LEP losses fall pounds 25m after revamp

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The Independent Online
LEP GROUP, the debt-laden transport and security business, made progress in reducing its losses to pounds 34.3m before tax in 1992, against pounds 59m the previous year.

But David James, the company doctor brought in to rescue the group, said there was still no prospect of a dividend. The shares fell 1p to 93 4 p.

The results follow a wholesale restructuring and refinancing of the group last autumn, in which bank creditors agreed to exchange pounds 180m of debt for equity. The banks now hold 85 per cent of LEP's share capital.

The debt/equity conversion helped cut interest charges only marginally to pounds 48m ( pounds 51m) as it came late in the year. The company said the charge would fall dramatically this year.

Exceptional restructuring costs were pounds 18.7m against pounds 47.3m in 1991. They related to the closure of the special engineering division in the US and restructuring and redundancy costs in the freight forwarding business. There were extraordinary charges of pounds 3.2m ( pounds 172m).

At the operating level, profits fell pounds 300,000 to pounds 26.2m on turnover almost pounds 40m lower at pounds 1.47bn because of the sale of LEP's Swift distribution business.

Despite the pounds 180m debt for equity swap, group net borrowings fell only pounds 76m to pounds 393m. Digby Davies, a LEP director, said the company's substantial dollar debt burden had risen by more than pounds 40m as a result of sterling's devaluation. A number of letters of credit relating to previous acquisitions had also been drawn down, further increasing debt.

Mr James said the short-term objective was still to develop the commercial viability and value of core subsidiaries, but that debt reduction remained a priority. He added: 'The maintenance of operating profit levels is particularly encouraging given the recessionary conditions in the world markets in which the freight forwarding operation is engaged.'

The accounts will be qualified by auditors Price Waterhouse because of an outstanding legal action against LEP by a US shareholder.