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Ultraframe PLC (UTF)

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Wednesday 18 May, 2005

Ultraframe PLC

Interim Results

Ultraframe PLC
18 May 2005


                                                                     18 May 2005

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

Ultraframe Plc, the leading specialist designer of conservatory systems in
Europe and North America, today announces its interim results for the 26 weeks
ended 1 April 2005.

Results                                                   H1 2005       H1 2004

(before goodwill amortisation and exceptionals) *
Turnover                                                   £44.0m        £54.9m
Operating (loss)/profit                                    £(0.7)m        £5.1m
(Loss)/profit before tax                                   £(1.1)m        £4.7m
(Loss)/earnings per share                                   (0.8)p         3.3p
Statutory results

(post goodwill amortisation and exceptionals)
Operating (loss)/profit                                    £(5.5)m        £3.6m
(Loss)/profit before tax                                   £(6.2)m        £3.2m
(Loss)/earnings per share                                   (4.5)p         2.3p
Dividend per share                                            Nil         3.24p
* Management use results that exclude goodwill amortisation and exceptional
items as the primary measure to provide a better comparison of underlying
business performance.

   • UK competitive and consumer environment remains challenging
     o    Sales down 28% on the comparative period and gross margins lower
     o    New divisional management team has implemented procedures to 
          accelerate new product development and introductions, encourage more 
          customer contact and more competitive pricing to stimulate sales in 
          the second half

   • North America showing the anticipated modest improvement in operating
     performance as a result of actions taken to realign the cost base and
     rephase revenue investments
          
     o    Dollar sales overall up 2% on first half last year and gross margins
          have been maintained
     o    Dollar turnover in Company-owned retail stores up 5%. Modest sales
          growth in the franchise network, impacted by planned franchise 
          deletions

   • Statutory results reflect first half exceptional item charge of £3.6m
     (£2.7m net of tax), including abnormal litigation costs of £2.9m and
     redundancy costs of £0.5m
   • Implementation of cost reduction plans expected to deliver annualised
     savings in excess of £6m in the UK and more than $3m in North America
     (anticipated Group savings of over £5m in current full year)
   • Net cash outflow before financing of £10.1m after payment of the final
     dividend for 2003/4 (£7.6m) and the cash cost of exceptional items (£2.6m).
     Net debt increased to £15.6m, representing gearing of 25.5%
   • In view of the current trading environment, the Board is not declaring
     an interim dividend for the half year ending 1 April 2005. It will review
     the dividend policy at the year end in light of the Group's full year
     performance

Rod Sellers, Chairman, commented:

'Trading in the first half has been in line with our expectations, reflecting
the well-documented slowdown in the conservatory market in the UK, and recording
an improved operating performance in North America. In the near term, the UK is
expected to remain intensely competitive and pressure will continue as a result
of the wider consumer environment. North America has good prospects for growth
in the second half, through a restructured, higher quality, franchise network
and the Company-owned retail stores. The cost reduction measures implemented in
both the UK and North America are on track, as are other operational
initiatives. This leads us to expect a return to profitability before tax,
goodwill and exceptional items in the second half, and consequently the Board's
expectations for the full year remain unchanged. Looking further ahead, we
intend to reinvest the majority of cost savings initiated this year into sales
and marketing activities to defend and build our market share.'



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 some 1,000 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

Trading in the first half has continued in line with the AGM statement issued in
January. The UK business performance reflects the expected slowdown in the
overall UK conservatory market due to the widely reported slower consumer
spending and an intensely competitive trading environment, whilst the North
American business recorded an improved operating performance.

On a constant currency basis, Group turnover for the half year was down 17.7%.
Taking into account a 6% decline in the average exchange rate of the US dollar
against sterling in the period under review, reported turnover is down by 19.8%
on the same period last year at £44.0m (H1 2004: £54.9m). Gross margin decreased
from 48.4% to 41.9% as the Group responded to the UK competitive environment.
Significant cost reduction plans have been implemented in the UK and North
America and as a result, overall savings both in direct costs (charged in
arriving at gross profit) and indirect overheads amounted to more than £1.5m in
the first half. Group wide cost reduction and efficiency initiatives are
expected to result in overall savings in excess of £5m for the full financial
year 2004/5 and to generate annualised cost savings of over £7.5m.

The reduction in the level of first half profitability in the UK outweighed an
improved operating performance in North America and accordingly, Group operating
loss before goodwill amortisation and exceptional items amounted to £0.7m (H1
2004: operating profit £5.1m). As expected, the Group delivered a first half
pre-tax loss, before goodwill amortisation and operating exceptional items, of
£1.1m (H1 2004: underlying pre-tax profit £4.7m). The reported pre-tax loss
after goodwill amortisation and an exceptional item charge of £3.6m (H1 2004:
£nil) amounted to £6.2m (H1 2004: reported pre-tax profit £3.2m). The underlying
loss per share, before goodwill amortisation and exceptional items, amounted to
0.8p (H1 2004: underlying earnings per share 3.3p), with a reported loss per
share of 4.5p (H1 2004: reported earnings per share 2.3p).

Net cash outflow before financing amounted to £10.1m (H1 2004: net cash outflow
£4.0m), after payment of the final dividend for 2003/4 of £7.6m and the cash
cost of exceptional items of £2.6m during the period under review. Accordingly,
net debt increased from £6.5m at the last financial year end to £15.6m at 1
April 2005 (H1: 2004: £10.3m), representing gearing of 25.5% (H1 2004: 13.6%)
against 9.6% at 1 October 2004.

