Interim Results

RNS Number : 1629C
Walker Greenbank PLC
14 October 2015
 

A meeting for analysts will be held at 10am today, 14 October 2015, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For further details, contact Buchanan on 020 7466 5000

 

 

For immediate release

14 October 2015

 

WALKER GREENBANK PLC

("Walker Greenbank" or "the Group")

Interim Results for the 6 months ended 31 July 2015

 

Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings Group whose brands include Sanderson, Morris & Co., Harlequin, Zoffany, Scion and Anthology, is pleased to announce its interim results for the six month period ended 31 July 2015.

 

Highlights

 

·      Group sales up 11.4% to £45.8 million (H1 2014: £41.1 million), 

                                                                                                                           

·      UK Brands sales up 7.6% and overseas Brands sales up 11.6% in reportable currency, 13.5% in constant currency

 

·      Profit before tax up 25.8% at £2.89 million (H1 2014: £2.30 million)

 

·      Adjusted profit before tax* up 12.3% at £3.68 million (H1 2014: £3.28 million)

 

·      Strong performance from Manufacturing with total sales up 8.2% at £18.6 million (H1 2014: £17.2 million) including digital fabric printing sales up 35.0% at £3.2 million

 

·      Earnings per share up 19.5% at 4.04 pence (H1 2014: 3.38 pence)

 

·      Adjusted earnings per share* up 3.9% at 5.35 pence (H1 2014: 5.15 pence)

 

·      Interim dividend up 25.7% to 0.44 pence per share (H1 2014: 0.35 pence per share)

 

* Adjusted for accounting charges relating to share-based incentives and defined benefit charge

 

Terry Stannard, the Chairman of Walker Greenbank, said: "Brand sales in the first ten weeks of the second half are up 7.5% in reportable currency (7.9% in constant currency) compared with the same period last year. This is an encouraging performance ahead of our key Autumn selling period and reflects strong trading in the UK, where Brand sales are up 7.5%, and in overseas markets, where Brand sales are up 8.5% in constant currency. Manufacturing also continues to perform strongly. The Board remains confident of meeting expectations for the full year."

 

For further information:

 

Walker Greenbank PLC

+44 (0) 844 543 4668

John Sach, Chief Executive


Mike Gant, Chief Financial Officer



Investec Bank plc

+44 (0) 20 7597 5970

Garry Levin / David Anderson - Nominated Adviser

Henry Reast - Corporate Broking



Buchanan

+44 (0) 20 7466 5000

Mark Court / Helen Chan / Sophie Cowles

 


Notes for editors:

 

About Walker Greenbank

 

Walker Greenbank PLC is a luxury interior furnishings Group that designs, manufactures and markets wallpapers and fabrics together with a wide range of ancillary interior products. The Group's brand portfolio - comprising Sanderson, Morris & Co, Harlequin, Zoffany, Scion and Anthology - spans heritage and contemporary design and its products are sold in more than 85 countries worldwide. The Group derives significant licensing income from the use of its designs in lifestyle products such as bed linen, rugs and tableware.

 

The Group employs more than 600 people and has showrooms in London, New York, Paris, Amsterdam and Dubai along with partnership showrooms in Moscow and in Shenzhen, China. Its UK manufacturing base, which includes a wallpaper factory in Loughborough and a fabric printing factory in Lancaster, manufactures product both for the Group and for other wallpaper and fabric brands. Continued investment in manufacturing has allowed the Group to offer a wide range of printing techniques.

 

Walker Greenbank trades on the AIM market of the London Stock Exchange under the ticker symbol WGB.

 

For further information please visit: www.walkergreenbank.com/

 



 

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

 

Overview

 

The six months to 31 July 2015 represent another successful trading period for Walker Greenbank. It is pleasing to announce another significant increase in sales, profitability and dividends. Total Brand sales for the first half increased by 8.8% in reportable currency (9.8% in constant currency) to £34.6 million compared with the same period last year.

 

We have delivered considerable growth in the UK, our largest market, where Brand sales increased by 7.6% to £20.2 million compared with the same period last year, reflecting continuing strong contracts sales and continued retail sales growth.

 

Overseas Brand sales were up 11.6% in reportable currency 13.5% in constant currency to £13.4 million. Overseas Brand sales benefited from the strength of the US dollar, but this was offset by the weakness of the Euro. Sales in the US have grown 30.3% in reportable currency 19.1% in constant currency to £4.4 million, positively impacted by the completion of our flagship New York showroom extension last year. 

 

Brand sales in Western Europe were up 0.9% in reportable currency, owing to the strength of Sterling 13.2% in constant currency to £3.7 million with growth in almost every territory. Our Dubai showroom has contributed to a strong sales performance in the Middle East, up 18.2% in constant currency, and sales in the Rest of the World grew 9.5% in constant currency.

