(DWSN.L) Dawson International PLC Buy/Sell

Commenting on the interim results, Chairman David Bolton said: "As anticipated in our Annual Report for 2008 the Group has experienced a lower level of demand overall for its products in the first six months of 2009, trading through the worst economic conditions experienced for a very long time. It is important to note that performance in the first half of the year reflects the seasonality of the US Knitwear division, which generates over 90 per cent of its sales and all of its profits in the second half of the year.

"The outlook for the full year remains very challenging. Every effort is being made to remain close to customers to find ways to adapt product and price point and respond to changing market demands dictated by the global recession, whilst maintaining a rigorous focus on cost containment and reduction. Another key objective for the Board will be to reduce the Group's exposure from its final salary pension schemes which are both costly and highly volatile and as such represent a barrier to potential new investment. I am confident that we as a Board and our management teams are taking the necessary steps to ensure that Dawson comes through these turbulent economic conditions well positioned to take advantage of market opportunities when the economy begins to show signs of improvement."

For further information please contact:

Andy Bartmess, Chief Executive Officer 01577 867000
Zoe Biddick, Biddicks Financial Public Relations 0207 448 1000
Robin Gwyn, WH Ireland 0161 832 2174

CHAIRMAN'S STATEMENT

Introduction

In my first address to you as Chairman of Dawson International PLC I think it is important to acknowledge the scale of strategic change the Group has undergone in the last 12 months. Following the sale of the Dorma brand to Dunelm Group in July last year and the recently completed sale of the Todd & Duncan business to Ningxia Zhongyin Cashmere Company, the Group is now composed of three operating divisions; UK Knitwear, US Knitwear and Home Furnishings, each primarily focussed on supplying high quality products to private label customers.

As anticipated in our Annual Report for 2008 the Group has experienced a lower level of demand overall for its products in the first six months of 2009, trading through the worst economic conditions experienced for a very long time. The results therefore, while disappointing, are not unexpected and the Board believes that the restructured Group is well placed to weather the current recession and benefit from an economic recovery.

Operating and financial review
Operating
Revenues profit (loss) before exceptional
items

£m £m £m £m
UK Knitwear 2.9 4.3 (0.1) 0.4
US Knitwear 1.6 2.0 (1.2) (0.8)
Home Furnishings - Private 13.0 11.3 0.2 1.7

Label
Central costs - - (0.8) (1.7)
Continuing operations before 17.5 17.6 (1.9) (0.4)

Home Furnishings - Branded
Home Furnishings - Branded(i) 6.6 10.6 (0.9) (1.3)
Continuing operations after 24.1 28.2 (2.8) (1.7)

Home Furnishings - Branded
Discontinued operations(ii) 12.4 15.8 (0.3) 0.7
Eliminations (1.7) (2.3) - -
Total Group 34.8 41.7 (3.1) (1.0)
(i) The Home Furnishings - Branded division, while classified as a continuing operation under IFRS, is being wound down and so is shown separately.

(ii) Discontinued operations traded for the full six month period.

Continuing operations

Turnover from continuing operations for the six months ended 4 July 2009 was £24.1 million (2008: £28.2 million) while the pre-exceptional operating loss was £2.8 million (2008: £1.7 million). It is important to note that the performance in the first half of the year reflects the seasonality of the US Knitwear division, which generates over 90 per cent. of its sales and all of its profits in the second half of the year.

UK Knitwear

The UK Knitwear division had an exceptional full year in 2008 benefiting, in particular, from strong sales to high value couture customers which were partly based on orders placed before the extent of the recession became clear in the second half of last year. It seemed inevitable that volumes would drop this year following lower than expected sell through by retail customers and this has proved to be the case. The business is normally seasonally weighted to the second half of the year and this trend is likely to be more pronounced in the current year as customers have reacted to the economic uncertainty by delaying order placement.

Management have responded to this challenge by maintaining tight control of costs and working capital. Exceptional costs of £125,000 were incurred in respect of a redundancy programme announced in May comprising 19 job losses required to bring production into line with demand.

US Knitwear

Turnover for the first half of the year in US dollars was $2.5 million (2008: $4.0 million) and the operating loss $1.8 million (2008: $1.7 million) with the reduction in margin from lower sales almost entirely offset by operating expense savings. As noted above, this division generates over 90 per cent. of its sales and all of its profits in the second half of the year.

