WGB.L Regulatory News (WGB)

17 Apr 2007 07:02

Walker Greenbank PLC17 April 2007 For immediate release 17 April 2007 WALKER GREENBANK PLC ("Walker Greenbank" or "the Company") Preliminary Results for the 12 months ended 31 January 2007 Walker Greenbank plc (AIM: WGB), the designer, manufacturer and distributor offurnishing fabrics and wallpapers whose international business includes thebrands Sanderson, Morris & Co, Harlequin and Zoffany, is pleased to announce itspreliminary results for the 12 month period ended 31 January 2007. Highlights • A further year of excellent progress with continued strong organic growth • Turnover from continuing operations up 15% to £53.33 million (2006: £46.36 million) • Operating profit from continuing operations up nearly three-fold to £2.20 million (2006: £0.76 million) • Earnings per share of 4.49p (2006: 4.51p) with underlying earnings per share from continuing operations of 2.23p (2006: loss per share 0.77p) • Pension deficit further reduced to £3.82 million (2006: £7.98 million) which now represents only 30% of Shareholders' Funds (2006: 93%) • Gearing reduced to 67% (2006: 109%) • Shareholders' Funds increased by 49% to £12.85 million (2006: £8.60 million) • Current financial year has started strongly as organic growth continues and trading is ahead of internal projections Ian Kirkham, the Chairman of Walker Greenbank, said: "I am very pleased toreport another year of excellent progress in which our recovery has allowed usto enter a sustained growth phase. Our brands, supported by our nichemanufacturing, are well placed to exploit the move away from minimalism towardscolour and design. The Board views the outcome for the current year withincreasing confidence." For further information: Walker Greenbank plc 08708 300077 John Sach, Chief Executive Alan Dix, Finance Director Julian Wilson, Company Secretary Teather & Greenwood 020 7426 9000 Mark Dickenson Tom Hulme Buchanan Communications 020 7466 5000 Mark Court/Suzanne Brocks CHAIRMAN'S STATEMENT Overview In last year's Annual Report I began by describing the year to January 2006 as alandmark year in that we reported a full year operating profit for the firsttime since 2000, reflecting the success of our strategy of restoring the Groupto profitability and of the strengthening trend in interior design towards theuse of colour and pattern in wallpaper and fabrics. I am now very pleased toreport another year of excellent progress in which our recovery has allowed usto enter a sustained growth phase. The momentum in our business is highlightedby a near three-fold increase in operating profits from continuing operationsbefore exceptional items of £2,201,000 in the year to 31 January 2007, comparedwith £758,000 in 2006. Our financial year concluded with a significantlystrengthened balance sheet, which benefited from a cash inflow from operatingactivities of £2,995,000 (2006: £1,643,000), a substantially reduced pensiondeficit and reduced debt. Our brands - Harlequin, Sanderson, Morris & Co and Zoffany - have madesignificant progress during the year. Harlequin, our mid-market brand, has delivered substantial year on year salesgrowth. The brand has gained market share from its competitors and more thandoubled its operating profits for the second consecutive year, reflectingcontinued investment in new designs and a widening of the brand's distribution.Growth in revenue at Sanderson is accelerating, following the significantinvestment in product and an increase in marketing this year. Our strategy offocusing the Zoffany brand on its core and traditional design values isre-establishing the business as a leading brand at the premium end of themarket. This has led to Zoffany's first increase in sales after a number ofyears of under performance. As reported at the interim stage, results from ourbusiness in the United States have been disappointing, with underlying salesgrowing more slowly than anticipated. This led to a strengthening of themanagement team and we are confident of making progress in this importantmarket. Anstey, our wallpaper factory, and Standfast, our fabric printing factory, havemade significant progress in the year. The strong return to popularity ofwallpaper at the premium end of the market is now building in the mid-market andhas helped Anstey deliver significant growth in both revenue and profits.Standfast continues to win market share and it also has achieved significantgrowth in both revenue and profits. Financials Turnover increased 10% to £53,327,000 from £48,392,000 and 15% from