LEEDS
GROUP PLC
Annual Report and Accounts 2023
Contents
Group Information and Advisors
Strategic Report
Chairman’s Statement
Finance and Operating Review
Governance
Board of Directors
Chairman’s Corporate Government Statement
Corporate Governance Report
Directors’ Report
Independent Auditor’s Report
FFinancial Statements
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
1
2
2
3
7
7
8
17
21
28
29
30
31
32
57
58
59
62
63
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
Director during the year
Jörg Hemmers
Principal activity
Import, sale & distribution of fabric
Wholly owned subsidiary companies of Hemmers
to 1 January 2023:
Stoff-Ideen-KMR GmbH
‘‘KMR’’
Twentestrasse 1
48527 Nordhorn
Germany
Director during the year
Jörg Hemmers
Principal activity
Placed into insolvency during the year and,
therefore, regarded as a discontinued operation
Group Advisers
Solicitors
Financial Advisers
Auditors
Walker Morris LLP
33 Wellington Street
Leeds
LS1 4DL
Cairn Financial Advisers LLP
Ninth Floor
107 Cheapside
London
EC2V 6DN
MHA
Sixth Floor
2 London Wall Place
London
EC2Y 5AU
Registrars*
Principal Bankers
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Lloyds Bank
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
Strategic Report (continued)
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 2023, 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
•
•
•
loss before tax
loss per share
working capital levels
Group highlights
• Group revenue for all operations in the year was £27,817,000 (2022: £29,590,000).
• Group operating loss was £509,000 (2022: loss £2,990,000 which included an impairment charge of
£1,662,000).
• The interest charge was £384,000 (2022: £255,000) reflecting higher interest rates.
• Group loss before tax was £893,000 (2022: loss £3,245,000).
• The tax credit in the year was £53,000 (2022: charge £4,000).
• Total loss per share was 3.1p (2022: loss per share 11.9p).
Hemmers
Hemmers is an international business engaged in designing, importing, warehousing and wholesaling of fabrics from
its base in Germany. The markets in Germany and other European countries have over the past few years been affected
by the Covid-19 pandemic and the conflict in Ukraine and more recently by high inflation and high interest rates.
Management have made significant reductions in the cost base and will continue to align costs with sales levels and
look to make efficiencies wherever they can to ensure Hemmers is as competitive as it can be in the marketplace.
External sales increased slightly in the year to £24,290,000 (2022: £23,998,000). The gross contribution percentage
increased to 35% (2022: 34%) and the gross profit increased to £5,156,000 (2022: £4,440,000). Hemmers reported a
loss before interest of £248,000 (2022: loss £415,000). External interest has increased to £337,000 (2022: £162,000)
due to increased interest rates.
Hemmers bank debt, net of cash, increased in the year to £6,046,000 (2022: £5,643,000). The bank debt is secured on
the assets of Hemmers.
KMR
On 7 October 2022, the German Courts accepted Hemmers’ management decision to place its subsidiary KMR into an
insolvency process. As a result of the insolvency, an impairment charge of £1,662,000 was recognised in last year’s
accounts with the assets relating to the KMR retail shops being written down to a £nil net book value. Full control
passed to the insolvency administrator on 1 January 2023 and at that point KMR ceased to be a subsidiary within the
Group. The results for KMR are only consolidated for the 7 months to 31 December 2022 and are reported as a
discontinued operation in these financial statements.
The loss for the 7-month period before interest for the year was £32,000 (2022: loss £2,277,000 for 12 months) and the
loss after interest was £79,000 (2022: loss £2,370,000). During the year, KMR’s freehold property was sold for
£521,000 realising a profit on sale of £139,000. The Group made a net gain of £138,000 on the transfer of its assets to
the insolvency administrator.
3
Strategic Report (continued)
Finance and Operating Review (continued)
Business review (continued)
Fixed Assets
The net book amount of tangible fixed assets is £6,487,000 (2022: £7,335,000). Capital additions in the year amounted
to £51,000 (2022: £447,000). During the year, KMR’s freehold property was sold for £521,000 realising a profit on sale
of £139,000.
The net book value of right-to-use assets is £207,000 (2022: £170,000). These relate to car leases, of which there were
£142,000 additions during the year (2022: £45,000).
Working Capital and Cash Flow
Net debt decreased from £6,381,000 to £5,812,000 in the year. Net cash generated in the year at average exchange rates
was £1,892,000 (2022: used £344,000). Working capital, which comprises inventories, trade and other receivables and
trade and other payables, decreased in the year by £2,239,000 (2022: increased by £1,139,000) mainly due to lower
levels of stock as there was no KMR stock this year. Loan repayments of £539,000 (2022: £708,000) have been made
this year. There were no new loans taken out in the year (2022: £2,835,000).
Lease liability repayments (including interest) of £698,000 (2022: £1,059,000) were 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 £738,000 as follows:
At 31 May 2022
Loss after tax
Translation differences
At 31 May 2023
Net assets
£000
11,177
(840)
102
10,439
Per share
pence
40.9
(3.1)
0.4
38.2
Debt Profile
The funding policy of the Group continues to match its funding requirements in a cost-effective fashion with an
appropriate combination of short and longer-term debt. Property investments have been financed by long term loans at
fixed interest rates between 1.05% and 1.65%. Working capital finance, when required, is via short term loans of three
months currently attracting interest at rates of between 1.5% and 3%. Bank debt in the subsidiary is secured by charges
on inventories, receivables and property and is without recourse to the Parent Company.
4
Strategic Report (continued)
Finance and Operating Review (continued)
Business review (continued)
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 2023, this resulted in average availability of
€8.4m (2022: €7.7m) with a range of €7.2m to €10.0m (2022: €6.5m to €8.8m) and minimum headroom of €1.0m (2022:
€3.2m) in the year. In the forecast period to 31 May 2025, the estimated availability range is €7m to €8.8m and the
minimum headroom €0.3m. The facility is committed until 31 May 2024. Hemmers also has another working capital
facility of €1m secured on working capital which was fully drawn at the year end. The facilities are uncommitted, but
the bank is obliged to give reasonable notice of any change.
The Directors consider that there will be sufficient headroom available within the Hemmers working capital facility
and, therefore, the Directors are of the opinion that it is appropriate to apply the going concern basis of preparation to
the financial statements.
However, the Directors acknowledge that the volatile global situation could have an impact on the future trading result
of Hemmers and in turn could affect the ability of the Group to meet its forecasts and therefore comply with banking
covenants in downside scenarios. In addition, the Group has borrowing facilities which are due for renewal within one
year of the date of approval of these financial statements, which the Group relies on to operate as a going concern. The
Directors will look to renew the existing facilities when they are due for renewal, although acknowledge the conditions
noted above give rise to a material uncertainty around the going concern of the Group.
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.
Principal risks and uncertainties
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.
5
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 2020. 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’s main activity is as a textiles business which designs, sources, and
sells fabric. It sources mainly from the Far East and sells mainly to the
European market. To service these markets, the Group has invested
significantly in recent years in warehousing and distribution facilities and in
double folding plant and machinery to provide a complete, rapid response, in-
house service.
The Board continues to look at all available options to 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 announcements 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.
8
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 held in Germany or via the internet and will involve
Hemmers management for discussions on the performance of that subsidiary.
9
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 one meeting 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.
10
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 2022/23, there were nine internet Board meetings and one other Board
meetings which were attended by all Directors. There were two further internet
Board Meeting where all Directors did not attend.
In 2022/23 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.
11
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.
12
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.
Fully
compliant
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.
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.
13
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.
14
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
arrangements for senior management
incentive
• 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
15
Directors’ Report
The Directors present their annual report and the audited financial statements for the year ended 31 May 2023.
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.
Results and dividend
The consolidated statement of comprehensive income for the year is set out on page 28.
Given the results of the financial year, the Directors do not recommend the payment of a dividend in 2023 (2022: £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. Mr Jörg Hemmers
resigned as a director effective 1 January 2023.
The Director retiring by rotation is Mr David Cooper who, being eligible, offers himself 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
Johan Claesson
David Cooper
Jan Holmstrom
7,978,050
-
-
-
-
-
7,978,050
-
-
-
-
-
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 23 October
2023.
Substantial shareholdings
The following shareholders held interests of 3% or more of the issued share capital of the Company as at 23 October
2023:
Mr Johan Claesson and associates
Mr Peter Gyllenhammar and associates
Sunningdale Investments Ltd
% of issued share capital
29.20
25.04
10.49
17
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 2023 and 31
May 2022.
