DAWSON INTERNATIONAL
 
Consolidated Profit and Loss Account
 
Period ended 1 January 2005
 
                                                    2004           2003
 
                                    Note              £m             £m
-------------------------------------------------------------------------------
Turnover                                            70.2           68.3
-------------------------------------------------------------------------------
 
Operating loss
                                                 ---------      ---------
-   base                                            (0.2)          (9.6)
-   goodwill impairment                                -           (1.5)
-   exceptional                         3           (1.2)          (7.0)
                                                 ---------      ---------
                                                    (1.4)         (18.1)
                                                 ---------      ---------
Exceptional gain on sale of
operations                              3            2.2              -
Goodwill previously written off
to reserves                                         (0.8)             -
                                                 ---------      ---------
                                                     1.4              -
Profit on disposal of fixed
assets                                               0.3              -
-------------------------------------------------------------------------------
 
Profit/(loss) on ordinary
activities before interest                           0.3          (18.1)
 
Interest and similar charges            4           (2.3)          (1.0)
-------------------------------------------------------------------------------
 
Loss on ordinary activities 
before taxation                                     (2.0)         (19.1)
 
Taxation                                               -           (0.1)
-------------------------------------------------------------------------------
 
Loss for the financial period
transferred to reserves                             (2.0)         (19.2)
-------------------------------------------------------------------------------
 
 
 
Loss per share (pence)
Basic                                   5           (2.0)  p      (18.9)  p
Diluted                                 5           (2.0)  p      (18.9)  p
Adjusted                                5           (2.3)  p      (10.5)  p
-------------------------------------------------------------------------------
 
 
Balance Sheets
 
at 1 January 2005
 
                                                Group                   Company
-------------------------------------------------------------------------------
                                     2004        2003        2004          2003
 
                                       £m          £m          £m            £m
-------------------------------------------------------------------------------
 
Fixed assets
Tangible assets                       2.6         5.9           -             -
Investments                             -           -        43.5          43.5
------------------------------------------------------------------------------- 
                                      2.6         5.9        43.5          43.5
-------------------------------------------------------------------------------
 
Current assets
Stocks                               11.7        18.9           -             -
Debtors                              15.2        22.2        56.8          60.2
Cash and deposits                    11.9        10.1         0.1           0.1
-------------------------------------------------------------------------------
                                     38.8        51.2        56.9          60.3
 
Creditors - amounts falling due
within one year                    -------     -------     -------       ------
-   borrowings                          -       (20.2)          -             -
-   other creditors                  (9.1)      (10.0)      (77.3)        (80.1)
                                   -------     -------     -------       ------
                                     (9.1)      (30.2)      (77.3)        (80.1)
-------------------------------------------------------------------------------
Net current assets/(liabilities)     29.7        21.0       (20.4)        (19.8)
-------------------------------------------------------------------------------
 
Total assets less current 
liabilities                          32.3        26.9        23.1          23.7
 
Creditors - amounts falling due after
more than one year
-   borrowings                       (5.7)          -        (5.7)            -
 
Provisions for liabilities
and charges                          (4.3)       (3.2)          -             -
-------------------------------------------------------------------------------
Net assets                           22.3        23.7        17.4          23.7
-------------------------------------------------------------------------------
 
Capital and reserves
Called up share capital              50.8        50.8        50.8          50.8
Profit and loss account             (28.5)      (27.1)      (33.4)        (27.1)
-------------------------------------------------------------------------------
Equity shareholders'funds            22.3        23.7        17.4          23.7
-------------------------------------------------------------------------------
 
These financial statements were approved by the Board of Directors on 6 May 2005
and signed on its behalf by
 
Michael G Hartley, Chairman                  David Cooper, Director
 
 
Consolidated Cash Flow Statement
Period ended 1 January 2005
                                                       2004         2003
 
                                                         £m           £m
-------------------------------------------------------------------------------
Reconciliation of operating loss to net cash inflow/(outflow) from 
operating activities
 
