Textile and finance company Leeds Group said it will be placing its German subsidiary into insolvency after various macroeconomic issues impacted its financial situation.
The decision comes in spite of the easing of covid-19 restrictions, with other factors like a decrease in consumer confidence and the conflict in Ukraine also having an impact.
In a release, the UK-based firm said: “As a result, the continuing uncertainty in global markets remains and the impact on the German economy has deepened.”
The AIM-listed company added that the subsidiary, Stoff Idee-KMR GmbH (KMR), operated by Hemmers-Itex Textil Import Export, had continued to make losses in the current financial year.
For the year ended May 31, 2021, revenue for KMR accounted for approximately 16 percent of the company’s overall revenue, while Hemmers' revenue accounted for 84 percent in the same period.
The decision follows an independent review, which had contributions from the firm’s local management, ultimately determining that the KMR business was unsustainable.
During the insolvency process, an administrator will control and operate KMR to realise its assets in order to pay any outstanding creditors, Leeds Group noted.
It continued: “The Hemmers management and Leeds Group directors are committed to ensuring that Hemmers returns to profitability and confirm that sales for the current year are in line with their expectations.”