Interim Results

RNS Number : 6621N

Walker Greenbank PLC

02 October 2012

 



For immediate release

2 October 2012

WALKER GREENBANK PLC

("Walker Greenbank" or "the Group")

Interim Results for the 6 months ended 31 July 2012

Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings group whose brands include Sanderson, Morris & Co., Harlequin, Zoffany and Scion, is pleased to announce its interim results for the six month period ended 31 July 2012.

Highlights

·      Sales up 2.4% to £38.3 million (2011: £37.4 million), with strong growth in the US, the Far East and Eastern Europe.

·      Adjusted profit before tax* up 11.0% at £2.70 million (2011: £2.43 million).

·      Unadjusted profit before tax of £1.94 million (2011: £2.03 million).

·      Licensing income up 19% at £0.80 million (2011: £0.68 million), with strong growth in Japan.

·      Launch of Scion, a new contemporary brand, and launch of Sanderson Home, a competitively priced offshoot of the Sanderson brand.

·      Adjusted earnings per share* up 14.8% at 3.80p (2011: 3.31p).

·      Interim dividend up 15% to 0.23p per share (2011: 0.20p per share)

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

Terry Stannard, the Chairman of Walker Greenbank, said: "We are pleased with our underlying performance in the first half and have increased the interim dividend by 15%.

"We enter the key autumn selling period with some excellent products, including those from our recently launched Scion and Sanderson Home offerings and also those from new product categories such as Harlequin trimmings. We remain confident of achieving market expectations for the full year."

For further information:

Walker Greenbank PLC	[phone]
John Sach, Chief Executive
Caroline Geary, Company Secretary
Seymour Pierce	[phone]
Mark Percy / Catherine Leftley - Nominated Adviser
Katie Ratner - Corporate Broking
Buchanan	[phone]
Mark Court / Fiona Henson / Sophie Cowles

CHAIRMAN'S STATEMENT

Overview

I am pleased to report that the half year to 31 July 2012 represents another period of progress during which we continued to focus on extending our product offering and our manufacturing capability and on building sales in the UK and internationally.

During the half year, we saw the first significant growth since 2008 in the US, where brand sales were up 21.5% in reportable currency and up 18% at constant currency. We have always viewed the US as an area of significant potential for growing market share and we are therefore encouraged by the first half performance, which also reflects a wider upturn in the interior furnishings industry in the US.

The UK, our largest market, performed well during the half year with brand sales up 5.6%. It was pleasing that 40% of our brand sales are now overseas with highlights in the half year including the Far East, with brand sales up 13%, and Eastern Europe, up 9%. With difficult market conditions in the Eurozone countries of Western Europe, sales in the region declined 11.6%, or 6% in constant currency.

We made significant progress in extending our product offering in the half year. In February we launched Scion, a completely new interiors brand aimed at younger customers, and in July we launched Sanderson Home, a competitively priced brand offshoot. Initial sales from both Scion and Sanderson Home have been very encouraging.

We have also continued to extend our product offering through licensing arrangements and through working with leading designers. I am pleased to report that licence income in the half year is up 19%. We recently announced a Harlequin wallpaper collection with Orla Kiely, the internationally acclaimed designer, which has been well received by the design community.

Our UK manufacturing base is a key asset that differentiates us from our industry peers and allows us to be at the forefront of innovation in printing techniques. We have continued to invest in our factories, which have performed well in the first half year.

Financials

Sales in the half year increased 2.4% to £38.3 million, from £37.4 million. Operating profits before an accounting charge relating to the Long Term Incentive Plan (LTIP) have risen 8.7% from £2.57 million to £2.79 million. The profit from operations was up 1.3% at £2.38 million (2011: £2.35 million).

The interest charge has reduced from £137,000 to £93,000 due to lower average borrowings. The defined benefit pension charge has risen from £175,000 to £350,000 as a consequence of a reduction in the expected return on scheme assets.

Profit before tax before the LTIP accounting charge and the increased defined benefit charge was £2.70 million (2011: £2.43 million). Profit before tax after the two charges was £1.94 million (2011: £2.04 million).

