DWSN
1 February 2010

DAWSON INTERNATIONAL PLC (“the Company”)
Trading Update

Dawson International PLC, the international textiles group, is pleased to provide the following trading update for the year ended 2 January 2010.

Continuing Operations
A strong final quarter from both our UK and US Knitwear businesses more than offset continued weakness in our Home Furnishings business and so it is anticipated that sales and profits for continuing operations will be ahead of market expectations for the year. 

The UK Knitwear business benefited from the timing of high margin sales to couture customers which significantly improved margins in the final quarter. This is likely to have some negative impact on the first quarter of 2010 with the sales mix impact reversing.

The US Knitwear business sustained sales and margins through the final quarter in spite of the fragile US economic environment. In particular, in-season sales of branded lines and overall margin levels were both stronger than expected.

The Private Label Home Furnishings business has experienced poor margins throughout the year with the significant decline in Sterling compared with the US dollar impacting its cost of sales. While this improved somewhat in the second half of the year it is anticipated that the business will report a small loss overall.

As expected, the Branded Home Furnishings business continued to incur trading losses as we manage an exit following the sale of the Dorma brand to Dunelm Group plc in 2008. This exit will be completed in the first half of 2010.

Discontinued Operations
We noted in our 2009 interim report that the discontinued Todd & Duncan business traded at a loss in the first half of the year with further trading losses expected in the period to disposal on 28 August. This proved to be the case with the business also requiring an additional provision of £0.5m for doubtful debts.

King Deer
As noted in our 2008 annual report and 2009 interim report, the Company had a long standing debt due to it by Inner Mongolia King Deer Cashmere Company Limited of approximately $10 million which was fully provided against. A payment plan was agreed during the year in accordance with which $0.5 million was received in the first half of the year and $1.0 million in the second half. Considering the age of the debt, the Company considers it appropriate to retain a provision for the outstanding balance at this time.

Pensions
The Company is currently finalising its accounts for 2009 which will include an updated actuarial valuation of defined benefit pension scheme liabilities. This is expected to reflect the general market trend and therefore show a significant deterioration, principally due to lower corporate bond yields and increased longevity assumptions.