Interim Results

Victoria PLC 19 November 2002 Issued by Citigate Dewe Rogerson Ltd, Birmingham Date: Tuesday, 19 November 2002 Embargoed: 7.00am Victoria P.L.C. Interim Results for the six months to 28 September 2002 • Turnover £18.95m +15% • Profit before tax £1.29m +125% • Earnings per share 12.92p +123% • Strong cash generation • UK sales up 7.0% in difficult and challenging markets with sales to Independent Retailers improving by 7.4% • Exports to the hotel and leisure sector remain affected by 9/11 • Excellent performance in Australia with substantial increase in sales and market share • Investment continues in plant and new products across the Group 'The first six months of the year have undoubtedly been an extremely busy period as we put in place the acquisitions of both Munster Carpets in the Republic of Ireland and Pacific Textiles, in Australia, whilst remaining fully focused on our day-to-day business. 'The results show a significant improvement in the Group's financial performance in the six month period ended 28 September 2002, when compared with the first six months of last year. Sales within the UK in the six months were up by 7.0% in what many have considered to be a difficult and challenging market, and sales in Australia were up by almost 40%. 'Overall, we are optimistic that we should continue to trade well through the second half year and we are cautiously optimistic that the results for the full year will show a return to the levels of profitability previously achieved.' Bob Gilbert, Chairman FULL STATEMENT ATTACHED Enquiries: Alan Bullock, Group Managing Director Mark Lee, Group Finance Director Fiona Tooley Victoria P.L.C. Citigate Dewe Rogerson Today: 020 7282 8000 Today: 020 7282 8000 Thereafter: 01562 749300 Thereafter: 0121 455 8370 Mobile: 07785 325701 (AB) Mobile: 07785 703523 -2- Victoria P.L.C. Interim Results for the six months to 28 September 2002 STATEMENT BY THE CHAIRMAN, R M GILBERT Introduction I am pleased to report that the Group has made very good progress during the past six months, with the earlier investments made in plant, products and systems now all bearing fruit. The first six months of the year have undoubtedly been an extremely busy period as we put in place the acquisitions of both Munster Carpets in the Republic of Ireland and Pacific Textiles, in Australia, whilst remaining fully focused on our day-to-day business. Results The results show a significant improvement in the Group's financial performance in the six month period ended 28 September 2002, when compared with the first six months of last year. However, it should be borne in mind that last year's interim results were affected by a heavy spend on launching new ranges. Turnover at £18.95 million was 14.7% higher than the £16.53 million reported in the comparable period last year. Operating profit increased by 92.7% to £1.42 million (2001: £0.74 million) and profit before tax by 125.4% to £1.29 million (2001: £0.57 million). Earnings per share were 12.92p (September 2001: 5.78p), an increase of 123.5%. The strong cash generation of the business has funded £1.91 million of capital expenditure during the period and has taken gearing to 17.3% at 28 September 2002. This is only slightly up from 13.3% at the year ended 30 March 2002 and in fact down from the gearing level of 20.5% at September 2001. United Kingdom Sales within the UK in the six months were up by 7.0% in what many have considered to be a difficult and challenging market with sales to our targeted Independent Retail sector reassuringly up by 7.4%. Exports out of the UK operation remained badly affected by the terrorist atrocities of September 11th 2001, with still no sign of recovery in sales to the international hotels & leisure sector during this period. Consequently, Export sales were down by 40.6% which had the effect of reducing overall sales from the UK operation in the first half year by 3.3%. The loss of efficiency from running below capacity in the production areas serving the export business has had a depressing effect on the profitability of that part of our business. Nevertheless, the stronger UK sales and the contribution from the John Lewis distribution service have more than outweighed this to give an increase in overall profitability at Victoria Carpets. September saw the first anniversary of this warehousing, cutting and distribution operation for the John Lewis Partnership on their 'Jonelle' branded carpet ranges. This operation has proven to be a great benefit and success to both parties. During the period Victoria Carpets has continued to pursue its policy of achieving organic growth through heavy investment in new ranges, patterning and in-store displays. Additionally, the demise of several of our competitors has allowed us to take advantage of the opportunity to place more in-store display units in the retail sector. The cost of this has been borne in this period and we believe the greater exposure of our products will bring long-term benefits. continued... -3- The installation of the new backing line is proceeding well with commissioning planned towards the end of this financial year. From the spring of 2003 onwards we are looking forward to further enhancing sales of our carpet ranges