RNS Number:3055L
McLeod Russel Holdings PLC
20 May 2003

FOR IMMEDIATE RELEASE
                                                                     20 May 2003

                   McLeod Russel Holdings PLC (the "Company")

                             Reports on Forecast



On 30 April 2003, the Company made a statement that the Board believed the Group
will report a loss before tax in the current financial year to 30 September
2003.  The Directors confirm that they believe the statement remains valid as at
today's date (the "Forecast").  As stated in the earlier announcement, because
the Company is in an Offer Period for the purposes of the City Code on Takeovers
and Mergers (the "City Code"), it is required to make a formal statement of the
assumptions underlying the Forecast and to publish reports on it by the
Company's auditors and financial advisers in the form required by the City Code
(the "Reports").  The statement of assumptions underlying the Forecast and the
Reports are now set out in the Appendix to this press release.



In addition to the expected loss referred to above, as anticipated in the annual
report and accounts for the year ended 30 September 2002, an updated actuarial
valuation of the Masons pension plan (which is already in deficit) for Minimum
Funding Requirement purposes is currently being finalised.  The increased
deficit arising from this valuation will be accrued in the interim results for
the six months to 31 March 2003 as an exceptional item, when the results of this
actuarial valuation are expected to be available. Furthermore, as a result of
the trading and financial performance currently being experienced by the Group,
the Directors are currently reviewing the carrying value of goodwill in
accordance with FRS11.  Any adjustments resulting from the results of this
review will be incorporated in the interim results for the six months to 31
March 2003 as an exceptional item.  Notwithstanding the anticipated Group loss
before taxation for the year ending 30 September 2003, the Board expects the
Group to incur a tax charge for the period due to the international mix of its
businesses.



It is anticipated that the Company will report its interim results for the six
months to 31 March 2003 in June 2003.  At that time, the Company will comment
further on the current trading environment for the Group as a whole, which
continues to be challenging with additional contract deferrals expected.



As a result of the financial performance of the Group, the Company is in
technical breach of its trading based banking covenants although not in default
of any payment obligations.  The Company is currently in discussion with its
banks who are fully informed as to the position and are continuing to extend
banking facilities.



Update on potential offer



We expect that the Group's financial advisers, Amethyst Corporate Finance PLC,
who were appointed on 30 April 2003, will shortly be in a position to despatch
information memoranda to parties who have expressed an interest in potentially
making an offer for the Group.


The directors of McLeod Russel Holdings plc accept responsibility for the
information contained in this announcement relating to McLeod Russel Holdings
plc.  To the best of the knowledge and belief of the directors of McLeod Russel
Holdings plc (who have taken all reasonable care to ensure that such is the
case) the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.



Amethyst Corporate Finance PLC, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting for McLeod Russel
Holdings plc and no one else in connection with a possible offer for McLeod
Russel Holdings plc and will not be responsible to anyone other than McLeod
Russel Holdings plc for providing the protections afforded to clients of
Amethyst Corporate Finance PLC, or for providing advice in relation to the
possible offer, or for giving advice in relation to the contents of this
announcement.
Appendix



Statement of Assumptions



The Forecast is based upon management projections by the Group, taking account
of the unaudited management accounts for six months ended 31 March 2003 and
management's forecast for the six months ending 30 September 2003 and has been
prepared using the Group's accounting policies, consistent with those used by
the Group in preparing its financial statements for the year ended 30 September
2002.



The assumptions on which the forecasts are made are set out below:



*         there will be no material change in trading conditions in the Group's markets;

*         the Group's present banking facilities will continue to be made available;

*         there will be no material industrial, commercial, legislative, economic or 
          political disputes or change, abnormal weather conditions, or other
          interruptions adversely affecting the Group, its operations, its customers or
          its suppliers;

*         current interest, inflation, taxation (direct and indirect) and exchange rates 
          will continue to prevail; and

*         the Company will not acquire or dispose of any businesses prior to 30 
          September 2003.



