Interim Results

Dinkie Heel PLC
29 September 2003



29 September 2003


                                Dinkie Heel plc

             Interim results for the six months ended 30 June 2003

Chairman's Statement

Strategic progress

The company continues to pursue its reorganisation vigorously.

Finance

Completion of the sale of the freehold premises in Bristol is expected at the
beginning of October 2003. Heads of terms have been exchanged for the long
leasehold premises and an early completion date for the transaction is
anticipated. Surplus plant and machinery has been auctioned. These steps will
provide a welcome cash input to the company.

In the interim the company has raised additional finance with which to fund the
reorganisation. This has been achieved in this half year by further issues of 10
per cent Secured Loan Notes 2003 totalling £295,000 and by the issue of 936,056
ordinary shares realising almost £47,000. The £400,000 Loan Note instrument,
repayable on 18 December 2003, is now fully subscribed.

The company also completed in April, on commercial terms, the sale and lease
back of its freehold premises in Kettering. The net proceeds of the sale were
£145,000.

Trading

During this half year responsibility for the Phillips Rubber business was
transferred from Bristol to Davies Odell in Rushden and the move was completed
efficiently during April. Toe cap production in Bristol ceased in April 2003 and
accommodation has been obtained locally for the remaining toe cap stockholding,
marketing and technical support operation.

Prospects

Davies Odell has begun the second half year satisfactorily, having traded ahead
of its budget in the first half. The division is now well placed to take
advantage of the seasonal upturn in sales that is expected in its matting and
footwear markets and to capitalise on the product developments for which the
costs caused a pause in profits for the second half of last year.

Toe cap orders have suffered from the intensity of global competition and from
the uncertainties caused by the changed lines of supply. Production in Botswana
is now making real improvement and, although rebuilding the business will take
time, further progress will be made in the second half year. Overheads in the UK
toe cap business have been dramatically reduced by the redundancies and will
further reduce with the disposal of the Bristol premises.

The sales of premises and plant and machinery are expected to create an overall
surplus to net book value. Some further restructuring charges will also be
required. The asset sale proceeds will significantly reduce bank borrowings and
interest charges.


Financial results of the period

Sales for the first six months were £2,710,000 (2002, £3,510,000) and the
operating loss before exceptional items was £216,000 (2002, loss £388,000).
Exceptional costs of £229,000 in the six months all relate to the restructuring
of the Dinkie business. They comprise termination payments to employees of
£136,000, costs related to the removal overseas of production facilities of
£66,000 and related professional fees of £27,000. After these exceptional items
the operating loss from continuing operations was £445,000 (2002, loss £56,000).
The sale and lease back of the freehold premises in Kettering realised an
exceptional profit of £78,000. Interest payable was £95,000 (2002, £107,000) and
the loss on ordinary activities before taxation for the first six months was
£462,000 (2002, loss £163,000). The loss per share, basic and diluted, was 3.11p
(2002, 1.10p).

The net cash outflow from operating activities in the period was £391,000 (2002,
£40,000) and net debt at the period end was £2,973,000 (2002, £3,038,000).

Operational review

Davies Odell sales were £2,011,000 (2002, £2,140,000). Sales of body armour
products and matting products, after allowing for the reduction representing the
change in sales procedure to a commission only basis in one important export
market, were unchanged from last year. Sales to the footwear trade include sales
of Phillips Rubber products from April but nevertheless were slightly lower than
in 2002. Overall the division increased its segmental profit before exceptional
items by 7.5% to £171,000 (2002, £159,000) on net assets of £1,181,000 (2002,
£1,097,000).

Dinkie results continued to reflect the repercussions of the restructuring and
of the intensification of competition for global sales. Toe cap sales were 47%
down by comparison with the first six months of 2002 and divisional sales were
£699,000 (2002, £1,370,000). Overheads were reduced and labour costs 49% lower
than in the same period of 2002. Overall the segmental loss before exceptional
items was much reduced at £295,000 (2002, loss £452,000).

The company meets its working capital requirements from a combination of bank
loan and overdraft facilities and Loan Notes. The bank overdraft facilities are
due for renewal in October 2003. The Loan Notes are repayable on 18 December
2003 and company projections require part to be refinanced at that date. The
directors have reduced the carrying value of the assets by impairment provisions
in each of the last two years. The financial statements do not include any
further adjustments that might prove necessary should the forecasts not be
achieved, the support of the company's principal lender be withdrawn or the
company be unable to refinance the required element of the Loan Notes.

Dividend

The paramount objective of your board is to complete the reorganisation and
return the company to healthy profit. Conserving cash is vital to this and in
consequence the board is unable to recommend the payment of an interim dividend
for this year (2002, nil).



Richard Organ
Chairman
29 September 2003





Dinkie Heel plc
Profit and Loss Account
Six months ended 30 June 2003

                                                                Unaudited               Audited
                                                        6 months to   6 months to      12 months to
                                                       30 June 2003  30 June 2002  31 December 2002
                                                              £'000         £'000             £'000

Turnover
Continuing operations                                         2,710         3,510             6,909

Operating loss before exceptional items                       (216)         (388)             (881)
Exceptional items
Profit on sale of property held for resale                        -           573               574
Restructuring costs                                           (229)         (241)             (618)
Plant & Machinery impairment provision                            -             -             (647)
Operating loss from continuing operations                     (445)          (56)           (1,572)
Profit on sale of fixed assets                                   78             -                 -
Interest payable                                               (95)         (107)             (178)
Loss on ordinary activities before taxation                   (462)         (163)           (1,750)
Taxation                                                          -             -                10
Loss for the period                                           (462)         (163)           (1,740)
Dividends                                                        -             -                  -
Loss set against reserves                                     (462)         (163)           (1,740)