Exceptional items

During the six month period under review, the Group has incurred an exceptional
item charge of £3.6m (£2.7m net of tax) (H1 2004: £nil). This includes a charge
of £2.9m for abnormal litigation costs, mainly due to the increased duration and
cost (£2.6m) of a complex UK legal case, significantly more than the normal run
rate of legal expenses incurred in our usual IP protection actions. In addition,
the cost reduction plans implemented both in the UK and North America resulted
in redundancy costs of £0.5m in the first half. There was also a charge of £0.2m
in incremental financing costs, directly attributable to the provision of
collateral for the ongoing litigation involving Patio Enclosures, consistent
with the accounting treatment previously adopted.

Dividend

In view of the current trading environment, the Board is not declaring an
interim dividend for the half year ending 1 April 2005. It will review the
dividend policy at the year end in light of the Group's full year performance.

Board and employees

Since the appointment of Vanda Murray as UK managing director in September last
year, new divisional board appointments have been made in marketing, sales,
finance and operations. The new team have made significant changes to the UK
business and are settling in well. In North America, David Ewing stepped down at
the end of March and Mitch Pisik, who was appointed as Four Seasons' CFO during
2003, is acting chief executive. The US divisional management team have been
making good progress on the turnaround plan.


United Kingdom

Financial highlights (26 weeks)                 2005      2004         % change
£m

Turnover                                        26.0      36.1           (28.0)
Operating profit before exceptional items        1.1       7.9           (85.6)

Turnover decreased 28.0% to £26.0m. Sales volumes fell 14% in the first half,
although within this, volume sales of budget segment products rose 6.5%; sales
of budget segment products represented 27% of roofing volumes, against 22% in
the comparable period. Uzone sales volumes were almost 4 times higher than in
the first half last year. Gross margin declined from 51.0% to 40.8%, reflecting
the highly competitive market background across the product spectrum. Cost
reduction plans were implemented resulting in savings in the direct and indirect
cost base of over £1m during the first half. Cost reduction initiatives are
expected to result in overall cost savings in the region of £4m for the full
financial year 2004/5 and to generate annualised savings in excess of £6m.
Against the harsh market background, operating profit before exceptional items
fell from £7.9m to £1.1m for the period under review.

A number of initiatives were implemented as part of the strategic response to
the shift the UK market has been experiencing over the past two years, following
the appointment of Vanda Murray as UK managing director in September last year.
New divisional board appointments were made in the first half in marketing,
sales and finance and a new design and development director had previously been
appointed in January last year. A newly appointed operations director joined the
divisional board in May 2005. The new UK management team is focused on faster
new product development and introduction, closer partnering with customers, new
channel development, enhanced customer service and improved operational
efficiencies. We have launched a 'Customer First' initiative and our overall
pricing policy has been restructured to focus on delivering a more competitive
offer across our comprehensive product portfolio. This programme includes
customer consultation days, our registered installer scheme and a certificate of
authenticity on Ultraframe products to maintain differential quality standards
in the industry. Internal processes have been restructured and are subject to
continuous process improvement initiatives. We have delayered middle management,
reduced operational headcount and implemented significant cost saving plans. In
the second half, the drive for efficiency will be focused on manufacturing and
supply chain activities.

Although Ultraframe is clear market leader, we are under-represented in the
faster growing budget segment, with volume sales of budget products representing
24% of our total roofing product sales in the last financial year. In the
overall market, we estimate that budget products account for some 40% of total
volume. We are addressing this segment of the market through new
purpose-designed products. These unique products are based on our newly
developed click-lock technology, facilitating quicker and easier installation
and are competitively priced.

Our 'Uzone' product established a good sales platform in the second half of last
year and has seen good sales momentum in the first half. We introduced the
'Elevation' lean-to roof during the period under review and expect it to make a
small contribution to sales in the seasonally important second half. 'Litespace'
the glazed, bay window style product previewed last year, is currently
generating interest amongst DIY retail chains and provides potential scope for
new channel development. At the Glassex exhibition in March, we previewed our
latest click-lock roofing product 'Sunroom', and we also displayed our newly
developed chambered top cappings, offering superior thermal performance, as a
product enhancement for our core 'Classic' range of highly configurable
products. We plan further product introductions in late 2005 and 2006 to further
expand our comprehensive product range across market segments.

North America

Financial highlights
(26 weeks)            2005   2004   % change    % change at constant FX rates*
£m

Turnover              18.0   18.8       (4.1)                              2.1
Operating loss
before goodwill
amortisation and
exceptional items     (0.7)  (1.6)      54.4                              51.5

* % change at constant FX 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, dollar sales were up 2.1% to $33.9m. Within overall dollar
turnover for the first half, sales in our Company-owned retail stores rose 5.1%
to $5.9m, whilst franchise network sales were 1.4% higher at $28.0m. Franchise
sales trends were adversely impacted by franchise deletions, with first half
sales of $0.3m attributable to network deletions, against $1.5m in the
comparable period. The adverse impact of deletions is expected to be less marked
in the second half, as comparable sales attributable to former franchisees were
more modest in the final six months of last year. The major restructuring of the
franchise network was completed in 2004. Gross margin was maintained at 43.4%
(2004: 43.6%) for the period under review. Cost reduction plans were implemented
resulting in savings in the overall direct and indirect cost base in excess of
$1.5m during the first half, with expected cost savings of more than $3m for the
full financial year and on an annualised basis. Accordingly, indirect overheads
decreased from $17.3m to $16.1m. Overall, this resulted in an improved operating
performance and a reduced operating loss, before goodwill amortisation and
exceptional items, of $1.4m (£0.7m) against a comparable operating loss of $2.8m
(£1.6m) on the same basis. The 6% depreciation in the US dollar exchange rate
has impacted the sterling reported results of our North American business during
the period under review.

