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RNS
Walker Greenbank PLC  -  WGB   

Interim Results

Released 07:00 04-Oct-2017

RNS Number : 6176S
Walker Greenbank PLC
04 October 2017
 

 

 

For immediate release

4 October 2017

 

 

WALKER GREENBANK PLC

 

("Walker Greenbank", the "Company" or the "Group")

 

Interim Results for the six months ended 31 July 2017

 

Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings group, is pleased to announce its interim results for the six month period ended 31 July 2017.

 

Highlights

 

·      Sales up 29.9% to £54.3 million (H1 2016: £41.8 million) including £10.3 million from Clarke & Clarke, the fabrics and wallpaper business acquired in October 2016

 

·      Overseas Brands sales growth and a strong revenue contribution from Clarke & Clarke offset a weaker UK performance

 

·      Adjusted underlying profit before tax* up 55.3% at £5.9 million (H1 2016: £3.8 million)

 

·      Licensing income up 21.1% in reportable currency, 17.9% in constant currency, at £1.3 million driven by new licensing agreements signed in the prior financial year including blinds in the UK and bedding in the US and Asia   

 

·      Final settlement of the insurance claim in respect of the flood in December 2015 at Standfast & Barracks. These interim results include the recognition of £1.3 million (H1 2016: £3.3 million) of insurance reimbursements for loss of profits and net proceeds for asset replacement

 

·      Underlying profit from operations** up 52.8% at £5.5 million (H1 2016: £3.6 million)

 

·      Total statutory profit from operations at £4.8 million (H1 2016: £5.3 million) due to acquisition costs

 

·      Adjusted earnings per share* up 39.4% at 6.86 pence (H1 2016: 4.92 pence)

 

·      Interim dividend up 25.5% at 0.69 pence per share (H1 2016: 0.55 pence per share)

 

 

*    Excludes accounting charges relating to share-based incentives, defined benefit pension charge and non-underlying items,
see note 6
.

**  Excludes acquisition costs and Standfast flood-related costs.

 

 

Terry Stannard, the Chairman of Walker Greenbank, said: "Our results for the first half of this year reflect a strong contribution from last year's acquisition of Clarke & Clarke, a positive export performance and significant growth in licensing.

 

"Brand sales in the third quarter of the prior year included the invoicing of a backlog of flood-affected orders from the first half of the year. Against this comparator, in the first nine weeks of the current half year Brand sales excluding Clarke & Clarke were down 3.8% in reportable currency, down 4.8% in constant currency, but including Clarke & Clarke were up 31.7% in reportable currency.

 

"Encouragingly, the Brands' order intake is growing ahead of last year and is on an improving trend in the run-up to our key autumn selling period. Subject to this momentum continuing, the Board expects to meet its expectations for the full year."

 

 

 

Analyst meeting

 

A meeting for analysts will be held at 10.00 a.m. today, 4 October 2017, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For further details, contact Buchanan on 020 7466 5000.

 

 

For further information:

 

Walker Greenbank PLC

+44 (0) 1895 221068

John Sach, Chief Executive


Mike Gant, Chief Financial Officer

Caroline Geary, Company Secretary




Investec Bank plc

+44 (0) 20 7597 5970

Garry Levin/David Anderson/Alex Wright  - Nominated Adviser

Henry Reast - Corporate Broking




Buchanan

+44 (0) 20 7466 5000

Mark Court/Sophie Cowles/Catriona Flint


 

 

 

 

Notes for editors:

 

About Walker Greenbank

 

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

 

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

 

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

 

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

 



 

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

 

Overview

 

Our half year financial results show a step change in Walker Greenbank's performance reflecting the acquisition in October 2016 of Clarke & Clarke, a fabrics and wallcoverings business with two international brands, Clarke & Clarke and Studio G.

 

During the half year we received, in aggregate, £3.9 million in insurance receipts covering costs and business interruption losses as final settlement of our insurance claim in respect of the flood at Standfast & Barracks, the Company's fabric printing business in Lancaster. In total we have received £19.3 million in insurance payments following the flood.

 

The adjusted underlying profit before tax*, for the first six months of the year was £5.9 million (H1 2016: £3.8 million), an increase of 55.3% on the same period last year. The reported financial results include the recognition of £1.1 million of insurance reimbursements following the flood at Standfast & Barracks as a contribution to loss of profits.

 

Total Brand sales for the first half, which include Clarke & Clarke sales of £10.3 million, increased by 33.4% in reportable currency compared with the same period last year to £45.2 million. Excluding Clarke & Clarke, total Brand sales for the half year were up 3.1% at £34.9 million. In the UK, our largest market, Brand sales excluding Clarke & Clarke decreased by 2.6% compared with the same period last year to £18.3 million, impacted by a weaker UK consumer environment.

 

Excluding Clarke & Clarke, overseas Brand sales were up 10.0% in reportable currency, up 2.7% in constant currency, to £15.4 million. Sales in the US, which is now the Group's second largest market, grew 12.0% in reportable currency and 1.9% in constant currency, compared with the same period last year to £5.0 million.  Brand sales in Western Europe were up 6.4% in reportable currency, down 3.0% in constant currency, compared with the same period last year at £4.4 million and sales in the Rest of the World were up 8.2% in constant currency.

 

During the period we launched Style Library, our initiative to bring together our portfolio of brands including the unification of salesforces, customer service and websites to improve efficiency. We opened our Style Library flagship showroom in Chelsea Harbour in July 2017 to showcase all of our brands. This showroom replaces the individual showrooms at Chelsea Harbour and seeks to offer in one place the widest and most diverse range of the Company's fabrics, wallpapers and paints.

 

In addition, the Company has continued to develop its international sales channels in the US and its licensing channels both in the UK and overseas. Progress is also being made towards direct distribution in Russia.

 

Licensing income in the first six months was up 21.1% in reportable currency, 17.9% in constant currency, to £1.3 million largely as a result of new licensing agreements signed in the previous financial year for blinds in the UK and bedding in the US and Asia. We are continuing to pursue the extension of our product offering through new licensing agreements to take the Company's Brands further into lifestyle products and geographical territories.

 

We believe that our vertically integrated high-quality British manufacturing base, offering innovative printing techniques, differentiates us from others in our industry. The factories have seen improving order books from both new and existing third-party customers driven by digital printing. As a result total manufacturing sales grew 7.5% over the first six months when compared with the flood disrupted period last year driven by export orders to both new and existing customers given the increased international competitiveness resulting from weaker Sterling.