continuingoperations. The operating profit from continuing operations increased nearlythree-fold to £2,201,000 (2006: £758,000). The operating profit for the year was£3,477,000 (2006: £5,018,000). Both 2006 and 2007 include the exceptionalbeneficial effect of the pension deficit reduction exercise. The profit before tax was £2,594,000 (2006: £2,625,000). The results include theexceptional profit from the pension deficit reduction exercise in 2007 of£1,276,000 (2006: £4,076,000) and the exceptional loss on the sale of BorgeHoldings AS in 2006 of £1,281,000. The earnings per share for the year were4.49p (2006: 4.51p) Following the Group's return to profitability and the successful outcome of thepension deficit reduction exercise, shareholders' funds have increased 49% to£12,847,000. (2006: £8,597,000). The pension deficit has reduced to represent30% of shareholders' funds at the year end, compared with 93% a year ago. Thepension deficit reduction exercise has been extremely successful with thepension deficit reducing directly by £1,562,000 in 2007 and £5,634,000 in 2006.As a direct result of the reduction in the pension deficit the profit and losshas benefited in 2007 with other finance income of £81,000 compared with afinance charge of £174,000 in the prior year. The Group's net indebtedness finished the year at £8,604,000 (2006: £9,357,000).The cash inflow from operating activities was £2,995,000 (2006: £1,643,000)after payments to pensioners and settlement of liabilities of £894,000 (2006:£950,000) associated with the pension deficit reduction exercise. Dividend The Directors do not recommend the payment of a dividend, but remain consciousof returning to the dividend list as soon as is prudent. People I would like to thank all of our employees who have demonstrated tremendouscommitment and enthusiasm and have been an important ingredient in deliveringthe excellent progress of the Group in the past year. Outlook Having established the Group as a profitable and cash generative business we nowhave a solid platform from which to take advantage of the opportunities thatexist within a market that is benefiting from a major shift in interior fashiontrends. Our brands, supported by our niche manufacturing, are well placed toexploit the move away from minimalism towards colour and design. Harlequin'ssuccess in the past year underlines the growing strength of this trend and theorganic growth opportunities that exist for the Group going forward. With two months of our financial year now complete, we are trading ahead of ourinternal projections. The Board views the outcome for the current year withincreasing confidence. Ian KirkhamChairman16 April 2007 CHIEF EXECUTIVE'S REVIEW The year to January 2007 was a period of excellent progress in which we haveconsolidated the recovery of the Group and created a platform for future growth.Much work has been done to strengthen our financial position and this will allowus to take advantage of the opportunities ahead. Strategy Our strategy is to deliver earnings growth and to maximise the return toshareholders. We are driving our brands' organic growth, expanding our contractsdivision, exploiting manufacturing opportunities and negotiating furtherlicensing arrangements. There is significant organic growth potential in our brands: with Harlequin, weare expanding the product offer and aiming to achieve greater presence inoverseas markets, specifically the North American market where the brand to datehas had limited exposure; with Sanderson and Morris & Co we are exploiting thestrength of the brands' global recognition through continued product investmentand licensing arrangements; and with Zoffany we will continue with the progressalready made in restoring the business to its deserved pre-eminent position as apremium brand through enhanced focus on Zoffany's core and traditional designvalues. We are driving the expansion of our contracts division, with increasedinvestment in contract-specific product supported by the strength of the brandnames and our manufacturing capability. We will evaluate acquisition opportunities in our highly fragmented market.However, any acquisition would have to fit with the current brand portfolio andprovide synergistic and earnings enhancing opportunities. The Brands Harlequin The Harlequin brand has continued the impressive sales growth seen in the firsthalf of the year, achieving a year on year increase of 42% and marking thesecond consecutive year of substantial growth. Growth in 2007 was across allproduct categories - wallpaper, printed