21st Nov 2007 07:01
Victoria PLC21 November 2007 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: Wednesday, 21 November 2007 Embargoed: 7.00am Victoria PLCLeading manufacturers of high quality carpets in the UK, Australia and Ireland Interim Results six months ended September 2007 2007 2006 Revenue £28.76m £27.03m +6.4% Operating Profit £1.58m £1.29m +23.2% Profit before Tax £1.25m £1.00m +24.8% Earnings per Share 12.92p 10.69p +20.9% Solid operating cash generation The Group's geographic spread and customer profile helped to off-set economicand market conditions in UK and Ireland. Australia delivered a very solidperformance and increased market share Changes to the composition of NED's combined with experienced management team todrive and develop future strategy "The continued growth we envisage from both existing product brands, recentlyintroduced product styles and other initiatives will, we believe, enable us totake full advantage of our market leading position and successfully deal withwhatever market conditions prevail. "The Group remains optimistic that it will deliver an overall performance aheadof last year and in-line with both the Management's and market expectations." Bob Gilbert, Chairman FULL STATEMENT ATTACHED Enquiries:Alan Bullock, Group Managing Director Fiona Tooley, DirectorIan Davies, Group Finance Director Keith Gabriel, Senior Account ManagerVictoria PLC Citigate Dewe RogersonTel: +44 (0) 1562 749640 Tel: +44 (0) 121 455 8370Mobile: +44 (0) 7785 325701 (AB) Mobile: +44 (0) 7785 703523 (FMT)www.victoria.plc.uk Victoria PLC CHAIRMAN'S STATEMENT Interim Results for the six months ended September 2007I am pleased to be able to report that the Group has made a solid start to thisfinancial year, with the Group's geographical spread of business and customerprofile assisting us to off-set the challenging economic and market conditionswe have seen during the first half-year in both the UK and Ireland. Financial Results SummaryIncome StatementRevenues from the Group's activities have grown by 6.4% in the half-year from£27.0 million to £28.8 million. Operating profit has increased by 23.2% from£1.29 million to £1.58 million. The Group has continued to demonstrate tightoperating and material cost control with a further improvement in operatingmargin, on a like for like basis, from 4.8% to 5.5% Net finance costs at £0.38 million (2006 £0.36 million) were broadly in-linewith the comparative period and remain well covered by operating profit. Profitbefore tax was up 24.8% at £1.25 million compared to £1.00 million for thecorresponding period last year. Profit attributable to equity shareholdersincreased 20.9% from £0.74 million to £0.90 million, with basic earnings pershare up from 10.69 pence to 12.92 pence. Balance Sheet The Group's net assets increased from £29.0 million at 31 March 2007 to £29.8million at the end of the period. Inventory has increased by £1.42 million to£17.2 million, in part reflecting increased levels of revenue, but also thebuild up of product to support new ranges and the usually busy autumn period inthe UK and Ireland. Cash Flows and Net DebtNet cash inflow from operating activities was £1.99 million, an increase of£0.44 million on the corresponding period last year. The net effect of theincrease in working capital, reflecting the growth in the business, was a cashoutflow of £0.37 million. Reported net debt has increased over the period by£0.16 million from £9.69 million at 31 March 2007 to £9.85 million. The Groupcontinues to maintain a significant proportion of its borrowings in Australiandollars and the effect of changes in exchange rates on overall foreign currencyborrowings, increased Group net debt by £0.19 million. UKTrading in the first four months of the period in the UK saw sales reasonablyahead of the corresponding period last year, followed by a marked fall-off inAugust & September. This left revenues up 1.1% in the half-year at £12.4million. Successive base interest rate increases and the sub-prime mortgagecrisis conspired to sap consumer confidence for spending on the High Street. Asa result, operating profit in the UK was down by 23.2% to £262k with profitbefore tax down to £135k. During the first half-year, Victoria Carpets has continued to invest inadditional plant and new product ranges thus positioning itself well for thesecond half of the financial year which traditionally has been the strongerperiod. IrelandIn Ireland, revenues were down by 13.7% from £3.03 million to £2.61 million withsales declining in both the contract and residential carpet sectors. The rather"lumpy" nature of contract sales corresponded with a particularly strongfirst-half last year and accounted for the majority of this decline. Residentialcarpet sales were slightly down with the General Election and a slower economynegatively affecting consumer confidence. The resultant effect was to see operating profit down from £204k to £118k andprofits before tax down from £185k to £100k. Again in Ireland