may
ask questions both about the resolutions being proposed and the business in
general. The Directors are also available after the meeting for an informal
discussion with shareholders.
The Committees of the Board have not published committee reports. They will
consider whether to do so in the future.
The Board is supported by the Audit and Remuneration Committees, each of
which has access to information, resources and advice that it deems necessary,
at the company’s cost, to enable the Committee to discharge its duties. These
duties are set out in the Terms of Reference which are available on the website.
The Audit Committee
The Audit Committee has met with the external auditors during the year to
monitor progress and discuss any issues arising.
The Remuneration Committee
The Remuneration Committee reviews and determines on behalf of the Board
and shareholders of the Company the pay, benefits and other terms of service of
the executive Directors of the Company and the broad pay strategy with respect
to senior Company employees.
Remuneration Policy
The objective of the Company’s remuneration policy is to develop
remuneration packages which motivate Directors and support the business
objectives in the short, medium and long term; to align the interests of
executive Directors with the interests of long-term shareholders; encourage
executives to operate within the risk parameters set by the Board and ensure
that the company can recruit and retain high quality executives through
packages which are fair and attractive but not excessive.
15
Corporate Governance Report (continued)
10 Communicate
how the
company is
governed and
is performing
by maintaining
a dialogue
with
shareholders
and other
relevant
stakeholders
(continued)
Matters reserved for the Board
1. Management structure and appointments
• Senior management responsibilities
• Board and other senior management appointments or removals
• Board and senior management succession, training, development and
appraisal
• Appointment or removal of Company Secretary
• Appointment or removal of internal auditor
• Remuneration, contracts, grants of options and
incentive
arrangements for senior management
• Delegation of the board’s powers
• Agreeing membership and terms of reference of board committees and
task forces
• Establishment of managerial authority limits for smaller transactions
• Matters referred to the board by the board committees
2. Strategic/Policy considerations
Business strategy
•
• Diversification/retrenchment policy
•
Specific risk management policies including insurance, hedging,
borrowing limits and corporate security
• Agreement of codes of ethics and business practices
•
• Annual assessment of significant risks and effectiveness of internal
Receipt and review of regular reports on internal controls
controls
Calling of shareholders’ meetings
•
• Avoidance of wrongful or fraudulent trading
3. Transactions
• Acquisitions and disposals of subsidiaries or other assets over, say
•
•
5% of net assets/profits
Investment and other capital projects over a similar level
Substantial commitments including:
i. Pension funding
ii. Contracts in excess of one year’s duration
iii. Giving securities over significant Company assets (including
mortgages and charges over the Company’s property)
Contracts not in the ordinary course of business
•
• Actions or transactions where there may be doubt over property
• Approval of certain announcements, prospectuses, circulars and
similar documents
• Disclosure of Directors’ interests
•
Transactions with Directors or other related parties
16
Corporate Governance Report (continued)
Matters reserved for the Board (continued)
4. Finance
•
•
Raising new capital and confirmation of major financing facilities
Treasury policies including foreign currency and interest rate
exposure
• Discussion of any proposed qualification to the accounts
•
Final approval of annual and interim reports and accounts and
accounting policies
• Appointment/proposal of auditors
•
Charitable and political donations
• Approval and recommendation of dividends
• Approval before each year starts of operating budgets for the year
and periodic review during the year
5. General
• Governance of company pension schemes and appointment of
company nominees as trustee
• Allotment, calls or forfeiture of shares
Notices of all general meetings are contained within the Annual Accounts.
These are included on the Company’s website in the Documents and
Notifications section.
There have been no significant votes against any resolution proposed at a
general meeting in the past 5 years. Significant means more than 20% of those
who voted, voting against a resolution.
10 Communicate
how the
company is
governed and
is performing
by maintaining
a dialogue
with
shareholders
and other
relevant
stakeholders
(continued)
Jan G Holmstrom
Non-Executive Chairman
15 October 2021
17
Directors’ Report
The Directors present their annual report and the audited financial statements for the year ended 31 May 2021.
Principal activities
Leeds Group plc has been established for more than a century and is incorporated in England and Wales under
Company Number 0067863. Its principal country of operation is Germany.
For most of its history, the Group has been mainly engaged in textile processing, specialising in fabric printing and
yarn dyeing, and by 1996 had manufacturing operations in UK, Holland and Italy. In recent years, the European textile
manufacturing industry has contracted, with an ever-increasing proportion of European textile consumption being
sourced from the low wage economies of the Far East. In response, Leeds Group has ceased all manufacturing
activities and is today totally focused on the import and sale throughout the world of fabric imported chiefly from the
Far East.
Leeds Group’s trading operations are conducted by Hemmers. Hemmers is based in Nordhorn, Germany and has a
German subsidiary, KMR based in Nordhorn.
Results and dividend
The Consolidated statement of comprehensive income for the year is set out on page 29.
Given the results of the financial year, the Directors do not recommend the payment of a dividend in 2021 (2020:
£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 6 to the financial statements.
The Directors retiring by rotation are Jörg Hemmers and David Cooper 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 share capital 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 15 October
2021.
Substantial shareholdings
The following shareholders held interests of 3% or more of the issued share capital of the Company as at 15 October
2021:
% of issued share capital
Mr Johan Claesson and associates
Mr Peter Gyllenhammar and associates
Sunningdale Investments Ltd
29.20
24.64
10.31
18
Directors’ Report (continued)
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.
Political and charitable contributions
The Group made no political contributions, nor any donations to UK charities in the years ended 31 May 2021 and 31
May 2020.
Leeds Group plc Ordinary shares of 12 pence each
The market value of Leeds Group shares between 1 June 2020 and 31 May 2021 ranged between 10p and 30p. The
average market value for the year was 18.5p, and as at 31 May 2021 the market value was 28p (31 May 2020: 10p).
Employees
The Directors acknowledge that the employees of the Group are key to the success of the business. Employment
policies are in place to ensure there is adequate training and development plans in place for all employees aligned to
personal appraisal schemes. The Directors encourage management feedback at all levels and seek to ensure employees
are informed on all matters affecting them through regular management and departmental meetings. It is the Group’s
policy to give fair and full consideration to all applications for employment having regard to their aptitudes and
abilities including disabled employees. Should an employee become disabled, the Group would, where practicable,
seek to continue and arrange appropriate training.
Emissions
Quoted companies of any size and large unquoted companies are required to report under the Streamlined Energy and
Carbon reporting unless exemptions apply. The UK operations do not consume more than 40,000kWh of energy in a
reporting period granting them low energy status, and the overseas subsidiaries are incorporated in Germany and
therefore are exempt from disclosure. Furthermore, as an unquoted group, the group and company does not meet the
definition of large in current and prior periods and therefore is exempt from Streamlined Energy and Carbon reporting.
Financial risk management policies
The Group’s activities are exposed to a variety of financial risks which are set out in note 4 to the consolidated financial
statements.
Future developments
The Group is focused on developing and improving the Hemmers and KMR businesses, bringing economies of scale
within the two companies.
Going Concern
When considering its opinion about the application of the going concern basis of preparation of the financial
statements the Directors have given due consideration to:
• The performance of the Group in the last financial year and the robustness of forecasts for the next 24 months,
which return the Group to profit.
• The impact of the Covid-19 pandemic on the business, its suppliers and its customers.
• The financing facilities available to the Group and the circumstances in which these could be limited or
withdrawn.
Financial performance and forecasts
Having been consistently profitable in the past, the Group has been loss making in each of the last three years.
•
•
•
In the year to 31 May 2019, the Group reported a pre-tax loss from continuing operations of £1.3m after
writing off goodwill of £1.0m.
In the year to 31 May 2020, the Group reported a pre-tax loss from continuing operations of £2.0m.
Approximately £1.0m of this loss arose in the final quarter which was significantly impacted by the Covid-
19 restrictions discussed below. To address the poor underlying performance the Directors and management
restructured the business in the first half of the year to focus on profitable business streams and reduce its
operating costs. Restructuring costs of £0.4m were incurred in the financial year which will benefit results
going forward. Although loss making, the business was cash generative in the year with net debt reducing
by £2.4m, of which £1.3m resulted from the sale of investment properties.
In the year to 31 May 2021, the Group reported a pre-tax loss from continuing operations of £0.5m primarily
due to the ongoing impact of the Covid-19 pandemic.
19
Directors’ Report (continued)
Going Concern (continued)
Forecasts have been prepared for the 24-month period to May 2023 which indicate a return to modest profit over that
period. These forecasts have been prepared in the knowledge of current Covid-19 conditions and assume that there is
no further period of total country-wide lockdown. At the end of the first quarter of the current financial year sales and
profit were in line with forecast. The company has sensitised these forecasts for a reduction in revenues of 10% at
both Hemmers and KMR in the forecast period and an additional net €1 million profit reduction from a second period
of lockdown. The Directors are of the opinion that this is a reasonable worst case, and the currently available facilities
would be sufficient in this scenario.
Covid-19 Impact
Both Hemmers and KMR are located in Germany which has responded well to the outbreak. KMR was most directly
impacted by the measures put in place with all shops closed from late March 2020 to early May 2020 and again from
mid December 2020 to early March 2021 with further local restrictions from early March 2021 to late May 2021.
Since the start of the financial year, the shops have performed in line with forecast with all restrictions lifted. Hemmers
has traded in line with forecast in the first quarter of the current year
Both businesses have been supported by the government employment scheme which reimburses the company for
payments to employees for any short time working. The German government also provides a scheme whereby
companies can be compensated for a reduction in trading with reference to reduced turnover and goods sold at reduced
margins as a result of the pandemic. This scheme will remain available through any further affected periods. In
addition, KMR has negotiated rent reductions for its shops in the current financial year which are reflected in the
forecasts.
The ongoing effects of the Covid-19 pandemic are still being experienced globally with markets not fully recovered
and supply chain issues. Although the Group is affected by these issues, we are currently managing delays in
deliveries effectively through good stock management and any increased costs associated with container shipments
from the Far East are being recovered through an increase in sales prices. While there is clearly uncertainty about the
future course of the pandemic, the Directors consider that with ongoing government support it is well placed to trade
through reasonably foreseeable scenarios.
Financing facilities
The operating businesses of the group are Hemmers and KMR, both located in Germany. The Parent Company, which
has no borrowing facilities, is located in the UK.
Hemmers has four sources of funding:
• Term loans which have funded property purchases. These are repayable in instalments over the term as
detailed in note 22. They are secured over the associated properties and that security could be called in the
event that the business defaulted on repayment.
• A maximum working capital facility of €11m, restricted to the borrowing base which is calculated as 70% of
eligible inventory and 80% of eligible debtors. In the financial year 2021, this resulted in average availability
of €7.7m (2020: €8.8m) with a range of €6.9m to €8.3m (2020: €8.0m to €9.0m) and minimum headroom of
€4.5m (2020: €4.7m) in the year. In the forecast period to 31 May 2023, the estimated availability range is
€6.9m to €8.8m and the minimum headroom €3.4m. The only covenant on this facility is an equity ratio
which must exceed 30% of gross assets at the financial year end. At 31 May 2021, the ratio was higher than
60% (2020: 61%). The facility is uncommitted, but the bank is obliged to give reasonable notice of any
change.
