Victoria Regulatory News (VCP)

23 Nov 2006 07:00

Victoria PLC23 November 2006 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: 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 2005Revenue £27.03m £26.02Net Profit £1.00m £0.98mEPS 10.69p 10.07pFree Cash Flow £1.04mNet Assets per share £3.94 Renewed 5-year distribution contract with The John Lewis Partnership Creditable performance from UK & Irish business reflecting improvement inrevenues and profits Innovative and contemporary value for money products help to improve overall UKmarket share whilst Australian position maintained in a changing marketlandscape "Despite an extremely challenging first six months, we have adapted relativelywell to both the economic environment and to the market conditions prevailing ineach of our core market areas. "The Group will continue to remain focused on developing exciting new productsthat meet the ever-changing customer needs and that complement modern interiorstyling. "Whilst early indications are that the Autumn trading season has started welland we have been encouraged by trading levels to date, the remainder of ourfinancial year will likely remain challenging. "The benefits of product innovation, a focus on customer service and a drive forbusiness improvement should flow through into a better second half performance." Bob Gilbert, Chairman FULL STATEMENT ATTACHEDEnquiries:Alan Bullock, Group Managing Director Fiona Tooley / Katie DaleVictoria P.L.C. Citigate Dewe RogersonTel: +44 (0)1562 749640 Tel: +44 (0)121 455 8370Mobile: +44 (0)7785 325701 (AB) Mobile: +44 (0)7785 703523 (FMT) This announcement, together with other information on Victoria P.L.C. may befound at: www.victoria.plc.uk. -2- Interim Results 6 months ended 30 September 2006 CHAIRMAN'S STATEMENT INTRODUCTIONDespite an extremely challenging first six months, I am pleased to report thatwe have adapted relatively well to both the economic environment and to themarket conditions prevailing in each of our core market areas. FINANCIALSGroup revenue at £27.03 million, is up by 3.87% in the period compared to lastyear. Overall, Operating profit of £1.29 million was marginally down from £1.35million, whilst Net profit was up by 2.67% to £1.00 million from £0.98 millionin 2005. EBITDA in the period being reported was £2.50 million and the Earnings per shareincreased 6.16% from 10.07 pence to 10.69 pence per share. UNITED KINGDOM & IRELANDDespite the retail sector in the UK and Ireland remaining tough and the long hotsummer which was hardly conducive to improving the sales of floor coverings; oursales were up by a creditable 6.97% on a like-for-like basis in the 26 weekstrading period to the end of September 2006. Revenue increased from £14.32 million to £15.32 million whilst Operating profitwas up 54.39% from £0.35 million to £0.54 million and Profit before tax by116.50% from £0.17 million to £0.36 million. We are always conscious of an ever-changing consumer environment and haveconcentrated our efforts on continuing to introduce innovative, contemporary andvalue for money products. This focus has enabled us to grow our share of a UKmarket that has been flat at best by 9.6% in volume and 7.10% in value terms. InIreland too, sales were 23.44% higher in volume and 16.50% in value, withMunster Carpets in particular exploiting a stronger contract market. Whilst theIrish residential market continued to mirror the tough UK market, Navan Carpetsalso managed to achieve a moderate growth in performance. During the period, Victoria signed a new five year contract with The John LewisPartnership to continue to warehouse, cut, wrap and distribute all of JLP'sown-label and stocked carpet ranges throughout their stores in the UK. Victoriais rightly proud of its long association with the Partnership and to share inthe success they continue to enjoy on the High Street. The patterning and point of sale display material that Victoria continues toplace in the market in both the UK and Ireland should further increase our brandrecognition and drive sales through existing and newly established saleschannels. AUSTRALIAThe general economic conditions, weaker consumer spending and a stagnant housingmarket in Australia, combined with the demise of the second largest Australianmanufacturer, Feltex Carpets, have presented us with an interesting challenge inthe first six months of this financial year. Our clear strategy during the past 18 months or so in this changing marketlandscape has been to maintain market share and to position ourselves as well aspossible for the more stable market conditions which we hope will now prevail asa result of the likely acquisition of the assets of Feltex by the manufacturerGodfrey Hirst. continued... -3- Victoria is now the second largest player in the Australian carpet market and weare very well placed to exploit that position in what we hope will be calmer andbetter times in the market. Our Sales revenue