Victoria Regulatory News (VCP)

06 November 2013

Victoria PLC

('Victoria,' the 'Company,' or the 'Group')

Half-Year Results

for the 26 weeks ended 28 September 2013

Victoria PLC (LSE: VCP), a manufacturer, supplier and distributor of design-led carpets, carpet tiles and other floorcoverings, announces the following results for the 26 weeks ended 28 September 2013.

Summary:

· Group revenue: £34.53m (2012: £35.99m), decreased by 4.1% (1.5% in constant currency terms)

· Group profit before tax and exceptional items: £0.61m (2012: £0.07m loss).

· Net debt has reduced by a further £4.54m from the year end to £2.97m

· Interim dividend of 2.00 pence (2012: 2.00 pence)

· Working capital has reduced by £4.34m from September 2012

Geoff Wilding, Executive Chairman commented:

"The Group's trading performance in the first half of the current financial year has been satisfactory. A considerable amount of work has been done to remove unnecessary cost from the business and improve the Group's working capital position, although more remains to be done before the Group starts to deliver acceptable results.

The Board believes it has an appropriate strategy to further improve the Group's performance and is focussed on its execution."

For more information contact:

Chairman's Statement

The Group's trading performance in the first half of the current financial year has been satisfactory. A considerable amount of work has been done to remove unnecessary cost from the business and improve the Group's working capital position, although more remains to be done before the Group starts to deliver acceptable results.

Key financial and operational highlights from the first half include:

· Revenues are 4.1% lower than for the same period last year at £34.53m, although 2.6% of this fall is due to currency movements. Nonetheless, the Group is now focussing on selling product at an acceptable margin, rather than seeking sales at any cost. This will impact top line sales but, in time, should deliver improved profits to the Group.

· Profits (pre-exceptional costs associated with the closure of the Group's spinning mill at Castlemaine, Australia) have improved from a loss of £0.07m for the same period last year to a profit of £0.61m.

· Net debt has reduced from £7.51m at 30 March 2013 to £2.97m. Despite needing to absorb significant exceptional costs over the last twelve months, net debt shows a substantial improvement from the £8.87m position as at the date the new Board was appointed (3 October 2012), and has been achieved without material asset sales and while maintaining investment where required into key operating assets.

· Colin Campbell & Sons Limited is now wholly-owned, having previously been a 50% associated undertaking. This has been achieved at no cash cost to Victoria (indeed during the period we have received the largest dividend since our involvement) and gives us greater control over the future of this business.

· Stock levels have been reduced, lowering the risk (and resultant expense) of obsolete product and materially improving the Group's working capital. Cash locked up in stock is 'dead money' and this improved stock management position means that growth in the future will consume less capital than previously, allowing funds to either be deployed into productive assets elsewhere in the business or returned to shareholders.

· A new Managing Director has been appointed in Australia and he, together with a talented team, is delivering significant improvements to the Australian subsidiary despite the most challenging market conditions in many years.

Sports Ground Update

The Company has withdrawn from its negotiations with the local council to sell the Sports Ground in Kidderminster and is now actively pursuing other opportunities to realise value for shareholders in respect of this asset.

Outlook

The market outlook remains mixed. Although there appears to be more positive consumer sentiment in both the UK and Australia, we share the views of other listed companies trading in the sector that conditions remain challenging. Wool prices, a key driver of our costs, have appreciated significantly in the last six months and, overall, consumer demand for carpet remains soft. However, residential construction and property sales activity continue to improve, which shows encouraging signs of growth in consumer confidence. The Board believes it has an appropriate strategy to further improve the Group's performance and is focussed on its execution.

Half-year Dividend

The Board declares an interim dividend of 2.00p per share, payable on 20 December 2013 (2012: 2.00p) to all Shareholders on the register as at 29 November 2013, with the ex-dividend date being 27 November 2013.

