Leeds Group PLC 27 May 2005 Issued on behalf of Leeds Group plc Date: Friday, 27th May 2005 Embargoed: 7.30am Leeds Group plc Interim Results for the six months ended 31st March 2005 STATEMENT BY THE GROUP CHAIRMAN, VIN MURRIA Group Results In the six months ended 31 March 2005, operating profit amounted to £772,000 (2004: £769,000). The Group's interest expense, at £460,000, exceeded that of the corresponding period in 2004 by £100,000 as a consequence of higher interest rates, increased debt to support a growing lease book and the absence of interest income from the Langholm loan note, which was sold to the Langholm Directors in December 2004. Profit before tax in the period amounted to £312,000 (2004: loss £1,177,000 after an exceptional charge of £1,586,000). Leeds Leasing Pre-tax profit amounted to £249,000 (2004: £135,000). New business levels were 11% higher than in the comparable period, largely due to growth in the commercial asset finance sector where, although yields are below the average achieved in our core markets of catering, hospitality and leisure, we do enjoy far greater asset security. At the same time, we are looking to improve the volume and quality of core business by launching manufacturers' schemes under which our leasing services will be endorsed through their national distributor networks by some of the sector's largest suppliers. It is pleasing to report that we have succeeded in improving our collections performance, achieving a welcome reduction in the default charge. With a level of new business approved and awaiting drawdown comfortably more than double that of twelve months ago, we believe that a busy second half-year is in prospect. Hemmers-Itex Pre-tax profit in our fabric trading division fell to £167,000 (2004: £472,000) primarily as a result of the continued low level of consumer confidence and demand in Germany that was highlighted in our AGM statement. We have responded to lower sales of summer season items by entering the sector supplying fabric to garment manufacturers, whilst also taking steps to increase exports by appointing new agents in certain other European markets at a cost in the first half of this year of approximately £100,000. We have begun the process of relocating our Nordhorn based operation from its present three buildings to a single facility where we expect to achieve improved control of activities at reduced cost. Our new range of licensed Disney printed fabrics has been successfully launched. The order book for our winter collection is greater than it was this time last year and, although we expect the market for basic products to remain demanding for the rest of the year, the overall outlook for the second half of the year is more encouraging than the experience of the first half. Head Office Costs have been reduced significantly compared to last year, and we are giving active consideration to a programme of share buy-backs in accordance with the powers granted to the Board by shareholders at the AGM in March 2005. Enquiries: Malcolm Wilson, Group Managing 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 Unaudited Unaudited Audited Six months Six months Twelve months to to to 31st March 31st March 30th September 2005 2004 2004 £000 £000 £000 Turnover from continuing operations 8,054 8,130 16,514 Cost of sales (5,021) (4,887) (10,512) ---------- ---------- ----------- Gross profit 3,033 3,243 6,002 Distribution costs (402) (327) (648) Administrative expenses (1,859) (2,147) (4,750) ---------- ---------- ----------- Operating profit Before exceptional items 772 769 1,204 Exceptional items - - (600) ---------- ---------- ----------- Operating profit 772 769 604 Loss on sale or termination of a business operation - (1,586) (1,431) ---------- ---------- ----------- Profit/(loss) on ordinary activities before interest 772 (817) (827) Net interest payable (460) (360) (805) ---------- ---------- ----------- Profit/(loss) on ordinary activities before taxation 312 (1,177) (1,632) Taxation (72) (215) (630) ---------- ---------- ----------- Transfer to reserves/(Unrecovered loss for period) 240 (1,392) (2,262) ========== ========== =========== Earnings/(loss) per share before exceptional items 0.7p 0.5p (0.6)p exceptional items - (4.3)p (5.6)p ---------- ---------- ----------- after exceptional items 0.7p (3.8)p (6.2)p ========== ========== =========== Consolidated statement of total recognised gains and losses Transfer to reserves/(unre covered loss for the period) 240 (1,392) (2,262) Foreign currency translation differences 26 (222) (110) ---------- ---------- ----------- Total recognised gains and losses for the period 266 (1,614) (2,372) ========== ========== =========== -3- Leeds Group plc Interim Results Consolidated Balance Sheet Unaudited Unaudited Audited As at As at As at 31st March 31st March 30th September 2005 2004 2004 £000 £000 £000 Fixed assets Intangible assets 909 969 951 Tangible assets 451 617 561 ---------- ---------- ----------- 