Leeds Group plc Ordinary shares of 12 pence each
The market value of Leeds Group shares between 1 June 2022 and 31 May 2023 ranged between 9.5p and 16p. The
average market value for the year was 14p, and as at 31 May 2023 the market value was 12.5p (31 May 2022: 16p).
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 Directors are committed to return its only subsidiary, Hemmers back to profitability but they will also continue to
look at all options available to the Group to maximise shareholder value.
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 financing facilities available to the Group and the circumstances in which these could be limited or
withdrawn.
Financial performance and forecasts
Forecasts have been prepared for the 24-month period to May 2025 which indicate a return to modest profit over that
period. The Company has sensitised these forecasts for a reduction in revenues for Hemmers and the banking facilities
remain adequate. The Directors are of the opinion that this is a reasonable worst case, and the currently available
facilities would be sufficient in this scenario.
For purposes of the going concern assessment, the Group make estimates of likely future cash flows which are based
on assumptions given the uncertainties involved. The key assumptions include (i) No significant deterioration in general
market conditions; (ii) No significant customer loss; (iii) No significant increase in raw material prices (iii) Continued
support of lenders. These assumptions are made by management based on recent performance, external forecasts and
management’s knowledge and expertise of the cashflow drivers. Management continually monitors the Group’s cash
balances and forecasts cash flows, including stress testing in respect of the timing of those cash flows.
18
Directors’ Report (continued)
Going Concern (continued)
Financing facilities
The operating business of the Group, Hemmers is 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 21. 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 2023, this resulted in average availability
of €8.4m (2022: €7.7m) with a range of €7.2m to €10.0m (2022: €6.5m to €8.8m) and minimum headroom of
€1.0m (2022: €3.2m) in the year. In the forecast period to 31 May 2025, the estimated availability range is €7m
to €8.8m and the minimum headroom €0.3m. The covenants on this facility are an equity ratio which must
exceed 50% of gross assets at the financial year end and profit for the previous six months to exceed €121,000.
At 31 May 2023, the ratio was 52% and the previous six months profit was €347,000. The facility is committed
until 31 May 2024.
A further working capital facility of €1m secured on working capital which was fully drawn at the year end.
The facilities are uncommitted, but the bank is obliged to give reasonable notice of any change.
• A €3m Parent Company loan which is currently subordinated to the working capital facility.
The Directors consider there will be sufficient headroom available in the Hemmers working capital facility and,
therefore, the Directors are of the opinion that it is appropriate to apply the going concern basis of preparation to the
financial statements.
However, the Directors acknowledge that the volatile global situation could have an impact on the future trading result
of Hemmers and in turn could affect the ability of the Group to meet its forecasts and therefore comply with banking
covenants in downside scenarios. In addition, the Group has borrowing facilities which are due for renewal within one
year of the date of approval of these financial statements, which the Group relies on to operate as a going concern. The
Directors will look to renew the existing facilities when they are due for renewal, although acknowledge the conditions
noted above give rise to a material uncertainty around the going concern of the Group.
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 and Parent Company financial statements in accordance with UK adopted
International Financial Reporting Standards (‘UK adopted IFRS’) and in accordance with 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 properly prepared in accordance with UK adopted International Financial Reporting
Standards in conformity with the Companies Act 2006, subject to any material departures disclosed and explained
in the financial statements, including FRS101 Reduced Disclosure Framework: and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
•
19
Directors' Report (continued)
Directors' responsibilities (continued)
The Directors me responsible for keeping adequate accounting records that are sufFrcient 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 ofthe 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 Cornpanies Act 2006, Resolution 3 is to be proposed at the forthcoming Annual
General Meeting for the re-appointuent of MHA as auditors of the Company following their appointrnent during the
year by the Directors, 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.
The Directors' report was approved by the Board on 23 October 2023 and signed on its behalf by:
\-'r*-^-rs.=c4
Dawn Henderson
Company Secretary
Craven House
14 - l8 York Road
Wetherby
Leeds,
LS226SL
20
Independent Auditor’s Report to the Shareholders of Leeds Group plc
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional and regulatory
responsibilities and reporting obligations to the members of Leeds Group plc. For the purposes of the table on pages 23
to 24 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our”
refer to MHA. The Group financial statements, as defined below, consolidate the accounts of Leeds Group plc and its
subsidiaries (the “Group”). The “Parent Company” is defined as Leeds Group plc, as an individual entity. The relevant
legislation governing the Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).
Qualified opinion
We have audited the financial statements of Leeds Group plc for the year ended 31 May 2023.
The financial statements that we have audited comprise:
the Consolidated Statement of Comprehensive Income
the Consolidated Statement of Financial Position
the Consolidated Cash Flow Statement
the Consolidated Statement of Changes in Equity
•
•
•
•
• Notes 32 to 56 to the consolidated financial statements, including significant accounting policies
•
•
• Notes 59 to 61 to the Company financial statements, including significant accounting policies.
the Company Statement of Financial Position
the Company Statement of Changes in Equity and
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and UK adopted International Financial Reporting Standards (“UK adopted IFRS”).The financial
reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable
law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure
Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the effects of the matter described in the Basis of qualified opinion section of our report:
•
•
•
•
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 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with applicable law and United
Kingdom adopted International Financial Reporting Standards (UK adopted IFRS);
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.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for qualified opinion
KMR Financial Information
As disclosed in Note 7, KMR, one of the Group’s subsidiaries was placed into insolvency by management. Full control
passed to the insolvency administrator on 1 January 2023 and therefore the financial results from KMR are consolidated
up until 31 December 2022 as part of the Group Annual Report.
Once the insolvency administrator took control of KMR, they were the only party who had access to the entity’s
accounting records for the period from 1 June 2022 to 31 December 2022. As part of our audit, we were unable to obtain
any audit evidence for the period that KMR was under the Group’s control. Consequently, in respect of discontinued
operations we were unable to determine whether any adjustments to the Consolidated Statement of Comprehensive
Income and Consolidated Cash Flow were necessary.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
21
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Material uncertainty relating to going concern
We draw your attention to note 2 in the financial statements which states that the Group and Parent Company incurred
substantial losses during the year and that the Group and Parent Company’s operational existence is dependent on the
continued support from the Group’s bank facilities and the eventual return to profitability.
The impact of this together with other matters set out in the note, indicate that a material uncertainty exists that may
cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of
this matter. In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of
the Group and Parent Company’s ability to continue to adopt the going concern basis of accounting included:
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
• The consideration of inherent risks to the Group’s operations and specifically its business model.
• The evaluation of how those risks might impact on the Group’s available financial resources.
• Review of the mathematical accuracy of the cashflow forecast model prepared by management and
corroboration of key data inputs to supporting documentation for consistency of assumptions used with our
knowledge obtained during the audit.
• Challenging management for reasonableness of assumptions in respect of the timing and quantum of cash
receipts and payments included in the cash flow model.
• Holding discussions with management regarding future financing plans, corroborating these where necessary
and assessing the impact on the cash flow forecast.
• Review of the Group’s external debt exposure to determine if any future repayments have been included within
the Group’s cash flow projections.
• Holding discussions with management and completing reviews of any events after the reporting period to
identify if these may impact on the Group’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Scope
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.
At the beginning of reporting period 31 May 2023, the Group consisted of 4 components:
Leeds Group plc (standalone parent), Hemmers-Itex Textil Import Export GmbH
(Hemmers), Stoff-Ideen KMR GmbH (KMR) and Leeds Properties GmbH.
Two of the Group’s entities, KMR (liquidated) and Leeds Properties GmbH (dormant),
were disposed during the year. For KMR we had intended to complete specified audit
procedures for the period up until 31 December 2022 (the date of disposal), although due
to difficulties obtaining information from the insolvency administrator, this was not
possible.
We therefore determined that the two remaining entities in the Group, being Leeds Group
plc (standalone parent) and Hemmers are both significant components of the Group.
The significant components were subject to full scope audits for the purposes of our audit
report on the Group financial statements.
Material subsidiaries were determined based on:
financial significance of the component to the Group as a whole, and
1)
2) assessment of the risk of material misstatements applicable to each component.
Our audit scope results in all major operations of the Group being subject to audit work.