fabric and woven fabric - and across allmarkets, with export sales up strongly at 45% and the UK up 40%. Thisperformance further strengthens Harlequin's position as the leading mid-marketcontemporary brand in the UK. Harlequin continues to expand its product launchesand all of its recent collections have performed extremely well. Two Harlequinwallpaper collections now have annualised sales in excess of £1 million. Salesto the USA have doubled following the successful re-launch into certain Stateslast year, expanding our presence to 15 States in total. The continued investment in design capability has delivered excellent product,which, supported by strong marketing, sampling and patterning, has fuelled the42% sales growth. Coupled with improved margins, this has led to an almostthree-fold increase in profits compared with the same period last year. Zoffany The process, begun in 2005, of re-enforcing Zoffany's position as one of theUK's leading premium brands is taking effect. Having brought an intense focus toits core and traditional design values we have seen sales growth in the secondhalf of the year for the first time in four years. Overall sales for the yearare slightly up on the same period last year with UK underlying sales in linewith last year following an adjustment for a large contract order to theIntercontinental London Park Lane Hotel in the early part of last year. Exportsales are up 13% on the same period last year. Overall margins are slightly reduced compared with last year due to the higherproportion of export activity. This, combined with a planned increase inmarketing expenditure, has led to Zoffany breaking even this year in line withinternal expectations. We fully expect the business to return to profitabilityin the current year. Arthur Sanderson & Sons incorporating the Morris & Co brand Following increased investment in product over the past two years, we are nowexperiencing increasing momentum in Sanderson's sales growth. Sales are up 13%compared with last year. As with Harlequin, the sales growth has been broadbased showing growth in all major markets but driven by a strong UK performance. Licensing contribution grew 7%, with the key markets of Japan and Australasiaperforming well, helped by the continued development of the Sanderson and Morris& Co names across a number of product categories. We continue to invest for thefuture in the key areas of product development and marketing, both of which webelieve will deliver strong profit growth in the future. Manufacturing Anstey Anstey has established itself as the market leader in the UK in wallpapermanufacture at the mid to premium end of the market. With the interior designtrend now moving strongly towards wallpaper in this sector of the market Ansteyhas increased overall sales by 16%. External third party sales have grown 23% asmore of its customers have sought to satisfy the consumer demand for wallpaper.Group sales have grown 11%. This higher activity assisted by continuedimprovement in factory efficiencies and tightly controlled overheads has enabledthe business to generate a return on sales compared with a break-even positionlast year. Standfast Standfast has continued to win market share and achieved growth in third partybusiness of 14%. This together with the impact of the success of the Group'sbrands has helped Standfast achieve overall sales growth of 19%. There has beena significant increase in investment during the year both in terms of capitalequipment and the level of preventive maintenance to help mitigate the impact ofincreases in energy costs. The higher activity and improved factory loadingshave increased efficiencies enabling Standfast to generate improved return onsales. Overseas USA Sales in the USA are down 9%, but this is primarily due to the exit of lowermargin third-party business during the second half of last year. Sanderson &Morris sales have grown by 11% with particular benefit arising from the latestMorris & Co collection. Zoffany sales declined by 12% primarily due to fewersignificant contract orders realised in the year. The re-launch of the Harlequinbrand last year has helped achieve more than a doubling of revenue. Margins have improved with the exit from the lower margin third-party businessduring the second half of last year. However the overall result was a loss dueto increased investment in patterning, sampling and marketing during the year,all of which were clearly focused in support of our medium to long term beliefin our brands' potential in this important market. Europe The