TIDMWGB
RNS Number : 8427P
Walker Greenbank PLC
15 October 2019
For immediate release 15 October 2019
WALKER GREENBANK PLC
("Walker Greenbank", the "Company" or the "Group")
Interim Results for the six months ended 31 July 2019
Walker Greenbank PLC (AIM: WGB), the luxury interior design and
furnishings group, announces its interim results for the six-month
period ended 31 July 2019, which are in line with the Board's
expectations.
Financial Highlights
Six months ended 31 July 2019 2018 Change
2019
Revenue GBP55.9m GBP54.7m +2.2%
Adjusted underlying profit
before tax* GBP4.9m GBP4.3m +14.0%
Adjusted underlying EPS* 5.54p 4.73p +17.1%
Statutory profit before
tax GBP3.5m GBP3.9m (10.3)%
Basic EPS 3.70p 4.35p (14.9)%
Interim dividend per share 0.52p 0.69p (24.6)%
-- Total Brand product sales up 1.2% in reportable currency, up
0.1% in constant currency reflecting International sales offset by
challenging trading conditions in the UK. On a like-for-like
basis**, international brand sales were down 1.3% in constant
currency
-- Licence income up 60.0% in both reportable and constant
currency, largely driven by the IFRS 15 recognition of future
guaranteed licensing income but also reflecting core licensing
growth over the period. Excluding the recognition of fixed minimum
guaranteed licensing income under IFRS 15 and income from apparel
contracts, core licensing income was up approximately 12.2% in
reportable currency (up 12.4% in constant currency)
-- Total Manufacturing sales including Group sales up 5.1% in
reportable currency. Total third-party manufacturing sales down
4.7% driven by lower UK sales but offset in part by strong overseas
manufacturing sales up 16.6%
-- Net debt down following the adoption of IFRS 16 'Leases'
GBP7.7 million (31 January 2019: GBP9.2 million on an equivalent
basis). Excluding impact of IFRS 16 net funds of GBP0.9 million (31
January 2019: net funds of GBP0.4 million)
-- New five year bank facilities to 2024 comprising GBP12.5
million rolling credit facility and GBP5 million accordion
-- Interim dividend of 0.52p per share (H1 2018: 0.69p) with
full year dividend pay-out ratio expected to be maintained
Operational Highlights
-- Significant progress made on the review of the Company's strategy
-- Morris & Co brand continues to perform strongly,
reflecting sustained consumer interest in the Arts & Crafts
movement
-- Kravet Inc. appointed in July 2019 to represent the Clarke
& Clarke and Studio G brands in the US with encouraging
performance seen to date
-- Efficiency and cost-saving initiatives expected to deliver
GBP2 million of annualised cost savings of which approximately GBP1
million will be delivered in the second half of the current
financial year
*Excludes accounting charges relating to the LTIP, defined
benefit pension charge and non-underlying items, see note 7 to the
financial statements below.
**Reflecting a temporary change to the Company's US operating
model for Clarke and Clarke sales whereby revenue in the half year
was recorded on an agency basis whereby sales in the prior half
year were recorded on a distribution basis
Dianne Thompson, Non-executive Chairman of Walker Greenbank,
said: "Trading in the first half of the year was in line with the
Board's expectations and continues to reflect the challenges
affecting the consumer sector both in the UK and internationally.
We have made significant progress with our strategy review and have
begun taking steps to increase the focus of the business going
forwards to drive sales and increase efficiency. At this stage of
the year, as we enter the autumn selling period, we continue to
expect the full year out-turn to meet the Board's
expectations."
Analyst meeting
A meeting for analysts will be held at 10.00 a.m. today, 15
October 2019, at the offices of Buchanan, 107 Cheapside, London
EC2V 6DN. For further details, contact Buchanan on 020 7466 5000 or
email walkergreenbank@buchanan.uk.com.
For further information:
Walker Greenbank PLC c/o +44 (0) 20 7466 5000
Lisa Montague, Chief Executive Officer
Mike Gant, Chief Financial Officer
Caroline Geary, Company Secretary
Investec Bank plc (Nominated Adviser
and Broker) +44 (0) 20 7597 5970
David Anderson / Alex Wright
Henry Reast
Buchanan +44 (0) 20 7466 5000
Mark Court / Sophie Wills
Notes for editors:
About Walker Greenbank
Walker Greenbank PLC is a luxury interior furnishings company
that designs, manufactures and markets wallpapers, fabrics and
paints. In addition, the Company derives significant licensing
income from the use of its designs on a wide range of products such
as bed and bath collections, rugs, blinds and tableware.
Walker Greenbank's brands include Zoffany, Sanderson, Morris
& Co., Harlequin, Scion, Anthology, Clarke & Clarke and
Studio G.
The Company has a strong UK manufacturing base comprising Anstey
wallpaper factory in Loughborough and Standfast & Barracks a
fabric printing factory, in Lancaster. Both sites manufacture for
the Company and for other wallpaper and fabric brands.
Walker Greenbank employs more than 650 people and its products
are sold in more than 85 countries worldwide. It has showrooms in
London, New York, Chicago, Paris, Amsterdam, Moscow and Dubai.
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/
CHIEF EXECUTIVE'S STRATEGIC AND OPERATIONAL REVIEW
Introduction
These interim results, for the six months ended 31 July 2019,
mark my first as Chief Executive Officer of Walker Greenbank. I was
very pleased to be appointed to the role in April this year and I
am excited by the potential of the Company, which has a compelling
core asset in its brands and the strength of design that runs
throughout the business supported by an extensive and valuable
design archive.
Strategy review
As previously announced, I have been leading a review of the
Company's strategy on behalf of the Board. I am pleased to provide
today an overview of our planned changes in strategic emphasis,
which seek to build upon our compelling market proposition by
sharpening the focus of the Company to drive future growth.
Walker Greenbank benefits from a strong and broad portfolio of
brands, each with clear market positions, customers and price
points. Each of these brands has a defined identity and unique
attributes. To drive sales growth, we intend to focus precisely on
the individuality of each brand, giving them their own market,
product and launch strategies thereby strengthening their positions
in their respective marketplaces and cementing relationships with
key customers and expanding those relationships further.
Walker Greenbank is a business-to-business company and, whilst
there are changes in our broader marketplace as a result of
e-commerce in particular, our short and medium term strategy is to
focus on our core products of wallpaper, fabric and paint and to
build deeper relationships with our core trade customers. We have
already identified, through independent market research, a number
of straightforward initiatives to improve our customer service.
Licensing, or other forms of collaboration, will continue to
underpin the brands' use in homeware, finished goods and other
products.
