ANNUAL GENERAL MEETING
The Annual General Meeting of Dawson International PLC (“the Company” or “the Group”) will be held today at 12 noon in Kinross. At that meeting Andy Bartmess, Chief Executive Officer, will give a short presentation reviewing the results and activities of the Company which will be available on the Company’s website www.dawson-international.co.uk

QUARTER 1 TRADING UPDATE
In the 2008 Annual Report and Accounts Andy Bartmess commented:

“Current economic conditions in the countries where we operate are the worst that have been experienced for a very long time.  Each of our businesses is experiencing a great deal of uncertainty with respect to the level of demand for their products and it is quite likely we will see lower sales levels in 2009 than in 2008. Fortunately, we have entered 2009 in a position of strength based on the strategic actions taken and the results achieved in 2008.  Our balance sheet is strong and the Group’s current businesses have a lower risk profile than in the past.” 

The results for the first quarter of the year reflect these comments. The following financial information is derived from the unaudited consolidated management accounts of the Company for the three month period to 4 April 2009:

Group Results
Revenues are down £3.0 million (14%) compared with the first quarter of last year however the pre-exceptional operating loss is just £0.2 million higher at £0.7 million. Reorganisation costs of £0.2 million have been incurred in respect of redundancy costs at Barrie Knitwear while net finance charges were £0.1 million lower due to lower interest rates and our improved funding position.

The results of each division have been impacted by the weakness of Sterling compared with last year. For our UK businesses, export selling prices have benefited but US Dollar denominated cost of sales increased. For our US business, which is loss making in the first quarter, the translated loss is increased.
              
Net funds of £0.4 million are £10.1 million higher than last year. The cash outflow of £5.3 million in the first quarter compares with an outflow of £4.0 million last year and reflects the seasonality of the business.

Spinning Division (Todd & Duncan)
Cashmere sales volumes are down 35% compared with last year with customers buying very carefully to avoid being overstocked. Export selling prices continue to benefit from the weakness in Sterling which has improved margins.

Knitwear Division (Barrie Knitwear and Dawson Forte)
The first quarter of the year is the quietest period for our knitwear businesses in which they invariably report losses. Sales were higher than last year but losses increased slightly due to the currency impact of translating the results of the Dawson Forte business at $1.43 compared with $1.98 last year, an impact of £0.2m.

Home Furnishings Division (Dawson Home Group: Branded and Private Label)
The phased exit from the Branded business is proceeding to schedule with the exit from Debenhams now complete. Sales of this business are therefore £1.7 million lower than last year. Sales from the Private Label business are £0.5 million higher than last year despite the difficult retail environment however margins have been negatively impacted by the strong US Dollar, which has increased the cost of sales.

Central Overheads
Central costs of £0.1 million compare with £0.7 million for the same period last year. £0.3 million of this reduction is due to the receipt of a debt from Inner Mongolia King Deer Cashmere Limited (“King Deer”) which had been provided in prior years as noted below with £0.2 million due to the partial unwinding of unrealised exchange losses.

King Deer
In previous years the Company has made full provision for a debt due by King Deer. The total amount due, inclusive of interest, was $10.5 million. In March 2009 King Deer proposed a payment plan to settle this balance in full by December 2012. This proposal was accepted and an initial payment of $0.5 million has been received. The payment schedule is weighted to the final year of the plan and the Company considers it prudent to keep the remaining balance fully provided. The next payment of $1.0 million is due by 31 December 2009.

Potential Sale of Todd & Duncan
Negotiations are continuing for the possible sale of the Todd & Duncan business to Ningxia Zhongyin Cashmere Company Limited.  All points to enable exchange of contracts have now been agreed save for an agreed form lease for an extended period between the Kinross landlord and the purchaser.

Pensions
In the 2008 Annual Report we noted that “through close collaboration with the Pension Trustees we have implemented a recovery plan which is awaiting the formal consent of the Pensions Regulator”. The Pensions Regulator has since informed the Trustees that it has outstanding issues concerning the technical provisions, the length of the recovery plans and potential additional security on the Group’s assets.  Notwithstanding those concerns the Regulator has stated that it will take no action providing the Trustees address those concerns as part of the 2009 triennial valuation process which is required to be completed by 31 December 2009. In the meantime, the Group continues to implement the recovery plan agreed with the Trustees which provides payments of £0.35 million per annum towards reducing the historic pension scheme deficit.

Outlook
The results in the first quarter have confirmed our expectations that the global recession will reduce sales, which combined with the net impact of weaker Sterling will reduce profitability in the current year. This may be partly offset by the unwinding of the unrealised exchange losses provided in 2008. The Company continues to benefit from the actions taken during the last year to strengthen the business as well as maintaining a strong balance sheet but we remain cautious in our outlook for the remainder of the year with fragile customer confidence, currency volatility and a difficult credit insurance market.


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