 

* excluding the Long Term Incentive Plan ("LTIP") accounting charge and the net defined benefit charge

 

 

The Brands

 

This segment incorporates global trading from our internationally recognised brands including our overseas subsidiaries in the US and France. In addition to Sanderson, Morris & Co, Harlequin, Zoffany, Scion and Anthology, the Brands now include Clarke & Clarke and Studio G.

 

Harlequin incorporating Scion and Anthology

Harlequin saw a reduction in worldwide sales of 1.2% in reportable currency compared with the same period last year to £15.4 million, primarily as a result of a more challenging UK consumer  environment.  Whilst Harlequin remains the UK's leading mid-market contemporary brand, UK sales reduced by 5.4%. Export sales grew 5.4% in reportable currency, down 1.5% in constant currency in the first half. In the US, Harlequin was up 12.2% in reportable currency, 2.1% in constant currency. Sales in Western Europe grew 5.0% in reportable currency, but fell 4.2% in constant currency when compared with the same period last year.

 

We are excited by Harlequin's recent collaboration with Clarissa Hulse, the renowned textile designer, to create Lilaea, a vibrant and glamorous range of fabrics displaying Clarissa's trademark style of contemporary botanical designs injected with intense colour.

 

The Scion brand, launched in February 2012, continues to be a valuable brand for licensing partners where the contemporary and graphic nature of the designs translates to licensed product particularly well.  This accessibly priced brand continues to be a success with young, aspirational and fashion-aware customers. The brand's designs have stretched very successfully to a wide range of licensed product ranging from bedding and bath products to window furnishings, apparel, gifting and stationery.

 

The Anthology brand continues to perform strongly. Anthology 05, which has been complemented by an exciting range of innovative wide-width woven fabrics, has generated strong sales growth. Anthology's recent Definition collection of innovative  wallcoverings defined by their textures and intricate backgrounds have been manufactured using technically-advanced machines and production methods.

 

Arthur Sanderson & Sons incorporating the Morris & Co brand

Worldwide sales at Sanderson were up 9.9% at £11.7 million in reportable currency, compared with the same period last year. Sales in the US were up 25.0% in reportable currency, 13.9% in constant currency. Sales in Western Europe were up 13.0% in reportable currency, 2.9% in constant currency. Sanderson's Woodland Walk collection has been the best-selling Sanderson collection for several years and has helped this increase in sales.

 

The Morris & Co. brand has seen positive sales performance up 28.8% to £3.9 million in reportable currency, helped by the launch of the Pure Morris collection which interprets William Morris' iconic designs in a neutral colour palette opening the potential of the brand to a wider audience.

  

Zoffany

Zoffany, positioned at the upper end of the premium market, saw worldwide sales reduce 0.3% in reportable currency compared with the same period last year to £6.1 million. This was despite strong performances from recent collections reflecting our focus on design strategy to position the Zoffany brand for sustained growth. Sales to export markets were up by 5.6% in reportable currency, down 1.8% in constant currency. The new Damask collection presents seven historical wallpaper designs, reinterpreted to introduce artistry and provenance into contemporary interiors.

 

Clarke & Clarke

Clarke & Clarke's two brands, Clarke & Clarke and Studio G, are at the more affordable end of our target markets, complementing the Group's existing Brands and representing an exciting addition to our product portfolio. As the brands were acquired in October 2016 we do not have comparative figures on which to calculate half year sales growth though the brands continue to perform in line with the Board's expectations. Studio G has launched four new collections during the half year and will, for the first time, launch 11 new collections in the US during the second half. Clarke & Clarke has launched seven new collections during the half year and is in the process of developing ready-made curtains, a new category, which will be launched in the second half of the current year. 

 

Licensing

We license four of our brands for use in a very wide range of homeware products including bed linen, rugs, towelling, kitchen and tableware, lighting and giftware. In addition to being high margin and an increasing source of profits, licensing helps to increase the recognition of our Brands internationally. Our licensed product is available in many countries worldwide and is an important part of our export strategy. For example, our licensee in Japan has had significant success with Sanderson and Morris & Co designs on bedding and other licensed products. The Pure Morris concept has given our licensees and potential licensees the opportunity to extend their Morris & Co. offering into wider product categories including bedlinen and rugs.

 

We are very pleased by the growth delivered by our blinds licensee in the UK during the half year and, following the licensee's recent launch of an Australian website, we anticipate further growth. Mirtos, our licensee in China, has recently launched its latest range of bedlinen for Scion, Morris & Co., Sanderson and Harlequin at a trade fair in Shanghai, which we expect to drive growth.

 

 

Manufacturing

 

The fabric printing factory is back in full production following the flood, resulting in increased sales and profitability following a disrupted period last year. Total sales grew 7.5% to £16.1 million leading to an increase in profits of £0.3 million to £0.5 million before receiving a contribution to loss of profits of £1.1 million from our insurer.

 

Anstey

Anstey, our wallpaper manufacturer, has seen sales in the first half fall by 7.6% in reportable currency, compared with the same period last year, to £8.6 million. Third party sales in the UK were down 2.2% whilst third party export sales were down 15.4% but the order intake is on an improving trend and the benefits of a weaker Sterling are starting to feed through. September 2017 saw the launch of our in-house paint tinting and distribution for our Sanderson and Zoffany brands in partnership with PPG, the global US-based paints and coatings company.      

 

Standfast

Overall sales at Standfast & Barracks, our fabric printing factory, were 32.2% higher in reportable currency, at £7.5 million, compared with the flood-impacted period at the same time last year. Third party sales in the UK were up 47.3% with third party export sales increasing 24.3% compared with the first half last year.

 

Digital printed fabric sales have increased 39.1% compared with the same period last year. Further investment in a new high speed digital pigment printer is expected in the second half of the current financial year. These investments will continue to enhance capacity, capability and efficiency.

 

 

Financials

 

Total sales in the half year increased 29.9% to £54.3 million, from £41.8 million in the prior period. The underlying profit from operations** grew 52.8% to £5.5 million (2016: £3.6 million).