distribution businesses for Zoffany and Harlequin in Rome and Zoffany andSanderson in Paris are relatively small but have grown their combined sales by22%, returning a small profit compared with a loss last year. Summary We are delighted to have built on last year's substantial achievements throughfurther progress delivered across all areas of our business, from our productcollections to our balance sheet. We have created a solid platform for futureprogress and have identified significant opportunities for growth throughleveraging our brand assets. The organic potential of our brands, underlined bythe sales growth at Harlequin and more recently Sanderson, clearly demonstratesour ability to create shareholder value and we look forward to deliveringfurther progress in the year ahead. John SachChief Executive16 April 2007 FINANCIAL REVIEW(Extracted from the Financial Review) Profit and Loss The profit and loss account has been set out in a columnar format this year.This presentation has been adopted in order to reflect more clearly theunderlying performance of the business and to separate the exceptionalbeneficial impact of the pension deficit reduction exercise in both 2007 and2006 and of the exceptional loss in 2006 on the sale of Borge Holdings AS andits subsidiary John O Borge AS. The table below shows the true underlyingperformance. 2007 2006 £000 £000 Profit before tax per the accounts 2,594 2,625Exclude discontinued activities - (184)Exclude exceptional benefit from pension deficit reduction exercise (1,276) (4,076)Exclude exceptional loss on disposal of Borge Holdings AS - 1,281Underlying Profit/(loss) before tax 1,318 (354)Tax (58) (80)Profit/(loss) after tax 1,260 (434) Underlying EPS 2.23 (0.77) Disposals There were no disposals during the year. In the previous year the Group sold thenon-core business of Borge Holding AS and its subsidiary John O Borge AS. Therewas a profit on disposal after related costs of £532,000. Under FRS 17 the Groupaccounts showed a pension liability associated with the John O Borge business,although under Norwegian accounting rules there was a small pension surplus. Asa consequence of the sale this liability, £95,000 was no longer required and wasreleased. Goodwill previously written off to reserves was expensed in the profitand loss as required by FRS 10, leading to an overall net loss on disposal of£1,281,000. The goodwill was directly credited back to reserves as seen in theReconciliation of Movements in Shareholders' Funds. Interest The interest charge for the year was £964,000 (2006: £938,000) includingamortisation of debt issue costs capitalised in accordance with FRS4 'CapitalInstruments'. There was other finance income during the year of £81,000 (2006:other finance charge £174,000). This is a consequence of the significantreduction in the gross pension liability compared with the previous year. Taxation The Group tax charge continues to reflect the amounts borne in foreignterritories. This is constantly under review to ensure every opportunity isconsidered to minimise the amount incurred. In the UK, the Group has substantialbrought forward tax trading losses and, as a consequence, does not anticipatepaying UK corporation tax in the foreseeable future. It will be the Group'sintention to reflect a deferred tax asset in the future as the Groupdemonstrates its continuing improving profitability. The first step was toreflect the deferred tax asset associated with the pension liability this year,which is reflected in the Statement of Total Recognised Gains and Losses. Earning per share ('EPS') The basic and diluted EPS was 4.49p (2006: 4.51p). The underlying EPS is 2.23pfor the current year (2006: loss per share 0.77p). The number of shares in issueremained constant for both years at 56,457,000. Operating Cash Flow The Group generated net cash inflow from operating activities during the year of£2,995,000 (2006: £1,643,000). It paid interest of £893,000 (2006: £866,000) andcapital expenditure of £1,220,000 (2006: £710,000). There has been increasedinvestment in the manufacturing businesses focused on energy-saving projects andreplacement of old equipment which was becoming unreliable. The depreciationcharge during the period continued to be greater than required capitalexpenditure. Working capital was tightly controlled and although the groupturnover for continuing businesses increased by 15% there was a decrease inworking capital. The Group made payments to the Pension schemes of £1,078,000 to reduce thedeficit and this is part of the ongoing planned