Final Results

Victoria PLC 20 June 2007 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Wednesday, 20 June 2007 Embargoed: 7.00am Victoria PLC Leading manufacturers of high quality carpets in the UK, Australia and Ireland 2007 Preliminary Results Victoria continues to win market share whilst increasing margin and profitability Focus on products, style, quality and innovation coupled with good service will continue to underpin growth • Group Revenue increased 6% to £55.43 million • Operating profit up 26% to £3.39 million • Profit before tax increased by 37% to £2.76 million • Adjusted Earnings per share (as per note 2) up 15% to 28.92p • Proposed Dividend 12.50p, up 9% • Net asset value per share increased by 4.3% to 417p • Net cash increase of £2.66 million • Good performance across most sectors against challenging economic conditions • Despite a decline in the overall market Victoria has taken market share from its competitors • New five-year service agreement with The John Lewis Partnership to warehouse, cut and deliver JLP branded carpets to its UK stores • New showroom facilities in Vancouver attracting the architect & design community 'Despite the fact that the economic and trading conditions in our key markets have remained tough and challenging the Group has made good progress on all fronts.' 'In the UK and Ireland we have produced a very strong performance when viewed against the state of the trade in general whilst, in Australia we managed to win market share once again against a difficult market and during a period of consolidation of the industry's two largest players. Our associate in Canada has had another very successful year.' 'Our strategic approach is focused on growth, taking advantage of opportunities to exploit and build on our leading market position' 'Although we are unlikely to see any real improvement in general overall market conditions in the year ahead, the Board believe that Victoria has the structure, products and people in place to achieve the Group's objectives for the year and in particular to deliver an improved performance again within this new financial year.' Enquiries: Alan Bullock, Group Managing Director Fiona Tooley, Director Ian Davies, Group Finance Director Keith Gabriel, Senior Account Manager Victoria PLC Citigate Dewe Rogerson Today: +44 (0) 207 638 9571 (until 11.30am) Today: +44 (0) 207 638 9571 Thereafter: +44 (0) 1562 749640 Thereafter: +44 (0) 121 455 8370 Mobile: +44 (0) 7785 325701 (AB) Mobile: +44 (0) 7785 703523 (FMT) www.victoria.plc.uk -2- Victoria PLC Preliminary Results for 52 weeks ended 31 March 2007 CHAIRMAN'S STATEMENT Despite the fact that the economic and trading conditions in the key markets in which our business operates have remained tough and indeed challenging, I believe that the Group has made good progress on all fronts. Revenues from the Group's activities amounted to £55.43 million, an increase of 6.0% on last year, whilst profit before tax increased by 37.3% to £2.76 million. EARNINGS & DIVIDEND Basic earnings per share increased by 24.1% from 23.30p to 28.92p and your Board is recommending a dividend of 12.50p per share, an increase of 8.7% on last year. The dividend, which is subject to Shareholder approval at the Annual General Meeting to be held on 24 July 2007, will be paid on 30 July 2007 to all members on the Register at the close of business on 27 June 2007. OPERATIONS Whilst overall in the United Kingdom and Ireland demand from the residential market has again remained subdued, we have produced a very strong performance particularly when viewed against the state of the trade in general. Revenues in the period increased by 7.0% from £29.65 million to £31.72 million. Operating profits were up by 80.91% to £1.56 million from £0.87 million last year and Profit before tax significantly improved by 130.7% from £0.53 million to £1.22 million. In Australia, the market has for the second year in succession remained difficult. However, against a tough economic and trading environment, coupled with the merger of the Industry's two largest carpet manufacturers, which created both additional challenges and some opportunities, we again managed to win market share. Revenues from within the Australasian region improved from £22.64 million to £23.71 million, a 4.7% increase. This was, however, at the expense of margin with operating profits down slightly from £2.22 million to £2.08 million (-6.29%), whilst Profit before tax was £1.81 million, 8.2% down on last year. In Canada, our associate company, Colin Campbell & Sons, had another very successful year with sales moving forward by 16.2% to C$9.12 million and profit before tax up by 51.1% to C$0.59 million. PROPERTY A detailed planning application to develop the Company's former Sports Field site in Kidderminster is close to being submitted to the Local Authority. The past year has been spent in satisfying planning matters which are a requirement if the detailed planning application is to succeed. The site will hopefully become, subject to final planning approval, an indoor and outdoor Bowling Centre of Excellence, a budget hotel and public house/restaurant. The net sale proceeds, subject to capital gains tax, are likely to be around £1.00 million. continued... -3- THE BOARD During the year, we have seen several changes to the Board. Firstly, Mark Lee the Group Finance Director left the Company in September 2006 to pursue a career within a larger organisation. On behalf of everyone