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LEP GROUP REPORTS PRELIMINARY RESULTS TO DEC. 31, 1992

 GREENWICH, Conn., June 10 /PRNewswire/ -- Lep Group PLC (NASDAQ-NMS: LEPGY) today announced the following preliminary results for the year ended Dec. 31, 1992.
 The results for the year to Dec. 31, 1992 cover a period during which very substantial changes took place within the company. These changes arose principally from a serious loss of shareholders value in the company which had occurred in 1991 and which led to the major financial reconstruction carried through, with shareholders' consent, during the Autumn of 1992.
 A major consequence of this reconstruction was that certain of the group's bankers acquired 85 percent of the enlarged ordinary share capital in the company in return for converting 180 million pounds sterling of their debt. At the same time, the banks set in place new facilities for a three year period, including the provision of additional working capital.
 Results For 1992
 Group turnover in 1992 amounted to 1,472,763,000 pounds (1991 -- 1,510,964,000 pounds). The reduction from the previous year principally resulted from the sale of the Swift physical distribution businesses in the U.K., Holland and Belgium.
 Despite the fall in turnover profit before exceptional items, at 26,226,000 pounds was only marginally below the 1991 figure of 26,514,000 pounds. Exceptional item of 18,681,000 pounds (1991 -- 47,320,000 pounds) and net interest of 41,881,000 (1991 -- 38,256,000 pounds) resulted in a loss before taxation of 34,336,000 pounds compared to 59,062,000 in 1991.
 It should be noted that the interest charge in 1992 included the costs for eight months applicable to 180 million pounds of bank debt prior to its conversion into ordinary share capital on Aug. 28, 1992. Consequently it may be expected that the 1993 interest charge will be significantly lower.
 The maintenance of the level of operating profit in 1992 is particularly encouraging given the recessionary conditions afflicting the world markets in which the Freight Forwarding operation is engaged, and the domestic market within the USA where The National Guardian Corporation (NGC) is based.
 Exceptional and Extraordinary Items
 Exceptional items for 1992 amounted to 18,681,000 pounds compared to 47,320,000 pounds in 1991. The 1992 exceptional items comprised the following:
 -- 5.3 million pounds relating to the closure by NGC of its special engineering division. This division commenced certain major contracts in 1991, the completion of which incurred substantial cost overruns.
 -- 7.5 million pounds of restructuring costs and provisions applied specifically to the Freight Forwarding business. The most significant items within this category were the coasts of redundancy and re- organization in various European countries occasioned principally by the lower manning levels required consequent upon the changes in customs regulations from Jan. 1, 1993.
 -- 2.7 million pounds representing further fees and expenses incurred in connection with the group's restructuring. This represents an increase of 0.5 million pounds above the figure identified at the interim result stage.
 -- 1.9 million pounds representing the write-down of the 1991 carrying value of certain investment properties to the values at which they were subsequently disposed of in 1993.
 -- 1.25 million pounds being a provision for various investigative and other litigation costs.
 Extraordinary items for 1992 amounted to 3,240,000 pounds compared to 172,086,000 pounds in 1991. These costs comprise the following:
 -- 1.1 million pounds of further costs related to the withdrawal by the group from property development in the United States and closure of the knitwear companies and associated operations.
 -- 2.2 million pounds representing the write-down of the carrying value due to closure of disposal of various investments and businesses held by LEP Industrial Holdings Limited.
 The 1991 accounts showed that the pro-forma consolidated value of shareholders funds as at Dec. 31, 1991, after taking into account the 180 million pounds debt equity conversion, amounted to 71 million pounds. After allowing for the loss in 1992, shareholders funds at Dec. 31, 1992 were 45 million pounds. The net bank borrowings fell from 469 million pounds at Dec. 31, 1991 to 393 million pounds at Dec. 31, 1992, a net reduction of 76 million pounds. The adverse movement of Sterling, affecting borrowings in foreign denominations, and the crystallization of certain liabilities provided for in creditors at Dec. 31, 1991 restricted the amount of the reduction.
 Group Structure
 The group's core activities continue to be the internationally based Freight Forwarding business and the U.S. based security services operation, NGC.
 The freight forwarding industry is substantially dependent upon levels of world trade which have been adversely affected during the extended and difficult period of the recession. Despite this, LEP's business has achieved a number of innovations and developments to enhance its services in a highly competitive market, these include new IT systems, new intercontinental services and new representation in markets abroad.
 The freight forwarding business is also undertaking a number of extensive cost reduction exercises, these being in part facilitated by the development of new software for its computer based systems.