People, and creativity, are at the heart of our business. In our
industry, Walker Greenbank is the favoured destination for emerging
new designers and we will benefit from doing even more to bring in
new design talent. We are also strengthening our senior leadership
team with three important appointments: Mauricio Solodujin has
already started in the new position of Global Commercial Director
to work across all brands, markets and channels. Both a Group
Marketing & Digital Director and a Group Operations Director
have been recruited to join the Company before the end of the
current financial year to drive brand initiatives and operational
efficiencies throughout our international organisation.
Our brands continue to have significant international potential,
reflected in their being sold in more than 85 countries worldwide.
The sales in many of these countries are small and in future we
will focus our efforts on developing three key geographies: the UK,
Northern Europe and the US. Our approach will be tailored to each
individual region. For example, in the US, which has the potential
to be a major market for the Company, we will, over time and
leveraging our understanding and experience in the US market,
develop our presence on the ground.
In summary, the Company's strategy going forwards will be a
sharp focus on driving the brands; on core products of wallpaper,
fabric and paint and core customers; investing in people; and three
key geographies of the UK, Northern Europe and the US. This
strategy will be supported by our UK manufacturing base, which
remains an important asset and differentiator for the business.
In addition, we will continue to identify cost savings and
improve the efficiency, agility and productivity of the business
where possible, for example through innovation in product marketing
and optimising the numbers of products launched to deliver our
internal hurdle rates of return on creation costs.
I look forward to providing a comprehensive update on progress
with this strategy at the time of our full year results
announcement next year.
Operational review
Interim results
As set out in the half year trading update released on 6 August
2019, trading conditions in the six months to 31 July 2019
continued to be challenging, although our performance in the half
year was in line with the Board's expectations.
Total sales in the six months to 31 July 2019 were up 2.2% at
GBP55.9 million (H1 2018: GBP54.7 million). The adjusted underlying
profit before tax* for the first six months was GBP4.9 million (H1
2018: GBP4.3 million), an increase of 14.0% on the same period last
year, reflecting the recognition of fixed minimum guaranteed
licensing income under IFRS 15 offset by the performance of the
portfolio of brands within the Brands division.
During the first half, the Company progressed a number of
efficiency and cost-saving initiatives, including the integration
of Clarke & Clarke's support functions, resulting in expected
annual savings of approximately GBP2 million, of which
approximately GBP1 million will be delivered in the second half of
the current financial year.
The interim results reflect the Group's adoption of IFRS 16
'Leases' from the start of the financial year on a modified
retrospective basis. Accordingly, the prior half-year comparative
numbers have not been restated.
Segmental review
The Brands
Half year ended Change
31 July
----------------
2019 2018 Reported Constant Like-for-like**
currency
---------- ---------- --------- ---------- ----------------
Total Brand sales GBP46.3m GBP44.6m +3.8% +0.8% n/a
---------- ---------- --------- ---------- ----------------
Comprising:
---------- ---------- --------- ---------- ----------------
Licensing GBP3.2m GBP2.0m +60.0% +60.0% n/a
---------- ---------- --------- ---------- ----------------
UK Brand product GBP22.2m GBP23.1m (3.9%) n/a n/a
sales
---------- ---------- --------- ---------- ----------------
International Brand
product sales GBP20.9m GBP19.5m +7.2% +4.8% (1.3)%
---------- ---------- --------- ---------- ----------------
* US GBP8.0m GBP6.9m +15.9% +9.7% (6.2%)
---------- ---------- --------- ---------- ----------------
* Western Europe GBP6.1m GBP5.8m +5.2% +5.4% n/a
---------- ---------- --------- ---------- ----------------
GBP6.8m GBP6.8m - +1.0% n/a
* Rest of the World
---------- ---------- --------- ---------- ----------------
Total Brand product
sales GBP43.1m GBP42.6m +1.2% +0.1% (2.7%)
---------- ---------- --------- ---------- ----------------
The Brands segment comprises Sanderson, Morris & Co.,
Harlequin, Zoffany, Scion, Anthology, Clarke & Clarke and
Studio G. It includes licensing income derived from the brands as
well as global trading from our brands, including our overseas
operations in the US, France, Russia and Germany.
Total Brand sales increased in the first half by 3.8% in
reportable currency, compared with the same period last year, to
GBP46.3 million, up 0.8% in constant currency. Total Brand product
sales excluding licensing were up 1.2% in reportable currency,
compared with the same period last year, at GBP43.1 million.
In the UK, our largest market, sales decreased by 3.9% compared
with the same period last year to GBP22.2 million, impacted by the
weaker UK consumer environment. Within the Brands, Clarke &
Clarke has continued to perform strongly as a result of being
positioned at the more affordable end of our premium target markets
and boosted by the growth of homeware ranges, which are a
relatively new category for the business.
Morris & Co. has also continued to perform well, reflecting
the sustained revival of consumer interest in the Arts & Crafts
movement.
International Brand product sales were up 7.2% in reportable
currency, up 4.8% in constant currency, to GBP20.9 million. The
international performance in the half year primarily reflects a
temporary change in the US operating model relating to the
distribution of the Clarke & Clarke and Studio G brands in
which revenue due to a third party is included in the Company's
reported Brands revenue. This change in operating model ceased to
be in effect on 31 July 2019. On a like-for-like basis**,
international brand sales were down 1.3%.
Starting on 1 August 2019, we appointed Kravet Inc., the
industry leader in the to the trade home furnishings industry, to
distribute the Clarke & Clarke and Studio G brands in the US.
Kravet Inc, has a substantial footprint in the US and we are
pleased by the progress made to date.
Sales in the US, our second largest market after the UK, were up
15.9% in reportable currency, up 9.7% in constant currency,
compared with the same period last year, to GBP8.0 million. On a
like-for-like basis**, sales in the US were down approximately
6.2%, reflecting the impact of the disruption to Clarke &
Clarke distribution following the Robert Allen Duralee Group
entering into Chapter 11.
Brand product sales in Western Europe were up 5.2% in reportable
currency, up 5.4% in constant currency, compared with the same
period last year at GBP6.1 million and sales in the Rest of the
World were up 1.0% in constant currency.
Licensing
Licensing income in the first six months was up 60.0% in
reportable currency, 60.0% in constant currency, to GBP3.2 million,
largely as a result of the recognition of fixed minimum guaranteed
licensing income together with a strong performance from our core
bedding, blinds and Japanese licensees. During the first half,
approximately 30% of licensing income was generated in overseas
markets. Excluding the recognition of fixed minimum guaranteed
licensing income under IFRS 15 and income from apparel contracts,
core licensing income was up approximately 12.2% in reportable
currency (up 12.4% in constant currency), compared with the
corresponding period last year.