22
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Overview of our audit approach (continued)
Materiality
Group
2023
2022
£278,000
£147,900 1.0% (2022: 0.5%) of total revenue
Parent Company
£41,900
£30,900 0.5% (2022: 0.5%) of gross assets
Key audit matters
Recurring
•
Inventory valuation
Key audit matters
In addition to the matter described in the basis for qualified opinion section, 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.
These matters included those matters 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 basis for qualified opinion section, we have determined the matter described
below to be the key audit matter to be communicated in our report.
Inventory Valuation
Key audit
matter description
How the scope of our audit
responded to the key audit
matter
The inventory held by the Group is a key and material area to the financial statements
and accounts for a large amount of the Group’s current assets. Due to the nature of
the Group’s operations and the reported stock error in the year, the inventory balance
is inherently linked to both the
purchases and the sales cycles.
Typically, items of inventory can be held for significant periods of time before
eventually being sold. Therefore, there is the risk that various items of inventory may
be held at an amount which is above its net realisable value.
Our audit work included, but was not restricted to the following:
• Attending the year-end inventory counts on multiple sites including sample
testing of inventory items recorded on inventory count sheets to physical
inventory located in the warehouses and vice versa.
Performing a reconciliation between the inventory report and the balance
sheet amount including discussions with management regarding any
discrepancies.
•
• Reviewing the inventory listing, as well as the inventory physically present
in the warehouses for any slow-moving or obsolete inventory items which
requires writing off or providing for.
Performing substantive testing for a sample of inventory items held at the
year end to the original purchase invoice and to related post year-end sales
to ensure inventory is held at the lower of cost and net realisable value in
the accounts.
•
• Reviewing managements provision calculation
the
calculations have been prepared with the requirements of the applicable
accounting standards and are mathematically correct.
to ensure
that
• Obtaining an understanding of management’s policy and methodology in
•
calculating the stock provision.
Performing a review of the Group’s accounting policies, to confirm that
these conform with the requirements of IFRS.
23
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Key audit matters (continued)
Key observations
During the year an inventory error was identified by management which was the
result of a software issue. The issue arose as discrepancies identified in the stock
count were not correctly reconciled on the system. This error has since been adjusted
for by management.
Except for the above, no issues were identified from the procedures performed over
inventory valuation.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial
statements. 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. Materiality is used in planning the scope of our work, executing that work
and evaluating the results.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Performance
materiality
How we
determined it
Rationale for the
benchmark
applied
Group financial statements
Parent Company financial statements
£278,000 (2022: £147,900)
£41,900 (2022: £30,900)
1.0% of total revenue (2022: 0.5% of
total revenue)
0.5% of gross assets (2022: 0.5% of gross assets)
£193,000 (2022: 103,500)
£29,330 (2022: £21,600)
70% of overall materiality (2022: 70%)
70% of overall materiality (2022: 70%)
is
revenue
Total
the key measure
considered by the users of the Group’s
financial statements. Moreover, on an
industry wide level within the consumer
market, this materiality benchmark is
consistent across other similar listed
entities.
The Parent Company is largely a holding company
incurring limited costs and therefore gross assets
the most appropriate
has been considered
benchmark for materiality.
Therefore, we consider this to be the
most appropriate benchmark for Group
materiality.
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated
financial statements. This assessment takes into account the size, risk profile, organisation / distribution and
effectiveness of group-wide controls, changes in the business environment and other factors such as recent internal audit
results when assessing the level of work to be performed at each component.
24
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Overview of the scope of the Group and Parent Company audits (continued)
At the beginning of the financial year ending 31 May 2023, the Group consisted of 4 components, which are based in
both the UK and Germany. The scope for these entities is presented in the table below.
During the year, two of the companies were liquidated and we therefore determined that we needed to perform specified
and analytical procedures on those entities to gain sufficient coverage.
The coverage achieved by our audit procedures was:
Number of
components
Revenue
Gross assets
Loss before
tax
Full scope audit
Audit of specified balances, transaction
classes or disclosures
Analytical Procedures
KMR – See basis for qualified opinion
Total
2
0
1
1
4
88%
0%
0%
12%
100%
100%
0%
0%
0%
100%
91%
0%
0%
9%
100%
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the Parent Company,
which are relevant to our audit, such as those relating to the financial reporting cycle.
Climate-related risks
In planning our audit and gaining an understanding of the Group and Parent Company, we considered the potential
impact of climate-related risks on the business and its financial statements.
We have agreed with managements’ assessment that climate-related risks are not material to these financial statements.
Reporting on other information
The other information comprises the information included in the annual report other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
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.
As described in the basis for qualified opinion section of our report, we were unable to obtain any audit evidence for
the period that KMR was under the Group’s control. Consequently, we were unable to determine whether any
adjustments to the results were necessary for the same reason.
Strategic report and directors’ report
Except for the possible effects of the matter described in the basis for qualified opinion section. 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.
Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and
understanding of the Group and the Parent Company and their environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the directors’ report.
25
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Matters on which we are required to report by exception
Arising solely from the limitation on the scope of the work relating to KMR, referred to above:
• we have not obtained all the information and explanations that we considered necessary for the purposes of
our audit; and
• we were unable to determine whether adequate accounting records have been kept.
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:
•
•
•
returns adequate for our audit have not been received by 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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, 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 Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor 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 aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered 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.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud
or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those
that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations.
Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the
financial statements, the less likely we would become aware of it.
Identifying and assessing potential risks arising from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of
irregularities, including fraud, included the following:
• We considered the nature of the industry and sector the control environment, business performance including
remuneration policies and the Group’s, including the Parent Company’s, own risk assessment that irregularities
might occur as a result of fraud or error. From our sector experience and through discussion with the Directors,
we obtained an understanding of the legal and regulatory frameworks applicable to the Group focusing on laws
and regulations that could reasonably be expected to have a direct material effect on the financial statements,
such as provisions of the Companies Act 2006, UK tax legislation or those that had a fundamental effect on
the operations of the Group.
26
Independent Auditor’s Report to the Shareholders of Leeds Group plc
(continued)
Identifying and assessing potential risks arising from irregularities, including fraud (continued)
We enquired of the directors and management concerning the Group’s and the Parent Company’s policies and
procedures relating to:
-
identifying, evaluating and complying with the laws and regulations and whether they were aware of any
instances of non-compliance;
- detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected
-
fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance with laws and
regulations.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might
occur by evaluating management’s incentives and opportunities for manipulation of the financial statements.
This included utilising the spectrum of inherent risk and an evaluation of the risk of management override of
controls. We determined that the principal risks were related to posting inappropriate journal entries to increase
revenue or reduce costs, creating fictitious transactions to hide losses or to improve financial performance, and
management bias in any accounting.
Audit response to risks identified
In respect of the above procedures:
we corroborated the results of our enquiries through our review of the minutes of the Group’s and the Parent
Company’s board and audit committee meetings, inspection of legal documents and list of cases where
applicable;
audit procedures performed by the engagement team in connection with the risks identified included:
- Holding discussions with management to ascertain any ongoing claims or issues during the year as well
as a review of legal and professional expense codes.
- Performing audit work over the risk of management override of controls, including testing of journal
entries and other adjustments for appropriateness, evaluating the business rationale of significant
transactions outside the normal course of business, and reviewing accounting estimates for bias.
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance
with applicable laws and regulations.