involved with Victoria, I would like to thank Mark for his efforts and commitment during his eight-year tenure and wish him every possible success in his new career. I would then like to welcome Ian Davies to the Board as our new Group Finance Director. I am sure that Ian will make a significant contribution to the Board and to the future development and growth of the Group. Last, but not least, John Duncan retired from the Company on 30 April 2007 having spent 37 years with Victoria Carpets in the UK, 11 years of which he was part of the Group Board. John has been a great servant to the Group throughout his career and he will be greatly missed by both his colleagues and the trade in general. On behalf of the Board and the Shareholders may I wish John and his wife Margaret a very happy and long retirement. Above all, I would also like to thank him for all he has done for the Company. EMPLOYEES The continued good performance of the Group and its sound prospects for the future could not have been achieved without a committed and highly competent team at all levels of the business. I take this opportunity to express my personal thanks to everyone in the Group for the efforts they have put into achieving yet another successful year. PROSPECTS Although we are unlikely to see any real improvement in general overall market conditions in the year ahead, the Board believe that we have the structure, products and people in place to achieve our objectives for the year and in particular to deliver an improved performance again within this new financial year. Bob Gilbert Chairman 20 June 2007 -4- Victoria PLC Preliminary Results for 52 weeks ended 31 March 2007 GROUP MANAGING DIRECTOR'S - OPERATING REVIEW UNITED KINGDOM The past twelve months in the UK have been extremely challenging with erratic market conditions prevailing. The market in the first half of the financial year was badly affected by the long, hot, dry spell of weather, which was hardly conducive to consumers buying carpeting. The Autumn trading was then stronger, only to see the effects of higher energy costs and interest rate increases sapping consumer confidence after Christmas and through into the first quarter of 2007. Statistics have shown a 5% decline during the year in the market and yet despite this backdrop, I am pleased to report that Victoria has performed well and has continued to take market share from its competitors. Carpet sales were up by 7.3% from £25.46 million to £27.32 million, primarily driven by an extremely active programme of new range launches. As we stated at the time of our interim results, there were nine new product introductions alone in the first half of our financial year, which undoubtedly helped us out-perform the market. Carpet sales in the UK were up from £21.69 million to £23.28 million, reflecting particularly strong growth to The John Lewis Partnership (+20.9%), who remain our biggest customer. Sales to our core independent retail sector also saw good growth (+7.9%) and, in fact, this sector remains key to our market strategy and within these results represents 63% of our total UK sales. Export sales also increased from £3.77 million to £4.04 million, a 7.2% improvement over last year. Operationally, Victoria Carpets has focused on maximising operational efficiencies by making full use of the additional space created following the planned closure of both the Axminster weaving and dyehouse in March 2005 and April 2006 respectively. I am pleased to report that despite significant increases in energy costs, we have seen a 14.8% reduction in the kWh of electricity used over the past twelve months as a direct result of investing in energy saving measures. Victoria Carpets' spend on both new ranges and 'Point-of-Sale' (POS) merchandising displays has again been kept at high levels throughout the year. Our investment in keeping product ranges fashionable and current is, we believe, keeping us ahead of our competitors and is in no small measure responsible for us growing our business within what is reported to be a declining market. continued... -5- Likewise, service remains a priority and at the forefront as we seek to differentiate ourselves from the competition. Victoria has again been recognised for its efforts in this area when, for the fifth year in succession, we won the Greendale Flooring Award for 'Best Service Provider'. Greendale is perhaps the UK's foremost independent retail buying group and their members are very important to us. We were also delighted at the same time to be awarded 'Best Product' by the same buying group for our recently re-coloured Tudor Twist Collection which has proved to be a very successful range within our portfolio. During the year, Victoria entered into a new five-year service agreement with The John Lewis Partnership (JLP). Under this agreement, we warehouse, cut and deliver all of JLP branded carpet ranges to their UK store network. As part of this new service contract, Victoria has installed new IT Systems, which will link all JLP stores on-line to our warehousing, thereby improving stock checking and order processing. Victoria is rightly proud of its special relationship with JLP and we believe that this extension to our service agreement underpins this relationship. Looking ahead to the current financial year: Victoria has placed an order for an additional 1/8th gauge tufting machine which is needed to meet demand. Victoria has again an active programme of new product introductions