Interim Results - Six Months To June 30, 1999

RAP GROUP PLC 29 October 1999 INTERIM REPORT FOR THE SIX MONTHS TO JUNE 30, 1999 FINANCIAL RESULTS The results for the half year to June 30, 1999 show a further decline in sales of 20.7% to £10.57 million (1998: £13.33m). This represents a reduction of 16.6% in sales within the old core rubber business, RAP Industrial Distributions, Potter Cowan and Conveyors and a 51% decline at Anderson & Firmin. It also reflects the closure of the Poplar Industries glove manufacturing business during the period and discontinuation of much of the lower margin business previously conducted by Planet Gloves. As a result, the loss before tax was £450,000 (1998: loss of £187,000). This was after charging further reorganisation costs of £158,000 (1998: £527,000). The loss per share was 3.7p per share (1998: a loss of 1.5p per share) The directors do not propose to pay an interim dividend (1998: nil). OPERATIONAL REVIEW The implementation of the new IT system for the group has progressed according to plan with all operations handled by earlier computer systems having been successfully transferred. Our system is fully Y2K compliant and work continues to extend it to group sites which were not previously computerised. This process will continue into the year 2000. One of the major benefits of the new system is its e-commerce capability. In trading with our major customers, we are now able to receive orders, issue invoices and receive payments electronically. This seamless and paperless system enables more accurate processing, greater efficiency and hence enhanced customer service. RAP Industrial Fixings has been a major beneficiary of this technology with nearly 50% of its sales being processed in this manner. Within RAP Industrial Fixings, we have invested in new packaging technology in order to meet new EU standards in advance of legislative imperatives. This has helped us to win new business from the major retail multiples - an important market for the group. We have also addressed environmental issues, such as on-site waste disposal at our operations, which are of increasing importance to our larger customers. We believe that it is as a result of attention to such issues as these, together with the operational efficiencies gained as a result of our focus on e-commerce that our industrial fixings division has returned to growth. It achieved a 15.6% increase on the corresponding period, despite the absence of large contracts lost in 1997 which contributed to sales in 1998. The new computer system delivers the capability to monitor and analyse stock in greater detail. As a result, we are now able to identify slow moving stock lines more easily and quickly. In other areas of the group, trading continued to be difficult. RAP Safety Specialists saw prices come under pressure. While volume and margins held up well, the result was a 4% reduction in sales. Due to the specialist nature of the market for RAP Conveyors, the directors consider this business to be non-core to the group. Approaches have been received from third parties to purchase the division. These are currently under consideration and should a sale go ahead, the proceeds would be applied to reduce group indebtedness. Anderson & Firmin, which supplies products to garden centres, suffered a decline of 51% in sales in the first half. A number of major contracts were lost by this division in 1997 the full effects of which were not evident until mid 1998. However, steps have been taken to rectify the situation. RAP GROUP PLC - INTERIMS 2/5 PROSPECTS While parts of the business remain in poor shape and are experiencing continued price pressure, there are very encouraging improvements being achieved within other areas in the group. In particular, we are seeing increasing sales to the major retail multiples for both RAP Industrial Fixings products and for selected lines supplied by RAP Safety Specialists. The introduction of e-commerce capabilities, a focus on quality of customer service and investment in new EU compliant and environmentally friendly packaging systems place the group in an ideal position to compete for high volume business at attractive margins. We anticipate further growth within RAP Industrial Fixings - particularly through our e-commerce system, which has been well received by our higher volume customers. We expect sales at RAP Safety Specialists to stabilise and those of Anderson & Firmin to grow. However, sales of RAP Industrial Distributions products continue to decline in a very competitive market. The reorganisation of the group, which I have already indicated would be a lengthy process, will continue throughout the remainder of this year and into 2000. For further information, please contact: RAP Group PLC John Savage Tel: 01282 451110 Biddick Associates Zoe Biddick / Katie Tzouliadis Tel: 020 7377 6677 RAP GROUP PLC - INTERIMS 3/5 Consolidated Profit and Loss Account for the six months ended 30 June 1999 Unaudited Unaudited Audited Notes Six months Six months Year to 30 June to 30 June to 31 Dec 1999 1998 1998 £'000 £'000 £'000 Turnover - continuing operations 10,573 13,332 24,863 _____________________________________________________________________________ Operating loss - continuing operations 3 (303) (2) (1,525) Interest payable