• A further working capital facility of €0.5m.
• A €3m Parent Company loan which is currently subordinated to the working capital facility.
KMR has a fixed working capital facility of €1m which was fully drawn at the year end and has a €0.5m bank overdraft
facility secured on working capital, of which €0.2m was utilised as at 31 May 2021. The covenants on these facilities
are (i) an equity ratio which must exceed 35% of gross assets at the financial year end and (ii) the ratio of working
capital/bank facility should be a minimum 1.5x. At 31 May 2021, these ratios were 55.5% (2020: 39.5%) and 1.54
(2020: 1.58). These facilities are uncommitted, but the bank is obliged to give reasonable notice of any change.
Considering the trading results in the first quarter of the current financial year, the likely ongoing impact of the Covid-
19 pandemic and the headroom available on the Hemmers working capital facility, the Directors are of the opinion
that it is appropriate to apply the going concern basis of preparation to the financial statements.
20
Directors’ Report (continued)
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the Group and Parent Company 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) in conformity with the requirements of the Companies Act 2006.
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 Parent 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 in conformity with the requirements of the
Companies Act 2006, 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.
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
15 October 2021
Craven House
14 – 18 York Road
Wetherby
Leeds,
LS22 6SL
21
Independent Auditor’s Report to the Shareholders of Leeds Group plc
Opinion on the financial statements
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 2021 and of the Group’s loss for the period then ended;
the Group financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006;
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.
We have audited the financial statements of Leeds Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 May 2021 which comprise the Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity,
Company Statement of Financial Position, 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 accounting standards in conformity with the requirements of the Companies Act
2006. 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).
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 believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Given the fundamental nature of the going concern assumption to the financial statements, and the level of judgement
required on the part of the directors, we considered this to be a significant audit risk and a key audit matter.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
• Review of the management’s going concern assessment supporting the Group and the Parent Company
assessment of going concern, ensuring this is consistent with underlying supporting documentation and that
liquidity, headroom and covenant analysis is accurate;
• Consideration of the forecast income statement and cash flows of the Group for the next two financial years,
to evaluate whether the forecasts are calculated on a reasonable basis with reference to historical performance
and forecast accuracy, business performance post year end and current market environments;
• Confirmation of the available cash and financing facilities within the Group, and evaluation of management’s
downside sensitivities on cash flow headroom, incorporating a review of financial covenants and headroom
analysis throughout the forecast period;
22
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Conclusions relating to going concern (continued)
• Review of correspondence between component auditor and the Group’s primary banking provider regarding
the borrowing facilities, borrowing base certification throughout the period and post year end, and
confirmations of anticipated maturity dates of which extend beyond managements forecast period, and of the
wider lender relationship; and
• Review of the disclosures made both in the Directors’ Report and in note 2 to the financial statements. We
assessed whether these adequately and completely disclose the basis of the judgements taken and the view
formed by management with respect to the going concern basis of preparation.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are authorised
for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview
Key audit matters
Carrying value of inventory
Going Concern
2021
2020
☒
☒
☒
☒
Materiality
Group financial statements as a whole
£165,000 (2020: £180,000) based on 0.5% (2020: 0.5%) of revenue
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. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
Our involvement with component auditors
There are four components within the Group, including the Parent Company. The Parent Company was subject to a
full scope audit by the Group audit team. The two significant components, based in Germany, were subject to full
scope audits by a local BDO member firm acting as component auditor. This work was subject to a high level of
involvement from the Group engagement team, including most notably risk identification, setting of materiality and
audit response. The Group audit team was involved in these audits from planning through to completion through
engagement with both component management and auditors at various stages. Consistent with the previous year, travel
restrictions imposed as a result of the Covid-19 outbreak prohibited travel for the purposes of reviewing component
audit files and meeting with management in person. Instead, the Group audit team obtained the necessary assurance
through remote mechanisms, including most notably conference/video calls with all BDO component audit teams and
the local management teams. Remote file reviews were performed alongside the component audit teams, with
subsequent exchange and resolution of findings prior to reporting.
For the remaining non-significant component, the Group engagement team performed analytical review procedures,
in tandem with limited audit procedures on any significant transactions.
23
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 judgement, 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) that 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. In addition to the matter described in the Conclusion relating
to going concern section of our report we have determined the matters described below to be the key audit matters.
Key audit matter
Carrying
value of
inventories
Note 18 and
the summary
of accounting
policies.
As detailed in note 18 of the
consolidated financial
statements, the Group has
£10.3m (2020: £10.2m) of
inventories at the year end.
Given the nature of the
business, these inventories
include items which may be
held in stock for a significant
period before being sold. This
creates a risk that certain items
of inventory may not sell at
prices above cost. As detailed
in note 3 of the Group
financial statements,
management therefore make
an assessment of the estimated
provision required to write
down inventory to net
realisable value.
For both trading subsidiaries,
management calculates an
inventory provision in respect
of slow moving items. They
identify these items based on
stock turnover seen in the
current year, and apply
provisioning rates, based on
turnover rates.
Given the significant value of
inventories on the Group
statement of financial
position, and the estimation in
valuation, we identified this as
a significant audit risk and a
key audit matter.
How the scope of our audit addressed the key audit matter
We reviewed the mechanics of management’s provisioning
calculation and confirmed that the calculation remained in
accordance with the requirements of the applicable accounting
standards. Based on our knowledge of the business and
discussions with management we considered whether there
were any changes to the nature of the business or potential
impacts of Covid-19 that would render the provisioning
policies no longer appropriate.
We tested the integrity of management’s provision
calculations by agreeing the stock turnover categorisation for
each item on a sample basis to sales data in the year, and
reperforming the provisioning calculation by turnover band of
this sample to ensure this was accurate.
To gain assurance over the reasonableness of provisioning
rates used by management, we performed a retrospective
review of prior year inventory items sold at below cost to
confirm that the methodology adopted yielded an adequate
provision.
To consider completeness of management’s assessment, we
reviewed negative margin sales during the year and after the
balance sheet date to consider if any residual stock balances
held at year end may require write down to net realisable
values, outside of the mechanical turnover provision.
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 provisions estimated by
management.
We also challenged management on the existence of a new
provision intrinsically linked to government assistance claims
in relation to seasonal fabrics. Those fabrics that are deemed
seasonal, and therefore could not be sold during periods of
government lockdowns, anticipated losses can be part
recovered in government assistance claims. Our challenge of
management override included review of calculations of the
extra provision, consideration of in year losses made on these
seasonal products due to forced government lockdowns and
review and challenge of management’s forecasted assessment
of which seasonal fabrics required write down. We considered
the recoverability of these stock losses post year-end to
consider management bias in application, and therefore the
recoverability, reasonableness and accuracy of the wider
government assistance claim.
24
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Key audit matters (continued)
Key audit matter
How the scope of our audit addressed the key audit
matter
We also challenged management on the existence of a new
provision intrinsically linked to government assistance claims
in relation to seasonal fabrics. Those fabrics that are deemed
seasonal, and therefore could not be sold during periods of
government lockdowns, anticipated losses can be part
recovered in government assistance claims. Our challenge of
management override included review of calculations of the
extra provision, consideration of in year losses made on these
seasonal products due to forced government lockdowns and
review and challenge of management’s forecasted assessment
of which seasonal fabrics required write down. We considered
the recoverability of these stock losses post year-end to
consider management bias in application, and therefore the
recoverability, reasonableness and accuracy of the wider
government assistance claim.
Key observations:
Based on the procedures performed we found management’s
inventory provision assumptions and applications thereof to be
appropriate.
There is inherent judgement in the extra seasonal products
stock provision. This is not noted as a change in accounting
policy and still remains a provision based on realisable value
of stock, with the aide of government assistance to improve
the recoverability of stock and part compensate the group for
the impact of lockdown forcing shops closures whilst such
seasonal products would be expected to be sold.
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 effect on the financial
statements as a whole.
25
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Our application of materiality (continued)
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Performance materiality
Basis for determining
performance materiality
Group financial statements
2021
£
165,000
0.5% of revenue
2020
£
180,000
0.5% of revenue
Revenue was considered to be a more
suitable benchmark given continued
volatility in profit for the group and an
area of principal consideration for
members of the Parent company in
assessing financial performance.
115,500
126,00
Parent company financial statements
2021
£
70,000
1.1% of net
assets
2020
£
60,000
0.9% of net assets
Holding company therefore net asset
basis of materiality applied, restricted
to a level of group materiality.
49,000
42,000
70% of materiality based upon factors
including the number of areas subject to
significant estimation uncertainty and
errors identified in the prior period.
70% of materiality based upon factors
including the number of areas subject
to significant estimation uncertainty
and errors identified in the prior period.
Component materiality
We set materiality for each component of the Group based on a percentage of between 42% and 90% of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £70,000 to £150,000 (2020: £60,000 to £170,000). In the audit of each
component, we further applied performance materiality levels of 70% of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £6,600
(2020: £7,200). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the Annual Report and Accounts 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. 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 course of 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
this gives rise to a material misstatement in the financial statements themselves. 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.
26
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
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.
•
In the light of the knowledge and understanding of the Group and 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.
Matters on which
we are required to
report by exception
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 by the Parent Company, or
returns adequate for our audit have not been received from branches not visited
by us; or
the Parent Company financial statements are not in agreement with the
accounting records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our
audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, 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.
27
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Auditor’s responsibilities for the audit of the financial statements (continued)
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
As part of the audit we gained an understanding of the legal and regulatory framework applicable to the Group, the
industries and geographies in which it operates, and considered the risk of acts by the Group that were contrary to
applicable laws and regulations, including fraud. We considered the Group’s compliance with laws and regulations
that have a direct impact on the financial statements including, but not limited to, company law and tax legislation in
the jurisdictions within which the group operates, and we considered the extent to which non-compliance might have
a material effect on the financial statements. We considered and challenged the application of new government
assistance schemes by considering the existence of the claim, legitimacy with current government guidelines and
challenged management on the existence, accuracy and recoverability of the claims.
We made enquiries of management, the Directors and of component audit teams as to the risks of non-compliance and
any instances thereof, as well as the risk of fraud and irregularity, which was updated regularly throughout the audit.
We also communicated with component audit teams on potential risk areas including that of fraud and irregularity.
We also addressed the risk of management override of internal controls, including in particular areas of accounting
estimates for evidence of bias, and the testing of journal entries processed during and subsequent to the year end and
thereby further evaluating whether there was evidence of bias by the Directors that represented a risk of material
misstatement due to fraud.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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.