Letter from the Company's auditors



The following is the text of a letter from Ernst & Young LLP (the Company's
auditors) issued today in connection with the Forecast:



                               "Ernst & Young LLP

                          Central Region - Birmingham

                                One Colmore Row

                               Birmingham  B3 2DB



The Directors

McLeod Russel Holdings plc

2 Hitching Court

Blacklands Way

Abingdon Business Park

Abingdon

Oxon OX14 1RG



The Directors

Amethyst Corporate Finance PLC

107 Fleet Street

London EC4A 2AB

                                                                     20 May 2003

Dear Sirs



We have reviewed the accounting policies and calculations for the forecast of
McLeod Russel Holdings PLC ("McLeod Russel" or "the Company") and its
subsidiaries (together "the Group") for the year ending 30 September 2003 as
stated in the press release dated 20 May 2003.



The forecast, which has been prepared under the historical cost convention using
the going concern basis which assumes the continued support of the Group's
bankers, includes the results of the Group for the six months ended 31 March
2003, which are based on unaudited management accounts, and a forecast for the
six months ending 30 September 2003.



Responsibility

The forecast referred to in the forecast trading statement issued on 20 May 2003
is the responsibility of the Directors of McLeod Russel.



It is our responsibility to form an opinion on the forecast and to report our
opinion to you.



Basis of opinion

We planned and performed our work so as to obtain all the information and
explanations which we considered necessary in order to provide us with
reasonable assurance that the forecast, so far as the accounting policies and
calculations are concerned, has been properly compiled on the basis stated.



We conducted our work in accordance with the Statements of Investment Circular
Reporting Standards issued by the Auditing Practices Board.



Opinion

Providing that the Group continues to have the support of its bankers, in our
opinion the forecast, so far as the accounting policies and calculations are
concerned, has been properly compiled on the basis of the assumptions made by
the directors of the Company and has been prepared on a basis consistent with
the accounting policies normally adopted by the Group.



The work we carried out on the forecast was solely for the purpose of reporting
to Amethyst Corporate Finance PLC and to the directors of McLeod Russel and
hence to the existing members of McLeod Russel in relation to their existing
shareholdings in that company.  As a result, we assume no responsibility
whatsoever to any person contemplating acquiring or increasing any holding of
shares in McLeod Russel in respect of or arising out of or in connection with
our work on the forecast.



Yours faithfully





Ernst & Young LLP"



Ernst & Young LLP has consented to the issue of this press release dated 20 May
2003 with the inclusion of the letter attributed to them in the form and context
in which it is included.





Letter from the Company's financial advisers



The following is a text of a letter from Amethyst Corporate Finance PLC (the
Company's financial advisers) issued today in connection with the Forecast:



"20 May 2003
                                                  Amethyst Corporate Finance PLC

                                                                107 Fleet Street

                                                                London  EC4A 2AB

The Directors

McLeod Russel Holdings plc

Hitching Court

Blacklands Way

Abingdon Business Park

Abingdon

Oxfordshire

OX14 1RG





Dear Sirs



We refer to the statement being made in a press release to be issued today by
McLeod Russel Holdings plc (the "Company") that the Board believes the Group
will report a loss before tax in the current financial year to 30 September 2003
(together with the assumptions on which the Directors have based their profit
forecast) (the "Forecast").  The Forecast is a repeat of a statement originally
made by the Company in a press release dated 30 April 2003.  Copies of these
press releases are attached.



We have discussed with the Company and with the Company's auditors, Ernst &
Young LLP, the Forecast, together with the bases of its compilation including
the assumptions on which it is based, and have considered the attached letter
dated 20 May 2003 from Ernst & Young LLP addressed to the Directors of the
Company and the Directors of Amethyst.



We consider that the Forecast, for which the Directors of McLeod Russel Holdings
plc are solely responsible, has been made with due care and consideration by the
Directors of the Company.



Amethyst Corporate Finance PLC has given and not withdrawn its consent to the
publication of this letter as an attachment to the press release being issued
today by the Company.



Yours faithfully

For and on behalf of Amethyst Corporate Finance PLC



John Edwards                                       Marcus Shapiro

Managing Director                                Managing Director"


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