Operating loss before exceptional
charges and goodwill                                   (0.2)        (9.6)
Depreciation                                            0.8          1.3
Loss on disposal of fixed assets                        0.1            -
(Increase)/decrease in stocks                          (2.9)         4.7
Decrease/(increase)in debtors                           0.3         (1.6)
Increase in creditors                                   3.9          2.0
-------------------------------------------------------------------------------
Net cash inflow/(outflow)from operating
activities before exceptional charges                   2.0         (3.2)
Reorganisation costs and utilisation of
closure provisions                                     (1.6)        (1.3)
-------------------------------------------------------------------------------
Net cash inflow/(outflow)from operating activities      0.4         (4.5)
 
Returns on investments and servicing of finance
-   net interest paid                                  (1.2)        (1.1)
 
Taxation                                                0.3          0.1
 
Capital expenditure                                  --------     --------
-   purchase of tangible fixed assets                  (0.5)        (1.3)
-   sale of tangible fixed assets                       0.8          0.4
                                                     --------     --------
                                                        0.3         (0.9)
 
Acquisitions and disposals
                                                     --------     --------
-   disposals                                          16.7          1.3
-   cash balances transferred on disposal              (0.2)           -
                                                     --------     --------
                                                       16.5          1.3
-------------------------------------------------------------------------------
Net cash inflow/(outflow)before management of
liquid resources and financing                         16.3         (5.1)
 
Financing
-   shareholder loan (repaid)/received                 (3.3)         3.3
-   Loan Stock                                          5.3            -
-   net movement in other loans                        (0.2)         0.2
-------------------------------------------------------------------------------
Increase/(Decrease)in cash                             18.1         (1.6)
-------------------------------------------------------------------------------
 
Reconciliation of Net Cash Flow to Movement in Net Funds
 
Period ended 1 January 2005
 
Increase/(decrease) in cash                              18.1     (1.6)
Loan Stock                                               (5.7)       -
Decrease/(increase) in debt                               3.5     (3.5)
-------------------------------------------------------------------------------
Increase/(decrease) in net funds resulting from       
cashflows                                                15.9     (5.1)
Loans disposed of                                         0.7        -
Translation adjustments                                  (0.3)    (0.8)
-------------------------------------------------------------------------------
Movement in net funds                                    16.3     (5.9)
Net debt at beginning of period                         (10.1)    (4.2)
-------------------------------------------------------------------------------
Net funds/(debt) at end of period                         6.2    (10.1)
-------------------------------------------------------------------------------
 
 
Consolidated Statement of Total Recognised Gains and Losses
 
Period ended 1 January 2005
                                                    2004         2003
 
                                                      £m           £m
-------------------------------------------------------------------------------
 
Loss for the financial period                       (2.0)       (19.2)
Translation adjustments                             (0.3)        (0.2)
-------------------------------------------------------------------------------
Total recognised losses for the financial period    (2.3)       (19.4)
-------------------------------------------------------------------------------
 
 
 
Consolidated Reconciliation of Movements in Equity Shareholders' Funds
 
Period ended 1 January 2005
                                                    2004         2003
 
                                                      £m           £m
-------------------------------------------------------------------------------
 
Loss for the financial period                       (2.0)       (19.2)
Goodwill relating to operations sold previously
written off to reserves                              0.8            -
 
Fair value adjustment in respect of share options
granted in the period                                0.1            -
 
Translation adjustments                             (0.3)        (0.2)
-------------------------------------------------------------------------------
Net decrease in equity shareholders' funds          (1.4)       (19.4)
Equity shareholders' funds at beginning of period   23.7         43.1
-------------------------------------------------------------------------------
Equity shareholders' funds at end of period         22.3         23.7
-------------------------------------------------------------------------------
 
 
 
 
Notes to the Preliminary Announcement
 
1   Basis of information in the preliminary announcement
 
    The financial information in the preliminary announcement does not
    constitute the Company's statutory financial statements for the financial
    periods ended 1 January 2005 and 3 January 2004. The financial statements
    for the year ended 3 January 2004 ('2003') have been delivered to the
    Registrar of Companies and those for the financial year ended 1 January 2005
    ('2004') will be delivered following the Company's Annual General Meeting.
    The 2004 financial information has been derived from the audited financial
    statements and that for 2003 has been derived from the audited financial
    statements for that period. The auditor's report on the financial statements
    for both periods was unqualified and did not contain a statement under
    section 237(2) or (3) of the Companies Act 1985.
 
