Information  X 
Enter a valid email address

Walker Greenbank (WGB)

  Print      Mail a friend       Annual reports

Tuesday 11 April, 2006

Walker Greenbank

Preliminary Results

Walker Greenbank PLC
11 April 2006


For immediate release                                              11 April 2006



                              WALKER GREENBANK PLC

                     ('Walker Greenbank' or 'the Company')



          Preliminary Results for the 12 months ended 31 January 2006



Walker Greenbank plc (AIM: WGB), the wallpaper, textiles and furnishings
business whose brands include Sanderson, Morris & Co, Harlequin and Zoffany, is
pleased to announce its preliminary results for the 12 month period ended 31
January 2006.



Highlights

  • Successful turnaround - pre-tax profit of £2.62 million (2005: loss
    £0.81m), marking the Company's first full year pre-tax profit since 2000



  • Operating profit of £5.02 million (2005: loss £2.69m) with underlying
    growth - pre-exceptional operating profit for continuing operations of £0.76
    million (2005: loss of £3.06m which included exceptional costs of £0.67m)



  • Cashflow positive - net cash inflow from operating activities of £1.64
    million (2005: outflow £4.06m)



  • Pension deficit reduced - FRS 17 pension liability of £7.98 million at 31
    January 2006 calculated after adoption of latest PA92 mortality tables
    (2005: £11.27m)



  • Brand portfolio performed strongly and all parts of the business traded
    profitably including UK fabric printing and wallpaper factories



  • Current financial year has started strongly - considerably ahead of last
    year and well ahead of internal projections





Ian Kirkham, the Chairman of Walker Greenbank, said: 'These excellent financial
results show that the restructuring of the Company is complete. The start of the
current financial year continues to see all parts of the Company trading
profitably and we are confident of continuing to develop the Company into an
exciting, cash generative and highly profitable business. Your Board views the
future with increasing confidence and looks forward to delivering substantial
shareholder value.'





A briefing for analysts  will be held at 10.00am today (11 April 2006) at the
offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.



For further information:


Walker Greenbank plc                                               01908 658078
Ian Kirkham, Chairman
John Sach, Chief Executive

Teather & Greenwood                                               020 7426 9000
Mark Dickenson
Robert Naylor

Buchanan Communications                                           020 7466 5000
Mark Court/Suzanne Brocks/Elly Williamson





CHAIRMAN'S STATEMENT





Overview



This has been a landmark year for Walker Greenbank and I am pleased to report
that the Group has returned a full-year operating profit for the first time
since the year 2000, following the considerable losses of the past 5 years. The
encouraging return to operating profit that I reported at the half-year stage
gathered momentum in the second half. This significant achievement underlines
the Board's strategy of re-establishing the Group as a profitable and cash
generative business with an exciting and sustainable future.



The business is now fully benefiting from the total integration of Sanderson
within the Group and the considerable investment in product that has taken place
in this brand over the past two years. Profits have been further enhanced by the
full year effect of the considerable cost savings that have been achieved
following the amalgamation of all the Group's brands under the control of one
management structure and the exit of low margin non-core business.



Manufacturing



All parts of the Group's business have traded profitably. After a difficult
start to the year, Standfast, our fabric printing factory, recovered strongly in
the second half and posted a full-year profit. Significant progress has also
been made at Anstey, our wallpaper factory, following the reorganisation and
cost reduction exercise that took place in the latter part of last year and the
refocus of the business at the premium end of the market. This, combined with
the return to popularity of wallpaper at the premium end of the market, has
returned Anstey to profitability for the first time in 6 years.



Brands



Our brands have all performed strongly. Harlequin, our mid-market brand, is
gaining real momentum through increasingly rapid sales growth, gains in market
share and more than a doubling of its profits during the year. Harlequin and
Sanderson are among the leading suppliers of home furnishings to the John Lewis
Partnership.  Sanderson has taken longer to reinvigorate than we anticipated at
the time of acquisition. However, following the substantial investment in
product of the past two years, significant profit growth has been achieved this
year. Following the appointment of a new design director, and the refocusing of
the Zoffany brand back to its core values, progress has been made in
re-establishing the business as a leading brand at the premium end of the
market.



Disposals



In line with the Group's strategy of disposing of non-core assets, the sale of
Borge Holding AS was successfully completed in June 2005.