planned for the first half of 2007, which should enable us to continue to grow the business despite market conditions which are unlikely to show any real improvement in the short-term. Westwood Yarns, the Group's UK spinner, has enjoyed a reasonably busy year with the bulk of its yarn capacity being utilised in-house at Victoria Carpets. A new white blending line has been installed during the year, which is now enabling us to manufacture the very light white and beige shades of carpets that are so popular with today's consumer, with less risk of contamination from either foreign coloured fibres or vegetable matter. We have also placed a contract with a specialist machinery manufacturer which will enable Westwood Yarns to manufacture plied yarns for the first time. The new equipment will be installed during summer 2007 and we expect it to be operational in the second half of this new financial year. This enhancement at Westwood's plant will see overall yarn capacity increased by around 10%. More importantly, it will enable them to supply Victoria with some of the premium value yarns that it currently has to outsource from the market, whilst also providing security of supply, further operational efficiencies and cost savings. AUSTRALIA During the past year, the State economies of Queensland and Western Australia have maintained a degree of buoyancy whilst the more populous States of Victoria & New South Wales have experienced little or no growth at all. New building starts have continued at a low level throughout the year, whilst spending on consumer durables such as carpets remained weak. Against this backdrop and in a year of contrasting halves, our Australian operation recovered well from a weak first-half which saw net profits down by almost 24% to record a net profit of A$4.50 million for the full year, just 4% down on the previous year's reported profits of A$4.70 million. This was a robust performance in a tough market and which was in-line with our budget expectations. continued... -6- Sales for the year were up by 9% from A$53.73 million to A$58.52 million. This, in a market which showed no real growth at all but which was assisted by the extremely positive reaction to both our new wool and synthetic ranges made on a new state-of-the-art level cut loop (LCL) tufting machine installed at Dandenong in late 2006. We have been particularly pleased with the general market reaction to our increased range of synthetic products which we have added to our product offering during the year. Although we will still be remaining focused on the wool and wool-rich products, which are our core business, we will look to continue to develop our synthetic ranges. The acquisition by Godfrey Hirst of its major competitor Feltex in October 2006 and the subsequent rationalisation of these two major Australian/New Zealand carpet manufacturers has, as we anticipated, caused some market disruption. It has also presented us with additional sales opportunities as well as allowing us to identify and attract to our Australian operation some extremely talented key personnel from these leading players, which has substantially bolstered our Sales & Marketing team. Today, Victoria is now the number two producer of residential carpet in Australia and, despite somewhat indifferent market conditions, our Australian business continues to take market share from the competition. Our exports to New Zealand and Pacific Rim countries, particularly North America, increased strongly by 18% in the year despite the continuing strength of the Australian Dollar. The strength of the Australian currency, however, does have some implications for the level of imported products being brought into the local market, particularly in view of the reduced import protection now afforded to Australian manufacturers. Operationally, we have had a busy year in Australia. Carpet production levels at our Dandenong factory reached an all-time record in the year, up by 13% on the previous record levels achieved last year. As well as adding to the tufting plant's capacity and flexibility with the installation of a new LCL tufter, the main item of investment in plant and equipment during the year was the installation of a completely new finishing oven at the Dandenong plant. This major project was executed and successfully completed in the summer shut-down without any disruption to sales. The backing line has afforded us improved productivity through increased line speeds, greater energy efficiency and higher quality of finished carpet. Our two Spinning Mills at Bendigo and Castlemaine, both in the State of Victoria , operated below full capacity in the first half of the year and, whilst they were better utilised during the second half, they still had some under utilised capacity. The performance of both Mills during the year was satisfactory and they contributed well to the overall performance of the Australian operation. In accordance with the terms of our 2002 Purchase Agreement, when we acquired the Pacific Textiles Spinning Mill in Bendigo, we exercised the option to acquire the freehold of the land at the option price previously agreed of A$1.70 million. This brought total capital expenditure made in Australia during the course of the year to A$3.90 million. continued... -7- We believe that our Australian business is well positioned to improve on its solid performance achieved last year. Our continued investment in plant, new product development and quality people places