Disposal

Leeds Group PLC
21 December 2001

Issued on behalf of Leeds Group plc

Date: Friday, 21 December 2001

     Embargoed: 7.00am


                               Leeds Group plc

                 Proposed Disposal of the UK Dyeing Division


Introduction

The Board of Leeds Group plc ('Leeds' or 'Company') today announces that Leeds
Dyers Limited ('Leeds Dyers'), a wholly owned subsidiary of Leeds, has agreed
to sell the trade and assets of a division of Leeds Dyers, comprising Langholm
Dyeing and Schofield Cloth Finishers ('UK Dyeing Division') to Langholm Dyeing
Co. Limited ('Langholm Dyeing Co.'), a company formed by the UK Dyeing
Division Management Team comprising of Jeffrey Beardsley, Frank Steele, Jim
Thomson and Aidan Queen. The aggregate consideration receivable is £6 million
which is payable as to £4.45 million in cash on Completion and £1.55 million
in Loan Notes.


Jeffrey Beardsley, the Managing Director of the UK Dyeing Division who
resigned as an executive director of Leeds on 19 December 2001, will become
the Managing Director of Langholm Dyeing Co. and will own more than 30 per
cent. of the issued share capital of Langholm Dyeing Co. As he was a director
of the Company within the twelve months prior to the date of this announcement
he has undertaken not to vote upon the Resolution at the EGM. The Directors
have received confirmation from the UK Dyeing Division Management Team that
Langholm Dyeing Co. will have sufficient funding, subject to normal banking
conditions, to enable it to complete the acquisition of the UK Dyeing
Division. Funding for the cash consideration payable by Langholm Dyeing Co. at
Completion is to be provided by The Royal Bank of Scotland plc and the UK
Dyeing Division Management Team.


As a consequence of the size of the UK Dyeing Division in relation to the
Leeds Group and the fact that the Disposal is a related party transaction
under the Listing Rules as a result of Jeffrey Beardsley's shareholding in
Langholm Dyeing Co., the Disposal requires the prior approval of Shareholders
at the EGM.


A circular (the 'Circular') containing further details on the disposal and
convening an extraordinary general meeting is being sent to shareholders.
Words and expressions defined in the Circular shall, unless the context
otherwise requires, have the same meaning in this announcement.


Background to and reasons for the Disposal

The Board believes that this transaction is a critical stage in the strategy
to transform Leeds from a textile company to a financial services company. In
the Interim Announcement, it was stated that the Directors, after completing a
thorough review of the options, had concluded that Shareholders' interests
would be best served by taking the opportunities that may arise for realising
the investments in textile manufacturing and by concentrating on the growth of
Leeds Leasing.


In 2001, Leeds Group has closed or sold two major UK printing companies which
were loss making. If the sale of the UK Dyeing Division is approved there will
remain only one small UK textile subsidiary where negotiations for its sale
are continuing. These transactions will release a total of six freehold
properties, of which the first was sold in September 2001 for £1.75 million.
It is envisaged that contracts will shortly be exchanged for the sale of a
further four properties which, if completed, will realise in the region of £
4.5 million. Where appropriate the Company has retained the right to benefit
from subsequent development.


Following the sale last year of two plants in Holland, the Board is taking
steps to reorganise the Company's continental interests in order to optimise
their value and realise cash.

continued...
                                      -2-




The Board is satisfied with the progress that has been made to date and it
regards the proposed sale of the UK Dyeing Division as a critical step in
delivering the Board's strategy. The Board is confident that the new financial
services group that will eventually result from the restructuring of the Group
will have a strong position in a niche market, with real prospects of growth
and with a balance sheet appropriate to sustain this. The Board remains
convinced that this strategy is essential in view of the continuing
deterioration in the European textile market.


Information on the UK Dyeing Division

The UK Dyeing Division comprises two businesses, Langholm Dyeing and Schofield
Cloth Finishers. Langholm Dyeing specialises in package dyeing and processing
of yarn, whilst Schofield Cloth Finishers specialises in piece dyeing and
finishing of fabric.


Langholm Dyeing

Langholm Dyeing is based on a single site in Dumfries & Galloway. Its
activities include package dyeing of a wide range of products, including wool,
cotton and synthetics and the merchanting of yarn. The business has developed
a diversified customer base, supplying customers in the apparel, transport and
furnishings sectors.


Schofield Cloth Finishers

Schofield Cloth Finishers is a cloth finishing business based in Galashiels.
Investment in a new dyehouse has helped consolidate Schofield Cloth Finishers'
position as the key piece dyer and finisher for the Scottish market. Its
customer base principally mirrors that of Langholm Dyeing and the two
companies complement one another within the markets in which they operate.


