Victoria Regulatory News (VCP)

9 Feb 2005 14:00

Victoria PLC09 February 2005 Issued By Citigate Dewe Rogerson, BirminghamDate: Wednesday, 9 February 2005 Embargoed: 2.00pm VICTORIA P.L.C. Proposed withdrawal from Axminster weaving As outlined in our announcements dated 6 September and 24 November 2004, theGroup has for some time experienced market and operational difficulties in itsAxminster manufacturing operation which accounts for 5% of the Group's turnover.As a result, the future viability of this traditional method of weaving carpetshas been carefully monitored and kept under review by the Board. We have focused substantial management time and effort, all of which has beensignificantly disproportionate to the size of this business in order to try torestore the fortunes of our Axminster manufacturing which has been part ofVictoria's UK activities for 50 years. Whilst our Axminster department has contributed towards overheads, it hasremained unprofitable and, despite our best efforts to improve productivity andto eliminate losses, it has not yet reached break-even. In the year ended March2004, the Axminster operation had sales of approximately £2.73 million, andcontributed a pre-tax loss of £0.74 million. In the first six months of thecurrent financial year, Axminster sales totalled £1.68 million with pre-taxlosses of £0.62 million. Although losses from the Axminster business have been reduced over the last 4months, the Directors believe that the market for this type of traditionallywoven carpet will not return to historic levels, mainly as a result of a changein consumer taste, and margins will come under increasing pressure frommanufacturers based within much lower cost economies. Against this background and subject to the normal regulatory employment andconsultation procedures, the Directors of Victoria P.L.C are proposing towithdraw from the manufacture of Axminster carpet in the UK. This may result inthe loss of up to 85 jobs at Victoria Carpets Limited in Kidderminster,Worcestershire. It is with regret that through this proposed action, the Group is likely to losemany of the loyal, dedicated and long-serving employees associated withAxminster production and sales. However, it is crucial, with the ever increasingdemands of the industry and the consumer, that the Group remains fully focusedon its core and profitable Tufted and specialist Wilton weaving businesses whichrepresents 95% of the Group's overall trading. continued... -2- It is estimated that the proposed Axminster department closure would give riseto an exceptional cost of some £1.2 million in the year ending 31 March 2005.However, the Board believes that the elimination of losses and the release offunds from this activity would have a major positive impact on the Group'sfuture. Victoria P.L.C. will continue to focus and build upon its core Tufted businessand its specialist Wilton weaving and remain at the forefront of the UK andAustralian carpet industries through its 655 skilled employees in the Group'sstate-of-the-art spinning and tufting plants where we manufacture an excellentrange of products for both the retail and contract markets, backed by highlevels of quality and service. Group TradingTrading in the second half of this financial year has continued to remain toughin the UK. However, balanced by a good contribution still expected fromAustralia, the Group's profits and dividend for the year ending March 2005,before the exceptional closure costs, are expected to be in line with marketexpectations. Enquiries: Alan Bullock, Group Managing DirectorMark Lee, Group Finance Director Fiona Tooley, DirectorVictoria P.L.C. Citigate Dewe RogersonTelephone: 01562 749300 Telephone: 0121 455 8370Mobile: 07785 325701 (AB) Mobile: 07785 703523 (FMT)www.victoria.plc.uk--------------------- This information is provided by RNS The company news service from the London Stock Exchange