us in a particularly strong position to deal with the competition we experience within this marketplace from Australian and New Zealand manufacturers, as well as from growing imports. Whilst we are optimistic that we will this year once again out-perform the market, it is likely that there will be no positive assistance from the economy in general, which remains flat and may continue to be so until after Federal elections are completed later this year. IRELAND Our Irish businesses are focused primarily on distribution to two different segments of the floor coverings market. Munster Carpets markets and sells mainly through the design & specification route targeting the commercial contract market. Navan Carpets on the other hand is marketing and selling principally to the residential market through the independent retailers, as well as to the hotel industry. As is often the case, these markets run at different paces and are dependent on the economic cycle, and this has certainly been the case in the year currently under review. Over the past year, the Irish economy in general has been relatively robust, with a strong growth in GDP of around 6% per annum. This growth has flowed well into the commercial contract market for floor coverings and I am pleased to report that Munster Carpets has exploited these market conditions well. Their sales were up by 21% in volume, 31% in value and the margins on these sales were very pleasing too, with net profits advancing by 48%. From a residential floor covering perspective, the pattern of trade in both the Irish and UK markets has been somewhat similar with the long hot summer of 2006 badly affecting footfall through the retail shops. Despite the poor start to the year, the Autumn trading season picked up well and, for the year as a whole, sales were up by 8%. The margins were, however, affected by the discontinuation of some ranges being cleared to make way for new product introductions. Overall, our combined Irish businesses produced a creditable performance with revenues up by 15.3% and profit before tax up by 13.7%. The maturing Special Savings Incentive Accounts (SSIAs), a Government supported tax-efficient savings scheme may give a boost to consumer confidence later in 2007. Irrespective of whether or not this does flow through into additional floor covering sales in the forthcoming year, our Irish businesses still have fairly good prospects for organic growth with the strong programme of new product introductions planned for launch in the coming year. This should underpin both sales revenues and profits in the year ahead. CANADA Colin Campbell, our Canadian associate company, has enjoyed another very successful year as their business continues to go from strength to strength. The Western Canadian economy in which Campbell's mainly operate has been buoyant for a while now and its strength has been underpinned by both its wealth of natural resources and the Winter Olympics, which are to be held in British Columbia in 2010. continued... -8- Campbell's prime business is as a decorative supply house, 'trade-only showroom' supplying high quality floor coverings to interior designers and architects who are dealing with both high-end residential and leading commercial clients. I am pleased to report that this part of the business has continued to perform well and during the second half of the year under review, Campbell's added an exclusive range of designer furniture to their product offering, which represents the first step to providing a wider product assortment of home furnishings. The business will of course continue to focus on broadloom, wall-to-wall carpeting, as well as area rugs for which the business has perhaps been better known. But we are confident that by adding other decorative items, such as furniture, we can further expand sales through the architects and designers who, in addition to specifying floor covering, also buy other items of furnishings. In September 2006, Campbell's opened innovative contemporary showrooms in the Vancouver waterfront area. Taking a disused fish packer's warehouse, a leading Vancouver architect has created a fashionable and chic showroom which has rapidly become a destination venue for British Columbia's designers and architects looking for great floor coverings. These showrooms, as well as offering increased floor space for merchandising, have proved highly attractive to the design community, our core customer. In addition to the decorative supply business, Campbell's has been pioneering sales through the internet portal called 'Nature's Carpets'. Nature's Carpets are totally non-toxic and biodegradable carpets suitable for people who may be allergic to certain chemicals or off-gases. These products are made using natural un-dyed wools with no chemical treatment and are tufted into natural jute and backed with natural latex. They are totally 'green' being made from renewable resources. Given the growing demand and very positive results achieved through internet sales of this form of carpeting, Campbell's will now be rolling out an extended sales and marketing programme across the United States and Canada using a dedicated sales team as well as continuing with the web-based programme which will attract increased sales for this niche product offering. Overall, Campbell's sales increased during the period by 16.2% from Can$7.85 million to Can$9.12 million, whilst profit before tax was up from Can$0.39 million to Can$0.59 million (+51.1%). Net margin on sales rose from 4.9% to 6.4%. Victoria's associated share of profits in the year were Can$0.30 million up from Can$0.20 million last year. The outlook for our Canadian business remains promising. With the stronger product offering planned, we are confident of seeing continuing growth within this business. Alan Bullock Group Managing Director 20 June 2007 -9- Victoria PLC Preliminary Results for 52 weeks ended 31 March 2007 FINANCIAL REVIEW HEADLINE RESULTS Profit before tax increased by 37.3% to £2.76 million, compared to £2.01 million for 2006. Revenue rose by 6% from £52.29 million to £55.43 million. Earnings per share (as per note 2) were 28.92p, up 24.1% (2006: 23.30p) with adjusted earnings per share also at 28.92p, showing an increase of 14.8% on the prior year (2006: 25.20p). REVENUE AND OPERATING PROFIT UK AND IRELAND Revenue was up 7% from £29.64 million to £31.72 million. The business in the UK operated in a market that did not demonstrate any significant growth. Against this background, the business continued to focus on tight operating and material cost control. Combined with the operational gearing effect of higher revenues, this enabled operating margin to increase from 2.9% to 4.9%. Operating profit for the UK and Ireland increased by 80.8% to £1.56 million (2006: £0.87 million). AUSTRALIA Revenue rose by 8.9% to A$58.52 million compared to A$53.73 million for 2006. The market conditions in Australia remained subdued but the increased profile of synthetic carpet has supported growth. Price competition amongst carpet suppliers has continued to be a feature of the marketplace and our operating margin declined from 9.8% to 8.8%. Operating profit has fallen by 2.5% from A$5.27 million to A$5.14 million. Further investments have been made in our equipment and facilities. This continues to attract grants under the Australian government's Strategic Investment Programme, which accounted for A$0.4 million of operating profit in comparison with A$0.51 million last year. SHARE OF PROFITS OF ASSOCIATED COMPANY There was also an increased contribution from our associated company, Colin Campbell and Sons, which is 50% owned by the Group. Revenues increased by 16.2% from Can$7.84 million to Can$9.12 million, accompanied by an improvement in operating margins. Our share of the pre tax profit increased by Can$0.10 million to Can$0.30 million. INTEREST Interest costs remained in-line with the previous year at £0.73 million. The increase in base rates in the period was mitigated by lower borrowings and the movement in the fair value of financial instruments. Interest was covered 4.6 times by operating profit (2006: 3.9 times). continued... -10- PROFIT BEFORE TAXATION Profit before taxation for the year was £2.76 million (2006: £2.01 million). TAXATION The effective rate of tax on profit for the year was 27.3%. This is higher than 2006 (19.5%) which had benefited from extra reliefs in Australia that had reduced the deferred tax provision for the realisation of property values through sale. Without these extra reliefs, the effective rate in 2006 would have been approximately 27%. EARNINGS PER SHARE Basic earnings per share grew by 24.1% to 28.92p (2006: 23.30p). The growth in earnings per share, however, was impacted by the rise in the effective rate of tax. Adjusted earnings per share is also 28.92p, compared to 25.20p, excluding restructuring costs in 2006. The number of shares in issue remained constant during the year and there remain no options or other dilutive arrangement. DIVIDENDS We are recommending a final dividend of 12.50p per share this year, compared to 11.50p in 2006. This represents an 8.7% increase and our aim will be to deliver continued dividend growth in future years. NET ASSETS Our net asset value at the financial year end increased by 4.2% to £28.98 million (2006: £27.81 million). The main movement in the balance sheet was financial liabilities which reduced by £2.06 million from £12.40 million to £10.33 million. CASH FLOW AND NET DEBT Our net cash inflow was £2.66 million, reducing our cash and cash equivalent borrowings to £3.69 million (2006: £6.36 million). This compares with a net cash outflow in 2006 of £0.52 million. We have continued to invest in our facilities and equipment during the year and our capital expenditure totalled £1.96 million (2006: £2.77 million). Spend on plant and machinery is down £1.84 million on previous years, in-line with expectations, as key equipment replacement programmes have been completed. During the year, we acquired the freehold to the property at Bendigo in Australia, which we had leased since acquisition of the business at that location, for £0.75 million. HEDGING The Group uses derivative financial instruments to manage our interest rate exposure in the UK. The Group has two swaps covering £3.00 million, with maturity dates in July 2007 and July 2009. Our policy is to continue to utilise such instruments as deemed appropriate. The Group reviews its currency exposure relating to trading operations involving the export sale of goods or import of raw materials or capital equipment. The Group may utilise forward currency contracts to manage any currency exposures where it is considered that currency movements may be volatile and the amounts involved significant. The principal exposure of the Group relates to the investment in its Australian subsidiary. The Group maintains a significant proportion of its borrowings in Australian