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Ultraframe PLC (UTF)

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Tuesday 07 December, 2004

Ultraframe PLC

Final Results

Ultraframe PLC
07 December 2004

                                                                 7 December 2004

                  ULTRAFRAME PLC ('Ultraframe' or 'the Group')
                              PRELIMINARY RESULTS

Ultraframe Plc, the leading specialist designer of conservatory systems in
Europe and North America, today announces preliminary results for the 53 weeks
ended 1 October 2004 (2003: 52 weeks).

Results                                 2004     2003   % change     % change at
                                                                        constant
(before goodwill amortisation and                                    currency **
exceptionals) *

Turnover on continuing operations     £118.2m  £139.1m     (15.0)        (11.2)

Operating profit on continuing
operations                             £12.8m   £33.4m     (61.6)        (61.8)

Profit before tax                      £12.0m   £32.0m     (62.5)

Earnings per share                       8.5p    22.9p     (62.6)

Statutory results

(post goodwill amortisation and exceptionals)

Operating profit                        £4.6m   £29.8m     (84.5)        (87.9)

Profit before tax                       £3.6m   £28.1m     (87.1)

Earnings per share                       1.0p    20.0p     (95.2)

Dividend per share                     11.10p   11.10p

* Management use results that exclude goodwill amortisation and exceptional
items as the primary measure to provide a better comparison of underlying
business performance.
** The use of constant rates of exchange more clearly portrays the underlying
trend of the business. There has been an 11% depreciation in the dollar exchange
rate during the period.

   • UK sales in the year were down 18.7% compared with the prior year, as
     indicated in the October trading statement. Pressure on margins continues
     and the UK market remains volatile and competitive
   • In North America, core sunroom dollar sales for the year were 4.5% up on
     the prior year. A 4.7% decline in sales in the franchise network was counter
     balanced by very strong growth in the nascent Company-owned retail stores
     with sales almost doubled
   • Operating cash flow of £22.8m (2003: £30.6m) remained strong; net debt
     reduced to £6.5m (2003: £8.3m)
   • Results include prudent provision for an exceptional item of £5.3m,
     charged in respect of the US litigation announced on 3 September

Dividend
   • Proposed final dividend of 7.86p held in line with last year, as
     previously indicated
   • In 2005, the board intends to return to its stated policy to pay a full
     year dividend that is around twice covered by earnings before goodwill
     amortisation and exceptional items

Rod Sellers, Chairman, commented:

'Whilst the Group results are in line with the statement we made in August, the
past year has clearly been disappointing in terms of operational performance.
The business, however, is being repositioned and the board has been, and will
continue to be, determined to effect the necessary changes in business
operations to respond to the challenges we face.

'In the UK, our recently appointed managing director has employed new management
and initiated a cost reduction programme to help mitigate the effects of a
continuing decline in sales. The strategy going forward includes faster new
product development, especially for the growing budget segment of the market. It
focuses the team on building stronger customer relationships, and targets
investment in sales and marketing to strengthen existing channels to market and
identify new ones. In North America, the franchise network performance has been
disappointing as the newer franchisees take time to build their sales, and the
business is now being managed to control overheads in a period of lower than
expected growth. The programme to open retail stores is also being rephased for
the coming year to reflect the economic realities of Four Seasons' recent
trading performance, but these Company-owned stores continue to deliver strong
sales growth and the board remains convinced that they build brand awareness and
bring us closer to consumers.

'In the new financial year, the competitive environment in the UK remains
challenging and we do not expect that it will improve in the first half, while
in North America a modest improvement is expected as the operational
improvements take effect and the newer retail stores generate further sales
growth. We expect the Group to deliver a small underlying pre-tax loss in the
first half, but to show an improvement in trading in the second half, as the
planned operational initiatives in the UK and North America gather momentum.
Overall, the rate of decline in profitability before goodwill and exceptionals
in 2005 should be less than in 2004.'



Enquiries

Ultraframe Plc David Moore, Chief Executive      ) today:        020 7404 5959
               Alan Rothwell, Finance Director   ) thereafter:   01200 443311
Brunswick      Gill Ackers/Sarah Tovey                           020 7404 5959

Access our investor website at www.ir.ultraframe.com, and view our commercial
websites at
www.ultraframe-conservatories.co.uk and www.fourseasonssunrooms.com.

Notes to editors:

Ultraframe, established in 1983, is the leading international designer and
manufacturer of conservatories and sunroom systems for domestic and light
commercial use. In Europe, the Group is primarily focused on the UK where it is
the industry leader in conservatory roof design and manufacture. In 1997
Ultraframe listed on the London Stock Exchange. In North America, the Four
Seasons business was acquired in 2001 and is the only nationally recognised
consumer brand for sunrooms in the US. The Group HQ team is based on the main UK
site in Clitheroe, Lancashire. Ultraframe employs 1,100 people worldwide and has
more US and European quality accreditations and patents as well as a broader
intellectual property base for its roofing and sunroom systems than any other
conservatory company. This ensures that the Group remains at the forefront of
quality and technological innovation with a reputation for excellence.


OPERATING & FINANCIAL REVIEW

Group results

The Group results for 2004 reflect a slowing market and increased competition in
the UK conservatory market along with increased revenue investment in North
America. On a constant currency basis, Group turnover on continuing operations
for the full year was down by 11.2%, with reported Group turnover on continuing
operations down by 15.0% to £118.2m (2003: £139.1m). This reflects an 11%
decline in the average exchange rate of the US dollar against sterling in the
year under review. Gross margin from continuing operations decreased from 51.6%
to 47.4% primarily due to changes in the UK competitive environment, while
operating margin before goodwill amortisation and exceptional items declined
from 24.0% to 10.8 % on the same basis, reflecting volume related operational
gearing together with increased revenue investment in North America. Operating
profit on continuing operations before goodwill amortisation and exceptional
items was down to £12.8m (2003: £33.4m). Profit before tax, goodwill
amortisation and exceptional items fell to £12.0m (2003: £32.0m) and reported
pre-tax profit after goodwill amortisation and an exceptional item provision
relating to US litigation amounted to £3.6m (2003: £28.1m). Earnings per share
before goodwill amortisation and exceptional items decreased to 8.5p (2003:
22.9p), with reported EPS down to 1.0p (2003: 20.0p).
Net debt at the financial year end has fallen to £6.5m (2003: £8.3m)
representing gearing of 9.6% (2003: 10.3%). The level of net debt reflects a
neutral cash flow, together with a foreign exchange reduction of £1.8m in dollar
denominated North American debt.

