Interim Results

Leeds Group PLC 26 June 2002 Issued by Leeds Group plc Date: Wednesday 26th June 2002 Embargoed: 7.00am Leeds Group plc Interim Results for the six months to 31 March 2002 STATEMENT BY THE CHAIRMAN, BILL CRAN At the Annual General Meeting held on 11th February, Robert Wade told shareholders that in the current financial year, Leeds Leasing was showing further increases in sales and profits but that the performance of the remaining textile businesses, and particularly Nemesis, the Italian subsidiary, continued to decline. Having succeeded Robert as Chairman at the conclusion of the AGM, I can confirm that his comments are borne out in the interim accounts. However, I am also pleased to report that further progress has been achieved in implementing our strategic withdrawal from textile manufacturing businesses both during and since the period under review. Group profit before tax and exceptional items was £195,000 (2001: £154,000) although within this total there were considerable changes in the performances of individual businesses: Leeds Leasing recorded pre-tax profit of £451,000, an increase of 19% on last year. The lease book at 31st March 2002 stood at £18.5m, representing growth of 37% over March 2001. The second half of the year, traditionally stronger for Leeds Leasing, has begun in an encouraging fashion, and there is every reason to believe the recent trend of profitable growth can continue. Import & Distribution saw operating profits reduce by £68,000 to £310,000. Hemmers, based in Germany, matched last year's performance but the results of Itex in Holland declined and, as a consequence, we announced on 18th April 2002 our intent, subject to consultation, to withdraw from Holland and continue business in Western Europe from our German company. The market conditions favouring suppliers from the Far East make textile manufacturing in Europe unattractive but conversely, work in favour of an importing business. We believe our proposed action will increase the profitability of the Division, while releasing cash from synergistic stock reduction and from the sale of surplus freehold property. The decision of the Dutch employment authorities is expected in the near future, and if favourable will enable this project to be completed during this financial year. Nemesis suffered a decline of 25% in sales from 2001, and in a business heavily dependent on volumes this led to a fall in operating profit from £747,000 last year to just £28,000 despite management action to control overheads, including a reduction of more than 13% in the workforce. We continue to explore opportunities to divest this business. The operating profit of £192,000 reported as discontinued operations comprises the results of the UK Dyeing Division and of Sharps Fabric Printers, which were sold on 17th January and 6th June respectively. The sale of the UK Dyeing Division resulted in an exceptional loss of £4,231,000 of which £3,388,000 was in respect of goodwill previously written off on acquisition. Included in the comparative figure for discontinued operations last year are the losses of the UK Printing Division from which we have now withdrawn. The board does not propose the payment of an interim dividend (2001: 1p). continued..... -2- Leeds Group plc Interim Results STATEMENT BY THE CHAIRMAN, BILL CRAN In the 12 months to 31st March 2002, borrowings by Leeds Leasing increased by £3.7m, which, together with retained earnings, has financed the increase of £4.9m in the lease book. In the same period, net borrowings in our textile businesses decreased by £7.0m with there being a net cash surplus in the UK of £3.3m. Net borrowings in the textile businesses have continued to fall since 31st March as a result of the sale of Sharps Fabric Printers, and the sale for £2.7m of three properties previously utilised in the UK Printing Division. We are currently holding discussions with the bankers to our European businesses with a view to re-financing those businesses with debt secured on local assets without the need for parent company guarantees. This is a necessary first step before we can apply to the High Court for approval for the capital reconstruction that will be required for us to resume dividends or otherwise to return surplus cash to shareholders. In conclusion, we are pleased to report the continuing growth of Leeds Leasing and further progress in implementing our strategic withdrawal from textile manufacturing. We are currently marketing our one remaining UK property to maximise value prior to disposal, which we hope to achieve during the coming months. ENQUIRIES Chris Marsden, Chief Executive Malcolm Wilson, Finance Director Leeds Group plc Tel: 0113 391 9000 -3- Leeds Group plc Interim Results Profit and Loss Account Six months to Six months to Twelve months to 31 March 2002 31 March 2001 30 September 2001 £000 £000 £000 Turnover Continuing operations 15,643 19,828 33,739 Discontinued operations 3,902 13,894 22,491 19,545 33,722 56,230 Cost of sales (14,304) (26,809) (44,687) Gross profit 5,241 6,913 11,543 Distribution costs (645) (966) (1,756) Administrative expenses (3,640) (4,993) (12,520) Operating profit/(loss) Continuing operations 764 1,495 1,480 Discontinued operations 