dollars which helps to provide a natural hedge against the investment exposure. continued... -11- FUTURE FUNDING The gearing of the Group is now significantly lower than in 2006 and our current facilities will provide sufficient debt capacity in 2007. The strong cash generation is providing capacity for future investments. Capacity exists in Sterling, Euros and Australian dollars to cover anticipated capital expenditure and working capital requirements. KEY PERFORMANCE INDICATORS (KPIS) As part of the detailed budgeting process, each subsidiary is required to establish targets across a range of financial and non-financial indicators. At the monthly Board meetings, the Managing Director is required to present a review on progress against these targets. The non-financial KPIs may differ in each subsidiary but are focused on delivering high levels of customer satisfaction, introducing new products and services which meet the needs of our customers, ensuring operational effectiveness and attracting, retaining and developing key employees. The financial KPIs reviewed and reported by all subsidiaries, focus on profit growth, profitability improvement, inventory management, levels of debt, cash generation, future levels of borrowing requirement and return on capital employed. CHANGES IN ACCOUNTING POLICIES There have been no changes in accounting policies this year. Ian Davies Group Finance Director 20 June 2007 -12- Victoria PLC CONSOLIDATED INCOME STATEMENT for the 52 weeks ended 31 March 2007 Notes 52 weeks ended 52 weeks ended 31 March 2007 1 April 2006 £'000 £'000 -------------------------------------------------------------------------------- Revenue 1 55,426 52,288 Cost of sales (39,003) (37,566) -------------------------------------------------------------------------------- Gross profit 16,423 14,722 Distribution costs (10,641) (9,770) Administrative expenses (3,097) (3,007) Other operating income 700 921 Restructuring costs - (188) -------------------------------------------------------------------------------- Operating profit 1 3,385 2,678 Share of results of associated company 104 73 Finance costs 1 (727) (740) -------------------------------------------------------------------------------- Profit before tax 1 2,762 2,011 Taxation 1 (754) (393) -------------------------------------------------------------------------------- Profit for the period 2,008 1,618 Attributable to equity holders of the parent 2,008 1,618 -------------------------------------------------------------------------------- Earnings per share - pence Basic 2 28.92 23.30 Diluted 2 28.92 23.30 -------------------------------------------------------------------------------- -13- Victoria PLC CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE for the 52 weeks ended 31 March 2007 52 weeks ended 52 weeks ended 31 March 2007 1 April 2006 £'000 £'000 ------------------------------------------------------------------------------- Exchange differences on translation of foreign operations (33) 83 ------------------------------------------------------------------------------- Net income/(loss) recognised directly in equity (33) 83 Profit for the period 2,008 1,618 ------------------------------------------------------------------------------- Total recognised income and expense for the period 1,975 1,618 ------------------------------------------------------------------------------- Attributable to Equity holders of the parent 1,975 1,618 ------------------------------------------------------------------------------- -14- Victoria PLC BALANCE SHEETS for the 52 weeks ended 31 March 2007 Group Company 31 March 2007 1 April 2006 31 March 2007 1 April 2006 £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------- Net-current assets Intangible assets 491 527 - - Property, plant and equipment 23,846 24,172 5,312 5,373 Investment property 180 180 180 180 Investment in subsidiary undertakings - - 3,321 3,321 Investment in associated company 469 440 56 56 Deferred tax asset 983 659 3 13 -------------------------------------------------------------------------------- Total non-current assets 25,969 25,978 8,872 8,943 -------------------------------------------------------------------------------- Current assets Inventories 15,740 16,110 - - Trade and other receivables 9,603 10,215 4,505 4,074 Financial asset 10 - 10 - Cash at bank and in hand 644 234 - - -------------------------------------------------------------------------------- Total current assets 25,997 26,559 4,515 4,074 -------------------------------------------------------------------------------- Total assets 51,966 52,537 13,387 13,017 -------------------------------------------------------------------------------- Current liabilities Trade and other payables 8,234 8,505 61 130 Current tax liabilities 998 961 - - Financial liabilities 5,261 7,551 2,782 2,645 -------------------------------------------------------------------------------- Total current liabilities 14,493 17,017 2,843 2,775 -------------------------------------------------------------------------------- Non-current liabilities Trade and other payables 1,209 1,090 - - Financial liabilities 5,072 4,849 - - Deferred tax liabilities 2,209 1,774 695 682 -------------------------------------------------------------------------------- Total non-current liabilities 8,490 7,713 695 682 -------------------------------------------------------------------------------- Total liabilities 22,983 24,730 3,538 3,457 -------------------------------------------------------------------------------- Net assets 28,983 27,807 9,849 9,560 -------------------------------------------------------------------------------- Equity Issued share capital 1,736 1,736 1,736 1,736 Share premium 829 829 829 829 Retained earnings 26,418 25,242 7,284 6,995 -------------------------------------------------------------------------------- Total equity 28,983 27,807 9,849 9,560 -------------------------------------------------------------------------------- -15- Victoria PLC CASH FLOW STATEMENTS for the 52 weeks ended 31 March 2007 Group Company 52 weeks 52 weeks 52 weeks 52 weeks ended ended ended ended 31 March 1 April 31 March 1 April 2007 2006 2007 2006 £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------- Net cash inflow from operating activities 5,061 2,957 574 407 -------------------------------------------------------------------------------- Investing activities Dividends received from associates 32 23 32 23 Purchases of intangible fixed - - - - assets Purchase of property, plant and equipment (1,959) (2,773) - - Proceeds of disposals of property, plant 74 435 - 10 and equipment -------------------------------------------------------------------------------- Net cash used in investing activities (1,853) (2,315) 32 33 -------------------------------------------------------------------------------- Financing activities (Decrease)/incre ase in long-term loans 347 (73) - - Receipts from financing of assets 870 639 - - Payment of finance leases/HP liabilities (963) (934) - - Dividends paid (799) (799) (799) (799) -------------------------------------------------------------------------------- Net cash (used in)/from investing (545) (1,167) (799) (799) activities -------------------------------------------------------------------------------- Net (decrease)/incre ase in cash and 2,663 (525) (193) (358) cash equivalents Cash and cash equivalents at beginning (6,363) (5,827) (2,590) (2,232) of period Effect of foreign exchange rate changes 7 (11) - - -------------------------------------------------------------------------------- Cash and cash equivalents at end of (3,693) (6,363) (2,783) (2,590) period -------------------------------------------------------------------------------- -16- Victoria PLC NOTES TO THE PRELIMINARY ANNOUNCEMENT 1 Segmental Information For management purposes, the Group is organised into three operating divisions according to the geographical areas where they are managed. These divisions are the basis on which the Group reports its primary segment information. The three divisions are UK & Ireland, Australia and the Canadian associate. Geographical segment information for revenue, operating profit and a reconciliation to entity net profit is presented below. Income 52 weeks ended 31 March 2007 52 weeks ended 1 April 2006 Statement Revenue Operating Finance Profit Revenue Operating Finance Profit £'000 profit charges before £'000 profit charges before £'000 £'000 tax* £'000 £'000 tax* £'000 £'000 ------------------------------------------------------------------------------------------------ UK & 31,720 1,564 (346) 1,218 29,647 865# (337) 528 Ireland Australia 23,706 2,082 (271) 1,811 22,641 2,222 (250) 1,972 ------------------------------------------------------------------------------------------------ 55,426 3,646 (617) 3,029 52,288 3,087 (587) 2,500 Share of results Of - - - 104 - - - 73 associate Central - (261) (110) (371) - (409) (153) (562) costs ------------------------------------------------------------------------------------------------ Total continuing Operations 55,426 3,385 (727) 2,762 52,288 2,678 (740) 2,011 ---------------------------------------------- ------------------------------------ Tax (754) (393) ------- ------ Profit after tax from 2,008 1,618 continuing activities ------- ------ * The share of profits of the associated company is shown net of tax as required by IAS1. # Operating profit from the UK and Ireland operations is stated after a £188,000 charge for business reorganisation costs (closure of Kidderminster dyehouse). Intersegment sales between the UK and Ireland and Australia were immaterial in the current and comparative periods. Balance Sheet As at 31 march 2007 As at 1 April 2006 Segment Segment Segment Segment Assets Liabilities Assets Liabilities £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------- UK & Ireland 28,239 9,901 30,058 12,675 Australia 22,994 9,544 21,652 8,598 Canada 469 - 440 - Unallocated central assets/liabilities 264 3,538 387 3,457 -------------------------------------------------------------------------------- 51,966 22,983 52,537 24,730 -------------------------------------------------------------------------------- The investment in associated company is held directly by the parent entity and does not relate specifically to either geographic segment. continued... -17- Other Segmental Information 52 weeks 52 weeks ended ended 31 March 2007 1 April 2006 £'000 £'000 --------------------------------------------------------------------------------- Depreciation and Amortisation UK and Ireland 1,024 1,139 Australia 1,229 1,181 Unallocated central - - -------------------------------------------------------------------------------- 2,253 2,320 -------------------------------------------------------------------------------- No other significant non-cash expenses were deducted in measuring segment results. Capital Expenditure UK and Ireland 379 1,298 Australia 1,580 1,475 Unallocated central - - -------------------------------------------------------------------------------- 1,959 2,773 -------------------------------------------------------------------------------- Business Segments: No secondary segmental information is reported as the Directors consider that substantially all of the Group's operations relate to a single activity, that of the manufacture and sale of carpets. 