Interim Results

Victoria PLC 23 November 2006 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Thursday, 23 November 2006 Embargoed: 7.00am Victoria P.L.C. Manufacturers of Carpet and Carpet Yarns Interim Results 6 months ended 30 September 2006 2006 2005 Revenue £27.03m £26.02 Net Profit £1.00m £0.98m EPS 10.69p 10.07p Free Cash Flow £1.04m Net Assets per share £3.94 Renewed 5-year distribution contract with The John Lewis Partnership Creditable performance from UK & Irish business reflecting improvement in revenues and profits Innovative and contemporary value for money products help to improve overall UK market share whilst Australian position maintained in a changing market landscape 'Despite an extremely challenging first six months, we have adapted relatively well to both the economic environment and to the market conditions prevailing in each of our core market areas. 'The Group will continue to remain focused on developing exciting new products that meet the ever-changing customer needs and that complement modern interior styling. 'Whilst early indications are that the Autumn trading season has started well and we have been encouraged by trading levels to date, the remainder of our financial year will likely remain challenging. 'The benefits of product innovation, a focus on customer service and a drive for business improvement should flow through into a better second half performance.' Bob Gilbert, Chairman FULL STATEMENT ATTACHED Enquiries: Alan Bullock, Group Managing Director Fiona Tooley / Katie Dale Victoria P.L.C. Citigate Dewe Rogerson Tel: +44 (0)1562 749640 Tel: +44 (0)121 455 8370 Mobile: +44 (0)7785 325701 (AB) Mobile: +44 (0)7785 703523 (FMT) This announcement, together with other information on Victoria P.L.C. may be found at: www.victoria.plc.uk. -2- Interim Results 6 months ended 30 September 2006 CHAIRMAN'S STATEMENT INTRODUCTION Despite an extremely challenging first six months, I am pleased to report that we have adapted relatively well to both the economic environment and to the market conditions prevailing in each of our core market areas. FINANCIALS Group revenue at £27.03 million, is up by 3.87% in the period compared to last year. Overall, Operating profit of £1.29 million was marginally down from £1.35 million, whilst Net profit was up by 2.67% to £1.00 million from £0.98 million in 2005. EBITDA in the period being reported was £2.50 million and the Earnings per share increased 6.16% from 10.07 pence to 10.69 pence per share. UNITED KINGDOM & IRELAND Despite the retail sector in the UK and Ireland remaining tough and the long hot summer which was hardly conducive to improving the sales of floor coverings; our sales were up by a creditable 6.97% on a like-for-like basis in the 26 weeks trading period to the end of September 2006. Revenue increased from £14.32 million to £15.32 million whilst Operating profit was up 54.39% from £0.35 million to £0.54 million and Profit before tax by 116.50% from £0.17 million to £0.36 million. We are always conscious of an ever-changing consumer environment and have concentrated our efforts on continuing to introduce innovative, contemporary and value for money products. This focus has enabled us to grow our share of a UK market that has been flat at best by 9.6% in volume and 7.10% in value terms. In Ireland too, sales were 23.44% higher in volume and 16.50% in value, with Munster Carpets in particular exploiting a stronger contract market. Whilst the Irish residential market continued to mirror the tough UK market, Navan Carpets also managed to achieve a moderate growth in performance. During the period, Victoria signed a new five year contract with The John Lewis Partnership to continue to warehouse, cut, wrap and distribute all of JLP's own-label and stocked carpet ranges throughout their stores in the UK. Victoria is rightly proud of its long association with the Partnership and to share in the success they continue to enjoy on the High Street. The patterning and point of sale display material that Victoria continues to place in the market in both the UK and Ireland should further increase our brand recognition and drive sales through existing and newly established sales channels. AUSTRALIA The general economic conditions, weaker consumer spending and a stagnant housing market in Australia, combined with the demise of the second largest Australian manufacturer, Feltex Carpets, have presented us with an interesting challenge in the first six months of this financial year. Our clear strategy during the past 18 months or so in this changing market landscape has been to maintain market share and to position ourselves as well as possible for the more stable market conditions which we hope will now prevail as a result of the likely acquisition of the assets of Feltex by the manufacturer Godfrey Hirst. continued... -3- Victoria is now the second largest player in the Australian carpet market and we are very well