- Challenging assumptions and judgements made by management in their significant accounting estimates.
the Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that
the team had the appropriate competence and capabilities; and
we communicated relevant laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
for and on behalf of MHA, Statutory Auditor
London, United Kingdom
23 October 2023
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered
number OC312313)
27
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2023
Note
Year ended 31 May 2023
Discontinued
£000
Continuing
£000
Total
£000
Discontinued
£000
Year ended 31 May 2022
Continuing
£000
Total
£000
Revenue
8
3,527
24,290
27,817
5,592
23,998
29,590
Cost of sales
Gross profit
(3,249)
(19,134)
(22,383)
(4,551)
(19,570)
(24,121)
278
5,156
5,434
1,041
4,428
5,469
Distribution costs
(690)
(1,513)
(2,203)
(1,082)
(1,401)
(2,483)
Impairment of assets
Gain on discontinued
operations
Administrative costs
Total administrative
costs
Other income
Loss from operations
Finance expense
Loss before tax
5
7
5
5
9
Tax credit/(charge)
10
Loss for the year
attributable to the
equity holders of the
Parent Company
Other comprehensive
profit/(loss)
Translation
differences on foreign
operations
Total comprehensive
loss for the year
attributable to the
equity holders of the
Parent Company
-
138
225
363
17
(32)
(47)
(79)
-
-
-
(1,662)
-
(1,662)
-
(4,274)
138
(4,049)
(4,274)
154
(3,911)
171
-
(606)
(2,268)
32
(477)
(509)
(2,277)
(337)
(384)
(93)
-
(3,855)
(3,855)
115
(713)
(162)
-
(4,461)
(6,123)
147
(2,990)
(255)
(814)
(893)
(2,370)
(875)
(3,245)
53
53
-
(4)
(4)
(79)
(761)
(840)
(2,370)
(879)
(3,249)
15
87
102
(22)
(113)
(135)
(64)
(674)
(738)
(2,392)
(992)
(3,384)
There is no tax effect relating to other comprehensive income/(loss) for the year. Amounts included in other
comprehensive income/(loss) may be reclassified subsequently as profit or loss.
Loss per share attributable to the equity holders of the Company
Note
Year ended
31 May 2023
Year ended
31 May 2022
Basic and diluted total loss per share (pence)
11
3.1p
11.9p
The notes on pages 32 to 56 form part of these financial statements.
28
Consolidated Cash Flow Statement
for the year ended 31 May 2023
Note
Year ended
31 May 2023
Cash flows from operating activities
Loss for the year
Adjustments for:
Government assistance credit
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Depreciation of right-of-use assets
Impairment of right-of-use assets
Amortisation of intangible assets
Finance expense – interest on bank loans
Finance expense – interest lease liabilities
Gain on sale of property, plant and equipment
Loss on sale of right-of-use assets
Gain on discontinued operations
Tax (credit)/charge
Cash from operating activities before changes in working
capital and provisions
Decrease/(increase) in inventories
(Increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from/(used in) operating activities
Tax (paid)/received
Net cash flows generated from/(used in) operating
activities
Investing activities
Purchase of property, plant and equipment
Proceeds from the sale of fixed assets
Net cash generated from/(used in) investing activities
Financing activities
Bank borrowings drawn
Bank borrowing disposed of
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)/generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Translation loss on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents disposed of
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
The notes on pages 32 to 56 form part of these financial statements.
30
5
13
13
14
14
15
9
9
5
5
7
10
17
18
20
13
21
7
21
22
22
9
5
7
19
19
20
Year ended
31 May 2022
£000
(3,249)
(119)
735
42
827
1,620
5
179
76
-
-
-
4
120
(1,818)
(43)
722
(1,019)
114
(905)
(447)
-
(447)
2,835
-
(708)
(983)
(76)
(179)
119
1,008
£000
(840)
(59)
608
-
103
-
6
347
37
(142)
3
(138)
(53)
(128)
2,744
(404)
(101)
2,111
(32)
2,079
(51)
521
470
-
868
(539)
(661)
(37)
(347)
59
(657)
1,892
(3)
126
(1,781)
(344)
(2)
472
-
234
234
-
234
126
471
(345)
126
Consolidated Statement of Changes in Equity
for the year ended 31 May 2023
At 31 May 2021
Loss for the year
Other comprehensive loss
Total comprehensive loss
At 31 May 2022
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
Share
capital
£000
Capital
redemption
reserve
£000
Foreign
exchange
reserve
£000
Retained
earnings
Total
equity
£000
£000
3,279
1,113
2,185
7,984
14,561
-
-
-
-
-
-
-
(3,249)
(3,249)
(135)
-
(135)
(135)
(3,249)
(3,384)
3,279
1,113
2,050
4,735
11,177
-
-
-
-
-
-
-
(840)
(840)
102
102
-
102
(840)
(738)
At 31 May 2023
3,279
1,113
2,152
3,895
10,439
The following describes the nature and purpose of each reserve within equity:
Reserve
Share capital
Description and purpose
The nominal value of issued ordinary shares in the Company.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury share reserve
Cost of own shares held in treasury.
Foreign exchange reserve
Gains/(losses) arising on retranslation of the net assets of overseas
operations into sterling.
Retained earnings
Cumulative net gains/(losses) recognised in the consolidated statement
of comprehensive income after deducting the cost of cancelled treasury
shares.
The notes on pages 32 to 56 form part of these financial statements.
31
Notes
forming part of the financial statements for the year ended 31 May 2023
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.
The subsidiaries of the Group are set out on page 1 Group Information, the Directors Report and note 16.
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.
The Group financial statements have been properly prepared in accordance with UK adopted International
Financial Reporting Standards (UK adopted IFRS) and in accordance with the Companies Act 2006.
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 consolidated statement of
comprehensive income. 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 2023, 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 financing facilities available to the Group and the circumstances in which these could be limited
or withdrawn.
Financial performance and forecasts
Forecasts have been prepared for the 24-month period to May 2025 which indicate a return to modest profit
over that period. The Company has sensitised these forecasts for a reduction in revenues for Hemmers and the
banking facilities remain adequate. The Directors are of the opinion that this is a reasonable worst case, and
the currently available facilities would be sufficient in this scenario.
32
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
Going Concern (continued)
Financial performance and forecasts (continued)
For purposes of the going concern assessment, the Group make estimates of likely future cash flows which are
based on assumptions given the uncertainties involved. The key assumptions include (i) No significant
deterioration in general market conditions; (ii) No significant customer loss; (iii) No significant increase in raw
material prices (iii) Continued support of lenders. These assumptions are made by management based on recent
performance, external forecasts and management’s knowledge and expertise of the cashflow drivers.
Management continually monitors the Group’s cash balances and forecasts cash flows, including stress testing
in respect of the timing of those cash flows.
Financing facilities
The operating business of the Group is Hemmers which is 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 21. 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 2023, this resulted in
average availability of €8.4m (2022: €7.7m) with a range of €7.2m to €10.0m (2022: €6.5m to €8.8m)
and minimum headroom of €1.0m (2022: €3.2m) in the year. In the forecast period to 31 May 2025,
the estimated availability range is €7m to €8.8m and the minimum headroom €0.3m. The covenants
on this facility are an equity ratio which must exceed 50% of gross assets at the financial year end and
profit for the previous six months to exceed €121,000. At 31 May 2023, the ratio was 52% and the
previous six months profit was €347,000. The facility is committed until 31 May 2024.
A further working capital facility of €1m secured on working capital which was fully drawn at the
year end. The facilities are uncommitted, but the bank is obliged to give reasonable notice of any
change.
A €3m Parent Company loan which is currently subordinated to the working capital facility.
The Directors consider there will be sufficient headroom available in the Hemmers working capital facility
and, therefore, the Directors are of the opinion that it is appropriate to apply the going concern basis of
preparation to the financial statements.
However, the Directors acknowledge that the volatile global situation could have an impact on the future
trading result of Hemmers and in turn could affect the ability of the Group to meet its forecasts and therefore
comply with banking covenants in downside scenarios. In addition, the Group has borrowing facilities which
are due for renewal within one year of the date of approval of these financial statements, which the Group relies
on to operate as a going concern. The Directors will look to renew the existing facilities when they are due for
renewal, although acknowledge the conditions noted above give rise to a material uncertainty around the going
concern of the Group.
Changes in accounting policies
The following standards will be effective for financial years beginning on or after 1 January 2023.
• Amendments to IFRS 17 Insurance Contracts (issued in December 2021)
The amendments added a transition option that permits an entity to apply an optional classification
overlay in the comparative period(s) presented on initial application of IFRS 17. The classification
overlay applies to all financial assets, including those held in respect of activities not connected to
contracts within the scope of IFRS 17. It allows those assets to be classified in the comparative period(s)
in a way that aligns with how the entity expects those assets to be classified on initial application of
IFRS 9. The classification can be applied on an instrument-by-instrument basis.
33
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
Changes in accounting policies (continued)
• Amendments to IAS 1 Presentation of Financial Statements
The amendments clarify that liabilities are classified as either current or non-current, depending on the
rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the
entity or events after the reporting date (e.g., the receipt of a waver or a breach of covenant). The
amendments also clarify what IAS 1 means when it refers to the 'settlement' of a liability. The
amendments could affect the classification of liabilities, particularly for entities that previously
considered management's intentions to determine classification and for some liabilities that can be
converted into equity.