Dividend

As previously indicated, the board proposes a final dividend of 7.86p per share
(2003: 7.86p), to be paid on 31 January 2005 to shareholders on the register at
31 December 2004. This, together with the interim dividend of 3.24p paid on 25
June 2004, makes a total dividend for the year of 11.10p per share (2003:
11.10p).

In 2005, the board intends to return to its stated policy to pay a full year
dividend that is around twice covered by earnings before goodwill amortisation
and exceptional items.

Board and employees

In September, Vanda Murray OBE, who has been a non-executive director since
January 2002, became a full time executive on her appointment as the new
Ultraframe UK managing director. She brings expertise in sales, multi-channel
distribution and customer relationships in similar markets to Ultraframe.
Combined with her strong international marketing background she further
strengthens the executive team.

David Ewing, who joined as a non-executive director in June 2000 and became CEO
of the Group's North American operations in September 2001, will retire early in
2005. The process of recruiting his successor is already underway and he will
assist with the transition to the new leadership in 2005.

Current trading and outlook

In the UK, the competitive environment remains challenging and we do not expect
that it will improve in the first half. Turnover in the first two months of the
new financial year is 29% down, albeit against a comparative period that had not
yet seen the full impact of the market downturn. In North America, dollar sales
are 4% ahead of the comparable period last year.

The board has conducted a review of costs across the Group and remains vigilant
for further opportunities to control costs. The cost base has been reduced in
the first two months of the financial year so that the Group is better placed to
meet the competitive challenges in its markets, and these savings will be
reinvested in the business, so overall Group overheads are expected to remain
broadly flat.

The board expects the lower sales and margin trends in the UK to continue into
2005. A modest improvement is expected in North America, particularly as the
newer retail stores deliver a higher rate of sales growth in the second half.
However, it is apparent that Group results before goodwill amortisation and
exceptional items will suffer, albeit at a slower rate of decline than in 2004.
The board anticipates that this deterioration in results and the attendant cash
flow effect will be most evident in the first half, when the Group is likely to
deliver a small underlying pre-tax loss. In the second half of the new financial
year, the board expects an improvement in trading as the planned operational
initiatives in the UK and North America gather momentum. Overall, the rate of
decline in profitability before goodwill and exceptionals in 2005 should be less
than in 2004.

United Kingdom

Financial highlights *                    2004           2003         % change
£m
------------------------               ---------      ---------       ----------
Turnover                                  73.8           90.7            (18.7)
Operating profit                          15.4           28.8            (46.7)
------------------------               ---------      ---------       ----------
Operating margin                          20.9%          31.8%
------------------------               ---------      ---------       ----------
* on continuing operations

Turnover decreased 18.7% to £73.8m; sales were down 13.5% in the first half and
down 23.0% in the second half. Gross margin on continuing operations declined
from 54.1% to 49.5%, reflecting the highly competitive market background, with
increased customer churn and changes in customer and product mix. UK overheads
have increased by £0.9m to £21.1m, mainly due to higher legal costs as the Group
continues to vigorously protect its intellectual property rights. Operating
profit declined to £15.4m (2003: £28.8m).

Over the past two years, the market has become increasingly volatile and is
experiencing a slowdown in overall growth rates. The Group commissioned
independent research from The Henley Centre in 2004. This confirmed that the
market was seeing both demographic and structural changes, and that the three
main macro economic factors influencing the conservatory market are trends in
interest rates, house prices and real disposable income. Against this
background, consumers have recently been more cautious on big-ticket home
improvement expenditure, causing an overall slowdown in the conservatory market.
Against the slowing overall market, there has been some growth in the emerging
budget segment, which is led by younger consumers who are more price-conscious
and are driven by their need for living space.

The slowdown in the traditional baby boomer market segment and the growth of the
budget segment has caused increased competitive intensity. A number of the main
window profile companies have been moving aggressively into the conservatory
market, with lower priced products and low margin expectations, as they seek
alternative opportunities for growth.

This market shift has led the board to reposition the Group during the year.
Much effort has been spent on ensuring the business has the right management
team and the right strategy in place to address these challenges. The strategy
is led by:
   • High quality and innovative product development that responds to
     customers' and consumers' needs
   • Greater focus on customer relationships
   • Focusing sales and marketing efforts to get more of the product to
     market

The Group has developed and successfully introduced a new family of products
aimed at the budget segment. 'Uzone' was developed to grow Ultraframe's market
share in this growing segment and to open up new channels to market. The Group
is pleased that it has been well received in the market place and it now
provides a strong platform for growth. Developing the concept further, the
click-lock technology incorporated in 'Uzone' has been extended to an innovative
lean-to roofing product called 'Elevation,' previewed in September 2004. Another
completely new product, 'Litespace' is a glazed, bay-window style extension that
was previewed at the Ideal Home exhibition. Investment in innovation and more
rapid new product development continues and the Group has a number of further
exciting products scheduled for introduction during 2005 to assert the Group's
market leadership and increase its share of the growing budget segment.