The key measure for this business at the half year is the open order position which was $30.2 million compared with $45.6 million in the prior year, a reduction of 34 per cent. This is a reflection of both the current economic environment in the United States and the excellent performance by the business in 2008 when it returned record levels of both turnover and profit. While results are anticipated to be well below last year's record level the business is expected to deliver another satisfactory full year profit and return on capital employed.

Home Furnishings - Private Label

The success of this business is built on establishing long-term relationships as a trusted supplier to major private label customers. Key deliverables are innovative design capability, value for money, quality control and on-time delivery. The relationship with one such customer, Dunelm Group, is underpinned with a four year supply agreement following the sale of the Dorma brand to it in July 2008.

Turnover increased to £13.0 million from £11.3 million (15 per cent.) compared with last year however operating profit slipped to £0.2 million from £1.7 million with margins impacted by the strength of the US dollar. A significant proportion of product is purchased in US dollars and the increased Sterling cost has had to be absorbed by the business in the current economic environment. The average rate for the first half of 2009 was $1.50 compared with $1.97 in 2008. The US dollar has weakened since the period end, which is expected to benefit second half results.

Central costs

Net central costs have reduced to £0.8 million from £1.7 million, an improvement of £0.9 million. There are three main components of this improvement: in April 2009 the Company received a payment of US$500,000 (£348,000) from King Deer Cashmere Company Limited which had previously been fully provided against, professional fees were £324,000 lower and foreign currency losses reduced by £186,000. Management continues to actively look at cost initiatives to mitigate revenue shortfall.

Home Furnishings - Branded

This business is being wound down following the sale of the Dorma brand to Dunelm Group in July 2008. The process, which involves exiting from retail operations and liquidating working capital, is expected to complete on time by January 2011. Turnover consequently fell to £6.6 million from £10.6 million last year, while the operating loss was reduced to £0.9 million from £1.3 million. The business is not regarded as a discontinued operation under International Financial Reporting Standards and so is reported separately as a part of continuing operations.

Discontinued operations

Turnover from the discontinued Todd & Duncan division has fallen to £12.4 million from £15.8 million while a first half operating loss of £0.3 million compares with a profit of £0.7 million last year.

The sale of the Todd & Duncan business to Ningxia Zhongyin Cashmere Company Limited was completed on 28 August 2009. The subjects of the sale were the business operations, fixed assets and stocks. The Company has retained the debtors and creditors, which will mostly be realised in the second half of the year.

The consideration for the sale is the agreed value of fixed assets and stocks at completion less a discount of £4.2 million. An initial consideration of £6.1 million was paid on completion based on forecast values of fixed assets and stocks and this will be adjusted following agreement of completion accounts. This discount reflects the current poor profitability of the business which lost £0.3 million before financing costs in the normally profitable first half of the year and is expected to incur further losses in the seasonally weaker second half. It also reflects the strategic challenges faced by the business, not least the need to relocate and re-equip within a relatively short time period.

The sale proceeds of £6.1 million will initially be used to settle any trading balance due to Zhongyin and reduce Group borrowings. As the retained working capital of approximately £4 million is liquidated, the additional funds generated will be applied towards achieving the longer-term strategic objectives of the Group.

Further details are given in note 4 to the accounts.

Cash flow and funding

Historically, the Group absorbs funds from operations in the first half of the year and generates funds from operations in the second half reflecting the seasonality of the businesses, particularly the US Knitwear division.

The net funds outflow in the first half of the year was £9.7 million compared with £4.0 million in the same period last year, a deterioration of £5.7 million. £4.6 million of this resulted from the discontinued Todd & Duncan division which will partly be recovered by the sale of that business.

Net debt at the end of the period was £4.0 million compared with £9.7 million net debt at 28 June 2008.

Retirement benefit obligations

The Company has two defined benefit pension schemes in the UK, which are closed to new members, and one defined benefit pension scheme in the US, which is closed to all members. Following the sale of the Todd & Duncan business the Company will consider closing the UK schemes to existing members for future accrual as these schemes will have fewer than 70 remaining active members.

The triennial valuations of the two UK schemes are due in 2009 and these are currently being prepared by the schemes' actuary. It is likely that these will show a significant deterioration due to a change in mortality assumptions and the present economic conditions which affects current asset values and projected future returns. The Company will work with the Trustee to reduce these liabilities where possible, recognising that this issue has a significant influence on shareholder value.

Whilst recovery plans were agreed with the Trustees of the UK schemes in 2008 and payments have been made to the schemes during the period in accordance with these plans, it should be recognised that on completion of the 2009 valuations, a revised recovery plan will have to be agreed between the Company and the Trustee and approved by the Pensions Regulator.

