Final Results

Victoria PLC 20 June 2006 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Tuesday, 20 June 2006 Embargoed: 7.00am Victoria P.L.C. Manufacturers of Carpet and Carpet Yarns Preliminary Results for the 52 weeks ended 1 April 2006 2006 2005 Group Revenue £52.29m £49.28m Adjusted Operating Profit* £2.87m £3.73m Adjusted Profit before Tax* £2.20m £3.01m Restructuring / closure costs £0.19m £1.31m Net assets £27.8m £26.9m Earnings per Share (adjusted)** 25.20p 30.83p Earnings per Share 23.30p 11.95p Dividend maintained 11.5p 11.5p Gaining market share in weak markets Revenues from continuing UK and Irish operations up 7% whilst revenues held in Australia Margins impacted by price competition in UK & Australia and increased energy and raw material prices * 2006 adjusted to add back restructuring costs of £0.19m; 2005 not adjusted ** 2006 after adding back restructuring costs, 2005 from continuing operations only 'Over the last year, we have continued to focus the business so that it is best able to deal with the economic and competitive challenges the sector faces. With this in mind, the Group has performed in line with our expectations. 'We believe, that our business is well positioned in the higher-end of the market and will be benefiting from recently introduced additional new ranges which will soon start to feed through. 'We expect the markets in both the UK and Australia to remain subdued. However, your Directors are confident that the business will continue to deliver growth in both sales and profits and that the Group is well positioned to take advantage of market opportunities and any upturn in activity when it occurs.' Enquiries: Alan Bullock, Group Managing Director Mark Lee, Group Finance Director Fiona Tooley Victoria P.L.C. Citigate Dewe Rogerson Today: +44 (0)20 7638 9571 (up to 12noon) Today: +44 (0)20 7638 9571 (up to 12noon Thereafter: +44 (0)1562 749640 Thereafter: +44 (0)121 455 8370 Mobile: +44 (0)7785 325701 (AB) Mobile: +44 (0)7785 703523 This announcement, together with other information on Victoria P.L.C. may be found at: www.victoria.plc.uk. -2- Victoria P.L.C. Preliminary Results for the 52 weeks ended 1 April 2006 CHAIRMAN'S STATEMENT Whilst the year has been challenging with tough market conditions prevailing, I believe that the Group has nonetheless adapted well to the difficult market environment and has enjoyed a satisfactory year's trading. RESULTS OF CONTINUING OPERATIONS The Group's revenue of £52.29 million in the year being reported was up 6.10% from £49.28 million last year. Operating Profit in the same period was £2.68 million (2005: £3.73 million). After taking into account the closure costs of £188,000 relating to the dye house which we announced in March, profit before tax came in at £2.01 million. Our 2005 reported profit before tax of £3.01 million was pre-exceptional costs of £1.31 million which related to the closure of the Group's Axminster operations in that year. Adjusted earnings per share in the period were 25.2 pence (2005: 30.83 pence) from continuing operations after adding back restructuring costs. Earnings per share including all closure and restructuring costs were 23.3p (2005: 11.95p). OPERATIONS In the United Kingdom, the retail sector has seen the continuation of the sluggish demand for most consumer products, including floorcoverings, which we have experienced now for almost two years. Against this back-drop, we battled hard in what was at best a stagnant market to grow our market share. Revenue from the continuing UK and Irish operations was up by 7.70% from £27.53 million to £29.65 million. Profit before tax and restructuring costs was 29.5% lower at £0.72 million compared to £1.02 million in the previous year. In Australia, the economy has remained subdued throughout the year with intense price competition from both home and overseas manufacturers. Despite this, we managed to increase our revenue from carpet sales by 1.6% to A$52.3, although our sales from yarn to our competitors fell sharply leaving overall A$ revenues down by 0.9%. However, the price competition impacted on margins resulting in profit before tax of A$4.68 million compared to the previous year 2005: A$5.95 million, a reduction of 21.3%. In Canada, our associate company, Colin Campbell & Sons enjoyed another successful year with sales up 10.5% and Profit before tax up 37.7%. DIVIDEND Your Board is proposing that the dividend be maintained at 11.5p per share, which would be covered 2.03 times by earnings. The dividend, which is subject to shareholder approval at the Annual General Meeting to be held on 7th August 2006, will be paid on 10th August 2006 to all members on the register at the close of business on 14th July 2006. PROPERTY The 2002 Option Agreement that the Company gave to Whitbread Group PLC relating to the purchase of Victoria's six acre sports field in Kidderminster, was not exercised by them and fell away in January 2006. As a result we had the opportunity of re-marketing the site and I am pleased to report to shareholders that we believe we are close to concluding a conditional sale agreement with three parties to purchase