As part of the Group's ongoing strategy to focus on delivering operational
excellence - quality products and services - the UK management team has been
strengthened and the sales and marketing team restructured. A new marketing
director and a new sales director were appointed in October 2004. The management
structure was delayered in October 2004 and refocused on customer relationships,
and an initiative is underway to improve production processes. The new team is
also implementing improved buying and supply chain management.

These changes will help the Group meet the new competitive challenges and
reinforce the importance of customer relationships. The new structure also
reflects the Group's intention to invest in and empower its employees at every
level to improve the speed of decision-making and with it customer service.
Ultraframe continues to take a prudent approach to costs, and has implemented a
cost reduction programme in October 2004 which will result in annualised cost
savings in the region of £1m, much of which will be reinvested in new product
development, sales and marketing and to protect its intellectual property.



North America

Financial highlights      2004         2003        % change          % change at
£m                                                                   constant FX
                                                                          rates*
                    
----------------------   -------     --------         -------       ------------
Turnover (core sunrooms)  44.4         47.5            (6.6)               4.5
Turnover (total)          44.5         48.4            (8.0)               2.8
Operating (loss)/profit 
before goodwill
amortisation and
exceptional items         (0.5)         6.5          (107.4)            (108.3)
----------------------   -------     --------         -------       ------------
Operating margin          (1.1)%       13.4%
----------------------   -------     --------         -------       ------------

* % change at constant FX rates removes the distorting impact of currency
movements and more clearly shows the underlying performance of the business. The
FX rate used on this basis is the average rate for the prior period.

In North America, core sunroom dollar sales were up 4.5% to $79.5m. Overall
dollar sales were up 2.8% to $79.6m. Within core sunrooms, sales in our
Company-owned retail stores increased from $7.4m to $14.0m, partly offset by a
4.7% decline in franchise network sales to $65.5m (mainly as a result of
strategic franchisee deletions). Year on year, core sunroom dollar sales were
broadly flat in the first half and up 7.8% in the second half. Gross margin
declined from 46.9% to 44.1% mainly due to higher labour costs in anticipation
of higher sales growth. There was a significant increase in overheads from $26m
to $36m, reflecting planned revenue investment in retail stores, and also in
infrastructure in anticipation of the franchise sales growth that did not
materialise. Marketing costs were also higher. This resulted in an operating
loss before goodwill amortisation and exceptional items of $0.9m (2003:
operating profit $10.3m). The 11% depreciation in the US dollar exchange rate
has impacted the sterling reported results of our North American business during
the period under review.

Since the unscheduled trading statement in August, the Board has evaluated the
performance of the North American business, and the Group Chief Executive has
been taking more direct responsibility for implementing a programme of actions
to drive profitable growth, including aligning the costs and investment to match
more closely the potential opportunities and likely rate of sales improvement.
The management team is being strengthened with a new franchise development
director, appointed in October 2004 and a new divisional CFO, appointed earlier
in the year. In light of David Ewing's retirement, the Board is looking for a
new divisional chief executive who has the appropriate skills and expertise to
drive the business forward. Mr Ewing will continue as chief executive of Four
Seasons whilst the replacement is being recruited.

The Group said in August that the restructuring of the franchise network, aimed
at a higher quality partner base and a reduced number of franchisees, was taking
longer to deliver sales progression than it had hoped for. Franchisee sales
growth has been delayed by the impact of franchisee deletions and there were 310
franchise and dealer outlets at the financial year-end, compared with some 380
on acquisition and 320 at September 2003. The large scale restructuring of the
franchise network is now complete. In October 2004 a cost reduction initiative
was undertaken to realign the cost base of the manufacturing and franchise
operations in recognition of the slower growth trends anticipated in the
franchise network, and it is expected that these costs will be reduced as a
result by some 10% in 2005. Whilst overheads in manufacturing and franchise
operations have been reduced, the retail store cost base is expected to
increase, reflecting continued revenue investment and higher trading levels.
Consequently, overall dollar overheads in 2005 are expected to be at a similar
level overall.

The Group remains committed to investing in the expansion plans for its retail
stores, where the board sees the best opportunities for growth. New stores were
opened in San Antonio in November 2003 and Houston in April 2004 and Four
Seasons operated a total of 5 stores at the financial year-end. The next stores
are scheduled to open in Orlando and Austin in 2004/5 and specific locations
have been identified for future expansion. In light of Four Seasons' recent
financial performance, the schedule for rolling out further stores has been
rephased to ensure an appropriate level of revenue investment in the new
financial year. Notwithstanding, the solid progress of the retail stores
demonstrates the underlying strength of the market and gives the board
confidence that it can deliver profitable growth in North America in the years
ahead. The Group plans to open further stores in locations where there are
opportunities to develop the market, and will resume the planned expansion of
the store network in 2006, with the intention of increasing the number of stores
by 3 to 5 per year for the next several years.

New product development saw the introduction of the first complete vinyl clad
room during the year. In addition, our programme of introducing Ultraframe
technological know-how has further improved the speed and simplicity of
installation, and provides greater flexibility and durability of the product
range. We continued to invest in plant and machinery to improve automation and
manufacturing efficiency. Franchise support initiatives during the year included
the major development of the Four Seasons website, resulting in increased sales
leads for participating franchisees.

Exceptional items

As previously reported in September 2004, our Four Seasons business was the
subject of an adverse jury verdict in the USA as set out in note 10 to the
financial statements. The trial court entered judgement on a jury's verdict to
the plaintiff, Patio Enclosures, in the amount of approximately $8.8m (£4.9m),
including legal costs. The board has confidence in Four Seasons position in this
case and believes that challenge to the current judgement, by post trial motions
or alternatively on appeal, is well founded. The directors believe that this
judgement should be reduced upon review by the courts, although this process
could take some considerable time.