The profit after tax was £1.42 million (2011: £1.47 million) and adjusted earnings per share were up 14.8% at 3.80p (2011: 3.31p), after removing the LTIP accounting charge and defined benefit charge.

The Group's net indebtedness at the half year was £2.72 million, a reduction of £2.04 million over the 12 month period (2011: £4.76 million).

Dividend

The Company's financial profile has been transformed in the past few years and we are now able to invest in the business at the same time as delivering a progressive dividend policy. We are announcing an increase of 15% in the interim dividend to 0.23p per share (2011: 0.20p per share). The dividend will be payable on 23 November 2012 to shareholders on the register on 26 October 2012.

People

On behalf of the Board I would like to thank all our employees for their continuing enthusiasm, commitment and support.

Outlook

Brand sales in the current half were subdued in August but grew 2.4% in September compared with the prior year. Our manufacturing sites continued to perform well throughout. We enter the key autumn selling period with some excellent products, including those from our recently launched Scion and Sanderson Home offerings and also those from new product categories such as Harlequin trimmings. We remain confident of achieving market expectations for the full year.

Terry Stannard

Non-Executive Chairman

1 October 2012

CHIEF EXECUTIVE'S REVIEW

Introduction

It is pleasing to report continued progress in the trading performance with sales and operating profits both increasing over the same period last year. We have continued to invest strongly in the brands' product range and in stretching their market positions through the launch of new sub-brands and product categories, along with sustained investment in innovative manufacturing capabilities.

All four of our existing brands, Sanderson, Morris & Co, Harlequin and Zoffany, have grown sales over the same period last year and the new Scion brand launched in February is performing ahead of our internal projections.

Manufacturing continues to perform well as sustained investment in manufacturing capability helps win new customers and grow sales and profits over the same period last year.

The Brands

The Brands segment incorporates global trading from our internationally recognised brands including our overseas subsidiaries in the US and France.

The brands have grown sales by 4.5% over the same period last year to £29.6 million. Our largest market, the UK, increased by 5.6% with the launch of the new brand Scion contributing well. The US market has seen significant growth for the first time since 2008 with sales growing 21.5%, or 18% in constant currency. Western Europe has seen sales decline by 11.6%, or 6% in constant currency; the decline has affected all major economies in the region with the specific markets of France, Italy, and Spain the worst affected. Sales have also declined 50% in the Middle East down to £0.40 million, primarily due to two substantial contracts in the first half of last year not being repeated. Elsewhere substantial growth has been achieved with sales up 9.2% in Eastern Europe to £1.2 million, Far East up 13.4% to £1.4 million, South America up 176% to £0.24 million and Australasia up 10.8% to £0.41 million.

Our licence income has grown 19% to £804,000 as we continue to stretch into more interior lifestyle categories.

The brands' operating profits have increased by 5.3% to £2.54 million.

Harlequin & Scion

Harlequin has grown its worldwide sales 6.5% to £12.6 million over the same period last year. It continues to be the UK's leading mid-market brand, achieving further growth of 3.3% in the UK. Substantial sales increases in the USA of 51% have helped Harlequin to be the Group's number one brand in that market. A poor performance in Western Europe has been more than compensated by strong growth in other international markets, particularly the Far East up 31% and South America up 140%.

There has been significant investment in Scion, the newly launched contemporary brand, and sales in the first six months have exceeded internal projections. Scion is an affordable contemporary brand aimed at aspirational and fashion aware customers in an adjacent market segment to that of Harlequin.

Harlequin licensing income increased by 72% to £146,000, helped by recently signed licence arrangements for rugs with Brink & Campman and for lighting with Elstead Lighting together with strong performances from bedding licensees in the UK and Australia.

Sanderson, incorporating the Morris & Co brand

Overall sales of £10.1 million are up 2.0% over the same period last year. The UK and the USA have been the drivers of growth, with increases of 6.1% and 14.1% respectively. Sanderson has a more established distribution network in Western Europe and has seen sales decline by 15% in this region with its top four markets of France, Italy, Spain and Southern Ireland worst affected. Eastern Europe has continued to advance with sales growth of 15%.

In July Sanderson Home was launched as an exciting brand offshoot combining keen pricing with aspirational English design, stretching the Sanderson brand into a new area of the market place.