 

Statutory profit before tax of £4.1 million (2016: £4.9 million) included non-underlying charges of £980,000 (H1 2016: credits of £1,739,000). These are analysed below:

 

 


H1 2017

£000

H1 2016

£000

Statutory profit before tax

4,069

4,938




Acquisition related costs

707

-

Unwind of discount on contingent consideration

268

-

Total acquisition related costs

975

-




Standfast flood related costs

1,125

4,564

Standfast flood insurance reimbursements

(1,342)

(6,303)

Standfast net other income

(217)

(1,739)




Restructuring and reorganisation costs

222

-




Total non-underlying charges/(credits) included in profit before tax

980

(1,739)




Underlying profit before tax

5,049

3,199

LTIP accounting charge

522

286

Net defined benefit pension charge

327

291

Adjusted underlying profit before tax

5,898

3,776

 

Acquisition related costs incurred were in respect of the acquisition of Clarke & Clarke, which completed on 31 October 2016. These include amortisation of intangible assets of £525,000 and a charge of £182,000 associated with the fair value adjustment recognised on the inventory as at the date of acquisition. The balance of the inventory fair value uplift has been fully unwound during the period. A charge of £268,000 has been recognised in respect of unwind of the discount on contingent consideration payable for Clarke & Clarke.

 

Standfast net other income comprises of proceeds of £217,000 from the reimbursement of costs to replace impaired plant and equipment and intangible assets.

 

Restructuring and reorganisation costs of £222,000 reflect the ongoing rationalisation of certain operational and support functions. These costs mainly comprise professional fees, employee severance and property costs associated with the reorganisation process.

 

In addition to the non-underlying net other income described above, a further £1,069,000 has been recognised in underlying net other income which represents business interruption losses for the period to 31 July 2017.

 

The net underlying interest charge has increased from £60,000 to £134,000 reflecting higher borrowings as a result of utilisation of £5,000,000 of the Group's existing accordion tranche of its bank facilities following the acquisition of Clarke & Clarke in the prior year. The defined benefit pension charge has risen from £291,000 to £327,000 driven by an increase in the interest on pension scheme liabilities as a result of a decrease in the bond rates.

 

Underlying profit before tax, excluding the LTIP accounting charge, defined benefit charge and non-underlying items, increased 55.3% to £5.9 million (H1 2016: £3.8 million) and adjusted earnings per share were up 39.4% at 6.86 pence (H1 2016: 4.92 pence), after removing the LTIP accounting charge, defined benefit charge and other non-underlying items. Statutory profit after tax was £3.3 million (H1 2016: £4.0 million) and basic earnings per share were down 28.9% at 4.66 pence (2016: 6.55 pence).

 

The Group maintains a strong balance sheet with a small improvement to net debt at the half year at £5.1 million (31 January 2017: net debt £5.3 million).

 

** Excludes acquisition, Standfast flood-related and restructuring costs

 

 

Dividend

 

The Board is pleased to announce an interim dividend of 0.69 pence per share which represents an increase of 25.5% on the prior half year reflecting the Board's confidence in the current financial position and future financial performance of the Group. The interim dividend will be payable on 17 November 2017 to shareholders on the register as at 20 October 2017.

 

 

People

 

On behalf of the Board, I would like to thank all of our management and employees for their contribution. Post the half-year end, Brands Director Fiona Holmes resigned from the Company's Board and left the business. We would like to record our thanks to Fiona and wish her well in her future endeavours. The recruitment of her replacement is underway.

 

 

Outlook

 

Our results for the first half of this year reflect a strong contribution from last year's acquisition of Clarke & Clarke, a positive export performance and significant growth in licensing.

 

Brand sales in the third quarter of the prior year included the invoicing of a backlog of flood-affected orders from the first half of the year. Against this comparator, in the first nine weeks of the current half year Brand sales excluding Clarke & Clarke were down 3.8% in reportable currency, down 4.8% in constant currency, but including Clarke & Clarke were up 31.7% in reportable currency.

 

Encouragingly, the Brands' order intake is growing ahead of last year and is on an improving trend in the run-up to our key autumn selling period. Subject to this momentum continuing, the Board expects to meet its expectations for the full year.

 

 

 

 

 

Terry Stannard                                                                        John Sach

Chairman                                                                     Group Chief Executive

4 October 2017                                                              4 October 2017

 



 

Unaudited Consolidated Income Statement

For the six months ended 31 July 2017

 

 


Note

6 months to 31 July

2017


6 months to 31 July

2016



Underlying

£000

Non-underlying

(note 6)

£000

Total

£000


Underlying

£000

Non-underlying

(note 6)

£000

Total

£000

Revenue

2

54,254

-

54,254


41,826

-

41,826

Cost of sales


(22,495)

(182)

(22,677)


(16,649)

-

(16,649)

Gross profit / (loss)

 

31,759

(182)

31,577

 

25,177

-

25,177

Net operating expenses:

 

 

 

 

 

 

 

 

Distribution and selling expenses

 

(7,206)

-

(7,206)

 

(6,175)

-

(6,175)

Administration expenses

 

(20,112)

(747)

(20,859)

 

(17,045)

-

(17,045)

Net other income

4

1,069

217

1,286

 

1,593

1,739

3,332

Profit / (loss) from operations

 

5,510

(712)

4,798

 

3,550

1,739

5,289

 

 

 

 

 

 

 

 

 

Net defined benefit pension charge

5

(327)

-

(327)

 

(291)

-

(291)

Finance costs

 

(134)

(268)

(402)

 

(60)

-

(60)

Total finance costs

 

(461)

(268)

(729)

 

(351)

-

(351)

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax  

 

5,049

(980)

4,069

 

3,199

1,739

4,938

Tax (expense) / income

7

(936)

121

(815)

 

(692)

(296)

(988)

Profit / (loss) for the year attributable to owners of the parent

 

4,113

(859)

3,254

 

2,507

1,443

3,950

 

 

 

 

 

 

 

 

 

Earnings per share - Basic

8

 

 

4.66p

 

 

 

6.55p

Earnings per share - Diluted

8

 

 

4.52p

 

 

 

6.46p

Adjusted earnings per share

- Basic

8

 

 

6.86p

 

 

 

4.92p

Adjusted earnings per share

- Diluted

8

 

 

6.66p

 

 

 

4.86p

 









 

 



 

Unaudited Consolidated Income Statement (continued)

 

 


Note

Audited

Year to 31 January 2017



Underlying

£000

Non-underlying

(note 6)

£000

 

 

Total

£000

Revenue

2

92,373

-

92,373

Cost of sales


(36,223)