the land. continued... -3- EMPLOYEES I would like to thank everyone within the Group for the positive contribution they have made to the Company's success in what are very challenging market conditions. Above all, I would like to make special mention of Michael Oakley. Michael, our Australian subsidiary Executive Chairman and its former Managing Director, will be retiring from the Board at the AGM in August having served 12 years on the PLC Board and 27 years in total with our Australian business. Pleasingly, we will not be losing Michael who, whilst retiring from executive duties, will be continuing in the position of Non-Executive Chairman with our Australian subsidiary. During Michael's stewardship, he has helped steer our business to the position of one of Australia's foremost carpet manufacturers and he is highly respected by employees, customers and competitors alike. I am sure you would like to join with me in wishing Michael and his wife Wendy, a very happy and long retirement. Finally, I am pleased to announce that Barry Poynter, our Australian Managing Director, will be appointed to the PLC Board following the AGM in August. OUTLOOK We expect the markets in both the UK and Australia to remain subdued. However, your Directors are confident that the business will continue to deliver growth in both sales and profits and that the Group is well positioned to take advantage of market opportunities and any upturn in activity when it occurs. R. M Gilbert Chairman -4- Victoria P.L.C. Preliminary Results for the 52 weeks ended 1 April 2006 OPERATING REVIEW Over the last year we have continued to focus the business so that it is best able to deal with the economic and competitive challenges the sector faces. With this in mind, the Group has performed in line with our expectations. UNITED KINGDOM Victoria Carpets in the UK has continued to witness poor trading conditions on the High Street with the reduced level of consumer spending being well-reported across many sectors, including floor coverings. At the same time, whilst we have continued to see a pattern with a lack of consumer confidence, we have also had to contend with significant increases in energy and raw materials costs as a result of higher oil and gas prices. Despite these challenges, we have remained focused on our core Independent Retail business offering our customers a comprehensive range of products of differentiation, backed with excellent stock and service levels. This strategy has enabled us to win market share from our competitors. Home sales on a like-for like-basis were £21.8 million, up from £21.1 million which is a creditable achievement when you look at the overall market performance which is reported to be down by as much as 10%. Export Sales, again on a like-for-like basis, were marginally lower at £3.47 million compared to £3.53 million, reflecting a slight overhang from the closure of Axminster weaving last year. Operationally, at Victoria Carpets, we took the decision to close our hank-dyeing operation in Kidderminster in March 2006, resulting in a full cost of closure of £188,000 which has been taken in this financial year being reported. The hank-dyeing operation was a very small part of our overall business and was mainly used for the dyeing of Axminster and Wilton yarns. With the previous decision to cease Axminster production in February 2005, the plant's continuing operation became unviable. Any future requirements will be out-sourced within the UK more competitively. Westwood Yarns in Holmfirth, West Yorkshire continued to supply most of its yarn capacity internally to meet Victoria Carpets' demands and have been kept busy throughout the year. During the course of the year, Westwood's successfully completed the installation of a further new 3-metre card, which has allowed us to increase the spinning mill's capacity by an additional 16 tonnes of yarn per week. In addition, the installation of a new dedicated white blending line was started towards the end of this financial year. The line has since become operational and will enable Westwood's to more effectively produce the very light beige and pastel shades of yarn, which are so popular with today's consumers. The Management team at Westwood Yarns was strengthened in December 2005 and I am pleased to welcome Trevor Chippendale to the company as Managing Director. continued... -5- IRELAND The Irish economy saw a recovery in 2005, with both the housing and commercial property markets moving forward positively again. Munster Carpets, however, had a more difficult year in the contract market, with sales down marginally in both volume and value terms although, margins held up well and were improved. Sales volumes at Navan Carpets are now starting to grow. Through the number of new ranges and point of sales displays now out in the market we were able to increase sales strongly by 12.3% in the year and improved bottom line profitability. Overall our Irish operations performed well and I would like to pay tribute to Sean Kelly, our Irish Managing Director and his team who are working tirelessly in developing this business. AUSTRALIA Overall statistics