Interim Results

Leeds Group PLC 19 May 2004 Issued by Leeds Group plc Date: Wednesday, 19th May 2004 Immediate Release Leeds Group plc Interim Results for the six months ended 31st March 2004 STATEMENT BY THE GROUP MANAGING DIRECTOR, MALCOLM WILSON Results Operating profit for the Group's continuing operations in the six months ended 31 March 2004 amounted to £769,000 (2003: £944,000). A segmental analysis is shown as Note 4 to this Interim Report. Although operating profit grew by a satisfactory 17% in the Hemmers-Itex Division, in Leeds Leasing the lower average yields at which new business has been written over the past twelve months have resulted in an operating profit reduction of 28%. The increase in Central costs reflects an exchange loss of £66,000 crystallised on the partial repayment by Hemmers-Itex of a Group loan. Group profit before tax and exceptionals in the period was £409,000, a reduction of £465,000 from last year's level of £874,000 which included £314,000 attributable to discontinued businesses and interest of approximately £80,000 earned on the monies returned to shareholders as a Special Capital Payment in August 2003. The exceptional costs of £1,586,000 represent a provision against amounts receivable in connection with a business divested in 2002. The Directors remain optimistic that some of this will be recovered, although the amount and timing of any such recovery is uncertain at this time. After exceptional costs, the Group loss before tax was £1,177,000 (2003: loss £11,958,000). The Directors have not recommended an interim dividend, but will consider the resumption of dividend payments in the light of the Group's performance in the second half of the year and the developments referred to below. Outlook and strategy In the three years ended September 2002, the value of the Leeds Leasing book tripled. Changes in the competitive environment have meant that the book today remains at the September 2002 level and to achieve that, we have entered sectors where yields are lower than our traditional core areas. Leeds Leasing and Hemmers-Itex remain sound and attractive businesses. However, the Board has concluded that they are unlikely to achieve the critical mass required to support the costs of a public listing and provide attractive returns to shareholders in an acceptable timescale. Therefore as we indicated in our trading update issued on 29 April 2004 the Board has concluded that shareholder value is likely to be maximised through a disposals process. Accordingly, the Directors have been engaged in discussions concerning a possible offer for the Group. Although those discussions have now been terminated, the Directors remain in discussions with a number of other parties who have expressed an interest in acquiring one or other of the Group's two businesses. Bill Cran, who joined the Board as Chairman in February 2002, resigned on 29 April 2004 in order to avoid any conflict as he has indicated that he wishes to pursue an interest in acquiring Leeds Leasing. We are grateful to Bill for his support and guidance during his years as Chairman. Finally, I am grateful for the hard work of all our employees. Although the developments I have outlined clearly cause uncertainty and doubt in their minds, I am pleased to see a positive response and a continued commitment to our businesses, irrespective of their future ownership. We will continue to keep shareholders updated. Enquiries: Malcolm Wilson, Group Managing Director Dawn Bowler, Group Finance Director Fiona Tooley Leeds Group plc Citigate Dewe Rogerson Ltd Tel: 0113 391 9000 Tel: 0121 455 8370 -2- Leeds Group plc Interim Results Consolidated Profit and Loss Account Six months Six months Twelve months to to to 31st March 31st March 30th September 2004 2003 2003 £000 £000 £000 Turnover ---------- ---------- ----------- Continuing operations 8,130 8,358 16,903 Discontinued operations - 8,194 8,194 ---------- ---------- ----------- 8,130 16,552 25,097 Cost of sales (4,887) (11,791) (17,119) ---------- ---------- ----------- Gross profit 3,243 4,761 7,978 Distribution costs (327) (653) (979) Administrative expenses (2,147) (2,720) (5,437) Operating profit ---------- ---------- ----------- Continuing operations 769 944 1,795 Discontinued operations - 444 444 ------ ------ ------ 769 1,388 2,239 Exceptional items - - (677) ---------- ---------- ----------- 769 1,388 1,562 Loss on sale or termination of a (1,586) (12,832) (12,832) business operation ---------- ---------- ----------- Loss on ordinary activities before interest (817) (11,444) (11,270) Net interest payable (360) (514) (837) ---------- ---------- ----------- Loss on ordinary activities before taxation (1,177) (11,958) (12,107) Taxation (215) (73) (81) ---------- ---------- ----------- Unrecovered loss (1,392) (12,031) (12,188) ========== ========== =========== Earnings/(loss) per share before exceptional items 0.5 p 2.2 p 3.1 p exceptional items (4.3)p (35.1)p (36.4)p ---------- ---------- ----------- after exceptional items (3.8)p (32.9)p (33.3)p ========== ========== =========== Consolidated statement of total recognised gains and losses Loss for the period (1,392) (12,031) (12,188) Foreign currency translation differences (222) 427 536 ---------- ---------- ----------- Total recognised gains and losses for the period (1,614) (11,604) (11,652) ========== ========== =========== -3- Leeds Group plc Interim Results Consolidated Balance Sheet As at As at As at 31st March 31st March 30th September 2004 2003 2003 £000 £000 £000 Fixed assets Intangible assets 969 1,091 1,067 