(1,061)

(37,284)

Gross profit / (loss)

 

56,150

(1,061)

55,089

Net operating expenses:

 

 

 

 

Distribution and selling expenses

 

(12,421)

-

(12,421)

Administration expenses

 

(36,724)

(3,170)

(39,894)

Net other income

4

2,837

2,248

5,085

Profit / (loss) from operations

 

9,842

(1,983)

7,859

 

 

 

 

 

Net defined benefit pension charge

5

(527)

-

(527)

Finance costs

 

(186)

(181)

(367)

Total finance costs

 

(713)

(181)

(894)

 

 

 

 

 

Profit / (loss) before tax

 

9,129

(2,164)

6,965

Tax (expense) / income

7

(1,609)

9

(1,600)

Profit / (loss) for the year attributable to owners of the parent

 

7,520

(2,155)

5,365

 

 

 

 

 

Earnings per share - Basic

8

 

 

8.55p

Earnings per share - Diluted

8

 

 

8.08p

Adjusted earnings per share

- Basic

8

 

 

13.67p

Adjusted earnings per share

- Diluted

8

 

 

12.92p

 





 



 

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 July 2017

 

 


6 months to

31 July

2017

6 months to

31 July

2016

Audited

Year to

31 January

2017


£000

£000

£000

Profit for the period

3,254

3,950

5,365

Other comprehensive income:

 

 


Items that will not be reclassified to profit or loss:

 

 


Remeasurements of defined benefit pension schemes

-

-

(4,339)

Corporation tax credits recognised in equity

-

5

270

Increase in deferred tax asset relating to pension scheme liability

-

-

484

Total items that will not be reclassified to profit or loss

-

5

(3,585)

Items that may be reclassified subsequently to profit or loss:

 

 


Currency translation (losses) / gains

(13)

101

128

Cash flow hedge

-

26

26

Total items that may be reclassified subsequently to profit or loss

(13)

127

154

Other comprehensive (expense) / income for the period, net of tax

(13)

132

(3,431)

Total comprehensive income for the period attributable to

the owners of the parent

3,241

4,082

1,934

 



Unaudited Consolidated Balance Sheet

As at 31 July 2017

 

 


Note

As at

31 July

2017

£000

As at

31 July

2016

£000

Audited

As at

31 January

2017

(Restated)

£000

Non-current assets





Intangible assets


32,143

7,118

32,561

Property, plant and equipment


16,252

13,844

15,845



48,395

20,962

48,406

Current assets





Inventories


29,046

20,840

30,305

Trade and other receivables


20,345

16,010

19,508

Cash and cash equivalents

9

1,708

2,930

1,516



51,099

39,780

51,329

Total assets


99,494

60,742

99,735

Current liabilities


 

 



Trade and other payables


(22,557)

(17,751)

(25,685)

Borrowings

9

(6,860)

(397)

(6,825)

Provision for other liabilities and charges


(1,280)

-

(3,570)

 


(30,697)

(18,148)

(36,080)

Net current assets


20,402

21,632

15,249

Non-current liabilities





Borrowings

9

-

-

-

Deferred income tax liabilities


(2,502)

(142)

(2,573)

Retirement benefit obligation


(6,789)

(3,711)

(7,413)

Provision for other liabilities and charges


(2,636)

-

(2,376)



(11,927)

(3,853)

(12,362)

Total liabilities


(42,624)

(22,001)

(48,442)

Net assets


56,870

38,741

51,293

 





Equity





Share capital


709

606

696

Share premium account


18,681

457

16,390

Foreign currency translation reserve


(441)

(455)

(428)

Accumulated losses


(2,586)

(2,374)

(5,872)

Other reserves


40,507

40,507

40,507

Total equity attributable to owners of the parent


56,870

38,741

51,293

 

 

The restatement of the year ended 31 January 2017 is explained in note 1.

Unaudited Consolidated Cash Flow Statement

For the six months ended 31 July 2017

 

 

 

Note

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

 





Cash flows from operating activities





Cash generated from operations

10

1,722

3,053

12,381

Interest paid


(118)

(59)

(162)

Corporation tax paid


(1,102)

(844)

(2,294)

Net cash generated from operating activities


502

2,150

9,925

 





Cash flows from investing activities





Acquisition of subsidiary, net of cash acquired


-

-

(27,073)

Purchase of intangible assets


(448)

(348)

(792)

Purchase of property, plant and equipment


(1,662)

(3,073)

(5,976)

Proceeds from disposal of property, plant and equipment


-

-

89

Insurance proceeds relating to investing activities


1,785

1,398

2,268

Net cash used in investing activities


(325)

(2,023)

(31,484)

 





Cash flows from financing activities





Proceeds from issuance of ordinary shares


-

-

16,022

Debt issue costs


-

-

(40)

Net repayment of loans

9

(200)

(200)

(400)

Dividends paid to Company's shareholders


-

-

(1,818)

Net cash (used in) / generated from financing activities


(200)

(200)

13,764






Net decrease in cash and cash equivalents


(23)

(73)

(7,795)

Cash and cash equivalents and bank overdraft

at beginning of period


(5,110)

2,902

2,902

Effect of exchange rate fluctuations on cash held


(19)

101

(217)

Cash and cash equivalents and bank overdraft

at end of period

9

(5,152)

2,930

(5,110)

 

 

 

 

 

 

 



 

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 July 2017

 

 


Attributable to owners of the parent





Other reserves




Share capital

£000

Share premium account

£000

Accumulated losses

£000

Capital reserve

£000

Merger reserve

£000

Hedge reserve

£000

Foreign currency translation

reserve

£000

Total

equity

£000

Balance at 1 February 2017

696

16,390

(5,872)

43,457

(2,950)

-

(428)

51,293

Profit for the period

-

-

3,254

-

-

-

-

3,254

Other comprehensive income:









Corporation tax credits recognised in equity

-

-

-

-

-

-

-

-

Deferred tax relating to pension scheme liability

-

-

-

-

-

-

-

-

Currency translation differences

-

-

-

-

-

-

(13)

(13)

Cash flow hedge

-

-

-

-

-

-

-

-

Total comprehensive income

-

-

3,254

-

-

-

(13)

3,241

Transactions with owners, recognised directly in equity:









Allotment of share capital

13

2,291

(2)

-

-

-

-

2,302

Long-term incentive plan charge

-

-

443

-

-

-

-

443

Long-term incentive plan vesting

-

-

(404)