Results



The operating profit for the year was £5,018,000 (2005: operating loss
£2,690,000).  Turnover was up 0.8% from continuing operations, after the impact
of the sale of the Sanderson retail activity and the exit from Anstey's low
margin Cirka business part way through last year. The operating profit from
continuing operations was £758,000 (2005: operating loss £3,062,000). The profit
on ordinary activities before tax was £2,625,000 (2005: loss £807,000). This was
after charging the profit and loss in the current year with an exceptional loss
on the sale of Borge Holding AS of £1,281,000 which included £1,908,000 for
goodwill previously written off to reserves and after crediting the profit and
loss with £4,076,000 from the successful outcome of the pension liability
reduction exercise. Last year's pre-tax loss of £807,000 included an exceptional
profit of £2,931,000 arising from sale of the Warner Archive and freehold
property in Milton Keynes.



The profit per share for the year was 4.51p (2005: loss per share 1.48p).



The other finance charge for the year was £174,000 (2005: £205,000) as a result
of the improved return on assets of the pension scheme.



Pensions



During the year the Group offered to buy out the right to non-statutory pension
increases from its active and deferred pensioners. This proposal proved to be
attractive to the members with a 70% acceptance rate. This has resulted in a
reduction in the FRS 17 liability in the balance sheet of £5,634,000 and a
benefit of £4,076,000 in the profit and loss, disclosed as an exceptional
operating item. Additionally the Board decided to take this opportunity to adopt
the most up to date mortality tables in the FRS 17 calculation which caused the
deficit to increase by £3,196,000. The Financial Review contains more details of
the changes to our FRS 17 pension deficit.



Since the year end additional acceptances have been received from the members of
the pension scheme that have reduced the pension deficit by a further £800,000.



Balance Sheet



The net assets of the Group have increased by £1,527,000. This has been
primarily driven by the reduction of the pension deficit following the
settlement of liabilities which improved the net assets of the Group by
£4,076,000, offset by the adoption of the most up to date mortality tables, with
an impact of £3,196,000. The Group also disposed of Borge Holdings AS during the
year for net proceeds of £1,498,000 and profit on sale of assets of £532,000.



The Group's net indebtedness reduced during the year by £1,389,000 to £9,357,000
(2005: £10,746,000).  Cash inflow from operating activities was £1,643,000
(2005: outflow £4,060,000) after payments to pensioners of £950,000 as part of
the settlement of liabilities. This cash inflow from operating activities was
principally driven from operating profit and  working capital inflows. The
proceeds of the sale of Borge Holdings AS reduced the total level of borrowings.



Dividend



The Directors do not recommend the payment of a dividend at this point in the
Group's recovery.



People



During the period Peter Harkness resigned as a Non-Executive Director after more
than four years' service. In July Alan Dix was appointed Group Finance Director
after spending seven months as Finance Director designate.



I would like to take this opportunity to thank all of our employees whose
energy, ability and commitment have helped to restore the Group's fortunes.



Outlook



The reorganisation of the Group and the integration of Sanderson are now fully
complete. Our factories have been restructured and are now both trading
profitably. The substantial investment in product and the creativity of our
design teams have helped our brands to gain market share and to grow at a
considerable pace.



We have gone a long way to addressing the structural issues on the balance
sheet. The pension reduction liability exercise has already reduced the deficit
by a significant amount. Our funding facility with Burdale Financial Ltd, part
of the Bank of Ireland, has greatly supported us in creating the headroom within
the business to invest strongly in our brands.



Our brands have gathered real momentum and are all at an exciting point in their
development. There are many opportunities for continuing to leverage our brand
portfolio through additional organic growth, expansion through investment in the
contract and commercial markets and further exposure to the large North American
market. The Group is also alert to the acquisition opportunities that can arise
in a large, fragmented market that is ripe for consolidation.



The start of the current financial year continues to see all parts of the
business trading profitably, considerably ahead of last year and well ahead of
our own internal projections. We are confident of continuing to develop the
Group into an exciting, cash generative and highly profitable business. Your
Board views the future with increasing confidence and looks forward to
delivering substantial shareholder value.









IAN KIRKHAM

CHAIRMAN

10 April 2006





Chief Executive's Review





The Brands



Harlequin

Harlequin has continued to strengthen its position as the leading mid-market
contemporary brand in the UK and has reinforced its position as one of the
leading home furnishings suppliers to the John Lewis Partnership. It continues
to expand its launches across a broad range of excellent products and take
market share from its competitors. This year has seen strong growth in its
wallpaper sales for the first time in a number of years as the fashion trend for
wallpaper at the premium end of the market feeds down into the mid-market.
Decadence, a wallpaper collection launched at the start of the year has become
the single best selling range within the brand's portfolio.  With its
increasingly strong product offering, Harlequin was re-launched in the US at the
start of the year in a limited number of targeted States. The growth in the US
is ahead of our expectations and on the back of this we will continue to further
expand in the US in the current year. Overall sales gathered real momentum in
the second half leading to year on year growth of 13%. Margins have improved and
costs have been tightly controlled leading to more than a doubling of profits
this year.