 
2   Segmental analysis
 
(a) Class of business
 
                                            2004                           2003
    ---------------------------------------------------------------------------
                            Operating                         Operating  
                         profit/(loss)   Profit/           profit/(loss) Profit/
                               before     (loss)                 before   (loss)
                         goodwill and     before           goodwill and   before
               Turnover  exceptionals   interest  Turnover exceptionals interest
 
                     £m            £m         £m        £m           £m       £m
    ---------------------------------------------------------------------------
 
    Fibres & Yarns 31.3           0.7        0.4      31.5         (3.1)   (4.3)
    Knitwear       10.1          (0.6)      (0.6)     18.0         (3.5)   (4.4)
    Sourced   
    Garments       31.1           3.1        4.6      22.2          1.1     1.0
    Intra Group   
    turnover       (2.3)            -          -      (3.4)           -       -
    Central      
    overheads         -          (3.4)      (5.8)        -         (4.1)   (8.9)   
    ---------------------------------------------------------------------------
                   70.2          (0.2)      (1.4)     68.3         (9.6)  (16.6)
    ----------------------------------                ------------------
 
    Exceptional gain on disposal and                                 
    termination of operations                2.2                              -
    Goodwill amortisation                      -                           (1.5)
    Goodwill relating to operations sold 
    previously written off to reserves      (0.8)                             -
    Profit on disposal of fixed assets       0.3                              -
    ---------------------------------------------------------------------------
    Profit/(loss) on ordinary activities 
    before interest                          0.3                          (18.1)
    ---------------------------------------------------------------------------
 
                                      Net assets                Net assets
 
                                              £m                        £m
    ---------------------------------------------------------------------------
 
    Fibres & Yarns                          15.0                      23.4
    Knitwear                                 0.2                       9.8
    Sourced Garments                         2.5                      (1.5)
    Central                                 (3.0)                      0.5
    ---------------------------------------------------------------------------
    Net operating assets                    14.7                      32.2
    Taxation                                 1.4                       1.6
    Net funds/(debt)                         6.2                     (10.1)
    ---------------------------------------------------------------------------
    Net assets                              22.3                      23.7
    ---------------------------------------------------------------------------
 
    It is not considered appropriate or meaningful to allocate interest across
    segments in order to give a segmental analysis of profit before taxation as
    borrowing requirements are managed on a Group wide basis.
 
    The Fibres & Yarns segment includes the Joseph Dawson business which was
    disposed of on 15 October 2004.
    The Knitwear segment includes the Ballantyne business which was disposed of
    on 31 March 2004.
    As it was not possible to clearly distinguish the results of either the
    Joseph Dawson business or the Ballantyne business beyond turnover for
    financial reporting purposes neither has been reported as a discontinued
    activity.
 
 
(b) Geographical segments
 
 
                                            2004                           2003
    ---------------------------------------------------------------------------
                            Operating                         Operating  
                         profit/(loss)   Profit/           profit/(loss) Profit/
                               before     (loss)                 before   (loss)
                         goodwill and     before           goodwill and   before
               Turnover  exceptionals   interest  Turnover exceptionals interest
 
                     £m            £m         £m        £m           £m       £m
    ---------------------------------------------------------------------------
 
    United Kingdom 39.1          (1.9)      (4.2)     46.1         (9.3)  (15.2)
    United States  
    of America     31.1           1.7        2.8      22.2         (0.3)   (1.4)
    ---------------------------------------------------------------------------
                   70.2          (0.2)      (1.4)     68.3         (9.6)  (16.6)
    ----------------------------------                ------------------
 
    Exceptional gain on disposal
    and termination of operations            2.2                              -
    Goodwill amortisation                      -                           (1.5)
    Goodwill relating to operations sold   
    previously written off to reserves      (0.8)                             -
    Profit on disposal of fixed assets       0.3                              -
    ---------------------------------------------------------------------------
    Profit/(loss) on ordinary activities        
    before interest                          0.3                          (18.1)   
    ----------------------------------------------------------------------------
 
 
                                      Net assets             Net assets       
                                              £m                     £m
    ---------------------------------------------------------------------------
 
    United Kingdom                          14.4                   36.1
    United States of America                (0.3)                  (3.9)
    ---------------------------------------------------------------------------
    Net operating assets                    14.7                   32.2
    Taxation                                 1.4                    1.6
    Net funds/(debt)                         6.2                  (10.1)
    ---------------------------------------------------------------------------
    Net assets                              22.3                   23.7
    ---------------------------------------------------------------------------
 