-

-

-

-

(404)

Related tax movements on

long-term incentive plan

-

-

(5)

-

-

-

-

(5)

Balance at 31 July 2017

709

18,681

(2,586)

43,457

(2,950)

-

(441)

56,870

 

 

 


Attributable to owners of the parent

 





Other reserves




Share capital

£000

Share premium account

£000

Accumulated losses

£000

Capital reserve

£000

Merger reserve

£000

Hedge reserve

£000

Foreign currency translation

reserve

£000

Total

equity

£000

Balance at 1 February 2016

602

457

(5,700)

43,457

(2,950)

(26)

(556)

35,284

Profit for the period

-

-

3,950

-

-

-

-

3,950

Other comprehensive income:









Corporation tax credits

recognised in equity

-

-

5

-

-

-

-

5

Currency translation differences

-

-

-

-

-

-

101

101

Cash flow hedge

-

-

-

-

-

26

-

26

Total comprehensive income

-

-

-

-

26

101

4,082

Transactions with owners, recognised directly in equity:









Allotment of share capital

4

-

(4)

-

-

-

-

-

Long-term incentive plan charge

-

-

258

-

-

-

-

258

Long-term incentive plan vesting

-

-

(664)

-

-

-

-

(664)

Related tax movements on

long-term incentive plan

-

-

(219)

-

-

-

-

(219)

Balance at 31 July 2016

606

457

(2,374)

43,457

(2,950)

-

(455)

38,741

 



 

Unaudited Consolidated Statement of Changes in Equity (continued)

 


Attributable to owners of the parent





Other Reserves




Share capital

£000

Share premium account

£000

Accumulated losses

£000

Capital reserve

£000

Merger reserve

£000

Hedge reserve

£000

Foreign currency

translation

reserve

£000

Total equity

£000

Balance at 1 February 2016

602

457

(5,700)

43,457

(2,950)

(26)

(556)

35,284

Profit for the year

-

-

5,365

-

-

-

-

5,365

Other comprehensive Income:









Remeasurements of defined benefit pension schemes

-

-

(4,339)

-

-

-

-

(4,339)

Corporation tax credits recognised in equity

-

-

270

-

-

-

-

270

Deferred tax relating to pension scheme liability

-

-

484

-

-

-

-

484

Currency translation differences

-

-

-

-

-

-

128

128

Cash flow hedge

-

-

-

-

-

26

-

26

Total comprehensive income

-

-

1,780

-

-

26

128

1,934

Transactions with owners, recognised directly in equity:









Dividends

-

-

(1,818)

-

-

-

-

(1,818)

Allotment of share capital

94

15,933

(4)

-

-

-

-

16,023

Long-term incentive plan charge

-

-

658

-

-

-

-

658

Long-term incentive plan vesting

-

-

(664)

-

-

-

-

(664)

Related tax movements on long-term incentive plan

-

-

(124)

-

-

-

-

(124)

Balance at 31 January 2017

696

16,390

(5,872)

43,457

(2,950)

-

(428)

51,293

 

 



 

Unaudited Notes to the interim financial statements

 

 

1.  Basis of preparation of interim financial statements

 

The interim financial statements have been prepared in accordance with the accounting policies that the Group expects to apply in its annual financial statements for the year ending 31 January 2018. The Group's accounting policies are based on International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and IFRS Interpretations Committee ("IFRS IC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the valuation of derivative financial instruments at fair value through profit and loss.

 

These interim financial statements for the six months ended 31 July 2017 have been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 January 2017, which have been prepared in accordance with IFRSs as adopted by the European Union. All comparative information is for the six month period ended 31 July 2016, unless otherwise stated.

 

The Group's accounting policies for the year ended 31 January 2018 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 2017, a number of authoritative pronouncements issued by the International Accounting Standards Board and IFRS IC along with new or revised accounting standards are now effective for financial years ending 31 January 2018. 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 2018 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 2018.

 

The interim financial statements do not represent statutory accounts for the purposes of section 434 'Requirements in connection with publication of statutory accounts' of the Companies Act 2006. The financial information for the year ended 31 January 2017 is based on the statutory accounts for the financial year ended 31 January 2017, on which the auditors issued an unqualified opinion and did not contain a statement under section 498 'Duties of auditor' of the Companies Act 2006, and have been delivered to the Registrar of Companies. The interim financial statements for the 6 month period ended 31 July 2017 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.

 

Prior year restatement

During the year end 31 January 2017, the Group acquired the entire share capital of Globaltex 2015 Limited in October 2016. In accordance with IFRS 3 Business Combinations, the directors made an initial assessment of the fair values of the acquired assets and liabilities and contingent consideration, resulting in goodwill of £14,736,000 being created in the consolidated balance sheet. During the six months ended 31 July 2017 (i.e. within 12 months of the acquisition date), the Directors undertook a review of the provisional fair values, with adjustments being reflected within the carrying value of goodwill as at the acquisition date. Net adjustments of £955,000 were made this year, increasing the contingent consideration, other payables and respective goodwill which are shown as a prior year restatement of the Unaudited Consolidated Balance Sheet. The 31 January 2017 net assets are unaffected by this adjustment.

 

The Board approved the interim financial information on 4 October 2017.

 

 

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 and distribution, and licensing activities of Sanderson, Morris & Co, Harlequin, Zoffany, Anthology, Scion, Clarke & Clarke and Studio G brands operated from the UK and its foreign subsidiaries in the US and France;

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

 

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

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

2.  Segmental analysis

 

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

 

6 months to 31 July 2017

 


Brands

£000

Manufacturing

£000

Eliminations and unallocated

£000

Total

£000

UK Revenue


23,468

7,287

-

30,755

International Revenue


20,345

1,805

-

22,150

Licence Revenue


1,349

-

-

1,349

Revenue - External


45,162

9,092

-

54,254

Revenue - Internal


-

6,983

(6,983)

-

Total Revenue


45,162

16,075

(6,983)

54,254

Profit/(loss) from operations


5,975

495

(1,672)

4,798

Net defined benefit pension charge


-

-

(327)

(327)

Finance costs


-

-

(402)

(402)

Profit/(loss) before taxation


5,975

495

(2,401)

4,069

Tax charge


-

-

(815)

(815)

Profit/(loss) for the period


5,975

495

(3,216)

3,254

 

Business interruption reimbursements to cover loss of profits of £1,069,000 (2016: £1,593,000) are included within 'Eliminations and unallocated'. Tax charges have not been allocated to a segment.