Zoffany

Zoffany overall has maintained its sales in line with last year. Sales in the UK
have reduced very slightly compared with last year whilst export sales have
continued to grow. Despite the flat sales, margins are slightly up and following
the amalgamation of its back office functions with Sanderson at a single site in
Denham, the business has benefited from the full year effect of considerable
cost savings which has helped profit improve significantly over last year. With
the appointment of a new design team at Zoffany in the second half of the year
to January 2005, the business has been put onto a sound footing to refocus the
brand back to its core values. The new collections for 2006 have been well
received but with most markets remaining tight, we see the current year as a
year of consolidation before Zoffany returns to any significant upward trend in
sales.



Arthur Sanderson & Sons incorporating the Morris & Co brand

This has been a very encouraging year for Sanderson. The considerable investment
that has taken place over the last 2 years has started to drive sales. The sales
growth seen in the first half aided by the launch in the early part of the year
of Options 9, Sanderson's flagship collection, has continued in the second half,
helping Sanderson to gain year on year sales growth of 10%. Sales in the UK led
the improvement in the year and export markets are now showing similar growth.
Licensing revenues have grown 16% driven by considerable growth from our bedding
licencee, a partnership that was established during the previous year, and
healthy growth from our established agreements in the Far East and Australasia.
This progress has been augmented by new licence arrangements with a furniture
and blind manufacturer. Margins have improved, so with the benefits of the
restructuring that took place at the end of last year and the merging of the
back office activities with Zoffany, a more than doubling of profits has been
achieved. The brand continues to gain momentum and we are confident that it will
deliver continued profit growth in the future.





Manufacturing



Anstey

Anstey has achieved the transformation into a profit making business after 6
years of significant losses. This has been the direct result of refocusing the
business to a producer at the mid to premium end of the market, significantly
improving factory efficiencies and further cost reductions. There has been a 4%
decline in headline revenues but this is due to the exiting of lower margin
business. Overall underlying sales for the year have remained static. However,
sales in the second half have increased by 7% as Anstey starts to benefit from
the considerable revival in trend for wallpaper at the upper end of the market.
This move in fashion is now starting to filter down into the mid-market as
demonstrated by Harlequin's recent wallpaper revival and this augurs well for
the continued revival of Anstey.



Standfast

Sales at Standfast have increased year on year by 4%. The difficult trading
conditions of the first quarter were not repeated during the remainder of the
year and the ground lost in that period was more than made up in the second
half. Margins have been broadly maintained despite significantly higher energy
costs. Overhead costs have been tightly controlled leading to an overall
improvement in profitability.



Overseas



USA

Sales have reduced 5% in local currency year on year, following the cessation of
low margin third party distribution business. As a consequence of this, margins
have risen and this, combined with the full year effect of the overhead
reduction following the amalgamation of the Sanderson and Zoffany businesses
last year, returned the business to profitability. Sales have benefited from the
re-launch of the Harlequin brand in a limited number of States. This re-launch
has performed ahead of our expectations and will be further extended in the
coming year.

The withdrawal from a third party distribution arrangement with a furniture
manufacturer has allowed us to amalgamate our Zoffany and Sanderson showrooms
into a single prestigious 6,000ft showroom promoting all our brands within the D
&D building in Manhattan, New York. This combined with continued investment in
the American market will present the business with considerable growth
opportunities in the future.



Europe

Borge Holding AS in Norway was sold during the year generating a profit on sale
of £532,000 and a release of the FRS17 pension provision of £95,000. Goodwill
previously written off to reserves of £1,908,000 was charged through the profit
& loss account. Borge Holding AS had contributed £184,000 operating profit
during the year.



Our distribution businesses for Zoffany in Rome and Sanderson in Paris broadly
broke even in line with expectations, although they do not represent a large
part of the Group.





Summary



The restructuring of the Group and successful turnaround of a loss making
business is now complete. This has helped to deliver a better quality of
earnings on a stable turnover together with significant cost reductions leading
to a corporate profit for the first time in 5 years.

All parts of the Group are now trading profitably and there are considerable
growth opportunities for the Group to exploit in the future.









JOHN SACH

GROUP CHIEF EXECTUVE

10 April 2006



Financial Review





Profit and Loss



The profit and loss account has been set out in a columnar format this year.
This presentation has been adopted in order to reflect more clearly the
successful impact of the pension deficit reduction exercise and disposal during
the year of Borge Holdings AS. More importantly this disclosure clearly
demonstrates the improvement in the profitability of the continuing business
over last year. Full details of the pension deficit reduction and Borge Holdings
AS disposal are disclosed in note 3 and note 4 respectively.



