Interim Results

Victoria PLC 18 November 2003 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Tuesday, 18 November 2003 Embargoed: 7.00am Victoria P.L.C. Interim Results for the six months to 27 September 2003 'The Group is continuing to build upon the excellent performance of recent years and has made significant progress on all fronts' Turnover £25.48m + 34% Operating profit £2.45m + 73% Profit before tax £2.22m + 72% Earnings per share 22.08p + 71% •Strong organic growth delivered throughout the Group with like-for-like turnover up by 24% •Munster Carpets acquisition has contributed positively to the Group's performance in the period and the integration of the Navan Carpets business is proceeding to plan 'In the UK, the traditionally busy Autumn selling season is well underway, and we have seen a strong demand for our products. The continued good performance of existing ranges and the new product range introductions bodes well for the second half year. 'Sales in Ireland through Munster Carpets are expected to improve and sales to the residential market through Navan Carpets are also expected to make a positive contribution in the second half year. 'The Australian economy is still robust and signs are promising that we can continue to build on the excellent results that we have seen over recent years. 'We remain confident that we will see a continued growth in both turnover and profitability throughout the Group' Bob Gilbert, Chairman FULL STATEMENT ATTACHED Enquiries: Alan Bullock, Group Managing Director Mark Lee, Group Finance Director Fiona Tooley/Katie Dale Victoria P.L.C. Citigate Dewe Rogerson Today: 020 7282 8000 Today: 020 7282 8000 Thereafter: 01562 749300 Thereafter: 0121 455 8370 Mobile: 07785 325701 (AB) Mobile: 07785 703523 (FMT) www.victoria.plc.uk --------------------- -2- Victoria P.L.C. Interim Results for the six months to 27 September 2003 STATEMENT BY THE CHAIRMAN, BOB GILBERT Introduction I am pleased to report that the Group is continuing to build upon the excellent performance of recent years and has made significant progress on all fronts in the first half of this current financial year. Results In the six months to 27 September 2003, the Group continued to enjoy strong growth with turnover increasing by 34% from £18.95 million to £25.48 million. Operating profits increased 73% from £1.42 million to £2.45 million and pre-tax profits rose by 72% to £2.22 million. Earnings per share were 22.08 pence, up by 71%. The acquisitions of Munster Carpets in Ireland and Pacific Textiles in Australia benefited the Group fully in this period, but even after stripping out their effect, strong organic growth was delivered throughout the Group with like for like turnover up by 24%. The acquisition of Navan Carpets in late July 2003 had a neutral effect on the results in the period, other than on gearing which has increased to 43% as a result of both this acquisition and a spend of £1.63 million on capital projects. United Kingdom Although the market remained challenging throughout the six months under review and the long, hot and dry summer was hardly conducive to retail carpet sales, I am delighted to report that Victoria Carpets continued to prosper with turnover up by 22%. In the UK, sales were up by 19% in value terms, as new range introductions further complemented our established product offerings, which have continued to gain market share. In addition, sales to our targeted Independent Retail sector grew by 23%, with strong gains also being made in sales to both the major groups and contract sectors. Similar good progress was made in Export markets where the decline in business experienced since September 11 2001 was arrested and we saw a 39% increase in sales compared to the same period last year. Operationally, the six months under review has been extremely busy at Victoria Carpets in Kidderminster. The new and technically advanced polyethylene backing line was successfully commissioned and is now delivering a new style of backing on most of the tufted carpet ranges. The first two new products off the backing line in five metre width have also recently been launched and are already delivering sales. In August, a brand new liveried distribution fleet was brought into operation in the UK, extending the geographical area covered with stated day deliveries to the Independent Retailers. The fleet is capable of carrying five metre width carpet and has increased capacity to meet anticipated future sales' demand. During the period, Victoria Carpets has also continued to invest in new ranges as well as in new 'point of sale' display units. The full benefits of all of these initiatives will be seen in future periods. I am delighted to report that Victoria Carpets has again been recognised within the Floorcovering Industry by receiving the prestigious 'Best Carpet Supplier of the Year' award, which was presented by the Carpet Flooring Retail (CFR) magazine. This is particularly pleasing as it is the outcome of a vote by CFR's readers, who are mainly the Independent Retailers, to whom we try to give consistently high levels of service. continued... -3- At our spinning division, Westwood Yarns, capacity has been increased to meet demand from Victoria Carpets to provide more high quality carpet yarn. Capital expenditure of £1.18 million