show that the general Australian economy performed reasonably well during the year under review. Economic conditions, however, varied greatly within Australia, with the resource-based economies in the West and the North performing well, but the major States of New South Wales and Victoria, where the market for homewares is greatest, remaining very subdued. New residential dwelling completions, particularly Capital City apartments, were again down on the preceding year. Our Australian business, however, completed another satisfactory year, and very much in line with their budget forecasts. Sales for the year were marginally down on the previous year at A$53.7 million (2005: A$54.2 million). However, the fall was in yarn sales to our competitors, and our revenue from the sale of carpets was up 1.6% to A$ 52.3 million. With intense competition in quiet markets impacting on our ability to raise selling prices in-line with cost increases, our margins were adversely affected. Net Profit before tax was 22% lower at A$4.7 million. With the Australian dollar relatively strong for most of the year, imports, predominantly on synthetic carpets, continued to improve their share of the market. As synthetic carpets now account for some 70% of the Australian market demand, our Company successfully launched several solution-dyed nylon products during the year, with yarns out-sourced from both the USA & China. This unquestionably expands the appeal of the our product ranges to retailers across Australia, but in no way reduces our focus on retaining our pre-eminent position with quality wool products in our Australian and overseas markets. Our Castlemaine & Bendigo yarn production facilities continued at similar levels of output to the previous year of around 3,000 tonnes for the twelve months. We are now the biggest woollen spun producer of carpet yarn in Australia, accounting for more than half the wool and wool rich blends of carpet yarn spun in this country. Investment during the year continued in new plant and equipment, with a second Superba continuous heat-setting line installed at the Bendigo plant, and a new state-of the-art, Level Cut Loop (LCL) tufting machine installed at Dandenong. This tufter will produce 'point of difference' products for both the Australian and export markets. These investments in new plant and equipment continue to qualify for positive assistance from the Australian Government's, Strategic Investment Programme (SIP). Exports, mainly to New Zealand and North America, accounted for more than 10% of our turnover which is well above the industry average. We are confident that our expanded product offerings will allow our business to continue to grow both sales and profitability. continued... -6- CANADA The Western Canadian economy has continued to prove resilient to the economic down-turn seen in other countries and in parts of North America. Colin Campbell & Sons, our Western Canadian based associate company, has again seen another good year of progress and results. Sales increased across our product offerings by 10.6% in value from C$ 7.10 million to C$ 7.85 million and Net Profit before tax was up by 37.7 %. During August 2006, Campbell's Vancouver operation will move into exciting new showroom facilities, which will enable us to further expand our product portfolio. In addition to the existing carpet broadloom and rug business, this business, for the first time, will be offering high-end contemporary furniture to its existing designer/architect customer base. OUTLOOK Within the United Kingdom there is still no real evidence that consumer demand or footfall on the High Street is returning. We are therefore anticipating that there is unlikely to be any growth in the market in real terms. We believe, however, that our business is well positioned in the higher-end of the market and will be benefiting from recently introduced additional new ranges which will soon start to feed through. These together with the re-colouring to our popular Duchess and Tudor Twist ranges planned during this Summer should also further underpin sales in the traditionally busier Autumn/Winter selling seasons. In Ireland, with the economy looking stronger again and with our expanded product offerings we are optimistic of continuing to grow both sales and profits. Westwood Yarns under the stewardship of their new Managing Director and with recently expanded capacity should continue to be a valuable asset for the Group. In Canada, whilst only a small part of our business, Campbell's look set fair to continue to grow both sales and profits. Again this year, the economic picture in Australia remains uncertain with aggressive competition from both home and overseas suppliers likely to continue to impact margins. Hitherto, in a market which over the last 18 months has been flat at best and highly competitive we have managed to increase our market share and I see no reason to believe why we should not continue to out perform the market. Overall, across the business, we expect to continue to take market share from weaker players. Alan R Bullock Group Managing Director -7- Victoria P.L.C. Preliminary