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
The amendments define what is 'material accounting policy information' and explain how to identify
when accounting policy information is material. They further clarify that immaterial accounting policy
information does not need to be disclosed. If it is disclosed, it should not obscure material accounting
information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making
Materiality Judgements to provide guidance on how to apply the concept of materiality to accounting
policy disclosures.
• Amendments to IAS 12 Income Taxes
The amendments require companies to recognise deferred tax on transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. They will typically apply
to transactions such as leases of lessees and decommissioning obligations and will require the
recognition of additional deferred tax assets and liabilities. The amendment should be applied to
transactions that occur on or after the beginning of the earliest comparative period presented. In
addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be
utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible
and taxable temporary differences associated with right-of-use assets and lease liabilities; and
decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part
of the cost of the related assets. The cumulative effect of recognising these adjustments is recognised in
retained earnings, or another component of equity, as appropriate.
• Amendments to IFRS 10 Consolidated financial statements and IAS 28 Investments in
associates and joint ventures
The amendments clarify the accounting treatment for sales or contribution of assets between an investor
and its associates or joint ventures. They confirm that the accounting treatment depends on whether the
non-monetary assets sold or contributed to an associate or joint venture constitute a business (as defined
in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the investor
will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the
definition of a business, the gain or loss is recognised by the investor only to the extent of the other
investor's interests in the associate or joint venture.
The Group does not expect these amendments will have a material impact on its financial statements.
The following standards will be effective for financial years beginning on or after 1 January 2024.
• Amendments to IFRS 16 Finance leases
The amendments require a seller-lessee to subsequently measure lease liabilities arising from a
leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of
use it retains.
• Amendments to IAS 1 Non-current liabilities with covenants
The amendments will provide additional information about liabilities arising from loan arrangements
for which an entity's right to defer settlement of those liabilities for at least twelve months after the
reporting period is subject to the entity complying with conditions specified in the loan arrangement
(liabilities with covenants).
The Group does not expect these amendments will have a material impact on its financial statements.
34
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
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. Revenue 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 8. There are no material concentrations of revenue by customers.
Dividends
Interim dividends are recognised when paid and final dividends are recognised when approved by the
shareholders at the AGM.
Segmental reporting
The Board considers that the Group’s business comprised 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.
Government grants
The Group was eligible for two types of grants provided by the German government in response to the global
Covid-19 pandemic. One related to income provided to support the payroll of the employees in both Hemmers
and KMR. The other related 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.
Goodwill
Goodwill arising on 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 consolidated statement of comprehensive income 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
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where
appropriate. Any gain or loss on disposal of property, plant and equipment is recognised in the consolidated
statement of comprehensive income.
35
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
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 consolidated statement of comprehensive income. 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 consolidated statement of comprehensive income.
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. Payments made under
these leases are charged to profit and loss on a straight-line basis over the lease term.
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.
Discontinued operation
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale
and that represents a separate major line of business or geographical area of operations, is part of a single co-
ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued operations are presented separately in the statement of profit
or loss.
36
Notes
forming part of the financial statements for the year ended 31 May 2023
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
Taxation comprises current and deferred tax. It is recognized in profit or loss except to the extent it relates to
a business combination or items directly in equity or other comprehensive income (IAS12:58).
Employee 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 scheme 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.
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 consolidated statement of comprehensive income 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.
37
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
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.
Financial asset
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.
38
Notes
forming part of the financial statements for the year ended 31 May 2023
2
Accounting policies (continued)
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past
transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of
money and the risks specific to the liability. Where 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.
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. Key areas of estimation uncertainty 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:
Impairment of Property, Plant and Equipment
The Company reviews its property, plant and equipment as at each reporting date for indicators of impairment. Given that
Hemmers has incurred a loss in the current and previous financial year, management have undertaken an impairment
assessment using their judgement and do not deem that an impairment is required.
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 17. A 1% increase in the inventory provision would equate to approx.
£89,000.
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.
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 2022 or 2023. All other financial assets and financial
liabilities are measured at amortised cost.
39
Notes
forming part of the financial statements for the year ended 31 May 2023
4
Financial instruments - risk management (continued)
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.
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 23 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.
40
Notes
forming part of the financial statements for the year ended 31 May 2023
4
Financial instruments - risk management (continued)
(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 £830,000 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 £844,000 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.
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
Total auditor’s fees
Staff costs
Depreciation
- Property, plant and equipment
- Right-of-use assets
Impairment
- Property, plant and equipment
- Right-of-use assets
Amortisation of trademarks
Gain/(loss) on disposal of
- Property, plant and equipment
- Right-of-use assets
Other income:
Government grants relating to Covid-19 pandemic:
Grant received as compensation for reduced trading
Other income
Total other income
Year ended
31 May 2023
Year ended
31 May 2022
£000
£000
88
64
5
157
5,954
608
103
-
-
6
142
(3)
59
112
171
75
52
4
131
6,984
735
827
42
1,620
5
-
-
119
28
147
41
Notes
forming part of the financial statements for the year ended 31 May 2023
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
2023
2022
6
7
108
189
44
51
35
39
193
286
Staff costs, including Directors, comprise
Wages, salaries and Directors’ fees
Defined contribution pension cost
Employer’s national insurance contributions
and similar taxes
Total staff costs
Year ended
31 May 2023
Year ended
31 May 2022
£000
5,033
2
919
5,954
£000
5,824
1
1,159
6,984
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.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the subsidiary companies and the Group. The remuneration of key personnel are as
follows:
Salary and fees
Employer’s national insurance contributions and similar taxes
Total remuneration of key management personnel
Year ended
31 May 2023
Year ended
31 May 2022
£000
644
49
693
£000
629
52
681
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. Jörg Hemmers resigned as a director of
the Company effective 1 January 2023. The fees relating to Johan Claesson and Jan Holmstrom are paid,
respectively, to Johan & Marianne Claesson and Somerset AB who invoice the Company for the services of
these Directors. Directors’ remuneration is as follows:
Salary
&
Fees
£000
Taxes
Year ended
31 May
£000
2023
£000
Salary
&
Fees
£000
Taxes
Year ended
31 May
£000
2022
£000
Executive director
Jörg Hemmers to 1 January 2023
Non - executive Directors
Johan Claesson
David Cooper
Jan G Holmstrom
134
15
15
25
189
8
-
-
-
8
142
216
14
230
15
15
25
15
15
25
-
-
-
15
15
25
197
271
14
285
Outstanding share options granted to employees or Directors at 31 May 2023 were nil (2022: nil).
42
Notes
forming part of the financial statements for the year ended 31 May 2023
7
Discontinued operations
On 7 October 2022, the German Courts accepted Hemmers’ management decision to place its subsidiary KMR
into an insolvency process. The insolvency process is ongoing although full control passed to the insolvency
administrator on 1 January 2023 and at that point KMR ceased to be a subsidiary within the Group. The gain
has arisen due to the assets being transferred to the insolvency administrator and any IFRS adjustments
reversed. There was no tax impact on the gain which arose on transfer.
Fixed assets
Current assets less current liabilities
Finance lease liability
Provision
Cash
Loan
Net cash effect
KMR balance sheet
at insolvency date
£000
(136)
254
-
-
118
(1,781)
868
(913)
IFRS adj
£000
133
(213)
1,360
(347)
933
-
-
-
Total
£000
(3)
41
1,360
(347)
1,051
(1,781)
868
(913)
(Loss)/gain on transfer
(795)
933
138
8
Segmental information
The Group’s trading businesses during the year were 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 was also incorporated in Germany and was a retailer of fabric and
haberdashery, operating leased shops in various German cities until its insolvency on 7 October 2022 and is
regarded as a discontinued operation in these financial statements. 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.
The following tables set out a segmental analysis of the Group’s operations.