Sanderson, which is widely acknowledged as the world's most recognised interior decoration brand, maintains its historically unique design archive in the UK. Licence income has continued to grow up 13.5% in the first half. Income from Japan has grown significantly as Sanderson and Morris & Co designs are used on a growing range of product categories following the interest generated from the recent 150^th anniversary celebrations for both brands.

In the half year, Sanderson announced a collaboration with the international ceramics company Portmeirion which includes two collections, an eye-catching tea-time collection based on 1950s artwork and a classic dinner service inspired by Sanderson fabrics from the 18th and 19th centuries. Sanderson also announced a new range of stationery, bags and tinware by Blueprint Collections, a private company specialising in high-quality accessories.

Zoffany

Zoffany is positioned at the upper end of the premium market. Zoffany's two biggest markets, the UK and USA, have grown 12.9% and 8.2% respectively. Difficult market conditions in Western European markets have seen sales decline there by 6%. Two large contracts in the first half of last year in the Middle East have not been repeated leading to a substantial reduction in revenues. Elsewhere the brand has grown 7% in Eastern Europe and 14% in the Far East, resulting in overall growth of 2.6% to £5.7 million.

Manufacturing

Manufacturing has continued to perform well with overall revenues up 2.7% over what was a particularly strong performance in the same period last year, leading to an increase in profits of 3.7% to £1.36 million. Interest in wallpaper and the increasing range of printing techniques has helped Anstey, our wallpaper printing factory, grow its sales significantly. Whilst Standfast, our fabric printing factory, has seen overall activity reduce compared with the same period last year, its digital printing activities have, encouragingly, seen substantial growth.

Anstey

Sales at Anstey increased 17.4% to £8.0 million with external sales up 15.5%. Sales in the UK and overseas increased 10.8% and 41.8% respectively. Sales to our own brands increased 19.8% partly due to the timing of new collection launches.

Anstey's continued investment in new printing techniques has helped win new customers and create new innovative product. Its investment in its first digital printer helped create Zoffany's Melissa White wallpaper collection launched in February. The scatter machine purchased last year has been utilised to help create Harlequin's Momentum II wallpaper collection to be launched in the autumn this year.
Anstey will continue to invest in innovation to ensure it remains the lead supplier to the industry.

Standfast

Sales at Standfast were 9.6% lower than the same period last year with sales from third party customers declining 18.0%. This was predominantly a result of third party customer caution and destocking in the first quarter. The second quarter saw a significant improvement. Sales from our own brands increased 6.3%.

Standfast's commitment to investment in digital printing over the last five years has resulted in digital sales increasing significantly by 65% in the first half. Standfast now has four fully utilised slow run digital printers. The growing demand for digitally printed product has encouraged the Group to commit to a fast run digital printer which will be commissioned in the second half of the year. This will significantly expand the printing capability for its customers.

Eliminations and unallocated

The cost of the Long Term Incentive Plan for Executive Directors and senior managers is included in this segment. As the share price has risen 44% in the first half the accounting charge associated with the LTIP has risen to £413,000 compared with £221,000 in the first half of last year.

Summary

We remain committed to extending the reach and range of our brands and despite demanding conditions in the Eurozone we are encouraged that our investment in product design, marketing and customer service has helped increase the proportion of international brand sales to 40%. We continue to stretch the brands into new market segments through the development of the new Scion brand and the Sanderson brand offshoot, Sanderson Home.

The development and widening of our licence products has helped further stretch our brands into new product categories. Our commitment to investment in our manufacturing capability will keep Anstey and Standfast as leading suppliers to the industry.

We remain confident of the quality and strength of our business, and of our strategy to take advantage of the growth opportunities available to us.