Manufacturing
Total manufacturing sales grew 5.1% over the first six months to
GBP17.1 million compared with the same period last year.
Third-party sales were down 4.7% in the first half, primarily due
to a contraction in orders from UK customers driven by economic
uncertainty. During the period, both factories continued to grow
exports as a result of their digital printing capabilities and of
the weakness of Sterling. Third-party export sales grew by 16.6%
year-on-year over the same period.
Export sales at Anstey, our wallpaper printing factory,
delivered a strong performance in the first half of the year as it
took advantage of a third new digital printer installed in quarter
one. Digital printing sales grew by 42% compared with the first
half last year and digital grew significantly as a proportion of
factory output from 8.7% to 12.3%.
At Standfast, our fabric printing factory, its 55%:45% digital
to traditional print mix remained unchanged as conventional fabrics
benefited from renewed interest from home and abroad. We expect to
increase both digital and conventional print volumes further with
the launch of a new outdoor range of digitally printed pigment
products and leverage technical innovation in conventional
fabrics.
Impact of the UK's exit process from the European Union
The negotiation of the UK's exit terms from the European Union
continues to present significant uncertainties owing to the
potential impact of a disorderly exit on supply chains, tariffs,
exchange rates and consumer demand. As disclosed at the time of our
results in April 2019, we are building stocks of key raw materials
that could be affected by disruption to the flow of goods into the
UK.
*Excluding the Long-Term Incentive Plan ("LTIP") accounting
charge, the net defined benefit charge and non-underlying items
**Reflecting a temporary change to the Company's US operating
model for Clarke and Clarke sales whereby revenue in the half year
was recorded on an agency basis whereby sales in the prior half
year were recorded on a distribution basis
FINANCIAL REVIEW
Newly adopted accounting standards
The Group has adopted IFRS 16 'Leases' from 1 February 2019.
This has resulted in changes in accounting policies. In accordance
with the transition provisions in IFRS 16, the Group has adopted
the new rules on a modified retrospective basis and therefore not
restated comparatives for the financial year. Note 1 to the
financial statements below describes the impact of the Group
adopting IFRS 16.
The balance sheet at 31 July 2019 recognises new 'right-of-use
assets' of GBP8.8 million and new lease liabilities totalling
GBP8.7 million. In the Income Statement operating lease costs (save
for low-value and short-term leases) have been replaced by a
depreciation charge on each right-of-use asset and an interest
charge that reduces over the lease term. Total expenses
(depreciation for 'right of use' assets and interest on lease
liabilities) are higher in the earlier years of a typical lease and
lower in the later years, in comparison with former accounting for
operating leases. The main impact on the Statement of Cash Flows is
higher cash flows from operating activities, since cash payments
for the principal part of the lease liability are classified in the
net cash flow from financing activities.
Overview
Statutory profit before tax of GBP3.5 million (H1 2018: GBP3.9
million) included non-underlying charges of GBP1.06 million (H1
2018: non-underlying charges of GBP0.04 million). These are
analysed below:
H1 2019 H1 2018
GBP000 GBP000
------------------------------------------------- -------- --------
Statutory profit before tax 3,515 3,867
------------------------------------------------- -------- --------
Amortisation of acquired intangible assets 508 508
Restructuring and reorganisation costs 694 95
------------------------------------------------- -------- --------
Anstey fire insurance reimbursements (144) (650)
Anstey fire-related costs - 85
------------------------------------------------- -------- --------
Anstey net other income (144) (565)
------------------------------------------------- -------- --------
Total non-underlying charges included in profit
before tax 1,058 38
------------------------------------------------- -------- --------
Underlying profit before tax 4,573 3,905
LTIP accounting charge - 68
Net defined benefit pension charge 359 323
Adjusted underlying profit before tax 4,932 4,296
------------------------------------------------- -------- --------
Acquisition related costs incurred were in respect of the
acquisition of Clarke & Clarke, which completed on 31 October
2016. This comprises the amortisation of intangible assets of
GBP0.5 million.
Restructuring and reorganisation costs of GBP0.7 million reflect
the rationalisation of certain operational and support functions
relating to the integration of the warehouse and back offices of
Clarke & Clarke into Style Library. These costs mainly comprise
professional fees, employee severance and property costs associated
with the reorganisation process.
Anstey net other income comprises proceeds of GBP0.14 million
from the insurance reimbursement of plant and equipment repair and
related costs following the machine fire in 2017.
In addition to the non-underlying net other income described
above, a further GBP0.05 million was recognised during the year in
underlying net other income, which represents business interruption
losses for the period to 31 July 2019.
The net underlying interest charge increased to GBP0.21 million
as a result of the impact of IFRS 16. The defined benefit pension
charge increased marginally to GBP0.36 million driven by an
increase in the interest on pension scheme liabilities as a result
of the increase in the pension deficit.
Adjusted underlying profit before tax, excluding the LTIP
accounting charge, defined benefit charge and non-underlying items,
increased 14.0% to GBP4.9 million (H1 2018: GBP4.3 million).
Adjusted earnings per share were up 17.1% at 5.54 pence (H1
2018: 4.73 pence), after removing the LTIP accounting charge,
defined benefit charge and other non-underlying items.
Statutory profit after tax was GBP2.6 million (H1 2018: GBP3.1
million) and basic earnings per share were down 15.2% at 3.69 pence
(H1 2018: 4.35 pence).
Cash flow
A working capital outflow during the period of GBP3.0 million
(H1 2018: GBP1.0 million) reflected:
- an increase in accrued accelerated licensing income:
- the half year movement in stock driven by higher levels of
stock in Brands and Anstey to mitigate potential supply chain
disruption due to Brexit; and
- the GBP0.19m insurance reimbursement proceeds received in respect of the Anstey machine fire.
Capital expenditure in the period was GBP1.2 million which
includes the purchase of a digital pigment printer at our fabric
printing factory in line with the Group's strategy to continue to
invest in innovative printing techniques, cementing its position as
the UK's leading manufacturer to the industry.
The Group's reported net debt (post IFRS 16) at the half year
increased to GBP7.7 million. Excluding the impact of IFRS 16, the
Group had net funds at the end of July 2019 of GBP0.9 million (H1
2018: GBP3.4 million).
Dividend
The Board has declared an interim dividend of 0.52p per share
(H1 2018: 0.69p) with the previous year's dividend pay-out ratio
expected to be maintained for the current financial year. The
interim dividend will be payable on 22 November 2019 to
shareholders on the register as at 25 October 2019.