                                                     2004           2003
 
3   Exceptional items                                  £m             £m
    ---------------------------------------------------------------------------
 
    Operating
    Refinancing costs                       (i)      (0.6)             -
    Reorganisation costs                    (ii)     (0.2)          (0.4)
    Fixed asset impairment                              -           (1.8)
    Exceptional debtor provision            (iii)    (1.5)          (3.7)
    Release of supplier provision           (iv)      1.5              -
    Environmental costs                                 -           (0.9)
    Actuarial shortfall arising on          
    discontinued US pension scheme          (v)      (0.4)          (0.4)
    Other                                               -            0.2
    ---------------------------------------------------------------------------
                                                     (1.2)          (7.0)
    ---------------------------------------------------------------------------
 
    Exceptional gain/(loss) on sale of operations
    Disposal of the Ballantyne business               3.5              -
    Disposal of the Joseph Dawson business           (1.3)             -
    ---------------------------------------------------------------------------
                                                      2.2              -
    ---------------------------------------------------------------------------
 
    (i)    The Group undertook two refinancing exercises in the year,
           firstly to replace its existing bank facilities and secondly to
           secure funding for the Dorma acquisition. All associated costs not
           directly related to the facilities secured are expensed as
           exceptional refinancing costs.
 
    (ii)   The reorganisation costs were incurred by the Fibres and Yarns
           division.
 
    (iii)  No repayments were received from the Group's former joint
           venture partner, King Deer, during the year. Following the year end
           a revised payment plan was agreed extending the repayment term to
           2008. While the Group remains optimistic that the total debt can be
           recovered full provision has been made to reflect the risk inherent
           in such an extended term of credit.
 
    (iv)   The Group carried a provision in respect of supplier balances
           relating to 2003 and earlier years. Following agreement with those
           suppliers the provision has now been released. The release is
           treated as an exceptional item due to its size.
 
    (v)    Further provision was made against the discontinued US pension
           scheme following an actuarial valuation at 31 December 2004.
 
                                                   2004           2003
 
4   Net interest payable                             £m             £m
    ---------------------------------------------------------------------------
 
    Interest receivable and similar income
    Interest receivable on short term deposits      0.2              -
    ---------------------------------------------------------------------------
 
    Interest payable and similar charges
    Bank loans and overdrafts
       -   base                                    (0.7)          (0.9)
       -   exceptional                             (0.1)             -
    Loan Stock premium and issue costs          
    amortisation                                   (1.5)             -
    Other loans                                    (0.2)          (0.1)
    ---------------------------------------------------------------------------
                                                   (2.5)          (1.0)
    ---------------------------------------------------------------------------
 
                                                   (2.3)          (1.0)
    ---------------------------------------------------------------------------
 
 
                                                   2004           2003
 
5   Earnings per share                            pence          pence
    ---------------------------------------------------------------------------
 
    Basic and diluted loss per share              (2.0)         (18.9)
    Goodwill                                       0.8            1.5
    Gain on fixed assets disposals                (0.3)             -
    Permanent diminution in fixed assets             -            1.8
    Gain on sale of operations                    (2.2)             -
    Other exceptional charges                      1.4            5.1
    ---------------------------------------------------------------------------
    Adjusted loss per share                       (2.3)         (10.5)
    ---------------------------------------------------------------------------
 
                                                000s           000s
    ---------------------------------------------------------------------------
    Weighted average number of shares
    Basic weighted average shares in 
    issue during the period                  101,506        101,506
    ---------------------------------------------------------------------------
 
    Basic loss per share is calculated on the loss for the financial period of
    £2.0 million (2003: loss £19.2 million) and the weighted average number of
    shares during the period calculated in accordance with Financial Reporting
    Standard 14.
 
    Diluted loss per share adjusts for share options granted to employees and
    warrants issued where the exercise price is less than the average price of
    the Company's shares during the period and when their exercise would reduce
    earnings per share or increase loss per share. 4,000,000 potentially
    dilutive ordinary shares have been disregarded as they would decrease the
    loss per share.
 
    Adjusted loss per share is calculated on the loss for the period before
    exceptional items and goodwill.