John Sach

Group Chief Executive

1 October 2012

Walker Greenbank PLC

Unaudited Consolidated Income Statement

For the six months ended 31 July 2012

			Note	6 months to 31 July 2012 £000	6 months to 31 July 2011 £000	Audited Year to 31 January 2012 £000
Revenue			2	38,295	37,397	74,014
Profit from operations				2,381	2,350	5,555
Net defined benefit pension charge Interest payable			4	(350) (93)	(175) (137)	(407) (254)
Net finance costs				(443)	(312)	(661)
Profit before taxation				1,938	2,038	4,894
Total tax charge			5	(515)	(569)	(1,065)
Profit for the period				1,423	1,469	3,829
Earnings per share  - Basic and diluted			6	2.47p	2.61p	6.76p
Adjusted earnings per share - Basic and diluted			6	3.80p	3.31p	8.21p

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 July 2012

		6 months to 31 July 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
		£000	£000	£000
Profit for the period		1,423	1,469	3,829
Other comprehensive income:
Actuarial gains on scheme assets Actuarial losses on scheme liabilities  Currency translation differences		- - (38)	- - 54	5,460 (6,864) (41)
Cash flow hedges		27	37	(113)
Movement in deferred tax asset relating to pension scheme liability(note 5)		(249)	(211)	(47)
Other comprehensive (expense) for the period, net of tax		(260)	(120)	(1,605)
Total comprehensive income for the period attributable to the owners of the parent		1,163	1,349	2,224

Unaudited Consolidated Balance Sheet

As at 31 July 2012

	Note	As at 31 July 2012 £000	As at 31 July 2011 £000	Audited As at 31 January 2012 £000
Non-current assets
Intangible assets		6,403	6,022	6,111
Property, plant & equipment		9,356	9,272	9,313
Deferred income tax assets		2,091	3,206	2,850
		17,850	18,500	18,274
Current assets
Inventories		16,921	16,517	17,000
Trade and other receivables	7	14,261	16,177	13,047
Cash and cash equivalents		1,630	2,335	2,197
Derivative financial asset		-	148	54
		32,812	35,177	32,298
Total assets		50,662	53,677	50,572
Current liabilities
Borrowings	8	(2,760)	(400)	(400)
Derivative financial liability		(37)	-	(50)
Trade and other payables		(16,013)	(17,754)	(17,511)
		(18,810)	(18,154)	(17,961)
Net current assets		14,002	17,023	14,337
Non-current liabilities
Borrowings	8	(1,587)	(6,694)	(2,464)
Retirement benefit obligation	10	(6,632)	(6,193)	(7,095)
		(8,219)	(12,887)	(9,559)
Total liabilities		(27,029)	(31,041)	(27,520)
Net assets		23,633	22,636	23,052
Equity
Share capital		590	590	590
Share premium account		457	457	457
Foreign currency translation reserve		(240)	(107)	(202)
Accumulated losses		(17,658)	(18,911)	(18,250)
Other reserves		40,484	40,607	40,457
Total equity		23,633	22,636	23,052

Unaudited Consolidated Cash Flow Statement

For the six months ended 31 July 2012

	Note	6 months to 31 July 2012 £000	6 months to 31 July 2011 £000	Audited Year to 31 January 2012 £000
Cash flows from operating activities
Cash (outflow)/inflow generated from operations	9	(469)	(1,371)	4,530
Interest paid		(81)	(125)	(230)
Interest received		-	-	-
Debt issue costs paid		-	-	-
Income tax paid		(5)	(4)	(18)
		(555)	(1,500)	4,282
Cash flows from investing activities
Purchase of intangible fixed assets		(432)	(197)	(441)
Purchase of property, plant & equipment		(915)	(1,231)	(2,097)
Proceeds on sale of property, plant and equipment		-	-	-
		(1,347)	(1,428)	(2,538)
Cash flows from financing activities
Purchase of treasury shares		(136)	-	-
Net drawdown/(repayment) of borrowings	8	1,471	3,338	(904)
Dividends paid to Company's shareholders		-	-	(570)
		1,335	3,338	(1,474)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts		(567)	410	270
Cash, cash equivalents and bank overdrafts at beginning of period		2,197	1,927	1,927
Exchange (losses) on cash and bank overdrafts		-	(2)	-
Cash, cash equivalents and bank overdrafts at the end of the period		1,630	2,335	2,197