192 (541) (476) ----- ----- ------- 956 954 1,004 Exceptional items - - (3,737) 956 954 (2,733) Profit on sale of land and buildings - - 1,185 Loss on sale or termination of a business operation (4,231) - (12,057) (Loss)/profit before interest (3,275) 954 (13,605) Net interest payable (761) (800) (1,606) (Loss)/profit before taxation (4,036) 154 (15,211) Taxation (99) (132) 2,089 (Loss)/profit after taxation (4,135) 22 (13,122) Dividends - (366) (366) Unrecovered loss (4,135) (344) (13,488) (Loss)/earnings per share before exceptional items 0.3p 0.1p (2.7)p exceptional items (11.6)p - (33.2)p after exceptional items (11.3)p 0.1p (35.9)p Dividend per share - 1.0p 1.0p -4- Leeds Group plc Interim Results Group Balance Sheet 31 March 31 March 30 September 2002 2001 2001 £000 £000 £000 Fixed assets Intangible assets 1,069 1,167 1,123 Tangible assets 11,494 24,913 16,074 12,563 26,080 17,197 Current assets Stocks 7,394 12,563 10,109 Debtors 12,516 19,094 14,920 Finance lease debtors 18,471 13,522 16,702 Cash at bank and in hand 3,312 266 215 41,693 45,445 41,946 Creditors: amounts falling due within one year (21,957) (31,105) (26,639) Net current assets 19,736 14,340 15,307 Of which: due within one year 9,406 6,737 5,501 due after more than one year 10,330 7,603 9,806 Total assets less current liabilities 32,299 40,420 32,504 Creditors: amounts falling due after more than one year (9,946) (7,226) (9,277) Provision for liabilities and charges (132) (1,896) (56) Accruals and deferred income - (50) (107) Net assets 22,221 31,248 23,064 Share capital and reserves: Called up equity share capital 9,150 9,150 9,150 Share premium account 15,832 15,832 15,832 Profit and loss account (2,761) 6,266 (1,918) Equity shareholders' funds 22,221 31,248 23,064 Reconciliation of movements in shareholders' funds: Result for the period (4,135) (344) (13,488) Goodwill written back 3,388 - 5,173 Exchange differences (96) 430 217 Net transfer (from)/to shareholders' funds (843) 86 (8,098) Shareholders' funds at beginning of the period 23,064 31,162 31,162 Shareholders' funds at end of the period 22,221 31,248 23,064 -5- Leeds Group plc Interim Results Group Cash Flow Statement Six months to Six months to Twelve months to 31 March 2002 31 March 30 September £000 2001 2001 £000 £000 Net cash inflow/(outflow) from operating activities 1,289 (278) (2,786) Returns on investments and servicing of finance (761) (800) (1,606) Taxation (173) (248) 126 Capital expenditure and financial investment (52) (2,070) (434) Acquisitions and disposals (net of cash and cash equivalents) 4,089 540 943 Equity dividends paid - (732) (1,098) Net cash inflow/(outflow) 4,392 (3,588) (4,855) Translation difference 153 (442) (399) Movement in net debt 4,545 (4,030) (5,254) Net debt at beginning of the period (25,696) (20,442) (20,442) Net debt at the end of the period (21,151) (24,472) (25,696) Leasing Textiles Total £000 £000 £000 As at 31 March 2002 Trading capital employed 17,500 25,872 43,372 Interest bearing net debt (14,311) (6,840) (21,151) Net assets 3,189 19,032 22,221 Net debt as a percentage of: trading capital employed 81.8% 26.4% 48.8% net assets 448.9% 35.9% 95.2% -6- Leeds Group plc Interim Results Notes 1. The interim results, which are not audited, have been prepared on the basis of the accounting policies set out in the 2001 Annual Report. The figures for the year ended 30th September 2001 have been abridged from the Group's full accounts which have been filed with the Registrar of Companies and on which the Company's auditors gave an unqualified report. 2. Earnings per share have been calculated on an average of 36,598,603 (2001: 36,598,603) ordinary shares of 25p in issue during the period. 3. The table below sets out a segmental analysis of the Group's operations. Turnover (Loss)/profit before taxation 31 March 31 March 30 September 31 March 31 March 30 September 2002 2001 2001 2002 2001 2001 £000 £000 £000 £000 £000 £000 Leasing 1,713 1,412 3,010 912 751 1,683 Import & Distribution 6,009 7,809 14,969 310 378 601 Central costs - - - (486) (381) (753) 7,722 9,221 17,979 736 748 1,531 Nemesis 7,921 10,607 15,760 28 747 (51) Continuing operations 15,643 19,828 33,739 764 1,495 1,480 Discontinued operations 3,902 13,894 22,491 192 (541) (476) 19,545 33,722 56,230 956 954 1,004 Exceptional items - - (3,737) Profit on sale of land and buildings - - 1,185 Loss on sale or termination of a business operation (4,231) - (12,057) Interest Leasing (461) (372) (796) Textiles (300) (428) (810) (761) (800) (1,606) (Loss)/profit before taxation (4,036) 154 (15,211) 4. The UK Dyeing Division was sold to management on the 17th January 2002. The results for this division have been shown as discontinued operations within the accounts. The loss on termination of the business can be analysed as follows: £000 Loss on sale 843 Goodwill written back 3,388 4,231 5. Sharps Fabric Printers was sold to management on the 5th June 2002. The results for this division have been shown as discontinued operations within the accounts. This transaction has not been reflected in these accounts. This information is provided by RNS The company news service from the London Stock Exchange

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