Qualceram Shires plc

Unaudited Interim results for the six months ended 30 June 2008.

Friday 29 August, 2008

Qualceram Shires plc, a leading manufacturer and distributor of a wide range of bathroom suites, today announces its unaudited interim financial results for the six months ended 30 June, 2008.

SUMMARY

Turnover                                                              €36.1m   (2007:€50.1 million)

Gross Profit                                                            €12.5m    (2007: €16.1 million)

Operating loss before exceptional items        (€0.08m)   (2007: Profit €2.4 million)

Net Debt                                                                   €4.9m (2007: €20.9 million)            

Commenting on the results Group Chief Executive of Qualceram Shires plc, John O'Loughlin said:  

"Demanding market conditions have impacted on turnover and profitability in the first half of 2008 and conditions will remain challenging for the remainder of the year. Further rationalisation will be implemented to counteract the downturn with particular emphasis on cash management." 

-ends-

For reference:

John O'Loughlin                         Aidan Clince  

Chief Executive                           Company Secretary

Qualceram Shires plc               Qualceram Shires plc

00-353-402-31288                     00-353-1-4047600     

Drury Communications (Dublin)

Paddy Hughes                             Tel: 00-353-1-2605000 / 00-353-87-6167811

Notes to Editors

Qualceram Shires plc is a leading manufacturer and distributor of a wide range of bathroom suites. Operating in Ireland and the UK, the Group's strategy is to increase its market share in the luxury end of the bathroom products sector by offering a complete package of luxury branded products supported by superior customer service. The Group has five brands: Qualceram, Shires, Selecta, Trent, and Shaws of Darwen. Founded in 1988, it was admitted to the London and Irish Stock Exchanges in 1997.

www.qualceram-shires.com

  Qualceram Shires plc

Interim Management Statement

for the six months ended 30 June 2008

Performance

The Group's trading performance in the six months ended 30 June 2008 has been adversely affected by the unprecedented slow-down in the property market and the deepening economic downturn both in Ireland and in the UK.  

Results

The Group's turnover in the first half of the year was €36.1m (2007: €50.1m). Turnover in Ireland fell by 34% to €13.7m (2007: €20.8m) while turnover in the UK fell by 27% to €18.9m (2007: €25.9m). Turnover in the Group's export markets increased by 3% to €3.4m (2007: €3.3m). Overheads for the six months were €12.7m (2007: €13.7m) and include costs of €0.23m relating to the unsolicited approach announced on 20 March 2008. Operating loss, before exceptional items, for the first six months of the year, was €0.08m (2007: profit €2.4m)

As a result of the sale of the Group's property in Arklow earlier this year, the Group's net debt has reduced from €17.3m at 31 December 2007 to €4.9m at 30 June 2008.

Properties

In February 2008, the Group completed the sale of its property at South Quay, Arklow, Co. Wicklow for €30.025m. In the current volatile and uncertain property market, the consideration achieved represents very good value. The Group has agreed terms to continue to occupy the premises in Arklow as its head office for a period of two and a half years from the date of completion at a nominal rent.

The Group is in discussions with the landlord of certain of its properties to waive covenants to reflect the changed environment in which it is trading. As part of these discussions the Group is also negotiating the disposal of its premises in Longton and Rochdale following the rationalisation of the Group's businesses operating from these premises.

Dividend

The Board is not proposing to declare an interim dividend.

Outlook

Economic conditions in the Group's main markets of Ireland and the UK continue to be challenging and with inflationary pressures growing, revenues are expected to decline in the second half of the year. The Board continues to take decisive action to reduce costs and rationalise the Group's businesses so as to counteract the downturn in the housing market and position the Group for the return of more favourable market conditions.

Approach 

On 20 March 2008, the Board announced that it had received a preliminary expression of interest from a party which may or may not lead to a formal offer being made for the Group. As a result of that approach, a number of other parties expressed an interest in entering into discussions with the Group. 

The position of potential buyers and current valuation levels had been negatively impacted by the continued deterioration in the UK and Irish construction markets, the general downturn in the economy, credit market conditions and uncertainty surrounding a recovery in the Group's key markets. These factors restricted the ability of the parties who had expressed an initial interest in making an offer for the Group, and with whom the Board had engaged during the last five months, to make an offer.

As a result, on 26 August 2008, the Board announced that it had terminated the process and ended discussions with potential buyers.

Principal risks and uncertainties

Under the Transparency (Directive 2004/109/EC) Regulations 2007 the Group is required to give a description of the principal risks and uncertainties it faces for the remaining six months of 2008. Risk management is an integral part of the Group's business processes.

The risks and uncertainties which are currently judged to have a material impact on the Group's performance for the remaining six months of the year are as follows:

• The Group faces strong competition in its various markets and if it fails to compete successfully market share and profitability may decline

• Due to market conditions, the Groups covenants with its landlord may come under increasing pressure

• The continuing upward trend in the cost of raw materials and energy may impact on the profitability of the Group

• A continued contraction in the new housebuilding sector could further impact on the profitability of the Group

• Movements in foreign currency exchange rates and higher interest rates could adversely affect the Group

• Changes in government regulations, particularly in the environment sector, may adversely affect the Group.

Related party transactions

In the opinion of the Directors, there have been no related party transactions, or changes therein since 31 December 2007, that have materially affected the Group's financial position or performance in the six months ended 30th June 2008.

Audit Review

The half year financial report has not been audited or reviewed by the Auditors of the Group pursuant to the Auditing Practices Board guidance on review of interim financial information.

Forward Looking Statements

Certain comments made in these interim results are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from the expected future events or results referred to in these forward looking statements. 

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Interim Statement in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34) and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Irish Financial Services Regulatory Authority.

The Directors confirm that the condensed set of financial statements have been prepared in accordance with IAS 34 and that they give a true and fair view of the assets, liabilities, financial position and loss of the Group and that as required by the Transparency (Directive 2004/109/EC) Regulations 2007, the Interim Statement includes a fair review of:

• important events that have occurred during the first six months of the year;

• the impact of those events on the condensed financial statements;

• a description of the principal risks and uncertainties for the remaining six months of the financial year; and

• details of any related party transactions that have materially affected the Group's financial position or performance in the six months to 30 June 2008.

Peter Addison        John O'Loughlin

Chairman              Group Chief Executive

29 August 2008

  Qualceram Shires plc

Unaudited Consolidated Income Statement for the period ended 30 June 2008

Qualceram Shires plc

Unaudited Consolidated Statement of total recognised income and expense 

for the period ended 30 June 2008

Qualceram Shires plc

Unaudited Consolidated Balance Sheet as at 30 June 2008

  Qualceram Shires plc

Unaudited Consolidated Cash Flow Statement for the period ended 30 June 2008