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This, their first tip, was emailed out at 1.35pm

Buy Leeds Group at 19p
by Tom Winnifrith editor of t1ps.com

Leeds Group served up a profits warning on Thursday which caused its shares to slip back to 19p - valuing the company at just 6.95 million. But the warning really was a one-off: this is an asset rich and essentially profitable business and the shares are a buy.

Leeds was one of Britain's small textiles groups. Like British female tennis players, very few of our textiles groups are successful and most drop off the scene after a while. Indeed: the Leeds textiles business was a dog's dinner and it was sold off in various chunks, the last bit to go being Nemesis Spa which went just before the half year. Those disposals involved large asset writedowns and goodwill write-offs so headline results for the year to September 30th 2003 will be awful. We all know that. However the underlying picture is rather more promising. Leeds is left with three assets.

The Three Assets

Cash and Equivalents. Leeds has net cash of around 900,000. There is also a deferred consideration of 2 million payable on the sale of an old textiles unit in eight instalments from 2005 onwards. the company thinks it will get that cash (and that might prompt a special dividend of which Leeds is fond) but in the British textiles business you never count your chickens... There are also deferred tax in the balance sheet at 1.1 million - this effectively gives Leeds some tax shelter on future profits.

Hemmers-Itex imports and distributes fabrics, sourced from China, to the North German and Dutch market. It sells either directly to retailers or to wholesalers. On the continent, the culture is still one of buying material and making your own curtain, sofa-covers etc, rather than buying ready made product as we do in the UK. This division closed its Dutch centre last November but is still supplying most of its old customers from Germany. That rationalisation helped drive first half profits up from 117,000 to 277,000

Of course the Germany economy is benefiting from membership of the Euro in that unemployment is 5 million and soaring and growth is more or less nil. But this is a stable traditional market. While it is hard to see there being much growth in profitability from Hemmers there is not much downside either. Group Managing director Malcolm Wilson told me earlier that conceivably he might expand into Southern Germany but it was not a high priority. Equally if someone made a decent offer for Hemmers he would take it. But there is no rush to do anything. The division should generate cash and should make a full year profit of c600,000 and do pretty much the same year in and year out.

Leeds Leasing is a leasing company supplying finance for small commercial and industrial items. It started out in the pubs, clubs and then catering and hotels trade. It has now diversified but its roots remain the core of the business. You don't need the brains of Einstein to work out that the pubs/entertainment and hotels industry had a pretty rotten 2002 and that was reflected in the company's round-up on first half trading:

"It is also true to say that the level of new business was short of our earlier expectations. Pre-tax profit was 320,000 (2002: 451,000). Our customer base faces many uncertainties at the present time, and in retrospect it is perhaps unsurprising that new business was no greater than was achieved in the second half of last year."

However, the company went on to state:

"Although the current high level of underwritten deals awaiting completion suggests we could be more active in the second half, we shall only write business that meets our requirements in terms of yield and our strict underwriting criteria."

A few months later (last week) came the shock warning:

"The Board of Leeds Group is disappointed to announce that its subsidiary Leeds Leasing has experienced trading difficulties with a long-standing supplier from which it has acquired assets to rent. Leeds Leasing has recourse arrangements with the supplier in the event of default by lessees, but the Board are of the opinion that the present financial position of the supplier makes it unlikely that recourse debts, either current or future, will be collectible. In the light of this situation, Leeds Leasing will this month make an exceptional bad debt provision of 600,000.


Growth in the lease book during the second half has been a little less than had been anticipated, with the effect that the underlying performance of Leeds Leasing has fallen slightly behind the Board's expectation. This, together with the exceptional provision, is expected to lead to the contribution of Leeds Leasing to the pre-tax profit of Leeds Group for the year ending 30 September 2003 being broadly neutral"

Since we had been looking for the division to generate a pre-tax profit of 700,000 (based on net income of 3.6 million) a break-even result is disappointing. But CEO Malcolm Wilson assured me that this really is a one-off. Longer-term (i.e. from the year that starts on Wednesday!) the maths is fascinating. Let us assume that Leeds doubles the size of its loan book (as it has indicated to me at a board and a divisional level that it intends to do). That would leave annual net interest income at 6.8 million.

Volume Variable costs (i.e. commissions and provisions) would double to 1.6 million, funding costs double to 1.7 million and the fixed overhead would be static at 1 million. That would leave a divisional pre-tax profit of 2.5 million. How long is long term? Leeds is not going to compromise on its credit approval process and so it will not be overnight. Wilson was talking in terms of four or five years of steady progress to meet that goal.

Central Overhead: Wilson has slashed his central overhead to a pretty mean 500,000 per annum.


Forecasts


The year just ending will be a dogs dinner at a headline level. having paid out a 13p special dividend in the summer there will be no ordinary dividend. But next year should see the start of the dramatic growth of Leeds Leasing. Hence I am looking for a group pre-tax profit of 1.78 million in the year just about to start rising to 2.1 million the year after. That equates to earnings per share of 3.5p and 4p respectively which should fund a dividend of 1p and 1.2p (or perhaps more).

From 2005 we will learn whether another special dividend (from the deferred consideration is on the cards).