 

Licensing income in the first six months is down 1.8% in reportable currency but up 5.6% in constant currency, to £0.96 million due mainly to the weakness of the Japanese Yen. We recently announced that Sanderson had collaborated with the consumer electronics manufacturer Pure to produce designer digital radios featuring Sanderson prints. This collaboration is another positive step in our licensing strategy which is taking the Company's designs into lifestyle products, helping us to increase the consumer awareness of our brands.

 

Vertically integrated high quality British manufacturing with innovative printing techniques distinguishes us from others in our industry. Continued investment in our manufacturing capabilities at both factories has helped deliver a strong performance from our manufacturing sites with total sales growing 8.2% over the first six months, a large proportion of which is digital printing.

 

We have continued to make significant progress with our growth strategy during the half year, particularly in market penetration through the launch of the third collection from the Anthology brand. We also progressed our digital sales and marketing strategy, including consumer e-commerce development and greater consumer insight. As part of an initiative to get closer to our customers, we are developing a new CRM solution.

 

The Brands

 

This segment incorporates global trading from our international recognised brands including our overseas subsidiaries in the US and France.

 

Harlequin incorporating Scion & Anthology

 

Harlequin has grown its worldwide sales 15.6% to £16.0 million in reportable currency compared with the same period last year. It continues to be the UK's leading mid-market contemporary brand achieving growth of 12.1% in the UK consumer market. Export sales have grown 12.0% in the first half despite the impact of currency. In the US, Harlequin has seen significant growth, up 52.0% in reportable currency. Southern Ireland was the largest market in Europe for the Harlequin group in the first half.

 

The Scion brand, launched in February 2012, continues to grow well with its substantial third collection, Spirit and Soul, launched in 2014, having increased appeal in overseas markets. For 2015, the fourth collection, Levande, has been joined by Scion's first children's collection Guess Who?

 

The Anthology brand was launched in April 2014 with two luxury collections of wallcoverings and sales have already exceeded expectations. The third collection was launched in Spring 2015 and will be followed later in the year by Anthology 4, which will be complemented by an exciting range of innovative wide-width fabrics. Anthology was specifically aimed at international markets which are already accounting for more than half of the Brand's sales.

 

 

 

Arthur Sanderson & Sons incorporating the Morris & Co brand

 

Sales at Sanderson have remained flat at £11.0 million. Recent collections (notably Fabienne) have driven UK growth of 1.2%, which has been offset by a reduction in export markets driven by Eastern Europe.

 

Zoffany

 

Zoffany, which is positioned at the upper end of the premium market, has delivered sales growth of 7.7% to £6.0 million compared with the same period last year, with strong performances from recent collections reflecting the focus on design strategy and direction to position the Zoffany brand for sustained growth. Sales to export markets have grown by 0.3% in reportable currency. Zoffany was recently included in the 2015/16 CoolBrands list, compiled by opinion formers and members of the public.

 

Manufacturing

 

Manufacturing has delivered another strong performance with sales and profitability both increasing. Total sales grew 8.2% to £18.6 million leading to an increase in profits of 15.3% to £1.8 million.

 

Anstey

 

Anstey, our wallpaper manufacturer, has seen sales in the first half remain constant at £9.0 million compared with the same period last year. Third party sales in the UK were up 12.8% and third party export sales were up 16.4% whilst sales to our own Group Brands fell by 16.6% following the launch of a large number of new collections from the Brands in the last quarter of the prior year.

 

Last year's additional investment in digital printing and correlated digital sampling together with finishing equipment for digital product has contributed to the strong growth of third party sales. These investments have continued to enhance capacity, capability and efficiency.

 

Standfast

 

Overall sales at Standfast & Barracks, our fabric printing factory, were 18.2% higher, at £9.6 million, compared with the same period last year. Third party sales in the UK were up 21.7% with sales to our own Group Brands increasing 6.9% year on year. Our continued investment in digital printing has contributed to digital print sales increasing be 35.0% year on year and now represent a third of total revenue. We have also recently installed a digital pigment printer which is part of a collaborative R&D project with the manufacturer which aims to develop the capability to print on new substrates. 

 

Financials

 

Total sales in the half year increased 11.4% to £45.8 million, from £41.1 million. The profit from operations grew 21.3% to £3.39 million (2014: £2.79 million). Operating profits before an accounting charge relating to the Long Term Incentive Plan (LTIP) have risen 12.2% from £3.37 million to £3.78 million.

 

The interest charge has increased from £92,000 to £102,000 reflecting the Group's investment in working capital in the form of new collections at the end of the previous financial year. The defined benefit pension charge has fallen slightly from £400,000 to £391,000 driven by a reduction in the service cost.

 

Profit before tax after the two non-cash charges increased 25.8% to £2.89 million (2014: £2.30 million). Profit before tax, and before the LTIP accounting charge and defined benefit charge, increased 12.3% to £3.68 million (2014: £3.28 million). Earnings per share were up 19.5% at 4.04 pence (2014: 3.38 pence). Profit after tax was £2.4 million (2014: £2.0 million) and adjusted earnings per share were up 3.9% at 5.35 pence (2014: 5.15 pence), after removing the LTIP accounting charge and defined benefit charge.

