Leather Up Limited Reports Higher Revenue but Continues to Face Financial Challenges in FY2026

Leather Up Limited has reported higher sales revenue for the financial year ended June 30, 2026, according to its financial statements. Despite a substantial increase in revenue and an improvement in gross profit, the company continued to face operating losses and reported a higher net loss compared with the previous financial year.

The company’s financial results highlight a mixed performance, with stronger sales and higher cash balances offset by rising expenses and continued pressure on profitability.

Revenue Records Significant Growth

Leather Up Limited recorded sales revenue of Rs 27.16 million in FY2026, compared with Rs 12.09 million in FY2025. This represents an increase of approximately 125%, indicating a substantial rise in the company’s reported sales.

The cost of sales also increased, reaching Rs 25.12 million compared with Rs 10.89 million in the previous year. Nevertheless, gross profit improved to Rs 2.05 million from Rs 1.20 million in FY2025.

The improvement in gross profit suggests that the company generated a higher gross surplus from its sales. However, its overall profitability remained under pressure because operating and administrative expenses continued to exceed the gross profit generated during the year.

Operating Expenses Remain a Major Challenge

Administrative expenses stood at Rs 5.73 million during FY2026, slightly lower than Rs 5.79 million in FY2025. Distribution expenses, however, increased to Rs 641,215 from Rs 398,905.

As a result, the company reported an operating loss of Rs 4.33 million, compared with an operating loss of Rs 4.99 million in the previous financial year.

Although the operating loss narrowed, the improvement was not enough to bring the company back to profitability. Other expenses and income also moved unfavourably, with the company recording a net expense of Rs 181,242 against other income of Rs 666,245 in FY2025.

Net Loss Increases During the Year

Leather Up Limited reported a loss before taxation of Rs 4.75 million for FY2026, compared with Rs 4.51 million in FY2025. The company’s loss after taxation was also Rs 4.75 million, against Rs 4.51 million a year earlier.

Basic and diluted loss per share increased to Rs 0.79 from Rs 0.75.

These figures indicate that, despite substantial revenue growth and an improvement in operating performance, the company has not yet translated higher sales into stronger bottom-line results. Controlling costs, improving margins and strengthening operating efficiency will remain important considerations for its future financial performance.

Total Assets and Cash Balances Increase

The company’s total assets increased to Rs 23.30 million as of June 30, 2026, compared with Rs 21.93 million at the end of the previous financial year.

Property, plant and equipment stood at Rs 2.29 million, while stock-in-trade amounted to Rs 10.81 million. Advances, deposits and other receivables totalled Rs 5.13 million, and tax refunds due from the government reached Rs 2.65 million.

Cash and bank balances improved to Rs 2.42 million from Rs 1.92 million in FY2025. The increase in cash provides a stronger cash position at the reporting date, although the company’s overall liquidity must also be assessed against its outstanding liabilities and operating requirements.

Liabilities and Shareholders’ Equity

Current liabilities increased considerably to Rs 11.22 million from Rs 5.37 million in the previous year. Trade and other payables rose to Rs 8.25 million from Rs 3.70 million, while loans from directors increased to Rs 1.34 million from Rs 33,600.

The company also reported unclaimed dividends of Rs 1.63 million. Staff retirement benefit obligations stood at Rs 858,648.

Meanwhile, shareholders’ equity declined to Rs 11.22 million from Rs 15.87 million, largely reflecting the accumulated loss. Accumulated losses increased to Rs 53.72 million from Rs 48.98 million.

The rise in current liabilities and the decline in equity underline the importance of strengthening the company’s financial position and managing its short-term obligations carefully.

Cash Flow Performance

Leather Up Limited’s cash flow statement showed net cash used in operating activities of Rs 806,652 in FY2026, compared with net cash generated from operating activities of Rs 561,350 in FY2025.

The company generated Rs 1.31 million through financing activities, primarily reflecting loans obtained from directors. This helped support its cash position during the year.

Consequently, cash and cash equivalents increased by Rs 503,348 during FY2026, taking the year-end balance to Rs 2.42 million.

While the increase in cash is encouraging, the negative operating cash flow indicates that the company will need to improve its ability to generate cash from its core business activities.

Outlook for the Company

Leather Up Limited’s FY2026 results present a combination of progress and continuing challenges. The sharp rise in revenue and improvement in gross profit are positive developments. However, persistent net losses, negative operating cash flow and a substantial increase in current liabilities remain areas requiring attention.

Going forward, the company’s performance will depend on its ability to convert sales growth into sustainable profits, manage expenses, improve cash generation and meet its financial obligations.

For shareholders and market observers, the latest results offer important insight into the company’s financial position. Continued monitoring of revenue growth, profit margins, liabilities and operating cash flow will be essential in assessing whether Leather Up Limited can improve its financial performance in the coming year.