Mark Langford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds, United Kingdom
15 October 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
28
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2021
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative costs
Other income
Loss from operations
Finance expense
Loss before tax
Tax credit/(charge)
Loss from continuing operations
Discontinued operations
Loss from discontinued operations
Loss for the year attributable to the equity holders
of the Parent Company
Other comprehensive (loss)/income
Translation differences on foreign operations
Total comprehensive loss for the year attributable
to the equity holders of the Parent Company
Note
7
5
5
9
10
8
Year ended
31 May 2021
£000
33,013
(26,700)
6,313
(2,647)
(4,912)
966
(280)
(228)
(508)
42
(466)
Year ended
31 May 2020
£000
35,067
(29,039)
6,028
(2,876)
(4,908)
-
(1,756)
(260)
(2,016)
(6)
(2,022)
-
(332)
(466)
(556)
(2,354)
196
(1,022)
(2,158)
There is no tax effect relating to other comprehensive income for the year. Amounts included in other
comprehensive income may be reclassified subsequently as profit or loss.
Loss per share attributable to the equity holders of the Company
Note
Year ended
31 May 2021
Year ended
31 May 2020
Basic and diluted total loss
per share (pence)
11
1.7p
8.6p
The notes on pages 33 to 60 form part of these financial statements.
29
Consolidated Statement of Financial Position
at 31 May 2021
Company number 00067863
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash on demand or on short term deposit
Total current assets
Total assets
Liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Provisions
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 2021
£000
31 May 2020
£000
13
14
16
18
19
20
22
23
21
22
23
25
26
26
26
7,750
2,453
58
10,261
10,287
2,867
136
670
13,960
24,221
(1,498)
(1,856)
(3,354)
(2,265)
(2,926)
(1,015)
(100)
(6,306)
(9,660)
8,183
2,374
67
10,624
10,188
3,464
206
1,104
14,962
25,586
(1,950)
(1,478)
(3,428)
(2,877)
(2,671)
(927)
(100)
(6,575)
(10,003)
14,561
15,583
3,279
1,113
-
2,185
7,984
3,792
600
(807)
2,741
9,257
14,561
15,583
The financial statements on pages 29 to 32 were approved and authorised for issue by the Board of Directors on
15 October 2021 and were signed on behalf of the Board by: -
Jan G Holmstrom
Non-Executive Chairman
The notes on pages 33 to 60 form part of these financial statements.
30
Consolidated Cash Flow Statement
for the year ended 31 May 2021
Note
Year ended
31 May 2021
Cash flows from operating activities
Loss for the year
Adjustments for:
Government assistance credit
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment of right-of-use assets
Depreciation of investment property
Amortisation of intangible assets
Finance expense – interest on bank loans
Finance expense – interest lease liabilities
Gain on sale of property, plant and equipment
Tax (credit)/charge
Cash flows from/(used in) operating activities
before changes in working capital and provisions
(Increase)/decrease in inventories
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operating activities
Tax received
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from the sale of fixed assets
Net cash (used in)/generated from investing
activities
Financing activities
Bank borrowings drawn
Bank borrowings repaid
Repayment of principal on lease liabilities
Repayment of interest on lease liabilities
Bank interest paid
Government assistance received
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Translation (loss)/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
Cash on demand or on short term deposit
Bank overdrafts
Cash and cash equivalents at the end of the year
5
13
14
14
15
16
9
9
5
10
18
19
21
13
22
22
23
23
9
5
20
20
20
21
The notes on pages 33 to 60 form part of these financial statements.
31
£000
(466)
(966)
624
1,062
333
-
6
154
74
(14)
(42)
765
(571)
718
(599)
313
110
423
(562)
21
(541)
787
(771)
(985)
(74)
(154)
705
(492)
(610)
(22)
1,104
472
670
(198)
472
Year ended
31 May 2020
£000
(2,354)
-
723
876
-
13
6
174
86
(32)
6
(502)
1,735
965
38
2,236
519
2,755
(560)
1,317
757
-
(2,378)
(840)
(86)
(174)
-
(3,478)
34
5
1,065
1,104
1,104
-
1,104
Consolidated Statement of Changes in Equity
for the year ended 31 May 2021
Share
capital
£000
Capital
redemption
reserve
£000
Treasury
share
reserve
£000
Foreign
exchange
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 31 May 2019
3,792
600
(807)
2,545
11,611
17,741
Loss for the year
Other comprehensive income
Total comprehensive
income/(loss)
At 31 May 2020
Cancellation of treasury shares
Loss for the year
Other comprehensive loss
Total comprehensive loss
-
-
-
3,792
(513)
-
-
-
-
-
-
600
513
-
-
-
At 31 May 2021
3,279
1,113
-
-
-
-
(2,354)
(2,354)
196
-
196
196
(2,354)
(2,158)
(807)
2,741
9,257
15,583
807
-
-
-
-
-
-
(807)
-
(466)
(466)
(556)
-
(556)
(556)
(466)
(1,022)
2,185
7,984
14,561
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share capital
The nominal value of issued ordinary shares in the Company.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury share reserve
Cost of own shares held in treasury.
Foreign exchange reserve
Gains/(losses) arising on retranslation of the net assets of overseas
operations into sterling.
Retained earnings
Cumulative net gains/(losses) recognised in the consolidated statement
of comprehensive income after deducting the cost of cancelled treasury
shares.
The notes on pages 33 to 60 form part of these financial statements.
32
Notes
forming part of the financial statements for the year ended 31 May 2021
1
General information
Leeds Group plc is an AIM listed public company, limited by shares and incorporated in England and Wales
under the Companies Act and its number is 00067863. The address of the registered office is Craven House,
14-18 York Road, Leeds, Wetherby, LS22 6SL.
2
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 International Accounting Standards in
conformity with the Companies Act 2006.
Subsidiaries
Subsidiaries are entities controlled by the Group. 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 financial statements of subsidiaries are
included in the consolidated financial statements from the date on which control commences to the date on
which control ceases. All intercompany transactions, balances, income and expenses between Group
companies are eliminated on consolidation.
Business combinations
The acquisition method is used to account for all acquisitions. The cost of an acquisition is measured at the
fair values at the date of acquisition, which is the date on which control is transferred to the Group. The
consideration is calculated as the sum of the fair value of assets transferred and liabilities incurred.
The Group measures goodwill at the acquisition date as:
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interest of the acquiree: less
the net recognised amount of separately identifiable assets acquired, and liabilities assumed,
measured at their fair value.
When the excess is negative, a bargain price is recognised immediately in the profit and loss account.
Transaction costs that the Group incurs in connection with a business combination are expensed as incurred.
Going Concern
When considering its opinion about the application of the going concern basis of preparation of the financial
statements to 31 May 2021, the Directors have given due consideration to:
• The performance of the Group in the last financial year and the robustness of forecasts for the next
24 months, which return the Group to profit.
• Any downside sensitivities including the impact of the Covid-19 pandemic on the business, its
suppliers and its customers.
• The financing facilities available to the Group and the circumstances in which these could be limited
or withdrawn.
33
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Going Concern (continued)
Financial performance and forecasts
Having been consistently profitable the Group has been loss making in each of the last three years.
•
•
•
In the year to 31 May 2019, the Group reported a pre-tax loss from continuing operations of £1.3m
after writing off goodwill of £1.0m.
In the year to 31 May 2020, the Group reported a pre-tax loss from continuing operations of £2.0m.
Approximately £1.0m of this loss arose in the final quarter which was significantly impacted by the
Covid-19 restrictions discussed below. To address the poor underlying performance the Directors
and management restructured the business in the first half of the year to focus on profitable business
streams and reduce its operating costs. Restructuring costs of £0.4m were incurred in the financial
year which will benefit results going forward. Although loss making, the business was cash
generative in the year with net debt reducing by £2.4m, of which £1.3m resulted from the sale of
investment properties.
In the year to 31 May 2021, the Group reported a pre-tax loss from continuing operations of £0.5m
primarily due to the ongoing impact of the Covid-19 pandemic.
Forecasts have been prepared for the 24-month period to May 2023 which indicate a return to modest profit
over that period. These forecasts have been prepared in the knowledge of current Covid-19 conditions and
assume that there is no further period of total country-wide lockdown. At the end of the first quarter of the
current financial year sales and profit were in line with forecast. The company has sensitised these forecasts
for a reduction in revenues of 10% at both Hemmers and KMR in the forecast period and an additional net
€1 million profit reduction from a second period of lockdown. The Directors are of the opinion that this is a
reasonable worst case, and the currently available facilities would be sufficient in this scenario.
.
Covid-19 Impact
Both Hemmers and KMR are located in Germany which has responded well to the outbreak. KMR was most
directly impacted by the measures put in place with all shops closed from late March 2020 to early May 2020
and again from mid December 2020 to early March 2021 with further local restrictions from early March
2021 to late May 2021. Since the start of the financial year, the shops have performed in line with forecast
with all restrictions lifted. Hemmers has traded in line with forecast in the first quarter of the current year.
Both businesses have been supported by the government employment scheme which reimburses the company
for payments to employees for any short time working. The German government also provides a scheme
whereby companies can be compensated for a reduction in trading with reference to reduced turnover and
goods sold at reduced margins as a result of the pandemic. This scheme will remain available through any
further affected periods. In addition, KMR has negotiated rent reductions for its shops in the current financial
year which are reflected in the forecasts.
The ongoing effects of the Covid-19 pandemic are still being experienced globally with markets not fully
recovered and supply chain issues. Although the Group is affected by these issues, we are currently managing
delays in deliveries effectively through good stock management and any increased costs associated with
container shipments from the Far East are being recovered through an increase in sales prices. While there is
clearly uncertainty about the future course of the pandemic, the Directors consider that with ongoing
government support it is well placed to trade through reasonably foreseeable scenarios.
34
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Going Concern (continued)
Financing facilities
The operating businesses of the group are Hemmers and KMR, both located in Germany. The Parent
Company, which has no borrowing facilities, is located in the UK.
Hemmers has four sources of funding:
• Term loans which have funded property purchases. These are repayable in instalments over the term
as detailed in note 22. They are secured over the associated properties and that security could be
called in the event that the business defaulted on repayment.
• A maximum working capital facility of €11m, restricted to the borrowing base which is calculated
as 70% of eligible inventory and 80% of eligible debtors. In the financial year 2021, this resulted in
average availability of €7.7m (2020: €8.8m) with a range of €6.9m to €8.3m (2020: €8.0m to €9.0m)
and minimum headroom of €4.5m (2020: €4.7m) in the year. In the forecast period to 31 May 2023,
the estimated availability range is €6.9m to €8.8m and the minimum headroom €3.4m. The only
covenant on this facility is an equity ratio which must exceed 30% of gross assets at the financial
year end. At 31 May 2021, the ratio was higher than 60% (2020: 61%). The facility is uncommitted,
but the bank is obliged to give reasonable notice of any change.
• A further working capital facility of €0.5m.
• A €3m Parent Company loan which is currently subordinated to the working capital facility.
KMR has a fixed working capital facility of €1m which was fully drawn at the year end and a €0.5m bank
overdraft facility secured on working capital, of which €0.2m was utilised as at 31 May 2021. The covenants
on these facilities are (i) an equity ratio which must exceed 35% of gross assets at the financial year end and
(ii) the ratio of working capital/bank facility should be a minimum 1.5x. At 31 May 2021, these ratios were
55.5% (2020: 39.5%) and 1.54 (2020: 1.58). The facilities are uncommitted, but the bank is obliged to give
reasonable notice of any change.