Strategy and outlook

In its revised structure, the Group moves forward as a core of three divisions, which are largely private label businesses that retain some branded elements. Their strengths lie in design, product innovation and supply chain management. It is those strengths we will continue to build on as we weather the storms of recession, whilst maintaining a rigorous focus on cost containment and reduction. Another key objective for the Board will be to reduce the Group's exposure from its final salary pension schemes which are both costly and highly volatile and as such represent a barrier to potential new investment. This will form the basis of our future strategy as we target opportunities to grow existing businesses and consider potential strategic acquisitions, which would enhance the Group's core capabilities.

The outlook for the full year remains very challenging and as predicted in our 2008 Annual Report all of our businesses have seen a drop in demand that will adversely affect our financial performance for 2009. Every effort is being made to remain close to customers in these challenging times to find ways to adapt product and price point and respond to changing market demands dictated by the global recession. At the same time we remain alert to new business opportunities as markets shift.

I am, therefore, confident that we as a Board, together with our management teams, are taking the necessary steps to ensure that the Group comes through these turbulent economic conditions well positioned to take advantage of market opportunities when the economy begins to shows signs of improvement.

David Bolton

Interim Chairman

For the period ended 4 July 2009
6 months to 6 months to Year to
4 July 28 June 3 January

re-presented re-presented
Note £000 £000 £000

Continuing operations
Revenue 2 24,091 28,164 87,358
Cost of sales (19,222) (19,589) (65,266)
Gross profit 4,869 8,575 22,092
Other income 343 - -
Selling and distribution costs (4,162) (6,032) (12,484)
Administrative expenses (3,796) (4,293) (9,091)
Operating (loss) profit before exceptional items 2 (2,746) (1,750) 517
Exceptional items 3 (125) - 1,342
Operating (loss) profit (2,871) (1,750) 1,859
Finance income 5 6 22 65
Finance costs 5 (262) (573) (930)
Net finance income on pension assets/liabilities - - 126
(Loss) profit before taxation 2 (3,127) (2,301) 1,120
Taxation 7 (595) - (146)
(Loss) profit for the period from continuing operations (3,722) (2,301) 974

Discontinued operations
(Loss) profit for the period from discontinued 4 (5,282) 662 (498)

operations
(Loss) profit for the period (9,004) (1,639) 476

(Loss) earnings per share From continuing and discontinued operations
Basic 6 (4.0) p (0.7) p 0.2 p
Diluted 6 (4.0) p (0.7) p 0.2 P

From continuing operations
Basic 6 (1.7) p (1.0) p 0.4 p
Diluted 6 (1.7) p (1.0) p 0.4 p

For the period ended 4 July 2009
6 months to 6 months to Year to
4 July 28 June 3 January

£000 £000 £000

(Loss) profit for the period (9,004) (1,639) 476

Other comprehensive income:
Exchange differences on translation of foreign (248) (4) 1,689

operations
Actuarial loss on defined benefit pension - - (2,533)

obligations
Other comprehensive income for the period (248) (4) (844)
Total comprehensive income for the period (9,252) (1,643) (368)

Total comprehensive income is all attributable to equity holders of the parent.

As at 4 July 2009
4 July 28 June 3 January

Note £000 £000 £000

Non-current assets
Intangible assets 121 426 131
Property, plant and equipment 962 3,990 2,285
Deferred tax asset 1,500 1,500 1,500
Total non-current assets 2,583 5,916 3,916

Current assets
Inventories 12,566 23,856 24,090
Trade and other receivables 15,634 17,252 14,973
Cash and cash equivalents 3,249 1,801 9,900
Disposal Group held for sale 4 10,716 - -
Total current assets 42,165 42,909 48,963
Total assets 44,748 48,825 52,879

Current liabilities
Trade and other payables 12,315 12,112 15,576
Income tax payable 126 96 142
Borrowings 7,212 11,479 4,212
Other financial liabilities 462 - 2,028
Liabilities directly associated with disposal Group held for sale 4 4,842 - -
Total current liabilities 24,957 23,687 21,958

Non-current liabilities
Provisions 2,460 1,515 3,951
Retirement benefit obligations 6,306 4,701 6,730
Total non-current liabilities 8,766 6,216 10,681
Total liabilities 33,723 29,903 32,639
Net assets 11,025 18,922 20,240

