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Date: 30 March 2009

THOMAS WALKER PLC

Chairman's Statement on the Interim Results for the half year ending

31 December 2008

The Group's first half performance has suffered from the sharp decline in the economy and a steep fall in demand since November 2008. This followed a moderate decline in the earlier months.

As reported in our pre-close period trading statement, the accessories business held up well in volume terms during the first half, although profitability was reduced by higher import costs following the fall in sterling against the American and Hong Kong dollars. 

The stampings business has been more seriously affected by the current economic conditions. The decline in traditional core markets of TW Stamping ('TWS'), particularly in sectors related to the housing market, has been profound. This has severely affected orders being placed with TWS, which are now mostly for small quantities on short lead times. This makes order input less predictable but does, however, favour the quick response capabilities of TWS.

To date, there is no sign of the recovery which we had originally anticipated for early 2009, as customers have not yet exhausted their stocks or generated new demand.

Financials
Group Revenues	£3,555,000	(2007: £4,499,000) declined by 21%
Loss before Tax	£388,000	(2007: Loss before Tax £130,000)
Loss after Tax	£358,000	(2007: Loss £77,000)
Net Debt	£2,273,000	(2007: £1,943,000)

Dividend

In view of the Group's current trading performance and the unpredictable outlook, the Board will not be declaring an interim dividend at the half-year stage. 

The Directors will review the position regarding future dividend payments once the Company has returned to sustainable profitability.

Stamping

Sales at TWS were some 40% below the comparable period in 2007. 

The improvements in control of raw materials have proved their worth as brass prices continue to be volatile. Disciplines ensure that purchases are only made against specific customer orders and that raw material stocks are kept to a minimum.

Margins have been restored, whilst remaining competitive, but the flow of orders has been severely restricted since late November 2008 as end users in the home building and engineering sectors scaled down or suspended their activities and as wholesale merchants and prime manufacturers reduced stocks and forward order commitments.

Accessories: Thomas Walker (UK) Limited and Thomas Walker (SEA) Limited

The original Thomas Walker operations which manufacture and distribute clothing accessories and identity products within the UK and Asia have experienced a mixed first-half performance.

Volumes of garment accessories were maintained compared with the same trading period in 2007. Demand for identity products has also held up well, with marginal sales growth being reported for the first half of the financial year as new ranges have been introduced. Overall profitability was adversely impacted by the weakness of Sterling and the consequential reduction of margin. 

Current trading and outlook

Trading since the half-year end continues to be extremely difficult and, if anything, the trend in order intake up to February has become even more depressed. Most orders for Stamping have been the result of successful promotion with new customers. This is an encouraging feature even though it has not been sufficient to compensate for lack of demand from traditional clients. 

As announced in the trading update issued on 12 March, the Group has been taking steps to reduce capacity and costs, regrettably including a number of redundancies. In the first phase, these steps will yield total savings circa £350,000 in a full year. Following a strategic review of the Group's business and prospects a second series of actions was identified as being necessary across all levels of the Company. Capital programmes have been suspended - including the new CNC machines which had been announced - and Directors have agreed to waive part of their salaries.

Cash availability is the prime concern in the short term and additional financial resources are being sought, principally from the Group's bankers, to fund the next wave of economies and to ensure the financial stability of the Group following completion of the restructuring programme. This may also involve an equity fundraising.

The Directors hope to be in a position shortly to announce a successful outcome to these discussions. 

As announced on 20 March 2009, the Directors have received an indicative offer for a management buy-out of one of the Group's subsidiaries. Discussions are at an early stage and there is no certainty that they will lead to an agreement.

Mr John Lomer, the Group Financial Director, is a party to the buy-out project and has stood down temporarily from the Board and Management of the Group in order to avoid a potential conflict of interest.

Bryan C Knight

Chairman

  

  Consolidated Income Statement

Six months ended 31 December 2008
	Unaudited 6mths to 31/12/08		Unaudited 6mths to 31/12/07		Audited Year ended 30/06/08
	£'000		£'000		£'000
Revenue	3,555		4,499		9,215
Operating expenses	(3,879)		(4,386)		(8,851)
One off costs	-		(161)		(161)
Operating (loss)/profit	(324)		(48)		203
Finance cost	(64)		(82)		(200)
(Loss)/Profit before income tax	(388)		(130)		3
Income tax credit/(expense)	30		53		(15)
Loss for the period attributable to the equity holders of the parent company	(358)		(77)		(12)
Basic and diluted (loss)/earnings per share (pence) (note 3)	(5.81)		(1.25)		(0.2)

Consolidated Statement of Recognised Income and Expense

Six months ended 31 December 2008
	Unaudited 6mths to 31/12/08	Unaudited 6mths to 31/12/07	Audited Year ended 30/06/08
	£'000	£'000	£'000
Actuarial (losses)/gains on defined benefit pension scheme	-	-	(109)
Deferred tax on actuarial (gain)/Loss	-	-	31
Exchange differences on translation of foreign operations	56	-	2
Net (loss)/gain recognised directly in equity	56	-	(76)
Loss for the period attributable to the equity holders of the parent company	(358)	(77)	(12)
Total recognised income and expense for the period	(302)	(77)	(88)

 