In the meantime, on the grounds of accounting prudence, full provision has been
made in the profit and loss account for the year ended 1 October 2004 for the
current recorded judgement and directly attributable costs. Any cash settlement
will not be payable until final determination of this case. The exceptional item
provision of £5.3m compromises an operating exceptional item of £5.1m, together
with a provision for pre-judgement interest and financing costs of £0.2m, as set
out in notes 5, 10 and 11 to the financial statements. Within this overall
provision, directly attributable costs incurred during the financial year under
review amounted to £0.2m. These costs comprise legal costs and also include
financing costs relating to the provision of collateral in favour of the
plaintiff, pending a final determination, in line with established US legal
procedures.

Goodwill

The goodwill charge, relating to our Four Seasons business in North America,
decreased from £3.4m to £3.1m, having been positively impacted by £0.3m as a
result of dollar depreciation.


Interest

Net interest payable (before exceptional items) fell from £1.2m to £0.8m, having
benefited from a decrease in interest payable reflecting debt repayments in line
with the debt maturity profile. In order to manage the risk of exposure to
fluctuating interest rates, the Group continues to maintain the majority of its
debt at fixed rates of interest by the use of interest rate swaps, as set out in
note 4 to the financial statements.

Net interest payable (before exceptional items) for the year under review was
covered 16.2 times (2003: 27.5 times) by operating profit on continuing
operations before goodwill amortisation and exceptional items.

Taxation

The tax charge of £2.7m represents an effective tax rate of 30.0% on pre-tax
profit excluding exceptional items, compared with 30.3% in the prior year. The
Group expects the effective tax rate in the foreseeable future to be in the
range of 30% to 33% on the same basis, based on existing accounting standards.

Eligibility for tax relief in the US in respect of any cash settlement relating
to the Patio Enclosures litigation is determined by the actual payment date of
any such settlement. Having regard to the uncertain duration of the related
legal process and potential time horizon for offset of any attributable tax
relief that may arise on any settlement, no related deferred tax credit has been
recognised in respect of the exceptional item charged in the profit and loss
account for the year under review.

Cash flow

Net debt at the financial year-end was £6.5m (2003: £8.3m), representing gearing
of 9.6% (2003: 10.3%). The level of net debt reflects a neutral cash flow,
together with a foreign exchange reduction of £1.8m in dollar denominated North
American debt.

Cash inflow from operating activities amounted to £22.8m, against £30.6m in the
previous year. The net cash inflow on working capital of £5.9m compares with a
net outflow of £5.3m in 2003, reflecting tighter management of trade debtors and
lower trading levels. Strong operating cash flow has remained a key
characteristic of the business.

Cash outflow on capital expenditure of £4.9m broadly in line with last year,
comprised £2.9m in the UK and £2.0m in North America. The overall level of
capital expenditure was scaled back from budget in response to lower trading
levels and compares with a depreciation charge for the year of £3.9m (2003:
£3.3m). We plan a capital investment spend of some £6.0m in 2004/5, including
£3.5m in the UK and £2.5m in North America.

Net cash inflow before financing and management of liquid resources was neutral
for the year under review (2003: £6.4m), after the payment of interest, taxation
and dividends.

Accounting standards

The Group contributes to employee personal pension plans and other similar US
retirement plans. The accounting standard FRS17 'Retirement benefits' has no
impact on the financial statements as the Group does not operate a defined
benefits scheme.

The financial statements will be prepared under International Financial
Reporting Standards ('IFRS') for the financial year ended 29 September 2006.
Following an independent review, the Company has identified the key areas of
difference between current accounting policies and IFRS. These include share
based payments, goodwill and financial instruments. A project plan is underway
to manage the process of conversion.


Financial calendar

As previously announced, operating results for the financial year ended 1
October 2004 represent 53 trading weeks (2003: 52 weeks). As part of its ongoing
financial calendar, the Company intends to update the market with a trading
statement at the time of its AGM on 25 January 2005.

CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the 53 weeks ended 1 October 2004

                    Note            2004            2004       2004   Restated
                           Before goodwill        Goodwill    Total       2003
                              amortisation    amortisation               Total
                           and exceptional and exceptional
                                   items           items
                                    £000            £000       £000       £000
                                                                          

Turnover             2,3
                               -----------     -----------   --------  ---------
Continuing 
operations                         118,243               -    118,243    139,051
Discontinued 
operations                               -               -          -        374
                               -----------     -----------   --------  ---------
                                   118,243               -    118,243    139,425
Cost of sales                     (62,142)              -    (62,142)   (67,560)
                               -----------     -----------   --------  ---------

Gross profit                        56,101               -     56,101     71,865
Distribution costs                 (2,766)              -     (2,766)    (2,956)
                               -----------     -----------   --------  ---------
Administrative 
expenses                
before goodwill
amortisation            5         (40,534)         (5,073)   (45,607)   (35,682)
Goodwill
amortisation                            -          (3,091)    (3,091)    (3,379)
                               -----------     -----------   --------  ---------
Administrative
expenses                          (40,534)         (8,164)   (48,698)   (39,061)
                                --------        --------   --------   --------
Operating
profit/(loss)        2,3
                               -----------     -----------   --------  ---------
Continuing
operations                          12,801          (8,164)     4,637     29,973
Discontinued
operations                              -               -          -       (125)
                               -----------     -----------   --------  ---------
                                    12,801          (8,164)     4,637     29,848
Loss on
disposal of
business                 
(discontinued
operations)              5               -               -          -      (553)
Interest
receivable                           
and similar
income                                 743               -        743        807
Interest
payable              
and similar
charges              4,5           (1,532)           (231)    (1,763)    (2,019)
                               -----------     -----------   --------  ---------
Profit/(loss)
on ordinary
activities
before
taxation                            12,012          (8,395)     3,617     28,083
Taxation on
profit/(loss)
on ordinary
activities             6           (3,707)          1,031     (2,676)    (8,677)
                               -----------     -----------   --------  ---------