We have made good progress in the drive to improve operating results in North
America. This includes aligning the cost base and planned investment more
closely to the likely rate of sales improvement. Management focus on improving
operational efficiency is centred on manufacturing and supply chain activities
both in terms of quality and performance. We are already seeing improvements in
manufacturing labour efficiency and have made progress in quality assurance
initiatives and in better procurement. Plant automation is also supporting the
continuous improvement programme. Further savings have been made in indirect
overheads as part of the overall cost reduction plan.

We have reduced costs in our franchise and manufacturing operations as planned,
in light of slower sales progress in the restructured franchise network. The
adverse impact of the major franchise deletion programme on year on year sales
trends will be less marked going forward, and we now have a higher quality
partner base on which to build sales and develop market potential. There were
296 franchise and dealer outlets at the half year end (H1 2004: 308 outlets)
against 310 at the last financial year end.

In Company-owned retail stores, we opened our sixth flagship outlet in Orlando
in October 2004. As previously reported, the schedule for rolling out further
stores has been rephased to moderate the level of revenue investment, in light
of Four Seasons' overall financial performance. The retail stores saw further
sales growth in the first half and we anticipate sales in the newer outlets at
Phoenix, San Antonio, Houston and Orlando will gather strong momentum in the
second half, as they build towards their expected sales potential. These
flagship stores provide a platform to build consumer and brand awareness, as we
broaden our geographic base in the Sunbelt states and stimulate overall market
development.

As previously announced, management changes have been made in North America and
David Ewing retired as divisional chief executive at the end of March 2005.
Mitch Pisik, the divisional CFO, has been appointed as acting chief executive. A
new franchise development director was appointed in October 2004. The divisional
management team are firmly focused on returning the business to profitable
growth and are on track with key business turnaround objectives. Group chief
executive David Moore has been spending a greater proportion of his time
monitoring the division's turnaround, and is making good progress in appointing
a suitable divisional chief executive.

Current trading and outlook

United Kingdom

In the UK, the competitive background remains challenging and the second half
has seen a slow start to the key selling season. Sales in April were 27% down on
the comparable period, although the run rate has picked up from March. The first
half sales comparator had not seen the full impact of the harsh market
environment, whereas the second half of last year saw a marked decline.

We expect an improving year on year sales trend to start to emerge as the second
half progresses, as our product, customer and pricing initiatives start to make
an impact. A richer mix of component roof sales in our core product range,
together with volume related throughput efficiencies, cost saving initiatives,
and improvements in process and supply chain is expected to result in a pick up
in gross margins from the first to the second half, narrowing the level of
margin decline on the comparable period. We anticipate that the indirect
overhead cost base will be lower in the second half than in the first six
months, in line with our cost reduction programme. Overall, we expect a
significant improvement in the level of operating profit (before exceptional
items) generated in the seasonally stronger second half, compared with the
first, albeit lower than the final six months of last year.

North America

Dollar sales in April were up 14% on the same period last year. Within this,
sales in retail stores grew strongly by 55%, driven by the newer stores, whilst
franchise network sales rose by 7%. This is a good start to the second half, but
is not necessarily an indicator of the sales trend for the remainder of the
year, although we do anticipate growth. We anticipate that gross margins will
see a pick up in the second half compared with the first, broadly similar to the
margin trend seen in the last financial year. This expected pick up is driven by
operational efficiencies, improved supply chain and volume related throughput
benefits.

We expect the indirect overhead dollar cost base to be lower in the second half
against the comparable period, albeit higher than in the first half. Overall, we
anticipate that the North American business will generate a dollar operating
profit (before goodwill and exceptional items) in the second half and for the
year as a whole, in line with the business turnaround plan.

Group outlook

Conservatory penetration levels are under 20% of the addressable market in the
UK and less than 5% in the US. These markets have long-term growth potential. In
the near term, macroeconomic drivers are likely to continue their adverse trend
in the UK and this market is also expected to remain intensely competitive.
North America offers good growth potential, through a restructured, higher
quality, franchise network and Company-owned retail stores. The cost reduction
measures implemented in both the UK and North America are on track and together
with the other operational initiatives, we expect the Group to generate a
pre-tax profit before goodwill and exceptional items in the second half, this
means that Board expectations for the full year remain unchanged. Looking
further ahead, we intend to reinvest the majority of cost savings initiated this
year into sales and marketing activities to defend and build our market share.


Operating exceptional item charges in the second half are currently expected to
amount to some £1m, reflecting the conclusion of the major UK legal proceedings
in May 2005.


The anticipated improvement in trading, together with the restrained level of
capital expenditure, expected reduction in abnormal UK litigation costs and the
absence of an interim dividend is anticipated to result in a net cash inflow
before financing in the second half. As a result, we expect a significantly
lower net cash outflow before financing for the full financial year, compared
with the first half.



Abnormal litigation

Ultraframe continuously and vigorously defends its intellectual property 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. In exceptional circumstances, where legal costs are
abnormal by size, incidence and materiality, such costs are charged by way of an
operating exceptional item and are separately disclosed.

As previously disclosed in the notes to the 2003/4 financial statements,
Ultraframe has a major legal case (arising from infringement of its intellectual
property rights belonging to wholly owned subsidiaries) currently under court
proceedings in the UK. Further details of this case are set out in Note 8 to the
interim financial statements.