Disposals



During the year the Group sold the non-core business of Borge Holding AS and its
subsidiary John O Borge AS. There was a profit on disposal after related costs
of £532,000. Under FRS 17 the Group accounts showed a pension liability
associated with the John O Borge business, although under Norwegian accounting
rules there was a small pension surplus. As a consequence of the sale this
liability, £95,000 is no longer required and has been released. Goodwill
previously written off to reserves was expensed in the profit and loss as
required by FRS 10. The goodwill was directly credited back to reserves as seen
in the Reconciliation of Movements in Shareholder's Funds.





Operating Cash Flow



There has been a cash inflow from operating activities during the period of
£1,643,000 due to the operating profit, the depreciation charge during the
period continuing to be greater than required capital expenditure and a
reduction in working capital.



Net cash receipts from the sale of Borge Holding AS and its subsidiary John O
Borge AS of £1,498,000 have helped to reduce the Group's borrowings.



The Group made payments to the Pension schemes of £799,000 to reduce the deficit
and this is part of the ongoing planned reduction. There were also payments made
to the majority of active and deferred pensioners of £950,000 as these
pensioners accepted an offer from the Group to buy out the right to non
statutory pension increases. At the year end there were liabilities of £608,000
associated with the pension reduction exercise. These covered the tax that had
been held on payments made to pensioners during the year awaiting tax clearance,
and acceptances received in January 2006 and paid in February together with
associated fees. Since the year end tax clearance has been received and payments
made of tax withheld.



As a consequence net debt in the Group has reduced by £1,389,000 to £9,357,000
(2005: £10,746,000).



Pension Deficit



The pension deficit has reduced significantly this year. The major factor was
the reduction arising from the settlement of liabilities of £5,634,000.
Contributions from the company further reduced the liability by £799,000. The
Group has adopted the PA92 mortality tables when computing the FRS 17 liability
and this has lead to an increase in the deficit of £3,196,000.



                                                     2006
                                                     £000
Deficit at beginning of period                   (11,269)
Current Service Cost                                (167)
Other Finance Cost                                  (174)
Contributions                                         799
Reduction of deficit following settlement of        5,634
liabilities                                              
Release due to sale of subsidiary                      95
Impact of PA 92 mortality tables                  (3,196)
Actuarial loss                                        297
Deficit at end of period                          (7,981)



Gearing



The gearing level for the Group remained similar to last year being 56.4% at
January 2006 compared to 58.4% at January 2005, after adjusting for the pension
liability. The Group's balance sheet remains underpinned by freehold properties
valued at £5 million.





Funding



The Group utilises a facility provided by Burdale Financial Ltd part of the Bank
of Ireland. It is a 3 year facility which commenced on 23 July 2004 with a limit
of £18.5m. A significant element of the facility is linked to working capital
levels which allows the Group to manage its cash more effectively during the
seasonal fluctuations in working capital associated with the industry in which
the Group operates.



All of the bank's facilities remain secured by first fixed and floating charges
over the Group's assets.





Interest



The Group has continued to maintain its debt in floating rate instruments in
order to benefit from the lower rates available. This policy remains constantly
under review to ensure interest rate risk is minimised.





Taxation



The Group tax charge continues to reflect the amounts borne in foreign
territories. This is constantly under review to ensure every opportunity is
considered to minimise the amount incurred. In the UK, the Group has substantial
brought forward tax trading losses and as a consequence, does not anticipate
paying UK corporation tax in the foreseeable future. It will be the Group's
intention to reflect a deferred tax asset in the future as the Group
demonstrates its continuing improving profitability.





Treasury Policy



The Group's treasury policy is controlled centrally in accordance with
procedures approved by the Board. It is run prudently as a central Group
function, providing services to the other Group companies and adopts a risk
adverse strategy.



The main risks covered by this policy are interest rate risk, foreign currency
risk and liquidity risk.





Interest rate risk



During the year, the Group has reduced its fixed rate finance lease borrowings
from £251,000 to nil, thereby eliminating the proportion of fixed rate
borrowings used by the Group. All other borrowings are on a floating rate. The
viability of hedging instruments that would limit the impact of interest rate
movements will continue to be reviewed based on the Board's perception of future
rate increases.





Foreign Currency Risk



All foreign currencies are bought and sold centrally on behalf of the Group.
Regular reviews take place of the foreign currency cash flows and any unmatched
exposures are covered by forward contracts wherever economically practical.



The Group does not trade in financial instruments and hedges are only used for
known cash flows. This has resulted in there being no significant gains and
losses.





Liquidity Risk



The Group ensures that it has adequate facilities available to cover both its
short term and medium term commitments.