there was a heavy spend on new ranges and point-of-sale displayunits positioning the business well for the second half year. AustraliaIn an otherwise buoyant Australian economy, only the commodity driven states ofWestern Australia and Queensland enjoyed strong growth in the housing sector.The major states of New South Wales and Victoria remained relatively flat withconsumer demand dampened by interest rate increases. In this context, our Australian operation has delivered a very solid performanceand has increased its market share. Revenues in Australia grew strongly from£11.7 million to £13.7 million, an increase of 17.1%. Pleasingly, new product introductions made last year also enabled us to grow ourgross profit margin by 2.8%. Operating profit increased by £0.49 million, up by53.2 % to £1.41 million and profit before tax increased by 61.1% from £0.79million to £1.28 million. CanadaColin Campbell, our Canadian Associate Company, has continued to make excellentprogress with revenues up 13.6% to C$ 4.87 million. Profits before tax increased6.5% to C$427k from C$401k in the corresponding period last year. Directorate ChangesAs shareholders will be aware, the Company recently announced changes to thecomposition of its Non-executive Director team. This is the last report that I will make to shareholders in my capacity as aDirector and Non-executive Chairman of Victoria. After eleven enjoyable years inthe Chair, I have decided to step down and retire. At the same time, my fellowNon-executive Director, Keith Ackroyd will also retire. I take this opportunity to welcome Mr Aram Shishmanian and Ms Nikki Beckett tothe Board as Non-executive Directors. They joined the Company in October andwill work alongside the Executive team and my successor, Alexander Anton, whowill take up the Chair on 3 December 2007. The timing of these changes clearly allows for an orderly transition by theCompany's current Non-executives to the new team whilst also dovetailing wellwith the Group's strategic planning programme for the future. I believe that when I retire from the Board at the end of the month, I leave theGroup in good health and with an experienced management team which, whencombined with the additional skills of the newly appointed Non-executiveDirectors, will be capable of taking the business forward over the next fewyears. Current Trading ProspectsOur growth to date reflects a creditable performance for the Group, especiallyas we continue to operate in a difficult period for UK retailers. Whilst there continues to be a clear lack of visibility about the short tomedium term economic and market prospects in the UK and Ireland, we arewitnessing stronger market conditions in Australia and Canada. The continued growth we envisage from both existing product brands, recentlyintroduced product styles and other initiatives will, we believe, enable us totake full advantage of our market leading position and successfully deal withwhatever market conditions prevail. The Group remains optimistic that it will deliver an overall performance aheadof last year and in-line with both the Management's and market expectations. Bob GilbertChairman21 November 2007 Victoria PLC Consolidated Income StatementFor the half-year ended 29 September 2007 (unaudited) Notes Half-year Half-year Year ended ended ended 31 March 2007 29 September 30 September £'000 2007 2006 £'000 £'000--------------------------------------------------------------------------------Revenue 3 28,757 27,026 55,426Cost of sales (20,208) (19,288) (39,003)--------------------------------------------------------------------------------Gross profit 8,549 7,738 16,423Distribution costs (5,662) (5,459) (10,641)Administrative expenses (1,644) (1,531) (3,097)Other operating income 340 537 700Exceptional items - - ---------------------------------------------------------------------------------Operating profit 3 1,583 1,285 3,385Share of results ofassociated company 45 78 104Finance costs (379) (362) (727)--------------------------------------------------------------------------------Profit before tax 1,249 1,001 2,762Taxation 4 (352) (259) (754)--------------------------------------------------------------------------------Profit for the period 897 742 2,008--------------------------------------------------------------------------------Attributable to:Equity holders of the parent 897 742 2,008--------------------------------------------------------------------------------Earnings per shareFrom continuing operationsBasic 5 12.92p 10.69p 28.92p--------------------------------------------------------------------------------Diluted 12.92p 10.69p 28.92p-------------------------------------------------------------------------------- Consolidated Statement of Recognised Income and ExpenseFor the half-year ended 29 September 2007 (unaudited) Half-year Half-year Year ended ended ended 29 September 2007 30 September 2006 31 March 2007 £'000 £'000 £'000--------------------------------------------------------------------------------Exchange