Considering the trading results in the first quarter of the current financial year, the likely ongoing impact of
the Covid-19 pandemic and the headroom available on the Hemmers working capital facility, the Directors
are of the opinion that it is appropriate to apply the going concern basis of preparation to the financial
statements.
Changes in accounting policies
There were a number of narrow scope amendments to existing standards which were effective for this
financial period. None of these had a material impact on the company except for the amendment to IFS16,
Covid-19 Related Rent concessions. However, the Group did not satisfy the criteria for this practical
expedient.
Revenue
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and is
shown net of Value Added Tax. The sale of goods is recognised at the point of acceptance by the customer
this reflecting fulfilment of the sole performance obligation to the customer. Contracts with wholesale
customers are typically fixed price based on agreed amounts and invoiced upon despatch of the goods in line
with the standard terms and conditions of the Group. The Group’s standard payment terms are between 30
and 60 days following the date of invoice. Contracts with retail customers are based on a fixed price at the
point of sale. There are no long-term or financing arrangements in place across the Group. The Group is
assessed operationally and financially under two revenue streams wholesale and retail revenue as detailed
above. The Directors do not therefore consider there to be a lower relevant level of revenue disclosure than
that disclosed the segmental analysis in note 7. There are no material concentrations of revenue by customers.
Segmental reporting
The Board considers that the Group’s business comprises two operating segments, Hemmers and KMR. 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.
35
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Government grants
The Group was eligible for two types of grant provided by the German government in response to the global
pandemic. One relates to income provided to support the payroll of the employees in both Hemmers and
KMR. The other relates to compensation paid/receivable to KMR and Hemmers for the reduction in turnover
experienced as result of the pandemic together with additional allowances for the part recovery of lost margin
on certain seasonal products that were not able to be sold due to the trading interruption of certain lockdowns.
Both sources of grant have been shown as other income rather than reducing the related expense or increasing
the turnover figures.
Dividends
Interim dividends are recognised when paid and final dividends are recognised when approved by the
shareholders at the AGM.
Goodwill
Goodwill arising an acquisition of subsidiary undertakings, representing the excess of the fair value of the
consideration given over the fair value of identifiable assets and liabilities acquired, is capitalised as an
intangible asset. On capitalisation the goodwill is allocated to a specific cash generating unit to which it
relates. The goodwill is tested for impairment on an annual basis at the end of the financial year by reference
to the cash generating unit and is carried at cost less accumulated impairment losses. Any impairment is
recognised immediately in the profit and loss account and is not subsequently reversed.
Other intangible assets
Intangible assets purchased separately, such as trademarks, are capitalised at cost and amortised on a straight-
line basis. This is charged to operating expenses over the asset’s useful of 20 years.
Property, plant and equipment
Other than freehold land, all items of property, plant and equipment are carried at cost less accumulated
depreciation and any recognised impairment loss. 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 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. Freehold land held as an
investment is not depreciated.
Impairment of non-current assets
At each financial year end, the Group assesses whether there is an indication that is its assets have been
impaired. If there is an indication that its assets have been impaired, the recoverable amount is determined
to determine the extent of the impairment. If it is not possible to estimate the recoverable amount of the
individual asset, the recoverable amount of the cash generating unit to which it relates is determined.
The recoverable amount is defined as the higher of the fair value less costs to sell and value in use at that
date. Value in use is calculated as the expected future cash flows discounted on a pre-tax basis, using a pre-
tax discount rate that reflects the current market assessments of the time value of money and the risks specific
to that assets or cash generating unit. If the recoverable amount of the asset is less than the carrying value,
the carrying value is reduced to its recoverable amount, that reduction is recognised as an impairment loss.
An impairment loss relating to an asset carried at cost less accumulated depreciation or amortisation is
recognised immediately in the profit and loss account. If an impairment loss subsequently reverses, the
carrying value of the asset is increased to the revised recoverable amount but limited to the carrying value
that would have been determined had no impairment been recognised in prior years. A reversal of an
impairment loss is recognised in the profit and loss account.
36
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Leases
The Group has adopted IFRS 16 using the modified retrospective approach, with recognition of transitional
adjustments on 1 June 2020, without restatement of comparative figures. Lease liabilities are measured at
the present value of the contractual payments due to the lessor over the determined lease term, with the
discount rate applied being the incremental borrowing rate of the group. The incremental borrowing rate has
been determined with the use of existing ability of the group to obtain finance on similar security.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the group is contractually required to dismantle,
remove or restore the leased asset.
On initial recognition, the carrying value of the lease liability also includes:
•
•
•
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the group if it is reasonably certain to
exercise that option; and
any penalties payable for terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a
straight-line basis over the remaining term of the lease or over the remaining economic life of the asset.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low
value assets. Payments made under these leases are charged to profit and loss on a straight-line basis over the
lease term.
A number of shops have also had rent negotiations during the year due directly due to the Covid-19 pandemic.
Management have been able to renegotiate rent reductions for a number of store leases. The rent reductions
continue to the end of the term of the leases but have not fundamentally changed the nature or scope of the
lease other than an agreed reduction in rental payments. In May 2020, the IASB issued an amendment to
IFRS 16 which provides lessees with an immediate relief from the requirement to assess whether Covid-19
related rent concessions are a lease modification. Unfortunately, the group's rent concession agreements
failed this relief test in the 2020 accounts as it did not satisfy the criteria for being Covid-19 related rent
concessions because all the concessions extended past June 2021 In March 2021, the IASB issued a further
amendment to IFRS16 to further extend the time limit for this criteria out to June 2022 to reflect the prolonged
impact of Covid-19. The original practical expedient as of May 2020 was an optional relief, but nonetheless,
the group did have any rent concessions that satisfied the amendment criteria and as a result the extension to
the practical expedient does not have any effect on the group’s financial statements. No retrospective
alteration is required to this practical expedient as the group did not apply the original amendment. As such,
the rent reductions agreed continue to be accounted for as a lease modification on the date of agreement of
the reduction not the date of reduced payments. On the date of deemed modification agreement, the lease
liability is remeasured using the discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount. There is no P&L impact on modification, other than the future reduction
of both interest and depreciation. For those short-term reductions which in substance reflect partial
forgiveness of a lease liability for a temporary period within a year, IFRS 9 derecognition principles have
been followed, reflecting the reduced liability within profit or loss at the period in which the reduction
occurred.
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.
37
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
statement of financial position differs from its tax base, except for differences arising on:
•
•
•
the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and
at the time of the transaction affects neither accounting or taxable profit; and
investments in subsidiaries where the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will
be available against which the difference can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by the date of the statement of financial
position and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
•
•
the same taxable Group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis,
or to realise the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Taxation
The charge for taxation is based on the results for the year and takes into account deferred taxation.
Retirement benefits
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 a pension schemes in Germany where pension arrangements are provided by the state.
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.
Financial assets and liabilities
IFRS 9’Financial Instruments’ outlines the principles an entity must apply to measure and recognise financial
assets and liabilities. The Group recognises financial assets and liabilities when it becomes a party to the
terms of the contract, which is the settlement date.
38
Notes
forming part of the financial statements for the year ended 31 May 2021
2
Accounting policies (continued)
Financial assets
Financial assets that are held to collect are categorised as amortised cost under IFRS 9. This includes the
Group’s trade and other receivables and cash and cash equivalents. The measurement of these financial assets
held at amortised cost remains unchanged since the introduction of IFRS 9.
Trade receivables
Trade receivables that do not contain a significant financing component are recognised initially at fair value
and thereafter at amortised cost less provision for impairment. Impairment provisions for current and non-
current trade receivables are recognised based on a simplified approach within IFRS 9 using a provision
matrix in the determination of the lifetime expected credit losses. During this process, the probability of the
non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the
gross trade receivables to determine the expected credit loss for the trade receivables. For trade receivables,
which are reported net, such provisions are recorded in a separate provision account with the loss being
recognised within administration cost in the consolidated statement of comprehensive income. On
confirmation that the trade receivable will not be collected, the gross carrying value is written off against the
associated provision.
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.
Financial liabilities
The classification and measurement of financial liabilities in accordance with IFRS 9 remains largely
unchanged. All financial liabilities are measured at amortised cost and include trade and other payables and
bank borrowings.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate.
Borrowings
Borrowings, which comprise bank loans are initially recognised at fair value, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any difference between proceeds (net of transaction
costs) and the redemption value is recognised in the consolidated statement of comprehensive income over
the period of the borrowings using the effective interest method. Fees paid on the arrangement of the loan
facilities and revolving credit facilities are recognised as transaction costs over the life of the agreement.
Current borrowings are secured against working capital rather than being a factored agreement that
relinquishes control of the assets to the bank.
Share capital
The Group’s ordinary shares are classified as equity instruments.
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.
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 a customer has the right to return 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.
39
Notes
forming part of the financial statements for the year ended 31 May 2021
3
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 cash generating units
A cash generating unit is defined by IAS36 as the smallest identifiable group of assets that generates
cash flows that are largely independent of the cash inflows from other assets, or group of assets. As
such, each store in KMR represents its own cash generating unit. Following the implementation of
IFRS16, the right-of-use assets relating to KMR’s retail shops are now considered part of the cash
generating units. Other immaterial assets are allocated to each store to consider the wider asset portfolio
of each store, where right-of-use assets remain the only material in scope assets to consider in
impairment testing. Although annual impairment reviews are not required on tangible assets,
management have performed an impairment review on these assets due to historic trading losses and
the effects of the Covid-19 pandemic. Impairment tests have been performed by assessing relevant cash
flows of each cash generating unit and assessing this against the value of assets relating to that specific
cash generating unit to consider recoverable amounts. In order to conduct this review, trading and cash
flows forecasts per each retail shop have been considered as well as considerations regarding
managements intention and judgments around the remaining length of leases in order to determine value
in use calculations.
Following this review, an impairment charge of £333,000 across 6 shops has been recognised during
this financial year. The impairment calculated represents either management’s intentions to cease
trading a particular retail store or the shortfall between anticipated earnings over the remaining life of
the CGUs against the book value. The remaining net book value of these 6 shops totals £287,000 at 31
May 2021 after impairment. The other remaining shops showed no indication of impairment based on
current and intended future forecast trading.
(ii) Right-to-use assets
The group agreed a number of COVID related rent concessions during the period with landlords, where
the group was not eligible to apply the latest IFRS16 practical expedient in relation to accounting for
COVID related rent concessions. As such, judgement is required in considering the nature and substance
of the concessions agreed with landlords to assess whether the accounting treatment should follow
IFRS16 lease modifications, or extinguishment of lease liabilities under IFRS9. No concessions agreed
decrease the scope of existing leases, and none have been identified as being separable new leases and
therefore management have considered this to relate to lease modifications where the reductions agreed
are deemed as significant and for a sustained period. This results in a recalculation of the right-of-use
assets and liabilities at the date of agreement, with the difference between the carrying value of existing
liabilities and new calculations being recorded against the right-of-use asset, with no direct impact on
profit or loss. For those short-term reductions which in substance reflect partial forgiveness of a lease
liability for a temporary period within a year, IFRS9 derecognition principles have been followed,
reflecting the reduced liability within profit or loss at the period in which the reduction occurred.