People
On behalf of the Board, I would like to thank all of our
management and employees for their contribution during the first
half.
Current Trading and Outlook
Trading in the first half of the year was in line with the
Board's expectations and continues to reflect the challenges
affecting the consumer sector both in the UK and internationally.
We have made good progress with our strategy review and have begun
taking steps to increase the focus of the business going forwards
to drive sales and increase efficiency. At this stage of the year
as we enter the autumn selling period, we continue to expect the
full year out-turn to meet the Board's expectations.
Lisa Montague
Chief Executive Officer
14 October 2019
Unaudited Consolidated Income Statement
For the six months ended 31 July 2019
6 months to 31 July 6 months to 31 July
2019 2018
--------------------------------------- ---------------------------------------
Non-underlying Non-underlying
(note (note
Underlying 7) Total Underlying 7) Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- ----------- --------------- --------- -----------
Revenue 2 55,932 - 55,932 54,682 - 54,682
Cost of sales (20,405) - (20,405) (22,332) - (22,332)
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Gross profit / (loss) 35,527 - 35,527 32,350 - 32,350
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Net operating expenses:
Distribution and selling
expenses (11,950) - (11,950) (11,790) - (11,790)
Administration expenses 6 (21,490) (1,202) (22,692) (19,798) (603) (20,401)
Net other income 5 2,694 144 2,838 3,278 565 3,843
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Profit / (loss) from
operations 4,781 (1,058) 3,723 4,040 (38) 4,002
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Net finance costs (208) - (208) (135) - (135)
Profit / (loss) before
tax 4,573 (1,058) 3,515 3,905 (38) 3,867
Tax (expense) / income 8 (1,082) 190 (892) (862) 78 (784)
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Profit / (loss) for
the period attributable
to owners of the parent 3,491 (868) 2,623 3,043 40 3,083
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Earnings per share
- Basic 9 3.70p 4.35p
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Earnings per share
- Diluted 9 3.70p 4.35p
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Adjusted earnings
per share - Basic 9 5.54p 4.73p
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Adjusted earnings
per share - Diluted 9 5.54p 4.73p
------------------------- ------- ----------- --------------- --------- ----------- --------------- ---------
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2019
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
Profit for the period 2,623 3,083
Items that may be reclassified subsequently
to profit or loss:
Currency translation gains 71 93
Total items that may be reclassified
subsequently to profit or loss 71 93
-------------------------------------------------- --------- ---------
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of defined benefit pension 3,917 -
schemes
Deferred tax relating to pension scheme (666) -
liability
-------------------------------------------------- --------- ---------
Total items recognised directly in equity 3,251
-------------------------------------------------- --------- ---------
Total comprehensive income for the period
attributable to
the owners of the parent 5,945 3,176
-------------------------------------------------- --------- ---------
Unaudited Consolidated Balance Sheet
As at 31 July 2019
As at As at As at
31 July 31 July 31 January
2019 2018 2019
Note GBP000 GBP000 GBP000
---------------------------------- ----- --------- --------- -------------
Non-current assets
Intangible assets 30,291 31,419 30,816
Property, plant and equipment 14,679 15,929 15,227
Right-of-use assets 8,793 - -
-------------
53,763 47,348 46,043
---------------------------------- ----- --------- --------- -------------
Current assets
Inventories 28,807 27,878 28,020
Trade and other receivables 21,077 22,116 18,857
Cash and cash equivalents 10 2,460 1,813 2,415
---------------------------------- ----- --------- --------- -------------
52,344 51,807 49,292
---------------------------------- ----- --------- --------- -------------
Total assets 106,107 99,155 95,335
---------------------------------- ----- --------- --------- -------------
Current liabilities
Trade and other payables (22,380) (20,545) (21,839)
Lease liabilities (2,589) - -
Borrowings 10 (1,538) (5,181) (1,981)
-------------
(26,507) (25,726) (23,820)
---------------------------------- ----- --------- --------- -------------
Net current assets 25,837 26,081 25,472
---------------------------------- ----- --------- --------- -------------
Non-current liabilities
Lease liabilities (6,077) - -
Deferred income tax liabilities (1,510) (1,542) (970)
Retirement benefit obligation (5,186) (6,620) (9,663)
-------------
(12,773) (8,162) (10,633)
-------------
Total liabilities (39,280) (33,888) (34,453)
-------------
Net assets 66,827 65,267 60,882
---------------------------------- ----- --------- --------- -------------
Equity
Share capital 710 710 710
Share premium account 18,682 18,682 18,682
Retained earnings / (accumulated
losses) 7,266 5,800 1,392
Other reserves 40,169 40,075 40,098
---------------------------------- ----- --------- --------- -------------
Total equity attributable to
owners of the parent 66,827 65,267 60,882
---------------------------------- ----- --------- --------- -------------
Unaudited Consolidated Cash Flow Statement
For the six months ended 31 July 2019
6 months 6 months
to to
31 July 31 July
2019 2018
Note GBP000 GBP000
------------------------------------------- ----- --------- ---------
Cash flows from operating activities
Cash generated from operations 11 3,555 4,181
Finance costs paid (including interest
on lease liabilities) (266) (128)
Corporation tax paid (402) (694)
Net cash generated from operating
activities 2,887 3,359
------------------------------------------- ----- --------- ---------
Cash flows from investing activities
Finance income received - 3
Capital element of lease payments (1,291) -
Purchase of intangible assets (337) (469)
Purchase of property, plant and equipment (839) (1,143)
Net cash used in investing activities (2,467) (1,609)
------------------------------------------- ----- --------- ---------
Cash flows from financing activities
Net cash used in financing activities - -
------------------------------------------- ----- --------- ---------
Net increase in cash and cash equivalents 420 1,750
Cash and cash equivalents and bank
overdraft at beginning of period 434 (5,263)
Effect of exchange rate fluctuations
on cash held 68 145
Cash and cash equivalents and bank
overdraft at end of period 10 922 (3,368)
------------------------------------------- ----- --------- ---------
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 31 July 2019
Attributable to equity owners of the parent company
----------------------- -------------------------------------------------------------------------------------
Other reserves
----------------------- --------- --------- ---------------- ----------------------------------- --------
Retained Foreign
Share earnings currency
Share premium / (accumulated Capital Merger translation Total
capital account losses) reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- --------- ---------------- --------- --------- ------------- --------
Balance at 1 February
2019 710 18,682 1,392 43,457 (2,950) (409) 60,882
Profit for the
period - - 2,623 - - - 2,623
Other comprehensive
income:
Re-measurement
of defined benefit
pension schemes - - 3,917 - - - 3,917
Deferred tax relating
to pension scheme
liability - - (666) - - - (666)
Currency translation
differences - - - - - 71 71
Total comprehensive
income - - 7,266 - - 71 2,168
Transactions with - - - - - - -
owners, recognised
directly in equity:
Balance at 31 July
2019 710 18,682 7,266 43,457 (2,950) (338) 66,827
----------------------- --------- --------- ---------------- --------- --------- ------------- --------
Attributable to equity owners of the parent company
----------------------- -------------------------------------------------------------------------------------
Other reserves
----------------------- --------- --------- ----------------------------------------------------- --------
Retained Foreign
Share earnings currency
Share premium / (accumulated Capital Merger translation Total
capital account losses) reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- --------- ---------------- --------- --------- ------------- --------
Balance at 1 February
2018 709 18,682 2,778 43,457 (2,950) (525) 62,151
Profit for the
period - - 3,083 - - - 3,083
Other comprehensive
income:
Currency translation
differences - - - - - 93 93
Total comprehensive
income - - 3,083 - - 93 3,176
Transactions with
owners, recognised
directly in equity:
Allotment of share
capital 1 - (1) - - - -
Long-term incentive
plan charge - - 75 - - - 75
Long-term incentive
plan vesting - - (135) - - - (135)
----------------------- --------- --------- ---------------- --------- --------- ------------- --------
Balance at 31 July
2018 710 18,682 5,800 43,457 (2,950) (432) 65,267
----------------------- --------- --------- ---------------- --------- --------- ------------- --------
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 2020. 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 2019 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 2019, 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 2018, unless otherwise stated.