differenceson translation offoreign operations 819 (402) (33)--------------------------------------------------------------------------------Net income/(loss)recognised directly inequity 819 (402) (33)Profit for the period 897 742 2,008--------------------------------------------------------------------------------Total recognisedincome and expense forthe period 1,716 340 1,975--------------------------------------------------------------------------------Attributable to:Equity holders of the parent 1,716 340 1,975-------------------------------------------------------------------------------- Victoria PLC Consolidated Balance SheetAs at 29 September 2007 (unaudited) 29 September 2007 30 September 2006 31 March 2007 £'000 £'000 £'000--------------------------------------------------------------------------------Non-current assets Intangible assets 486 504 491 Property, plant andequipment 24,354 23,275 23,846 Investment property 180 180 180 Investment inassociated company 565 507 469 Deferred tax asset 1,016 646 983--------------------------------------------------------------------------------Total non-currentassets 26,601 25,112 25,969--------------------------------------------------------------------------------Current assets Inventories 17,160 15,406 15,740 Trade and otherreceivables 10,132 11,182 9,603 Financial asset 11 - 10 Cash at bank and inhand 823 633 644--------------------------------------------------------------------------------Total current assets 28,126 27,221 25,997--------------------------------------------------------------------------------Total assets 54,727 52,333 51,966--------------------------------------------------------------------------------Current liabilities Trade and otherpayables 9,437 8,849 8,234 Current taxliabilities 1,051 977 998 Financial liabilities 6,426 7,264 5,261--------------------------------------------------------------------------------Total currentliabilities 16,914 17,090 14,493--------------------------------------------------------------------------------Non-current liabilities Trade and otherpayables 1,502 976 1,209 Financial liabilities 4,246 5,154 5,072 Deferred taxliabilities 2,234 1,764 2,209--------------------------------------------------------------------------------Total non-current liabilities 7,982 7,894 8,490--------------------------------------------------------------------------------Total liabilities 24,896 24,984 22,983--------------------------------------------------------------------------------Net assets 29,831 27,349 28,983--------------------------------------------------------------------------------EquityIssued share capital 1,736 1,736 1,736Share premium 829 829 829Retained earnings 27,266 24,784 26,418--------------------------------------------------------------------------------Total equity 29,831 27,349 28,983-------------------------------------------------------------------------------- Victoria PLC Consolidated Cash Flow StatementFor the half-year ended 29 September 2007 (unaudited) Notes Half-year Half-year Year ended ended ended 29 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000-------------------------------------------------------------------------------Net cash inflowfrom operatingactivities 6a 1,993 1,552 5,061-------------------------------------------------------------------------------Investing activities Dividends receivedfrom associates - - 32 Purchases ofproperty, plant andequipment (1,106) (527) (1,959) Proceeds ofdisposals ofproperty, plant and 10 19 74equipment-------------------------------------------------------------------------------Net cash used ininvestingactivities (1,096) (508) (1,853)-------------------------------------------------------------------------------Financing activities (Decrease)/increasein long-term loans (682) 663 347 Receipts fromfinancing of assets 40 339 870 Payment of financeleases/HPliabilities (397) (564) (963) Dividends paid (868) (799) (799)-------------------------------------------------------------------------------Net cash (usedin)/from investingactivities (1,907) (361) (545)-------------------------------------------------------------------------------Net (decrease)/increasein cash and cash equivalents (1,010) 683 2,663 Cash and cashequivalents atbeginning of period (3,693) (6,363) (6,363) Effect of foreignexchange ratechanges 21 13 7-------------------------------------------------------------------------------Cash and cashequivalents at endof period 6b (4,682) (5,667) (3,693)------------------------------------------------------------------------------- Victoria PLC Notes to the Interim Financial StatementsFor the half-year ended 29 September 2007 (uanudited) 1 General InformationThese condensed consolidated financial statements for the six months ended 29September 2007 have not been audited or reviewed by the Auditors. They wereapproved by the Board of Directors on 20 November 2007. The information for the year ended 31 March 2007 does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. A copy of thestatutory accounts for that year has been delivered to the Registrar ofCompanies. The Auditors' report on those accounts was unqualified. 