TEXTILES firm Leeds Group saw half-year profits eroded by the cost of writing off its stake in cashmere firm Dawson International.
The Drighlington, Bradford-based group saw pre-tax profits fall to £114,000 during the six months to the end of November from £697,000 a year ago. After tax, losses hit £166,000.
Dawson appointed administrators in August, forcing Leeds Group to write off its 29 per cent stake at a cost of £745,000.
Dawson had attempted to dump its ballooning pension liabilities into the Pension Protection Fund, but its request was turned down.
Leeds Group said its results were “severely influenced” by Dawson’s administration.
However, its revenues climbed to £16.2m from £14.8m a year earlier.
Chairman Kathryn Davenport said despite the improved first half trading, the economy remains uncertain.
“Sales in the seasonally quiet months of November and December have been in line with the expectations of the board and we approach the first few busy months of 2013 with order books a little fuller than at this time last year,” she said.
“Nevertheless the seasonal nature of our businesses has led in recent years to first half trading profits running somewhat ahead of those of the second half.”
In its core subsidiary, Germany-based Hemmers Europe, sales volumes climbed by 12.5 per cent, to hit 6.2 million metres. The group said trading conditions were a “little easier” than in the previous year.
In euro terms, revenues increased by 14.9 per cent compared with 2011 which Leeds Group said was “sufficient to offset the effect of the declining value of the euro against the US dollar and to lead to a very small increase in the rate of gross margin”.
Profits before tax for Hemmers Europe were £697,000, from £706,000 in 2011.
External sales volumes and revenues at its ChinohTex Chinese subsidiary grew by more than 80 per cent and profits hit £189,000.
“(It) has now begun moving towards being a valuable profit centre in its own right,” said Ms Davenport.
Activist investor Peter Gyllenhammar is a major shareholder in Leeds Group, with more than 21 per cent of its shares.
Mr Gyllenhammar previously described the pensions regulator’s rejection of a rescue plan for Dawson International as “exceptionally frustrating, dangerous and short-termist”.
Leeds Group did not propose an interim dividend.
It continued to buy back shares, although lack of liquidity restricted it to purchasing 20,000 shares.