The accounting policies adopted in the preparation of these
interim financial statements to 31 July 2019 are consistent with
the accounting policies applied by the group in its annual report
and accounts as at, and for the year ended, 31 January 2019 as
required by the Disclosure Guidance and Transparency Rules ('DTR')
of the UK's Financial Conduct Authority, with the exception of the
adoption of new and amended standards as set out below.
Since the Group's previous annual financial report for the year
ended 31 January 2019, a number of authoritative pronouncements
issued by the International Accounting Standards Board and IFRS
Interpretations Committee along with new or revised accounting
standards are now effective for financial years beginning on or
after 1 February 2019. This is the Group's first set of financial
statements where IFRS 16 ('Leases') has been applied; details of
which are described below.
Standards not yet effective
A number of new standards and amendments to standards are
effective for annual periods beginning after 1 February 2019 and
earlier application is permitted; however, the Group has not early
adopted them in preparing these interim financial statements.
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
2019 is based on the statutory accounts for the financial year
ended 31 January 2019, 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 six-month period ended 31 July 2019 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, a period of not less than 12 months from the
date of this report. Accordingly, the going concern basis has been
adopted in preparing the interim statements.
The Group's activities expose it to a variety of financial
risks: market risk (including foreign exchange risk and interest
rate risk), credit risk, liquidity risk and capital risk. The
interim financial statements do not include all risk management
information and disclosures required in the annual report and
accounts; they should be read in conjunction with the Group's
annual report and accounts as at 31 January 2019. In particular,
information on the principal risks can be found on page 20 - 21 of
the Group's 2019 annual report which comprise of trading
environment; competition; foreign exchange; pension funding;
recruitment and retention of key employees; reputation;
acquisition; major incident such as a fire or flood; IT; and risks
resulting from the impact of Brexit. There have been no changes in
either the principal risks or risk management policies since the
year end.
Unaudited Notes to the interim financial statements
(continued)
1. Basis of preparation of interim financial statements
(continued)
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates. In preparing these interim
financial statements, the significant judgements made by management
in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 January
2019, with the exception of changes in estimates that are required
in determining the provision for income taxes and the following new
critical estimates for the newly adopted accounting policies
described below.
The Board approved the interim financial statements on 14
October 2019.
Newly adopted accounting policies
IFRS 16 Leases
IFRS 16 supersedes IAS 17 'Leases' and IFRIC 4 'Determining
whether an Arrangement contains a Lease'. IFRS 16 introduced a
single, on-balance sheet accounting model for leases. The Group now
assesses whether a contract is or contains a lease based on the new
definition of a lease. Under IFRS 16, a contract is, or contains, a
lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration. As a result, the Group, as a lessee, has recognised
right-of-use assets representing its right to use the underlying
leased assets and lease liabilities representing its obligation to
make lease payments. The Group has applied IFRS 16 using the
modified retrospective transition approach, whereby the initial
right-of-use asset values were equal to the present value of the
remaining lease payments, discounted at the rate implicit in each
lease, or the Group's incremental borrowing rate if this was not
readily determinable. The weighted average lessee's incremental
borrowing rate applied to the lease liabilities on 1 February 2019
was 2.57%.
Nature of the effect of adoption of IFRS 16
The Group has lease contracts for various items of property,
vehicles, plant and machinery. Prior to the adoption of IFRS 16,
leases of property, plant and machinery were classified as either
finance or operating leases. Payments made under operating leases
(net of any incentives received from the lessor) were previously
charged to the Income Statement on a straight-line basis over the
period of the lease.
Upon adoption of IFRS 16, the Group elected to apply the
practical expedient allowing the standard to be applied only to
contracts that were previously identified as leases under IAS17 and
IFRIC 4. Therefore, the definition of a lease under IFRS 16 has
been applied only to contracts entered into or amended on or after
31 January 2019. The Group also elected to use the recognition
exemptions for lease contracts that, at the date of transition,
have a lease term of 12 months or less and do not contain a
purchase option, and lease contracts for which the underlying asset
is of low value (<GBP3,000 ('low-value assets)).
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease. The right-of-use assets are measured at cost,
less accumulated depreciation and impairment losses and adjusted
for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised, adjusted for any lease payments made at or before the
transition date, less any lease incentives received. Right-of-use
assets are depreciated over the shorter of the asset's useful life
or the lease term on a straight-line basis, and are subject to and
reviewed regularly for impairment.
Unaudited Notes to the interim financial statements
(continued)
1. Basis of preparation of interim financial statements
(continued)
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of the lease
payments to be made over the lease term. Lease payments include
fixed payments (including any initial direct costs incurred) less
any lease incentives receivable and variable lease payments that
depend on an index or rate. Any variable or lease payments that do
not depend on an index or rate are recognised as an expense in the
period in which the event or condition that triggers the payment
occurs.
After the commencement date, the lease liability is increased to
reflect the accretion of interest and reduced for lease payments
made. Additionally, the carrying amount of lease liabilities is
re-measured if there is any relevant contractual change made to the
lease such as changes to the lease term or payment profile.
Interest charges are included within finance costs within the
Income Statement.