Profit/(loss)
on ordinary
activities
after taxation                       8,305          (7,364)       941     19,406

Dividends              8          (10,788)              -    (10,788)   (10,788)
                               -----------     -----------   --------  ---------
Retained
(loss)/profit
for the period                      (2,483)         (7,364)    (9,847)     8,618
                                    ======          ======     ======     ======

Earnings per
ordinary share
Basic                  7                                         1.0p      20.0p
Diluted                7                                         1.0p      19.9p
Earnings per
ordinary share
before goodwill
amortisation and
exceptional items
Basic                  7                                         8.5p      22.9p
Diluted                7                                         8.5p      22.8p




CONSOLIDATED BALANCE SHEET
as at 1 October 2004
                                                  Note        2004    Restated
                                                              £000        2003
                                                                          £000

Fixed assets
Intangible assets                                    9      50,305      57,735
Tangible assets                                             26,930      26,670
                                                         ---------   ---------
                                                            77,235      84,405
                                                         ---------   ---------
Current assets
Stocks                                                       9,697       9,457
Debtors                                                     16,482      25,439
Cash at bank                                        15      21,151      23,295
                                                         ---------   ---------
                                                            47,330      58,191

Creditors: amounts falling due within one year             (29,803)    (34,848)
                                                         ---------   ---------
Net current assets                                          17,527      23,343
                                                         ---------   ---------

Total assets less current liabilities                       94,762     107,748
Creditors : amounts falling due in more than one
year                                                       (21,641)    (25,342)
Provisions for liabilities and charges                      (5,771)     (1,454)
                                                         ---------   ---------

Net assets                                           2      67,350      80,952
                                                             =====       =====

Capital and reserves
Called up share capital                                     24,347      24,347
Share premium account                                       15,824      15,824
Merger reserve                                                  14          14
Profit and loss account                                     27,165      40,767
                                                         ---------   ---------
Equity shareholders' funds                           2      67,350      80,952
                                                             =====      ======




CONSOLIDATED CASH FLOW STATEMENT
for the 53 weeks ended 1 October 2004

                                                  Note        2004        2003
                                                              £000        £000

Cash inflow from operating activities               13      22,835      30,618

Returns on investments and servicing of
finance
Interest received                                              684         660
Interest paid                                               (1,582)     (2,027)
                                                         ---------   ---------
Net cash outflow from returns on investments and
servicing of finance                                          (898)     (1,367)
                                                         ---------   ---------
Taxation                                                    (6,310)     (7,828)
                                                         ---------   ---------
Capital expenditure
Purchase of tangible fixed assets                           (4,921)     (5,098)
Sale of tangible fixed assets                                   83         170
                                                         ---------   ---------
Net cash outflow from capital expenditure                   (4,838)     (4,928)
                                                         ---------   ---------
Acquisitions and disposals
Disposal of subsidiaries                                         -         120
                                                         ---------   ---------

Equity dividends paid                                      (10,788)    (10,244)
                                                         ---------   ---------

Cash inflow before management of liquid
resources                                        
and financing                                    14,15           1       6,371
                                                         ---------   ---------
Management of liquid resources                   14,15       8,615      (5,353)
Transfer of cash from/(to) deposits
                                                         ---------   ---------
Financing
Repayment of loans                               14,15      (2,069)     (6,714)
                                                         ---------   ---------

Increase/(decrease) in cash in the period        14,15       6,547      (5,696)
                                                            ======      ======


CONSOLIDATED STATEMENT
OF TOTAL RECOGNISED GAINS AND LOSSES
for the 53 weeks ended 1 October 2004

                                                          2004           2003
                                                          £000           £000

Profit for the period                                      941         19,406

Exchange differences on foreign currency net
investment                                              (3,755)        (3,304)
                                                    ----------     ----------
Total gains and losses relating to the period           (2,814)        16,102
                                                        ======          =====



RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
for the 53 weeks ended 1 October 2004

                                                           2004       Restated
                                                           £000           2003
                                                                          £000

Profit for the period                                       941         19,406
Dividends                                               (10,788)       (10,788)
                                                     ----------     ----------
Retained (loss) / profit for the period                  (9,847)         8,618

Exchange differences on foreign currency net
investment                                               (3,755)        (3,304)
                                                     ----------     ----------
Net (reduction)/addition to shareholders' funds         (13,602)         5,314

Opening shareholders' funds                              80,952         75,638
                                                     ----------     ----------
Closing shareholders' funds                              67,350         80,952
                                                         ======         ======

Opening shareholders' funds at 27 September 2003 were originally £81,434,000
before deducting £482,000 through a prior year adjustment relating to the
adoption of UITF 38 'Accounting for ESOP trusts' (see note 1 to the financial
statements).

                       NOTES TO THE FINANCIAL STATEMENTS

(1) Basis of preparation

The financial information set out above does not comprise full accounts within
the meaning of Section 240 of the Companies Act 1985. The financial information
contained in this announcement in respect of the 53 weeks ended 1 October 2004
and 52 weeks ended 26 September 2003 has been extracted from the financial
statements which have been audited and reported upon without qualification by
KPMG Audit Plc and did not contain a statement under Section 237 (2) or (3) of
the Companies Act 1985. The 2003 accounts have been filed with the Registrar of
Companies, and the 2004 accounts will be filed in due course.

In order to indicate the underlying profitability of the Group and the effect of
goodwill amortisation and exceptional items on reported profit; operating
profit, profit before tax and earnings per share has been calculated and
separately disclosed using consolidated profit before these items.

In order to indicate the underlying trading performance of the Group in local
currency terms, growth in turnover and operating profit has been calculated and
separately disclosed using constant foreign exchange ('FX') rates (at the actual
average exchange rate that applied to the comparative period).