In determining the incremental borrowing rate used in IFRS16 lease calculations, there is inherent
estimation required to ensure that the incremental borrowing rate suffices that of similar security. The
method of determining the incremental borrowing rate of the Group looks at the existing facility
arrangements and historic ability of the Group to borrow at this level.
(iii) 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. The values of stock are shown in note 18. A 1% increase in the inventory provision
would equate to approx. £112,000.
40
Notes
forming part of the financial statements for the year ended 31 May 2021
3
Critical accounting estimates and judgements (continued)
(iii) Inventory (continued)
In 2021, stock provisions have been made against certain seasonal stock lines due to the Company
missing much of its seasonal spring trading as a result of the Covid lockdowns in Germany. A detailed
review of the seasonal products which were impacted by this was carried out in order to determine the
amount of the stock provision required. The company has been able to make a claim for government
assistance for these losses and this income has been recognised in the accounts see note 5.
4
Financial instruments - risk management
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Liquidity risk
• Market risk in the form of foreign exchange 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 loan debt increased from £2,671,000 to £2,926,000 and the non-
current bank debt decreased from £1,950,000 to £1,498,000.
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
The Group had no forward contracts at either 31 May 2020 or 2021. All other financial assets and 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.
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.
41
Notes
forming part of the financial statements for the year ended 31 May 2021
4
Financial instruments - risk management (continued)
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 25 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, to avoid those
subsidiaries being exposed to unnecessary foreign exchange risk. Bank borrowings or cash deposits of the
Parent Company are denominated in Sterling.
(ii) Foreign exchange risk
The Group has operations located in Germany whose functional currencies are the Euro. 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. There are no forward contracts outstanding at either year end.
At the date of the consolidated statement of financial position, a 10% strengthening of Sterling against the
Euro, all other variables held constant, would have resulted in an estimated decrease of £930,000 in the
reported net asset value of the Group. A 10% weakening of Sterling against the Euro at the date of the
statement of financial position, on the same basis, would have resulted in an estimated increase of £1,114,000
in the reported net asset value of the Group.
Capital policy
The Group’s capital comprises equity as shown in the Consolidated Statement of Financial Position plus net
debt. 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.
42
Notes
forming part of the financial statements for the year ended 31 May 2021
5
Operating loss
Operating loss 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
- Bank compliance
Total auditor’s fees
Staff costs
Depreciation
- Property, plant and equipment
- Right-of-use assets
- Investment property
Impairment of right-to-use assets
Amortisation of trademarks
Short term lease expense
Gain on disposal of property, plant and equipment
Other income
Government grants relating to Covid-19 pandemic:
Employee related grant received
Grant received as compensation for reduced trading
Grant to be received as compensation for reduced trading
Total other income
Year ended
31 May 2021
Year ended
31 May 2020
£000
£000
79
59
4
142
6,785
624
1,062
-
333
6
56
(14)
170
535
705
261
966
70
47
3
120
8,480
723
876
13
-
6
341
(32)
-
-
-
-
-
6
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
2021
2020
8
8
204
226
50
63
41
46
303
343
Staff costs, including Directors, comprise
Year ended
31 May 2021
Year ended
31 May 2020
Wages, salaries and Directors’ fees
Defined contribution pension cost
Employer’s national insurance contributions
and similar taxes
Total staff costs
£000
5,506
1
1,278
6,785
£000
7,107
1
1,372
8,480
43
Notes
forming part of the financial statements for the year ended 31 May 2021
6
Staff costs (continued)
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
Taxes
Year ended
31 May
Year ended
31 May
£000
£000
2021
£000
2020
£000
226
17
15
28
286
14
240
-
-
-
17
15
28
14
300
230
19
15
31
295
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. Their costs include VAT unrecoverable in the
UK.
Outstanding share options granted to employees or Directors at 31 May 2021 were nil (2020: 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 7.
Salary and fees
Employer’s national insurance contributions and similar taxes
Total remuneration of key management personnel
7
Segmental information
Year ended
31 May 2021
Year ended
31 May 2020
£000
286
14
300
£000
284
11
295
The Group’s trading businesses are now Hemmers, and its trading subsidiary KMR. Hemmers is incorporated
in Germany and is engaged in the import and distribution of fabric from its principal place of business in
Nordhorn, Germany. KMR is also incorporated in Germany and is a retailer of fabric and haberdashery,
operating leased shops in various German cities. Hemmers liquidated its Chinese subsidiary, Chinoh-Tex, in
2020 and that has been treated as a discontinued activity in 2020.
The chief operating decision maker is the Board, which considers that the Hemmers business comprises two
operating segments, namely Hemmers and KMR. 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 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.
44
Notes
forming part of the financial statements for the year ended 31 May 2021
7
Segmental information (continued)
The following tables set out a segmental analysis of the Group’s operations.
Year ended
31 May 2021
Hemmers
KMR
£000
£000
Inter
segmental
£000
Parent
Company
£000
Continuing
operations
£000
Discontinued
operations
£000
Total
Group
£000
External revenue
Inter-segmental revenue
Cost of sales
27,669
5,344
1,071 1
(24,160) (3,602)
-
(1,072)
1,062
-
-
-
33,013
-
(26,700)
Gross profit
Distribution costs
Admin expenses
Other income
Operating profit/(loss)
Finance expense
Internal interest
4,580
1,743 (10)
(1,499) (1,148)
-
(3,212) (1,498) 187
692 (187)
461
330
(128) (100)
(211) (10)
-
-
(213)
-
-
-
(389)
-
(389)
-
213
6,313
(2,647)
(4,912)
966
(280)
(228)
-
Loss before tax
(11)
(311) (10)
(176)
(508)
-
-
-
-
-
-
-
-
-
-
At 31 May 2021
Hemmers
KMR
Adj
£000
£000
£000
Parent
Company
£000
Continuing
operations
£000
Discontinued
operations
£000
Total assets
15,803
5,688
(174)
2,904
24,221
Total liabilities
(5,589)
(3,969)
-
(102)
(9,660)
Total net assets
10,214
1,719
(174)
2,802
14,561
-
-
-
33,013
-
(26,700)
6,313
(2,647)
(4,912)
966
(280)
(228)
-
(508)
Total
Group
£000
24,221
(9,660)
14,561
Year ended
31 May 2020
Hemmers
KMR
£000
£000
Inter
segmental
£000
Parent
Company
£000
Continuing
operations
£000
Discontinued
operations
£000
Total
Group
£000
External revenue
Inter-segmental revenue
Cost of sales
27,060
1,563
8,007
5
(24,468) (5,930)
-
(1,681)
1,472
-
-
-
35,067
(113)
(28,926)
Gross profit/(loss)
Distribution costs
Admin expenses
Other income
Operating loss
Finance expense
Internal interest
4,155
2,082
(1,628) (1,312)
(988)
(3,913)
-
88
(209)
64
233
(88)
(1,298)
(147)
(148)
(218)
(113)
-
-
-
(240)
-
(240)
-
148
6,028
(2,876)
(4,908)
-
(1,756)
(260)
-
488
113
(697)
(96)
(51)
(185)
-
(332)
-
-
35,555
-
(29,623)
5,932
(2,927)
(5,093)
-
(2,088)
(260)
-
Loss before tax
(1,593)
(331)
(92)
(2,016)
(332)
(2,348)
-
-
-
-
45
Notes
forming part of the financial statements for the year ended 31 May 2021
7
Segmental information (continued)
At 31 May 2020
Hemmers
KMR
Adj
£000
£000
£000
Parent
Company
£000
Continuing
operations
£000
Discontinued
operations
£000
Total
Group
£000
Total assets
16,998
5,745
(218)
3,061
25,586
Total liabilities
(5,769)
(4,151)
-
(83)
(10,003)
Total net assets
11,229
1,594
(218)
2,978
15,583
-
-
-
25,586
(10,003)
15,583
Disaggregation of revenue is shown by destination as follows:
31 May 2021
£000
31 May 2020
£000
Germany
Austria
Holland
France
Rest of EU
Total EU
UK
Switzerland
Rest of Europe
Total Europe
North America
Asia
Oceania
South America
Total revenue
22,345
1,203
1,006
835
3,749
29,138
1,421
1,709
373
32,641
16
10
346
-
33,013
25,259
1,496
1,164
744
3,505
32,168
1,170
1,367
483
35,188
89
13
244
21
35,555
Non-current assets are all derived in Germany.
Other information:
Year ended 31 May 2021
Hemmers
KMR
£000
£000
Discontinued
activities
£000
Group
£000
Hemmers
KMR
Year ended 31 May 2020
Discontinued
activities
£000
£000
£000
Group
£000
Additions
Property, plant &
equipment
Right-of-use assets
Depreciation
Property, plant &
equipment
Right-of-use assets
Investment
property
Impairment
Right-of-use assets
Amortisation
Intangible assets
554
184
8
566
-
-
562
750
556
105
4
153
-
-
560
258
-
-
-
-
-
624
543
179
1
723
1,062
112
764
-
333
6
13
-
6
-
-
-
-
-
-
-
876
13
-
6
503
121
142
920
-
-
6
-
333
-
46
Notes
forming part of the financial statements for the year ended 31 May 2021
8
Discontinued operations
Chinoh-Tex was liquidated prior to the year ended 31 May 2020. The losses associated with the closure have
been included in the profit and loss account for the year ended 31 May 2020 and are as follows:
Turnover
Cost of sales
Gross loss
Distribution costs
Admin expenses
Operating loss
Year ended
31 May 2020
£000
601
(697)
(96)
(51)
(185)
(332)
Included above is an amount of £25,000 which relates to the write off debtors which could not be recovered
at the date of liquidation.
9
Finance expense
Finance expense
Interest paid on lease liabilities
Interest paid on bank overdrafts and loans
Finance expense recognised in comprehensive income
10
Tax credit/(charge)
Current tax credit/(charge)
Tax of overseas operations on losses for the year
Adjustments for over provision in prior years
Total tax credit/(charge)
Tax credit/(charge) on discontinued operations
Tax credit/(charge) on continuing operations
Year ended
31 May 2021
Year ended
31 May 2020
£000
£000
74
154
228
86
174
260
Year ended
31 May 2021
Year ended
31 May 2020
£000
£000
-
42
42
-
42
(6)
-
(6)
-
(6)
The Group has UK capital losses carried forward of £13m and unrelieved UK trading losses of £1.2m. 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 differences in the foreseeable future.