Going Concern



The Directors are confident, after having made appropriate enquiries, that the
Group and Company have adequate resources to continue in the foreseeable future.
For this reason, they continue to adopt the going concern basis in preparing the
accounts.





Restatement



In prior year, the Group had charged amortisation of issue costs of finance of
£32,000 against operating profit. In the year, this has been reclassified to net
interest payable requiring restatement of the prior year comparatives.



IFRS



The Group will adopt IFRS for the year ending 31 January 2008, and its first
reporting under the new accounting rules will be for the interim period ending
31 July 2007. The Board commenced a project during the year to ensure the
successful implementation of IFRS accounting rules for the year ending 31
January 2008.







ALAN DIX

GROUP FINANCE DIRECTOR

10 April 2006



Group Profit and Loss Account
Year ended 31 January 2006

 

 
                                            Before                               
                                       Exceptional Exceptional   Total       2005                              
                                             items       items    2006 (restated)                        
                                  Note        £000        £000    £000       £000                                   
                                                                                 
                                                                                 
Turnover                                                                         
Continuing operations              1,2      46,361           -  46,361     46,013
Discontinued operations            1,2       2,031           -   2,031      4,598
                                            48,392           -  48,392     50,611
Operating profit/(loss)                                                          
Continuing operations                2         758       4,076   4,834    (3,062)
Discontinued operations              2         184           -     184        372
                                               942       4,076   5,018    (2,690)
Profit on sale of subsidiary         3           -         532     532          -
Pension provision (FRS17) release                -          95      95          -
on sale of subsidiary                                                            
Goodwill previously written off                  -     (1,908) (1,908)          -
to reserves                                                                      
Net loss on sale of subsidiary                   -     (1,281) (1,281)          -
Profit on sale of properties         4           -           -       -      1,461
Profit on sale of Warner Archive     5           -           -       -      1,470
Profit on ordinary activities                  942       2,795   3,737        241
before interest                                                                  
Net interest payable                                                             
Interest payable                                                 (872)      (811)
Amortisation of issue costs                                       (66)       (32)
                                                                 (938)      (843)
Other finance charge                                             (174)      (205)
Profit/(Loss)on ordinary             1                           2,625      (807)
activities before taxation                                                       
Tax on profit/(loss) on ordinary                                  (80)       (27)
activities                                                                       
Profit/(loss) on ordinary                                        2,545      (834)
activities after taxation                                                        
Dividends                                                            -          -
Profit/(loss) for the year                                       2,545      (834)
Profit/(loss) per share - Basic      6                           4.51p    (1.48)p
and diluted                                                                      
Profit/(loss) per share - Basic      6                           6.46p    (1.77)p
and diluted from continuing                                                      
operations                                                                       
Dividend per ordinary share                                          -          -

 

 

There is no material difference between the loss on ordinary activities above
and their historical cost equivalent.

 

Balance Sheet
At 31 January 2006

 
                                                 Group    Group Company Company 
                                                  2006     2005    2006    2005 
                                         Note     £000     £000    £000    £000 
                                                                                
                                                                                
Fixed assets                                                                    
Intangible assets                                4,859    4,898       -       - 
Tangible assets                                 10,205   11,376   4,595   4,692 
Investment in subsidiaries                           -        -  33,250  19,000 
                                                15,064   16,274  37,845  23,692 
Current assets                                                                  
Stocks                                          11,539   12,879       -       - 
Debtors                                          9,137   11,346  15,823  30,655 
Cash at bank and in hand                         1,530    1,149      77       - 
                                                22,206   25,374  15,900  30,655 
Creditors: amounts falling due within         (10,403) (11,657) (9,440) (7,886) 
one year                                                                        
Net current assets                              11,803   13,717   6,460  22,769 
Total assets less current liabilities           26,867   29,991  44,305  46,461 
Creditors: amounts falling due after          (10,289) (11,310) (1,225) (1,500) 
more than one year                                                              
Provisions for liabilities and charges               -    (342)       -    (44) 
Net assets excluding pension liability          16,578   18,339  43,080  44,917 
Pension liability                          10  (7,981) (11,269)       -       - 
Net assets                                       8,597    7,070  43,080  44,917 
Capital and reserves                                                            
Share capital                                      590      590     590     590 
Share premium account                              457      457     457     457 
Profit and loss account                       (32,957) (34,484)     145   1,982 
Other reserves                                  40,507   40,507  41,888  41,888 
Equity shareholders' funds                       8,597    7,070  43,080  44,917 

 

 

Group Cash Flow Statement
Year ended 31 January 2006

 

 
                                        Note    2006    2006    2005    2005    
                                                £000    £000    £000    £000    
                                                                                
                                                                                
                                                               