Cost of sales and operating expense categories in North America have been
reclassified to ensure the most relevant and consistent classification of direct
and indirect labour costs within the Group. The board considers that the revised
basis provides a more accurate reflection of the nature of costs incurred in the
business. Direct labour costs are charged in arriving at gross profit, whilst
indirect labour is included in administrative expenses. The comparative
information has been restated accordingly. The effect of the reclassification is
to increase gross profit and administrative expenses by £1,331,000 in the 52
weeks ended 26 September 2003. There is no effect on turnover or operating
profit.

The Group has adopted UITF 38 'Accounting for ESOP trusts' during the period,
and in accordance with this statement has changed its policy in accounting for
investments in own shares. The investment in own shares is now deducted from
shareholders' funds where previously it had been included in fixed asset
investments. This change in accounting policy has been made through a prior year
adjustment and reduces net assets and fixed assets by £482,000 at 26 September
2003. There is no impact of this restatement on the profit and loss account.

(2) Segmental information

In the directors' opinion, all profit and turnover arises from one class of
business, that being the specialist design and manufacture of conservatory
systems for domestic and light commercial applications and may be analysed by
geographical market as follows:

                                           Note          2004             2003
                                                         £000             £000

Turnover

By origin

United Kingdom                                         73,775           90,694
North America                                          44,468           48,357
                                                   ----------       ----------
Total continuing operations                   3       118,243          139,051
Discontinued operations (United Kingdom)      3             -              374
                                                   ----------       ----------
                                                      118,243          139,425
                                                       ======           ======

By destination

United Kingdom                                         72,962           89,891
Rest of Europe                                          1,667            1,630
North America                                          43,496           47,349
Rest of World                                             118              181
                                                   ----------       ----------
Total continuing operations                           118,243          139,051
Discontinued operations (United Kingdom)                    -              374
                                                   ----------       ----------
                                                      118,243          139,425
                                                       ======           ======

(2) Segmental information (continued)

                                  2004            2004        2004        2003
                       Before goodwill        Goodwill       Total       Total
                          amortisation    amortisation
                       and exceptional and exceptional
                                 items           items
                  Note            £000            £000        £000        £000

Profit on
ordinary
activities before
taxation

By origin

United Kingdom                  15,387               -      15,387      28,848
North America                     (479)         (8,164)     (8,643)      3,078
Group head
office costs                    (2,107)              -      (2,107)     (1,953)
                             ---------       ---------   ---------   ---------
Total
continuing
operations           3          12,801          (8,164)      4,637      29,973
Discontinued
operations           
(United Kingdom)     3               -               -           -        (125)
                             ---------       ---------   ---------   ---------
                     3          12,801          (8,164)      4,637      29,848
Loss on
disposal of
discontinued
operations
(United
Kingdom)                             -               -           -        (553)
Net interest
payable                           (789)           (231)     (1,020)     (1,212)
                             ---------       ---------   ---------   ---------
Profit/(loss)
on ordinary
activities
before
taxation                        12,012          (8,395)      3,617      28,083
                                ======          ======      ======       =====


                                                                     Restated
                                                        2004             2003
                                                        £000             £000
Operating net assets

By origin

United Kingdom                                        21,203           26,769
North America                                         54,347           67,940
                                                   ---------        ---------
                                                      75,550           94,709

Net borrowings                                        (6,491)          (8,328)
Corporation and deferred taxation                     (1,709)          (5,429)
                                                   ---------        ---------
Shareholders' funds                                   67,350           80,952
                                                      ======           ======


(3) Analysis of continuing and discontinued operations

As stated in note 1, cost of sales and operating expense categories in North
America have been reclassified to ensure the most relevant and consistent
classification of direct and indirect labour costs within the Group. This
revised basis provides a more accurate reflection of the nature of costs
incurred in the business. Accordingly, the comparative information within this
note has been restated. Only continuing operations are affected by the
restatement. There is no effect on turnover or operating profit.

The effect of this reclassification is to increase Group gross margin on
continuing operations for the 52 weeks ended 26 September 2003 from 50.7% to
51.6% and North American gross margin from 44.1% to 46.9%.
                                                                       Restated
                                       2004                                2003
                           Cont     Discont       Total        Cont     Discont       Total
               Note        £000        £000        £000        £000        £000        £000

Turnover          2     118,243           -     118,243     139,051         374     139,425
Cost of                 
sales                   (62,142)          -     (62,142)    (67,288)       (272)    (67,560)
                      ---------   ---------   ---------   ---------   ---------   ---------
Gross profit             56,101           -      56,101      71,763         102      71,865
Distribution
costs                    (2,766)          -      (2,766)     (2,954)         (2)     (2,956)
Administrative
expenses
before
goodwill
amortisation
and
exceptional
items                   (40,534)          -     (40,534)    (35,457)       (225)    (35,682)
                      ---------   ---------   ---------   ---------   ---------   ---------
Operating
profit/(loss)
before
goodwill
amortisation
and
exceptional
items             2      12,801           -      12,801      33,352        (125)     33,227
Exceptional
items                    
(included
within
administrative
expenses)                (5,073)          -      (5,073)          -           -           -
Goodwill
amortisation
(included
within
administrative
expenses)                (3,091)          -      (3,091)     (3,379)          -      (3,379)
                      ---------   ---------   ---------   ---------   ---------   ---------
Operating
profit/(loss)     2       4,637           -       4,637      29,973        (125)     29,848
                         ======         ======   ======      ======      ======      ======

Following the 2002 financial year end, the Group announced the disposal of
Ultraspan Limited. Further to this divestment, the relevant operating results of
Ultraspan Limited have been included in discontinued operations for the
comparative period.

(4) Interest

The majority (83%) of the US dollar borrowings are fixed, by way of interest
rate swaps, at an interest rate of 4.59% plus a margin up to June 2006. The
remainder of the US borrowings are subject to floating rates based on the local
base rate plus a margin.