reduction. There were alsopayments made during the year to active and deferred pensioners of £286,000 asthese pensioners accepted an offer from the Group to buy out the right tonon-statutory pension increases. During the year liabilities of £608,000associated with the pension reduction exercise that arose last year weresettled. As a consequence net debt in the Group has reduced by £753,000 to £8,604,000(2006: £9,357,000). Pension Deficit The pension deficit has reduced further this year. There are three keycontributing factors; the first being £1,078,000 ongoing contributions from thecompany to reduce the deficit; the second was the reduction arising from thesettlement of liabilities of £1,562,000; the final being the recognition of thedeferred tax associated with the pension deficit. The impact of these factors isshown below. 2007 £000 Deficit at beginning of period (7,981)Current service cost (180)Other finance income 81Contributions 1,078Reduction of deficit following settlement of liabilities 1,562Actuarial loss (18)Gross deficit at the end of the year (5,458)Deferred tax asset arising 1,637Net deficit at end of period (3,821) Long-Term Incentive Plan At the AGM held on 25 July 2006, conditional awards of shares were granted tothe executive directors and certain employees under the Long-Term Incentive Plan("LTIP"). FRS20 has been adopted during the year. The impact has been a chargein the Profit and Loss Account of £143,000. Treasury Policy The Group's treasury policy is controlled centrally in accordance withprocedures approved by the Board. It is run prudently as a central Groupfunction, providing services to the other Group companies and adopts a riskaverse strategy. Gearing The gearing level for the Group improved during the year to 67% at 31 January2007 (2006: 109%). Funding The Group utilises a facility provided by Burdale Financial Ltd, part of theBank of Ireland. It is a 3 year facility which ends on 23 July 2007 with a limitof £18.5m. A significant element of the facility is linked to working capitallevels which allows the Group to manage its cash more effectively during theseasonal fluctuations in working capital associated with the industry in whichthe Group operates. The Group has been seeking a funding structure that is more appropriate to itsimproving financial strength and an agreement has been reached on commercialterms with a UK clearing bank to provide these requirements from July 2007subject only to satisfactory legal agreements being concluded. All of the bank's facilities remain secured by first fixed and floating chargesover the Group's assets. Going Concern The directors are confident, after having made appropriate enquiries that theGroup and company have adequate resources to continue in the foreseeable future.For this reason they continue to adopt the going concern basis in preparing theaccounts. Alan DixFinance Director16 April 2007 Group Profit and Loss AccountYear ended 31 January 2007 Before Exceptional Exceptional Total Total items items 2007 2006 note £000 £000 £000 £000 Turnover Continuing operations 1,2 53,327 - 53,327 46,361 Discontinued operations 1,2 - - - 2,031 53,327 - 53,327 48,392Operating profit Continuing operations 2 2,201 - 2,201 758 Discontinued operations 2 - - - 184 Exceptional items 2 - 1,276 1,276 4,076 2,201 1,276 3,477 5,018Profit on sale of subsidiary 3 - - - 532Pension provision (FRS17) release on sale of - - - 95subsidiaryGoodwill previously written off to reserves - - - (1,908) Net loss on sale of subsidiary - - - (1,281) Profit on ordinary activities before interest 2,201 1,276 3,477 3,737Net interest payable Interest payable (898) (872) Amortisation of issue costs (66) (66) (964) (938)Other finance income/(charge) 81 (174) Profit on ordinary activities before taxation 1 2,594 2,625Tax on profit on ordinary activities (58) (80) Profit on ordinary activities after taxation 2,536 2,545Dividends - - Profit for the year 2,536 2,545 Earnings per share - Basic and diluted 4 4.49p 4.51pEarnings per share - Basic and diluted from 4 4.49p 6.46pcontinuing operationsDividend per ordinary share - - There is no material difference between the profit on ordinary activities aboveand their historical cost equivalent. Balance SheetsAt 31 January 2007 Group Group Company Company note 2007 2006 2007 2006 £000 £000 £000 £000Fixed assetsIntangible assets 4,820 4,859 - -Tangible assets 9,623 10,205 4,489 4,595Investment in subsidiaries - - 43,579 33,250 14,443 15,064 48,068 37,845Current assetsStocks 13,476 11,539 - -Debtors 10,344 9,137 17,175 15,823Cash