and similar charges (147) (185) (357) _____________________________________________________________________________ Loss on ordinary activities before taxation (450) (187) (1,882) Tax on loss on ordinary activities 0 0 0 _____________________________________________________________________________ Loss on ordinary activities after taxation (450) (187) (1,882) Dividends on equity shares 0 0 0 _____________________________________________________________________________ Retained loss for the financial period (450) (187) (1,882) _____________________________________________________________________________ Loss per ordinary share 5 (3.7)p (1.5)p (15.3)p _____________________________________________________________________________ Statement of Total Recognised Gains and Losses Retained loss for the period (450) (187) (1,882) Unrealised surplus on revaluation of freehold and long leasehold properties 0 0 512 Unrealised deficit on revaluation of freehold property (10) 0 0 _____________________________________________________________________________ Total recognised losses since the last annual report and accounts (460) (187) (1,370) _____________________________________________________________________________ RAP GROUP PLC - INTERIMS 4/5 Consolidated Balance Sheet as at 30 June 1999 Notes Unaudited Unaudited Audited As at As at As at 30 June 30 June 31 Dec 1999 1998 1998 £'000 £'000 £'000 Fixed Assets Intangible assets 32 36 34 Tangible assets 2,973 2,513 3,140 _____________________________________________________________________________ 3,005 2,549 3,174 _____________________________________________________________________________ Current assets and liabilities Stocks 4,449 6,271 4,923 Debtors 5,093 6,702 5,610 _____________________________________________________________________________ 9,542 12,973 10,533 Creditors falling due within one year (7,228) (8,494) (7,724) _____________________________________________________________________________ Net current assets 2,314 4,479 2,809 _____________________________________________________________________________ Total assets less current liabilities 5,319 7,028 5,983 Creditors falling due after more than one year (489) (633) (712) Provisions for liabilities and charges (319) (241) (300) _____________________________________________________________________________ Net assets 4,511 6,154 4,971 _____________________________________________________________________________ Capital and Reserves Called up share capital 616 616 616 Share premium account 4 5,259 5,259 5,259 Revaluation reserve 4 467 512 Profit and loss account 4 (1,831) 279 (1,416) _____________________________________________________________________________ Equity shareholders' funds 4,511 6,154 4,971 _____________________________________________________________________________ RAP GROUP PLC - INTERIMS 5/5 Notes 1. The summarised results for the six months ended 30th June 1999, which are unaudited, have been prepared in accordance with the accounting policies adopted in the accounts for the year ended 31st December 1998. 2. The figures for the year ended 31st December 1998 have been extracted from the statutory accounts which have been filed with the Registrar of Companies. The audit report was unqualified and did not contain any statement under section 237 (2) and (3) of the Companies Act 1985. 3. The operating loss for the six months ended 30th June 1999 included exceptional costs as summarised below : Unaudited Unaudited Audited Six months Six months Year to 30 June to 30 June to 31 Dec 1999 1998 1998 £'000 £'000 £'000 Reorganisation and closure Systems related costs 0 23 107 Centralisation of group functions 45 0 212 Redundancy and closure costs 38 0 224 Reorganisation 32 0 93 Fixed asset write-offs 20 27 27 Write-offs of other assets 0 22 53 Pension scheme underfunding 0 178 Dilapidations provisions 28 50 (30) Stock write-offs 0 405 850 Property realisations (5) 0 0 _____________________________________________________________________________ 158 527 1,714 _____________________________________________________________________________ 4. Reserves Share Revaluation Profit and Total premium account reserve loss account At 1 January 1999 5259 512 (1,416) 4,355 Retained loss for the period 0 0 (450) (450) Revaluation of property 0 (10) 0 (10) Sale of properties 0 (30) 30 0 Depreciation of revalued properties 0 (5) 5 0 ____________________________________________________________________________ At 30 June 1999 5,259 467 (1,831) 3,895 ____________________________________________________________________________ 5. Earnings per share for the six months ended 30th June 1999 is calculated by dividing the loss attributable to ordinary shareholders of £450,000 by the weighted average of the number of ordinary shares in issue during the period of 12,325,841. (For the six months ended 30th June 1998, loss attributable was £187,000 and the number of ordinary shares in issue was 12,325,841. For the year ended 31st December 1998 the loss was £1,892,000 and the weighted average number of ordinary shares in issue was 12,325,841). 6. The above information is being sent to the shareholders and is available from the Company's registered office: RAP House, Harrison Street,Burnley, Lancashire BB10 2HP.

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