Final Results

Walker Greenbank PLC 11 April 2001 11 April 2001 For immediate release Walker Greenbank PLC Preliminary results for the year ended 31 January 2001 Results last year adversely affected by difficult market conditions, restructuring and site consolidation and by disruption to customer service from the introduction of a new IT system. Pre-exceptional operating loss of £1.94 million as foreshadowed in the December trading statement. Exceptional losses of £3.33 million include higher than anticipated costs arising from a more comprehensive redundancy programme. Loss per share of 9.60p (2000: earnings 0.25p); underlying loss per share adjusting for exceptional and other items, of 3.74p (2000: earnings 3.33p) Final dividend of 1p per share proposed making the total dividend for the year 1p per share (2000:2p) Consolidation of wallpaper manufacturing onto one site complete and the anticipated operational efficiencies from the move now coming through. Fabrics manufacturing acquisitions produce good performance. New IT system now operational creating a platform for further savings and efficiency gains. Lord Thurso, Chairman of Walker Greenbank PLC said: 'This has been an unsatisfactory year as far as results are concerned but we have carried out a great deal of the groundwork for achieving shareholder value in the future. I was pleased to announce the arrival last month of our new Chief Executive, David Medcalf and, despite facing market conditions that remain very testing, we believe we are in a strong position to return the business to profitability.' For further information contact: The Viscount Thurso John Rudofsky Chairman Walker Greenbank PLC Helsen Communications 01442 291303 020 8786 6699 / 07767 823676 WALKER GREENBANK PLC CHAIRMAN'S STATEMENT Overview This has been an unsatisfactory year for the group with a below par performance in many of our operations. We have faced difficult market conditions and the final restructuring and consolidation of our main wallpaper manufacturing activities on a single site disrupted the business more than we expected. However, the operational changes now finally complete put us in a strong position to return the business to profitability. Similarly, as we reported last year the introduction of the new IT system caused severe problems to customer service levels initially. This caused the anticipated efficiencies to be delayed but we can report that this period of disruption is over and the benefits of the new IT system are now coming through. As we reported during the year, the Board received an approach from a management buy-in team prior to a potential offer being made for the group. The initial indication of price suggested the Board should encourage continued discussions and a considerable amount of management time and effort went into completing this process, partly at the expense of the day-to-day management of the operations. Market conditions moved against the management buy-in team during their thorough investigation of the operations and their final proposal was not one the Board felt fairly reflected the underlying value of the business. Nevertheless, the Board was impressed by the buy-in team and their view of the potential of the group. Accordingly, David Medcalf was invited to join the Board as Chief Executive, replacing Aidan Connolly who was not part of the buy-in/buyout team and who had agreed to remain with the group until the discussions reached a conclusion. Peter Harkness from the buy-in team was also invited to join the Board as non-executive director. Phillip Billington and Philip Cadle felt that their Board roles did not leave them with sufficient time to concentrate on their operational responsibilities and in the best interests of the group they proposed that they should step down from the Board. Results Sales of the continuing businesses were in line with last year at £49.7 million (2000: £49.9 million). The operating loss before exceptional items for the year on continuing businesses was £2.98 million (2000: £1.72 million profit) but the new fabrics manufacturing acquisitions produced a good performance with operating profits of £1.05 million. Therefore, the overall operating loss before exceptional items was £1.94 million as foreshadowed in the December trading statement. Exceptional costs amounted to £3.33 million and arose principally from the consolidation of wallpaper manufacturing onto one site in Leicestershire, exceptional costs incurred following the installation of the new IT system and redundancy costs, which amounted to £1.1 million, following the reduction in the UK workforce as part of the group's efficiency