WGB.L Regulatory News (WGB)

A meeting for analysts will be held at 10am today, 14 October 2015, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For further details, contact Buchanan on 020 7466 5000

WALKER GREENBANK PLC

("Walker Greenbank" or "the Group")

Interim Results for the 6 months ended 31 July 2015

Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings Group whose brands include Sanderson, Morris & Co., Harlequin, Zoffany, Scion and Anthology, is pleased to announce its interim results for the six month period ended 31 July 2015.

Highlights

· Group sales up 11.4% to £45.8 million (H1 2014: £41.1 million),

· UK Brands sales up 7.6% and overseas Brands sales up 11.6% in reportable currency, 13.5% in constant currency

· Profit before tax up 25.8% at £2.89 million (H1 2014: £2.30 million)

· Adjusted profit before tax* up 12.3% at £3.68 million (H1 2014: £3.28 million)

· Strong performance from Manufacturing with total sales up 8.2% at £18.6 million (H1 2014: £17.2 million) including digital fabric printing sales up 35.0% at £3.2 million

· Earnings per share up 19.5% at 4.04 pence (H1 2014: 3.38 pence)

· Adjusted earnings per share* up 3.9% at 5.35 pence (H1 2014: 5.15 pence)

· Interim dividend up 25.7% to 0.44 pence per share (H1 2014: 0.35 pence per share)

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

Terry Stannard, the Chairman of Walker Greenbank, said: "Brand sales in the first ten weeks of the second half are up 7.5% in reportable currency (7.9% in constant currency) compared with the same period last year. This is an encouraging performance ahead of our key Autumn selling period and reflects strong trading in the UK, where Brand sales are up 7.5%, and in overseas markets, where Brand sales are up 8.5% in constant currency. Manufacturing also continues to perform strongly. The Board remains confident of meeting expectations for the full year."

For further information:

Notes for editors:

About Walker Greenbank

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

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

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

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

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

Overview

The six months to 31 July 2015 represent another successful trading period for Walker Greenbank. It is pleasing to announce another significant increase in sales, profitability and dividends. Total Brand sales for the first half increased by 8.8% in reportable currency (9.8% in constant currency) to £34.6 million compared with the same period last year.

We have delivered considerable growth in the UK, our largest market, where Brand sales increased by 7.6% to £20.2 million compared with the same period last year, reflecting continuing strong contracts sales and continued retail sales growth.

Overseas Brand sales were up 11.6% in reportable currency 13.5% in constant currency to £13.4 million. Overseas Brand sales benefited from the strength of the US dollar, but this was offset by the weakness of the Euro. Sales in the US have grown 30.3% in reportable currency 19.1% in constant currency to £4.4 million, positively impacted by the completion of our flagship New York showroom extension last year.

Brand sales in Western Europe were up 0.9% in reportable currency, owing to the strength of Sterling 13.2% in constant currency to £3.7 million with growth in almost every territory. Our Dubai showroom has contributed to a strong sales performance in the Middle East, up 18.2% in constant currency, and sales in the Rest of the World grew 9.5% in constant currency.

Licensing income in the first six months is down 1.8% in reportable currency but up 5.6% in constant currency, to £0.96 million due mainly to the weakness of the Japanese Yen. We recently announced that Sanderson had collaborated with the consumer electronics manufacturer Pure to produce designer digital radios featuring Sanderson prints. This collaboration is another positive step in our licensing strategy which is taking the Company's designs into lifestyle products, helping us to increase the consumer awareness of our brands.

Vertically integrated high quality British manufacturing with innovative printing techniques distinguishes us from others in our industry. Continued investment in our manufacturing capabilities at both factories has helped deliver a strong performance from our manufacturing sites with total sales growing 8.2% over the first six months, a large proportion of which is digital printing.

We have continued to make significant progress with our growth strategy during the half year, particularly in market penetration through the launch of the third collection from the Anthology brand. We also progressed our digital sales and marketing strategy, including consumer e-commerce development and greater consumer insight. As part of an initiative to get closer to our customers, we are developing a new CRM solution.

The Brands

This segment incorporates global trading from our international recognised brands including our overseas subsidiaries in the US and France.

Harlequin incorporating Scion & Anthology

Harlequin has grown its worldwide sales 15.6% to £16.0 million in reportable currency compared with the same period last year. It continues to be the UK's leading mid-market contemporary brand achieving growth of 12.1% in the UK consumer market. Export sales have grown 12.0% in the first half despite the impact of currency. In the US, Harlequin has seen significant growth, up 52.0% in reportable currency. Southern Ireland was the largest market in Europe for the Harlequin group in the first half.