2 Accounting PoliciesThese condensed consolidated financial statements should be read in conjunctionwith the Group's financial statements for the year ended 31 March 2007, whichwere prepared in accordance with IFRSs as adopted by the European Union. The accounting policies and basis of consolidation of these condensed financialstatements are consistent with those applied and set out on pages 40 to 44 ofthe Group's audited financial statements for the year ended 31 March 2007. In the current financial year, the Group will adopt International FinancialReporting Standard 7 "Financial Instruments: Disclosures" (IFRS 7) for the firsttime. As IFRS 7 is a disclosure standard, there is no impact of that change inaccounting policy on the half-yearly financial statements. Full detail of thechange will be disclosed in our annual report for the year ending March 2008. 3 Business SegmentsFor management purposes, the Group is organised into four operating divisionsaccording to the geographical areas where they are managed. These divisions arethe basis on which the Group reports its primary segment information. The fourdivisions are UK, Ireland, Australia and the Canadian Associate. Segment information for revenue, operating profit and a reconciliation to entitynet profit is presented below. Half-year ended 29 September 2007 Half-year ended 30 September 2006 Revenue Operating Finance Profit Revenue Operating Finance Profit £'000 profit costs before £'000 profit costs before £'000 £'000 tax £'000 £'000 tax £'000 £'000--------------------------------------------------------------------------------------------------UK 12,432 262 (127) 135 12,293 341 (158) 183Ireland 2,611 118 (18) 100 3,027 204 (19) 185Australia 13,714 1,414 (138) 1,276 11,706 923 (131) 792Canada - - - 45 - - - 78--------------------------------------------------------------------------------------------------Subtotal 28,757 1,794 (283) 1,556 27,026 1,468 (308) 1,238Central costs - (211) (96) (307) - (183) (54) (237)--------------------------------------------------------------------------------------------------Totalcontinuingoperations 28,757 1,583 (379) 1,249 27,026 1,285 (362) 1,001--------------------------------------------------- ------------------------------Tax (352) (259)--------------------- ------ ------Profit aftertax fromcontinuingoperations 897 742 Profit for the period from discontinuedoperations - ---------------------- ------ ------Profit aftertax anddiscontinued 897 742operations--------------------- ------ ------ 4 Tax Charge Half-year Half-year ended ended 29 September 2007 30 September 2006 £'000 £'000--------------------------------------------------------------------------------Current tax:UK corporation tax (52) (13)Overseas taxation charge 404 272-------------------------------------------------------------------------------- 352 259Deferred tax:Current year - ---------------------------------------------------------------------------------Total 352 259-------------------------------------------------------------------------------- Corporation tax for the interim period is charged at 28.2% (2006: 28.1%),representing the best estimate of the weighted average annual corporation taxrate expected for the full financial year. 5 Earnings and Earnings per ShareThe calculation of the basic and diluted earnings per share is based on thefollowing data: Number of Shares Half-year Half-year ended ended 29 September 30 September 2007 2006-------------------------------------------------------------------------------Weighted average number of ordinaryshares for the purposes of basic earnings per share 6,943,556 6,943,556 Effect of dilutive potential ordinary shares:Share options - --------------------------------------------------------------------------------Weighted average number of ordinaryshares for the purposes of diluted earnings per share 6,943,556 6,943,556------------------------------------------------------------------------------- Half-year ended Half-year ended 29 September 2007 30 September 2006 Earnings EPS Earnings EPS £'000 pence £'000 pence--------------------------------------------------------------------------------Profit for the period from continuingoperations 897 12.92 742 10.69 Profit for the period from discontinued operations - - - ---------------------------------------------------------------------------------Profit for the period from continuingand discontinued operations 897 12.92 742 10.69--------------------------------------------------------------------------------Earnings per share- basic continuing 12.92 10.69- basic discontinued - ---------------------------------------------------------------------------------- basic 12.92 10.69--------------------------------------------------------------------------------- diluted 12.92 