Unaudited Consolidated Statement of Changes in Equity

				Other reserves
	Share capital £000	Share premium account £000	Accumulated losses £000	Capital reserve £000	Merger reserve £000	Hedge reserve £000	Translation reserve £000	Total £000
Balance at 1 February 2012	590	457	(18,250)	43,457	(2,950)	(50)	(202)	23,052
Profit for the period	-	-	1,423	-	-	-	-	1,423
Other comprehensive income:
Currency translation differences	-	-	-	-	-	-	(38)	(38)
Deferred tax relating to pension scheme liability- (refer note 5)	-	-	(249)	-	-	-	-	(249)
Cash flow hedging reserve - released to Income Statement	-	-	-	-	-	25	-	25
Cash flow hedging reserve - recognised in equity during the period	-	-	-	-	-	2	-	2
Net comprehensive income/(expense)	-	-	1,174	-	-	27	(38)	1,163
Transactions with owners: Dividends in respect of year ended 31 January 2013	-	-	-	-	-	-	-	-
Long term incentive plan charge	-	-	194	-	-	-	-	194
Long term incentive plan vesting	-	-	(640)	-	-	-	-	(640)
Purchase of treasury shares	-	-	(136)	-		-	-	(136)
Balance at 31 July 2012	590	457	(17,658)	43,457	(2,950)	(23)	(240)	23,633

				Other reserves
	Share capital £000	Share premium account £000	Accumulated losses £000	Capital reserve £000	Merger reserve £000	Hedge reserve £000	Translation reserve £000	Total £000
Balance at 1 February 2011	590	457	(20,063)	43,457	(2,950)	63	(161)	21,393
Profit for the period	-	-	1,469	-	-	-	-	1,469
Other comprehensive income:
Currency translation differences	-	-	-	-	-	-	54	54
Deferred tax relating to pension scheme liability- (refer note 5)	-	-	(211)	-	-	-	-	(211)
Cash flow hedging reserve - released to Income Statement	-	-	-	-	-	(3)	-	(3)
Cash flow hedging reserve - recognised in equity during the period	-	-	-	-	-	40	-	40
Net comprehensive income	-	-	1,258	-	-	37	54	1,349
Transactions with owners: Dividends in respect of year ended 31 January 2012	-	-	-	-	-	-	-	-
Long term incentive plan charge	-	-	242	-	-	-	-	242
Long term incentive plan vesting	-	-	(348)	-	-	-	-	(348)
Balance at 31 July 2011	590	457	(18,911)	43,457	(2,950)	100	(107)	22,636

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	Translation reserve £000	Total £000
Balance at 1 February 2011	590	457	(20,063)	43,457	(2,950)	63	(161)	21,393
Profit for the year	-	-	3,829	-	-	-	-	3,829
Other comprehensive income:
Actuarial gains on scheme assets	-	-	5,460	-	-	-	-	5,460
Other actuarial losses on scheme liabilities	-	-	(6,864)	-	-	-	-	(6,864)
Deferred tax relating to pension scheme liability	-	-	(47)	-	-	-	-	(47)
Currency translation differences	-	-	-	-	-	-	(41)	(41)
Cash flow hedging reserve - released to Income Statement	-	-	-	-	-	(61)	-	(61)
Cash flow hedging reserve - recognised in equity during the year	-	-	-	-	-	(52)	-	(52)
Total comprehensive income/(expense)	-	-	2,378	-	-	(113)	(41)	2,224
Transactions with owners:
Dividends	-	-	(570)	-	-	-	-	(570)
Long term incentive plan charge	-	-	353	-	-	-	-	353
Long term incentive plan vesting	-	-	(348)	-	-	-	-	(348)
Balance at 31 January 2012	590	457	(18,250)	43,457	(2,950)	(50)	(202)	23,052

Unaudited Notes to the Accounts

1.

Basis of preparation of interim 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 2013. The Group's accounting policies are based on International Financial Reporting Standards ("IFRS") adopted for use by the European Union ("EU") and interpretive guidance from the International Financial Reporting Interpretations Committee ("IFRIC"). These standards and interpretations are subject to ongoing review and endorsement by the EU or possible amendment by further interpretive guidance from IFRIC and are therefore still subject to change. The Group has chosen not to adopt IAS 34 'Interim Financial Reporting' in preparing these interim financial statements for the period to 31 July 2012 as it is not mandatory for AIM listed companies. The Group's accounting policies for the year ended 31 January 2013 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 2012 a number of authoritative pronouncements issued by the International Accounting Standards Board and IFRIC along with new or revised accounting standards are now effective for financial years ending 31 January 2013; 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 2013 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 2013. The interim financial statements do not represent statutory accounts for the purposes of S434 of the Companies Act 2006. The financial information for the year ended 31 January 2012 is based on the statutory accounts for the financial year ended 31 January 2012, on which the auditors issued an unqualified opinion and did not contain a statement under section 498 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 2012 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 1 October 2012.

