Leeds Group PLC 14 October 2005 Leeds Group plc ("the Company") Disposal of the entire issued share capital of Leeds Leasing plc ("Leeds Leasing") Introduction The Company is pleased to announce that Leeds Group plc has entered into a conditional agreement for the disposal, to Bibby Asset Finance Limited, of the entire issued share capital of Leeds Leasing, the Company's wholly owned subsidiary that is engaged in the leasing of business equipment (the "Disposal"). The aggregate consideration payable (including the repayment of inter-company loans) is in excess of 75 per cent. of the Company's market capitalisation immediately prior to announcement of the Disposal and so the Disposal requires the approval of shareholders of the Company at the Extraordinary General Meeting ("EGM") convened for 31 October 2005. Background to and reasons for the Disposal In April 2004 the Company announced that it was in discussions which may have led to the sale of the group's two businesses and although those discussions were subsequently terminated in September of 2004, the Board believed that, subject to realising appropriate value for shareholders, the future for the group's businesses could be best served as part of larger organisations. The Board still believes that this strategy is in the best interests of the group and has agreed terms with Bibby Asset Finance Limited for the sale of the entire issued share capital of Leeds Leasing. Following the Disposal, the Company's only operating business will be Hemmers-Itex, the textile business selling, throughout Europe, fabric that has been mainly imported from the Far East. The Board intends to review its options for the future strategy of the group and will make a further announcement in due course. The Board has not yet determined any specific application for the proceeds of the Disposal and, in the short term, the proceeds will either be placed on deposit or applied towards the general working capital requirements of the Company. Key terms of the Disposal The consideration for the Disposal is £3.7 million to be satisfied in cash on completion of the Disposal. £500,000 of the consideration will be paid into a retention account and held in escrow for a period of 18 months following completion. The monies in the retention account will be used to satisfy any warranty claims arising under the sale and purchase agreement. In addition, Bibby Asset Finance Limited has agreed to take an assignment of the inter-company loan owed to the Company by Leeds Leasing for £1.35 million payable immediately following completion of the Disposal. Carol Roberts will resign from the Board on completion in order to continue in her role as managing director of Leeds Leasing. The Board would like to thank Carol for her contribution to the group since she joined us in June 2004. Information on Leeds Leasing For the year ended 30 September 2004, Leeds Leasing made a loss before tax and exceptional items of £61,000 on turnover of £2.849 million. The net assets of Leeds Leasing at 30 September 2004 were £3.851 million. Extraordinary General Meeting The Disposal is conditional upon, inter alia, the approval of shareholders, which is to be sought at an Extraordinary General Meeting convened for 11.30 a.m. on 31 October 2005. -------------------------------------------------------------------------------- Further Enquiries: Leeds Group plc Malcolm Wilson 0113 391 9000 Seymour Pierce Limited Sarah Wharry 020 7107 8000 This information is provided by RNS The company news service from the London Stock Exchange