Loss per share - basic and diluted                          (3.11p)       (1.10p)          (11.78p)



Dinkie Heel plc
Balance Sheet
As at 30 June 2003

                                                                   Unaudited             Audited
                                                              As at         As at             As at
                                                       30 June 2003  30 June 2002  31 December 2002
                                                              £'000         £'000             £'000
Net assets employed

Fixed Assets                                                  1,340         2,356             1,466

Current assets :
Stocks                                                          775         1,187               848
Debtors                                                         956         1,954             1,039
Cash at bank and in hand                                          -            17                17
                                                              1,731         3,158             1,904

Creditors: amounts falling due within one year              (2,976)       (3,417)           (2,775)
Net current liabilities                                     (1,245)         (259)             (871)

Total assets less current liabilities                            95         2,097               595

Creditors: amounts falling due after more than one
year                                                          (684)         (689)             (764)

Provisions for liabilities and charges                            -             -                 -
                                                                                                
                                                              (589)         1,408             (169)

Capital and reserves

Called up share capital                                         785           738               738

Share premium                                                   710           715               715
Revaluation reserve                                             513           516               513
Profit and loss account                                     (2,597)         (561)           (2,135)
                                                                                                
Total equity shareholders' funds                              (589)         1,408             (169)




Dinkie Heel plc
Cash Flow Statement
Six months ended 30 June 2003


                                                               Unaudited               Audited
                                                        6 months to   6 months to      12 months to
                                                       30 June 2003  30 June 2002  31 December 2002
                                                              £'000         £'000             £'000
Reconciliation of operating loss to net cash flow
from operating activities

Operating loss                                                (445)          (56)           (1,572)

Depreciation charges                                             80           196               330
Profit on sale of property held for resale                        -             -             (574)
Impairment provisions                                             -             -               647
Associate,
provision for costs of establishment                              -             -               148
Decrease in stocks                                               73            31               370
Decrease/(increase) in debtors                                   83         (202)               613
Decrease in creditors                                         (182)           (9)             (191)
                                                                                                
Net cash outflow from operating activities                    (391)          (40)             (229)


Cash Flow Statement
Net cash outflow from operating activities                    (391)          (40)             (229)
Returns on investments and servicing of
finance                                                        (95)         (107)             (178)
Taxation                                                          -             -                10
Capital expenditure and financial investment                    124         (105)               582

Acquisitions                                                      -          (22)              (74)
                                                              (362)         (274)               111

Financing                                                       349             -                98
(Decrease)/increase in cash                                    (13)         (274)               209

Reconciliation of net cash flow to movement in net
debt

(Decrease)/increase in cash in the period                      (13)         (274)               209
Cash increase from change in debt                             (307)             -              (98)
Change in net debt                                            (320)         (274)               111

Net debt at 1 January                                       (2,653)       (2,764)           (2,764)

Net debt at period end                                      (2,973)       (3,038)           (2,653)




Notes to the Financial Statements

1. Segmental analysis


Unaudited                                      Dinkie           Davies Odell             Company
6 months to 30 June                        2003      2002      2003      2002        2003        2002
                                          £'000     £'000     £'000     £'000       £'000       £'000

Turnover                                    699     1,370     2,011     2,140       2,710       3,510

Segmental (loss)/profit
before exceptional items                  (295)     (452)       171       159       (124)       (293)
Exceptional items                         (229)       332        78         -       (151)         332
Segmental (loss)/profit
before Group costs                        (524)     (120)       249       159       (275)          39
Group costs                                                                          (92)        (95)
Loss before interest and
Taxation                                                                            (367)        (56)
Interest payable                                                                     (95)       (107)
Company loss before taxation                                                        (462)       (163)


Net assets                                1,203     2,779     1,181     1,097       2,384       3,876
Proceeds from exceptional items
completed shortly after 30 June
                                                                                        -         570
Unallocated net liabilities                                                       (2,973)     (3,038)
Total net (liabilities)/assets                                                      (589)       1,408



Audited                                     Dinkie            Davies Odell              Company
Year ended 31 December 2002                 £'000                 £'000                  £'000

Turnover                                    2,592                 4,317                  6,909

Segmental (loss)/profit
Before exceptional items                    (928)                  244                   (684)
Exceptional items                           (691)                   -                    (691)
Segmental (loss)/profit
Before Group costs                         (1,619)                 244                  (1,375)
Group costs                                                                              (197)
Loss before interest and
Taxation                                                                                (1,572)
Interest payable                                                                         (178)
Company loss before taxation                                                            (1,750)


Net assets                                  1,401                 1,083                  2,484
Unallocated net liabilities                                                             (2,653)
Total net liabilities                                                                    (169)


2. Loss per share

The calculation of the loss per share for the six months is based on 14,867,200
(2002, 14,770,000) ordinary shares, being the weighted number in issue during
the period. As losses have been incurred in each period the exercise of share
options would not have been dilutive and accordingly basic and diluted earnings
per share are the same.


3. Status of the financial information


The financial information contained in the accounts does not constitute full
accounts within the meaning of the Companies Act 1985. The results for the half
year to 30 June 2003 are unaudited. The abridged profit and loss account,
balance sheet and cash flow statement for the year ended 31 December 2002 were
extracted from the published accounts which received an unqualified audit report
and which have been delivered to the Registrar of Companies.


4. Distribution of the interim report


A copy of the interim report is being sent to shareholders. Further copies will
be available to the public from the Company Secretary at the company's
registered address, St Ivel Way, Warmley, Bristol BS30 8TY or from City
Financial Associates Limited, Pountney Hill House, 6 Laurence Pountney Hill,
London EC4R 0BL.


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