The sterling borrowings are subject to floating rates based on LIBOR plus a
similar margin.



(5) Exceptional items

                                                            2004          2003
                                                            £000          £000
Operating exceptional item

Litigation in North America                               (5,073)            -
Non-operating exceptional item
Pre-judgement interest and financing costs relating
to litigation in North America                              (231)            -
Loss on disposal of Ultraspan Limited                          -          (553)
                                                       ---------     ---------
Total exceptional items before taxation                   (5,304)         (553)
                                                          ======        ======

Full details relating to litigation in North America are set out in notes 10 and
11 to the financial statements.

On 18 November 2002, the Group announced the disposal of Ultraspan Limited to
Ultraspan's management team for a cash consideration of £200,000. The Group
incurred £80,000 of professional costs relating to the disposal. The relevant
net assets of Ultraspan Limited on disposal were £673,000, resulting in a loss
on disposal of £553,000.


(6) Taxation

                                                            2004          2003
                                                            £000          £000
UK Corporation tax
Current tax on income for period                           4,248         8,695
Adjustments in respect of prior periods                     (668)         (744)
                                                         -------       -------
                                                           3,580         7,951

Foreign tax                                                 (146)          203

Deferred tax
Origination/reversal of timing differences                  (926)          396
Adjustments in respect of prior periods                      168           127
                                                         -------       -------
                                                            (758)          523
                                                         -------       -------
                                                           2,676         8,677
                                                            ====          ====

The tax charge of £2,676,000 represents an effective tax rate of 30.0% on
pre-tax profit before exceptional items for the year, compared with 30.3% in the
prior year.

Eligibility for tax relief in the US in respect of any cash settlement relating
to the Patio Enclosures litigation is determined by the actual payment date of
any such settlement. Having regard to the uncertain duration of the related
legal process and potential time horizon for offset of any attributable tax
relief that may arise on any settlement, no related deferred tax credit has been
recognised in respect of the exceptional item charged in the profit and loss
account for the year under review.




(7) Earnings per share

Earnings per share has been calculated by dividing the consolidated profit after
tax attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period. In order to indicate the underlying
profitability of the Group and the effect of goodwill amortisation and
exceptional items on the reported earnings, earnings per share has also been
calculated using the consolidated profit after taxation before these items.

Diluted earnings per share has been calculated, on the same basis as the above,
except that the weighted average number of ordinary shares that would be issued
on the conversion of all the dilutive potential ordinary shares (arising from
the Group's share option schemes) into ordinary shares has been added to the
denominator. There are no changes to the profit (numerator) as a result of the
dilutive calculation.

The earnings per share information has been calculated as follows:

                                             2004                    2003
                                     Earnings    Earnings    Earnings    Earnings
                                    after tax   per share   after tax   per share
                                         £000       pence        £000       pence
Profit on ordinary activities
after taxation before                   
goodwill amortisation and
exceptional items                       8,305         8.5      22,210        22.9
Operating exceptional item             (5,073)       (5.2)          -           -
Goodwill amortisation (net of
tax)                                   (2,060)       (2.1)     (2,251)       (2.3)
Non-operating exceptional item           (231)       (0.2)       (553)       (0.6)
                                    ---------   ---------   ---------   ---------
Profit on ordinary activities
after taxation and                        
attributable to ordinary
shareholders                              941         1.0      19,406        20.0
                                         ====        ====        ====        ====
                                           No                      No
                                          000                     000
Weighted average number of
ordinary shares in                     
issue                                  97,191                  97,191
Effect of dilutive potential
ordinary shares                             3                     135
                                    ---------               ---------
Weighted average number of
ordinary shares in                     
issue plus assumed conversion          97,194                  97,326
                                         ====                    ====

The above calculation excludes shares held by the QUEST in accordance with FRS
14.

(8) Dividends

The board has proposed a final dividend of 7.86 pence per share (2003: 7.86
pence) to be paid on 31 January 2005 to shareholders on the register at 31
December 2004. This, together with an interim dividend of 3.24 pence per share
(2003: 3.24 pence) paid on 25 June 2004, makes a total dividend for the year of
11.10 pence per share (2003: 11.10 pence).



(9) Goodwill

                                                                          £000
Cost
At beginning of period                                                  65,068
Exchange difference                                                     (4,779)
                                                                     ---------
At 1 October 2004                                                       60,289
                                                                     ---------
Amortisation
At beginning of period                                                   7,333
Charge for period                                                        3,091
Exchange difference                                                       (440)
                                                                     ---------
At 1 October 2004                                                        9,984
                                                                     ---------
Net book value

At 1 October 2004                                                       50,305
                                                                     ---------
At 26 September 2003                                                    57,735
                                                                     ---------

Goodwill arising on acquisitions prior to April 1998 was written off to
reserves. Goodwill arising on subsequent acquisitions is capitalised and
amortised over its estimated useful life, which is 20 years.



(10) Major litigation

Ultraframe Plc continuously and vigorously defends its intellectual property
rights and legal rights generally and at any one time, there are a number of
legal cases being pursued. All legal costs are fully expensed in the profit and
loss account as they are incurred.

North America

As previously reported in September 2004, Four Seasons was the subject of an
adverse jury verdict in the State of Ohio, USA. The case concerned a relatively
junior employee of Four Seasons employed between December 2001 and May 2002, who
had previously been employed by Patio Enclosures, the claimant in this case. The
case concerned alleged interference with contractual employment obligations and
alleged misuse of trade secrets. The trial court entered judgement on a jury's
verdict to Patio Enclosures in the amount of approximately $8.8m (£4.9m),
including legal costs. Post trial motions were subsequently filed with the trial
judge in the case, who has the option of reconsidering this judgement before
concluding his involvement. Ultraframe Plc has confidence in Four Seasons'
position in this case and believes that challenge to the current judgement, by
either post trial motions or alternatively on appeal, is well founded.
Ultraframe believes that this judgement should be reduced upon review by the
courts although this process could take some considerable time.