Results for the 52 weeks ended 1 April 2006 FINANCIAL REVIEW SUMMARY OF RESULTS During the year the Group's operations pursued a strategy of maintaining and increasing market share to take best advantage of the difficult market conditions in which we compete. The result of this is reflected in revenues increasing by 6.1 per cent to £52.3m. However, with considerable pressure on margins, pre-tax profits reduced by 33 per cent to £2.01m. A dividend of 11.5 pence per share is proposed out of earnings of 23.3 pence per share. INTERNATIONAL FINANCIAL REPORTING STANDARDS The accounts to 1 April 2006 are the first to be prepared by the Group under International Financial Reporting Standards (IFRS) adopted for use in the European Union. Victoria PLC has amended its accounting policies to comply with the standards issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee which have been issued and are effective (or are available for early adoption) at 1 April 2006. The Group has not elected for early adoption of IFRS7 or the amendments to IAS39. The comparative figures for the period ended 2 April 2005 have been restated to comply with adopted IFRS. They were previously prepared under UK Generally Accepted Accounting Principles. The main changes are the translation of the results of overseas operations at average exchange rates, the revaluation of land and buildings and provision of deferred tax on their balance sheet values, accounting for dividends when paid, rather than when proposed, and the revaluation of financial instruments. The adoption of IFRS has no effect on cash-flow. The changes will be set out in detail in the notes to the Report & Accounts being posted to Shareholders. All of the comparative figures referred to in this Annual Report relate to the restated figures under IFRS for the period ended 2 April 2005. UK & IRELAND Revenues from continuing activities in the UK and Ireland were 7.7 per cent higher at £29.65 million (2005: £27.53 million) Operating profits from continuing operations in the UK and Ireland were £1.05 million (2005: £1.34 million) before the exceptional cost of closing the dye-house. The cost of closing the dye-house in Kidderminster is shown as a business restructuring cost within the operating profit in the Income Statement. The full cost of £188,000 includes redundancy costs and the write down of plant and equipment. The cost savings from using third party dyeing are already coming through as planned in the first months of the new financial year. Capital expenditure of £1.30 million during the period related principally to the additional card and spinning installed at Westwood Yarns, together with the new white blending line. AUSTRALIA Our Australian company worked hard to maintain sales and managed to maintain Revenue at A$53.7 million (2005: A$54.2 million). With the benefit of a stronger Australian dollar, this translates to a 4.1per cent increase in contribution to Group Revenues from £21.8 million to £22.6 million However, facing severe competition in a depressed market, the operating profit margin was reduced from 12.3% to 9.8% and operating profit fell from A$6.64 million to A$5.27 million (£2.67 million to £2.22 million). continued... -8- We continued to invest in new plant and machinery, with a spend of A$3.50 million (£1.48 million) in the year. Our investment programme attracted ongoing support from the Australian Government's Strategic Investment Programme and grant income accounted for A$0.52 million of operating profit, compared to A$1.06 million the previous year. INTEREST Interest costs reduced slightly from £0.76 million to £0.74 million, as the movement in fair value of financial instruments taken through the Income Statement reduced. SHARE OF PROFITS OF ASSOCIATED COMPANY Our associated company Colin Campbell and Sons, which is 50% owned by the Group, made further advances. Revenues again increased, this year by 10.5 per cent, and the Group's share of post tax profit increased to £73,000 (2005: £46,000). PROFIT BEFORE TAXATION Profit before tax for the year was £2.01 million (2005: £3.01m on continuing operations). TAXATION The tax charge for the year was £0.39 million with the effective rate of 20% kept down by lower tax rates overseas and a one-off reduction in the deferred tax provision for the realisation of property values through sale as extra reliefs become available in Australia. Absent the latter one-off reduction the effective rate is circa 27%. EARNINGS PER SHARE Earnings attributable to shareholders were 23.30 pence per share, or 25.20 pence excluding restructuring costs. This compares to adjusted earnings (i.e. earnings from continuing activities) in 2005 of 30.83 pence per share, and unadjusted earnings of 11.95 pence per share. The number of shares in issue was unaltered during the year and there are no options or other dilutive arrangements. DIVIDEND The Board will be recommending a maintained final dividend of 11.5 pence per share (2005: 11.5p) at the Company's Annual General Meeting on 7 August 2006. The proposed dividend is 2.03 times covered by earnings (2005: 1.04 x cover). FINANCING The Group's balance sheet