   Net cash inflow/(outflow) from          7           1,643         (4,060)    
   operating activities                                                         
   Returns on investment and                                                    
   servicing of finance                                                         
   Interest received                              12               4            
   Interest paid                               (878)           (772)            
   Interest element of finance lease               -            (43)            
   payments                                                                     
                                                       (866)           (811)    
   Taxation                                            (184)           (278)    
   Capital expenditure                                                          
   Purchase of tangible fixed assets           (710)         (1,187)            
   Proceeds from assets held for                   -             325            
   resale                                                                       
   Proceeds from disposal of                       -           4,564            
   property                                                                     
                                                       (710)           3,702    
   Acquisitions and disposals                                                   
   Net proceeds from disposal of               1,498               -            
   subsidiary                                                                   
   Disposal of Warner Archive                      -           1,672            
   Sale of Sanderson retail division               -             675            
                                                       1,498           2,347    
   Equity dividends paid                                   -               -    
   Cash inflow before use of liquid                    1,381             900    
   resources and financing                                                      
   Management of liquid resources                          -               -    
   Financing                                                                    
   Proceeds from new loans                       655          11,744            
   Principal repayments of finance lease       (251)           (463)            
   obligations                                                                  
   Repayment of borrowings                   (1,414)         (4,487)            
                                                     (1,010)           6,794    
   Increase in cash                      8,9             371           7,694    

 

 

 

Statement of Total Recognised Gains and Losses
Year ended 31 January 2006

 
                                                              Group     Group   
                                                               2006      2005   
                                                               £000      £000   
                                                                                
                                                                                
  Profit/(Loss) for the financial year                        2,545     (834)   
  Actual less expected return on pension scheme assets        3,817       822   
  Experience gains and losses arising on pension scheme         425     (531)   
  liabilities                                                                   
  Change in actuarial assumptions                           (7,141)   (1,401)   
  Currency translation differences                             (27)       132   
                                                                                
                                                                                
  Total recognised gains and losses since the last annual     (381)   (1,812)   
  report                                                                        

 

 

 

Reconciliation of Movements in Shareholders' Funds
Year ended 31 January 2006

 
                                                             Group     Group    
                                                              2006      2005    
                                                              £000      £000    
                                                                                
                                                                                
   Profit/(loss) for the financial year                      2,545     (834)    
   Dividends                                                     -         -    
   Profit /(loss) for the year                               2,545     (834)    
                                                                                
                                                                                
   Other recognised gains and losses relating to the       (2,926)     (978)    
   year                                                                         
   Goodwill previously set off to reserves in respect of     1,908       202    
   the disposal of operations                                                   
                                                                                
                                                                                
   Net increase/(reduction) to shareholders' funds           1,527   (1,610)    
   Opening shareholders' funds                               7,070     8,680    
   Closing shareholders' funds                               8,597     7,070    

 

Notes to the Accounts

 

1         Segmental Analysis

 

(a) Classes of business
                                                           Turnover                   
                                                          2006       2005       
                                                          £000       £000       
                                                               (restated)       
      Continuing operations:                                                    
      Fabrics                                           30,062     29,969       
      Wallcoverings                                     12,415     12,492       
      Other                                              3,884      3,552       
                                                        46,361     46,013       
                                                                                
      Discontinued operations:                                                  
      Fabrics                                              511      1,157       
      Wallcoverings                                      1,520      3,441       
                                                         2,031      4,598       
                                                                                
      Group                                             48,392     50,611       

 

The other category includes furniture, paint and trimmings.

(b) Geographical Segments

                          Turnover      Profit/(loss)       Net assets    
                                      before taxation                   
                         2006    2006    2006     2005    2006      2005
                         £000    £000    £000     £000    £000      £000
By origin on                                                            
continuing:                                                             
United Kingdom         38,902  38,498   2,377    (993)   9,414     6,045
Continental Europe      1,198   1,016    (86)     (29) (1,003)     (920)
North America           6,261   6,499     154     (24)     186        89
                       46,361  46,013   2,445  (1,046)   8,597     5,214
By origin on                                                            
discontinued                                                            
operations:                                                             
Continental Europe      2,031   4,598     180      239       -     1,856
                                                                        
By origin Group        48,392  50,611   2,625    (807)   8,597     7,070
operations:                                                             
                                                                        
                                                                        
By destination on                                                       
continuing                                                              
operations:                                                             
United Kingdom         29,476  30,887                                   
Continental Europe      6,145   5,587                                   
North America           7,937   8,024                                   
Rest of the World       2,803   1,515                                   
                                                                        
                       46,361  46,013                                   
                                                                        
By destination on                                                       
discontinued                                                            
operations:                                                             
Continental Europe      2,031   4,598                                   
                                                                        