Group Balance Sheet
As at 31 December 2008
	Unaudited as at 31/12/08	Unaudited as at 31/12/07	Audited as at 30/06/08
	£'000	£'000	£'000
Non-current assets
Intangible Assets	551	551	555
Property, plant and equipment	3,705	3,886	3,861
Retirement benefit surplus	247	337	247
	4,503	4,774	4,663
Current Assets
Inventories	1,823	1,820	1,874
Trade and other receivables	1,787	2,337	2,096
Cash and cash equivalents	102	449	28
	3,712	4,606	3,998
Total assets	8,215	9,380	8,661
Current liabilities
Trade and other payables	(1,239)	(1,781)	(1,691)
Current tax liabilities	-	(199)	-
Obligations under finance lease	(21)	(46)	(41)
Bank loans	(1,113)	(1,021)	(679)
	(2,373)	(3,047)	(2,411)
Non Current liabilities
Bank loans	(1,242)	(1,305)	(1,286)
Deferred tax liabilities	(225)	(230)	(225)
Obligations under finance leases	-	(20)	-
	(1,467)	(1,555)	(1,511)
Total liabilities	(3,840)	(4,602)	(3,922)
NET ASSETS	4,375	4,778	4,739
Capital and Reserves
Called up Share Capital	308	308	308
Share Premium Account	15	15	15
Other Reserve	62	4	6
Retained earnings	3,990	4,451	4,410
TOTAL EQUITY	4,375	4,778	4,739

Group Statement of Cash Flows
For the six months ended 31 December 2008
	Unaudited 6mths to 31/12/08	Unaudited 6mths to 31/12/07	Audited Year ended 30/06/08
	£'000	£'000	£'000
Loss for the period	(358)	(77)	(12)
Adjustments for:
Finance costs	64	82	200
Income tax (Income)/expense	(30)	(53)	15
Gain on sale of property, plant and equipment	-	-	(28)
Depreciation of property, plant and equipment	252	209	472
Amortisation of Intangible assets	-	-	10
Operating cash flows before movement in working capital	(72)	161	657
Decrease/(increase) in inventories	51	(26)	(80)
Decrease/(increase) in trade and other receivables	395	205	447
(Decrease)/increase in trade and other payables	(451)	198	(33)
Increase/(decrease) in deferred tax liabilities	-	-	16
Cash flow from operations	(77)	538	1,007
Net Interest paid	(64)	(82)	(180)
Tax paid	-	-	(150)
Net cash from/(used in) operating activities	(141)	456	677
Cash flow from investing activities
Purchase of property, plant and equipment	(92)	(123)	(375)
Proceeds from sale of property, plant and equipment	-	-	27
Net cash used in investing activities	(92)	(123)	(348)
Cash flow from financing activities
Bank loan repayments	(44)	(42)	(62)
Proceeds /(repayment) new bank facilities	433	(5)	(347)
Finance lease repayments	(20)	(24)	(49)
Equity dividends paid (note 2)	(62)	(62)	(92)
Net cash (used in)/from financing activities	307	(133)	(550)
Net increase/(decrease) in cash, cash equivalents	74	200	(221)
Cash, cash equivalents at beginning of period	28	249	249
Cash, cash equivalents at end of the period	102	449	28

  Notes to the statements

At 31 December 2008

 

 

1.    Basis of Preparation

This interim report does not constitute statutory accounts of the group within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 June 2008, which were prepared in accordance with International Financial Reporting Standards (IFRS), and those parts of the Companies Act 1985 that remain applicable to companies reporting under IFRS, have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 237 of the Companies Act 1985.

The accounting policies applied in these un-audited interim financial statements are those that the group expects to apply in its annual financial statements for the year ended 30 June 2009, which will be prepared in accordance with International Financial Reporting Standards (IFRS), and those parts of the Companies Act 1985 that remain applicable to companies reporting under IFRS.

As noted in the Chairman's Statement, the directors are in discussion with the Group's bankers regarding increased borrowing facilities and are also exploring a number of alternative options to facilitate rationalisation.

The directors hope to be in a position shortly to announce a successful outcome to these discussions. They have therefore prepared the interim financial statements on the basis of a going concern.

 

 

2.    Dividends paid

Final equity dividend relating to year ended 30th June 2008 paid on ordinary shares of 1p per share, Company total of £61,600, (2007: Final equity dividend relating to year ended 30th June 2007 paid on ordinary shares of 1p per share, Company total of £61,600).

 

3.    Earnings per share

The calculation of basic earnings per share is based on the loss on ordinary activities after taxation (£358,000) for the period ending 31 December 2008 (31 December 2007: loss (£77,000)) and on 6,160,000 ordinary shares (2007: 6,160,000 ordinary shares), being the weighted average number of ordinary shares in issue during the period.

 

4.    Analysis of changes in net debt

   

	As at 1 July 2008	Cashflow	As at 31 December 2008
	£'000	£'000	£'000
Cash at bank and in hand	28	74	102
	28	74	102
Bank loans due within one year	(65)	-	(65)
Bank loans due after more than one year	(1,286)	44	(1,242)
Finance leases due within one year	(41)	20	(21)
Debt resulting from new invoice financing	(614)	(433)	(1,047)
	(1,978)	(295)	(2,273)

5.   Capital and Reserves

Reconciliation of movement in capital and reserves

	Share capital	Share premium account	Foreign exchange	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2008*	308	15	6	4,410	4,739
Dividends paid	-	-	-	(62)	(62)
Other reserves	-	-	56	-	56
Profit/(Loss) for the period	-	-	-	(358)	(272)
At 31 December 2008	308	15	62	3,990	4,375

The Interim Statement will be sent to shareholders and is available to the public at the registered office: Catesby Park, Eckersall Road, Kings Norton, Birmingham B38 8SE and on the Company website at www.thomaswalker.co.uk.

Contacts

Bill Good

Managing Director

Tel: 0121 486 4100

Mobile: 07790 742316

Katie Dale

Golley Slater Financial PR

Tel: 0121 384 9743

Mobile: 07918 716754

Colin Smith

Arden Partners

Tel: 0121 423 8940

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