Equity
Share capital 51,989 51,989 51,989
Share premium account 5,489 5,489 5,489
Translation reserve 570 (875) 818
Retained earnings (47,023) (37,681) (38,056)
Total equity 11,025 18,922 20,240

For the period ended 4 July 6 months to 6 months to Year to
2009 4 July 28 June 3 January

re-presented re-presented
£000 £000
£000

Continuing operations Cash flows from operating activities
(Loss) profit before tax (3,127) (2,301) 1,120
Depreciation 85 257 809
Gain on disposal of Dorma - - (1,517)

brand
Net finance expense 256 551 739
Share based payment expense 37 42 85
(2,749) (1,451) 1,236
(Increase) decrease in (2,440) (4,150) 2,222

inventories
Decrease (increase) in debtors 3,717 1,296 (148)
(Decrease) increase in (2,169) (122) 1,842

creditors
Decrease in provisions (1,455) (98) (21)
Cash (used) generated by (5,096) (4,525) 5,131

operations
Additional contributions to (175) - (887)

pension schemes
Taxes paid (565) (21) (231)
Net cash (used) generated by (5,836) (4,546) 4,013

operating activities

Cash flows from investing activities Interest received
Proceeds from disposal of - 19 -

property, plant and equipment
Proceeds from disposal of - - 4,523

Dorma brand
Purchase of property, plant (35) (401) (546)

and equipment
Purchase of intangible assets (12) - (2)
Net cash (used) generated by (41) (362) 4,038

investing activities Cash flows from financing activities
Interest paid (262) (628) (985)
Increase (decrease) in asset 3,000 (328) (7,602)

backed finance
Net cash generated (used) by 2,738 (956) (8,587)

financing activities
Net cash used by continuing (3,139) (5,864) (536)

operations Discontinued operations
Net cash (used) generated by (2,591) 1,540 2,250

operating activities
Net cash used by investing (446) (9) (18)

activities
Net cash (used) generated by (3,037) 1,531 2,232

discontinued operations
(6,176) (4,333) 1,696

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at 9,900 6,093 6,093

the beginning of the period
Exchange rate effects (475) 41 2,111
Cash and cash equivalents at 3,249 1,801 9,900

the end of the period

For the period ended 4 July 6 months to 6 months to Year to
2009 4 July 28 June 3 January

£000 £000 £000
(Decrease) increase in cash (6,176) (4,333) 1,696

and cash equivalents
(Increase) decrease in asset (3,000) 328 7,602

backed finance
Exchange rate effects (475) 48 2,111
Increase in net debt (9,651) (3,957) 11,409
Opening net funds (debt) 5,688 (5,721) (5,721)
Closing net (debt) funds (3,963) (9,678) 5,688

For the period ended 4 July

Share Share Translation Profit and Total
Capital Premium Reserve Loss account
£000 £000 £000 £000 £000
At 29 December 2007 51,989 5,489 (871) (36,084) 20,523
Total comprehensive income for - - (4) (1,639) (1,643)

the period
Share-based payments charge - - - 42 42
At 28 June 2008 51,989 5,489 (875) (37,681) 18,922
At 3 January 2009 51,989 5,489 818 (38,056) 20,240
Total comprehensive income for - - (248) (9,004) (9,252)

the period
Share-based payments charge - - - 37 37
At 4 July 2009 51,989 5,489 570 (47,023) 11,025

1. Basis of preparation and significant accounting policies

Basis of preparation

This half year report contains the condensed consolidated financial information of the Company and its subsidiaries ("the Group") for the six month period ended 4 July 2009 prepared in accordance with the AIM rules. It is unaudited and has not been reviewed by the auditors. The report does not contain all of the information and disclosures required in the annual financial statements and does not therefore constitute statutory accounts as defined in section 435 of the Companies Act 2006. It should be read in conjunction with the 2008 Annual Report.

Comparative information for the twelve month period to 3 January 2009 is based on the statutory accounts for that period which were prepared under International Financial Reporting Standards as adopted by the EU and have been delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

On 28 August 2009 the Company completed the sale of the Todd & Duncan Yarn Spinning division. The results of this division have therefore been reported as a discontinued operation and comparative figures restated accordingly.

The financial information is prepared on the historic cost basis with the exception of assets and liabilities which are classified as held for sale and is presented in Sterling, rounded to the nearest thousand.