47
Notes
forming part of the financial statements for the year ended 31 May 2021
10 Tax credit/(charge) (continued)
The reasons for the difference between the actual tax credit/(charge) for the year and the standard rate of
corporation tax in the UK applied to the profit for the year are as follows:
Loss before taxation from all operations
Expected tax credit based on the standard rate of
corporation tax in the UK of 19% (2020:19%)
Expenses not deductible for tax purposes
Unrelieved losses
Different tax rates applied in overseas jurisdictions
Total tax credit/(charge)
11 Loss per share and Net asset per share
Loss per share
Numerator
Total loss for the year
Denominator
Weighted average number of shares
Year ended
31 May 2021
Year ended
31 May 2020
£000
508
97
(22)
(33)
-
42
£000
2,348
446
(62)
(378)
(12)
(6)
Year ended
31 May 2021
Year ended
31 May 2020
£466,000
£2,354,000
27,320,843
27,320,843
Basic and diluted loss per share
1.7p
8.6p
Numerator
Loss for the year from continuing operations
Denominator
Weighted average number of shares
£466,000
£2,022,000
27,320,843
27,320,843
Basic and diluted loss from continuing operations per share
1.7p
7.4p
Numerator
Loss for the year from discontinued operations
Denominator
Weighted average number of shares
-
£332,000
-
27,320,843
Basic and diluted loss from discontinued operations per share
-
1.2p
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
Net assets per share
48
Year ended
31 May 2021
Year ended
31 May 2020
£14,561,000
£15,583,000
27,320,843
27,320,843
53.3p
57.0p
Notes
forming part of the financial statements for the year ended 31 May 2021
12 Dividend
The Directors have not proposed a dividend in respect of the year ended 31 May 2021 nor for the year ended
31 May 2020.
13 Property, plant and equipment
Freehold land and
buildings
£000
Plant and
equipment
£000
Total
£000
3,884
12,393
532
(296)
(63)
81
560
(591)
(63)
226
4,138
12,525
493
(293)
(208)
562
(293)
(583)
4,130
12,211
2,405
462
(274)
(34)
53
2,612
363
(286)
(134)
3,859
723
(292)
(34)
86
4,342
624
(286)
(219)
4,461
8,534
8,183
7,750
Cost
Balance at 31 May 2019
Additions
Disposals
Transferred to right-of use assets
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2021
Accumulated depreciation
Balance at 31 May 2019
Depreciation charge for the year
Disposals
Transferred to right-of use assets
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
8,509
28
(295)
-
145
8,387
69
-
(375)
8,081
1,454
261
(18)
-
33
1,730
261
-
(85)
Balance at 31 May 2021
1,906
2,555
Net book amount
At 31 May 2019
At 31 May 2020
At 31 May 2021
7,055
6,657
6,175
1,479
1,526
1,575
49
Notes
forming part of the financial statements for the year ended 31 May 2021
14 Right-of-use assets
Leasehold land
and buildings
£000
Plant and
equipment
£000
Cost
Introduced at 1 June 2019
Transferred from other assets
Additions
Modification
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Additions
Modification
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2021
Accumulated depreciation
Transferred from other assets
Depreciation charge for the year
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Depreciation charge for the year
Impairment
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2021
Net book amount
At 31 May 2020
At 31 May 2021
2,873
-
153
(138)
52
2,940
566
836
-
(175)
4,167
-
762
21
783
920
333
-
(74)
1,962
2,157
2,205
194
63
105
-
6
368
184
-
(75)
(20)
457
34
114
3
151
142
-
(75)
(9)
209
217
248
Total
£000
3,067
63
258
(138)
58
3,308
750
836
(75)
(195)
4,624
34
876
24
934
1,062
333
(75)
(83)
2,171
2,374
2,453
50
Notes
forming part of the financial statements for the year ended 31 May 2021
15
Investment properties
Freehold land and buildings
£000
1,045
(1,036)
(9)
-
36
13
(49)
-
1,009
-
Trademarks
£000
72
(6)
1
67
(6)
(3)
58
Cost
Balance at 31 May 2019
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Accumulated depreciation
Balance at 31 May 2019
Depreciation charge for the year
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Net book amount
At 31 May 2019
At 31 May 2020
16
Intangible assets
Balance at 31 May 2019
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2020
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2021
51
Notes
forming part of the financial statements for the year ended 31 May 2021
17 Subsidiaries
The subsidiaries of Leeds Group 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.
** KMR GmbH.
Germany
Germany
Germany
Import, sale, and distribution of textiles
Dormant
Retail trading
* Wholly owned subsidiaries of Leeds Group.
** Wholly owned subsidiaries of Hemmers.
The registered addresses of these subsidiaries are shown on page 1.
18 Inventories
Total gross value of goods and goods for resale
Less provision
Finished goods and goods for resale
31 May 2021
£000
31 May 2020
£000
11,195
(908)
10,287
10,970
(782)
10,188
The amount of inventories recognised as an expense during the year was £22,312,000 (2020: £23,973,000).
19 Trade and other receivables
Trade receivables
Other receivables
Prepayments
Total trade and other receivables
31 May 2021
£000
31 May 2020
£000
1,969
766
132
2,867
2,765
544
155
3,464
Within other receivables is an amount of £261,000 (2020: £nil) relating to government assistance not yet
received regarding compensation for reduced trading during the reporting period. This income is anticipated to
be recovered within 12 months of the balance sheet date and there has been no indication post year end to
suspect that this balance is irrecoverable.
All amounts are anticipated to be receivable in the short term. The carrying value of trade receivables is
considered to be a reasonable approximation of fair value.
20 Cash on demand or on short term deposit
31 May 2021
£000
31 May 2020
£000
Total cash on demand or on short term deposit
670
1,104
Cash held by the Parent Company is deposited with Bank of Scotland, earning interest at variable rates. In the
opinion of the Directors, the carrying value of cash and cash equivalents approximates to its fair value.
52
Notes
forming part of the financial statements for the year ended 31 May 2021
21 Trade and other payables
Bank overdrafts
Trade payables
Other tax and social security taxes
Accruals
Other payables
Total trade and other payables
31 May 2021
£000
31 May 2020
£000
198
1,350
179
453
85
2,265
-
1,378
303
675
521
2,877
All amounts are anticipated to be payable in the short term. The carrying values are considered to be a
reasonable approximation of fair value. A bank overdraft is secured on working capital of KMR with a facility
of £438k (€500k) and attracts an interest rate of 3%.
22 Borrowings
The book value of loans and borrowings are as follows:
Current
Secured bank loans
Non - current
Secured bank loans
Total loans and borrowings
31 May 2021
£000
31 May 2020
£000
2,926
1,498
4,424
2,671
1,950
4,621
The carrying values are considered to be a reasonable approximation of fair value.
Current loans and borrowings
At 31 May 2021 current loans and borrowings of £2,926,000 (2020: £2,671,000) comprise short term loans of
£2,562,000 and instalments due on long term loans detailed below of £364,000. The interest rate on the short-
term loans range from 1.25% to 3% (2020: 1.25% to 3%) and these loans are secured on working capital of
Hemmers and KMR. The short-term loans are drawn down by Hemmers against short-term borrowing
facilities of up to a maximum of £10.3m (€11.5m) and by KMR against short-term borrowing facilities of
£0.9m (€1m). At 31 May 2021, the maximum limit available totalled £7m (€8.2m) of which £2.6m (€3m) has
been utilised, therefore the headroom within the facility was £4.4m (€5.2m). Neither the Parent Company nor
any of its subsidiaries other than Hemmers and KMR have borrowing facilities. The bank facilities are reviewed
annually every May and are now in place for the forthcoming year.
Non-current loans and borrowings
A non-current loan was drawn down in 2007 from Kreissparkasse to finance the freehold extension of the
warehouse in Nordhorn. In 2016 and 2017 further loans were drawn down to finance developments at
Nordhorn.
The Group’s loans and borrowings are within the accounts of Hemmers. They are denominated in Euros, and
their principal terms are as follows:
Fixed
Interest rate
Repayment
profile
Final repayment
date
31 May 2021
£000
31 May 2020
£000
Loan 1
Loan 2
Loan 3
4.07%
1.65%
1.05%
Equal monthly instalments
Equal quarterly instalments
Equal quarterly instalments March 2026
September 2027
September 2025
Non-current loans
53
353
835
310
1,498
436
1,124
390
1,950
Notes
forming part of the financial statements for the year ended 31 May 2021
22 Borrowings (continued)
The changes in liabilities arising from financing activities were:
At the start of the year
Cash items
Borrowings drawn
Borrowings repaid
Exchange
At the end of the year
The changes in lease liabilities are shown in note 23.
23 Lease liabilities
31 May 2021
£000
31 May 2020
£000
4,621
787
(771)
(213)
6,944
-
(2,378)
55
4,424
4,621
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a duration of 12 months or less.
Payments made under these leases are charged to profit and loss on a straight-line basis over the lease term.
The lease liabilities recognised in the financial statements include 17 retail store leases located in Germany and
22 motor vehicle leases, all of which are subject to fixed payments.
The book value of lease liabilities are as follows:
Current
Secured lease liabilities
Non - current
Secured lease liabilities
Total lease liabilities
31 May 2021
£000
31 May 2020
£000
1,015
1,856
2,871
927
1,478
2,405
The majority of the retail shops are leased over a 12-month period and have, therefore, been accounted for by
recognising a right-of-use asset and a lease liability. Some shops are on 12 month rolling contracts and
management have considered IFRS 16 requirements and IFRIC agenda decision on the assessment of a lease
term regarding cancellable and renewable leases. These contracts have a termination option at the end of the
existing lease that both the lessor and lessee can exercise without the express permission or consent of the other
party and without a significant penalty of termination. However, following discussions with landlords
regarding rental concessions and future rentals of shops, management know they will now renew these leases
and they have now been recognised as right-to -use assets with the corresponding lease liability.
The lease liability is calculated as the present value of payments over the lease term, discounted at an
incremental borrowing rate to the Group. The Group has applied a practical expedient to apply a single discount
rate to a portfolio of leases of similar characteristics. The incremental borrowing rate is determined by utilising
existing facility agreements and the historic ability of the group to lend against a portfolio of assets of similar
security to the portfolio of leases.
54
Notes
forming part of the financial statements for the year ended 31 May 2021
23 Lease liabilities (continued)
A number of shops have also had rent negotiations during the year due directly due to the Covid-19 pandemic.
Management have been able to renegotiate rent reductions for a number of store leases. The rent reductions
continue to the end of the term of the leases but have not fundamentally changed the nature or scope of the
lease other than an agreed reduction in rental payments. In May 2020, the IASB issued an amendment to IFRS
16 which provides lessees with an immediate relief from the requirement to assess whether Covid-19 related
rent concessions are a lease modification. Unfortunately, the group's rent concession agreements failed this
relief test in the 2020 accounts as it did not satisfy the criteria for being Covid-19 related rent concessions
because all the concessions extended past June 2021.
In March 2021, the IASB issued a further amendment to IFRS16 to further extend the time limit for this criteria
out to June 2022 to reflect the prolonged impact of Covid-19. The original practical expedient as of May 2020
was an optional relief, but nonetheless, the group did have any rent concessions that satisfied the amendment
criteria and as a result the extension to the practical expedient does not have any effect on the group’s financial
statements. No retrospective alteration is required to this practical expedient as the group did not apply the
original amendment. As such, the rent reductions agreed continue to be accounted for as a lease modification
on the date of agreement of the reduction not the date of reduced payments. On the date of deemed modification
agreement, the lease liability is remeasured using the discount rate applicable on the modification date, with
the right-of-use asset being adjusted by the same amount. There is no P&L impact on modification, other than
the future reduction of both interest and depreciation.
