WGB.L Regulatory News (WGB)

WALKER GREENBANK PLC

("Walker Greenbank" or "the Group")

Interim Results for the 6 months ended 31 July 2012

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

Highlights

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

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

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

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

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

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

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

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

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

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

For further information:

CHAIRMAN'S STATEMENT

Overview

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

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

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

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

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

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

Financials

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

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

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

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

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

Dividend

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

People

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

Outlook

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

Terry Stannard

Non-Executive Chairman

1 October 2012

CHIEF EXECUTIVE'S REVIEW

Introduction

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

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

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

The Brands

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

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

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

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

Harlequin & Scion

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

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

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

Sanderson, incorporating the Morris & Co brand

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

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

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

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

Zoffany

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

Manufacturing

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

Anstey

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

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

Standfast

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

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

Eliminations and unallocated

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

Summary

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

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

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

John Sach

Group Chief Executive

1 October 2012

Walker Greenbank PLC

Unaudited Consolidated Income Statement

For the six months ended 31 July 2012

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 July 2012

Unaudited Consolidated Balance Sheet

As at 31 July 2012

Unaudited Consolidated Cash Flow Statement

For the six months ended 31 July 2012

Unaudited Consolidated Statement of Changes in Equity

Unaudited Consolidated Statement of Changes in Equity (Continued)

Other Reserves

Unaudited Notes to the Accounts

2. Segmental analysis

Walker Greenbank PLC is a designer, manufacturer and distributor of luxury interior furnishings, fabrics and wallpaper. The Board of Walker Greenbank PLC predominantly manages the operations of the Group. The reportable segments of the group are as follows:

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

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

This is the basis on which the Group presents its operating results to the Board of Directors which is considered to be the Chief Operating Decision Maker (CODM) for the purposes of IFRS8. There has been a change from last year in the information supplied to the CODM. Additional revenue-only data is also reported to the CODM and is disclosed on the basis explained below. Other group wide activities and expenses, predominantly related to corporate head office costs, defined benefit pension costs, long term incentive plans expenses, taxation and eliminations of intersegment items, are presented within 'Eliminations and unallocated'.

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

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

Revenue of the Brands reportable segments - revenue from operations in all territories where the sale is sourced from the United Kingdom and overseas subsidiary operations, excluding internal sales to overseas subsidiaries, together with contract and license revenue:

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

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

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

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

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

A deferred tax charge of £107,000 (2011: £143,000) has been recognised for movements in the deferred tax relating to the pension liability. An additional charge of £142,000 (2011: £68,000) arose due to the reduction in future corporation tax rates noted above. The movements in deferred tax relating to the pension liability have been recognised in the Statement of Comprehensive Income in accordance with the Group's accounting policy

6 Earnings per share

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

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

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

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

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

7 Trade and other receivables

8 Analysis of net debt

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

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

9 Cash generated from operations