 

The Group maintains a strong balance sheet with indebtedness at the half year of £0.57 million, a significant inflow of £1.69 million over the last 12 month period (31 January 2015: net funds £0.002 million).

 

Dividend

The Board has declared an interim dividend of 0.44 pence per share which represents an increase of 25.7% on the prior half year reflecting the Board's confidence in the current financial position and future financial performance of the Group. The interim dividend will be payable on 13 November 2015 to shareholders on the register as at 23 October 2015.

 

 

Outlook

Brand sales in the first ten weeks of the second half are up 7.5% in reportable currency (7.9% in constant currency) compared with the same period last year. This is an encouraging performance ahead of our key Autumn selling period and reflects strong trading in the UK, where Brand sales are up 7.5%, and in overseas markets, where Brand sales are up 8.5% in constant currency. Manufacturing also continues to perform strongly. The Board remains confident of meeting expectations for the full year.

 

 

                                   

 

 

Terry Stannard                                     John Sach

Chairman                                             Group Chief Executive

14 October 2015                                    14 October 2015

 

 

Unaudited Consolidated Income Statement

For the six months ended 31 July 2015

                                                                       


Note

 

6 months to 31 July

2015

£000

 

6 months to 31 July

2014

£000

Audited

Year to 31 January

2015

£000

Revenue


2

45,834

41,148

83,373

Profit from operations


3

3,387

2,793

7,335

Net defined benefit pension charge


4

(391)

(400)

(798)

Finance costs



(102)

(92)

(208)

Total finance costs



(493)

(492)

(1,006)







Profit before tax  



2,894

2,301

6,329

Income tax expense


5

(478)

(306)

(1,224)

Profit for the period attributable to owners of the parent



2,416

1,995

5,105







Earnings per share  - Basic (pence)


6

4.04

3.38

8.60

Earnings per share  - Diluted (pence)


6

3.95

3.27

8.28

 






Adjusted earnings per share  - Basic (pence)


6

5.35

5.15

11.64

Adjusted earnings per share  - Diluted (pence)           


6

5.23

4.99

11.20

 



Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 July 2015


 

6 months to

31 July

2015

 

6 months to

31 July

2014

Audited

Year to

31 January 2015


£000

£000

£000

 

Profit for the period

2,416

1,995

5,105

Other comprehensive (expense)/income:

 

 


Items that will not be reclassified to profit or loss:

 

 


Remeasurements of defined benefit pension schemes

-

-

(2,011)

(Reduction)/increase of deferred tax asset relating to

pension scheme liability

 

(9)

 

(76)

 

228

Total items that will not be reclassified to profit or loss

(9)

(76)

(1,783)

Items that may be reclassified subsequently to profit or loss:

 

 


Currency translation gains/(losses)

103

(54)

(276)

Cash flow hedge gains/(losses)

148

(19)

(348)

Total items that may be reclassified subsequently to profit or loss

251

(73)

(624)

Other comprehensive expense for the period, net of tax

242

(149)

(2,407)

Total comprehensive income for the period attributable to the owners

of the parent

2,658

1,846

2,698

 



Unaudited Consolidated Balance Sheet

As at 31 July 2015


 

 

Note

 

As at

31 July

2015

£000

 

As at

31 July

2014

£000

Audited

As at

31 January 2015

£000

Non-current assets





Intangible assets


7,090

7,216

7,158

Property, plant and equipment


12,634

12,203

12,714

Deferred income tax assets


1,087

1,544

1,591



20,811

20,963

21,463

Current assets





Inventories


20,053

19,080

22,004

Trade and other receivables


16,423

15,370

14,130

Derivative financial asset


-

134

-

Cash and cash equivalents


213

2,635

971



36,689

37,219

37,105

Total assets


57,500

58,182

58,568

Current liabilities





Trade and other payables


(17,703)

(17,629)

(20,115)

Derivative financial liability


(47)

-

(195)

Borrowings

7

(400)

(400)

(400)

 


(18,150)

(18,029)

(20,710)

Net current assets


18,539

19,190

16,395

Non-current liabilities





Borrowings

7

(384)

(4,498)

(569)

Retirement benefit obligation


(9,903)

(8,832)

(10,352)



(10,287)

(13,330)

(10,921)

Total liabilities


(28,437)

(31,359)

(31,631)

Net assets


29,063

26,823

26,937

Equity





Share capital


602

598

598

Share premium account


457

457

457

Foreign currency translation reserve


(262)

(143)

(365)

Accumulated losses


(12,194)

(14,730)

(14,065)

Other reserves


40,460

40,641

40,312

Total equity attributable to owners of the parent


29,063

26,823

26,937

 



 

Unaudited Consolidated Cash Flow Statement

For the six months ended 31 July 2015

 

 

 

Note

 

6 months to

31 July

2015

£000

 

6 months to

31 July

2014

£000

Audited

Year to

31 January 2015

£000

Cash flows from operating activities





Cash inflow/(outflow) generated from operations

8

769

(1,624)