drive. The loss before tax after interest and other items amounted to £5.49 million compared to a profit of £386,000 in 2000. The loss per share was 9.60p (2000: earnings 0.25p) but the underlying loss per share adjusting for exceptional and other items was 3.74p (2000: earnings 3.33p). The balance sheet remained strong with net assets of 67p per share at the year end and the net gearing level was just 13 per cent. A final dividend of 1p per share is proposed making a total dividend for the year of 1p per share (2000: 2p) payable on 6 July 2001 to shareholders registered at the close of business on 15 June 2001. The dividend proposal has been made in view of these latest results but also bearing in mind that the group is now in a stronger position to exploit any improvement in market conditions. Operating review Restructuring The restructuring of our operations has been at a considerable expense to the business this year but the Board believes we now have in place a platform on which to build a stronger business for the future. The consolidation of the wallpaper factories onto one site is now complete giving us a fully integrated modern manufacturing facility. The process proved more difficult than we expected necessitating large scale renovations to the building. Short term efficiency was affected but is now returning and we expect value to be created by the move in the forthcoming year. During the last quarter of the financial year a programme of redundancy and natural wastage led to a fall in the headcount of over 100, approximately 15 per cent of the UK workforce. The cost of this programme was higher than anticipated in our December trading statement but the firm action taken means the business is now much better placed to return to profitability from a lower cost base. The closure of the German and French distribution businesses has been successfully completed and whilst sales have been lost during this transition period, there have been significant cost savings and improved profitability from these markets. We believe Continental Europe, which now can be served directly from the UK, offers us good opportunities for growth in the future. Information Technology The group introduced its new IT system in December 1999. As we have reported previously, the introduction of the system caused unexpected disruptions to customer service initially. We incurred additional costs in the carriage of goods, the use of temporary staff and overtime and less definable costs resulting from the damage to customer relations and the consequential loss of sales. The system is now fully operational. It has allowed us to close the European distribution operations, create more efficient practices and achieve considerable cost savings. We expect to achieve further operating efficiencies this year. Brands and distribution The Zoffany brand continues to be our largest selling brand worldwide. Overall, sales held steady. There was strong growth in the US with sales up 32 per cent but sales were down 7 per cent in the UK. Second half sales in the UK, normally our strongest selling period, were significantly affected by fuel shortages, transport disruption and flooding. The Warner brand had another difficult year. As reported at the half year, the sale of Cole & Son and its associated business, John Perry, was successfully completed in September for a total consideration of £3 million and a profit on the sale of £555,000. Second half trading at Harlequin was affected by the same factors that impacted Zoffany and sales declined 6 per cent over the year. Results were affected by higher than expected patterning costs and some stock write-off due partly to the sales slowdown. We have appointed new senior sales and marketing directors to the business to initiate a new sales drive. The continuing success of the new Cirka brand was demonstrated by a threefold increase in turnover to £3 million. Cirka combines experienced design capability, an innovative and fresh product with a clear market focus. The Norwegian business, Borge, produced another improvement in operating profits despite a 3 per cent reduction in sales. The company maintains a dominant position in its markets and further initiatives will be launched later this year. WG Inc, our American business, has had another highly successful year with sales growing 17 per cent and operating profits increasing by 9 per cent. We abandoned the Whittaker & Woods marketing concept and the main business is now trading as Zoffany. The New York showroom has been rebranded and a new head of this business appointed. Wallpaper manufacturing The downturn in business in the second half