at bank and in hand 2,065 1,530 - 77 25,885 22,206 17,175 15,900Creditors: amounts falling due within one year (13,587) (10,403) (9,987) (9,440) Net current assets 12,298 11,803 7,188 6,460 Total assets less current liabilities 26,741 26,867 55,256 44,305Creditors: amounts falling due after more than one year (10,073) (10,289) (780) (1,225) Net assets excluding pension liability 16,668 16,578 54,476 43,080Pension liability 8 (3,821) (7,981) - - Net assets 12,847 8,597 54,476 43,080 Capital and reservesShare capital 590 590 590 590Share premium account 457 457 457 457Profit and loss account (28,707) (32,957) 11,541 145Other reserves 40,507 40,507 41,888 41,888 Equity shareholders' funds 12,847 8,597 54,476 43,080 Group Cash Flow StatementYear ended 31 January 2007 2007 2007 2006 2006 note £000 £000 £000 £000 Net cash inflow from operating activities 5 2,995 1,643Returns on investment and servicing of financeInterest received 20 12Interest paid (913) (878) (893) (866) Taxation (50) (184) Capital expenditurePurchase of tangible fixed assets (1,220) (710) (1,220) (710)Acquisitions and disposalsNet proceeds from disposal of operations - 1,498 - 1,498 Equity dividends paid - - Cash inflow before use of liquid resources and financing 832 1,381Management of liquid resources - - FinancingProceeds from new loans - 655Principal repayments of finance lease obligations - (251)Repayment of borrowings (282) (1,414) (282) (1,010) Increase in cash 6,7 550 371 Statement of Total Recognised Gains and LossesYear ended 31 January 2007 Group Group 2007 2006 £000 £000 Profit for the financial year 2,536 2,545Actual less expected return on pension scheme assets (1,216) 3,817Experience gains and losses arising on pension scheme liabilities (5) 425Change in actuarial assumptions 1,203 (7,141)Currency translation differences (17) (27) Deferred tax on pension liability 1,637 - Total recognised gains and losses since the last annual report 4,138 (381) Reconciliation of Movements in Shareholders' FundsYear ended 31 January 2007 Group Group 2007 2006 £000 £000 Profit for the financial year 2,536 2,545Dividends - - Profit for the year 2,536 2,545 Other recognised gains/(losses) relating to the year 1,602 (2,926)Accrual for long term incentive plan liabilities 112 -Goodwill previously set off to reserves in respect of the disposal of - 1,908operations Net increase to shareholders' funds 4,250 1,527Opening shareholders' funds 8,597 7,070 Closing shareholders' funds 12,847 8,597 Notes to the Accounts 1 Segmental analysis (a) Classes of business Turnover 2007 2006 £000 £000 (restated)Continuing operations:Fabrics 37,414 31,943Wallcoverings 14,553 12,415Other 1,360 2,003 53,327 46,361 Discontinued operations:Fabrics - 511Wallcoverings - 1,520 - 2,031 Group 53,327 48,392 The comparative classes of business have been restated to better reflect thenature of the business. The other category includes furniture, paint and trimmings. (b) Geographical segments Turnover Profit Net assets before taxation before taxation 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000By origin on continuingoperations:United Kingdom 46,320 38,902 2,721 2,377 13,816 9,414Continental Europe 1,466 1,198 9 (86) (1,011) (1,003)North America 5,541 6,261 (136) 154 42 186 53,327 46,361 2,594 2,445 12,847 8,597 By origin on discontinuedoperations:Continental Europe - 2,031 - 180 - - By origin Group operations 53,327 48,392 2,594 2,625 12,847 8,597 By destination on continuingoperations:United Kingdom 35,485 29,476Continental Europe 7,693 6,145North America 7,503 7,937Rest of the World 2,646 2,803 53,327 46,361By destination ondiscontinued operations:Continental Europe - 2,031 By destination Group 53,327 48,392operations 2 Analysis of operating profit 2007 2006 Continuing Discontinued Total Continuing Discontinued Total £000 £000 £000 £000 £000 £000 Turnover 53,327 - 53,327 46,361 2,031 48,392Cost of sales (23,006) - (23,006) (20,562) (957) (21,519) Gross Profit 30,321 - 30,321 25,799 1,074 26,873 Net operating expenses:Distribution costs (13,272) - (13,272) (11,650) (305) (11,955)Administrative expenses (15,845) - (15,845) (14,489) (583) (15,072)Other operating income 997 - 997 1,098 (2) 1,096 Operating profit before 2,201 - 2,201 758 184 942exceptionalsReduction of pension 1,276 - 1,276 4,076 - 4,076deficit followingsettlement of liabilities Operating profit 3,477 - 3,477 4,834 184 5,018 Exceptional items During the year the Group bought out the right to non statutory pensionincreases from its active and deferred pensioners. This has resulted in areduction of the FRS 17 liability in the balance sheet of £1,562,000 (2006:£5,634,000) and a benefit of £1,276,000 (2006: £4,076,000) in the profit andloss account. The benefit arising from the pension reduction exercise would beclassified as administration expenses under FRS 3. 