The condensed financial statements have been prepared on the going concern basis which the Directors consider to be appropriate based on a review of projected cashflows which take into account (i) the general economic environment, which continues to be challenging (ii) the business specific risks and uncertainties which are discussed on pages 14 and 15 of the 2008 Annual Report and are not considered to have changed and (iii) the net impact of the Todd & Duncan disposal, which will generate cash but reduce borrowing capacity.

This half year report contains certain forward looking statements which are subject to various risks and uncertainties and should therefore be treated with an appropriate level of caution and not regarded as a forecast of future results.

Significant accounting policies

The interim condensed consolidated financial statements have been prepared applying the same accounting policies that were applied in the preparation of the Company's published consolidated financial statements for the year ended 3 January 2009 except for the adoption of the following new and amended reporting standards, which are effective for periods commencing on or after 1 January 2009:

A new primary statement, 'Consolidated Statement of Changes in Equity' is required containing information previously disclosed in the notes to the accounts. In addition, the Consolidated Statement of Recognised Income and Expense is replaced with the Consolidated Statement of Comprehensive Income which may be shown separately or combined with the Income Statement.

This standard replaces IAS14 - 'Segment Reporting' which required operating segments to be analysed into Primary (business) and Secondary (geographical) segments. IFRS8 requires that operating segments should be aligned with those reviewed by the 'Chief Operating Decision Maker' which is considered to be the Board of Directors. As a result, the Knitwear segment has been divided into UK and US Knitwear segments and the Home Furnishings segment has been divided into Private Label and Branded Home Furnishings segments. Various other amendments to standards and interpretations of standards are effective for periods commencing on or after 1 January 2009 as detailed on page 29 of the 2008 Annual Report, none of which have any impact on reported results.

This half year report was approved by the Board of Directors on 31 August 2009. Copies of this report and the 2008 Annual Report are available on the Company's website at www.dawson-international.co.uk.

2. Segmental analysis

As described in note 1 - basis of preparation, the segmental analysis has been prepared in accordance with IFRS8 - 'Operating Segments' which has replaced the previous reporting standard IAS14 - 'Segment Reporting'. The new standard requires that the segmental analysis should be aligned with internal reporting to the 'Chief Operating Decision Maker' which is considered to be the Board of Directors. The operating segments have been identified as the following:

UK Knitwear

This segment comprises the Barrie business which manufactures cashmere and woollen garments which are sold mainly in the European market. It sells both to private label customers and under its own labels which include Barrie, John Laing and Glenmac.

US Knitwear

This segment comprises the Forte business which sources cashmere garments from China which are sold in the American market, primarily to large private label customers. It also sells to smaller boutique customers under its own 'Kinross' label. This business is highly seasonal, making over 90 per cent of its sales and all of its profit in the second half of the year.

Home Furnishings - Private Label

This segment designs and sources bed linen, primarily from Asia, which is sold to a small number of Private Label customers.

Home Furnishings - Branded

This segment designed and sourced 'Dorma' branded bed linen which it retailed through a number of channels. Following the sale of the 'Dorma' brand to Dunelm Group in July 2008 a phased exit from this business is being conducted which will complete by January 2011. Certain establishment costs, currently charged to the Branded segment will then transfer to the Private Label segment.

Revenue Profit (loss)

Interim Interim Full Year Interim Interim Full Year
£000 £000 £000 £000 £000 £000
UK Knitwear 2,859 4,254 10,032 (124) 443 1,507
US Knitwear 1,652 2,048 34,023 (1,171) (843) 3,588
Home Furnishings - Private 12,998 11,287 23,143 244 1,665 2,862

Label
Home Furnishings - Branded 6,582 10,575 20,160 (867) (1,348) (2,422)
Segmental revenues/results 24,091 28,164 87,358 (1,918) (83) 5,535

before exceptional items Unallocated central costs

exceptional items
Exceptional items (125) - 1,342
Net finance charges (256) (551) (739)
Continuing operations 24,091 28,164 87,358 (3,127) (2,301) 1,120

Net finance charges are not allocated across segments as borrowing requirements are managed on a Group wide basis.

The results of discontinued operations are disclosed in note 4.