The duration and related cost of this complex UK legal case have exceeded
initial estimates and the level of costs specifically incurred on this case is
significantly higher than the normal run rate of legal expenses. Accordingly,
directly attributable costs incurred on this case, amounting to £2.6m, have been
treated as abnormal by size, incidence and materiality in the period under
review and have been charged to the profit and loss account by way of an
operating exceptional item. This major court case follows earlier, related,
legal proceedings in prior periods. These earlier proceedings established that
relevant intellectual property exists and that it is owned by wholly owned
subsidiaries of Ultraframe Plc. Specifically related costs incurred in respect
of earlier proceedings were charged in arriving at operating profit and were not
separately disclosed. In the last financial year, these costs amounted to £1.5m
(H1 2004: £0.4m, H2 2004: £1.1m) and additional costs were also incurred in
earlier years.

As previously reported, our Four Seasons business was the subject of an adverse
jury verdict in the US in September 2004, as set out in Note 8 to the interim
financial statements for the period under review. The board has confidence in
Four Seasons position in this case and believes that challenge to the current
judgement, by appeal, is well founded. In the first half of the current
financial year, directly attributable legal costs incurred amounted to $0.5m
(£0.3m) and these expenses have been charged to the profit and loss account as
an operating exceptional item, consistent with the accounting treatment adopted
last year.

Interest

Net interest payable (before exceptional items) was broadly in line with the
comparable period at £0.4m. Within this, a slight decrease in interest payable
was offset by lower interest receipts on reduced average cash balances.

Taxation

The tax credit of £1.8m represents an effective tax rate of 31.5% (2004: 30.0%)
on the first half pre-tax loss excluding exceptional items, based on the
estimated pre-exceptional effective rate for the full year (2004: 30.0%)

Cash flow

As previously reported, the board anticipated that the lower trading result and
attendant cash flow effect would be most evident in the first half of the
current financial year, prior to an expected improvement in the trading and cash
flow profile in the second half, as a result of operational initiatives.

Cash inflow from operating activities, excluding outflows on exceptional items,
amounted to £3.6m against £10.6m in the comparable period, reflecting the lower
trading result. The net cash inflow on working capital of £3.2m compares with a
net inflow of £3.6m in the first half last year. Cash outflows on exceptional
items amounted to £2.6m (2004: £nil), including abnormal litigation and
redundancy costs.

Cash outflow on capital expenditure decreased from £2.6m to £1.8m and the Group
now expects to invest a further £2.3m (2004: £2.3m) in the second half. This
represents a significant reduction in planned full year capital expenditure
(£6.0m) in response to the overall financial profile of the business. Capital
expenditure outflows in the first half compare with a depreciation charge of
£2.0m (2004: £1.9m) for the period under review.


Net cash outflow before financing and management of liquid resources amounted to
£10.1m (2004: £4.0m), after payment of interest, taxation and dividends. This
net outflow reflects the payment of the final dividend for 2003/4 of £7.6m and
the cash cost of operating exceptional items of £2.6m in the first half.

Net debt at the half-year end amounted to £15.6m (2004: £10.3m), compared with
£6.5m at 1 October 2004. This represents gearing of 25.5% (2004: 13.6%) against
9.6% at the last financial year end.

Accounting standards

The Group is making good progress in preparing for the requirement to adopt
International Financial Reporting Standards ('IFRS') with effect from 1 October
2005 and has completed a preliminary review of IFRS and its financial
statements. This indicates that the main areas where there may be some impact on
the Group's accounts will be in relation to share based payments, goodwill,
financial instruments and the accrual of dividends. A project plan is underway
to manage the process of conversion.

Financial calendar

Operating results for the financial year ended 30 September 2005 will represent
52 trading weeks (2004: 53 weeks). As part of its ongoing financial calendar,
the Company intends to update the market with a trading statement in early
October 2005.


Consolidated profit & loss account
for the 26 weeks ended 1 April 2005 (unaudited)

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

Turnover                          2        43,986              -         43,986
Cost of sales                             (25,577)             -        (25,577)
                                       __________     __________     __________
Gross profit                               18,409              -         18,409
Distribution costs                         (1,288)             -         (1,288)
Administrative expenses
before
goodwill amortisation             3       (17,773)        (3,408)       (21,181)
Goodwill amortisation                           -         (1,446)        (1,446)
Administrative expenses                   (17,773)        (4,854)       (22,627)
                                      ___________     __________     __________

Operating loss                    2          (652)        (4,854)        (5,506)
Interest receivable and
similar income                                301              -            301
Interest payable and similar    3/4          (730)          (239)          (969)
charges
                                      ___________    ___________     __________
Loss on ordinary activities
   before taxation                         (1,081)        (5,093)        (6,174)
Taxation on loss on ordinary
activities                        5           315          1,457          1,772
                                      ___________     __________     __________
Loss on ordinary activities
   after taxation                            (766)        (3,636)        (4,402)
Dividends                         6             -              -              -
                                      ___________     __________     __________

Retained loss for the period                 (766)        (3,636)        (4,402)
                                       ==========     ==========     ==========
Loss per ordinary share:

Basic                             7                                        (4.5)p
Diluted                           7                                        (4.5)p

Loss per ordinary share
before goodwill amortisation 
and exceptional items:
Basic                             7                                        (0.8)p
Diluted                           7                                        (0.8)p


Consolidated profit & loss account
for the 26 weeks ended 26 March 2004 (unaudited)

                              Note  Before goodwill      Goodwill        Total
                                       amortisation  amortisation
                                                and           and 
                                        exceptional   exceptional
                                              items         items
                                               £000          £000         £000
     
Turnover                         2           54,871             -       54,871
Cost of sales                               (28,294)            -      (28,294)
                                         __________    __________   __________
Gross profit                                 26,577             -       26,577
Distribution costs                           (1,344)            -       (1,344)
Administrative expenses
before
goodwill amortisation            3          (20,087)            -      (20,087)
Goodwill amortisation                             -        (1,535)      (1,535)
Administrative expenses                     (20,087)       (1,535)     (21,622)
                                        ___________    __________   __________