experienced by Harlequin and Zoffany fed through to the Anstey factory resulting in a 19 per cent reduction in sales to these companies. In addition, the factory move during this period created short term inefficiencies. All heavy plant has now been moved and recommissioned and all manufacturing has been operating from one site since January 2001. This will allow us to improve operating efficiencies. Fabric manufacturing Weavestyle has had an excellent first year in the group delivering profits ahead of our expectations at the time of the acquisition and well ahead of the same period last year. All key customers have been retained and the business grown further. The existing Contract Fabrics business, which also performed well with sales up 12 per cent on the previous year, was amalgamated with Weavestyle on one site at Silsden in Yorkshire. This allowed us to reduce the cost base of the combined business. Standfast also had a very encouraging first year with profits in line with expectations at the time of acquisition. Again, no key customers were lost and important new accounts have been won. Market conditions remain tough but the strong management team is focused on maintaining profitability. Outlook Creating shareholder value remains our prime objective. It is the Board's belief that a great deal of the groundwork for achieving that has been carried out in the last 18 months and we are very conscious that as far as the results are concerned, we have had little to show for it so far. We believe this will change, though how quickly is difficult to predict. Despite market conditions that remain very testing, we believe we are in a strong position to return the business to profitability. The Viscount Thurso Chairman 11th April 2001 Walker Greenbank PLC Group Profit and Loss Account Year ended 31 January 2001 Before Total Total exceptional Exceptional 2001 2000 items items £000 £000 £000 £000 Turnover - Continuing operations 49,721 - 49,721 49,937 - Acquisitions 14,346 - 14,346 - 64,067 - 64,067 49,937 Group operating (loss)/profit - Continuing operations (2,982) (3,242) (6,224) 1,719 - Acquisitions 1,047 (92) 955 - (1,935) (3,334) (5,269) 1,719 Share of associated - - - (56) undertaking's operating loss Operating (loss)/profit (1,935) (3,334) (5,269) 1,663 Profit on sale of - - - 1,036 property Profit on disposal of - 680 680 - operations (including goodwill previously written off of £1,390,000) Fundamental - (123) (123) (2,533) restructuring of overseas operations Amounts written off - (527) (527) (450) investments Loss on ordinary (1,935) (3,304) (5,239) (284) activities before interest Net interest (248) - (248) 670 (payable)/receivable (Loss)/profit on (2,183) (3,304) (5,487) 386 ordinary activities before taxation Taxation on 67 - 67 (247) (loss)/profit on ordinary activities (Loss)/profit after (2,116) (3,304) (5,420) 139 taxation Dividends (533) - (533) (1,123) Deficit (2,649) (3,304) (5,953) (984) (Loss)/earnings per share - Basic and diluted (9.60p) 0.25p - Underlying (3.74p) 3.33p Dividend per ordinary 1.00p 2.00p share Walker Greenbank PLC Group Balance Sheet At 31 January 2001 2001 2000 £000 £000 Fixed assets Goodwill 1,201 169 Tangible assets 24,036 15,381 Investment in own shares 1,046 1,573 26,283 17,123 Current assets Asset held for resale 292 - Stocks 15,245 12,605 Debtors 16,935 14,351 Cash at bank and in hand 2,402 12,818 34,874 39,774 Creditors: due within one year (19,234) (12,872) Net current assets 15,640 26,902 Total assets less current liabilities 41,923 44,025 Creditors: due after more than one year (3,840) (799) Provisions for liabilities and charges (352) (784) Net assets 37,731 42,442 Capital and reserves Share capital 590 590 Share premium account 457 457 Profit and loss account (3,823) 662 Other reserves 40,507 40,733 Equity shareholders' funds 37,731 42,442 Walker Greenbank PLC Group Cash Flow Statement Year ended 31 January 2001 2001 2001 2000 2000 £000 £000 £000 £000 Net cash (outflow)/inflow (931) 1,517 from operating activities Returns on investment and servicing of finance Interest received 216 1,005 Interest paid (251) (256) Interest element of finance (196) (66) lease payments Dividend income (Employee 57 57 Share Option Plan) (174) 740 Taxation 164 (658) Capital expenditure Purchase of tangible fixed (6,113) (6,283) assets Proceeds from disposal of - 2,104 property Proceeds from disposal of 9 73 fixed assets (6,104) (4,106) Acquisition, disposals and fundamental restructuring Acquisition (10,522) (302) Net proceeds from disposal of 2,689 - operations Fundamental restructuring (523) (454) costs Loan guarantee payment on liquidation of associated - (118) undertaking (8,356) (874) Equity dividends paid (1,180) (1,180) Cash outflow before use of liquid resources and (16,581) (4,561) financing Management of liquid resources Bills of exchange receivable - 343 Financing Proceeds from finance leases 3,400 - Principal repayments of (819) (214) finance lease obligations Proceeds of medium term loans 1,507 - Repayment of borrowings (31) (1,495) 4,057 (1,709) Decrease in cash and cash (12,524) (5,927) equivalents Walker Greenbank PLC Statement of Total Recognised Gains and Losses Year ended 31 January 2001 2001 2000 £000 £000 (Loss)/profit for the financial year (5,420) 139 Reversal of surplus on revaluation of properties (222) - reclassified as asset held for resale Currency translation differences 74 (336) Total recognised gains and loss relating to the year (5,568) (197) Note of Historical Cost Profit and Losses Year ended 31 January 2001 2001 2000 £000 £000 (Loss)/profit on ordinary activities before taxation (5,487) 386 Realisation of property revaluations - 606 Difference between historical cost depreciation 4 13 charge and actual depreciation charge Historical cost (loss)/profit on ordinary activities (5,483) 1,005 before taxation Historical cost loss for the year after taxation and (5,949) (365) dividends Reconciliation of Movements in Shareholders' Funds Year ended 31 January 2001 2001 2000 £000 £000 (Loss)/profit for the financial year (5,420) 139 Dividends (533) (1,123) Deficit for the year (5,953) (984) Currency translation differences 74 (336) Revaluation reserve reversed on transfer of property (222) - for resale to current assets Goodwill transferred to profit and loss account 1,390 975 Net reduction to shareholders' funds (4,711) (345) Opening shareholders' funds 42,442 42,787 Closing shareholders' funds 37,731 42,442 NOTES TO THE ACCOUNTS 1. Segmental analysis Turnover 2001 (a) Classes £000 2000 of business £000 Continuing operations: Fabrics 21,332 21,090 Wallcoverings 26,819 27,012 Other 1,570 1,835 49,721 49,937 Acquisitions: Fabrics 14,346 - Group 64,067 49,937 Non-interest bearing Turnover Operating operating net assets (loss)/profit 2001 2000 2001 2000 2001 2000 (b) £000 £000 £000 £000 £000 £000 Geographical segments By origin on continuing operations: United 36,602 34,772 (6,976) 1,833 32,876 29,214 Kingdom Continental 6,472 9,496 295 (533) 1,019 2,110 Europe North 6,647 5,669 457 419 1,148 1,184 America 49,721 49,937 (6,224) 1,719 35,043 32,508 By origin on acquisitions: United 14,346 - 955 - 8,957 - Kingdom Group 64,067 49,937 (5,269) 1,719 44,000 32,508 Turnover 2001 2000 £000 £000 By destination on continuing operations: United 29,686 28,947 Kingdom Continental 11,199 12,809 Europe North 7,455 6,683 America Rest of the 1,381 1,498 World 49,721 49,937 By destination on acquisitions: United 14,316 - Kingdom Continental 4 - Europe North 14 - America Rest of the 12 - World 14,346 - Group 64,067 49,937 2. ANALYSIS OF CONTINUING AND ACQUIRED OPERATIONS Continuing Operations Acquisitions Total Total 2001 2001 2001 2000 £000 £000 £000 £000 Turnover 49,721 14,346 64,067 49,937 Cost of sales (25,389) (9,249) (34,638) (23,073) Gross profit 24,332 5,097 29,429 26,864 Net operating expenses Distribution costs (11,136) (616) (11,752) (10,591) Administrative (19,483) (3,527) (23,010) (15,181) expenses Other operating 63 1 64 627 income Group operating (6,224) 955 (5,269) 1,719 (loss)/profit The continuing operations' operating loss included £3,242,000 of exceptional items. This comprised £1,101,000 of redundancies, £711,000 relating to inefficiencies arising from the consolidation of the Anstey and Sileby manufacturing operations onto one site, £541,000 of costs incurred as a result of problems with the group's new IT system, £589,000 of costs incurred directly as a result of the move of the Anstey and Sileby operations and £300,000 of legal and professional fees incurred defending an action bought by a telecoms provider and in the aborted sale of the company. The acquisitions' operating profit included £92,000 of exceptional items which related to redundancy costs in the year. Other operating income in 2000 included an exceptional credit of £600,000 representing compensation for the problems caused by the group's new IT system. The results for the acquisitions are shown before central management changes. This differs from the presentation at the half year and would have increased the previously reported profit in these businesses for the first six months by £126,000. 