Year ended 31 May 2023
Discontinued
operations
KMR
Continuing operations
Hemmers
Inter
segmental
£000
Parent
Company
£000
£000
£000
Total
Group
£000
External revenue
Inter-segmental revenue
Cost of sales
3,527
3
(3,252)
24,290
416
(19,550)
-
(419)
419
-
-
-
27,817
-
(22,383)
Gross profit
Distribution costs
Admin expenses
Other income
Operating loss
Finance expense
Internal interest
Loss before tax
278
(690)
363
17
(32)
(47)
-
5,156
(1,513)
(4,171)
280
(248)
(337)
(208)
-
-
127
(127)
-
-
(229)
-
5,434
(2,203)
(3,911)
171
-
-
-
(229)
-
208
(509)
(384)
-
(79)
(793)
-
(21)
(893)
43
Total
Group
£000
18,391
(7,952)
Total
Group
£000
29,590
-
(24,121)
5,469
(2,483)
(6,123)
147
(2,990)
(255)
-
Notes
forming part of the financial statements for the year ended 31 May 2023
8
Segmental information (continued)
At 31 May 2023
Total assets
Total liabilities
Total net assets
Discontinued
operations
KMR
Continuing operations
Hemmers
£000
£000
-
-
-
15,572
(7,852)
7,720
Adj
£000
Parent
Company
£000
2,819
(100)
-
-
-
2,719
10,439
Year ended 31 May 2022
Discontinued
operations
KMR
Continuing operations
Hemmers
Inter
segmental
£000
Parent
Company
£000
£000
£000
External revenue
Inter-segmental revenue
Cost of sales
5,592
-
(4,551)
23,998
1,069
(20,627)
-
(1,069)
1,057
Gross profit/(loss)
Distribution costs
Admin expenses
Other income
Operating loss
Finance expense
Internal interest
1,041
(1,082)
(2,268)
32
(2,277)
(93)
-
4,440
(1,401)
(3,763)
309
(415)
(162)
(204)
(12)
-
194
(194)
(12)
-
-
-
-
-
-
-
(286)
-
(286)
-
204
Loss before tax
(2,370)
(781)
(12)
(82)
(3,245)
At 31 May 2022
Total assets
Total liabilities
Discontinued
operations
KMR
Hemmers
Continuing operations
£000
£000
2,819
(3,540)
17,392
(8,091)
Total
Group
£000
Parent
Company
£000
Adj
£000
(123)
-
2,811
(91)
22,899
(11,722)
Total net (liabilities)/assets
(721)
9,301
(123)
2,720
11,177
44
Notes
forming part of the financial statements for the year ended 31 May 2023
8
Segmental information (continued)
Disaggregation of revenue is shown by destination as follows:
Discontinued
operations
£000
31 May 2023
Continuing
operations
£000
Total
Group
£000
Discontinued
operations
£000
31 May 2022
Continuing
operations
£000
3,527
-
-
-
-
3,527
-
-
-
3,527
-
-
-
13,935
1,130
1,128
1,052
4,206
21,451
1,524
750
416
24,141
72
62
15
17,462
1,130
1,128
1,052
4,206
24,978
1,524
750
416
27,668
72
62
15
5,592
-
-
-
-
5,592
-
-
-
5,592
-
-
-
13,754
891
917
1,227
3,956
20,745
1,524
1,169
363
23,801
46
47
104
Total
Group
£000
19,346
891
917
1,227
3,956
26,337
1,524
1,169
363
29,393
46
47
104
Germany
France
Austria
Holland
Rest of EU
Total EU
Switzerland
UK
Rest of Europe
Total Europe
Oceania
North America
Asia
Total revenue
3,527
24,290
27,817
5,592
23,998
29,590
Non-current assets are all derived in Germany.
Other information:
Additions
Property, plant & equipment
Right-of-use assets
Depreciation
Property, plant & equipment
Right-of-use assets
Impairment
Property, plant & equipment
Right-of-use assets
Amortisation
Intangible assets
9
Finance expense
Year ended 31 May 2023
Year ended 31 May 2022
Hemmers
£000
KMR
£000
Group
£000
Hemmers
£000
KMR
£000
Group
£000
51
142
608
103
-
-
6
-
-
-
-
-
-
-
51
142
608
103
-
-
6
447
45
689
121
-
-
5
-
182
46
706
447
227
735
827
42
1,620
42
1,620
-
5
Finance expense
Interest paid on lease liabilities
Interest paid on bank overdrafts and loans
Finance expense recognised in comprehensive income
45
Year ended
31 May 2023
Year ended
31 May 2022
£000
£000
37
347
384
76
179
255
Notes
forming part of the financial statements for the year ended 31 May 2023
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
Year ended
31 May 2023
Year ended
31 May 2022
£000
£000
(53)
-
(53)
4
-
4
The Group has UK capital losses carried forward of £13m and unrelieved UK trading losses of £0.4m. 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.
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% (2022:19%)
Expenses not deductible for tax purposes
Income adjustments not subject to tax
Unrelieved losses
Total tax (credit)/charge
11 Loss per share and Net asset per share
Year ended
31 May 2023
Year ended
31 May 2022
£000
(893)
(170)
459
(346)
4
(53)
£000
(3,245)
(617)
605
-
16
4
Loss per share
Numerator
Total loss for the year
Denominator
Weighted average number of shares
Year ended 31 May 2023
Discontinued Continuing Total
operations operations Group
£79,000
£761,000
£840,000
27,320,843
27,320,843
27,320,843
Basic and diluted loss per share
0.3p
2.8p
3.1p
Loss per share
Numerator
Total loss for the year
Denominator
Weighted average number of shares
Year ended 31 May 2022
Discontinued Continuing Total
Operations operations Group
£2,370,000
£879,000
£3,249,000
27,320,843
27,320,843
27,320,843
Basic and diluted loss per share
8.7p
3.2p
11.9p
Since there are no outstanding share options, there is no difference between basic and diluted earnings per share.
46
Notes
forming part of the financial statements for the year ended 31 May 2023
11 Loss per share and Net asset per share (continued)
Net assets per share
Numerator
Net assets
Denominator
Number of shares
Net assets per share
12 Dividend
Year ended
31 May 2023
Year ended
31 May 2022
£10,439,000
£11,177,000
27,320,843
27,320,843
38.2p
40.9p
The Directors have not proposed a dividend in respect of the year ended 31 May 2023 or 31 May 2022.
13 Property, plant and equipment
Freehold land and
buildings
£000
Plant and
equipment
£000
Cost
Balance at 31 May 2021
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2022
Additions
Reclassification
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2023
Accumulated depreciation
Balance at 31 May 2021
Depreciation charge for the year
Impairment
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2022
Depreciation charge for the year
Reclassification
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2023
Net book amount
At 31 May 2021
At 31 May 2022
At 31 May 2023
Any loans secured on these assets are set out on note 21.
47
8,081
3
(16)
(87)
7,981
3
(272)
(420)
94
7,386
1,906
240
-
(16)
(20)
2,110
225
(227)
(38)
25
2,095
6,175
5,871
5,291
4,130
444
(366)
(49)
4,159
48
272
(833)
54
3,700
2,555
495
42
(366)
(31)
2,695
383
227
(833)
32
2,504
1,575
1,464
1,196
Total
£000
12,211
447
(382)
(136)
12,140
51
-
(1,253)
148
11,086
4,461
735
42
(382)
(51)
4,805
608
-
(871)
57
4,599
7,750
7,335
6,487
Notes
forming part of the financial statements for the year ended 31 May 2023
14 Right-of-use assets
Leasehold land
and buildings
£000
Plant and
equipment
£000
4,167
182
(34)
-
(46)
4,269
-
(4,358)
89
-
1,962
706
1,620
-
(19)
4,269
-
(4,358)
89
-
2,205
-
-
457
45
-
(116)
(6)
380
142
(200)
4
326
209
121
-
(116)
(4)
210
103
(197)
3
119
248
170
207
Total
£000
4,624
227
(34)
(116)
(52)
4,649
142
(4,558)
93
326
2,171
827
1,620
(116)
(23)
4,479
103
(4,555)
92
119
2,453
170
207
Trademarks
£000
58
(5)
(1)
52
(6)
-
46
Cost
Balance at 31 May 2021
Additions
Modification
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2022
Additions
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2023
Accumulated depreciation
Balance at 31 May 2021
Depreciation charge for the year
Impairment
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2022
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange rates
Balance at 31 May 2023
Net book amount
At 31 May 2021
At 31 May 2022
At 31 May 2023
15
Intangible assets
Balance at 31 May 2021
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2022
Amortisation
Effect of movements in foreign exchange rates
Balance at 31 May 2023
48
Notes
forming part of the financial statements for the year ended 31 May 2023
16 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.
** KMR GmbH.
Germany
Germany
Import, sale, and distribution of textiles
Retail trading – placed into insolvency
and therefore discontinued during the
year
* Wholly owned subsidiaries of Leeds Group.