3,468

Interest paid


(87)

(80)

(181)

Income tax paid


(8)

(5)

(32)

Net cash generated from/(used in) operating activities


674

(1,709)

3,255

Cash flows from investing activities





Purchase of intangible fixed assets


(220)

(182)

(420)

Purchase of property, plant and equipment


(1,012)

(1,487)

(2,830)

Proceeds from disposal of property, plant and equipment


-

-

20

Net cash used in investing activities


(1,232)

(1,669)

(3,230)

Cash flows from financing activities





EBT purchase of shares


-

(348)

(348)

Allotment of share capital


-

-

8

Net (repayment)/drawdown of borrowings

7

(200)

3,531

(400)

Dividends paid to Company's shareholders


-

-

(1,144)

Net cash (used in)/generated from financing activities


(200)

3,183

(1,884)

Net decrease in cash and cash equivalents


(758)

(195)

(1,859)

Cash and cash equivalents at beginning of period


971

2,830

2,830

Cash and cash equivalents at end of period


213

2,635

971

 

 



 

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 July 2015





Other reserves




 

Share capital

£000

Share premium account

£000

Accumulated losses

£000

 

Capital reserve

£000

 

Merger reserve

£000

Hedge reserve

£000

Foreign currency translation

reserve

£000

Total

equity

£000

Balance at 1 February 2015

598

457

(14,065)

43,457

(2,950)

(195)

(365)

26,937

Profit for the period

-

-

2,416

-

-

-

-

2,416

Other comprehensive income:









Deferred tax relating to pension scheme liability

-

-

(9)

-

-

-

-

(9)

Currency translation differences

-

-

-

-

-

-

103

103

Cash flow hedge

-

-

-

-

-

148

-

148

Total comprehensive income

-

-

2,407

-

-

148

103

2,658

Transactions with owners, recognised directly in equity:









Allotment of share capital

4

-

(4)

-

-

-

-

-

Long-term incentive plan charge

-

-

311

-

-

-

-

311

Long-term incentive plan vesting

-

-

(967)

-

-

-

-

(967)

Related tax movements on

long-term incentive plan

-

-

124

-

-

-

-

124

Balance at 31 July 2015

602

457

(12,194)

43,457

(2,950)

(47)

(262)

29,063

 

 

 




Other reserves



 


 

Share capital

£000

Share premium account

£000

Accumulated losses

£000

 

Capital reserve

£000

 

Merger reserve

£000

Hedge reserve

£000

Foreign currency translation

reserve

£000

Total

equity

£000

 

Balance at 1 February 2014

590

457

(14,766)

43,457

(2,950)

153

(89)

26,852

 

Profit for the period

-

-

1,995

-

-

-

-

1,995

 

Other comprehensive income:









 

Deferred tax relating to pension scheme liability

-

-

(76)

-

-

-

-

(76)

 

Currency translation differences

-

-

-

-

-

-

(54)

(54)

 

Cash flow hedge

-

-

-

-

-

(19)

-

(19)

 

Total comprehensive income

-

-

1,919

-

-

(19)

(54)

1,846

 

Transactions with owners, recognised directly in equity:









 

EBT purchase of shares

-

-

(348)

-

-

-

-

(348)

 

Allotment of share capital

8

-

-

-

-

-

-

8

 

Long-term incentive plan charge

-

-

293

-

-

-

-

293

 

Long-term incentive plan vesting

-

-

(1,584)

-

-

-

-

(1,584)

 

Related tax movements on

long-term incentive plan

-

-

(244)

-

-

-

-

(244)

 

Balance at 31 July 2014

598

457

(14,730)

43,457

(2,950)

134

(143)

26,823

 

 

 



 

Unaudited Consolidated Statement of Changes in Equity (continued)

 





Other reserves




 

Share capital

£000

Share premium account

£000

Accumulated losses

£000

 

Capital reserve

£000

 

Merger reserve

£000

Hedge reserve

£000

Foreign currency translation

reserve

£000

Total

equity

£000

Balance at 1 February 2014

590

457

(14,766)

43,457

(2,950)

153

(89)

26,852

Profit for the year

-

-

5,105

-

-

-

-

5,105

Other comprehensive income:









Remeasurements of defined benefit pension schemes

 

-

 

-

 

(2,011)

 

-

 

-

 

-

 

-

 

(2,011)

Deferred tax relating to pension scheme liability

-

-

228

-

-

-

-

228

Currency translation differences

-

-

-

-

-

-

(276)

(276)

Cash flow hedging reserve - released to Income Statement

 

-

 

-

 

-

 

-

 

-

 

(153)

 

-

 

(153)

Cash flow hedging reserve - recognised in equity during the year

-

-

-

-

-

(195)

-

(195)

Total comprehensive income

-

-

3,322

-

-

(348)

(276)

2,698

Transactions with owners, recognised directly in equity:









Dividends

-

-

(1,144)

-

-

-

-

(1,144)

EBT purchase of shares  

-

-

(348)

-

-

-

-

(348)