in dollar terms was up by 3.20% to A$28.76 million, althoughit was similar to the comparable period last year in Sterling terms due to aweaker 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 competitionseen in the market place together with the higher patterning spend we have madeto position ourselves with the innovative new products necessary to furtherbuild our market share. As a result, Profit before tax was affected, down from£1.08 million to £0.79 million. CANADAOur Canadian Associate, Colin Campbell continues to perform well and their saleswere 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. PROPERTYThe task of disposing of the Group's former Sports field in Kidderminster isprogressing well, with a detailed Planning Application submission to the LocalAuthorities planned for early 2007 for a hotel, public house / restaurant andindoor / outdoor bowling club development. PROSPECTSThe Group will continue to remain focused on developing exciting new productsthat meet the ever-changing customer needs and that complement modern interiorstyling. This, coupled with a passion for customer service will increasinglyenable us to set ourselves apart from our competitors and continue to increasemarket share. Whilst early indications are that the Autumn trading season has started well andwe have been encouraged by trading levels to date, the remainder of ourfinancial year will likely remain challenging. However, it is our belief that, with the new products already launched andfurther new and innovative products still to come to market, we will continue tomake progress. The benefits of product innovation, a focus on customer service and a drive forbusiness improvement should flow through into a better second half performance. R. M. GilbertChairman -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 operationsRevenue 3 27,026 26,019 52,288Cost of sales (19,288) (18,619) (37,566) -----------------------------------Gross profit 7,738 7,400 14,722Distribution 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 ofassociated 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 periodfrom continuingoperations 742 699 1,618 Discontinued operationsProfit/(loss) for the period from - - -discontinued operations ----------------------------------- Profit for the period 742 699 1,618 ===================================Attributable to:Equity holders of theparent 742 699 1,618 ===================================Earnings per shareFrom continuing operationsBasic 5 10.69p 10.07p 23.30p ===================================Diluted 5 10.69p 10.07p 23.30p ===================================From continuing and discontinuedoperationsBasic 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 ontranslation of foreignoperations (402) 704 83 -------------------------------------------Net (loss)/incomerecognised directly inequity (402) 704 83 Profit for the period 742 699 1,618 -------------------------------------------Total recognised incomeand expense for the period 340 1,403 1,701 ===========================================Attributable to:Equity holders of theparent 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 assetsIntangible assets 504 532 527Property, plant and equipment 23,275 24,321 24,172Investment property 180 180 180Interests in associates 507 431 440Deferred tax assets 646 638 659 ------------------------------------------Total non-current assets 25,112 26,102 25,978 ------------------------------------------Current assetsInventories 15,406 16,362 16,110Trade and other receivables 11,182 9,870 10,215Cash and cash equivalents 633 772 234 ------------------------------------------Total current assets 27,221 27,004 26,559 ------------------------------------------Total assets 52,333 53,106 52,537 ==========================================Current liabilitiesTrade and other payables 8,849 9,017 8,505Current tax liabilities 977 732 961Finance liabilities 7,264 7,094 7,551 ------------------------------------------Total current liabilities 17,090 16,843 17,017 ------------------------------------------Non-current liabilitiesTrade and other payables 976 1,211 1,090Financial liabilities 5,154 5,539 4,849Deferred 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 ==========================================EquityIssued share capital 1,736 1,736 1,736Share premium account 829 829 829Retained earnings 24,784 24,948 25,242 ------------------------------------------Equity attributable toequity 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 operatingactivities 6a) 1,552 1,763 2,957 ---------------------------------------Investing activities Dividends received fromassociates - - 23 Purchases of property,plant and equipment (527) (1,130) (2,773) Proceeds on disposal ofproperty, plant andequipment 19 398 435 ---------------------------------------Net cash used ininvesting activities (508) (732) (2,315) ---------------------------------------Financing activities Increase / (decrease)in long-term loans 663 727 (73) Receipts from financingof assets 339 60 639 Payment of finance lease and HPliabilities (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 cashequivalents 683 375 (525) Cash and cashequivalents atbeginning of period (6,363) (5,827) (5,827) Effect of foreignexchange rate changes 13 (11) (11) ---------------------------------------Cash and cashequivalents at end ofperiod 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 informationThe information for the year ended 1 April 2006 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. These interim financial statements, which were approved by the Board ofDirectors on 22 November 2006, have been prepared in accordance with IAS 34.They have not been audited or reviewed by the Auditors. 2. Accounting policiesThe Company issued an announcement on 11 November 2005 entitled "Adoption ofInternational Financial Reporting Standards (IFRS), Restatement of FinancialInformation". This document can be viewed on the Company's websitewww.victoria.plc.uk. The document includes a description of the significant accounting polices to beadopted under IFRS. These interim financial statements have been prepared usingthose accounting policies and methods of computation. 3. Business segmentsFor management purposes, the Group is organised into three operating divisionsaccording to the geographical areas where they are managed. These divisions arethe basis on which the Group reports its primary segment information. The threedivisions 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 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) 170Australia 11,706 923 (131) 792 11,697 1,207 (129) 1,078Canada - - - 78 - - - 45 ----------------------------------------- ----------------------------------------Sub total 27,026 1,468 (308) 1,238 26,019 1,560 (312) 1,293Central - (183) (54) (237) - (212) (106) (318)costs ----------------------------------------- ----------------------------------------Totalcontinuingoperations 27,026 1,285 (362) 1,001 26,019 1,348 (418) 975 ============================== ================================Tax (259) (276) ------ ------Profit aftertax fromcontinuingactivities 742 699 Profit for the period from discontinued - -operations ------ ------ Profit aftertax anddiscontinuedoperations 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 269Deferred tax:Current year - 7 ---------------------------------- 259 276 ==================================Continuing operations 259 276Discontinued 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 taxrate expected for the full financial year. 5. Earnings per shareThe calculation of the basis and diluted earnings per share is based on thefollowing data: Number of shares Half-year Half-year ended ended 30 September 1 October 2006 2005--------------------------------------------------------------------------------Weighted average number of ordinaryshares for the 6,943,556 6,943,556purposes of basic earnings per share Effect of dilutive potential ordinary shares: Share options - - =============================Weighted average number of ordinaryshares for the 6,943,556 6,943,556purposes 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 continuingoperations 742 10.69 699 10.07 Profit for the period from discontinued - - - -operations ------------------------------------- Profit for the period from continuing 742 10.69 699 10.07and 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 dilutedearnings per share is £nil (2005: £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 statementa) 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 fromcontinuing 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 flowsbefore movements inworking capital 2,218 2,736 5,167 Increase in workingcapital (59) (424) (1,093) ----------------------------------------Cash generated from operations 2,159 2,312 4,074Interest paid (390) (418) (740)Income taxes(paid)/received (217) (131) (377) ----------------------------------------Net cash from operatingactivities 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 633Overdrafts (6,597) 290 - 7 (6,300) -----------------------------------------------------Cash and cashequivalents (6,363) 683 - 13 (5,667) Secured commercialbills Payable more than one year (2,261) (799) - 64 (2,996) Finance leases and hirepurchase 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 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 30 September 2006 1 October 2005 1 April 2006--------------------------------------------------------------------------------Australia - average rate 2.4565 2.3822 2.3730Australia - period end 2.5031 2.3167 2.4326Euro - average rate 1.4577 1.4666 1.4623Euro - period end 1.4746 1.4673 1.4333Canadian dollar - average rate 2.0676 2.2146 2.1276Canadian dollar - period end 2.0840 2.0532 2.0235 This information is provided by RNS The company news service from the London Stock Exchange