Geoff Wilding

Chairman

05 November 2013

Condensed Consolidated Income Statement

For the 26 weeks ended 28 September 2013 (unaudited)

Condensed Consolidated Statement of Comprehensive Income

For the 26 weeks ended 28 September 2013 (unaudited)

Condensed Consolidated Balance Sheet

As at 28 September 2013 (unaudited)

Condensed Consolidated Statement of Changes in Equity

For the 26 weeks ended 28 September 2013 (unaudited)

Condensed Consolidated Statement of Cash Flows

For the 26 weeks ended 28 September 2013 (unaudited)

Notes to the Condensed Half-year Financial Statements

1. General information

These condensed consolidated financial statements for the 26 weeks ended 28 September 2013 have not been audited or reviewed by the Auditor. They were approved by the Board of Directors on 5 November 2013.

The information for the 52 weeks ended 30 March 2013 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The Auditor's report on those accounts was unqualified and did not include a reference to any matter to which the Auditor drew attention by way of emphasis without qualifying the report and did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

2. Basis of preparation and accounting policies

These condensed consolidated financial statements should be read in conjunction with the Group's financial statements for the 52 weeks ended 30 March 2013, which were prepared in accordance with IFRSs as adopted by the European Union.

The accounting policies and basis of consolidation of these condensed financial statements are consistent with those applied and set out on pages 20 to 25 of the Group's audited financial statements for the 52 weeks ended 30 March 2013. 

Having reviewed the Group's projections, and taking account of reasonably possible changes in trading performance, the Directors believe they have reasonable grounds for stating that the Group has adequate resources to continue in operational existence for the foreseeable future.

The Directors are of the view that the Group is well placed to manage its business risks despite the current challenging economic and market conditions. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements of the Group.

Notes to the Condensed Half-year Financial Statements continued

3. Segmental information

The Group is organised into two operating divisions: The UK & Ireland and Australia. 

Geographical segment information for revenue, operating profit and a reconciliation to Group net profit is presented below:

* Results of the investment held for sale is shown net of tax.

Intersegment sales between the Group's subsidiaries were immaterial in the current and comparative periods.

4. Exceptional items

All exceptional items are classified within administrative expenses.

Notes to the Condensed Half-year Financial Statements continued

4 Exceptional items continued

(a) Relates to costs associated with "right-sizing" and reorganising the two Australian spinning mills to meet reduced volume requirements as a result of declining demand for woollen yarns. The smaller of the two spinning mills was closed during the first half period and production ceased at the end of June 2013. Key items of equipment were relocated to the mill at Bendigo, which has improved efficiencies at this mill.

(b) Relate to costs incurred in the move from the Official List to the AIM market of the London Stock Exchange. Further costs were incurred after the prior year first half period and the total cost was £233,000.

(c) Relate to costs in connection with a proposed incentive remuneration plan. The remuneration plan was subsequently withdrawn.

(d) Relate to costs in connection with various General Meetings of the Company, resulting in changes to the Board composition. 

5. Tax

The overall corporation tax rate is 26.7% (2012: 27.1%), representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year. 

Notes to the Condensed Half-year Financial Statements continued

6. 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:

* There was no difference in the weighted average number of shares used for the calculation of basic and diluted loss per share in the prior year first half period as the effect of all potentially dilutive shares outstanding was anti-dilutive.

Notes to the Condensed Half-year Financial Statements continued

7. Dividends

8. Notes to the cash flow statement

a) Reconciliation of operating profit/ (loss) to net cash inflow from operating activities

Notes to the Condensed Half-year Financial Statements continued

8. Notes to the cash flow statement (continued)

b) Analysis of net debt

9. Rates of exchange

The results of overseas subsidiaries and investments 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:

10. Related party transactions

During the period, the Group had transactions with its investment held for sale (Colin Campbell & Sons Limited), comprising sales of goods to the value of £163k (2012: £459k). At 28 September 2013, the Group was owed £145k (2012: £355k). All goods and services were provided at market rates. The Company also received a dividend of £179k during the period (2012: £nil).

Notes to the Condensed Half-year Financial Statements continued

11. Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group's medium term performance and the factors which mitigate these risks have not changed from those set out on page 8 of the Group's 2013 Annual Report, a copy of which is available on the Group's website - www.victoriaplc.com. The Chairman's Statement includes consideration of uncertainties affecting the Group in the remaining six months of the year.

On behalf of the Board

Geoff Wilding

Chairman

05 November 2013