Allotment of share capital

8

-

-

-

-

-

-

8

Long-term incentive plan charge

-

-

629

-

-

-

-

629

Long-term incentive plan vesting

-

-

(1,584)

-

-

-

-

(1,584)

Related tax movements on

long-term incentive plan

-

-

(174)

-

-

-

(174)

Balance at 31 January 2015

598

457

(14,065)

43,457

(2,950)

(195)

(365)

26,937

 

 

 

 

 



 

Unaudited Notes to the interim financial statements

 

 

1.  Basis of preparation of interim financial statements

The interim financial statements have been prepared in accordance with the accounting policies that the Group expects to apply in its annual financial statements for the year ending 31 January 2016. The Group's accounting policies are based on International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and IFRS Interpretations Committee ("IFRS IC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the valuation of derivative financial instruments at fair value through profit and loss.

 

The Group has chosen not to adopt IAS 34 'Interim Financial Reporting' in preparing these interim financial statements for the period to 31 July 2015 as it is not mandatory for AIM listed companies.

 

The Group's accounting policies for the year ended 31 January 2016 will be set out in the annual report for that year. Since the Group's previous annual financial report for the year ended 31 January 2015, a number of authoritative pronouncements issued by the International Accounting Standards Board and IFRS IC along with new or revised accounting standards are now effective for financial years ending 31 January 2016. None of these have any material impact on either the current or prior period financial statements. Additional authoritative pronouncements have been issued and will become effective in later years; these have not been adopted early by the Group.

 

Further details of authoritative pronouncements effective for financial years ending 31 January 2016 and additional authoritative pronouncements that have been issued and will become effective in later years will be set out in the financial statements of the Group for the year ending 31 January 2016.

 

The interim financial statements do not represent statutory accounts for the purposes of section 434 'Requirements in connection with publication of statutory accounts' of the Companies Act 2006. The financial information for the year ended 31 January 2015 is based on the statutory accounts for the financial year ended 31 January 2015, on which the auditors issued an unqualified opinion and did not contain a statement under section 498 'Duties of auditor' of the Companies Act 2006, and have been delivered to the Registrar of Companies. The interim financial statements for the 6 month period ended 31 July 2015 have not been audited, but have been reviewed by the auditors. The auditors' review report is included following the interim financial statements.

 

After making enquiries, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. Accordingly, the going concern basis has been adopted in preparing the interim statements.

 

The Board approved the interim financial information on 14 October 2015.

 

Adoption of Financial Reporting Standard (FRS) 101 - Reduced Disclosure Framework

Following the publication of FRS 100 'Application of Financial Reporting Requirements' by the Financial Reporting Council, Walker Greenbank PLC is required to change its accounting framework for its entity financial statements, which is currently UK GAAP, for its financial year commencing 1 February 2015. The Group is required to make a choice between two alternative sets of accounting standards: FRS 101, which allows UK companies to use the recognition and measurement requirements of IFRS, but with reduced disclosures; or FRS 102, which represents new UK GAAP, based on IFRS for small and medium-sized enterprises (SMEs), amended for UK-specific circumstances. The Board considers that it is in the best interests of the Group for the Company to adopt FRS 101 'Reduced Disclosure Framework' since this will enable the streamlining and simplification of reporting procedures. No material disclosures in the current UK GAAP financial statements would be omitted on adoption of FRS 101. In accordance with the provisions set out in FRS 101.5, a shareholder or shareholders holding in aggregate 5% or more of the total issued shares in the Company may object to the use of the disclosure exemptions, in writing, to the Company Secretary at the registered office no later than 11 November 2015.

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

2. Segmental analysis

Walker Greenbank PLC is a designer, manufacturer and distributor of luxury interior furnishings, fabrics and wallpaper. The Board of Walker Greenbank PLC predominantly manages the operations of the Group. The reportable segments of the group are as follows:

 

·      Brands - comprises the design, marketing, sales, distribution, and licensing activities of Sanderson, Morris & Co, Harlequin, Zoffany, Anthology and Scion brands operating from the UK and its foreign subsidiaries in the US and France;

·      Manufacturing - comprising the wallcovering and printed fabric manufacturing businesses operated by Anstey and Standfast respectively.

 

This is the basis on which the Group presents its operating results to the Board of Directors which is considered to be the Chief Operating Decision Maker (CODM) for the purposes of IFRS 8 'Operating Segments'. Additional
revenue-only data is also reported to the CODM and is disclosed on the basis explained below. Other group wide activities and expenses, predominantly related to corporate head office costs, defined benefit pension costs, long term incentive plans expenses, taxation and eliminations of intersegment items, are presented within 'Eliminations and unallocated'.