 

6 months to 31 July 2016

 


Brands

£000

Manufacturing

£000

Eliminations and unallocated

£000

Total

£000

UK Revenue


18,756

6,207

-

24,963

International Revenue


13,973

1,776

-

15,749

Licence Revenue


1,114

-

-

1,114

Revenue - External


33,843

7,983

-

41,826

Revenue - Internal


-

6,977

(6,977)

-

Total Revenue


33,843

14,960

(6,977)

41,826

Profit from operations


3,605

174

1,510

5,289

Net defined benefit pension charge


-

-

(291)

(291)

Finance costs


-

-

(60)

(60)

Profit before taxation


3,605

174

1,159

4,938

Tax charge


-

-

(988)

(988)

Profit for the period


3,605

174

171

3,950

 

 

12 months to 31 January 2017

 


Brands

£000

Manufacturing

£000

Eliminations and unallocated

£000

Total

£000

UK Revenue


42,531

12,227

-

54,758

International Revenue


31,552

3,497

-

35,049

Licence Revenue


2,566

-

-

2,566

Revenue - External


76,649

15,724

-

92,373

Revenue - Internal


-

16,320

(16,320)

-

Total Revenue


76,649

32,044

(16,320)

92,373

Profit/(loss) from operations


9,239

1,026

(2,406)

7,859

Net defined benefit pension charge


-

-

(527)

(527)

Finance costs


-

-

(367)

(367)

Profit/(loss) before taxation


9,239

1,026

(3,300)

6,965

Tax charge


-

-

(1,600)

(1,600)

Profit/(loss) for the year


9,239

1,026

(4,900)

5,365

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

2.  Segmental analysis continued

 

b)  Additional segmental revenue information

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

Brands international revenue by export market

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Western Europe

6,220

4,173

9,594

Scandinavia

1,343

1,121

2,557

Eastern Europe

1,643

1,085

2,374

Europe Total

9,206

6,379

14,525

Middle East

1,170

684

1,345

Far East

2,018

1,533

3,308

US

6,604

4,487

10,310

South America

191

222

458

Australasia

635

432

1,004

Other

521

236

602

 

20,345

13,973

31,552

 

 

Revenue of the Brands reportable segment - revenue from operations in all territories where the sale is sourced from the Brands operations, together with contract and licence revenue:

Brands revenue analysis

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Harlequin, incorporating Anthology and Scion

15,371

15,556

31,270

Sanderson, incorporating Morris & Co

11,701

10,648

22,516

Zoffany

6,121

6,138

12,162

Clarke & Clarke, incorporating Studio G

10,266

-

7,267

Other brands

354

387

868

Licensing

1,349

1,114

2,566

 

45,162

33,843

76,649

 

 

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

Manufacturing revenue analysis

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Standfast

7,479

5,657

15,097

Anstey

8,596

9,303

16,947

 

16,075

14,960

32,044

 

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

3.  Analysis of revenue by category

 

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Sale of goods

52,905

40,712

89,807

Licence royalty income

1,349

1,114

2,566

 

54,254

41,826

92,373

 

 

4.  Net other income

 

Net other income arising as a result of the flood at Standfast, the Group's fabric printing factory in December 2015, is £1,069,000
(2016: £1,593,000) and represents business interruption reimbursements to cover loss of profits in the current period from repeat business.

 

 

5.  Net defined benefit pension charge


6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Expected return on pension scheme assets

900

1,040

2,064

Interest on pension scheme liabilities

(994)

(1,108)

(2,199)

Scheme expenses met by the Group

(233)

(223)

(392)

Net charge

(327)

(291)

(527)

 

 

6.  Non-statutory profit measures

 

Underlying profit measures

The Group seeks to present a measure of underlying performance which is not impacted by material non-recurring items or items considered non-operational in nature. This measure of profit is described as 'underlying' and is used by management to measure and monitor performance. The excluded items are referred to as 'non-underlying' items.

 

Non-underlying items

The non-underlying items included in profit before tax are as follows:



6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000






(i) Acquisition related:





Transaction costs

(a)

-

-

(1,552)

Amortisation of acquired intangible assets


(525)

-

(342)

Unwind of the fair value uplift adjustment on inventory

(b)

(182)

-

(1,061)

Unwind of discount on contingent consideration

(c)

(268)

-

(181)



(975)

-

(3,136)






(ii) Standfast flood:





Incremental costs, inventory loss and

property, plant and equipment impairments


(1,125)

(4,564)

(7,165)

Insurance reimbursements


1,342

6,303

9,413


(d)

217

1,739

2,248





(iii) Restructuring and reorganisation costs

(e)

(222)

-

(1,276)

Total non-underlying items included in profit before tax


(980)

1,739

(2,164)

Tax on non-underlying items


121

(296)

9

Total impact of non-underlying items on profit after tax


(859)

1,443

(2,155)

Unaudited Notes to the interim financial statements (continued)

 

 

6.  Non-statutory profit measures continued

 

Costs detailed in (a) - (c) below incurred in the period to 31 July 2017 relate to the acquisition of Clarke & Clarke, which completed on
31 October 2016.

 

(a) Transaction costs comprise legal and professional fees in relation to the acquisition.

(b) In accordance with IFRS, the inventory value was uplifted to fair value at the date of the acquisition by £1,243,000 and this adjustment increased cost of sales in the post-acquisition period. £182,000 (2016: £nil) cost in respect of unwind of the fair value uplift adjustment is considered an exceptional cost of sale. The balance of the fair value uplift has been fully unwound during the period.

(c)  A charge of £268,000 (2016: £nil) has been recognised in respect of unwind of the contingent consideration on acquisition in finance costs.

(d) The net other income balance of £217,000 (2016: £1,739,000) comprises of proceeds arising from reimbursement of costs to replace impaired plant and equipment and intangible assets.

(e) Restructuring and reorganisation costs relate to the ongoing reorganisation of the Group and comprise of the rationalisation of certain operational and support functions. These costs mainly comprise professional fees, employee severance and property costs associated with the reorganisation process and are included in administration expenses.

 

In addition to the non-underlying items detailed above, an adjustment is made for the LTIP accounting charge and net defined benefit pension charge in arriving at the 'Adjusted profit' and 'Adjusted earnings per share'.

