ELH Eurodis Elect.

RNS Number:0813Z
Eurodis Electron PLC
26 May 2004


                              Eurodis Electron PLC
                     ("Eurodis Electron" or the "Company")
                            Pre-close trading update

Eurodis Electron today announces the following update prior to entering the
close period for its results for the year ending 31 May 2004, which are
scheduled to be announced on 27 July 2004.

Current trading

The successful conclusion of the #39m equity raising at the beginning of March
has enabled the business to get back to operating on a normal footing. The
equity proceeds have been deployed in line with the plans stated during the fund
raising.

As stated at the time of the equity raising, sales had been affected by the
Group's working capital position, and some erosion of market share occurred in
the quarter ended 31 March 2004. Since the refinancing we believe that financial
credibility in the Group has been restored and progress has been made in
regaining the confidence of trading partners. As anticipated, additional
inventory levels will enable the Group to take advantage of a strengthening
market.

Sales, margins and recurring operating costs for the year ending 31 May 2004 are
expected to be within market expectations. Further cost reductions have been
implemented in the second half of the current financial year as planned and we
continue to work towards improved utilisation of working capital. Net bank debt
as at 31 May 2004 will be substantially lower than market expectations.

Outlook

There are increasing signs of the market strengthening, though this is currently
characterised more by supply allocation than by market price increases. Against
this backdrop, and starting from a lower market share than anticipated, the
Board believes that steady progress will restore the Group to profitability
though this may take a few months longer than originally envisaged. The Group
continues to aim to increase margins but, in the short term, recovery of market
share is a higher priority. Operating expenses continue to be controlled tightly
in line with expectations.

Since the refinancing, we have been encouraged by the continuing level of
support from our key franchise partners. We have retained all franchises but
one, which has decided to rationalise its own distribution arrangements
following a merger. It represents about 2% of Group sales. We are in discussions
with a number of suppliers about potential new franchises that will provide
sales growth opportunities once in place.


Accounting charges, adoption of FRS17, proposed change of year end

As stated in the fund raising prospectus, the results for the six months ending
31 May 2004 will include a number of one off charges associated with
restructuring and refinancing.

The Board also intends to review the carrying value of assets, including
goodwill, and some significant one off charges may arise from this review. The
Board has also decided to adopt Financial Reporting Standard 17, "Retirement
Benefits", as it believes this will provide a clearer distinction between
financing and operating costs of the continuing business.

Later this year, the Company is planning to change its year end to 30 September.
Historically, the timetable for reporting the year end has fallen during a
period when sales are seasonally low and reporting during November will better
facilitate the Company's planning and forecasting. To effect this change, there
will be two sets of interim results: the first will cover the six months ending
30 November 2004 and the second will cover the four months ending 31 March 2005.
Audited results will then be announced for the sixteen month period to 30
September 2005.


Non-Executive Directors

Progress is being made with seeking two additional Non-Executive Directors and
we hope to announce the first of these appointments shortly.


Enquiries:

Eurodis Electron
Doug Rogers, Chairman                Tel:01737 242 464
Steve Swayne, Chief Executive
Peter Grant, Group Finance Director

Bell Pottinger Financial             Tel: 020 7861 3232
Billy Clegg/Emily MacKay

END



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