By destination Group   48,392  50,611                                   
operations:                                                             

 

 

2         Analysis of Operating Profit/(loss)

 
                     2006         2006     2006       2005         2005     2005
               Continuing Discontinued    Total Continuing Discontinued    Total
                     £000         £000     £000       £000         £000     £000
                                                                                
                                                                                
Turnover           46,361        2,031   48,392     46,013        4,598   50,611
Cost of sales    (20,562)        (957) (21,519)   (21,711)      (2,258) (23,969)
Gross Profit       25,799        1,074   26,873     24,302        2,340   26,642
                                                                                
                                                                                
Net operating                                                                   
expenses:                                                                       
Distribution     (11,650)        (305) (11,955)   (11,465)        (601) (12,066)
costs                                                                           
Administrative   (14,489)        (583) (15,072)   (16,878)      (1,372) (18,250)
expenses                                                                        
Other               1,098          (2)    1,096        979            5      984
operating                                                                       
income                                                                          
Operating             758          184      942    (3,062)          372  (2,690)
profit/(loss)                                                                   
before                                                                          
exceptionals                                                                    
Reduction of        4,076            -    4,076          -            -        -
pension                                                                         
deficit                                                                         
following                                                                       
settlement of                                                                   
liabilities                                                                     
Operating           4,834          184    5,018    (3,062)          372  (2,690)
profit/(loss)                                                                   



The comparative analysis of administration and distribution has been restated to
better reflect the costs of the business.

 

Exceptional Items

During the year the Group bought out the right to non statutory pension
increases from its active and deferred pensioners. This has resulted in a
reduction of the FRS 17 liability in the balance sheet of £5,634,000 and a
benefit of £4,076,000 in the profit and loss account.

 

The operating loss in the year ended January 2005 included £670,000 of items of
a one-off non recurring nature relating to the integration of the Sanderson
business within the Group. This comprised £191,000 redundancy costs incurred in
combining the Zoffany and Sanderson US operations, £295,000 redundancy costs
relating to the combining of the Sanderson and Zoffany UK divisions onto one
site, £127,000 removal costs and costs of terminating a property lease at the
Zoffany UK site, and £57,000 of cost incurred in transferring Sanderson stock to
the Group's warehouse at Tilbrook.

 

 

3      Loss on the sale of Borge Holdings AS and John O Borge AS

 

In June 2005, the wholly owned Norwegian subsidiaries Borge Holding AS and John
O Borge AS were sold for a consideration before costs of £1,881,000. A profit of
£532,000 was generated on the sale before goodwill previously written off to
reserves and the adjustment to FRS 17 provision. Goodwill previously written off
to reserves of £1,908,000 was charged through the profit and loss account. A net
loss on sale of £1,281,000 has been recorded. Net proceeds of £1,498,000 were
received as detailed in the table below:
                                                                 2006
                                                                 £000
Sale of Borge Holdings AS and John O Borge AS                        
The disposal compromised the following:                              
Tangible fixed assets                                              60
Stock                                                             681
Debtors                                                           745
Creditors                                                       (520)
Profit on disposal                                                532
                                                                     
Net cash inflow from the disposal of Borge Holdings AS and      1,498
John O Borge AS                                                      

 

 

4      Profit on Sale of Properties

 

In February 2004, the land and buildings at Bradbourne Drive, Tilbrook, Milton
Keynes, were sold under a sale and leaseback agreement. A consideration before
costs of £4,670,000 was received, and a profit of £1,461,000 was generated on
the sale. The tax effect of the disposal was nil.

 

 

5         Profit on sale of Warner Archive

 
                                                            2006      2005      
                                                            £000      £000      
                                                                                
                                                                                
     Profit on sale of Warner Archive                          -     1,470      
                                                                                
                                                                                

 

In May 2004, the Warner Archive of designs was sold for a consideration before
costs of £2,000,000, generating a profit on disposal of £1,470,000.

 

 

6         Profit Per Share

 

Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of shares outstanding
during the year, excluding those held in the employee share trust, which are
treated as cancelled.