2 Earnings per Share The calculation of earnings per ordinary equity share in the parent entity is based on the following earnings and number of shares: 2007 2006 £'000 £'000 -------------------------------------------------------------------------------- Earnings (£'000) basic and diluted Profit attributable to ordinary equity holders of the parent 2,008 1,618 entity -------------------------------------------------------------------------------- Number of shares (thousands) - in issue throughout the period 6,944 6,944 -------------------------------------------------------------------------------- Earnings per share (basic and undiluted) in pence 28.92p 23.30p -------------------------------------------------------------------------------- No arrangements existed during the period or the comparative period that might require the issue of shares and hence the diluted earnings per share are the same as the basic earnings per share. The calculation of the following non-statutory item used in the Chairman's Statement and Financial Review is set out below: Adjusted earnings 2007 2006 £'000 £'000 ------------------------------------------------------------------------------- Profit from continuing operations attributable to Ordinary equity holders of the parent Entity 2,008 1,618 Restructuring costs (net of 30% tax) - 132 ------------------------------------------------------------------------------- 2,008 1,750 ------------------------------------------------------------------------------- Adjusted earnings per share 28.92p 25.20p ------------------------------------------------------------------------------- continued... -18- 3 Rates of Exchange 2007 2006 Average Year end Average Year end ------------------------------------------------------------------------------- Australia 2.4687 2.4279 2.3730 2.4326 Euro 1.4717 1.4735 1.4623 1.4333 Canada 2.1540 2.2627 2.1276 2.0235 4 Notes to the Cash Flow Statement Reconciliation of operating profit to net cash from operating activities Group Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------- Operating profit from continuing operations 3,385 2,678 1,215 1,092 Adjustments for: - Depreciation of property, plant and equipment 2,226 2,293 61 61 - Business reorganisation costs - 188 - - - Amortisation of intangible assets 27 27 - - - (Profit)/loss on disposal of property, plant and equipment 8 (55) - - - Exchange rate difference on consolidation (18) 36 - - ------------------------------------------------------------------------------- Operating cash flows before movements in working capital 5,628 5,167 1,276 1,153 Increase/(decrease) in working capital 801 (1,093) (526) (592) -------------------------------------------------------------------------------- Cash generated by operations 6,429 4,074 750 561 Interest paid (792) (740) (176) (153) Income taxes (paid)/received (576) (377) - (1) -------------------------------------------------------------------------------- Net cash from operating activities 5,061 2,957 574 407 -------------------------------------------------------------------------------- 5 Analysis of Net Debt At 1 April Cash Other Exchange At 2006 flow non-cash Movement 31 March 2007 changes £'000 £'000 £'000 £'000 £'000 --------------------------------------------------------------------------------- Cash 234 410 - - 644 Bank loans payable less (6,597) 2,253 - 7 (4,337) than one year and overdrafts --------------------------------------------------------------------------------- Cash and cash equivalents (6,363) 2,663 - 7 (3,693) Secured commercial bills Payable less than one - - - - - year Payable more than one year (2,261) (618) - (4) (2,883) Finance leases and hire purchase agreements Payable less than one year (899) 963 (986) (2) (924) Payable more than one year (2,100) (870) 986 (1) (1,985) Bank loans payable more (488) 271 - (13) (204) than one year -------------------------------------------------------------------------------- Net debt (12,111) 2,409 - 13 (9,689) -------------------------------------------------------------------------------- 6 The results have been extracted from the audited financial statements of the Group for the year ended 31 March 2007. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company will publish full financial statements that comply with IFRSs. These audited financial statements incorporate an unqualified audit report. The results do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 1 April 2006, which incorporated an unqualified auditor's report, have been filed with the Registrar of Companies. 7 The Report & Accounts will be posted to shareholders by 25 June 2007. Further copies will be available from the Company's Registered Office: Worcester Road, Kidderminster, Worcestershire, DY10 1HL or via the website: www.victoria.plc.uk. 8 The Annual General Meeting is being held at the Registered Office of the Company, as above, at 2:30 pm on Tuesday, 24 July 2007. This information is provided by RNS The company news service from the London Stock Exchange

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