placed to exploit that position in what we hope will be calmer and better times in the market. Our Sales revenue in dollar terms was up by 3.20% to A$28.76 million, although it was similar to the comparable period last year in Sterling terms due to a weaker Australian Dollar exchange rate (A$2.3822 in 2005 v A$2.4565 in 2006). Operating profit was down from £1.21 million to £0.92 million (-23.53%) reflecting, as we have already highlighted, the aggressive pricing competition seen in the market place together with the higher patterning spend we have made to position ourselves with the innovative new products necessary to further build our market share. As a result, Profit before tax was affected, down from £1.08 million to £0.79 million. CANADA Our Canadian Associate, Colin Campbell continues to perform well and their sales were up 8.14% from C$3.97 million to C$4.29 million in the period under review. Campbells contributed £78,000 to Group profits in the six months compared to £45,000 in the corresponding period last year. PROPERTY The task of disposing of the Group's former Sports field in Kidderminster is progressing well, with a detailed Planning Application submission to the Local Authorities planned for early 2007 for a hotel, public house / restaurant and indoor / outdoor bowling club development. PROSPECTS The Group will continue to remain focused on developing exciting new products that meet the ever-changing customer needs and that complement modern interior styling. This, coupled with a passion for customer service will increasingly enable us to set ourselves apart from our competitors and continue to increase market share. Whilst early indications are that the Autumn trading season has started well and we have been encouraged by trading levels to date, the remainder of our financial year will likely remain challenging. However, it is our belief that, with the new products already launched and further new and innovative products still to come to market, we will continue to make progress. The benefits of product innovation, a focus on customer service and a drive for business improvement should flow through into a better second half performance. R. M. Gilbert Chairman -4- Victoria P.L.C. Consolidated Income Statement For the half-year ended 30 September 2006 (unaudited) Notes Half-year Half-year Year ended ended ended 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 -------------------------------------------------------------------------------- Continuing operations Revenue 3 27,026 26,019 52,288 Cost of sales (19,288) (18,619) (37,566) ----------------------------------- Gross profit 7,738 7,400 14,722 Distribution costs (5,459) (5,123) (9,770) Administrative expenses (1,531) (1,492) (3,007) Restructuring costs - - (188) Other operating income 537 563 921 ----------------------------------- Operating profit 3 1,285 1,348 2,678 Share of results of associated Company 78 45 73 Finance costs (362) (418) (740) ----------------------------------- Profit before tax 1,001 975 2,011 Tax 4 (259) (276) (393) ----------------------------------- Profit for the period from continuing operations 742 699 1,618 Discontinued operations Profit/(loss) for the period from - - - discontinued operations ----------------------------------- Profit for the period 742 699 1,618 =================================== Attributable to: Equity holders of the parent 742 699 1,618 =================================== Earnings per share From continuing operations Basic 5 10.69p 10.07p 23.30p =================================== Diluted 5 10.69p 10.07p 23.30p =================================== From continuing and discontinued operations Basic 5 10.69p 10.07p 23.30p =================================== Diluted 5 10.69p 10.07p 23.30p =================================== -5- Victoria P.L.C. Consolidated Statement of Recognised Income and Expense For the half-year ended 30 September 2006 (unaudited) Half-year Half-year Year ended ended ended 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 -------------------------------------------------------------------------------- Exchange differences on translation of foreign operations (402) 704 83 ------------------------------------------- Net (loss)/income recognised directly in equity (402) 704 83 Profit for the period 742 699 1,618 ------------------------------------------- Total recognised income and expense for the period 340 1,403 1,701 =========================================== Attributable to: Equity holders of the parent 340 1,403 1,701 =========================================== -6- Victoria P.L.C. Consolidated Balance Sheet For the half-year ended 30 September 2006 (unaudited) 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 -------------------------------------------------------------------------------- Non-current assets Intangible assets 504 532 527 Property, plant and equipment 23,275 24,321 24,172 Investment property 180 180 180 Interests