Operating profit/(loss)          2            5,146        (1,535)       3,611
Interest receivable and
similar income                                  377             -          377
Interest payable and similar   3/4             (809)            -         (809)
charges
                                        ___________   ___________   __________
Profit/(loss) on ordinary
activities
   before taxation                            4,714        (1,535)       3,179
Taxation on profit/(loss) on
ordinary activities              5           (1,466)          512         (954)
                                        ___________    __________   __________
Profit/(loss) on ordinary
activities
   after taxation                             3,248        (1,023)       2,225
Dividends                        6           (3,149)            -       (3,149)
                                        ___________    __________   __________

Retained profit/(loss) for the                   99        (1,023)        (924)
period
                                         ==========    ==========    =========
Earnings per ordinary share:

Basic                            7                                         2.3p
Diluted                          7                                         2.3p

Earnings per ordinary share before goodwill
amortisation and exceptional
items:

Basic                            7                                         3.3p
Diluted                          7                                         3.3p



Consolidated profit & loss account
for the 53 weeks ended 1 October 2004 (audited)

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

Turnover                          2         118,243               -      118,243

Cost of sales                               (62,142)              -      (62,142)
                                         __________      __________   __________
Gross profit                                 56,101               -       56,101
Distribution
costs                                        (2,766)              -       (2,766)
Administrative expenses
before goodwill
amortisation                      3         (40,534)         (5,073)     (45,607)
Goodwill
amortisation                                      -          (3,091)      (3,091)
Administrative
expenses                                    (40,534)         (8,164)     (48,698)
                                        ___________      __________   __________

Operating
profit/(loss)                     2          12,801          (8,164)       4,637

Interest receivable and
similar income                                  743               -          743
Interest payable and
similar charges                 3/4          (1,532)           (231)      (1,763)
                                        ___________     ___________   __________
Profit/(loss) on ordinary
activities before
   taxation                                  12,012          (8,395)       3,617
Taxation on
profit/(loss)
on ordinary
activities                        5          (3,707)          1,031       (2,676)
                                        ___________      __________   __________
Profit/(loss) on ordinary
activities
   after taxation                             8,305          (7,364)         941
Dividends                                   (10,788)              -      (10,788)
                                        ___________      __________   __________

Retained loss
for the period                               (2,483)         (7,364)      (9,847)
                                         ==========       =========    =========
Earnings per ordinary share:

Basic                             7                                          1.0p
Diluted                           7                                          1.0p

Earnings per ordinary share before goodwill
amortisation and exceptional
items:

Basic                             7                                          8.5p
Diluted                           7                                          8.5p



Consolidated balance sheet

                              Note          As at           As at        As at
                                     1 April 2005   26 March 2004   1 Oct 2004
                                      (unaudited)     (unaudited)    (audited)
                                             £000            £000         £000

Fixed assets
Intangible assets                          46,381          51,450       50,305
Tangible assets                            26,208          26,599       26,930
                                         ________        ________     ________
                                           72,589          78,049       77,235

Current assets
Stocks                                      9,239           9,782        9,697
Debtors                                    12,311          16,710       16,482
Cash at bank                                9,888          18,144       21,151
                                         ________        ________     ________
                                           31,438          44,636       47,330

Creditors: amounts falling
due within one year                       (18,029)        (22,779)     (29,803)
                                         ________        ________     ________

Net current assets                         13,409          21,857       17,527
                                         ________        ________     ________

Total assets less current
liabilities                                85,998          99,906       94,762
Creditors: amounts falling
due in more than one year                 (19,618)        (22,540)     (21,641)
Provisions for liabilities
and charges                                (5,386)         (1,456)      (5,771)
                                         ________        ________     ________

Net assets                       2         60,994          75,910       67,350
                                          =======         =======      =======

Equity shareholders' funds       2         60,994          75,910       67,350
                                          =======         =======      =======



Consolidated cash flow statement

                                Note       26 week         26 week     53 week
                                            period          period      period
                                             ended           ended       ended
                                           1 April        26 March       1 Oct
                                              2005            2004        2004
                                       (unaudited)     (unaudited)   (audited)
                                              £000            £000        £000

Cash inflow from operating
activities                        11           983          10,585      22,835
                                          ________        ________    ________

Returns on investments and
servicing of finance
Interest received                              332             419         684
Interest paid                                 (971)           (780)     (1,582)
                                          ________        ________    ________

Net cash outflow from returns
on investments and servicing of               (639)           (361)       (898)
finance
                                          ________        ________    ________

Taxation                                    (1,068)         (3,960)     (6,310)
                                          ________        ________    ________
Capital expenditure
Purchase of tangible fixed                  (1,822)         (2,633)     (4,921)
assets
Sale of tangible fixed assets                  120              15          83
                                          ________        ________    ________

Net cash outflow from capital
expenditure                                 (1,702)         (2,618)     (4,838)
                                          ________        ________    ________

Equity dividends paid                       (7,639)         (7,639)    (10,788)
                                          ________        ________    ________
Cash (outflow)/inflow before
management of liquid resources
and financing                  12/13       (10,065)         (3,993)          1
                                          ________        ________    ________
Management of liquid
resources
Transfer of cash from deposits 12/13         5,932          14,447       8,615
                                          ________        ________    ________
Financing
Repayment of loans             12/13        (1,051)         (1,030)     (2,069)
                                           _______         _______    ________

(Decrease)/increase in cash in
the period                     12/13        (5,184)          9,424       6,547
                                            ======          ======      ======