1,360 1,586 1,512 Current assets Stocks 3,616 3,605 3,868 ---------- ---------- ----------- Debtors 3,963 4,310 4,865 Deferred taxation 875 1,105 875 Finance lease debtors 19,110 18,409 18,328 ---------- ---------- ----------- Total debtors 23,948 23,824 24,068 Cash at bank and in hand 812 1,336 1,186 ---------- ---------- ----------- 28,376 28,765 29,122 Creditors: amounts falling due within one year (11,851) (12,732) (13,353) ---------- ---------- ----------- Net current assets 16,525 16,033 15,769 Of which: ---------- ---------- ----------- due within one year 4,510 4,999 3,970 due after more than one year 12,015 11,034 11,799 ---------- ---------- ----------- ---------- ---------- ----------- Total assets less current liabilities 17,885 17,619 17,281 Creditors: amounts falling due after more than one year (6,588) (5,830) (6,250) ---------- ---------- ----------- Net assets 11,297 11,789 11,031 ========== ========== =========== Share capital and reserves Called up equity share capital 4,392 4,392 4,392 Profit and loss account 6,905 7,397 6,639 ---------- ---------- ----------- Equity shareholders' funds 11,297 11,789 11,031 ========== ========== =========== Reconciliation of movements in shareholders' funds Transfer to reserves/(unre covered loss for the period) 240 (1,392) (2,262) Foreign currency translation differences 26 (222) (110) ---------- ---------- ----------- Net transfer to/from shareholders' funds 266 (1,614) (2,372) Shareholders' funds at beginning of the period 11,031 13,403 13,403 ---------- ---------- ----------- Shareholders' funds at end of the period 11,297 11,789 11,031 ========== ========== =========== -4- Leeds Group plc Interim Results Consolidated Cash Flow Statement Unaudited Unaudited Audited Six months to Six months to Twelve months to 31st March 2005 31st March 2004 30th September 2004 £000 £000 £000 Cash inflow from operating activities 1,005 1,043 503 Returns on investments and servicing of finance (460) (329) (805) Taxation (263) 58 18 Capital expenditure and financial investment (11) (154) (177) ---------- ---------- ----------- Net cash inflow before financing 271 618 (461) Financing (437) 253 1,383 ---------- ---------- ----------- (Decrease)/increase in cash in the period (166) 871 922 ========== ========== =========== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (166) 871 922 Cash inflow/(outflow) from debt and lease financing 437 (253) (1,383) ---------- ---------- ----------- Change in net debt resulting from cash flows 271 618 (461) Foreign currency translation differences (12) 63 28 ---------- ---------- ----------- Movement in net debt in the period 259 681 (433) Net debt at the beginning of the period (14,494) (14,061) (14,061) ---------- ---------- ----------- Net debt at the end of the period (14,235) (13,380) (14,494) ========== ========== =========== Reconciliation of operating profit to net cash inflow from operating activities Operating profit 772 769 604 Depreciation of fixed assets 122 105 193 Amortisation of goodwill 47 46 93 Loss on sale of tangible fixed assets 1 - - Decrease/(increase) in stocks 272 28 (131) Decrease/(increase) in debtors 921 279 (13) (Decrease)/increase in creditors (348) 211 71 Increase in finance lease debtors (782) (395) (314) ---------- ---------- ----------- Net cash inflow from operating activities 1,005 1,043 503 ========== ========== =========== -5- Leeds Group plc Interim Results Notes to the accounts 1. The financial information in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 31 March 2005 and 31 March 2004 are unaudited. The comparative figures for the financial year ended 30 September 2004 are not the Group's statutory accounts, but have been extracted from those accounts, which have been filed with the Registrar of Companies and on which the Group's auditors gave an unqualified report that did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. The interim accounts have been prepared on the basis of the accounting policies set out in the 2004 Annual report. 2. Earnings per share have been calculated on an average of 36,598,603 (2004: 36,598,603) ordinary shares of 12p in issue during the period. 3. 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 to months months months to to to to to 31st 31st 30th 31st 31st 30th March March September March March September 2005 2004 2004 2005 2004 2004 £000 £000 £000 £000 £000 £000 Leeds 1,506 1,622 2,849 700 535 764 Leasing Hemmers-Itex 6,548 6,508 13,665 247 539 1,041 Central - - - (175) (305) (601) costs -------------------------------------------------------------- 8,054 8,130 16,514 772 769 1,204 ============================= Interest ------------------------------ Leasing (451) (400) (825) Hemmers-Itex (80) (67) (159) Other 71 107 179 ------------------------------ (460) (360) (805) ------------------------------ 312 409 399 ============================== This information is provided by RNS The company news service from the London Stock Exchange