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

2. Segmental analysis

 

a) Principal measures of profit and loss - Income Statement segmental information

 

 

 

 

6 months to 31 July 2015



 

 

Brands

£000

 

 

Manufacturing

£000

Eliminations and unallocated

£000

 

 

Total

£000

UK Revenue



20,155

9,307

-

29,462

International Revenue



13,436

1,978

-

15,414

Licence Revenue



958

-

-

958

Revenue - External



34,549

11,285

-

45,834

Revenue - Internal



-

7,362

(7,362)

-

Total Revenue



34,549

18,647

(7,362)

45,834

Profit/(loss) from operations



3,335

1,807

(1,755)

3,387

Net borrowing costs



-

-

(102)

(102)

Net pension charge



-

-

(391)

(391)

Profit/(loss) before taxation



3,335

1,807

(2,248)

2,894

Tax charge



-

-

(478)

(478)

Profit/(loss) for the period



3,335

1,807

(2,726)

2,416

 

 

 

 

 

6 months to 31 July 2014



 

 

Brands £000

 

 

Manufacturing

£000

Eliminations and unallocated

£000

 

 

Total

£000

UK Revenue



18,732

7,932

-

26,664

International Revenue



12,035

1,473

-

13,508

Licence Revenue



976

-

-

976

Revenue - External



31,743

9,405

-

41,148

Revenue - Internal



-

7,826

(7,826)

-

Total Revenue



31,743

17,231

(7,826)

41,148

Profit/(loss) from operations



3,075

1,567

(1,849)

2,793

Net borrowing costs



-

-

(92)

(92)

Net pension charge



-

-

(400)

(400)

Profit/(loss) before taxation



3,075

1,567

(2,341)

2,301

Tax charge



-

-

(306)

(306)

Profit/(loss) for the period



3,075

1,567

(2,647)

1,995

 

 

 

 

 

12 months to 31 January 2015



 

 

Brands

£000

 

 

Manufacturing

£000

Eliminations and unallocated

£000

 

 

Total

£000

UK Revenue



38,468

15,802

-

54,270

International Revenue



24,151

2,871

-

27,022

Licence Revenue



2,081

-

-

2,081

Revenue - External



64,700

18,673

-

83,373

Revenue - Internal



-

16,401

(16,401)

-

Total Revenue



64,700

35,074

(16,401)

83,373

Profit/(loss) from operations



7,387

3,658

(3,710)

7,335

Net borrowing costs



-

-

(208)

(208)

Net pension charge



-

-

(798)

(798)

Profit/(loss) before taxation



7,387

3,658

(4,716)

6,329

Tax charge



-

-

(1,224)

(1,224)

Profit/(loss) for the year



7,387

3,658

(5,940)

5,105

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

2. Segmental analysis continued

 

b) Additional segmental revenue information

The segmental revenues of the Group are reported to the CODM in more detail. One of the analysis presented is revenue by export market in the Brands.

 



 

6 months to

31 July

2015

 

6 months to

31 July

2014

 

Audited

Year to

31 January

2015

Brands international revenue by export market

£000

£000

£000

Western Europe

3,651

3,619

7,038

Scandinavia

933

827

1,762

Eastern Europe

1,137

1,210

2,256

Europe Total

5,721

5,656

11,056

Middle East

682

575

1,026

Far East

1,589

1,423

2,957

US

4,379

3,359

7,041

Australasia

537

562

1,083

South America

187

175

361

Other

342

285

627

 

13,437

12,035

24,151

 

Revenue of the Brands reportable segments - revenue from operations in all territories where the sale is sourced from the United Kingdom and overseas subsidiary operations, excluding internal sales to overseas subsidiaries, together with contract and license revenue:

 



 

6 months to

31 July

2015

 

6 months to

31 July

2014

Audited

Year to

31 January

2015

Brands revenue analysis

£000

£000

£000

Harlequin, incorporating Anthology & Scion

16,049

13,887

28,982

Sanderson, incorporating Morris & Co

11,029

11,039

21,698

Zoffany

5,993

5,567

11,223

Other brands

520

274

716

Licensing

958

976

2,081

 

34,549

31,743

64,700

 

 

Revenue of the Manufacturing reportable segments - including revenues from internal sales to the Group's Brands:

 



 

6 months to

31 July

2015

 

6 months to

31 July

2014

Audited

Year to

31 January

2015

Manufacturing revenue analysis

£000

£000

£000

Standfast

9,615

8,136

16,744

Anstey

9,032

9,095

18,330

 

18,647

17,231

35,074

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

3. Analysis of operating profit by function of expense

 



 

6 months to

31 July

2015

 

6 months to

31 July

2014

 

Audited

Year to

31 January

2015

 

£000

£000

£000

Revenue

45,834

41,148

83,373

Cost of sales

(18,924)

(15,987)

(32,674)

Gross profit

26,910

25,161

50,699

Net operating expenses

(23,130)

(21,793)

(42,359)

LTIP accounting charge for the period*

(393)

(575)

(1,005)

Profit from operations

3,387

2,793

7,335

 

*The LTIP accounting charge of £393,000 (2014: £575,000) although not considered an exceptional cost has been separately disclosed within this note to aid comparison and analysis.