during the period has lifted capacity by around 20% with effect from August 2003. Strong demand from Victoria Carpets has kept Westwood Yarns at full capacity throughout the period and Westwoods has once again contributed well to the Group's overall result. Ireland Despite a slowing of growth in the Irish economy, the acquisition of Munster Carpets in October 2002 has contributed positively to the Group's performance in the period. In July 2003, we took the opportunity to acquire Navan Carpets, the foremost residential and contract hospitality brand in the Republic of Ireland, which now provides us the two premier floorcovering brands in Ireland. The integration of the Navan business into the Group is proceeding to plan. In the short term, sales have been affected by the publicity surrounding the liquidation of Navan Carpets Limited, the long hot summer and the weaker Irish economy. However, we are confident that the prospects for the Navan brand remain excellent. Australia The Australian operation has continued its extremely strong performance, producing good growth in sales and profitability over the last year. The sales increase has been in excess of 20%, and profit growth is in excess of that figure. In an economy showing a slight downturn on previously very buoyant levels, this is an outstanding achievement, and reflects the success of the Australian company's aggressive policy of ongoing development and placement of new products with our preferred customer base throughout Australia and New Zealand. The acquisition of Pacific Textiles, in Bendigo, in October 2002, formed the basis upon which our Australian management were successful in obtaining significant financial assistance from the Federal Government, under the Strategic Investment Programme (SIP) Regional Rationalisation provisions. These funds will be utilised in continuing the upgrade of plant and equipment at Bendigo, and further improve quality and productivity at that mill. The Bendigo acquisition has been most beneficial to the company. The mill has a tonnage output similar to our Castlemaine facility, and has been a significant contributor to the company's excellent results from the time of acquisition. The company continues to improve its market share in contract residential developments in Australia and New Zealand. Amongst its contract achievements this year was securing the order for carpet for the Eureka Tower on Melbourne's fashionable Southbank. Reputed to be the tallest residential building in the world, at 88 storeys, the Tower is using over 80,000 m2 of our product. The strength of the Australian Dollar had a beneficial effect on the contribution of the Australian operation to the Group results, being translated into Sterling at A$2.46 compared to A$2.61 = £1 at 29 March 2003 and A$2.87 at 28 September 2002. Prospects In the UK, the traditionally busy Autumn selling season is well underway, on which our UK operations and the Floorcovering Industry as a whole are so dependent, and we have seen a strong demand for our products. The continued good performance of existing ranges and the new product range introductions bodes well for the second half year in the UK. continued... -4- Sales in Ireland through our commercial contract focussed Munster Carpets brand are expected to improve and sales to the residential market through Navan Carpets are also expected to make a positive contribution to results in the second half year. The Australian economy is past the peak growth rates of 2002/3, but is still robust and signs are promising that we can continue to build on the excellent results that we have seen from the Australian operation over recent years. Ultimately, we remain confident that we will see a continued growth in both turnover and profitability throughout the Group. -5- Victoria P.L.C. Interim Results for the six months to 27 September 2003 GROUP PROFIT AND LOSS ACCOUNT Six months Six months Year to to to 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited Note £'000 £'000 £'000 Turnover 25,481 18,948 44,367 Cost of sales 17,814 13,211 31,479 ------------- ------------ ---------- Gross profit 7,667 5,737 12,888 Distribution costs 4,249 3,374 7,193 Administration expenses 1,440 1,218 3,014 Other operating income 468 277 663 ------------- ------------ ---------- Operating profit 2,446 1,422 3,344 Interest payable and similar charges 258 123 352 Share of profits / (losses) of 27 (5) 15 associated undertaking ------------- ------------ ---------- Profit on ordinary activities before 2,215 1,294 3,007 taxation Taxation 682 397 917 ------------- ------------ ---------- Profit for the period 1,533 897 2,090 Dividends - - 625 ------------- ------------ ---------- Retained profit 1,533 897 1,465 ------------- ------------ ---------- Earnings per share - basic 2 22.08p 12.92p 30.10p - diluted 22.08p 12.92p 30.10p ------------- ------------ ---------- Dividends per share 3 - - 9.00p ------------- ------------ ---------- -6- Victoria P.L.C. Interim Results for the six months to 27 September 2003 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months Six months Year to to to 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Profit after taxation 1,533 897 2,090 Currency translation differences on foreign currency net investments 482 (535) 193 ------------ ------------ ----------- Total gains relating to the period 2,015 362 2,283 ------------ ------------ ----------- Total gains recognised since last 2,015 362 2,283 annual report ------------ ------------ ----------- NOTE OF HISTORICAL COST PROFITS AND LOSSES Six months Six months Year to to to 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Reported profit on ordinary activities 2,215 1,294 3,007 before taxation ------------ ------------ ----------- Historical cost profit on ordinary 2,215 1,294 3,007 activities before taxation ------------ ------------ ----------- Historical cost profit for the period 1,533 897 1,465 retained after taxation and dividends ------------ ------------ ----------- -7- Victoria P.L.C. Interim Results for the six months to 27 September 2003 CONSOLIDATED BALANCE SHEET 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Intangible assets - Goodwill 594 - 377 Tangible assets 22,670 17,134 21,551 Investment in associated 306 274 289 undertaking ------------- ------------ ---------- 23,570 17,408 22,217 Current assets Stock 13,464 8,696 10,723 Debtors 10,285 7,205 9,352 Cash 42 237 257 ------------- ------------ ---------- 23,791 16,138 20,332 Less: Current liabilities Creditors due within one year 14,963 8,703 12,732 ------------- ------------ ---------- Net current assets 8,828 7,435 7,600 ------------- ------------ ---------- Total assets less current 32,398 24,843 29,817 liabilities Less: Creditors due after one 7,139 2,707 6,331 year Provisions for liabilities and 793 981 1,034 charges ------------- ------------ ---------- Net assets 24,466 21,155 22,452 ------------- ------------ ---------- Capital and reserves (equity) Share capital 1,736 1,736 1,736 Share premium account 829 829 829 Revaluation reserve 2,126 2,006 2,077 Profit and loss account 19,775 16,584 17,810 ------------- ------------ ---------- Total shareholders' funds 24,466 21,155 22,452 ------------- ------------ ---------- -8- Victoria P.L.C. Interim Results for the six months to 27 September 2003 CONSOLIDATED CASH FLOW STATEMENT Six months Six months Year to to to 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited Note £'000 £'000 £'000 Net cash inflow from operating 2,417 1,708 3,246 activities 4 ------------ ------------ ---------- Returns on investment and servicing of finance Dividend received from Associate - 8 8 Interest paid (163) (50) (202) Hire purchase interest (95) (73) (150) ------------ ------------ ---------- (258) (115) (344) ------------ ------------ ---------- Taxation UK corporation tax (paid) (118) (90) (280) Overseas tax paid (514) (129) (334) ------------ ------------ ---------- (632) (219) (614) ------------ ------------ ---------- Capital expenditure and financial investment Payments to acquire tangible fixed (1,470) (1,914) (4,433) assets Receipts from sales of tangible fixed 37 14 49 assets ------------ ------------ ---------- (1,433) (1,900) (4,384) ------------ ------------ ---------- Acquisitions Payments to acquire the assets of a (1,507) - (2,752) trade or business ------------ ------------ ---------- Equity dividends paid (625) (486) (486) ------------ ------------ ---------- Financing Increase in/(repayment of) long term (406) 87 1,912 loans Capital element of finance lease and hire purchase payments (552) (420) (597) Receipts from financing of assets 905 533 2,323 ------------ ------------ ---------- (53) 200 3,638 ------------ ------------ ---------- Increase / (decrease) in cash (2,091) (812) (1,696) ------------ ------------ ---------- -9- Victoria P.L.C. Interim Results for the six months to 27 September 2003 NOTES TO THE INTERIM STATEMENTS 1. Basis of preparation The results for the year ended 29 March 2003 are extracts from the Group report and accounts as filed with the Registrar of Companies. These were audited and reported upon without qualification under section 235 of the Companies Act 1985. 2. Earnings per share The earnings per share for the 6 month period to 27 September 2003 are based on 6,943,556 shares in issue throughout the period. The same number of shares were in issue throughout the six months ended 28 September 2002 and the year ended 29 March 2003. 3. Dividends No interim dividend is proposed (September 2002: nil; March 2003: 9.0 pence). 4. Reconciliation of operating profit to net cash inflow from operating activities Six months to Six months to Year to 27 September 28 September 29 March 2003 2002 2003 Unaudited Unaudited Audited £'000 £'000 £'000 Operating profit 2,446 1,422 3,344 Depreciation and amortisation 1,028 754 1,799 charges Loss/(Profit) on sale of fixed (2) (1) 11 assets Decrease/(Increase) in working (1,226) (238) (1,994) capital Exchange rate difference on 171 (229) 86 consolidation ------------- ------------ ---------- Net cash inflow from operating 2,417 1,708 3,246 activities ------------- ------------ ---------- 5. Exchange rates The results of overseas subsidiary and associated undertakings have been translated at the exchange rates prevailing at the period end: 27 September 2003 28 September 2002 29 March 2003 Australia A$ 2.4614 = £1 A$ 2.8703 A$ 2.6145 Euro € 1.4458 = £1 n/a € 1.4581 Canada C$ 2.2469 = £1 C$ 2.4691 C$ 2.3002 This information is provided by RNS The company news service from the London Stock Exchange

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