Pre-close Trading Update

RNS Number : 5332N

Victoria PLC

01 October 2012

 



"International designers, manufacturer & distributor of innovative floorcoverings"

Date: Monday, 1 October 2012                                                                                   Immediate Release

VICTORIA PLC

PRE-CLOSE TRADING UPDATE

Victoria PLC ('Group', 'Victoria' or 'Company') reports the following update on trading for the six months to 29 September 2012 ahead of its Half-yearly results to be announced in mid-November 2012.

TRADING

§ Group Trading

Trading throughout the Group has been satisfactory, particularly in the light of the prevailing difficult market and economic conditions in both of the Group's principal operating territories.  Market share has been maintained or increased in poor market conditions but overall Group sales will be below those in the equivalent period last year.  The Board is anticipating a breakeven outcome in the first half, after continued investment in new product initiatives and before exceptional costs. 

Careful management of stock and working capital has resulted in net debt at the end of the first half to be less than budgeted, and in the UK, the Company has also recently successfully secured new banking facilities, moving a substantial amount of borrowings from short term overdraft to fixed longer term facilities which will expire in 2015.  This will provide the Board with the financial capacity to grow the business pursuant to its strategy.

§ United Kingdom & Ireland

Trading conditions in the UK and Ireland have remained extremely tough during the first half, with both weak consumer sentiment and the impact of the Jubilee and Olympics reducing footfall on the High Street. Despite this, Victoria has continued to gain market share in the UK with sales significantly ahead of the corresponding period last year.

As reported in the Interim Management Statement issued on 15 August 2012, the Group's UK business continues to see increased sales to the John Lewis Partnership, the Insurance Replacement Market and within both the contract and export markets.  In addition, the Company is seeing sales growth in the Luxury Vinyl Tile market that the Group entered earlier this year and from other new carpet product ranges recently introduced.  It is anticipated that these new product sales will help off-set any further market weakness in the UK & Ireland.

§ Australasia

As previously reported, revenues in Australia in the first quarter of this financial year were 10.9% below those in the corresponding period last year as the Australian economy continued to slow.

In August and September, which are generally considered to be the start of a strong seasonal run into Christmas summer holiday period, there has been no sign of an uplift in sales; rather the market appears to be deteriorating further.

There has been a particular decline in sales of wool and wool-rich carpets, which has necessitated short-time working at both of the Group's woollen spinning mills in Australia. The company is taking steps to mitigate this reduction in the sale of wool carpet ranges and continues to actively promote wool carpets with the aim of underpinning production at the Australian spinning mills.

The sales of the new synthetic pile carpet ranges, marketed under the Stainmaster® Eversoft™ brand of solution dyed nylon, are progressing well despite the prevailing poor market conditions and is helping the business capture market share.

OUTLOOK

The final quarter of the calendar year is typically the strongest selling season in both of the Group's core markets.  However, the lack of sales visibility in volatile market conditions means that it is too early to forecast with any degree of certainty whether the current poor conditions in the UK and especially in Australia are going to continue.  The Company should be better placed to advise shareholders more accurately on this at the time of the Half-yearly announcement.

SPORTS GROUND - KIDDERMINSTER

The Company, having successfully obtained detailed planning consent earlier this year for its unused sports ground in Kidderminster, has now agreed a sale to Wyre Forest District Council for a consideration of £850,000.  The land has an existing use value in the balance sheet of £80,000.  The sale is subject to legal due diligence and the grant of outline planning consent for the Council's own proposed leisure facility.  It is expected that the sale will be completed before the end of 2012.

EXCEPTIONAL COSTS 

In the first half, the Group has incurred the following non-recurring costs:

§ Restructuring of the Australian Spinning Mills

The restructuring of the Group's two Australian spinning mills was completed in the first quarter of the financial year at a cost of A$1.30m (£0.86m), as stated in the 2012 Preliminary results announced on 26 June.

§ The proposed move to AIM

In the Annual Report and Accounts for the year ended 31 March 2012, the Company advised shareholders of a proposed move to AIM, subject to shareholder approval.  In light of the recent changes to the Board and the General Meeting to be held on 3 October 2012, the Board has, as previously advised, decided to suspend the process of moving to AIM.  To date, approximately £0.17m of costs have been incurred in this process.

§ Incentive Plan

Shareholders will be aware that the three former Non-executive Directors, Geoff Wilding, Alexander Anton and Sir Bryan Nicholson, were seeking to secure the adoption of an incentive remuneration plan, the terms of which the independent directors were unable to state were fair and reasonable to all shareholders.  Significant legal and other professional costs have been charged to the Company in connection with the creation and review of the proposed incentive scheme, amounting to approximately £0.21m.  Certain of these costs are currently being disputed by the Company.

§ General Meeting - 3 October 2012

The estimated costs incurred in convening the General Meeting to be held on 3 October 2012 are £0.27m.

Enquiries:
www.victoriaplc.com Ticker: VCP.L Premium Listing
Victoria PLC Katherine Innes Ker, Chairman Office: [phone] Victoria Carpets Ltd Alan Bullock, Group Managing Director Office: [phone]	TooleyStreet Communications (Media & IR relations) Fiona Tooley Mobile: + 44 (0) 7785 703523 Tel: [phone]	Seymour Pierce (Broker to the Company) Corporate Finance: Jonathan Wright or Tom Sheldon Corporate Broking: Richard Redmayne or Jacqui Briscoe Tel: [phone]

 

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