The Scion brand, launched in February 2012, continues to grow well with its substantial third collection, Spirit and Soul, launched in 2014, having increased appeal in overseas markets. For 2015, the fourth collection, Levande, has been joined by Scion's first children's collection Guess Who?

The Anthology brand was launched in April 2014 with two luxury collections of wallcoverings and sales have already exceeded expectations. The third collection was launched in Spring 2015 and will be followed later in the year by Anthology 4, which will be complemented by an exciting range of innovative wide-width fabrics. Anthology was specifically aimed at international markets which are already accounting for more than half of the Brand's sales.

Arthur Sanderson & Sons incorporating the Morris & Co brand

Sales at Sanderson have remained flat at £11.0 million. Recent collections (notably Fabienne) have driven UK growth of 1.2%, which has been offset by a reduction in export markets driven by Eastern Europe.

Zoffany

Zoffany, which is positioned at the upper end of the premium market, has delivered sales growth of 7.7% to £6.0 million compared with the same period last year, with strong performances from recent collections reflecting the focus on design strategy and direction to position the Zoffany brand for sustained growth. Sales to export markets have grown by 0.3% in reportable currency. Zoffany was recently included in the 2015/16 CoolBrands list, compiled by opinion formers and members of the public.

Manufacturing

Manufacturing has delivered another strong performance with sales and profitability both increasing. Total sales grew 8.2% to £18.6 million leading to an increase in profits of 15.3% to £1.8 million.

Anstey

Anstey, our wallpaper manufacturer, has seen sales in the first half remain constant at £9.0 million compared with the same period last year. Third party sales in the UK were up 12.8% and third party export sales were up 16.4% whilst sales to our own Group Brands fell by 16.6% following the launch of a large number of new collections from the Brands in the last quarter of the prior year.

Last year's additional investment in digital printing and correlated digital sampling together with finishing equipment for digital product has contributed to the strong growth of third party sales. These investments have continued to enhance capacity, capability and efficiency.

Standfast

Overall sales at Standfast & Barracks, our fabric printing factory, were 18.2% higher, at £9.6 million, compared with the same period last year. Third party sales in the UK were up 21.7% with sales to our own Group Brands increasing 6.9% year on year. Our continued investment in digital printing has contributed to digital print sales increasing be 35.0% year on year and now represent a third of total revenue. We have also recently installed a digital pigment printer which is part of a collaborative R&D project with the manufacturer which aims to develop the capability to print on new substrates.

Financials

Total sales in the half year increased 11.4% to £45.8 million, from £41.1 million. The profit from operations grew 21.3% to £3.39 million (2014: £2.79 million). Operating profits before an accounting charge relating to the Long Term Incentive Plan (LTIP) have risen 12.2% from £3.37 million to £3.78 million.

The interest charge has increased from £92,000 to £102,000 reflecting the Group's investment in working capital in the form of new collections at the end of the previous financial year. The defined benefit pension charge has fallen slightly from £400,000 to £391,000 driven by a reduction in the service cost.

Profit before tax after the two non-cash charges increased 25.8% to £2.89 million (2014: £2.30 million). Profit before tax, and before the LTIP accounting charge and defined benefit charge, increased 12.3% to £3.68 million (2014: £3.28 million). Earnings per share were up 19.5% at 4.04 pence (2014: 3.38 pence). Profit after tax was £2.4 million (2014: £2.0 million) and adjusted earnings per share were up 3.9% at 5.35 pence (2014: 5.15 pence), after removing the LTIP accounting charge and defined benefit charge.

The Group maintains a strong balance sheet with indebtedness at the half year of £0.57 million, a significant inflow of £1.69 million over the last 12 month period (31 January 2015: net funds £0.002 million).

Dividend

The Board has declared an interim dividend of 0.44 pence per share which represents an increase of 25.7% on the prior half year reflecting the Board's confidence in the current financial position and future financial performance of the Group. The interim dividend will be payable on 13 November 2015 to shareholders on the register as at 23 October 2015.