Consolidated statement of total recognised gains and losses

                                      26 week          26 week        53 week
                                 period ended     period ended   period ended
                                      1 April         26 March          1 Oct
                                         2005             2004           2004
                                  (unaudited)      (unaudited)      (audited)
                                         £000             £000           £000

(Loss)/profit for the period           (4,402)           2,225            941
Exchange differences on foreign
currency net investment                (1,954)          (4,118)        (3,755)
                                    _________        _________      _________
Total gains and losses relating
to the period                          (6,356)          (1,893)        (2,814)



Reconciliation of movements in shareholders' funds

                                        26 week         26 week        53 week
                                   period ended    period ended   period ended
                                        1 April        26 March          1 Oct
                                           2005            2004           2004
                                    (unaudited)     (unaudited)      (audited)
                                           £000            £000           £000

(Loss)/profit for the period             (4,402)          2,225            941
Dividends                                     -          (3,149)       (10,788)
                                        _______         ___-___        _______

Retained loss for the period             (4,402)           (924)        (9,847)
Exchange differences on foreign
currency
net investment                           (1,954)         (4,118)        (3,755)
                                        _______        ________       ________

Net reduction to shareholders'
funds                                    (6,356)         (5,042)       (13,602)
Opening shareholders' funds              67,350          80,952         80,952
                                       ________        ________       ________

Closing shareholders' funds              60,994          75,910         67,350
                                        =======         =======        =======



Notes to the interim financial statements

1. Basis of preparation

The interim financial information has been prepared on the basis of accounting
policies consistent with those applied in the 2004 financial statements. The
information is unaudited but has been reviewed by the auditor, KPMG Audit Plc.
The information does not comprise the statutory accounts of the Group. The
statutory accounts of Ultraframe Plc for the 53 week period ended 1 October 2004
have been filed with the Registrar of Companies. KPMG Audit Plc have reported on
these accounts; their report was unqualified and did not contain any statement
under Section 237 of the Companies Act 1985.

In order to indicate the underlying profitability of the Group and the effect of
goodwill amortisation and exceptional items on reported results; operating
results, results before tax and results 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 six month period).

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:

Turnover
                          26 week                26 week               53 week
                     period ended           period ended          period ended
                          1 April               26 March                 1 Oct
                             2005                   2004                  2004
                      (unaudited)            (unaudited)             (audited)
By origin                    £000                   £000                  £000

United Kingdom             25,959                 36,068                73,775
North America              18,027                 18,803                44,468
                         ________               ________              ________
                           43,986                 54,871               118,243
                          =======                =======               =======

By destination               £000                   £000                  £000

United Kingdom             25,608                 35,690                72,962
Rest of Europe                668                    651                 1,667
North America              17,582                 18,491                43,496
Rest of World                 128                     39                   118
                         ________               ________              ________

                           43,986                 54,871               118,243
                          =======                =======               =======


Notes to the interim financial statements

2. Segmental information (continued)

Profit on ordinary activities before taxation

                                           26 week         26 week     53 week
                                            period          period      period
                                             ended           ended       ended
                                           1 April        26 March       1 Oct
                                              2005            2004        2004
                                       (unaudited)     (unaudited)   (audited)
By origin                                     £000            £000        £000

United Kingdom
Operating profit before exceptional
items                                        1,143           7,922      15,387
Exceptional items                           (3,001)              -           -

                                            (1,858)          7,922      15,387
North America
Operating loss before goodwill
amortisation and exceptional items            (731)         (1,604)       (479)
Goodwill amortisation and exceptional
items                                       (1,853)         (1,535)     (8,164)

                                            (2,584)         (3,139)     (8,643)

Group head office costs                     (1,064)         (1,172)     (2,107)
                                         _________       _________   _________

                                            (5,506)          3,611       4,637

Net interest payable                          (668)           (432)     (1,020)
                                         _________       _________   _________
(Loss)/profit on ordinary activities
before taxation                             (6,174)          3,179       3,617
                                          ========        ========    ========

Operating net assets

                                     As at                As at          As at
                                   1 April             26 March          1 Oct
                                      2005                 2004           2004
                               (unaudited)          (unaudited)      (audited)
By origin                             £000                 £000           £000

United Kingdom                      26,375               28,775         21,203
North America                       49,167               59,846         54,347
                                 _________            _________      _________
Operating net assets                75,542               88,621         75,550

Net borrowings                     (15,564)             (10,349)        (6,491)
Corporation and deferred tax         1,016               (2,362)        (1,709)
                                 _________            _________      _________

Shareholders' funds                 60,994               75,910         67,350
                                   =======              =======        =======


Notes to the interim financial statements

3. Exceptional items

                                             26 week       26 week     53 week
                                              period        period      period
                                               ended         ended       ended
                                             1 April      26 March       1 Oct
                                                2005          2004        2004
                                         (unaudited)   (unaudited)   (audited)
                                                £000          £000        £000

Operating exceptional items
Litigation in UK                              (2,609)            -           -
Litigation in North America                     (276)            -      (5,073)
Restructuring costs                             (523)            -           -
                                            ________      ________    ________
                                              (3,408)            -      (5,073)

Non-operating exceptional item
Pre judgement interest and financing
costs relating to litigation in North
America                                         (239)            -        (231)

                                            ________      ________    ________
                                              (3,647)            -      (5,304)
                                             =======       =======     =======

Full details relating to the litigation in the UK and North America are set out
in the operating and financial review and note 8 to the interim financial
statements.