Tangible assets 617 437 582 ---------- --------- ----------- 1,586 1,528 1,649 Current assets Stocks 3,605 3,746 3,820 ---------- --------- ----------- Debtors 4,310 6,448 6,350 Deferred taxation 1,105 1,130 1,245 Finance lease debtors 18,409 18,196 18,014 ---------- --------- ----------- Total debtors 23,824 25,774 25,609 Cash at bank and in hand 1,336 8,359 529 ---------- --------- ----------- 28,765 37,879 29,958 Creditors: amounts falling due within one year (12,732) (15,981) (12,591) ---------- --------- ----------- Net current assets 16,033 21,898 17,367 Of which: ---------- --------- ----------- due within one year 4,999 9,597 4,691 due after more than one year 11,034 12,301 12,676 ---------- --------- ----------- ---------- --------- ----------- Total assets less current liabilities 17,619 23,426 19,016 Creditors: amounts falling due after more than one year (5,830) (5,217) (5,613) ---------- --------- ----------- Net assets 11,789 18,209 13,403 ========== ========= =========== Share capital and reserves: Called up equity share capital 4,392 9,150 4,392 Share premium account - 15,832 - Profit and loss account 7,397 (6,773) 9,011 ---------- --------- ----------- Equity shareholders' funds 11,789 18,209 13,403 ========== ========= =========== Reconciliation of movements in shareholders' funds Unrecovered loss for the period (1,392) (12,031) (12,188) Special capital payment - - (4,758) Goodwill written back - 7,875 7,875 Foreign currency translation differences (222) 427 536 ---------- --------- ----------- Net transfer from shareholders' funds (1,614) (3,729) (8,535) Shareholders' funds at beginning of the period 13,403 21,938 21,938 ---------- --------- ----------- Shareholders' funds at end of the period 11,789 18,209 13,403 ========== ========= =========== -4- Leeds Group plc Interim Results Consolidated Cash Flow Statement Six months Six months Twelve months to to to 31st March 31st March 30th September 2004 2003 2003 £000 £000 £000 Net cash inflow from operating activities 1,426 1,858 1,505 Returns on investments and servicing of finance (329) (514) (837) Taxation 58 765 708 Capital expenditure and financial investment (54) 455 293 Acquisitions and disposals (483) (500) (500) ---------- ---------- ------------ Net cash inflow before financing 618 2,064 1,169 Special capital payment - - (4,758) Financing 253 (1,721) (1,643) ---------- ---------- ------------ Increase/(decrease) in cash in the period 871 343 (5,232) ========== ========== ============ Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period 871 343 (5,232) Cash (outflow)/inflow from debt and lease financing (253) 1,721 1,643 ---------- ---------- ------------ Change in net debt resulting from cash flows 618 2,064 (3,589) Net debt disposed of with subsidiary - 5,408 5,408 Translation difference 63 (648) (685) ---------- ---------- ------------ Movement in net debt in the period 681 6,824 1,134 Net debt at the beginning of the period (14,061) (15,195) (15,195) ---------- ---------- ------------ Net debt at the end of the period (13,380) (8,371) (14,061) ========== ========== ============ Reconciliation of operating profit to operating cash flows Operating profit 769 1,388 1,562 Depreciation and amortisation of fixed assets 105 236 312 Amortisation of goodwill 46 57 106 (Profit)/loss on sale of tangible fixed assets - (3) 4 Decrease in stocks 411 1,395 1,427 Decrease/(increase) in debtors 279 (1,492) (1,315) Increase/(decrease) in creditors 211 138 (912) (Increase)/decrease in finance lease debtors (395) 139 321 ---------- ---------- ------------ Net cash inflow from operating activities 1,426 1,858 1,505 ========== ========== ============ -5- Leeds Group plc Interim Results Notes to the accounts 1. The interim results, which are not audited, have been prepared on the basis of the accounting policies set out in the 2003 Annual Report. The figures for the year ended 30th September 2003 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 (2003: 36,598,603) ordinary shares of 12p (2003: 25p) in issue during the period. 3. A provision of £1.6m has been made in these interim accounts in respect of amounts payable by Langholm Dyeing Company Limited, who in January 2002 acquired the Group's UK Dyeing Division for £4.5m in cash and £1.6m in loan notes. The provision has been disclosed on the face of the profit and loss account as loss on sale of a business operation. 4. The table below sets out a segmental analysis of the Group's operations. Turnover Profit before taxation and exceptional items Six Six Twelve Six Six Twelve months months months months months months to to to to to to 31st 31st 30th 31st 31st 30th March March September March March September 2004 2003 2003 2004 2003 2003 £000 £000 £000 £000 £000 £000 Leeds Leasing 1,622 1,696 3,373 535 740 1,356 Hemmers-Itex 6,508 6,662 13,530 539 461 883 Central costs - - - (305) (257) (444) ----------------------------------------------------------- Continuing operations 8,130 8,358 16,903 769 944 1,795 Discontinued operations in 2003 - 8,194 8,194 - 444 444 ----------------------------------------------------------- 8,130 16,552 25,097 769 1,388 2,239 ============================ Interest --------------------------- Leasing (400) (420) (801) Hemmers-Itex (67) (184) (275) Other 107 220 369 Discontinued operations - (130) (130) --------------------------- (360) (514) (837) --------------------------- 409 874 1,402 =========================== This information is provided by RNS The company news service from the London Stock Exchange

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