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 - comprising the design, marketing, sales, distribution, and licensing activities of Sanderson, Morris & Co, Harlequin, Zoffany and Scion brands operated from the UK and the Group's foreign based subsidiaries in France and the United States.

·      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 IFRS8. There has been a change from last year in the information supplied to the CODM. 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'.

2a. Principal measures of profit and loss - Income Statement segmental information

6 months to 31 July 2012			Brands £000	Manufacturing £000	Eliminations and unallocated £000	Total £000
UK Revenue			17,332	7,279	-	24,611
International Revenue			11,447	1,433	-	12,880
Licence Revenue			804	-	-	804
Revenue - External			29,583	8,712	-	38,295
Revenue - Internal			-	6,582	(6,582)	-
Total Revenue			29,583	15,294	(6,582)	38,295
Profit/(loss) from operations			2,540	1,361	(1,520)	2,381
Net borrowing costs			-	-	(93)	(93)
Net pension charge			-	-	(350)	(350)
Profit/(loss) before taxation			2,540	1,361	(1,963)	1,938
Tax charge			-	-	(515)	(515)
Profit/(loss) for the period			2,540	1,361	(2,478)	1,423

6 months to 31 July 2011			Brands £000	Manufacturing £000	Eliminations and unallocated £000	Total £000
UK Revenue			16,405	7,687	-	24,092
International Revenue			11,233	1,394	-	12,627
Licence Revenue			678	-	-	678
Revenue - External			28,316	9,081	-	37,397
Revenue - Internal			-	5,809	(5,809)	-
Total Revenue			28,316	14,890	(5,809)	37,397
Profit/(loss) from operations			2,412	1,312	(1,374)	2,350
Net borrowing costs			-	-	(137)	(137)
Net pension charge			-	-	(175)	(175)
Profit/(loss) before taxation			2,412	1,312	(1,686)	2,038
Tax charge			(4)	-	(565)	(569)
Profit/(loss) for the period			2,408	1,312	(2,251)	1,469

12 months to 31 January 2012			Brands £000	Manufacturing £000	Eliminations and unallocated £000	Total £000
UK Revenue			33,834	14,043	-	47,877
International Revenue			21,995	2,554	-	24,549
Licence Revenue			1,588	-	-	1,588
Revenue - External			57,417	16,597	-	74,014
Revenue - Internal			-	12,057	(12,057)	-
Total Revenue			57,417	28,654	(12,057)	74,014
Profit/(loss) from operations			5,377	2,572	(2,394)	5,555
Net borrowing costs			-	-	(254)	(254)
Net pension charge			-	-	(407)	(407)
Profit/(loss) before taxation			5,377	2,572	(3,055)	4,894
Tax charge			36	-	(1,101)	(1,065)
Profit/(loss) for the period			5,413	2,572	(4,156)	3,829

2b.	Additional segmental revenue information

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

		6 months to 31 July 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
Brands revenue by export market		£000	£000	£000
Western Europe		3,179	3,598	6,776
Scandinavia		947	978	1,997
Eastern Europe		1,186	1,086	2,104
Europe Total		5,312	5,662	10,877
Middle East		395	788	1,223
Far East		1,430	1,261	2,853
USA		3,360	2,765	5,478
South America and Canada		381	238	199
Australasia		409	369	770
Other		160	150	595
		11,447	11,233	21,995

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 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
Brand revenue analysis		£000	£000	£000
Harlequin		12,534	11,772	24,195
Sanderson incorporating Morris & Co		10,107	9,907	19,939
Zoffany		5,658	5,518	10,823
Other brands		480	441	872
Licensing		804	678	1,588
		29,583	28,316	57,417