4. Interest payable

The majority (75%) of the US dollar borrowings are fixed, by way of interest
rate swaps, at an interest rate of 4.59% plus a margin (in the range of 2.00% to
1.25%) up to June 2006. The remainder of the US dollar borrowings are subject to
floating rates based on LIBOR plus a similar margin.

The sterling borrowings are subject to floating rates based on LIBOR plus a
margin (in the range of 2.00% to 1.25%).

5. Taxation

The credit/(charge) for taxation for the period is based on the estimated
effective tax rate for the year, based on pre-tax profit excluding exceptional
items, of 31.5% (26 weeks to 26 March 2004: 30.0%, 53 weeks to 1 October 2004:
30.0%). The tax credit for the 26 weeks to 1 April 2005 includes a tax credit of
£1.0m in respect of exceptional items (26 weeks to 26 March 2004: £nil, 53 weeks
to 1 October 2004: £nil)

6. Dividend

The board is not declaring an interim dividend (2004: 3.24 pence) in respect of
the 26 week period ended 1 April 2005.

7. (Loss)/earnings per share

(Loss)/earnings per share has been calculated by dividing the consolidated
(loss)/profit after taxation 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 the exceptional items on the reported (loss)/earnings, (loss)/
earnings per share has also been calculated using the consolidated (loss)/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.

Notes to the interim financial statements

7. (Loss)/earnings per share (continued)

The (loss)/earnings per share information has been calculated as follows:

                                      26 week        26 week           53 week
                                       period         period            period
                                        ended          ended             ended
                                      1 April       26 March             1 Oct
                                         2005           2004              2004
                                  (unaudited)    (unaudited)         (audited)
                                         £000           £000              £000

(Loss)/profit on ordinary
activities after taxation
before goodwill amortisation
and exceptional items                    (766)         3,248             8,305
Operating exceptional items            (2,508)             -            (5,073)
Goodwill amortisation                    (965)        (1,023)           (2,060)
Non-operating exceptional item           (163)             -              (231)
                                   __________     __________        __________
(Loss)/profit on ordinary
activities after taxation
attributable to ordinary
shareholders                           (4,402)         2,225               941
                                    =========      =========         =========

                                           No             No                No
                                          000            000               000

Weighted average number of
ordinary shares in issue               97,191         97,191            97,191
                                   __________     __________        __________
Effect of dilutive potential
ordinary shares                             -            103                 3
                                   __________     __________        __________
Weighted average number of
ordinary shares in issue plus
assumed conversion                     97,191         97,294            97,194
                                    =========      =========         =========

                                        Pence         Pence            Pence

(Loss)/profit on ordinary
activities after taxation
before goodwill amortisation
and exceptional items                    (0.8)          3.3              8.5
Operating exceptional items              (2.5)            -             (5.2)
Goodwill amortisation                    (1.0)         (1.0)            (2.1)
Non-operating exceptional item           (0.2)            -             (0.2)
                                    _________     _________         ________
(Loss)/profit on ordinary
activities after taxation
attributable to ordinary
shareholders                             (4.5)          2.3              1.0
                                     ========     =========        =========
The above calculation excludes shares held by the Ultraframe Qualifying Share
Ownership Trust ('QUEST') in accordance with FRS 14.


Notes to the interim financial statements


8. Major litigation

Ultraframe Plc continuously and vigorously defends its intellectually 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.

United Kingdom

As previously disclosed in the notes to the 2003/4 financial statements,
Ultraframe has a major legal case, arising from infringement of its intellectual
property rights belonging to wholly owned subsidiaries, currently under court
proceedings in the UK as at the date of approval of the interim financial
statements for the period under review. This case is complex and the hearing
which began in November 2004 is expected to conclude in May 2005. A legal
determination by the court is pending. 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.

The duration and related cost of this complex UK legal case has exceeded initial
estimates and the level of costs specifically incurred on this case is
significantly higher than the normal run rate of legal expenses. Accordingly,
directly attributable costs incurred on this case, amounting to £2.6m, have been
treated as abnormal by size, incidence and materiality in the period under
review and have been charged to the profit and loss account by way of an
operating exceptional item. This major court case follows earlier, directly
related, legal proceedings in prior periods. These earlier proceedings
established that relevant intellectual property exists and that it is owned by
wholly owned subsidiaries of Ultraframe Plc. Specifically related costs incurred
in respect of earlier proceedings were charged in arriving at operating profit
and were not separately disclosed. These costs amounted to £1.5m in the last
financial year (H1 2004: £0.4m, H2 2004: £1.1m) and additional costs were also
incurred in prior periods.

North America

As previously reported, our Four Seasons business was the subject of an adverse
jury verdict in the US in September 2004. 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 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
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. It is currently expected that the appeal hearing is likely to
take place in the second half of the current financial year. The hearing takes
place in front of three appointed judges, in the absence of a jury, in line with
established US legal procedures.

In the meantime, on the grounds of accounting prudence, full provision was made
in the profit and loss account for the last financial year, by way of an
operating exceptional item, for the recorded judgement and directly attributable
costs. Any cash settlement will not be payable until final determination of this
case. Within the overall provision, directly attributable costs incurred during
2003/4 amounted to $0.4m (£0.2m), in respect of legal costs and financing costs
relating to the provision of collateral in favour of the plaintiff, pending a
final determination in line with established US legal procedures. In the first
half of the current financial year, directly attributable legal costs incurred
amounted to $0.5m (£0.3m) and these expenses have similarly been charged to the
profit and loss account as an operating exceptional item, consistent with the
accounting treatment adopted last year.