Lease term
Extension and termination options are included in a number of
property and vehicle leases across the Group. These terms are used
to maximise operational flexibility in terms of managing contracts.
The majority of extension and termination options held are
exercisable only by the Group and not by the respective lessor. In
determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended
(or not terminated).
Accounting impact on the Consolidated Balance Sheet
The impact on the Consolidated Balance Sheet as at 1 February
2019 (the date of transition) is the recognition of the following
items:
1 February
2019
GBP000
Assets
-----------
Non-current assets 9,785
-----------
Analysed as right-of-use assets related
to:
* Properties 8,090
716
979
* Motor vehicles
* Plant and machinery
-----------
Current assets
-----------
Prepayments (within trade and other receivables) (198)
-----------
Total impact on assets 9,587
-----------
Current liabilities
-----------
Lease liabilities (under one year) (2,506)
-----------
Non-current liabilities
-----------
Lease liabilities (more than one year) (7,081)
-----------
Total impact on liabilities (9,587)
-----------
Total impact on net assets -
-----------
Unaudited Notes to the interim financial statements
(continued)
1. Basis of preparation of interim financial statements
(continued)
The following table provides a reconciliation from the total
operating lease commitment as disclosed at 31 January 2019 to the
total lease liabilities recognised in the Consolidated Balance
Sheet in the accounts immediately following transition:
Properties Plant Motor Total
and machinery vehicles
GBP000 GBP000 GBP000 GBP000
----------- -------------- --------- ------
Operating lease commitments at 31 January
2019 * 8,356 1,012 709 10,077
----------- -------------- --------- ------
Add: payments due in periods covered
by extension options (which management
believe to be reasonably certain) 274 11 19 304
----------- -------------- --------- ------
Less: short-term leases (124) (14) (59) (197)
----------- -------------- --------- ------
Less: impact of discounting at the
date of transition (496) (60) (41) (597)
----------- -------------- --------- ------
Total lease liabilities recognised
at the date of transition 8,010 949 628 9,587
----------- -------------- --------- ------
Of which;
----------- -------------- --------- ------
Current lease liabilities (under one
year) 1,933 279 294 2,506
----------- -------------- --------- ------
Non-current lease liabilities (more
than one year) 6,077 670 334 7,081
----------- -------------- --------- ------
Total lease liabilities recognised
at the date of transition 8,010 949 628 9,587
----------- -------------- --------- ------
* Plant and machinery and motor vehicles were classified as
'other' within note 29b of the 2019 Annual Report
Accounting impact on the Consolidated Income Statement
Save for short-term and low value leases, the Group has
recognised depreciation and interest costs in respect of leases
that were previously classified in the Consolidated Income
Statement for the period, rather than rental charges. The
accounting impact on the Consolidated Income Statement was as
follows:
6 months to 31 July 2019
------------------------------------
Before IFRS
16 application IFRS16 application As reported
GBP000 GBP000 GBP000
------------------------------------ ---------------- ------------------- ------------
Revenue 55,932 - 55,932
Cost of sales (20,405) - (20,405)
------------------------------------ ---------------- ------------------- ------------
Gross profit 35,527 - 35,527
------------------------------------ ---------------- ------------------- ------------
Net operating expenses:
Distribution and selling expenses (11,950) - (11,950)
Administration expenses (22,742) 50 (22,692)
Net other income 2,838 - 2,838
------------------------------------ ---------------- ------------------- ------------
Profit from operations 3,673 50 3,723
------------------------------------ ---------------- ------------------- ------------
Finance costs (91) (117) (208)
------------------------------------ ---------------- ------------------- ------------
Profit before tax 3,582 (67) 3,515
------------------------------------ ---------------- ------------------- ------------
Tax expense (892) - (892)
------------------------------------ ---------------- ------------------- ------------
Profit for the period attributable
to owners of the parent 2,690 (67) 2,623
------------------------------------ ---------------- ------------------- ------------
Accounting impact on the Consolidated Cash Flow Statement
The adjustments to the Consolidated Income Statement and Balance
Sheets described above do not affect the cash balances. However,
under IFRS 16 the Group separates the total amount paid for leases
within the Consolidated Cash Flow Statement into a capital payment
(presented within investing activities) and interest (presented
within operating activities). Under IAS 17 operating lease payments
were all shown under operating activities. Consequently, there is
no change to the Group's net cashflow.
Unaudited Notes to the interim financial statements
(continued)
2. Segmental analysis
Walker Greenbank PLC is a designer, manufacturer and distributor
of luxury interior furnishings, fabrics and wallpaper. The Board of
Walker Greenbank PLC predominantly manages the operations of the
Group. The reportable segments of the Group are as follows:
-- Brands - 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, France, Russia and Germany;
-- 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 (continued)
a) Principal measures of profit and loss - Income Statement
segmental information
Operating segments
------------------------------- ------------------------ ----------------- --------
Eliminations
Brands Manufacturing and unallocated Total
6 months to 31 July 2019 GBP000 GBP000 GBP000 GBP000
------------------------------- -------- -------------- ----------------- --------
UK Revenue 22,215 6,609 - 28,824
International Revenue 20,893 2,977 - 23,870
Licence Revenue 3,238 - - 3,238
-------------------------------- -------- -------------- ----------------- --------
Revenue - External 46,346 9,586 - 55,932
Revenue - Internal - 7,557 (7,557) -
-------------------------------- -------- -------------- ----------------- --------
Total Revenue 46,346 17,143 (7,557) 55,932
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) from operations 5,615 1,038 (2,930) 3,723
Finance costs - - (208) (208)
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) before taxation 5,615 1,038 (3,138) 3,515
Tax charge - - (892) (892)
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) for the
period 5,615 1,038 (4,030) 2,623
-------------------------------- -------- -------------- ----------------- --------
Business interruption reimbursements to cover loss of profits of
GBP50,000 (2018: GBPnil) are included within 'Eliminations and
unallocated'. Tax charges have not been allocated to a segment.
Operating segments
(Restated*)
------------------------------- ------------------------ ----------------- --------
Eliminations
Brands Manufacturing and unallocated Total
6 months to 31 July 2018 GBP000 GBP000 GBP000 GBP000
------------------------------- -------- -------------- ----------------- --------
UK Revenue 23,137 7,509 - 30,646
International Revenue 19,482 2,554 - 22,036
Licence Revenue 2,000 - - 2,000
-------------------------------- -------- -------------- ----------------- --------
Revenue - External 44,619 10,063 - 54,682
Revenue - Internal - 6,245 (6,245) -
-------------------------------- -------- -------------- ----------------- --------
Total Revenue 44,619 16,308 (6,245) 54,682
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) from operations
* 4,688 555 (1,241) 4,002
Finance costs - - (135) (135)
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) before taxation
* 4,688 555 (1,376) 3,867
Tax charge - - (784) (784)
-------------------------------- -------- -------------- ----------------- --------
Profit/(loss) for the
period * 4,688 555 (2,160) 3,083
-------------------------------- -------- -------------- ----------------- --------
*We have reclassified restructuring costs of GBP177,000 to the
Brands and Manufacturing operating segments for the 6 months to 31
July 2018.