 
                                  2006     2006   2006     2005     2005   2005
                              Earnings Weighted    Per Earnings Weighted    Per
                                  £000  average  share     £000  average  share
                                         number Amount            number Amount      
                                             of  pence                of  pence                              
                                         shares                   shares  
                                        (000's)                  (000's)       

Basic & Diluted EPS:                                                           
Earnings attributable to         2,545   56,457   4.51    (834)   56,457 (1.48)
ordinary shareholders                                                          
                                                                               
Earnings per share from continuing                                             
operations:                                                                    
Basic & Diluted EPS              2,545   56,457   4.51    (834)   56,457 (1.48)
Loss on sale of subsidiary       1,281        -   2.27        -        -      -
Pre tax profit from              (180)        - (0.32)    (239)        - (0.42)
discontinued operation                                                         
Tax relating to discontinued         -        -      -       75        -   0.13
operations                                                                     
Basic and diluted EPS from       3,646   56,457   6.46    (998)   56,457 (1.77)
continuing operations                                                          
                                                                               
Earnings per share from discontinued                                           
operations:                                                                    
Basic & diluted EPS                                                            
Loss on sale of subsidiary     (1,281)   56,457 (2.27)        -   56,457      -
Pre tax profit from                180        -   0.32      239        -   0.42
discontinued operation                                                         
Tax relating to discontinued         -        -      -     (75)        - (0.13)
subsidiary                                                                     
                                                                               
Basic and diluted EPS from     (1,101)   56,457 (1.95)      164   56,457   0.29
discontinued operations                                                        

 

 

7         Reconciliation of Operating Profit/(loss) to Net Cash Inflow/(outflow)
from Operating Activities

 
                                             2006    2006    2005    2005
                                             £000    £000    £000    £000
                                                                         
                                                                         
Continuing operations:                                                   
Operating profit/(loss)                             4,834         (3,094)
Depreciation and amortisation               1,894           2,302        
Difference between pension charge and     (5,316)           (814)        
cash contributions                                                       
Settlement of pension liabilities           (950)               -        
Proceeds on disposal of fixed assets            3               -        
Decrease/(increase) in stocks                 525         (1,316)        
Decrease/(increase) in debtors              1,624            (21)        
Decrease in creditors                       (642)           (884)        
(Decrease)/increase in provisions           (323)             123        
Fair value adjustment                           -           (851)        
                                                  (3,185)         (1,461)
Net cash inflow/(outflow) from continuing           1,649         (4,555)
operating activities                                                     

 

 

 
                                             2006    2006    2005    2005
                                             £000    £000    £000    £000
                                                                         
                                                                         
Discontinued operations:                                                 
Operating profit                                      184             372
Depreciation and amortisation                   9              66        
Decrease in stocks                            134              15        
(Increase)/decrease in debtors              (125)             169        
Decrease in creditors                       (208)           (127)        
                                                    (190)             123
Net cash (outflow)/inflow from operating              (6)             495
activities                                                               
                                                                         
Total net cash inflow/(outflow) from                1,643         (4,060)
operating activities                                                     

 

Last year comparatives have not been restated for the impact of FRS 4. The
operating loss in the profit and loss account is after the FRS 4
reclassification of £32,000.

 

8         Analysis of Net Debt

 
                          1 February     Cash      Other   Exchange       31           
                                2005     flow  movements   movement  January      
                                                                        2006         
                                £000     £000       £000      £000      £000       
                                                                                
   Cash at bank and in         1,149      373          -         8     1,530    
   hand                                                                         
   Overdrafts                      -      (2)          -         -       (2)    
                               1,149      371          -         8     1,528    
   Debt due within one         (400)    (196)          -         -     (596)    
   year                                                                         
   Debt due after one       (11,244)      856         99         -  (10,289)    
   year                                                                         
   Finance leases              (251)      251          -         -         -    
                            (11,895)      911         99            (10,885)    
                            (10,746)    1,282         99         8   (9,357)    

 

 

9         Reconciliation of Net Cash Flow to Movement in Net Debt

 
                                                        2006        2005
                                                        £000        £000
                                                                        
                                                                        
Increase in cash in the year                             371       7,694
Decrease/(increase) in debt and lease financing          911     (6,794)
Cash inflow from cash flows                            1,282         900
Other movements                                           99           -
Exchange movement                                          8        (13)
Movement in the year                                   1,389         887
Net debt at 1 February 2005                         (10,746)    (11,633)
Net debt at 31 January 2006                          (9,357)    (10,746)

 

 

10      Pensions

 

Movement in deficit during the period

 
                                                        2006        2005
                                                       Group       Group
                                                        £000        £000
                                                                        
                                                                        
Deficit at beginning of period                      (11,269)    (10,768)
Movement in the period:                                                 
Current service cost                                   (167)       (226)
Contributions                                            799       1,040
Reduction of pension deficit following                 5,634           -
settlement of liabilities                                               
Release due to sale of subsidiary                         95           -
Other finance charge                                   (174)       (205)
Adoption of PA92 mortality tables                    (3,196)           -
Actuarial gain/(loss)                                    297     (1,110)
Deficit at end of period                             (7,981)    (11,269)





                      This information is provided by RNS
            The company news service from the London Stock Exchange