9. Other matters

Four Seasons is currently working confidentially with a supplier to assess a
potential product defect issue relating to a product component distributed until
2002. The evaluation includes assessment of whether the product is defective,
and, if so, the nature and the extent of any product defect and any necessary
remedial action to address the potential product defect. At this point the
evaluation and testing is ongoing and until the results of that evaluation and
testing are known, and interpreted, the board cannot determine the extent of any
necessary remedial action that may be advisable, the cost of any remedial
action, or the extent to which Four Seasons will bear the cost, if any, of
remedial action. At present the board believes that it is not practicable to
determine the financial effect of any possible obligation.
Notes to the interim financial statements

10. Foreign currency

The principal exchange rates used were as follows:

                        26 week                26 week                53 week
                   period ended           period ended           period ended
                   1 April 2005          26 March 2004             1 Oct 2004
                    (unaudited)            (unaudited)              (audited)
US dollar -
average                    1.88                   1.77                   1.79
US dollar -
closing                    1.89                   1.81                   1.80
Canadian
dollar -
average                    2.29                   2.34                   2.38
Canadian
dollar -
closing                    2.29                   2.39                   2.27

2005 results compared with 2004 at constant 2004 exchange rates

                                            26 week         26 week
                                       period ended    period ended
                                            1 April        26 March
                                               2005            2004
                                        (unaudited)     (unaudited)
Group                                          £000            £000   % change

Turnover                                     45,148          54,871      (17.7)
Operating (loss)/profit before
goodwill amortisation and
exceptional items                              (699)          5,146     (113.6)
Operating (loss)/profit                      (5,673)          3,611     (257.1)

North America
Turnover                                     19,189          18,803        2.1

Operating loss before goodwill                 (778)         (1,604)      51.5
amortisation and exceptional items


11. Reconciliation of operating profit to net cash inflow from operating
activities

                                        26 week        26 week        53 week
                                   period ended   period ended   period ended
                                        1 April       26 March          1 Oct
                                           2005           2004           2004
                                    (unaudited)    (unaudited)      (audited)
                                           £000           £000           £000

Operating (loss)/profit                  (5,506)         3,611          4,637
Depreciation charge                       1,994          1,921          3,925
Goodwill amortisation                     1,446          1,535          3,091
Profit on sale of tangible fixed
assets                                      (17)           (15)           (17)
Decrease/(increase) in stocks               251           (744)          (587)
Decrease in debtors                       3,935          8,143          8,517
Decrease in creditors                    (1,005)        (3,789)        (1,983)
(Decrease)/increase in provisions          (115)           (77)         5,252
                                      _________       ________       ________
Net cash inflow from operating
activities                                  983         10,585         22,835
                                       ========       ========       ========
Net cash outflow from exceptional
items                                     2,628              -              -
                                       ________       ________       ________
Net cash inflow from operating
activities before exceptional
items                                     3,611         10,585         22,835
                                       ========       ========       ========



Notes to the interim financial statements

12. Reconciliation of net cash flow to movement in net debt

                                  26 week            26 week           53 week
                             period ended             period            period
                                  1 April              ended             ended
                                     2005      26 March 2004        1 Oct 2004
                              (unaudited)        (unaudited)         (audited)      
                                     £000               £000              £000
                                                                          
(Decrease)/increase in
cash                               (5,184)             9,424             6,547
Cash inflow from the
movement in liquid
resources                          (5,932)           (14,447)           (8,615)
Cash outflow from the
movement in debt and
lease financing                     1,051              1,030             2,069
                                _________           ________        __________
Changes in net debt
resulting from cash
flows                             (10,065)            (3,993)                1
Exchange difference                   992              1,972             1,836
                               __________         __________        __________

Movement in net debt               (9,073)            (2,021)            1,837
Net debt at beginning
of period                          (6,491)            (8,328)           (8,328)
                                _________         __________        __________

Net debt at end of
period                            (15,564)           (10,349)           (6,491)
                                 ========           ========          ========


13. Analysis of changes in cash and net debt

                                     At    Cash flow     Exchange           At
                              1 October                difference      1 April
                                   2004                                   2005
                              (audited)                            (unaudited)
                                   £000        £000         £000          £000
                                   
Cash at bank and in hand         12,016      (5,184)        (147)        6,685
Liquid resources (deposits)       9,135      (5,932)           -         3,203
                               ________   _________     ________      ________
Cash at bank as per balance
sheet                            21,151     (11,116)        (147)        9,888
                               ________   _________     ________      ________
Debt due in less than one        (6,001)        (20)         187        (5,834)
year
Debt due in more than one       (21,641)      1,071          952       (19,618)
year
                               ________   _________     ________      ________

Debt and lease financing        (27,642)      1,051        1,139       (25,452)
                               ________   _________     ________      ________

Net debt                         (6,491)    (10,065)         992       (15,564)
                                =======     =======      =======       =======

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


14. Interim report

The Interim Report will be posted to all shareholders and copies of this and the
last annual report & accounts are available from the Company Secretary,
Ultraframe Plc, Clitheroe, Lancashire, BB7 1PE.


Independent review report by
KPMG Audit Plc to Ultraframe Plc

Introduction

We have been instructed by the Company to review the financial information set
out in pages 9 to 21 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 26 week period
ended 1 April 2005.

KPMG Audit Plc
Chartered Accountants
Registered Auditor
Preston
18 May 2005

Notes
     
1.   The maintenance and integrity of the Ultraframe Plc website is the
     responsibility of the directors; the work carried out by the auditors does 
     not involve consideration of these matters and, accordingly, the auditors 
     accept no responsibility for any changes that may have occurred to the 
     financial statements or interim report since they were initially presented 
     on the website.

2.   Legislation in the United Kingdom governing the preparation and 
     dissemination of financial statements may differ from legislation in other
     jurisdictions.



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