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 as follows;
Revenue by export market for Brands.
6 months 6 months
to to
31 July 31 July
Brands international revenue by export 2019 2018
market GBP000 GBP000
Western Europe 6,134 5,819
US 7,999 6,897
Rest of the World 6,760 6,766
---------------------------------------- --------- ---------
Total brands international revenue
by export market 20,893 19,482
---------------------------------------- --------- ---------
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:
6 months 6 months
to to
31 July 31 July
2019 2018
Brands revenue analysis GBP000 GBP000
--------------------------------------- --------- ---------
Harlequin, incorporating Anthology
and Scion 12,725 14,371
Sanderson, incorporating Morris &
Co. 12,120 11,194
Zoffany 4,854 5,725
Clarke & Clarke, incorporating Studio
G 13,158 11,062
Other brands 251 267
Licensing 3,238 2,000
Total brands revenue 46,346 44,619
--------------------------------------- --------- ---------
Revenue of the Manufacturing reportable segment - including
revenues from internal sales to the Group's Brands:
6 months 6 months
to to
31 July 31 July
2019 2018
Manufacturing revenue analysis GBP000 GBP000
Standfast 7,763 6,868
Anstey 9,380 9,440
-------------------------------- --------- ---------
Total manufacturing revenue 17,143 16,308
-------------------------------- --------- ---------
Unaudited Notes to the interim financial statements
(continued)
3. Analysis of revenue by category
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
Sale of goods 52,694 52,682
Licence royalty income 3,238 2,000
------------------------ --------- ---------
Total revenue 55,932 54,682
------------------------ --------- ---------
4. Seasonality and cyclicality
There is no material seasonality or cyclicality impacting the
interim financial statements.
5. Net other income
Net other income comprises consideration received from the sale
of marketing materials and additional services of GBP2,644,000
(2018: GBP3,278,000), and business interruption reimbursements to
cover loss of profits of GBP50,000 (2018: GBPnil). In addition,
there was non-underlying net other income of GBP144,000 (2018:
GBP565,000) as per note 7.
6. Net defined benefit pension charge
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
Expected return on pension scheme
assets 832 815
Interest on pension scheme liabilities (944) (898)
Scheme expenses met by the Group (247) (240)
Net defined benefit pension charge (359) (323)
---------------------------------------- --------- ---------
The Group paid contributions of GBP671,000 (2018: GBP750,000)
and scheme administration costs of GBP247,000 (2018: GBP240,000) to
the Group's two defined benefit schemes, further details of which
can be found in the 2019 annual report.
Unaudited Notes to the interim financial statements
(continued)
7. 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 are as follows:
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
--------------------------------------- ----- --------- ---------
(i) Acquisition related:
Amortisation of acquired intangible
assets (508) (508)
(508) (508)
--------------------------------------------- --------- ---------
(ii) Restructuring and reorganisation
costs (a) (694) (95)
--------------------------------------- ----- --------- ---------
(iii) Anstey fire:
Insurance reimbursements 144 650
Incremental costs and property,
plant and equipment repairs - (85)
---------------------------------------------- --------- ---------
(b) 144 565
--------------------------------------------- --------- ---------
Total non-underlying items included
in profit before tax (1,058) (38)
---------------------------------------------- --------- ---------
Tax on non-underlying items 190 78
Total impact of non-underlying
items on profit after tax (868) 40
---------------------------------------------- --------- ---------
(a) Restructuring and reorganisation costs relate to the
reorganisation of the Group and comprise of the rationalisation of
certain operational and support functions. These costs mainly
comprise employee severance of GBP284,000 (2018: GBPnil) associated
with the Clarke & Clarke Haslingden site exit together with a
further GBP410,000 (2018: GBPnil) in respect of professional fees
and dual running costs associated with the reorganisation
process.
(b) Anstey fire-related net other income of GBP144,000 (2018:
GBP565,000) comprise proceeds arising from the reimbursement of
repair costs in respect of plant and equipment and related costs
following a minor fire.
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'.
Unaudited Notes to the interim financial statements
(continued)
8. Income tax expense
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
Current tax:
- UK, current tax (777) (906)
- UK, adjustments in respect of prior
years (222) (161)
- overseas, current tax (20) -
--------------------------------------------------- --------- ---------
Corporation tax (1,019) (1,067)
--------------------------------------------------- --------- ---------
Deferred tax:
- current year 96 76
* adjustments in respect of prior years 31 207
Deferred tax 127 283
--------------------------------------------------- --------- ---------
Tax charge for the period (892) (784)
--------------------------------------------------- --------- ---------
No overseas taxation is anticipated to become payable within the
immediate future due to the availability of gross tax losses of
approximately GBP3,200,000 (2018: GBP3,200,000).
The deferred tax balance at 31 July 2019 included within these
interim financial statements has been calculated at a rate of 17%,
as this is the rate at which 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 GBP127,000 (2018: credit of GBP283,000)
arose in the period to 31 July 2019 on the profits for the period
and adjustments in respect of prior years.
Unaudited Notes to the interim financial statements
(continued)
9. 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
difficult marketplace impacting the profitability of the Group, PBT
performance criteria within LTIPs 10 and 11 are not being met and
as a consequence these Long-Term Incentive Plan ("LTIP") awards are
not dilutive.
6 months to 6 months to
31 July 2019 31 July 2018
-------------------------------- --------------------------------
Weighted Weighted
average Per average Per
number share number share
Earnings of shares amount Earnings of shares amount
GBP000 (000s) Pence GBP000 (000s) Pence
-------------------- --------- ----------- -------- --------- ----------- --------
Basic earnings
per share 2,623 70,984 3.70 3,083 70,926 4.35
Diluted earnings
per share 2,623 70,984 3.70 3,083 70,926 4.35
-------------------- --------- ----------- -------- --------- ----------- --------
Adjusted basic
and diluted
earnings
per share:
Add back
LTIP accounting
charge - 68
Add back
Net defined
benefit pension
charge 359 323
Non-underlying
items (note
6) 1,058 38
Tax effects
of non-underlying
items and other
addbacks (105) (157)
Adjusted basic
earnings
per share 3,935 70,984 5.54 3,355 70,926 4.73
-------------------- --------- ----------- -------- --------- ----------- --------
Adjusted diluted
earnings
per share 3,935 70,984 5.54 3,355 70,926 4.73
-------------------- --------- ----------- -------- --------- ----------- --------
Walker Greenbank's issued ordinary share capital with voting
rights consists of 70,983,505 (2018: 70,983,505) ordinary shares of
1p each of which no (2018: nil) ordinary shares are held in
treasury and no (2018: nil) 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.