Outlook

Brand sales in the first ten weeks of the second half are up 7.5% in reportable currency (7.9% in constant currency) compared with the same period last year. This is an encouraging performance ahead of our key Autumn selling period and reflects strong trading in the UK, where Brand sales are up 7.5%, and in overseas markets, where Brand sales are up 8.5% in constant currency. Manufacturing also continues to perform strongly. The Board remains confident of meeting expectations for the full year.

Terry Stannard John Sach

Chairman Group Chief Executive

14 October 2015 14 October 2015

Unaudited Consolidated Income Statement

For the six months ended 31 July 2015

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 31 July 2015

Unaudited Consolidated Balance Sheet

As at 31 July 2015

Unaudited Consolidated Cash Flow Statement

For the six months ended 31 July 2015

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 31 July 2015

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 2016. 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.

The Group has chosen not to adopt IAS 34 'Interim Financial Reporting' in preparing these interim financial statements for the period to 31 July 2015 as it is not mandatory for AIM listed companies.

The Group's accounting policies for the year ended 31 January 2016 will be set out in the annual report for that year. Since the Group's previous annual financial report for the year ended 31 January 2015, a number of authoritative pronouncements issued by the International Accounting Standards Board and IFRS IC along with new or revised accounting standards are now effective for financial years ending 31 January 2016. None of these have any material impact on either the current or prior period financial statements. Additional authoritative pronouncements have been issued and will become effective in later years; these have not been adopted early by the Group.

Further details of authoritative pronouncements effective for financial years ending 31 January 2016 and additional authoritative pronouncements that have been issued and will become effective in later years will be set out in the financial statements of the Group for the year ending 31 January 2016.

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 2015 is based on the statutory accounts for the financial year ended 31 January 2015, on which the auditors issued an unqualified opinion and did not contain a statement under section 498 'Duties of auditor' of the Companies Act 2006, and have been delivered to the Registrar of Companies. The interim financial statements for the 6 month period ended 31 July 2015 have not been audited, but have been reviewed by the auditors. The auditors' review report is included following the interim financial statements.

After making enquiries, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. Accordingly, the going concern basis has been adopted in preparing the interim statements.

The Board approved the interim financial information on 14 October 2015.

Adoption of Financial Reporting Standard (FRS) 101 - Reduced Disclosure Framework

Following the publication of FRS 100 'Application of Financial Reporting Requirements' by the Financial Reporting Council, Walker Greenbank PLC is required to change its accounting framework for its entity financial statements, which is currently UK GAAP, for its financial year commencing 1 February 2015. The Group is required to make a choice between two alternative sets of accounting standards: FRS 101, which allows UK companies to use the recognition and measurement requirements of IFRS, but with reduced disclosures; or FRS 102, which represents new UK GAAP, based on IFRS for small and medium-sized enterprises (SMEs), amended for UK-specific circumstances. The Board considers that it is in the best interests of the Group for the Company to adopt FRS 101 'Reduced Disclosure Framework' since this will enable the streamlining and simplification of reporting procedures. No material disclosures in the current UK GAAP financial statements would be omitted on adoption of FRS 101. In accordance with the provisions set out in FRS 101.5, a shareholder or shareholders holding in aggregate 5% or more of the total issued shares in the Company may object to the use of the disclosure exemptions, in writing, to the Company Secretary at the registered office no later than 11 November 2015.

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 - comprises the design, marketing, sales, distribution, and licensing activities of Sanderson, Morris & Co, Harlequin, Zoffany, Anthology and Scion brands operating from the UK and its foreign subsidiaries in the US and France;

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

This is the basis on which the Group presents its operating results to the Board of Directors which is considered to be the Chief Operating Decision Maker (CODM) for the purposes of IFRS 8 'Operating Segments'. Additionalrevenue-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'.

2. Segmental analysis

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

2. Segmental analysis continued

b) Additional segmental revenue information

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

3. Analysis of operating profit by function of expense

\* The LTIP accounting charge of £393,000 (2014: £575,000) although not considered an exceptional cost has been separately disclosed within this note to aid comparison and analysis.

4. Net defined benefit pension charge

5. Income tax expense

The rate of corporation tax changed from 21% to 20% with effect from 1 April 2015. Accordingly the UK companies' results for this accounting year are taxed at an effective whole year rate of 20.17%. Changes to UK corporation tax rates were announced in the Chancellor's Budget on 8 July 2015. These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 18% from 1 April 2020. As the changes have not been substantively enacted at the reporting date, their effects are not included within these interim financial statements.