Principal terms of the Disposal

Under the terms of the disposal agreement, the purchase price payable will be
£6 million, of which £4.45 million will be paid in cash at Completion and £
1.55 million will be satisfied by the issue, by Langholm Dyeing Co., of the
Loan Notes which will be secured by a floating charge over the assets and
business of Langholm Dyeing Co. but which will rank behind the fixed and
floating charge proposed to be granted by Langholm Dyeing Co. to The Royal
Bank of Scotland plc on Completion.


A summary of the principal terms of the disposal agreement are set out in the
Circular.


Financial effects of the Disposal

The Disposal of the UK Dyeing Division will generate a total consideration of
£6 million. The cash proceeds of the Disposal will be used to reduce
indebtedness in the Leeds Group, whilst the Loan Notes will be retained by the
Leeds Group.


The aggregate consideration of £6 million is based on the assumption that at
Completion the UK Dyeing Working Capital will be not less than £2.4 million
and not more than £2.5 million. To the extent that the UK Dyeing Working
Capital is less than £2.4 million at Completion, the purchase price will be
reduced on a pound for pound basis and to the extent that the UK Dyeing
Working Capital is more than £2.5 million at Completion, the purchase price
will be increased on a pound for pound basis.


In the year ended 30 September 2001, the UK Dyeing Division achieved profit
before taxation of £1.2 million. Net assets of the UK Dyeing Division at 
30 September 2001 were £6.4 million.


Current trading and Continuing Group prospects


Leeds Group

The preliminary statement of results for the year ended 30 September 2001 was
announced today. Group trading in the current financial year reflects the
continuing deterioration in textiles and the substantial improvement in Leeds
Leasing.


continued...

                                     -3-


Continuing Group

The Directors remain firmly committed to the strategy of realising investments
in textile manufacturing activities as opportunities arise, and concentrating
on the future growth of Leeds Leasing. In the Directors' view, this strategy
will eventually place the Continuing Group in a more favourable expanding
business environment, where the Continuing Group will have a strong
competitive position in a niche market from which it can further grow and
develop.


Leeds Leasing, which forms the core of the Group's recovery strategy, has
produced an encouraging performance despite the increasingly difficult market
conditions experienced as the year has progressed and has continued to grow
strongly. Further information on the performance of Leeds Leasing is set out
in the preliminary statement of results for the year ended 30 September 2001
which was announced today.


Continuing Group trading in the current financial year reflects the continuing
deterioration in textiles and the substantial improvement in Leeds Leasing.
The Directors expect these trends to continue through the remainder of the
current financial year.


Voting intentions

Shareholders who hold 32.2% of Leeds Shares have indicated their intent to
vote in favour of the Resolution at the EGM.


Extraordinary General Meeting

The Disposal is subject to the prior approval of Shareholders at an
extraordinary general meeting to be held at the offices of DLA at Princes
Exchange, Princes Square, Leeds LS1 4BY at 10 a.m. on 16 January 2002, notice
of which is in the Circular. A Form of Proxy for use in connection with the
EGM is enclosed with the Circular. The Resolution will be proposed as an
ordinary resolution to approve the Disposal and any non-material variations to
the Disposal Agreement.


Conclusion

The Directors, who have been so advised by KPMG Corporate Finance, Leeds'
financial adviser in relation to the Disposal, consider the terms of the
Disposal to be fair and reasonable so far as the Shareholders are concerned.
In providing advice to the Directors in relation to the Disposal, KPMG
Corporate Finance has taken into account the Directors' commercial assessments
of the Disposal.


Recommendation

The Directors consider the Disposal to be in the best interests of the Company
and of Shareholders as a whole and accordingly unanimously recommend you to
vote in favour of the Resolution as they intend to do in respect of their own
beneficial holdings amounting to 709,351 Leeds Shares, representing
approximately 1.94 per cent. of the issued share capital of Leeds. Jeffrey
Beardsley, who holds 17,500 Leeds Shares, has undertaken to abstain from
voting upon the Resolution at the EGM in respect of those Leeds Shares and has
also undertaken to take all reasonable steps to ensure that his associates
abstain from voting upon the Resolution at the EGM.


Enquiries:
Chris J Marsden, Chief Executive
Malcolm Wilson, Group Finance Director     Fiona Tooley
Leeds Group plc                            Citigate Dewe Rogerson Ltd
Tel: [phone]                         Tel: [phone] 455 8370
                                            or 07785 703523