On 29 May 2018, 142,238 shares vested under the Company's LTIP.
To satisfy the vesting, 87,994 shares of 1p each were allotted at
par value.
Unaudited Notes to the interim financial statements
(continued)
10. Analysis of net funds / (debt)
Other
1 February non-cash 31 July
2019 Cash flow changes 2019
GBP000 GBP000 GBP000 GBP000
--------------------------- ----------- ---------- ---------- --------
Cash and cash equivalents 2,415 (17) 62 2,460
Bank overdraft (1,981) 437 6 (1,538)
--------------------------- ----------- ---------- ---------- --------
Cash and cash equivalents
and bank overdraft 434 420 68 922
Finance lease liabilities (9,587) 1,291 (370) (8,666)
--------------------------- ----------- ---------- ---------- --------
Net funds / (debt) (9,153) 1,711 (302) (7,744)
--------------------------- ----------- ---------- ---------- --------
In December 2015, the Group entered into a GBP12,500,000
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 GBP10,000,000 accordion
facility option to further increase available credit which provides
substantial headroom for future growth. An initial bank arrangement
fee of GBP100,000 and an additional GBP40,000 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 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
GBP22,500,000 (31 January 2019: GBP22,500,000); the utilisation of
the facilities at 31 July 2019 was GBP1,538,000 (31 January 2019:
GBP1,981,000). 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.
Unaudited Notes to the interim financial statements
(continued)
11. Cash generated from operations
6 months 6 months
to to
31 July 31 July
2019 2018
GBP000 GBP000
---------------------------------------------- --------- ---------
Profit before tax 3,514 3,867
Defined benefit pension charge 359 323
Net finance costs 208 135
Depreciation and impairment of property,
plant and equipment (including right-of-use
assets) 2,769 1,230
Amortisation 859 825
Insurance reimbursements (144) (650)
LTIP charge recognised in equity - 75
LTIP vesting - (135)
Unrealised foreign exchange losses /
(gains) included in operating profit (218) (86)
Defined benefit pension cash contributions (918) (1,001)
---------------------------------------------- --------- ---------
Cash generated from operating activities
pre-insurance proceeds 6,429 4,583
Insurance proceeds relating to operating
activities 144 650
---------------------------------------------- --------- ---------
Cash generated from operating activities
post-insurance proceeds 6,573 5,233
Changes in working capital
(Increase) / decrease in inventories (787) 1,677
(Increase) / decrease in trade and other
receivables (2,474) (868)
Increase / (decrease) in trade and other
payables 243 (1,861)
---------------------------------------------- --------- ---------
Cash generated from operations 3,555 4,181
---------------------------------------------- --------- ---------
Unaudited Notes to the interim financial statements
(continued)
12. Retirement benefit obligations
The Group sponsors 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 2018. An updated funding valuation for IAS 19 financial
reporting purposes was completed as at 31 July 2019.
The assumptions applied for valuation of the defined benefit
schemes are fully disclosed in the annual financial statements for
the year ended 31 January 2019 and continue to be applied in the
half year ended 31 July 2019 with the exception of the discount
rate assumption which has been updated to 2.1%. 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 2020 and are based on previous
actuarial estimates. The net retirement benefit obligation
recognised at 31 July 2019 is based on the actuarial valuation
under IAS 19 'Employee Benefits' at 31 July 2019 with actuarial
gains for the period being recognised together with the deferred
tax effect of movements in the net retirement benefit obligation
which 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 2020, 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.
13. Dividends
Following shareholder approval at the Company's Annual General
Meeting on 19 July 2019, a final dividend in respect of the
financial year ended 31 January 2019 of 2.55 pence per share (2018:
3.68 pence) was paid on 9 August 2019 to shareholders on the
register as at 19 July 2019. The total cost of this was
GBP1,810,079 (2018: GBP2,612,000).
The directors have declared an interim dividend of 0.52 pence
per share (2018: 0.69 pence), totalling GBP369,000
(2018: GBP490,000) for the six months ended 31 July 2019, which
will be payable on 22 November 2019 to shareholders on the register
on 25 October 2019.
14. Related party transactions
Transactions between Group companies, which are related parties,
have been eliminated on consolidation and are therefore not
disclosed. Other transactions which fall to be treated as related
party transactions are those relating to the remuneration of key
management personnel, which are not disclosed in the interim
financial statements, and which will be disclosed in the Group's
next annual report; and transactions between the Group and the
Group's defined benefit pension plan, which are disclosed in note
6.
15. Events after the reporting period
On 3 October 2019, the Group renewed its GBP12,500,000
multi-currency revolving credit facility with Barclays Bank PLC for
a further five-year period. The agreement also includes a
GBP5,000,000 accordion facility option to further increase
available credit which provides substantial headroom for future
growth.
Unaudited Notes to the interim financial statements
(continued)
Responsibility Statement
The Directors confirm that, to the best of their knowledge,
these interim financial statements have been prepared in accordance
with IAS 34 as adopted by the European Union and that the interim
management report includes as fair review of the information
required by Disclosure Guidance and Transparency Rules 4.2.7 and
4.2.8, namely:
-- An indication of the important events that have occurred
during the first half year and their impact on the interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related party transactions in the first half year
and any material changes in the related party transactions
described in the last annual report.
By order of the Board
Lisa Montague Mike Gant
Chief Executive Officer Chief Financial Officer
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 for the six months ended 31 July 2019 of Walker Greenbank
PLC for the six-month period ended 31 July 2019. 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 Consolidated Balance Sheet as at 31 July 2019;
-- the Consolidated Income Statement and Consolidated Statement
of Comprehensive Income for the period then ended;
-- the Consolidated Cash Flow Statement for the period then ended;
-- the 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
for the six months ended 31 July 2019 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 for the six months ended 31 July 2019,
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 for the six months
ended 31 July 2019 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 for the six months
ended 31 July 2019 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 for the six months ended 31 July 2019 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
14 October 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR USOWRKOARAAA
(END) Dow Jones Newswires
October 15, 2019 02:00 ET (06:00 GMT)
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