The deferred tax balance at 31 July 2015 included within these interim financial statements has been calculated at a rate of 20%, being the rate enacted in the Finance Act (2013), as this is the rate at which majority of the balances are expected to unwind.

No overseas taxation is anticipated to become payable within the immediate future due to availability of gross tax losses of approximately £1.5 million (2014: £1.9 million).

A deferred tax charge of £27,000 (2014: £301,000) arose in the period to 31 July 2015 on the profits for the period.

A deferred tax charge of £469,000 (2014: £244,000) has been recognised for movements in the deferred tax relating to the long-term incentive plan. The movements in deferred tax relating to the long-term incentive plan have been recorded in equity in accordance with the Group's accounting policy.

6. 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 period, 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 result of the improved profitability of the Group, PBT performance criteria within LTIPs 7, 8 and 9 are now being met and as a consequence these LTIP awards are now dilutive.  

On 18 May 2015, 1,090,326 shares vested under the Company's Long Term Incentive Plan. To satisfy the vesting, 409,962 shares of 1 pence each were allotted at par value and a further 188,272 shares were issued from the Walker Greenbank PLC Employee Benefit Trust "EBT". Following these transactions Walker Greenbank's issued ordinary share capital with voting rights consists of 60,172,521 (2014: 59,762,559) ordinary shares of which no (2014: nil) ordinary shares are held in treasury and no (2014: 188,272) ordinary shares are held by the EBT.

On 22 May 2014, 1,849,663 shares vested under the Company's Long-Term Incentive Plan of which 997,008 shares were issued from the Walker Greenbank PLC Employee Benefit Trust.

The market value of shares held by the EBT at 31 July 2015 was £nil (2014: £395,371). The total number of shares held in the EBT at 31 July 2015 represented 0% (2014: 0.3%) of the issued shares.

7. Analysis of net funds

The Group's current borrowing facilities will expire in January 2016 and the Group is currently finalising terms with Barclays Bank PLC for a new five-year facility to replace these. The proposed facility will be a committed revolving loan amounting to £12.5 million with a further £10 million available as an additional accordion, if required. The proposed loan will bear interest at variable interest rates based on a margin above LIBOR (London Interbank Offered Rate) and a commitment fee payable on the undrawn facilities. The Group will be subject to financial covenants under the proposed facility, being interest cover and leverage. No new additional security would be required, and the proposed facility will retain the existing security on the Group's freehold property which is currently in place. It is anticipated that the new facility will be finalised and become effective in November 2015.

8. Cash generated from operations

9. Retirement benefit obligations

The Group operates the following funded pension schemes in the UK: the Walker Greenbank Pension Plan and the Abaris Holdings Limited Pension Scheme. The Walker Greenbank Pension Plan is the biggest scheme. All schemes contain defined benefits sections, which are closed to new members and the accrual of future benefits, however the Abaris Holdings Limited Pension Scheme also contains a defined contribution section, although this section is relatively small.

The pension costs relating to the UK defined benefit schemes are assessed in accordance with the advice of an independent qualified actuary using the projected unit method. These schemes are subject to triennial actuarial reviews with the most recent ones having been in April 2012. An updated funding valuation for IAS 19 financial reporting purposes was completed for the previous annual financial statements to 31 January 2015.

The assumptions applied for valuation of the defined benefit schemes are fully disclosed in the annual financial statements for the year ended 31 January 2015 and continue to be applied in the half year ended 31 July 2015. 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 2016, and are based on previous actuarial estimates. The net retirement benefit obligation recognised at 31 July 2015 is based on the actuarial valuation under IAS 19 at 31 January 2015 updated for movements in net defined benefit pension charge and contributions paid during the half year period which include additional payments to the pension scheme to reduce the deficit along with regular contributions to fund scheme expenses. The deferred tax effect of movements in the net retirement benefit obligation has also been recognised in the half year. A full triennial valuation for IAS 19 financial reporting purposes will be completed for the next annual financial statements for the year ending 31 January 2016, 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.

10. Dividends

The directors paid on 7 August 2015, a final dividend of 1.96 pence per share (2014: 1.57pence), a total of £1,179,000 (2014: £935,000) for the financial year ended 31 January 2015.

The directors have declared an interim dividend of 0.44 pence per share (2014: 0.35 pence), a total of £265,000(2014: £209,000) for the financial year ending 31 January 2016, which will be payable on 13 November 2015 to shareholders on the register on 23 October 2015.