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Walker Greenbank

  • BY: Andrew Hore |
  • POSTED: 10/04/2008 |

Walker Greenbank’s profits beat expectations for the fourth year in a row. 

The interior furnishings supplier improved the sales of all of its brands: Harlequin, Zoffany, Sanderson and Morris. It was helped by the return to fashion of wallpaper. It is also investing more in marketing its brands.

The wallpaper printing business improved its contribution but the fabric printing business was weak and its profit fell.

Group turnover rose 15% to £62.5m, while underlying profits more than doubled to £3.1m in the year to January 2008. The company recognised £5.1m of deferred tax relating to past losses. That makes the reported earnings per share meaningless. The underlying earnings per share are 5.4p, or 6.2p if the long term incentive plan charge is excluded.

Longer-term, North America and Europe will be growth areas for Walker Greenbank. It is also building up its contract furnishings operation. 

The pension deficit has fallen to £2.4m net and Walker Greenbank continues to pay £1m a year in cash towards the deficit. The deficit would have been lower but the reduction from contribution was balanced by assumptions that pensioners will live longer.

Cash generation was still strong enough to cut net debt by £1.3m to £7.3m and it should fall again this year. It is possible to pay a dividend but management wants to reduce borrowings further at the moment.

Management believes that there will be plenty of acquisition opportunities over the next 18 months or so.

The shares rose 1.5p to 42.5p.

House broker Landsbanki forecasts 2008-09 profit of £4.1m. A normal tax charge would make earnings per share 5.36p. That puts the shares on eight times forecast earnings.

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