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Walker Greenbank

  • BY: Andrew Hore |
  • POSTED: 13/10/2010 |

Walker Greenbank’s revenues have returned to their peak level of a couple of years ago and the furnishings supplier is paying an interim dividend for the first time in 13 years.

Revenues grew 16% to £33.7m in the six months to July 2010. That is more than the first half of 2008-09, which was the previous first half peak.

Operating profit was nearly doubled to £2.06m even before a £500,000 exceptional insurance gain relating to the loss of pattern books in a fire. Stripping out the exceptional, pre-tax profit improved from £604,000 to £1.81m.

The manufacturing businesses were responsible for the majority of the improvement. Higher capacity utilisation enabled these businesses to swing from an operating loss of £84,000 to a profit of £1.13m.

There was a higher profit contribution from the brands but investment in Sanderson’s 150th anniversary and other marketing held back the profit growth. Most of the longer-term improvement will come from this side of the business. Harlequin is increasing its licensing revenues via the sale of bedding, rugs and towels.

Investment in the manufacturing business and the normal first half working capital outflow meant that net debt was £2.82m at the end of July 2010. Further investment means that this is unlikely to change significantly this year. The banking facility lasts until July 2013 and there is headroom of £9.51m. The gross pension deficit is £7.38m.

Walker Greenbank is paying an interim dividend of 0.15p a share. That is the first interim for 13 years.

Management is turning its mind to acquisitions but they are not a priority. An upmarket UK brand that fits within the existing portfolio is a possibility.  Alternatively, European or US brands would be considered. There is also the possibility of acquiring a sourcing business.

At 40.5p a share, up 2.25p, Walker Greenbank is valued at £23.7m.

Underlying profit is expected to jump from £2.4m to more than £4m in the full year – second half growth will be against a stronger period last year. November is the most important month.

The shares are trading on eight times prospective 2010-11 earnings.

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