At 31 May 2021, the lease liabilities are shown as follows:
Up to 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
31 May 2021
£000
31 May 2020
£000
1,015
791
547
518
927
636
679
163
2,871
2,405
The movement in the lease liability is as follows:
Land and
buildings
£000
Motor
vehicles
£000
Total
£000
2,405
750
74
(1,059)
836
(135)
215
184
7
(135)
-
(23)
248
2,871
At the start of the year
Right-of-use lease additions (note 14)
Interest expenses (note 9)
Lease payments
Modifications
Foreign exchange movements
At the end of the year
2,190
566
67
(924)
836
(112)
2,623
55
Notes
forming part of the financial statements for the year ended 31 May 2021
24
Financial instruments
The financial assets of the Group are categorised as follows:
At amortised cost
Trade receivables
Cash and cash equivalents
The financial liabilities of the Group are categorised as follows:
At amortised cost
Bank overdrafts
Trade payables
Accruals
Other payables
Current bank borrowings
Non-current bank borrowings
Current lease liabilities
Non-current lease liabilities
Financial risk management
Overview
31 May 2021
£000
31 May 2020
£000
1,969
670
2,639
2,765
1,104
3,869
31 May 2021
£000
31 May 2020
£000
198
1,350
453
85
2,926
1,498
1,015
1,856
9,381
-
1,378
675
521
2,671
1,950
927
1,478
9,600
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Market risk in the form of foreign exchange risk
• Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. The Group’s risk management is coordinated by the Directors who focus on securing the Group’s
short to medium-term cash flow through regular review of all the operating activities of each of the businesses.
The most significant financial risks to which the Group is exposed are described as follows:
Credit risk
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the
balance sheet date as follows:
Trade receivables
31 May 2021
£000
31 May 2020
£000
1,969
2,765
The Group has adopted the IFRS 9 simplified approach to measuring expected credit losses using expected
loss rates and a provision matrix. The provision matrix is based on the Group’s historical default rates over
the expected life of the trade receivables adjusted for forward looking estimates.
56
Notes
forming part of the financial statements for the year ended 31 May 2021
24 Financial instruments (continued)
Credit risk (continued)
At 31 May 2021 £334,000 (2020: £465,000) of the Group’s trade receivables were past due. An expected loss
provision of £106,000 (2020: £260,000) is held to mitigate the exposure to bad and doubtful debts. The ageing
of the Group’s trade receivables is as follows:
Overdue up to 3 months
Overdue by 3 to 6 months
Overdue by 6 to 12 months
Overdue by more than 12 months
Total past due trade receivables
Total receivables not yet past due
Total gross receivables
Expected credit loss
Total trade receivables (note 19)
31 May 2021
£000
31 May 2020
£000
278
4
1
51
334
1,741
2,075
(106)
1,969
268
47
-
150
465
2,560
3,025
(260)
2,765
The ageing profile above is the profile used by management to review debts however it is the expected credit
loss model which is used to calculate the provision. The expected loss provision for trade receivables is as
follows:
As at 31 May 2021
Overdue
up to 3
months
Overdue
by 3 to 6
months
Overdue
by 6 to 12
months
Overdue
by more than
12 months
31 May
2021
£000
Not due
Expected loss rate
2%
Gross carrying amount
1,741
5%
278
100%
100%
100%
4
1
51
2,075
Loss provision
(36)
(14)
(4)
(1)
(51)
(106)
Net carrying value
1,705
264
-
-
-
1,969
As at 31 May 2020
Overdue
up to 3
months
Overdue
by 3 to 6
months
Overdue
by 6 to 12
months
Overdue
by more than
12 months
31 May
2020
£000
Not due
Expected loss rate
3%
Gross carrying amount
2,562
10%
266
10%
0%
100%
47
- -
150
3,025
Loss provision
(78)
(27)
(5)
-
(150)
(260)
Net carrying value
2,484
239
42
-
-
2,765
The situation with regard to the Covid-19 pandemic has not significantly affected the expected credit model as
a large proportion of the debts are covered by debt insurance which has mitigated this risk.
57
Notes
forming part of the financial statements for the year ended 31 May 2021
24 Financial instruments (continued)
Credit risk (continued)
A reconciliation of the movement in the impairment loss for trade receivables is shown below:
Expected credit loss provision at start of period
Amount charged
Amount released
Amount utilised
Effect of movements in foreign exchange rates
Expected credit loss provision at end of period
Foreign currency
31 May 2021
£000
31 May 2020
£000
260
-
(113)
(28)
(13)
106
728
61
-
(542)
13
260
The carrying values of the Group’s trade and other receivables are denominated in the following currencies:
Euro
US Dollar
Sterling
Total trade and other receivables
31 May 2021
£000
31 May 2020
£000
2,814
17
36
2,867
3,328
76
60
3,464
The carrying values of the Group’s trade and other payables are denominated in the following currencies:
Euro
US Dollar
Sterling
Total trade and other payables
All the groups external loans are denominated in Euros.
31 May 2021
£000
31 May 2020
£000
1,194
969
102
2,265
2,355
439
83
2,877
58
Notes
forming part of the financial statements for the year ended 31 May 2021
24 Financial instruments (continued)
Liquidity risk
The Group manages its liquidity needs very carefully on a short and medium terms basis. Longer term needs
are monitored as part of the Group’s budgetary process.
The Group’s financial liabilities have contractual maturities which are summarised below:
As at 31 May 2020
Amount due in
After
5 years
£000
2 to 5
years
£000
Total
£000
As at 31 May 2021
Amounts due in
Less than
1 year
£000
2 to 5
years
£000
After
5 years
£000
198
1,350
453
85
2,926
-
-
-
-
-
-
1,498
1,015
-
-
-
-
-
-
-
-
Total
£000
198
1,350
453
85
2,926
Less
than
1 year
£000
1,378
675
521
2,671
-
-
-
-
1,498
- 1,950
1,015
927
-
-
-
-
-
-
-
1,378
675
521
2,671
1,950
927
Bank overdrafts
Trade payables
Accruals
Other payables
Current bank
borrowings
Non-current bank
borrowings
Current lease liabilities
Non - current lease
liabilities
-
1,338
518
1,856
-
1,315
163
1,478
Net carrying value
6,027
2,836
518
9,381
6,172 3,265
163
9,600
25
Provisions
Provision as at 31 May 2020 and 2021
Tax
£000
100
A provision was made in 2020 for additional tax which may fall due following a prior year tax assessment in
Germany.
59
Notes
forming part of the financial statements for the year ended 31 May 2021
26
Share capital
Issued and fully paid
2021
Number
2021
£000
2020
Number
At beginning of the period
Cancellation of treasury shares
31,600,000
(4,279,157)
3,792
(513)
31,600,000
-
At end of period
27,320,843
3,279
31,600,000
2020
£000
3,792
-
3,792
At 31 May 2021, no options over ordinary shares of the Company were outstanding (2020: 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 2019
Shares purchased in the year
Shares purchased as at 31 May 2020
Number of
shares
9,247,760
30,000
9,277,760
Cost
£000
1,847
9
1,856
Shares cancelled as at 31 May 2020
(4,998,603)
(1,049)
Shares held in treasury as at 31 May 2020
Shares cancelled during the year
Shares held in treasury at 31 May 2021
4,279,157
(4,279,157)
-
807
(807)
-
During the year, the Company cancelled 4,279,157 ordinary shares held in treasury. The cost of these cancelled
shares has been calculated on a “first in, first out” basis, and the nominal value of the cancelled shares at 12p
each was £513,499. The total nominal value of shares cancelled is £1,113,331. This is shown in the
consolidated statement of financial position as a capital redemption reserve, a component of equity.
27
Commitments
At 31 May 2021, there were no capital commitments authorised and committed (2020: £110,000). There were
no amounts authorised but not committed (2020: £nil).
60
Company Statement of Financial Position at 31 May 2021
Prepared under FRS 101 "Reduced Disclosure Framework"
Company number 00067863
Note
31 May 2021
£000
31 May 2020
£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
6
7
8
3,370
2,578
5,948
15
311
326
(102)
224
6,172
3,279
1,113
-
1,780
6,172
3,370
2,699
6,069
13
349
362
(83)
279
6,348
3,792
600
(807)
2,763
6,348
The loss of the company for the year was £176,000 (2020: loss £92,000).
The financial statements on pages 61 to 62 were approved and authorised for issue by the Board of Directors on
15 October 2021 and were signed on behalf of the Board by: -
Jan G Holmstrom
Non-Executive Chairman
The notes on pages 63 to 65 form part of these financial statements.
61
Company Statement of Changes in Equity
for the year ended 31 May 2021
At 31 May 2019
Loss for the year
Share
capital
£000
Capital
redemption
reserve
£000
Treasury
share
reserve
£000
Retained
earnings
Total
equity
£000
£000
3,792
600
(807)
2,855
6,440
-
-
-
(92)
(92)
At 31 May 2020
3,792
600
(807)
2,763
6,348
Cancellation of treasury shares
Loss for the year
(513)
-
513
-
At 31 May 2021
3,279
1,113
807
(807)
-
-
-
(176)
(176)
1,780
6,172
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 63 to 65 form part of these financial statements.
62
Notes
forming part of the financial statements of the Company for the year ended 31 May 2021
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.
Impairment of intercompany receivables
At each financial year end, the Company assesses whether there is an indication that is its assets have been
impaired. If there is an indication that its assets have been impaired, the recoverable amount is assessed to
determine the extent of the impairment. If it is not possible to estimate the recoverable amount of the individual
asset, the recoverable amount of the cash generating unit to which it relates is determined.
The recoverable amount is defined as the higher of the fair value less costs to sell and value in use at that date.
Value in use is calculated as the expected future cash flows discounted on a pre-tax basis, using a pre-tax discount
rate that reflects the current market assessments of the time value of money and the risks specific to that assets
or cash generating unit. If the recoverable amount of the asset is less than the carrying value, the carrying value
is reduced to its recoverable amount, that reduction is recognised as an impairment loss.
An impairment loss relating to an asset carried at cost less accumulated depreciation or amortisation is recognised
immediately in the profit and loss account. If an impairment loss subsequently reverses, the carrying value of the
asset is increased to the revised recoverable amount but limited to the carrying value that would have been
determined had no impairment been recognised in prior years. A reversal of an impairment loss is recognised in
the profit and loss account.
Financial assets and liabilities
IFRS 9’Financial Instruments’ outlines the principles an entity must apply to measure and recognise financial
assts and liabilities. The Group recognises financial assets and liabilities when it becomes a party to the terms
of the contract, which is the settlement date.
Financial assets
Financial assets that are held to collect are categorised as amortised cost under IFRS 9. This includes the Group’s
trade and other receivables and cash and cash equivalents. The measurement of these financial assets held at
amortised cost remains unchanged since the introduction of IFRS 9.