 

 

4. Net defined benefit pension charge


 

6 months to

31 July

2015

£000

 

6 months to

31 July

2014

£000

Audited

Year to

31 January

2015

£000

Expected return on pension scheme assets

879

1,092

2,179

Interest on pension scheme liabilities

(1,067)

(1,279)

(2,552)

Scheme expenses met by the Group

(203)

(213)

(425)

Net charge

(391)

(400)

(798)

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

5. Income tax expense

 

 

 

 

6 months to

31 July

2015

£000

 

6 months to

31 July

2014

£000

Audited

Year to

31 January

2015

£000

Current tax:

 




 - UK, current tax

 

(451)

-

(582)

 - overseas, current tax

 

-

(5)

(14)

Corporation tax

 

(451)

(5)

(596)

Deferred tax:

 




 - current year


(112)

(301)

(669)

 - adjustments in respect of prior years


84

-

-

 - effect of change in corporation tax  

   rate to 20% (2014: 20%)


 

1

 

-

 

41

Deferred tax


(27)

(301)

(628)

Tax charge for the period


(478)

(306)

(1,224)

 

The rate of corporation tax changed from 21% to 20% with effect from 1 April 2015. Accordingly the UK companies' results for this accounting year are taxed at an effective whole year rate of 20.17%. Changes to UK corporation tax rates were announced in the Chancellor's Budget on 8 July 2015. These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 18% from 1 April 2020. As the changes have not been substantively enacted at the reporting date, their effects are not included within these interim financial statements.

 

The deferred tax balance at 31 July 2015 included within these interim financial statements has been calculated at a rate of 20%, being the rate enacted in the Finance Act (2013), as this is the rate at which majority of the balances are expected to unwind.

 

No overseas taxation is anticipated to become payable within the immediate future due to availability of gross tax losses of approximately £1.5 million (2014: £1.9 million).

 

A deferred tax charge of £27,000 (2014: £301,000) arose in the period to 31 July 2015 on the profits for the period.

A deferred tax charge of £9,000 (2014: £76,000) has been recognised for movements in the deferred tax relating to the pension liability. The movements in deferred tax relating to the pension liability have been recognised in the Statement of Comprehensive Income in accordance with the Group's accounting policy.

 

A deferred tax charge of £469,000 (2014: £244,000) has been recognised for movements in the deferred tax relating to the long-term incentive plan. The movements in deferred tax relating to the long-term incentive plan have been recorded in equity in accordance with the Group's accounting policy.



 

Unaudited Notes to the interim financial statements (continued)

 

 

6. Earnings per share

Basic earnings per share ('EPS') is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period, excluding those held in the Employee Benefit Trust ('EBT') and those held in treasury, which are treated as cancelled. The adjusted basic earnings per share is calculated by dividing the adjusted earnings by the weighted average number of shares. As a result of the improved profitability of the Group, PBT performance criteria within LTIPs 7, 8 and 9 are now being met and as a consequence these LTIP awards are now dilutive.  

 



6 months to 31 July 2015




6 months to 31 July 2014




Year to January 2015


 


Earnings

£000

 

Weighted average number of shares

(000s)

 

Per Share Amount

Pence


Earnings

£000

 

Weighted average number   of shares

(000s)

 

Per Share Amount

Pence


Earnings

£000

 

Weighted average number of shares

(000s)

 

Per Share Amount

Pence













 

Basic earnings per share

 

2,416

 

59,819

 

4.04


 

1,995

 

59,092

 

3.38


 

5,105

 

59,335

 

8.60

 

Effect of dilutive securities

 

-

 

-

 

-


 

-

 

-

 

-


 

-

 

-

 

-

 

Shares under LTIP

 

-

 

1,390

 

-


 

-

 

1,919

 

-


 

-

 

2,360

 

-

 

Diluted earnings per share

 

2,416

 

61,209

 

3.95


 

1,995

 

61,011

 

3.27


 

5,105

 

61,695

 

8.28

 













 

Adjusted basic and diluted earnings per share:












 

Add back LTIP accounting charge

 

393




 

575




 

1,005



 

Add back Net defined benefit pension accounting charge

 

 

 

391




 

 

 

400




 

 

 

798



 

Add/(less) Deferred tax arising on LTIP

 

-




 

 

72




 

 

-



 

Adjusted basic earnings per share

 

 

3,200

 

 

59,819

 

 

5.35


 

 

3,042

 

 

59,092

 

 

5.15


 

 

6,908

 

 

59,335

 

 

11.64

 

Adjusted diluted earnings per share

 

 

3,200

 

 

61,209

 

 

5.23


 

 

3,042

 

 

61,011

 

 

4.99


 

 

6,908

 

 

61,695

 

 

11.20

 

 

 

On 18 May 2015, 1,090,326 shares vested under the Company's Long Term Incentive Plan. To satisfy the vesting, 409,962 shares of 1 pence each were allotted at par value and a further 188,272 shares were issued from the Walker Greenbank PLC Employee Benefit Trust "EBT". Following these transactions Walker Greenbank's issued ordinary share capital with voting rights consists of 60,172,521 (2014: 59,762,559) ordinary shares of which no (2014: nil) ordinary shares are held in treasury and no (2014: 188,272) ordinary shares are held by the EBT.