10.69-------------------------------------------------------------------------------- The effect of dilutive shares on the earnings for the purposes of dilutedearnings per share is £nil (2006: £nil). The denominators used for all basic, diluted and adjusted earnings per share areas 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 29 September 30 September 31 March 2007 2006 2007 £'000 £'000 £'000--------------------------------------------------------------------------------Operating profit fromcontinuing operations 1,583 1,285 3,385 Discontinued operations profitbefore tax - - - Adjustments for:- Depreciation of property, plant and equipment 1,169 1,121 2,226 - Amortisation of intangible assets 13 14 27 - (Profit)/loss on disposal of property, plant and equipment (2) (5) 8 - Exchange rate difference on consolidation 362 (197) (18) - Business reorganisation costs - - ---------------------------------------------------------------------------------Operating cash flowsbefore movements in working capital 3,125 2,218 5,628 (Increase)/decrease inworking capital (370) (59) 801--------------------------------------------------------------------------------Cash generated fromoperations 2,755 2,159 6,429 Interest paid (379) (390) (792) Income taxes(paid)/received (383) (217) (576)--------------------------------------------------------------------------------Net cash fromoperating activities 1,993 1,552 5,061-------------------------------------------------------------------------------- b) Analysis of net debt At Cash flow Other Exchange At 31 March £'000 non-cash movement 29 September 2007 2007 £'000 movement £'000 £'000 £'000------------------------------------------------------------------------------------Cash 644 146 - 33 823Overdrafts (4,337) (1,156) - (12) (5,505)------------------------------------------------------------------------------------Increase/(decrease) in cashin period (3,693) (1,010) - 21 (4,682) Secured commercialbills Payable more than one year (2,883) 542 - (157) (2,498) Finance leases Payable less than one year (924) 397 (375) (19) (921) Payable more than one year (1,985) (40) 375 (29) (1,678) Bank loans Payable less than one year - - - - - Payable more than one year (204) 140 - (6) (70) Decrease innet debt inperiod - 1,039 - - -------------------------------------------------------------------------------------Total (9,689) 29 - (189) (9,849)------------------------------------------------------------------------------------ 7 Exchange RatesThe results of overseas subsidiaries and associated undertakings have beentranslated into sterling at the average exchange rates prevailing during theperiods. The balance sheets are translated at the exchange rates prevailing atthe period ends: Half-year Half-year Year ended ended ended 29 September 2007 30 September 2006 31 March 2007------------------------------------------------------------------------------Australia - averagerate 2.3845 2.4565 2.4687 Australia - period end 2.3023 2.5031 2.4279 Euro - average rate 1.4710 1.4577 1.4717 Euro - period end 1.4326 1.4746 1.4735 Canadian dollar -average rate 2.1296 2.0676 2.1540 Canadian dollar -period end 2.0246 2.0840 2.2627 8 Related Party TransactionsDuring the period, the Group had transactions with its associate comprisingsales of goods to the value of £197k (2006: £307k) and provision of servicesworth £41k (2006: nil). At 29 September 2007 the Group was owed £243k (2006:£317k). All goods and services were provided at market rates. 9 Risks and UncertaintiesThe Board continuously assesses and monitors the key risks of the business. Thekey risks that could affect the Group's medium term performance and the factorswhich mitigate these risks have not changed from those set out on page 29 of theGroup's 2007 Annual Report, a copy of which is available on the Group's website- www.victoria.plc.uk. The Chairman's Statement includes consideration ofuncertainties affecting the Group in the remaining six months of the year. 10 Information RightsUnder section 146 of the Companies Act 2006, registered shareholders of fullylisted companies are able to nominate the underlying beneficial owners of theirshares to receive information rights from 1 October 2007. Companies are requiredto fulfil these requests from 1 January 2008. Please note that beneficial owners of shares nominated by the registered holdersof those shares are required to direct all communications to the registeredholder of their shares rather than to the Company's registrar, CapitaRegistrars, or the Company directly. 11 Statement of Directors' ResponsibilitiesThe Directors confirm that to the best of their knowledge the condensed set offinancial statements has been prepared in accordance with IAS 34, "Interimfinancial reporting" as adopted by the European Union, and includes a fairreview of the information required by Disclosure and Transparency Rules 4.2.7and 4.2.8 of the United Kingdom's Financial Services Authority. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Victoria