continues to strengthen, with net assets increasing to £27.8 million (2005: £26.9 million). With net borrowings of £12.11 million at the year-end, net gearing reduced slightly to 43.6% (2005: 44.3%). Mark Lee Group Finance Director -9- Victoria P.L.C. Consolidated Income Statement For the 52 weeks ended 1 April 2006 Notes 52 weeks 52 weeks ended ended 1 April 2 April 2006 2005 £'000 £'000 Continuing operations Revenue 1 52,288 49,282 Cost of sales (37,566) (34,333) ------------------------------------------------------------------------------- Gross profit 14,722 14,949 Distribution costs (9,770) (9,489) Administrative expenses (3,007) (2,777) Restructuring costs (188) - Other operating income 921 1,047 ------------------------------------------------------------------------------- Operating profit 1 2,678 3,730 Share of results of associated company 73 46 Finance costs (740) (764) ------------------------------------------------------------------------------- Profit before tax 1 2,011 3,012 Tax (393) (871) ------------------------------------------------------------------------------- Profit for the period from continuing operations 1,618 2,141 Discontinued operations (Loss) for the period from discontinued operations 2 - (1,311) -------------------------------------------------------------------------------- Profit for the period 1,618 830 -------------------------------------------------------------------------------- Attributable to: Equity holders of the parent 1,618 830 -------------------------------------------------------------------------------- Earnings per share From continuing operations Basic 23.30p 30.83p -------------------------------------------------------------------------------- Diluted 23.30p 30.83p -------------------------------------------------------------------------------- From continuing and discontinued operations Basic 23.30p 11.95p -------------------------------------------------------------------------------- Diluted 23.30p 11.95p -------------------------------------------------------------------------------- The comparative figures for the 52 weeks ended 2 April 2005 have been restated to reflect the adoption of International Financial Reporting Standards. -10- Victoria P.L.C. Consolidated Statement of Recognised Income and Expense For the 52 weeks ended 1 April 2006 52 weeks 52 weeks ended ended 1 April 2006 2 April 2005 £'000 £'000 Exchange differences on translation of foreign operations 83 (89) ------------------------------------------------------------------------------- Net income/(loss) recognised directly in equity 83 (89) Profit for the period 1,618 830 ------------------------------------------------------------------------------- Total recognised income and expense for the period 1,701 741 ------------------------------------------------------------------------------- Attributable to: Equity holders of the parent 1,701 741 ------------------------------------------------------------------------------- -11- Victoria P.L.C. Balance Sheet For the 52 weeks ended 1 April 2006 Group Notes 1 April 2006 2 April 2005 £'000 £'000 Non-current assets Intangible assets 527 548 Property, plant and equipment 24,172 23,813 Investment property 180 180 Investment in subsidiary undertakings - - Investment in associated company 440 348 Deferred tax asset 659 1,366 ------------------------------------------------------------------------------- Total non-current assets 25,978 26,255 ------------------------------------------------------------------------------- Current assets Inventories 16,110 14,686 Trade and other receivables 10,215 9,503 Current tax asset - 145 Cash and cash equivalents 234 369 ------------------------------------------------------------------------------- Total current assets 26,559 24,703 ------------------------------------------------------------------------------- Non-current assets classified as held for sale - 304 ------------------------------------------------------------------------------- Total assets 52,537 51,262 ------------------------------------------------------------------------------- Current liabilities Trade and other payables 8,505 7,498 Current tax liabilities 961 644 Financial liabilities 7,551 7,378 ------------------------------------------------------------------------------- Total current liabilities 17,017 15,520 ------------------------------------------------------------------------------- Non-current liabilities Trade and other payables 1,090 1,145 Financial liabilities 4,849 4,959 Deferred tax liabilities 1,774 2,733 ------------------------------------------------------------------------------- Total non-current liabilities 7,713 8,837 ------------------------------------------------------------------------------- Total liabilities 24,730 24,357 ------------------------------------------------------------------------------- Net assets 1 27,807 26,905 ------------------------------------------------------------------------------- Equity Issued share capital 1,736 1,736 Share premium account 829 829 Retained earnings 25,242 24,340 ------------------------------------------------------------------------------- Equity