Valuation

The company has net assets of around 13 million. Even if one takes a harsh view on debtors and intangibles it seems almost impossible to talk net net assets down much below 11 million. The current market cap is just 6.95 million.

Put another way, at 19p the shares trade on a September 2004 PE of just 5.4, falling to 4.75. For a company with a decent growth story that rating is too low. And income fans should find solace in a 2004 yield of 5.26% rising to 6.3% with the possibility of special dividends in 2005 and 2006 to boot. The shares are a buy!


Tom Winnifrith is editor of t1ps.com, the online tipsheet. Over the past 3 years 75 tips have outperformed the Allshare by an average of more than 35% over the past year. Tom's tips have risen by an average of more than 40%.

These clowns are just after peoples money -We should just get them off this site as soon as possible.
Ithink we should start a new thread called "the Scammers" and put these idiots names with the likes of vince stanziane, darren winters etc

rgds
zarif

Homer,

You are wrong, he's actually A VERY SHREWD GUY!

He has realised that his own tipping record is so bad, he doesn't invest in his own tips! Whereas other people do, and pay him for the privelege of losing their own money!

Why didn't we think of that?

Homer,

Ok let's give him the benefit of the doubt, track this tip, and judge it fairly. I have posted the charts below, and the bigcharts will update daily, so we can see what happens to the price.

Comparison v FTSE 100




Bigcharts will update daily;

I think I will start a new tipping site. Of course, I will get a mate to buy a load of dud shares, then issue a tip and tell my mate to sell the shares 5 minutes later. Who cares if it's a good or bad tip, I'll be OK! Just need a really good mate to share the proceeds with....

Remember _ "THERE IS NO SUCH THING AS A FREE LUNCH"
I bet they want you to join them ( or them selling your email and snail mail address to some spam and junkmailers)and pay for the privilege of their tips which obviusly can go up or down ( at your risk and money.)
eg: if the subscription is say 200 per year and they get 1000 idiots they will make 200,000 not a bad earner and who needs stocks and shares when 1000 idiots will make 1 guy rich

rgds
zarif

God dont listen to that freak Tom Winnifrith shes got a dreadful record! if you need to listen to people like him then you shouldnt be trading

AVOID AT ALL COST OR HIS TIPS WILL COST YOU DEARLY.

He is apparently changing his current tipping site from www.t1ps.com to www.sh1tt1ps.com

price dropping LOL! He is so poor!

THIS GUY SHOULD BE BANNED!

Naughty Naughty Thomas.......

TOMMO TIPS LEEDS GROUP AT 35P ON HIS www.T1PS.con SITE 14/3/03 > Here is an extract:

Buy Leeds Group
14 May 2003 (13:04:08)
AIM Listed Leeds Group was another Textiles Disaster
But it is now a Growing Leasing Business
A Big Cash Return is Imminent but....
The stock still trades at a significant discount to NAV
The Rating is Lowly and a Dividend is On The Way
The shares are a Long Term Buy at 33.5p
The British textiles industry makes the British carpets industry look like a rip-roaring success. And in turn the British carpets industry makes Britain's women tennis players look like world beaters. Part of that horror story has been Leeds Group (LDSG). But interim results today show that, after three ghastly years, this company has been refocused as a specialist leasing company (with a textiles add-on). It is now profitable, growing, threatening to pay a decent dividend and will have net cash even after a planned 4.7 million return of capital to shareholders. The stock trades at a 43% discount to Net Assets (post return of capital) and on a lowly forward rating. At 33.5p Leeds is a long-term "buy" up to 36p.





29th sept >>> From His new tipping service www.stock-anal.con

Buy Leeds Group at 19p
by Tom Winnifrith editor of t1ps.com

Leeds Group served up a profits warning on Thursday which caused its shares to slip back to 19p - valuing the company at just 6.95 million. But the warning really was a one-off: this is an asset rich and essentially profitable business and the shares are a buy.

Leeds was one of Britain's small textiles groups. Like British female tennis players, very few of our textiles groups are successful and most drop off the scene after a while. Indeed: the Leeds textiles business was a dog's dinner and it was sold off in various chunks, the last bit to go being Nemesis Spa which went just before the half year. Those disposals involved large asset writedowns and goodwill write-offs so headline results for the year to September 30th 2003 will be awful. We all know that. However the underlying picture is rather more promising. Leeds is left with three assets.

i agree andy, but i doubt they will perform well. lets see how it goes. cheers for posting chart.

Tipping 5 shares a week for 52 weeks a year should ensure some large winners by which to promote the site when they begin to charge for the service.As with most 'tip sites' they will no doubt conveniently forget most of the howlers along the way and deny any alleged insider dealings by their tipsters ahead of their recommendations or on the back of subsequent rises.
Hopefully though they won't be using too many infamous crooked tipsters whose names are well chronicled on these BBs.

Not the dreaded TW again. Is he raising his head again?

I wonder if He (TW) and His cronnies do visit or read the comments on this site????
I think we should email them a copy of these comments with a good tip:
"Just Get Lost in the Woodwork"
rgds
zarif

Happy Days!