3 Loss on the sale of Borge Holdings AS and John O Borge AS In June 2005, the wholly owned Norwegian subsidiaries Borge Holding AS and JohnO Borge AS were sold for a consideration before costs of £1,881,000. A profit of£532,000 was generated on the sale before goodwill previously written off toreserves and the adjustment to FRS 17 provision. Goodwill previously written offto reserves of £1,908,000 was charged through the profit and loss account. A netloss on sale of £1,281,000 has been recorded. Net proceeds of £1,498,000 werereceived as detailed in the table below: 2006 £000Sale of Borge Holdings AS and John O Borge ASThe disposal comprised the following:Tangible fixed assets 60Stock 681Debtors 745Creditors (520)Profit on disposal 532 Net cash inflow from the disposal of Borge Holdings AS and 1,498John O Borge AS The tax effect of the disposal was £nil. 4 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of shares outstandingduring the year, excluding those held in the employee share trust, which aretreated as cancelled. 2007 2006 Earnings Weighted Per share Earnings Weighted Per share £000 average Amount £000 average Amount number of pence number of pence shares shares (000's) (000's)Basic and diluted EPS:Earnings attributable to ordinary 2,536 56,457 4.49 2,545 56,457 4.51shareholders Earnings per share from continuingoperations:Basic and diluted EPS 2,536 56,457 4.49 2,545 56,457 4.51Loss on sale of subsidiary - - - 1,281 - 2.27 Pre tax profit from discontinued - - - (180) - (0.32)operation Basic and diluted EPS from 2,536 56,457 4.49 3,646 56,457 6.46continuing operations Earnings per share from discontinuedoperations:Basic and diluted EPSLoss on sale of subsidiary - - - (1,281) 56,457 (2.27)Pre tax profit from discontinued - - - 180 - 0.32operation Basic and diluted EPS from - - - (1,101) 56,457 (1.95)discontinued operations 5 Reconciliation of operating profit to net cash inflow from operating activities 6 2007 2007 2006 2006 £000 £000 £000 £000Continuing operations:Operating profit 3,477 4,834Depreciation and amortisation 1,811 1,894Difference between pension charge and cash contributions (2,174) (5,316)Settlement of pension liabilities (894) (950)Proceeds on disposal of fixed assets - 3Loss on disposal of fixed assets 11 -(Increase)/decrease in stocks (1,940) 525(Increase)/decrease in debtors (1,245) 1,624Increase/(decrease) in creditors 3,837 (642)Decrease in provisions - (323)Accrual for long term incentive plan liabilities 112 - (482) (3,185) Net cash inflow from continuing operating activities 2,995 1,649 Discontinued operations:Operating profit - 184Depreciation and amortisation - 9Decrease in stocks - 134Increase in debtors - (125)Decrease in creditors - (208) - (190) Net cash outflow from discontinued operations - (6) Total net cash inflow from operating activities 2,995 1,643 7 Analysis of net debt 1 February 2006 Other movements Exchange 31 January Cash flow movement 2007 £000 £000 £000 £000 £000 Cash at bank and in hand 1,530 548 - (13) 2,065Overdrafts (2) 2 - - - 1,528 550 - (13) 2,065 Debt due within one year (596) - - - (596)Debt due after one year (10,289) 282 (66) - (10,073) (10,885) 282 (66) - (10,669) (9,357) 832 (66) (13) (8,604) 8 Reconciliation of net cash flow to movement in net debt 2007 2006 £000 £000 Increase in cash in the year 550 371Decrease in debt and lease financing 282 911 Cash inflow from cash flows 832 1,282Other movements (66) 99Exchange movement (13) 8 Movement in the year 753 1,389Net debt at 1 February 2006 (9,357) (10,746) Net debt at 31 January 2007 (8,604) (9,357) Other movements are amortisation of issue costs relating to the loan financing. 9 Pensions Movement in deficit during the period 2007 2006 Group Group £000 £000 Deficit at beginning of period (7,981) (11,269)Movement in the period:Current service cost (180) (167)Contributions 1,078 799Reduction of pension deficit following settlement of liabilities 1,562 5,634Release due to sale of subsidiary - 95Other finance income/(charge) 81 (174)Adoption of PA92 mortality tables - (3,196)Actuarial (loss)/gain (18) 297 Deficit at end of period (5,458) (7,981) Related deferred tax asset 1,637 - Net pension liability (3,821) (7,981) This information is provided by RNS The company news service from the London Stock Exchange