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

		6 months to 31 July 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
Manufacturing revenue analysis		£000	£000	£000
Standfast		7,325	8,103	15,172
Anstey		7,969	6,787	13,482
		15,294	14,890	28,654

3	Analysis of operating profit by function of expense
				6 months to 31 July 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
				£000	£000	£000
Revenue				38,295	37,397	74,014
Cost of sales				(15,545)	(15,668)	(30,029)
Gross profit				22,750	21,729	43,985
Net operating expenses				(19,956)	(19,158)	(38,016)
Long term incentive plan charge for period				(413)	(221)	(414)
Operating profit				2,381	2,350	5,555

The charge to the long term incentive plan of £413,000 (2011: £221,000) although not considered an exceptional cost has been separately identified within this note to aid comparison and analysis.

4	Net defined benefit pension costs
		6 months to 31 July 2012	6 months to 31 July 2011	Audited Year to 31 January 2012
		£000	£000	£000
	Expected return on plan assets	1,104	1,331	2,646
	Interest on obligation	(1,226)	(1,289)	(2,565)
	Scheme expenses	(228)	(217)	(488)
	Net defined benefit pension costs	(350)	(175)	(407)

5	Taxation				Audited
			6 months to 31 July 2012	6 months to 31 July 2011	Year to 31 January 2012
			£000	£000	£000
	UK Corporation tax at 23% (2011:26%)	- current year	-	-	-
	Overseas taxation	- current year	(5)	(4)	(15)
		- prior year	-	-	36
	Deferred tax	- current year	(424)	(485)	(933)
		- prior year - change in rates in future years	- (86)	- (80)	7 (160)
	Tax charge on profit on ordinary activities		(515)	(569)	(1,065)

Other than overseas taxation, there was no current tax arising in the year to 31 January 2012, as taxable profits arising in the year were offset against available losses from prior years. Because of the previous recognition of deferred tax assets relating to losses of prior years, the Group's taxable profits earned in the six months to 31 July 2012, and in future periods, will result in deferred tax charges being recognised as losses are utilised and as temporary differences originate and reverse. The tax at the half year has been based on a forecast full year effective tax rate.

A deferred tax charge of £424,000 (2011: £485,000) arose in the period to 31 July 2012 on the profits for the period. A further charge of £86,000 (2011: £80,000) arose due to the reduction in the corporation tax rate to 23% which was substantively enacted on 3 July 2012. In addition it was announced that the rate will reduce by a further 1% to attain a rate of 22% by 1 April 2014. 

The further reduction to a rate of 22%, assuming that this is formally enacted, would result in a decrease in the deferred tax balance at 31 July 2012 of £43,000. The deferred tax asset balance will be adjusted in the financial year that the change in the corporation tax rate is substantively enacted by Parliament.

A deferred tax charge of £107,000 (2011: £143,000) has been recognised for movements in the deferred tax relating to the pension liability. An additional charge of £142,000 (2011: £68,000) arose due to the reduction in future corporation tax rates noted above. 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

6              Earnings per share

The basic and diluted earnings per share for the half year are based on a profit for the period of £1,423,000 (2011: £1,469,000) and 57,571,000 ordinary shares (2011: 56,363,000), being the weighted average number of the shares in issue during the period, excluding those held in the Employee Benefit Trust ('EBT') and in treasury, which are treated as cancelled.

On 18 May 2012, 960,000 ordinary shares were transferred out of the treasury into the Company's Employee Benefit Trust. Following the transfer the company no longer holds treasury shares.

On 28 May 2012, 142,000 ordinary shares were acquired by the Company's Employee Benefit Trust.

On the 28 May 2012, 1,001,546 shares vested under the Company's Long-Term Incentive Plan and these were issued from the Walker Greenbank PLC Employee Benefit Trust.

The basic and diluted earnings per share for the year ended 31 January 2012 were based on a profit for the year amounting to £3,829,000 and the weighted average of 56,655,000 ordinaryshares in issue during the year.