 

 

7.  Income tax expense

 

 

6 months to

31 July

2017

£000

6 months to

31 July

2016

£000

Audited

Year to

31 January

2017

£000

Current tax:




 - UK, current tax

(891)

(757)

1,367

 - UK, adjustments in respect of prior years

-

(201)

78

 - overseas, current tax

-

-

-

Corporation tax

(891)

(958)

1,445

Deferred tax:




 - current year

90

(268)

271

-       adjustments in respect of prior years

-

219

(12)

-       effect of changes in corporation tax rates

(14)

19

(104)

Deferred tax

76

(30)

155

 




Tax charge for the period

(815)

(988)

(1,600)

 

No overseas taxation is anticipated to become payable within the immediate future due to the availability of gross tax losses of approximately £2,474,000 (2016: £1,302,000).

 

The deferred tax balance at 31 July 2017 included within these interim financial statements has been calculated at a rate of 17%, as this is the rate at which the majority of the balances are expected to unwind.

 

A change to the UK corporation tax rate was announced in the Chancellor's Budget on 16 March 2016 and became substantively enacted in Finance Bill 2016 on 6 September 2016 to reduce the main rate to 19% from 1 April 2017 and to 17% from 1 April 2020.

 

A deferred tax credit of £76,000 (2016: charge of £30,000) arose in the period to 31 July 2017 on the profits for the period.

 

A deferred tax charge of £5,000 (2016: £219,000) has been recognised for movements in the deferred tax relating to the long-term incentive plan. The movements in deferred tax relating to the long-term incentive plan have been recorded in equity in accordance with the Group's accounting policy.

 



 

Unaudited Notes to the interim financial statements (continued)

 

 

8.  Earnings per share

 

Basic earnings per share ('EPS') is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the year, excluding those held in the Employee Benefit Trust ('EBT') and those held in treasury, which are treated as cancelled. The adjusted basic earnings per share is calculated by dividing the adjusted earnings by the weighted average number of shares. As a consequence of the improved profitability of the Group, PBT performance criteria within LTIPs 9 and 10 are now being met and as a consequence these Long Term Incentive Plan ("LTIP") awards are now dilutive. 


6 months to

31 July 2017


6 months to

31 July 2016


Audited

Year to

31 January 2017



Earnings

£000

Weighted average number of shares

(000s)

 

Per

Share Amount

Pence


Earnings

£000

Weighted average number of shares

(000s)

Per

Share Amount

Pence


Earnings

£000

Weighted average number of shares

(000s)

Per Share Amount

Pence

 

Basic earnings per share

3,254

69,846

4.66


3,950

60,351

6.55


5,365

62,732

8.55

 

Effect of dilutive securities:












 

Shares under LTIP

-

2,088

-


-

767

-


-

3,645

-

 

Diluted earnings per share

3,254

71,934

4.52


3,950

61,118

6.46


5,365

66,377

8.08

 

Adjusted basic and diluted earnings

per share:












 

Add back

LTIP accounting charge

522




286




756



 

Add back

net defined benefit pension charge

327




291




527



 

Non-underlying items (note 6)

980




(1,739)




2,164



 

Tax effects of non-underlying items and other addbacks

(291)




180




(235)



 

Adjusted basic earnings

per share

4,792

69,846

6.86


2,968

60,351

4.92


8,577

62,732

13.67

 

Adjusted diluted earnings

per share

4,792

71,934

6.66


2,968

61,118

4.86


8,577

66,377

12.92

 

 

 

On 31 May 2017, 421,218 shares vested under the Company's LTIP. To satisfy the vesting, 227,247 shares of 1 pence each were allotted at par value and 4,909 shares were issued from the Walker Greenbank PLC EBT.

 

On 26 June 2017, the Company issued 1,116,586 ordinary shares of 1 pence each at an issue price of 206.25 pence per share in respect of the first tranche of the performance related Clarke & Clarke earn-out consideration for the period ended 31 January 2017.

 

Following these transactions Walker Greenbank's issued ordinary share capital with voting rights consists of 70,895,511 (2016: 60,604,309) ordinary shares of which no (2016: nil) ordinary shares are held in treasury and no (2016: 4,909) ordinary shares are held by the Walker Greenbank PLC EBT. Shares held in treasury or by the EBT are treated as cancelled when calculating EPS.

 

In order to finance the initial cash consideration to acquire 100% of the issued share capital of Clarke & Clarke, a placing of a total of 8,947,369 new ordinary shares of 1 pence each in the Company was announced on 12 October 2016. These shares, which represented approximately 12.9% of the Company's issued ordinary share capital on admission to trading on AIM (excluding treasury shares), were placed at a price of 190.0 pence per share raising proceeds of approximately £17,000,000.

 

On 16 May 2016, 773,397 shares vested under the Company's Long Term Incentive Plan. To satisfy the vesting, 431,788 shares of 1 pence each were allotted at par value.

 

Unaudited Notes to the interim financial statements (continued)

 

8.  Earnings per Share continued

 

The market value of shares held by the EBT at 31 July 2017 was £nil (2016: £9,352). The total number of shares held in the EBT at the period end represented 0% (2016: 0.01%) of the issued shares.

 

 

9.  Analysis of net funds / (debt)


1 February

2017

£000

Cash flow

£000

Current portion of term loan

£000

Other

non-cash changes

£000

31 July

2017

£000

Cash and cash equivalents

1,516

192

-

-

1,708

Bank overdraft

(6,626)

(234)

-

-

(6,860)

Cash and cash equivalents

and bank overdraft

(5,110)

(42)

-

-

(5,152)







Term loan due within 1 year

(199)

200

-

(1)

-

Term loan due after 1 year

-

-

-

-

-


(199)

200

-

-

-

Net debt

(5,309)

158

-

(1)

(5,152)

 

In December 2015, the Group entered into a new £12,500,000 multi-currency revolving credit facility with Barclays Bank PLC for a five year period and cancelled the existing Receivables facilities. The agreement also includes a £10,000,000 accordion facility option to further increase available credit which provides substantial headroom for future growth. An initial bank arrangement fee of £100,000 and an additional £40,000 is amortised over the life of the loan. Following full settlement of a five year variable rate Term Loan in July 2017, total facilities from Barclays Bank PLC comprise of the revolving credit facility secured on the Group's freehold property which may be drawn down in either sterling or euro.