In the meantime, on the grounds of accounting prudence, full provision has been
made in the profit and loss account for the year ended 1 October 2004 for the
current recorded judgement and directly attributable costs. Any cash settlement
will not be payable until final determination of this case. The provision of
£5.3m has been charged as an exceptional item, comprising an operating
exceptional item of £5.1m, together with a provision for pre-judgement interest
and financing costs of £0.2m, as set out in notes 5 and 11 to the financial
statements. Within this overall provision, directly attributable costs incurred
during the financial year under review amounted to £0.2m. These costs comprise
legal costs and also include financing costs relating to the provision of
collateral in favour of the plaintiff, pending a final determination, in line
with established US legal procedures.



United Kingdom

Ultraframe has a major legal case, regarding infringement of its intellectual
property rights, currently under court proceedings as at the date of approval of
the financial statements for the financial year ended 1 October 2004. This case
is expected to conclude in the first half of the 2004/5 financial year.
Ultraframe has been advised by legal counsel that its case is well founded and
its prospects of success are good. However, in all legal cases the claimant may
potentially be liable for the defendant's costs in the event that the defendant
successfully defends the litigation. Ultraframe believes that the prospect of
any such potential significant liability is remote.

(11) Contingent liabilities

The Group's bankers have issued a guarantee in favour of HM Customs and Excise
up to a limit of £160,000 (2003: £160,000) for payment of duties, taxes, levies
and similar amounts. The Group's bankers have recourse to the Group for recovery
of this amount.

The Company is party to banking facilities for certain members of the Ultraframe
Plc group of companies arranged by The Royal Bank of Scotland. The Company and
certain other members of the Ultraframe Plc group of companies have provided
security to The Royal Bank of Scotland as agent for the lenders in the form of a
first floating charge and an unlimited intercompany composite cross guarantee as
part of these arrangements. At 1 October 2004, the total indebtedness secured
under these arrangements was £27,783,000 (2003: £31,907,000).

Pending final determination of the litigation between Four Seasons and Patio
Enclosures in North America (see note 10 to the financial statements),
collateral must be put in place in favour of Patio Enclosures, in accordance
with US legal procedures. Consequently, the Company has given an indemnity for
$8.8m to the Group's bankers in respect of a bank letter of credit issued as
required collateral.


(12) Exchange rates

The principal exchange rates used were as follows:

                                          Average                 Closing
                                      2004      2003          2004        2003

US dollar                             1.79      1.60          1.80        1.66
Canadian dollar                       2.38      2.34          2.27        2.25

2004 results compared with 2003 at constant 2003 exchange rates

Group                                           2004          2003           %
                                                £000          £000      Change

Turnover on continuing operations            123,491       139,051       (11.2)
Operating profit on continuing operations     12,744        33,352       (61.8)
Operating profit                               3,617        29,848       (87.9)

North America                                   2004          2003           %
                                                £000          £000      Change

Turnover (core sunrooms)                      49,657       47,532          4.5
Turnover (total)                              49,716       48,357          2.8
Operating (loss)/ profit before goodwill
amortisation and exceptional items              (536)       6,457       (108.3)

(13) Reconciliation of operating profit to net cash inflow from operating
activities

                                                         2004            2003
                                                         £000            £000

Operating profit                                        4,637          29,848
Depreciation charge                                     3,925           3,344
Goodwill amortisation                                   3,091           3,379
Profit on sale of tangible fixed assets                   (17)             (3)
Increase in stocks                                       (587)         (1,156)
Decrease/(increase) in debtors                          8,517          (3,103)
Decrease in creditors                                  (1,983)         (1,057)
Increase/(decrease) in provisions                       5,252            (634)
                                                   ----------      ----------
Net cash inflow from operating activities              22,835          30,618
                                                       ======          ======

(14) Reconciliation of net cash flow to movement in net debt
                                                            2004          2003
                                                            £000          £000

Increase/(decrease) in cash in the period                  6,547        (5,696)
Cash (inflow)/outflow from liquid resources               (8,615)        5,353
Cash outflow from the movement in debt and lease
financing                                                  2,069         6,714
                                                       ---------     ---------
Changes in net debt resulting from cash flows                  1         6,371
Exchange difference                                        1,836         1,642
                                                       ---------     ---------
Movement in net debt                                       1,837         8,013
Net debt at beginning of the period                       (8,328)      (16,341)
                                                       ---------     ---------
Net debt at end of the period                             (6,491)       (8,328)
                                                           =====         =====

(15) Analysis of changes in cash and net debt

                        At 26 September    Cash flow      Exchange        At 1
                                   2003                 difference     October
                                   £000         £000          £000        2004       
                                                                          £000
                                                                          
Cash in hand and at bank          5,545        6,547          (76)      12,016
Liquid resources
(deposits)                       17,750       (8,615)           -        9,135
                             ----------    ----------  ----------   ----------
Cash at bank as per
balance sheet                    23,295       (2,068)         (76)      21,151

Debt due in less than one
year                             (6,281)         (36)         316       (6,001)
Debt due in more than one
year                            (25,342)       2,105        1,596      (21,641)
                            -----------    ----------  ----------   ----------
Debt and lease financing        (31,623)       2,069        1,912      (27,642)
                             ----------    ----------  ----------   ----------
Net debt                         (8,328)           1        1,836       (6,491)
                                 ======        ======      ======       ======

Liquid resources consist of short term deposits of no more than three months
duration.


(16) Annual Report

The annual report and accounts for the 53 weeks ended 1 October 2004 will be
posted to shareholders on or about 21 December 2004.

(17) The Annual General Meeting

The annual general meeting will be held at Enterprise Works, Clitheroe at 2.00
pm on 25 January 2005.






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