in associates 507 431 440 Deferred tax assets 646 638 659 ------------------------------------------ Total non-current assets 25,112 26,102 25,978 ------------------------------------------ Current assets Inventories 15,406 16,362 16,110 Trade and other receivables 11,182 9,870 10,215 Cash and cash equivalents 633 772 234 ------------------------------------------ Total current assets 27,221 27,004 26,559 ------------------------------------------ Total assets 52,333 53,106 52,537 ========================================== Current liabilities Trade and other payables 8,849 9,017 8,505 Current tax liabilities 977 732 961 Finance liabilities 7,264 7,094 7,551 ------------------------------------------ Total current liabilities 17,090 16,843 17,017 ------------------------------------------ Non-current liabilities Trade and other payables 976 1,211 1,090 Financial liabilities 5,154 5,539 4,849 Deferred tax liabilities 1,764 2,000 1,774 ------------------------------------------ Total non-current liabilities 7,894 8,750 7,713 ------------------------------------------ Total liabilities 24,984 25,593 24,730 ========================================== Net assets 27,349 27,513 27,807 ========================================== Equity Issued share capital 1,736 1,736 1,736 Share premium account 829 829 829 Retained earnings 24,784 24,948 25,242 ------------------------------------------ Equity attributable to equity holders of the parent 27,349 27,513 27,807 ------------------------------------------ Total equity 27,349 27,513 27,807 ========================================== -7- Victoria P.L.C. Consolidated Cash Flow Statement For the half-year ended 30 September 2006 (unaudited) Notes Half-year Half-year Year ended ended ended 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 -------------------------------------------------------------------------------- Net cash from operating activities 6a) 1,552 1,763 2,957 --------------------------------------- Investing activities Dividends received from associates - - 23 Purchases of property, plant and equipment (527) (1,130) (2,773) Proceeds on disposal of property, plant and equipment 19 398 435 --------------------------------------- Net cash used in investing activities (508) (732) (2,315) --------------------------------------- Financing activities Increase / (decrease) in long-term loans 663 727 (73) Receipts from financing of assets 339 60 639 Payment of finance lease and HP liabilities (564) (644) (934) Dividends paid (799) (799) (799) --------------------------------------- Net cash from/(used in) financing activities (361) (656) (1,167) --------------------------------------- Net increase/(decrease) in cash and cash equivalents 683 375 (525) Cash and cash equivalents at beginning of period (6,363) (5,827) (5,827) Effect of foreign exchange rate changes 13 (11) (11) --------------------------------------- Cash and cash equivalents at end of period 6b) (5,667) (5,463) (6,363) ======================================= -8- Notes to the Interim Financial Statements For the half-year ended 30 September 2006 (unaudited) 1. General information The information for the year ended 1 April 2006 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The Auditors' report on those accounts was unqualified. These interim financial statements, which were approved by the Board of Directors on 22 November 2006, have been prepared in accordance with IAS 34. They have not been audited or reviewed by the Auditors. 2. Accounting policies The Company issued an announcement on 11 November 2005 entitled 'Adoption of International Financial Reporting Standards (IFRS), Restatement of Financial Information'. This document can be viewed on the Company's website www.victoria.plc.uk. The document includes a description of the significant accounting polices to be adopted under IFRS. These interim financial statements have been prepared using those accounting policies and methods of computation. 3. Business segments 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. Segment information for revenue, operating profit and a reconciliation to entity net profit is presented below. Half-year ended 30 September 2006 Half-year ended 1 October 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 15,320 545 (177) 368 14,322 353 (183) 170 Australia 11,706 923 (131) 792 11,697 1,207 (129) 1,078 Canada - - - 78 - - - 45 ----------------------------------------- ---------------------------------------- Sub total 27,026 1,468 (308) 1,238 26,019 1,560 (312) 1,293 Central - (183) (54) (237) - (212) (106) (318) costs ----------------------------------------- ---------------------------------------- Total continuing operations 27,026 1,285 (362) 1,001 26,019 1,348 (418) 975 ============================== ================================ Tax (259) (276) ------ ------ Profit after tax from continuing activities 742 699 Profit for the period from discontinued - - operations ------ ------ Profit after tax and discontinued operations 742 699 ====== ====== continued... -9- 4. Tax charge Half-year Half-year ended ended 30 September 2006 1 October 2005 £'000 £'000 -------------------------------------------------------------------------------- Current tax: UK corporation tax (13) (66) Foreign tax 272 335 ---------------------------------- 259 269 Deferred tax: Current year - 7 ---------------------------------- 259 276 ================================== Continuing operations 259 276 Discontinued operations - - ---------------------------------- 259 276 ================================== Corporation tax for the interim period is charged at 28.1% (2005: 29.7%), representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year. 5. Earnings per share The calculation of the basis and diluted earnings per share is based on the following data: Number of shares Half-year Half-year ended ended 30 September 1 October 2006 2005 -------------------------------------------------------------------------------- Weighted average number of ordinary shares for the 6,943,556 6,943,556 purposes of basic earnings per share Effect of dilutive potential ordinary shares: Share options - - ============================= Weighted average number of ordinary shares for the 6,943,556 6,943,556 purposes of diluted earnings per share ============================= continued... -10- Earnings and earnings per share Half-year ended Half-year ended 30 September 2006 1 October 2005 Earnings EPS Earnings EPS £'000 pence £'000 pence -------------------------------------------------------------------------------- Profit for the period from continuing operations 742 10.69 699 10.07 Profit for the period from discontinued - - - - operations ------------------------------------- Profit for the period from continuing 742 10.69 699 10.07 and discontinued operations ===================================== Earnings per share - basic continuing 10.69 10.07 - basic discontinued - - -------- -------- - basic 10.69 10.07 ======== ======== - diluted 10.69 10.07 ======== ======== The effect of dilutive shares on the earnings for the purposes of diluted earnings per share is £nil (2005: £nil). The denominators used for all basic, diluted and adjusted earnings per share are as detailed in the 'Number of shares' table above. 6. Notes to the cash flow statement a) Reconciliation of operating profit to net cash from operating activities Half-year Half-year Year ended ended ended 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 -------------------------------------------------------------------------------- Operating profit from continuing operations 1,285 1,348 2,678 Discontinued operations profit - - - before tax Adjustments for: - Depreciation of property, plant and equipment 1,121 1,118 2,293 - Amortisation of intangible assets 14 13 27 - (Profit) / loss on disposal of property, plant (5) (39) (55) and equipment - Exchange rate difference on consolidation (197) 296 36 - Business reorganisation costs - - 188 ---------------------------------------- Operating cash flows before movements in working capital 2,218 2,736 5,167 Increase in working capital (59) (424) (1,093) ---------------------------------------- Cash generated from operations 2,159 2,312 4,074 Interest paid (390) (418) (740) Income taxes (paid)/received (217) (131) (377) ---------------------------------------- Net cash from operating activities 1,552 1,763 2,957 ======================================== continued... -11- b) Analysis of net debt At At 1 April Cash Non-cash Exchange 30 September 2006 flow Items Movement 2006 £'000 £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------- Cash 234 393 - 6 633 Overdrafts (6,597) 290 - 7 (6,300) ----------------------------------------------------- Cash and cash equivalents (6,363) 683 - 13 (5,667) Secured commercial bills Payable more than one year (2,261) (799) - 64 (2,996) Finance leases and hire purchase agreements Payable less than one year (899) 564 (611) 8 (938) Payable more than one year (2,100) (339) 611 9 (1,819) Bank loans Payable more than one year (488) 135 - 14 (339) ----------------------------------------------------- Total (12,111) 244 - 108 (11,759) ===================================================== 7. Exchange rates The results of overseas subsidiaries 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: Half-year Half-year Year ended ended ended 30 September 2006 1 October 2005 1 April 2006 -------------------------------------------------------------------------------- Australia - average rate 2.4565 2.3822 2.3730 Australia - period end 2.5031 2.3167 2.4326 Euro - average rate 1.4577 1.4666 1.4623 Euro - period end 1.4746 1.4673 1.4333 Canadian dollar - average rate 2.0676 2.2146 2.1276 Canadian dollar - period end 2.0840 2.0532 2.0235 This information is provided by RNS The company news service from the London Stock Exchange

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