Trading Update

Leeds Group PLC
01 September 2004

Issued by Citigate Dewe Rogerson Limited, Birmingham
Date: Wednesday, 1 September 2004
                                                              EMBARGOED : 3.00pm

                    Leeds Group plc ('Leeds' or 'the Group')
              Update on strategic development and current trading


The Directors of Leeds announced on 29th April 2004 that discussions were taking
place with several parties interested in acquiring one or other of the Group's
two businesses. Following the successful integration of the Itex customer base,
Hemmers-Itex continues to increase profits and is now the market leader in
Germany in the supply to retailers of imported fabrics. Leeds Leasing is a
strong brand in UK finance leasing, and holds a leading position in the niche
markets that it serves. Although this subsidiary is not currently matching its
previous levels of profitability, following recent management changes activities
are being re-focused into areas that offer greater asset security and profit
potential.

In the opinion of the Directors, the offers received to date for these two
businesses are unlikely to be acceptable to shareholders. Accordingly, these
discussions have now been terminated.

It remains the view of the Directors that both Hemmers-Itex and Leeds Leasing
would benefit from being part of larger entities; however, if this is to happen,
it needs to be on terms that realise appropriate value for the Group's
shareholders. The Directors will now review a number of opportunities for
enhancing the value of the businesses and possible disposal routes for the
longer term. To assist in this process, the Directors intend to appoint
additional Non-executive Directors, and have begun to discuss a number of
suitable candidates with the Group's major shareholders.

Although current trading at Hemmers-Itex continues to be satisfactory, the
Directors are disappointed to announce that Leeds Leasing will not achieve
profits in line with current market expectations. The new computer systems went
live in October 2003, and since then various modifications have been necessary
to deliver the required functionality. Following one such modification in April
2004, a programming error has meant that profit on certain leases written since
that date has been overstated by a total of £150,000. Management accounts since
April 2004 have therefore shown a misleading picture and, adjusting for this
error, the pre-tax profit before exceptional items for the year ending 30th
September 2004 for Leeds Leasing is expected to be close to break even.

Carol Roberts was appointed as Managing Director of Leeds Leasing in June 2004
and since then the business has been subject to her review, as well as to due
diligence performed by potential purchasers. Following this, the Directors now
believe that it is appropriate to change the methodology by which provisions are
established for bad and doubtful debts. The new methodology is less subjective
and more conservative, and we believe it to be more in line with the industry
norm for the markets we serve. Adopting this approach will result in an
exceptional increase in provisions of some £400,000, as a result of which the
Group pre-tax profit for the year ending 30th September 2004 is expected to be
around break even.

Each of the Group's two businesses is sound and fundamentally attractive. The
Board will be exploring options to improve performance as well as growth
opportunities, and will continue to keep shareholders updated with any
developments.


Enquiries:
Malcolm Wilson, Group Managing Director
Dawn Bowler, Group Finance Director        Fiona Tooley
Leeds Group plc                            Citigate Dewe Rogerson
Tel: [phone]                         Tel: [phone] or 07785 703523



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