** Wholly owned subsidiaries of Hemmers.
The registered addresses of these subsidiaries are shown on page 1.
17 Inventories
Total gross value of goods and goods for resale
Less provision
Finished goods and goods for resale
31 May 2023
£000
31 May 2022
£000
8,908
(690)
8,218
12,785
(791)
11,994
The amount of inventories recognised as an expense during the year was £16,293,000 (2022: £19,255,000).
18 Trade and other receivables
Trade receivables (note 23)
Other receivables
Prepayments
Total trade and other receivables
31 May 2023
£000
31 May 2022
£000
2,424
608
167
3,199
2,160
557
147
2,864
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. Trade receivables are stated net of a provision of
£159,000 (2022: £39,000). See Note 23 for further details.
19 Cash on demand or on short term deposit
Total cash on demand or on short term deposit
234
471
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.
31 May 2023
£000
31 May 2022
£000
49
Notes
forming part of the financial statements for the year ended 31 May 2023
20 Trade and other payables
Bank overdrafts
Trade payables
Other tax and social security taxes
Accruals
Other payables
Total trade and other payables
31 May 2023
£000
31 May 2022
£000
-
753
38
379
183
1,353
345
1,823
362
398
137
3,065
All amounts are anticipated to be payable in the short term. The carrying values are considered to be a
reasonable approximation of fair value.
21 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 2023
£000
31 May 2022
£000
5,502
544
6,046
5,671
836
6,507
The carrying values are considered to be a reasonable approximation of fair value.
Current loans and borrowings
At 31 May 2023 current loans and borrowings of £5,502,000 (2022: £5,671,000) comprise short term loans of
£5,201,000 (2022: £5,373,000) and instalments due on long term loans detailed below of £301,000 (2022:
£298,000). The interest rate on the short-term loans ranges from 1.5% to 3% (2022: 1.25% to 3%) and these
loans are secured on working capital of Hemmers. The short-term loans are drawn down by Hemmers against
short-term borrowing facilities of up to a maximum of £10.3m (€12m). At 31 May 2023, the total borrowing
facility available totalled £7.1m (€8.2m) of which £5.2m (€6m) has been utilised including any overdrafts,
therefore the headroom within the facility was £1.9m (€2.2m). Neither the Parent Company nor its subsidiary
Hemmers have any other borrowing facilities. The bank borrowing facilities are reviewed annually every May
and remain in place for Hemmers for the forthcoming year.
Non-current loans and borrowings
Non-current loans were drawn down in 2016 and 2017 to finance developments at the Hemmers warehouses in
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 2023
£000
31 May 2022
£000
Loan 1
Loan 2
1.65%
1.05%
Equal quarterly instalments
Equal quarterly instalments March 2026
September 2025
Non-current loans
358
186
544
590
246
836
50
Notes
forming part of the financial statements for the year ended 31 May 2023
21 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 22.
22 Lease liabilities
31 May 2023
£000
31 May 2022
£000
6,507
-
(539)
78
6,046
4,424
2,835
(708)
(44)
6,507
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 2022 financial statements included 17 retail store leases located in Germany
and 18 motor vehicle leases, all of which were subject to fixed payments. During the year, 9 car leases were
terminated and 8 new car leases were taken out. The shop leases liabilities as at 31 December 2022 were written
off following the insolvency process of KMR.
The book value of lease liabilities are as follows:
Current
Secured lease liabilities
Non - current
Secured lease liabilities
Total lease liabilities
31 May 2023
£000
31 May 2022
£000
97
112
209
885
1,165
2,050
The majority of the retail shops were leased over a 12-month period and have, therefore, been accounted for by
recognising a right-of-use asset and a lease liability. All these leases have now been terminated as a result of the
insolvency process of KMR.
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.
51
Notes
forming part of the financial statements for the year ended 31 May 2023
22 Lease liabilities (continued)
At 31 May 2023, the lease liabilities are shown as follows:
Up to 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
The movement in the lease liability is as follows:
At the start of the year
Right-of-use lease additions (note 14)
Interest expenses (note 9)
Lease payments
Leases written back (note 7)
Foreign exchange movements
31 May 2023
£000
31 May 2022
£000
97
81
31
-
885
400
610
155
209
2,050
Land and
buildings
£000
Motor
vehicles
£000
Total
£000
1,879
-
29
(585)
(1,360)
37
171
142
8
(113)
-
1
2,050
142
37
(698)
(1,360)
38
At the end of the year
-
209
209
23
Financial instruments
The financial assets of the Group are categorised as follows:
At amortised cost
Trade receivables
Other 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
52
31 May 2023
£000
31 May 2022
£000
2,424
608
234
3,266
2,160
557
471
3,188
31 May 2023
£000
31 May 2022
£000
-
753
379
183
5,502
544
97
112
7,570
345
1,823
398
137
5,671
836
885
1,165
11,260
Notes
forming part of the financial statements for the year ended 31 May 2023
23 Financial instruments (continued)
Financial risk management
Overview
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 2023
£000
31 May 2022
£000
2,424
2,160
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.
At 31 May 2023 £519,000 (2022: £366,000) of the Group’s trade receivables were past due. An expected loss
provision of £159,000 (2022: £139,000) 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 18)
31 May 2023
£000
31 May 2022
£000
410
3
-
106
519
2,064
2,583
(159)
2,424
238
37
26
65
366
1,933
2,299
(139)
2,160
53
Notes
forming part of the financial statements for the year ended 31 May 2023
23 Financial instruments (continued)
Credit risk (continued)
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:
Total
£000
2,583
(159)
Total
£000
2,299
(139)
106
(106)
65
(65)
As at 31 May 2023
Overdue
up to 3
months
Overdue
by 3 to 6
months
Overdue
by 6 to 12
months
Overdue
by more than
12 months
Not due
Expected loss rate
0%
Gross carrying amount
2,064
12%
410
100%
100%
100%
3
-
Loss provision
-
(50)
(3)
-
Net carrying value
2,064
360
-
-
-
2,424
As at 31 May 2022
Overdue
up to 3
months
Overdue
by 3 to 6
months
Overdue
by 6 to 12
months
Overdue
by more than
12 months
Not due
Expected loss rate
0%
Gross carrying amount
1,933
5%
238
100%
100%
100%
37
26
Loss provision
-
(11)
(37)
(26)
Net carrying value
1,933
227
-
-
-
2,160
A large proportion of the debts are covered by debt insurance.
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
31 May 2023
£000
31 May 2022
£000
139
34
-
(15)
1
159
106
36
-
(2)
(1)
139
54
Notes
forming part of the financial statements for the year ended 31 May 2023
23 Financial instruments (continued)
Foreign currency risk
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 2023
£000
31 May 2022
£000
3,180
3
16
3,199
2,832
16
16
2,864
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 Group’s external loans are denominated in Euros.
31 May 2023
£000
31 May 2022
£000
1,215
-
100
1,315
1,882
386
90
2,358
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 2023
Amounts due in
After
2 to 5
5 years
years
£000
£000
Less than
1 year
£000
Less than
1 year
£000
Total
£000
As at 31 May 2022
Amount due in
After
5 years
£000
2 to 5
years
£000
Total
£000
Bank overdrafts
Trade payables
Accruals
Other payables
Current bank
borrowings
Non-current bank
borrowings
Current lease liabilities
Non - current lease
liabilities
-
753
379
183
-
-
-
-
-
-
-
-
-
753
379
183
345
1,823
398
137
-
-
-
-
5,502
-
-
97
544
-
-
112
-
-
-
-
544
97
112
5,502
5,671
-
-
885
836
-
-
-
-
-
-
-
-
345
1,823
398
137
5,671
836
885
-
1,010
155
1,165
Net carrying value
6,914
656
-
7,570
9,259 1,846
155
11,260
55
Notes
forming part of the financial statements for the year ended 31 May 2023
24
Provisions
Provision as at 31 May 2022
Amount released
Amount provided
Provision as at 31 May 2023
£000
100
(100)
344
344
A provision was made in 2020 amounting to £100,000 for additional tax which may fall due following a prior
year tax assessment in Germany. This has now been agreed and paid, and therefore, the provision has been
released.
A provision has been made in 2023 amounting to £344,000 relating to a guarantee made by Hemmers to KSK
Bank in relation to a loan due from KMR. The amount of £344,000 is still outstanding after monies paid to KSK
by the insolvency administrator and may not be made from funds remaining in the insolvency.
