Shares in Leeds Group PLC (AIM:LDSG) fell 18.5% to 11p after the Anglo-German fabric designer and importer reported a fall in revenues but cut its losses.
Revenue fell 6% to £27.8 million in the year to end-May, with operating losses cut to £509,000 from £3 million and pre-tax losses to £893,000 from £3.25 million.
Net debt fell to £5.8 million from £6.4 million in the year, as £1.9 million of net cash was generated compared to a net use of £344,000 the previous year.
“It has been yet another challenging year for the group,” said chairman Jan Holmstrom, with the business still recovering from the pandemic and dealing with the impact of the Russia-Ukraine conflict and rising inflation.
During the year, the full focus moved onto the Germany-based Hemmers as the only operating subsidiary, after retail subsidiary KMR was placed into insolvency, with the administrators talking control in January but some exposure remaining via a loan guarantee.
Germany's textile markets continue to face low margins and consumer confidence, suggesting consolidation may be necessary for improvement, said Holmstrom.
“The group's focus is now solely to return Hemmers to profitability. Hemmers management will continue to assess the cost base to make sure it aligns with the reduced sales levels and look to make efficiencies wherever they can to ensure Hemmers is as competitive as it can be in the marketplace.
“The directors will continue to look at all options available to the group to maximise shareholder value.”