Amounts receivable from subsidiary undertakings
Amounts receivable from subsidiary undertakings are initially measured at fair value and subsequently measured
at amortised cost. Impairment provisions are recognised based on the general approach within IFRS 9, which
requires an assessment of whether there has been a significant increase in credit risk since initial recognition of
the facility. The requirement for a provision is assessed based on 12-month expected credit losses, or lifetime
credit losses, as appropriate.
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.
63
Notes
forming part of the financial statements of the Company for the year ended 31 May 2021
1 Accounting policies (continued)
Financial liabilities
The classification and measurement of financial liabilities in accordance with IFRS 9 remains largely unchanged.
All financial liabilities are measured at amortised cost and include trade and other payables and bank borrowings.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate.
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 £176,000 (2020: loss £92,000).
The remuneration of the Auditors is disclosed in note 5 to the consolidated financial statements.
3 Staff costs
The average number of persons employed in the year by the Company (including Directors) was 4 (2020: 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 2021
Year ended
31 May 2020
£000
£000
98
1
1
100
108
1
2
111
The remuneration of the Directors is disclosed in note 6 to the consolidated financial statements. Outstanding
share options granted to employees or Directors at 31 May 2021 were nil (2020: nil).
4 Investments in subsidiary undertakings
At 31 May 2020 and 2021
Cost
£000
3,370
Accumulated
impairment
£000
Net carrying
amount
£000
-
3,370
Details of subsidiary undertakings are given on the Group Information page 1 and in note 17 to the consolidated
financial statements.
64
Notes
forming part of the financial statements of the Company for the year ended 31 May 2021
5 Amounts receivable from subsidiary undertakings
31 May 2021
£000
31 May 2020
£000
Total amounts receivable from subsidiary undertakings
2,578
2,699
No impairment loss was recognised in the year in respect of amounts receivable from subsidiary undertakings.
(2020: £nil). The amounts receivable from subsidiary undertaking relates to long term loans with details as
follows:
Fixed
Interest
Rate
Repayment
Profile
31 May 2021
£000
31 May 2020
£000
Loan 1
8%
Repayable on demand
2,578
2,699
Although these balances are repayable on demand, the expectation of recoverability of these balances is in
nature and substance more of a longer-term funding arrangement, in which the company does not require
payment immediately. As such, this is presented as a non-current asset.
6 Trade and other receivables
31 May 2021
£000
31 May 2020
£000
Total trade and other receivables
15
13
7 Trade and other payables
Accruals and deferred income
Total trade and other payables
8 Share capital
Issued and fully paid
31 May 2021
£000
31 May 2020
£000
102
102
2021
Number
2021
£000
2020
Number
83
83
2020
£000
3,792
-
3,792
At beginning of the period
Cancellation of treasury shares
31,600,000
(4,279,157)
3,792
(513)
31,600,000
-
At end of period
27,320,843
3,279
31,600,000
At 31 May 2021, no options over ordinary shares of the Company were outstanding (2020: nil).
Details of the purchases and cancellation of the shares held in treasury are disclosed in note 26 to the
consolidated financial statements.
9 Commitments
There were no contracted capital commitments for the Company in either period.
End of the financial statements.
65
Appendix 1 - Five Year Summary of Results and Capital Employed
Year ended
31 May
2021
£000
Year ended
31 May
2020
£000
Year ended
31 May
2019
£000
Year ended
31 May
2018
£000
Year ended
31 May
2017
£000
33,013
(26,700)
35,555
(29,623)
41,271
(32,254)
41,538
(32,526)
41,053
(32,468)
6,313
(7,559)
966
5,932
(8,020)
-
9,017
(9,057)
-
9,012
(7,860)
-
8,585
(7,008)
-
Results
Revenue
Cost of sales
Gross profit
Operating expenses
Other income
(Loss)/profit from operations
(excluding impairment of goodwill)
Net finance expense
Share of post-tax (loss)/profit of
joint venture
Impairment of goodwill
(280)
(228)
(2,088)
(260)
-
-
-
-
(40)
(194)
(34)
(982)
(Loss)/profit before tax
Tax credit/(charge)
(508)
42
(2,348)
(6)
(1,250)
(43)
1,152
(160)
1,577
(162)
(107)
-
885
(340)
33
-
1,448
(334)
(Loss)/profit after tax
(466)
(2,354)
(1,293)
545
1,114
Assets
Non-current assets
Current assets
10,261
13,960
10,624
14,962
9,615
17,940
10,110
16,831
10,339
18,756
Total assets
24,221
25,586
27,555
26,941
29,095
Non-current liabilities
Current liabilities
(3,354)
(6,306)
(3,428)
(6,575)
(2,289)
(7,525)
(3,985)
(3,968)
(4,259)
(6,534)
Total liabilities
(9,660)
(10,003)
(9,814)
(7,953)
(10,793)
Total net assets
14,561
15,583
17,741
18,988
18,302
Financed by
Total equity
Key Statistics
14,561
15,583
17,741
18,988
18,302
Basic and diluted (loss)/earnings per
share
(1.7p)
(8.6p)
(4.7p)
2.0p
4.1p
Net assets per share
53.3p
57.0p
64.9p
69.4p
66.9p
66
Notice of Annual General Meeting
The one hundred and twenty first annual general meeting of the Leeds Group plc (the Company) will be held at 12
noon on 23 November 2021 at the Radisson Blu Hotel, Chicago Avenue, Manchester Airport, M30 3RA for the
following purposes:
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 2021 and the report
of the auditors thereon.
To re-appoint Mr Jörg Hemmers as a director.
To re-appoint Mr Dave Cooper 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.
5.
To authorise the Directors to fix the auditor's 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 resolution 7 will be proposed as a special resolution:
6.
7.
That, the Directors of the Company ("Directors") be and hereby are generally and unconditionally authorised
for the purposes of section 551 of the Companies Act 2006 (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 £1,093,000 (being approximately one third of the
existing issued share capital of the Company). 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 of shares or grant of Rights already made or to be made
pursuant to such authorities.
That, subject to the passing of resolution 6, the Directors of the Company ("Directors") be and hereby are
empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the "Act") to allot equity securities
(within the meaning of section 560 of the Act) wholly for cash pursuant to the authority conferred by resolution
6 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, up to an aggregate nominal amount of £164,000 (being
approximately 5 per cent. of the existing issued share capital of the Company.
67
Notice of Annual General Meeting (continued)
Special business (continued)
The powers 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.
For the purpose of this resolution 7:
a)
references to an "allotment of equity securities" shall include a sale of treasury shares; and
b)
the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or convert
any securities into shares of the Company, the nominal amount of such shares which may be allotted
pursuant to such rights.
By Order of the Board
Dawn Henderson
Company Secretary
Craven House
14-18 York Road
Wetherby
Leeds
LS22 6SL
15 October 2021
68
Notice of Annual General Meeting (continued)
Notes
1.
Shareholders of the Company are entitled to attend, speak and vote, either in person or by proxy, at general
meetings of the Company.
This the formal notification to members of the annual general meeting, its date and time, and the matters to be
considered. If you are in doubt as to what action to take you should consult an independent adviser.
Resolutions 1 to 6 (inclusive) will be proposed as ordinary resolutions. A simple majority (being more than
50 per cent.) of votes cast must be in favour of each such resolution in order for it to be passed. Resolution 7
will be proposed as a special resolution. A special resolution requires 75 per cent. or more of votes cast to be
in favour of the resolution in order for it to be passed. Resolutions 6 and 7 are items of special business.
2.
3.
4.
5.
6.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those
shareholders registered in the register of members of the Company at 8.30pm on 19 November 2021 as holders
of ordinary shares of 12p each in the capital of the Company shall be entitled to 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 vote at the meeting.
A member entitled to 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 but will need to participate in the annual general meeting in order to represent the member. Members
are strongly urged to register their votes in advance by appointing the Chairman of the annual general
meeting as their proxy (and not any other person). It is not recommended that any other person is
appointed as a proxy as they will not be able to attend the annual general meeting and the vote will not
be counted.
A member can vote either by logging on to www.signalshares.com and following the instructions; in the case
of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out in note 6; or by requesting a hard copy form of proxy directly from the registrars, Link
Group on Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between
09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. Or email Link Group at
shareholderenquiries@linkgroup.co.uk.
To submit a proxy electronically using the link www.signalshares.com you will need to log into your Signal
Shares account or register if you have not previously done so. To register you will need your Investor Code
which is detailed on your share certificate. need help with voting online, please contact our Registrar, Link
Group.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the annual general meeting (and any adjournment of it) by using the procedures described
in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST
members who have appointed (a) voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf.
69
Notice of Annual General Meeting (continued)
Notes (continued)
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate
CREST message ("CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear
UK & Ireland Limited's ("Euroclear") specifications, and must contain the information required for such
instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the
appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the Company's agent (ID RA10) by 12 noon on 19
November 2021. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Application Host) from which the Company's agent is able
to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change
of instructions to proxies appointed through CREST should be communicated to the appointee through other
means.
CREST members and, where applicable, their CREST sponsors, or voting service providers should note that
Euroclear does not make available special procedures in CREST for any particular message. Normal system
timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor
or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted
by means of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).
In the case of joint holders, where more than one of the joint holders’ purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in
which the names of the joint holders appear in the Company’s register of members in respect of the joint
holding (the first-named being the most senior).
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 submitted electronically using the Signal Shares system; CREST
system; or lodged at the Registrars of the Company, Link Group, Central Square, 29 Wellington Street, Leeds,
LS1 4DL not later than 12 noon on 19 November 2021.
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 8 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 a hard-copy proxy form and would like to change the
instructions using another hard-copy proxy form, please contact Link Group, Central Square, 29 Wellington
Street, Leeds, LS1 4DL.
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.
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 Group. 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 Group at Central Square, 29
Wellington Street, Leeds, LS1 4DLno later than 12 noon on 19 November 2021. If you attempt to revoke your
proxy appointment but the revocation is received after the time specified then, subject to paragraph 8 above,
your proxy appointment will remain valid.
7.
8.
9.
10.
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Notice of Annual General Meeting (continued)
Notes (continued)
11. As at 15 October 2021 (being the last practicable business day prior to the publication of this notice) the
Company’s issued share capital consisted of 27,320,843 ordinary shares of 12 pence each, with one voting
right per share.
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.
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 2021. That report and those financial statements, and the report of the Company's auditors on those financial
statements, are set out on pages 1 to 65 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 Jörg Hemmers and Mr David Cooper are
the Directors subject to retirement by rotation. Resolutions 2 and 3 propose the re-appointment of Mr Hemmers and
Mr Cooper, 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.
Resolution number 5
Resolution 5 follows past practice in giving the Directors authority to agree the auditor’s remuneration.
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 £1,093,000 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 and is in substitution for, all existing like authorities.
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 £164,000, 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.
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LEEDS
GROUP PLC
Registered in England and Wales
Registered Number 00067863
Registered Office
Craven House
14 – 18 York Road
Wetherby
Leeds
LS22 6SL
Tel: 01937 547877
Email: admin@leedsgroup.plc.uk
Website: www.leedsgroup.plc.uk
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