 While these actions should enable LEP to advance its position, its short term prospects will continue to reflect closely the conditions of world trade. Although Continental European markets remain in a depressed state, there are recent well publicized signs of recovery in the U.K. and U.S. The Asia Pacific market has maintained its vitality throughout the period under review.
 NGC maintained a strong position in its domestic U.S. market where it is one of the leading providers of electronic security services for domestic and commercial businesses. Although successfully consolidating its position in these markets the results were adversely affected by the overrun costs associated with the conclusion of various contracts. These formed part of an operation providing specially engineered services which has now been closed. Accordingly, it is expected that NGC will show some improvement for the 1993 year.
 Apart from these core operations, the group also retains the German distribution group, Wholfarth, and certain properties including, particularly, Swiss Bank House in the City of London.
 Legal Action
 The audit opinion contains a qualification in respect of an unquantified action brought against the company by a shareholder. This action has been brought in the U.S. courts. The company is contesting the action, initially on the grounds that there is no justification for the case to be heard within the jurisdiction of the U.S. courts while, in any event, strongly contesting the basis of the claim.
 Pension Fund
 A new board was appointed to the Trustee of the pension fund, comprising two independent external directors together with two employee representative directors and two employer representative directors. None of the group's main board is a director of the Trustee company nor is any member of the board engaged in management responsibility for the affairs of the pension fund.
 Dividends
 No dividend will be paid in respect of the year ended Dec. 31, 1992 and it is not expected that a dividend will be paid for the foreseeable future.
 Outlook and Strategy
 The financial reconstruction, achieved with the support of the group's principal bankers, has provided the company with the time and financial resources needed to develop and improve the trading prospects of the group's principal remaining subsidiaries. As such the board is optimistic that it will be possible to develop and advance the commercial prospects of both the Freight Forwarding and NGC operations.
 Despite the conversion of 180 million pounds of bank debt into ordinary equity, there remains a very substantial level of bank debt outstanding which requires to be serviced and ultimately discharged. The means by which this is achieved must significantly influence the future strategy options available. Also, as noted above, there can be no expectation of an early return to dividend payments.
 In the short term the board's principal objective is to develop the commercial vitality and value of the core subsidiaries. As progress is made in this respect, the board will have particular regard to the group's obligation to discharge the level of residual debt noted above. A significant amount of this debt has been incurred in respect of discontinued businesses and will not, therefore, be capable of absorption within the core subsidiaries.
 Annual General Meeting
 The annual general meeting will be held on Monday, July 12, 1993 at the London Press Centre commencing at 11:30 a.m..
 LEP GROUP PLC
 Consolidated Profit and Loss Account
 (In thousands of pounds sterling)
 Year ended Dec. 31 1992 1991
 Turnover 1,472,763 1,510,964
 Gross profit 354,352 398,336
 Net operating costs (328,088) (371,108)
 Share of losses of
 associated undertakings (38) (714)
 Operating profit/(loss)
 before exceptional items 26,226 26,514
 Exceptional items (18,681) (47,320)
 Operating profit/(loss)
 after exceptional items 7,545 (20,806)
 Interest receivable 6,180 12,818
 Interest payable (48,061) (51,074)
 Loss on ordinary activities
 before taxation (34,336) (59,062)
 Taxation (236) (5,334)
 Loss on ordinary activities
 after taxation (34,572) (64,396)
 Minority interests (884) 1,388
 Loss before extraordinary items (35,456) (63,008)
 Extraordinary items (3,240) (172,006)
 Loss attributable to shareholders (38,696) (235,094)
 Dividends -- --
 Retained loss transferred
 from reserves (38,696) (235,094)
 Loss per ordinary share (8.7)p (45.6)p
 NOTES
 (A) -- The figures above do not comprise statutory accounts. The audited statutory accounts for the year ended Dec. 31, 1991 have been delivered to the Registrar of Companies. The statutory accounts for the year ended Dec. 31, 1992 have been audited and will shortly be delivered to the Registrar of Companies.
 (B) -- The audit reports for both 1991 and 1992 were qualified subject to the outcome of an unquantified legal claim served by a shareholder, but did not contain any statements under section 237 (2) or (3) of the Companies Act 1985.
 (C) -- The loss per ordinary share has been calculated on the weighted average number of ordinary shares in issue of 406,786,379 (1991 - 130,260,934) shares. It is based on a loss of 35,456,000 pounds (1991 - loss of 63,008,000 pounds) after deducting minority interests.
 Lep's ordinary shares trade in the form of ADRs on the NASDAQ National Market System under the symbol "LEPGY".
 -0- 6/10/93
 /CONTACT: David N. James, in Epsom, Surrey: 44-071-222-8866, or George V. Flagg, 203-531-3501, both of LEP Group/
 (LEPGY)


CO: Lep Group PLC ST: Connecticut IN: SU: ERN

TS-SM -- NY030 -- 0605 06/10/93 11:58 EST
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Date:Jun 10, 1993
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