	6 months to 31 July 2012	6 months to 31 July 2011	Year to 31 January 2012
Basic and diluted EPS:
Weighted average number of shares	57,571	56,363	56,655
Earnings after tax	1,423	1,469	3,829
Earnings per share - basic and diluted	2.47p	2.61p	6.76p
Adjusted basic and diluted EPS:
Add back LTIP accounting charge	413	221	414
Add back Net defined benefit pension charge	350	175	407
Adjusted earnings after tax	2,186	1,865	4,650
Adjusted earnings per share - basic and diluted	3.80p	3.31p	8.21p

7              Trade and other receivables

			Audited
	6 months to 31 July 2012	6 months to 31 July 2011	As at 31 January 2012
	£000	£000	£000
Net trade receivables	10,413	11,818	9,087
Marketing materials	1,586	1,911	2,068
Other receivables and prepayments	2,262	2,448	1,892
Trade and other receivables	14,261	16,177	13,047

8              Analysis of net debt

	1 February 2012 £000	Cash flow £000	Working capital facilities (see note below) £000	Current portion of term loan facilities £000	Other non-cash changes £000	Exchange movement £000	31 July 2012 £000
Cash at bank and in hand	2,197	(567)	-	-	-	-	1,630
Borrowings due within 1 year	(400)	200	(2,360)	(200)	-	-	(2,760)
Borrowings due after 1 year	(2,464)	(1,671)	2,360	200	(12)	-	(1,587)
	(2,864)	(1,471)	-	-	(12)	-	(4,347)
Net debt	(667)	(2,038)	-	-	(12)	-	(2,717)

The total facilities from Barclays Bank Plc comprises: a variable rate Term Loan secured on the Group's freehold property which is being repaid on a ten year profile, and Receivables and Inventory Financing Agreements (the working capital facilities)which provide three year variable rate loans secured on the eligible trade receivables and eligible inventories at any point in time. The working capital facilities may be drawn down in either sterling or Euro.

The current working capital facilities provided by Barclays Bank PLC will end their three year term in July 2013. Negotiations to renew these facilities are well advanced with a number of banks offering terms. The borrowings under these facilities as at 31 July 2012 were £2,360,000 and have been classified as Borrowings due within one year. The Directors expect to replace the existing working capital facilities before their expiry date.

9              Cash generated from operations

		6 months to 31 July 2012 £000	6 months to 31 July 2011 £000	Audited  Year to 31 January 2012 £000
Profit before tax		1,938	2,038	4,894
Defined benefit pension charge		350	175	407
Net borrowing costs		93	137	254
Depreciation		855	727	1,550
Amortisation		140	148	303
Charge for long-term incentive plan		194	242	353
Tax paid on vesting of LTIP		(640)	(348)	(348)
Unrealised foreign exchange (gains)/losses included in operating profit		(21)	56	(39)
Defined benefit pension cash contributions		(813)	(724)	(1,458)
		2,096	2,451	5,916
Changes in working capital
Decrease/(increase) in inventories		79	(887)	(1,370)
(Increase)/decrease in trade and other receivables		(1,160)	(1,842)	1,282
(Decrease) in trade and other payables		(1,484)	(1,093)	(1,298)
Cash (outflow)/inflow generated from operations		(469)	(1,371)	4,530

10

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 April 2009. An updated funding valuation for IAS 19 financial reporting purposes was completed for the previous annual financial statements to 31 January 2012. The assumptions applied for valuation of the defined benefit schemes are fully disclosed in the annual financial statements for the year ended 31 January 2012 and continue to be applied in the half year to 31 July 2012. 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 2013, and are based on previous actuarial estimates. The net retirement benefit obligation recognised at 31 July 2012 is based on the actuarial valuation under IAS 19 at 31 January 2012 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 the 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 valuation for IAS 19 financial reporting purposes will be completed for the next annual financial statements for the year ending 31 January 2013, at which time any actuarial gains and losses arising throughout the year will be recognised.

11

Dividends The directors paid on 10 August 2012, a final dividend of 1.00p per share, a total of £578,000 (2011: £456,000) for the financial year ended 31 January 2012. The directors have declared an interim dividend of 0.23p per share, a total of £132,400 (2011: £114,000) for the financial year ending 31 January 2013, to be paid to shareholders on the register on 26 October 2012 (ex dividend date being 24 October 2012).

 

END

 

 

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