attributable to equity holders of the parent 27,807 26,905 ------------------------------------------------------------------------------- Total equity 27,807 26,905 ------------------------------------------------------------------------------- The comparative figures for the 52 weeks ended 2 April 2005 have been restated to reflect the adoption of International Financial Reporting Standards. -12- Victoria P.L.C. Cash Flow Statement For the 52 weeks ended 1 April 2006 Group 52 weeks 52 weeks ended ended 1 April 2006 2 April 2005 £'000 £'000 Net cash from operating activities 2,957 1,852 ------------------------------------------------------------------------------- Investing activities Dividends received from associates 23 - Purchases of property, plant and equipment (2,773) (1,962) Proceeds on disposal of property, plant and equipment 435 158 ------------------------------------------------------------------------------- Net cash used in investing activities 2,315 (1,784) ------------------------------------------------------------------------------- Financing activities (Decrease)/increase In long-term loans (73) 340 Receipts from financing of assets 639 124 Payment of finance lease and HP liabilities (934) (1,093) Dividends paid (799) (799) ------------------------------------------------------------------------------- Net cash (used in)/from financing activities (1,167) (1,428) ---------------------------------------- -------------------------------------- Net (decrease)/increase in cash and cash equivalents (525) (1,360) Cash and cash equivalents at beginning of period (5,827) (4,435) Effect of foreign exchange rate changes (11) (32) ------------------------------------------------------------------------------- Cash and cash equivalents at end of period (6,363) (5,827) ------------------------------------------------------------------------------- -13- Victoria P.L.C. Notes to the Accounts 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. The Axminster weaving operations, previously reported within UK & Ireland, were discontinued in March 2005. Note 2 provides further information on the discontinued operations. Geographical segment information for revenue, operating profit and a reconciliation to entity net profit is presented below. Income Statement 52 weeks ended 1 April 2006 52 weeks ended 2 April 2005 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 & Ireland 29,647 865+ (337) 528 27,529 1,340 (325) 1,015 Australia 22,641 2,222 (250) 1,972 21,753 2,667 (249) 2,418 ------------------------------------------------------------------------------------------------------- 52,288 3,087 (587) 2,500 49,282 4,007 (574) 3,433 Share of results of associate - - - 73 - - - 46 Central costs - (409) (153) (562) - (277) (190) (467) ------------------------------------------------------------------------------------------------------- Total continuing operations 52,288 2,678 (740) 2,011 49,282 3,730 (764) 3,012 ------------------------------------------------------ ---------------------------------- Tax (393) (871) ------ ------ Profit after tax from continuing activities 1,618 2,141 Profit for the period from discontinued operations - (1,311) ------ ------ Profit after tax and discontinued operations 1,618 830 ------ ------ * The share of profits of the associated company is shown net of tax as required by IAS 1. + 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 1 April As at 2 April 2006 2005 Segment Segment Segment Segment assets liabilities assets liabilities £'000 £'000 £'000 £'000 UK & Ireland 30,058 12,675 28,868 11,989 Australia 21,652 8,599 21,841 9,325 Canada 440 - 348 - Unallocated central assets/liabilities 387 3,457 205 3,043 -------------------------------------------------------------------------------- 52,537 24,730 51,262 24,357 -------------------------------------------------------------------------------- The investment in associated company is held directly by the parent entity and does not relate specifically to either geographic segment. 52 weeks 52 weeks ended ended 1 April 2006 2 April 2005 £'000 £'000 Depreciation and amortisation UK and Ireland 1,139 1,167 Australia 1,181 1,069 Unallocated central - 4 -------------------------------------------------------------------------------- 2,320 2,240 -------------------------------------------------------------------------------- continued... -14- No other significant non-cash expenses were deducted in measuring segment results. Capital expenditure UK and Ireland 1,298 869 Australia 1,475 1,080 Unallocated central - 13 -------------------------------------------------------------------------------- 2,773 1,962 -------------------------------------------------------------------------------- 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. Profit or Loss from Discontinued Operations The Group's Axminster weaving operations were discontinued in March 2005. The results of the discontinued activity are shown as follows: 2006 2005 £'000 £'000 Redundancy costs - 438 Write-down of plant and machinery - 127 Write-down of stocks - 433 -------------------------------------------------------------------------------- Closure