The autumn/winter collections of the Irish designer, Paul Costelloe, made a loss for the half year to August 31st, with the owners of the business, Silk Industries, saying that the period had been "disappointing and frustrating".

Mr Paul Costelloe sold his fashion clothing business, United Fashion, to the Silk supply company for £1.25 million in September, 1997, but continues to work as designer director for the company under a licensing arrangement.

Silk Industries said that yesterday's interim results showed a pre-tax profit of £274,000 sterling (£307,000) for the group on a £8.9 million sterling (£9.9 million) turnover, reflecting continued profitability in the core silk companies, but a loss of £202,000 sterling (£226,000) in Paul Costelloe.

The group's figures compare with a pre-tax profit of £1.12 million sterling (£1.25 million) for the same period in 1997 on an £8.5 million sterling (£9.5 million) turnover. The results "incorporate significant additional investment in developing new areas of the Paul Costelloe business which will result in additional turnover in the current period, and which has contributed to gearing rising to 110 per cent from 104 per cent in February", Silk stated.

The finance director, Mr Clive Reeks, said: "Paul Costelloe is a great designer and he has been under-supported in past years. We feel that there is a lot of potential there to expand his business."

He added that a weakening sterling and a strengthening lire would help its David Evans and Vanners silk businesses against Italian competition.