 

The total Barclays Bank PLC facilities are capped at £22,500,000 (2016: £22,900,000); the utilisation of the facilities at 31 July 2017 was £6,860,000 (2016: £397,000). The revolving credit facility bears interest at a variable rate based on a margin above LIBOR (for sterling loans) or the EURIBOR (for euro loans).

 

Under the Barclays Bank PLC facilities, the Group is subject to compliance of two financial covenants, being interest cover and leverage. Any non-compliance with covenants could, if not remedied or waived, constitute an event of default with respect to any such arrangements. The Group has reported to Barclays Bank PLC that it was in full compliance with its covenants throughout each of the periods presented and expects to be for the remaining term of the agreement.

 

 

10.  Cash generated from operations


6 months to

31 July 2017

£000

6 months to

31 July 2016

£000

Audited

Year to 31

January

2017

£000

Profit before tax

4,069

4,938

6,965

Defined benefit pension charge

327

291

527

Net finance costs

402

60

367

Depreciation and impairment of property, plant and equipment

1,253

988

2,172

Insurance reimbursements

(2,411)

(7,896)

(12,250)

Amortisation

853

334

1,019

Charge for LTIP recognised in equity

443

258

658

LTIP vesting

(404)

(664)

(664)

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

22

(84)

56

Defined benefit pension cash contributions

(951)

(893)

(1,766)

Cash (used in) / generated from operating activities pre insurance proceeds

3,603

(2,668)

(2,916)

Insurance proceeds relating to operating activities

2,126

9,852

13,165

Cash generated from operating activities post insurance proceeds

5,729

7,184

10,249

Changes in working capital




Decrease / (increase) in inventories

1,259

(2,736)

(5,976)

(Increase) / decrease in trade and other receivables

(2,080)

(219)

2,728

(Decrease) / increase in trade and other payables

(3,186)

(1,176)

5,380

Cash generated from operations

1,722

3,053

12,381



Unaudited Notes to the interim financial statements (continued)

 

 

11.  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 carried out as at 31 January 2017, based on membership data at 5 April 2015, updated to take account of benefit outgo since 5 April 2015, using actuarial assumptions at 31 January 2017.

 

The assumptions applied for valuation of the defined benefit schemes are fully disclosed in the annual financial statements for the year ended 31 January 2017 and continue to be applied in the half year ended 31 July 2017. 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 2018, and are based on previous actuarial estimates. The net retirement benefit obligation recognised at 31 July 2017 is based on the actuarial valuation under IAS 19 'Employee Benefits' at 31 January 2017 updated for movements in net defined benefit pension charge and contributions paid during the half year period which include additional payments to the pension scheme to reduce the deficit along with regular contributions to fund scheme expenses. The deferred tax effect of movements in the net retirement benefit obligation has also been recognised in the half year. An updated funding valuation for IAS 19 financial reporting purposes will be completed for the next annual financial statements for the year ending 31 January 2018, at which time any actuarial gains and losses arising throughout the year will be recognised, including those arising from a change in the underlying assumptions applied for valuation of the defined benefit schemes.

 

 

12.  Business combinations

 

On 12 October 2016, the Group conditionally acquired Clarke & Clarke for an initial cash consideration of £25,000,000 and a contingent consideration of up to £17,500,000, in aggregate, payable in the Company's shares linked to the performance of the acquired business over a four year period, giving a total potential consideration of up to £42,500,000 excluding working capital adjustments. The completion date for the transaction was 31 October 2016.

 

As of 31 January 2017, the assumed probability adjusted contingent consideration was recalculated to be approximately £5,329,000. On 26 June 2017, the Group issued 1,116,586 ordinary share shares of 1 pence each in the Company (the "Consideration Shares") in respect of the first tranche of the performance related earn-out consideration. This first tranche of Consideration Shares has been issued following Clarke & Clarke achieving its variable EBITDA target for the period ended 31 January 2017. The Consideration Shares have been issued at an issue price of 206.25 pence per share (being the average closing price for the Company's Ordinary Shares 10 business days preceding 16 June 2017) and are subject to a 12 month lock-in period.

 

The Group remeasures the contingent consideration at fair value at each balance sheet date. The estimated fair value of the contingent consideration at 31 July 2017 was approximately £3,916,000, which is classified at Level 3 in the fair value hierarchy.

 

Following finalisation of the Group's tax computations for the year ended 31 January 2017, purchase consideration for Clarke & Clarke has been reassessed in respect of tax reliefs relating to the acquiree's pre-acquisition position. This has resulted in an increase of £338,000 taken against goodwill which is shown as a prior year restatement of the Unaudited Consolidated Balance Sheet.

 

 

13.  Dividends

 

The directors paid on 11 August 2017, a final dividend of 3.06 pence per share (2016: 2.45 pence), a total of £2,169,000 (2016: £1,485,000) for the financial year ended 31 January 2017.

 

The directors have announced an interim dividend of 0.69 pence per share (2016: 0.55 pence), a total of £489,000
(2016: £333,000) for the six months ended 31 July 2017, which will be payable on 17 November 2017 to shareholders on the register on 20 October 2017.

 

 

14.  Events after the reporting period

 

On 14 August 2017 Fiona Holmes, Managing Director of the Brands business, resigned from the Company's Board and left the business with immediate effect to pursue other interests.

 



 

Independent review report to Walker Greenbank PLC

 

Report on the interim financial statements

 

Our conclusion

We have reviewed Walker Greenbank PLC's interim financial statements (the "interim financial statements") in the Interim Results of Walker Greenbank PLC for the 6 month period ended 31 July 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

What we have reviewed

The interim financial statements comprise:

 

        •       the Unaudited Consolidated Balance Sheet as at 31 July 2017;

        •       the Unaudited Consolidated Income Statement and Unaudited Consolidated Statement of Comprehensive Income for the
        period then ended;

        •       the Unaudited Consolidated Cash Flow Statement for the period then ended;

        •       the Unaudited Consolidated Statement of Changes in Equity for the period then ended; and

        •       the explanatory notes to the interim financial statements.

 

The interim financial statements included in the Interim Results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

The Interim Results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

 

Our responsibility is to express a conclusion on the interim financial statements in the Interim Results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the AIM Rules for Companies and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

What a review of interim financial statement involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

St Albans

3 October 2017

 

a) The maintenance and integrity of the Walker Greenbank PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

 

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


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