 

On 22 May 2014, 1,849,663 shares vested under the Company's Long-Term Incentive Plan of which 997,008 shares were issued from the Walker Greenbank PLC Employee Benefit Trust.

 

The market value of shares held by the EBT at 31 July 2015 was £nil (2014: £395,371). The total number of shares held in the EBT at 31 July 2015 represented 0% (2014: 0.3%) of the issued shares.

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

7. Analysis of net funds

 


1 February 2015

£000

Net

cash flow

£000

 

Current portion of term loan facilities

£000

Other

non-cash changes

£000

31 July 2015

£000

Cash at bank and in hand

971

(758)

-

-

213







Borrowings due within 1 year

(400)

200

(200)

-

(400)

Borrowings due after 1 year

(569)

-

200

(15)

(384)


(969)

200

-

(15)

(784)

Net funds/(debt)

2

(558)

-

(15)

(571)

 

The Group's current borrowing facilities will expire in January 2016 and the Group is currently finalising terms with Barclays Bank PLC for a new five-year facility to replace these. The proposed facility will be a committed revolving loan amounting to £12.5 million with a further £10 million available as an additional accordion, if required. The proposed loan will bear interest at variable interest rates based on a margin above LIBOR (London Interbank Offered Rate) and a commitment fee payable on the undrawn facilities. The Group will be subject to financial covenants under the proposed facility, being interest cover and leverage. No new additional security would be required, and the proposed facility will retain the existing security on the Group's freehold property which is currently in place. It is anticipated that the new facility will be finalised and become effective in November 2015.

 

 

8. Cash generated from operations

 



 

6 months to

31 July

2015

£000

 

6 months to

31 July

2014

£000

Audited

Year to 31

January

2015

£000

Profit before tax

2,894

2,301

6,329

Defined benefit pension charge

391

400

798

Finance costs

102

92

208

Depreciation

1,060

958

1,798

Amortisation

291

252

551

Gain on disposal of property, plant and equipment

-

-

(17)

Charge for long-term incentive plan recognised in equity

311

293

629

Long-term incentive plan vesting

(967)

(1,577)

(1,584)

Unrealised foreign exchange losses/(gains) included in operating profit

132

(23)

(271)

Defined benefit pension cash contributions

(840)

(776)

(1,665)


3,374

1,920

6,776

Changes in working capital




Decrease/(increase) in inventories

1,951

(652)

(2,298)

(Increase) in trade and other receivables

(2,293)

(1,486)

(1,524)

(Decrease)/increase in trade and other payables

(2,263)

(1,406)

514

Cash inflow/(outflow) generated from operations

769

(1,624)

3,468

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

9. Retirement benefit obligations

The Group operates the following funded pension schemes in the UK: the Walker Greenbank Pension Plan and the Abaris Holdings Limited Pension Scheme. The Walker Greenbank Pension Plan is the biggest scheme. All schemes contain defined benefits sections, which are closed to new members and the accrual of future benefits, however the Abaris Holdings Limited Pension Scheme also contains a defined contribution section, although this section is relatively small.

 

The pension costs relating to the UK defined benefit schemes are assessed in accordance with the advice of an independent qualified actuary using the projected unit method. These schemes are subject to triennial actuarial reviews with the most recent ones having been in April 2012. An updated funding valuation for IAS 19 financial reporting purposes was completed for the previous annual financial statements to 31 January 2015.

 

The assumptions applied for valuation of the defined benefit schemes are fully disclosed in the annual financial statements for the year ended 31 January 2015 and continue to be applied in the half year ended 31 July 2015. The net defined benefit pension charge recognised in the half year represents the relevant proportion of the annual amounts expected to be recognised for the year ending 31 January 2016, and are based on previous actuarial estimates. The net retirement benefit obligation recognised at 31 July 2015 is based on the actuarial valuation under IAS 19 at 31 January 2015 updated for movements in net defined benefit pension charge and contributions paid during the half year period which include additional payments to the pension scheme to reduce the deficit along with regular contributions to fund scheme expenses. The deferred tax effect of movements in the net retirement benefit obligation has also been recognised in the half year. A full triennial valuation for IAS 19 financial reporting purposes will be completed for the next annual financial statements for the year ending 31 January 2016, at which time any actuarial gains and losses arising throughout the year will be recognised, including those arising from a change in the underlying assumptions applied for valuation of the defined benefit schemes.

 

 

10. Dividends

The directors paid on 7 August 2015, a final dividend of 1.96 pence per share (2014: 1.57pence), a total of £1,179,000 (2014: £935,000) for the financial year ended 31 January 2015.

 

The directors have declared an interim dividend of 0.44 pence per share (2014: 0.35 pence), a total of £265,000
(2014: £209,000) for the financial year ending 31 January 2016, which will be payable on 13 November 2015 to shareholders on the register on 23 October 2015.

 


This information is provided by RNS
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