costs - 998 Loss during the period - 844 Less: Taxation - (531) -------------------------------------------------------------------------------- Loss from discontinued operations - 1,311 -------------------------------------------------------------------------------- 2006 2005 £'000 £'000 Loss from discontinued activities during the period Revenue - 3,302 Cost of sales - (3,516) -------------------------------------------------------------------------------- Gross (loss) - (214) Distribution costs - (516) Administrative expenses - (87) -------------------------------------------------------------------------------- Operating (loss) - (817) Interest payable - (27) -------------------------------------------------------------------------------- (Loss) during the period - (844) -------------------------------------------------------------------------------- No separate balance sheet is available for this activity and hence a cash flow statement can not be produced. Non-current assets used in the discontinued operations were written down to estimated recoverable value of £304,000 at 2 April 2005 and transferred to 'Non-current assets classified as held for sale'. Inventories relating to the discontinued activities were written down to net realisable value of £219,000 at 2 April 2005. 3. 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: 2006 2005 Earnings (£'000) basic and diluted Profit from continuing operations attributable to ordinary equity holders of the parent entity 1,618 2,141 Loss from discontinued operations attributable to the parent entity - (1,311) -------------------------------------------------------------------------------- Profit attributable to ordinary equity holders of the parent entity 1,618 830 -------------------------------------------------------------------------------- Number of shares (thousands) - in issue throughout the period 6,944 6,944 -------------------------------------------------------------------------------- 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. continued... -15- 4. Rates of Exchange The results of overseas subsidiary and associated undertakings have been translated into sterling at the average exchange rates prevailing during the periods. The balance sheets are translated at the exchange rates prevailing at the period ends: 2006 2005 Average Year end Average Year end Australia 2.3730 2.4326 2.4892 2.4441 Euro 1.4623 1.4333 1.4666 1.4573 Canada 2.1276 2.0235 2.3589 2.2940 -------------------------------------------------------------------------------- 5. Notes to the Cash Flow Statement Reconciliation of operating profit to net cash from operating activities Group 2006 2005 £'000 £'000 Operating profit from continuing operations 2,678 3,730 Operating loss from discontinued operations - (817) Cash element of exceptional charge - (438) Adjustments for: - Depreciation of property, plant and equipment 2,293 2,213 - Business reorganisation costs 188 - - Amortisation of intangible assets 27 27 - (Profit)/loss) on disposal of property, plant and equipment (55) (57) - Exchange rate difference on consolidation 36 60 -------------------------------------------------------------------------------- Operating cash flows before movements in working capital 5,167 4,718 Increase in working capital (1,093) (1,128) -------------------------------------------------------------------------------- Cash generated by operations 4,074 3,590 Interest paid (740) (745) Income taxes (paid)/received (377) (993) -------------------------------------------------------------------------------- Net cash from operating activities 2,957 1,852 -------------------------------------------------------------------------------- 6. Reconciliation of Net Cash Flow to Movement in Net Debt 2006 2005 £'000 £'000 (Decrease) in cash in the year (525) (1,360) Decrease in debt and lease financing 369 629 -------------------------------------------------------------------------------- Change in net debt resulting from cash flow (156) (731) Exchange rate difference on consolidation (38) (26) -------------------------------------------------------------------------------- Movement in net debt in the year (194) (757) Net debt at beginning of year (11,917) (11,160) -------------------------------------------------------------------------------- Net debt at end of year (12,111) (11,917) -------------------------------------------------------------------------------- 7. The results have been extracted from the audited financial statement of the group for the year ended 1st April 2006. 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 2nd April 2005, which incorporated an unqualified auditor's report, have been filed with Registrar of Companies. 8. The Report & Accounts will be posted to shareholders by 6 July 2006. 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. 9. The Annual General Meeting is being held at the Registered Office of the Company, as above, at 2.30pm on Monday 7th August 2006. This information is provided by RNS The company news service from the London Stock Exchange

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