25
Share capital
Issued and fully paid
At beginning of the period
Cancellation of treasury shares
2023
Number
27,320,843
-
2023
£000
3,279
-
2022
Number
31,600,000
(4,279,157)
At end of period
27,320,843
3,279
27,320,843
2022
£000
3,792
(513)
3,279
At 31 May 2023, no options over ordinary shares of the Company were outstanding (2022: 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 which were held in treasury and then
cancelled as follows:
Shares held in treasury as at 31 May 2021
Shares cancelled in 2022
Shares held in treasury as at 31 May 2022 and 2023
Number of
shares
4,279,157
(4,279,157)
-
Cost
£000
807
(807)
-
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.
26
Commitments
At 31 May 2023, there were no capital commitments authorised and committed (2022: £nil). There were no
amounts authorised but not committed (2022: £nil).
56
Company Statement of Changes in Equity
for the year ended 31 May 2023
At 31 May 2021
Loss for the year
At 31 May 2022
Loss for the year
At 31 May 2023
Share
capital
£000
Capital
redemption
reserve
£000
Retained
earnings
Total
equity
£000
£000
3,279
1,113
1,780
6,172
-
-
(82)
(82)
3,279
1,113
1,698
6,090
-
-
(21)
(21)
3,279
1,113
1,677
6,069
The following describes the nature and purpose of each reserve within equity:
Reserve
Share capital
Description and purpose
The nominal value of issued ordinary shares in the Company.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury share reserve
Cost of own shares held in treasury.
Retained earnings
Cumulative net gains/(losses) recognised in the Company’s statement of
comprehensive income after deducting the cost of cancelled treasury shares.
The notes on pages 59 to 61 form part of these financial statements.
58
Notes
forming part of the financial statements of the Company for the year ended 31 May 2023
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 statement of comprehensive income. 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 statement of comprehensive income.
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.
59
Notes
forming part of the financial statements of the Company for the year ended 31 May 2023
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 the statement of comprehensive income.
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 £21,000 (2022: loss £82,000).
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 (2022: 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 2023
Year ended
31 May 2022
£000
£000
91
2
-
93
91
1
1
93
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 2023 were nil (2022: nil).
4 Investments in subsidiary undertakings
At 31 May 2022
Released on liquidation of subsidiary
At 31 May 2023
Cost and
Carrying value
£000
3,370
(20)
3,350
Details of subsidiary undertakings are given on the Group Information page 1 and in note 16 to the consolidated
financial statements.
60
Notes
forming part of the financial statements of the Company for the year ended 31 May 2023
5 Amounts receivable from subsidiary undertakings
31 May 2023
£000
31 May 2022
£000
Total amounts receivable from subsidiary undertakings
2,579
2,550
No impairment loss was recognised in the year in respect of amounts receivable from subsidiary undertakings.
(2022: £nil). The amounts receivable from subsidiary undertaking relates to long term loans with details as
follows:
Fixed
Interest
Rate
Repayment
Profile
31 May 2023
£000
31 May 2022
£000
Loan 1
8%
Repayable on demand
2,579
2,550
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
Total trade and other receivables
16
16
31 May 2023
£000
31 May 2022
£000
7 Trade and other payables
Accruals and deferred income
Total trade and other payables
8 Share capital
Issued and fully paid
At beginning of the period
Cancellation of treasury shares
31 May 2023
£000
31 May 2022
£000
100
100
2023
Number
27,320,843
-
2023
£000
3,279
-
2022
Number
31,600,000
(4,279,157)
91
91
2022
£000
3,792
(513)
3,279
At end of period
27,320,843
3,279
27,320,843
At 31 May 2023, no options over ordinary shares of the Company were outstanding (2022: £nil).
Details of the purchases and cancellation of the shares held in treasury are disclosed in note 25 to the consolidated
financial statements.
9 Commitments
There were no contracted capital commitments for the Company in either period.
End of the financial statements.
61
Appendix 1 - Five Year Summary of Results and Capital Employed
Year ended
31 May
2023
£000
Year ended
31 May
2022
£000
Year ended
31 May
2021
£000
Year ended
31 May
2020
£000
Year ended
31 May
2019
£000
27,817
(22,383)
29,590
(24,121)
33,013
(26,700)
35,555
(29,623)
41,271
(32,254)
5,434
(6,114)
171
5,469
(6,944)
147
6,313
(7,226)
966
5,932
(8,020)
-
9,017
(9,057)
-
(509)
(384)
-
-
-
(893)
53
(1,328)
(255)
-
(1,662)
-
(3,245)
(4)
53
(228)
-
(333)
-
(508)
42
(2,088)
(260)
(40)
(194)
-
-
-
(34)
-
(982)
(2,348)
(6)
(1,250)
(43)
Results
Revenue
Cost of sales
Gross profit
Operating expenses
Other income
(Loss)/profit from operations
(excluding impairment of goodwill
and assets)
Net finance expense
Share of post-tax loss of joint
venture
Impairment of assets
Impairment of goodwill
Loss before tax
Tax credit/(charge)
Loss after tax
(840)
(3,249)
(466)
(2,354)
(1,293)
Assets
Non-current assets
Current assets
6,740
11,651
7,557
15,342
10,261
13,960
10,624
14,962
9,615
17,940
Total assets
18,391
22,899
24,221
25,586
27,555
Non-current liabilities
Current liabilities
(656)
(7,296)
(2,001)
(9,721)
(3,354)
(6,306)
(3,428)
(6,575)
(2,289)
(7,525)
Total liabilities
(7,952)
(11,722)
(9,660)
(10,003)
(9,814)
Total net assets
10,439
11,177
14,561
15,583
17,741
Financed by
Total equity
Key Statistics
10,439
11,177
14,561
15,583
17,741
Basic and diluted loss per share
(3.1p)
(11.9p)
(1.7p)
(8.6p)
(4.7p)
Net assets per share
38.2p
40.9p
53.3p
57.0p
64.9p
62
Notice of Annual General Meeting
The one hundred and twenty third annual general meeting of the Leeds Group plc (the Company) will be held at 2.15pm
on 22 November 2023 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.
To receive the report of the Directors, the financial statements for the year ended 31 May 2023 and the report of
the auditors thereon.
To re-appoint Mr Dave Cooper as a director.
To re-appoint MHA 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.
4.
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 5 will be proposed as an ordinary
resolution and resolution 6 will be proposed as a special resolution:
5.
6.
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:
6.1
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
6.2
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.
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.
63
Notice of Annual General Meeting (continued)
Special business (continued)
For the purpose of this resolution 6:
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
23 October 2023
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 4 (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 6 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 5 and 6 are items of special business.
2.
3.
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 close of business on 20 November 2023 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.
64
Notice of Annual General Meeting (continued)
Notes (continued)
4.
5.
6.
7.
8.
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,
in England and Wales. Or email Link Group at
Monday
shareholderenquiries@linkgroup.co.uk.
to Friday excluding public holidays
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.
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 & International 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 2.15pm on 20
November 2023. 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).
Unless otherwise indicated on the Form of Proxy, CREST or any other electronic voting instruction, the proxy
will vote as they think fit or, at their discretion, withhold from voting.
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 notarial
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 2.15pm on 20 November 2023.
65
Notice of Annual General Meeting (continued)
Notes (continued)
9.
10.
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 4DL no later than 2.15pm on 20 November 2023. 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.
11. As at 23 October 2023 (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.
66
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 2023. 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 61 of this document.
Resolution numbers 2
At each annual general meeting, one third of the Directors of the Company for the time being (other than those appointed
since the last annual general meeting) are required to retire. If the number of relevant Directors is not a multiple of three,
the number nearest to but not less than one third of the Directors are required to retire. Any retiring director is eligible
for re-appointment. At this annual general meeting, Mr Dave Cooper is the Director subject to retirement by rotation.
Resolutions 2 propose the re-appointment of Mr Cooper.
Resolution number 3
The auditors of the Company must be re-appointed at each meeting at which the financial statements are presented.
Resolution 3 proposes the re-appointment of MHA following their appointment during the year by the Directors, they
have indicated their willingness to be so re-appointed.
Resolution number 4
Resolution 4 follows past practice in giving the Directors authority to agree the auditor’s remuneration.
Resolution number 5
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 6
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.
67
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
68