YOR Yorkshire Grp.

RNS Number:8540Z
Yorkshire Group PLC
17 June 2004



PRESS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

17 June 2004

YORKSHIRE GROUP PLC ("YORKSHIRE" OR "THE COMPANY")

DISPOSAL OF PROPERTY

Yorkshire announces that its subsidiary, Yorkshire Hellas SA ("Yorkshire
Hellas") has entered into an initial contract (the "Initial Contract") in
respect of the sale (the "Disposal") of its freehold property at 3 Eleftheriou
Venizelou Avenue, Aegaleo, Greece (the "Property"). The Disposal forms part of
the Company's ongoing strategy of reducing debt through the pursuit of asset
disposals.

Yorkshire Hellas has entered into the Initial Contract with the Athens
municipality in which the Property is located (the "Purchaser") for an initial
gross cash consideration of Euro1 million (approximately Euro600,000 net of costs),
which was received yesterday. This payment obliges Yorkshire Hellas and the
Purchaser to enter into a final contract in respect of the Disposal on 20
September 2004, for which Yorkshire Hellas will receive an additional cash
payment of Euro3.57 million. A further Euro1.3 million will be payable on completion,
which is expected to take place on 16 May 2005. The net cash consideration from
the Disposal is expected to be approximately Euro3.6 million following anticipated
tax payments and demolition and clearance costs, which Yorkshire Hellas has
agreed to bear. This compares with a net book valuation of approximately Euro2.0
million at 30 June 2003. A valuation report dated 29 March 2004 commissioned by
the directors of Yorkshire (the "Board") valued the Property at Euro2.9 million on
the basis of its existing planning consents.

Having ceased manufacturing at the Property in 2001, Yorkshire currently uses
part of the premises for sales and distribution purposes, as well as for a
limited amount of technical and laboratory support. The Property is considered
to be surplus to Yorkshire's requirements.

In view of the size of the consideration relating to the Disposal, the
transaction would normally be subject to shareholder approval. However, in view
of the financial position of the Company set out below, the directors have
sought and obtained a dispensation from the usual requirement to obtain
shareholder approval. Nevertheless, the Board is firmly of the opinion that the
terms of the Disposal are attractive in themselves and that the sale is in the
best interests of the Company and its shareholders as a whole.

FINANCIAL POSITION

In a circular to shareholders dated 3 February 2004, Yorkshire indicated that it
did not have sufficient working capital for the present requirements of the
Company and its subsidiaries (the "Group"). Since then the Board has been taking
steps to improve the Group's working capital position and the Disposal
represents a key element in the Board's strategy to enhance the working capital.
However, the working capital position of the Group has deteriorated since the
beginning of February. On 26 May 2004, the Company met its principal lending
banks (the "Banks") and explained that without further support from the Banks
the Company would not be able to continue to trade. The Banks agreed to make
US$400,000 of cash available to the Group immediately and a further amount of
approximately US$400,000 conditional on the Disposal taking place. The
US$800,000 of additional funds will be treated as Group indebtedness. Despite
banking covenants requiring the proceeds of disposals to be paid to the Banks,
the Banks have also agreed that Euro600,000 of the proceeds from the Disposal may
be retained by the Group for working capital purposes. The remaining Euro3 million
of net proceeds will be used to reduce Yorkshire's indebtedness.

Following the Disposal the Group will still not have sufficient working capital
for its present requirements, that is for at least the twelve-month period
commencing from the present date, in view of the need for adequate headroom over
forecasts to consider the working capital position to be sufficient. However,
the working capital position will have significantly improved as a result of the
Disposal and the Board is of the view that the Group will have sufficient funds
to continue trading until at least 20 September 2004, the date on which the
Purchaser would be expected to enter into a final contract in respect of the
Disposal, under the terms of the Initial Contract. The Board is in discussions
in relation to other asset disposals with a number of other parties with a view
to improving the working capital position of the Company further. The Board
believes that there is a reasonable prospect of the Group reaching a position
where it would be in a position to make an unqualified working capital statement
in due course. The length of time it will take to reach this position would
depend on the progress of these discussions.

Trading conditions, particularly in the Asia Pacific region, remain difficult
with Group turnover running marginally behind forecast. Cash constraints
continue to limit the ability of the Group to trade as effectively as the Board
had originally intended. However, the Board believes that the Disposal will
alleviate these cash constraints and continues to believe that the Group is
capable of returning to profitability at the operating level in the medium term.

In view of the circumstances highlighted above, the Board was of the view that
agreeing to the Disposal was necessary to enable the Group to continue to trade.
The Board believes that the terms of the Disposal represent an attractive price
for the Property given its circumstances and would have welcomed the opportunity
to present the Disposal to shareholders. However, due to the financial position
of the Group, the Board was not able to delay entering into binding contractual
terms in relation to the Disposal until shareholder approval could be secured as
in the interim the Group would no longer have been able to pay its financial
commitments as they fell due and the Board would have been forced to file for
insolvency, in which circumstances any recovery for shareholders would have been
extremely unlikely.

APPENDIX

The following confirmations have been provided to the UK Listing Authority in
respect of the Disposal:

   * The Board has confirmed that (i) the Company's financial position is
    such that it does not have sufficient time to seek shareholder approval in
    respect of the Disposal; (ii) all alternative methods of financing have been
    exhausted and the only option remaining is to proceed with the Disposal;
    (iii) it believes that the Disposal is in the best interests of the Company
    and of its shareholders as a whole; and (iv) it believes that the Disposal
    is a step that it must take in order to avoid being forced to file for
    insolvency within the next two weeks;
   * The Banks have confirmed that they would withdraw Yorkshire's current
    facilities in the event that they are requested by the Board to appoint an
    insolvency practitioner; and
   * Hawkpoint has confirmed that Yorkshire is in severe financial difficulty
    and that it will not be possible to meet its obligations as they fall due
    unless the Disposal takes place within the timetable proposed by the
    Company.

Enquiries:

Yorkshire Group                                   Tel: 0113 244 3111
Andrew J Dick (Chief Executive)



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