3. PROFIT ON SALE OF PROPERTY On 31 January 2000, the sale of the group's property in Sileby, Leicestershire was completed for a cash consideration of £2,104,000. The net profit on disposal of £1,036,000 is after writing off the net book value of the property and associated costs of the sale. 4. PROFIT ON SALE OF OPERATIONS On 29 September 2000 the trade and certain of the assets of the businesses trading as Cole & Son and John Perry were sold, along with the dormant legal entities bearing these names. The proceeds were agreed at £3,000,000 of which £2,800,000 had been received in cash at 31 January 2001. After accounting for related costs and goodwill the exceptional profit on disposal was £555,000. There is no tax effect on this disposal due to capital losses brought forward from previous periods. The businesses disposed of have not been classed as discontinued operations on the grounds of materiality. A further £125,000 has been recognised relating to deferred consideration for a previous disposal where the recoverability was originally considered uncertain. 5. FUNDAMENTAL RESTRUCTURING In 2000, a fundamental restructuring of the group's overseas distribution businesses trading as Whittaker & Woods was undertaken, resulting in the decision to close the remaining parts of the group's operations in Holland, Germany and France and some restructuring in the USA. The exceptional costs relating to this closure comprised redundancy costs, write off of unrealisable net assets, professional fees and other related costs totalling £1,558,000. An additional charge of £975,000 in respect of goodwill previously written off to reserves was also made to the profit and loss account. Further costs of £123,000 were incurred in the year over and above those amounts provided at 31 January 2000. The tax effect of this restructuring was to reduce the tax charge by £nil (2000: £204,000). 6. AMOUNTS WRITTEN OFF INVESTMENTS The directors believe there is likely to be a shortfall between the cost of the shares held by the ESOP and anticipated future proceeds and have decided to recognise this shortfall with an amount of £527,000 written off in the year (2000: £450,000). 7. OPERATING (LOSS)/PROFIT 2001 2000 £000 £000 Operating (loss)/profit is stated after charging: Auditors' remuneration: Audit fee - group auditors 107 98 - other auditors 15 24 Other services - group auditors 48 17 Depreciation of owned assets 2,929 1,900 Depreciation of assets held under finance leases and hire 450 30 purchase contracts Hire of motor vehicles and plant and machinery 481 483 Other operating leases 495 549 Auditors' remuneration for audit services to the group includes £33,000 (2000: £30,000) in respect of the company. 8. DISPOSAL OF COLE & SON AND JOHN PERRY £000 Proceeds from sale 3,000 Deferred proceeds (200) Professional fees and other related costs (111) Net cash inflow 2,689 The disposal comprised the following: Tangible fixed assets 478 Stock 466 944 Goodwill 1,390 Profit on disposal 555 Deferred proceeds (200) Net cash inflow 2,689 9. ACQUISITION OF STANDFAST DYERS AND PRINTERS AND WEAVESTYLE On 31 March 2000 the group completed its purchase of the trade and certain of the assets of two businesses trading as Standfast Dyers and Printers and Weavestyle. In their last financial year to 31 December 1999, the two businesses made a profit before tax of £148,000. For the 3 month period to the date of acquisition, the accounts show turnover of £4,934,000 and a profit before and after tax of £159,000. Fair value Provisional fair Book value adjustment value £000 £000 £000 Assets acquired comprised: Tangible fixed 6,499 - 6,499 assets Current assets 6,363 - 6,363 Creditors: due (3,021) (125) (3,146) within one year 9,841 (125) 9,716 Goodwill 1,108 Cash cost of 10,824 acquisition including professional fees The fair value adjustment was in respect of building repairs required at the time of acquisition. 10. CONTINGENT LIABILITY In 1996, the company entered into an agreement with a communications conglomerate to supply the group with data transmission services over its wide area network in the UK and Europe. The company has recently received a claim under this contract relating to services purportedly supplied in 1998 amounting in all to some £1,800,000. The directors refute the claim and intend to defend it vigorously. 11. ANALYSIS OF NET (DEBT)/FUNDS 1 February Exchange 31 January 2000 Cash flow movement 2001 £000 £000 £000 £000 Cash at bank and 12,818 (10,493) 77 2,402 in hand Overdrafts - (2,031) - (2,031) 12,818 (12,524) 77 371 Debt due within (28) (273) (3) (304) one year Debt due after (59) (1,203) (7) (1,269) one year Finance leases (936) (2,581) - (3,517) (1,023) (4,057) (10) (5,090) 11,795 (16,581) 67 (4,719)

Companies

Sanderson Design Group (SDG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today