Assets

Interim Interim Full Year
£000 £000 £000
UK Knitwear 2,549 4,068 1,698
US Knitwear 2,692 5,957 2,526
Home Furnishings - Private Label 8,918 7,383 7,450
Home Furnishings - Branded 5,284 9,673 7,120
Segmental assets 19,443 27,081 18,794
Unallocated central assets 1,110 382 3,295
Deferred tax 1,500 1,500 1,500
Cash and deposits 3,249 1,801 9,900
Total assets, continuing operations 25,302 30,764 33,489
Total assets, discontinued operations 19,446 18,061 19,390
Total assets 44,748 48,825 52,879

Interim Interim Full Year
3. Exceptional items - continuing operations £000 £000 £000

Reorganisation costs

UK Knitwear (125) - -
Home Furnishings - Branded - - (175)
Gain on sale of Dorma brand - - 1,517
(125) - 1,342
4. Discontinued operations
On 28 August 2009 the Company completed the sale of the business, fixed assets and stocks of the Todd & Duncan Yarn Spinning division to
Ningxia Zhongyin Cashmere Company Limited. The consideration will be based on the value of fixed assets and stocks at completion less a discount
of £4.2 million. In addition, the Company will incur costs estimated at £818,000. The results of discontinued operations are as follows:

Interim Interim Full Year
£000 £000 £000
Revenue 12,399 15,757 21,514
Cost of sales (10,934) (13,269) (18,052)
Gross margin 1,465 2,488 3,462
Operating expenses (1,729) (1,826) (2,960)
(Loss) profit before exceptional items (264) 662 502
Fixed asset impairment - - (1,000)
Loss on disposal of business (5,018) - -
(Loss) profit for the period from discontinued (5,282) 662 (498)

operations

Disposal Group assets and liabilities comprise:

Fixed assets 1,353
Stocks 9,363
Total assets held for sale 10,716
Provision for loss on sale 4,842

As part of the sale two supply agreements have been entered into. Barrie, which currently sources most of its cashmere yarn from Todd & Duncan, has signed a four year supply agreement to source yarn from Todd & Duncan Limited at similar levels. Dawson Forte, which sources some its cashmere garments from Zhongyin, has signed a four year supply agreement to offer a minimum level of garment orders to Zhongyin.

Interim Interim Full Year
5. Finance income (costs) £000 £000 £000
Interest receivable on short-term deposits 6 22 65
Finance income 6 22 65
Interest payable on asset backed finance (262) (573) (930)
Finance costs (262) (573) (930)
6. (Loss) earnings per share 2009 2008 2008
Interim Interim Full Year
Basic and diluted (loss) earnings per £000 £000 £000

share

(Loss) profit for the period attributable

to equity holders of the parent:

Continuing operations (3,722) (2,301) 974
Discontinued operations (5,282) 662 (498)
(9,004) (1,639) 476
Weighted average number of shares 000's 000's 000's
In issue during the period 225,158 225,158 225,158
Dilutive potential ordinary shares - - -
225,158 225,158 225,158
Basic and diluted (loss) earnings per Pence Pence Pence

share

Continuing operations (1.7) (1.0) 0.4
Discontinued operations (2.3) 0.3 (0.2)
(4.0) (0.7) 0.2
Adjusted loss per share £000 £000 £000

(Loss) profit for the period from

continuing operations
attributable to equity holders of the (3,722) (2,301) 974

parent

Add back exceptional items 125 - (1,342)
(3,597) (2,301) (368)
000's 000's 000's
Weighted average number of shares in issue 225,158 225,158 225,158
Pence Pence Pence
Adjusted loss per share (1.6) (1.0) (0.2)
Adjusted loss per share is calculated on the profit or loss for the period from continuing operations before exceptional items.

Interim Interim Full Year
7. Income tax expense £000 £000 £000

Current tax expense:

UK

Overseas

Deferred tax:

Origination and reversal of timing - - -

differences

Total income tax expense (595) - (146)

The Group has significant tax losses available in the UK and federal tax losses available in the USA subject to any restrictions which may apply as a result of s.382 of the US tax code (change of ultimate ownership rules). The adjustment to overseas tax for the previous year results from the application of the change of ownership rules.

8. Retirement benefit obligations
The Group operates two defined benefit pension schemes in the UK which are closed to new members and a defined benefit pension scheme in
the USA which is closed to all members. Following the sale of the Todd & Duncan business the UK schemes have less than 70 active members and the
Company intends to consider closing the schemes to future accrual for existing members.
Full actuarial valuations of the UK schemes are made triennially by an independent, professionally qualified actuary and these fall due for renewal in
2009. The actuary updates these valuations on an annual basis for reporting and funding purposes. No update is performed for interim reporting
purposes and so the movement on the schemes at the half year represents additional funding made to the schemes in the period and any exchange
movement on the US discontinued scheme.

This information is provided by RNS The company news service from the London Stock Exchange

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