with this new and revolutionary style of backing that is lighter in weight, easier to fit and environmentally friendly. This will also allow us to offer a greater variety of widths up to 5 metres wide. Westwood Yarns has continued to operate at or near to capacity during the past six months, achieving an increase of just over 5% in production volume. Further recent additions to plant will increase this capacity in the later part of this financial year. Westwoods continues to contribute well to the Group performance. Australia The Australian economy has been buoyant throughout the past six months. We have been able to exploit this to the full whilst also benefiting significantly from the heavy spend made in 16 new product ranges last year, which has undoubtedly improved our market share. Sales in Australia were up by almost 40%, restricted only by our inability to service demand as a result of yarn supply limitations. With our Castlemaine spinning mill running at full capacity over the period, we have had to depend on outside yarn supplies, mainly from New Zealand. We had planned a further expansion programme at Castlemaine to overcome the yarn supply challenges but the opportunity to acquire Pacific Textiles of Bendigo presented itself and, as announced on 24 October 2002, we have acquired that business. This will not only give us a significant increase in yarn availability immediately, but will also allow us to better control quality and to take advantage of 'just-in-time' practices by co-ordination of both of our Australian spinning mills. I am also pleased to inform you that our Australian subsidiary has recently been recognised by one of Australia's major retail buying groups, Carpet Choice, as the 'Supplier of The Year', with our Victorian State Territory Manager also being voted as the best sales manager. Canada Sales in the first half of the year in our 50% associate company, Colin Campbell & Sons, have been slightly higher than last year. However, the cost of opening additional sales offices in Toronto and Montreal has led to a short-term reduction in profitability. Prospects The Australian market is still performing well for us, and although we are heading for their quieter summer months, and there are some signs of activity slowing at a retail level, we are optimistic that we should continue to prosper. The additional yarn capacity available from Pacific Textiles will ensure we satisfy sales demand and aid in developing new product styles to keep us at the forefront of the market. In the UK, the investments made earlier in 2002 in new products are now standing us in good stead. The traditionally better autumn selling season has started well for us, although we hear from others in the trade that business is still difficult. Residentially, we are very well placed to fully exploit the market. The one area of concern remains our Export Sales where the hospitality sector is still depressed. The acquisition of Munster Carpets, announced on 3 October 2002, will provide Victoria Carpets with a very strong brand and position in the Irish contract market, as well as the opportunity to develop the commercial contract market in the UK and Export Markets. continued... -4- The integration of Munster's plant into our Kidderminster site is proceeding well and on schedule and will also offer greater utilisation of production facilities such as dyeing. The acquisition has been well received by both Munster and Victoria's customers and there should be positive benefits flowing from this operation in the first quarter of 2003 calendar year. Overall, we are optimistic that we should continue to trade well through the second half year and we are cautiously optimistic that the results for the full year will show a return to the levels of profitability previously achieved. -5- Victoria P.L.C. Group Profit & Loss Account six months to 28 September 2002 Note Six months to Six months to Year to 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Turnover 18,948 16,526 35,000 Cost of sales 13,211 11,667 24,517 Gross profit 5,737 4,859 10,483 Distribution costs 3,374 3,315 6,824 Administrative costs 1,218 1,139 2,467 Other operating income 277 333 665 Operating profit 1,422 738 1,857 Interest payable 123 185 337 Share of (losses)/profits of associated (5) 21 43 undertaking Profit on ordinary activities before taxation 1,294 574 1,563 Taxation on profits on ordinary activities 397 173 441 Profit for the period 897 401 1,122 Dividends - - 486 Retained earnings 897 401 636 Earnings per share - basic 2 12.92p 5.78p 16.16p - diluted 12.92p 5.78p 16.16p Dividends per share 3 - - 7.00p -6- Victoria P.L.C. six months to 28 September 2002 Statement of Total Recognised Gains and Losses Six months to Six months to Year to 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Profit after taxation 897 401 1,122 Currency translation differences on (535) (144) 590 foreign currency net investments Total gains relating to the period 362 257 1,712 Total gains recognised since last annual report 362 257 1,712 Note of Historical Cost Profits and Losses Six months to Six months to Year to 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Reported profit on ordinary activities before taxation 1,294 574 1,563 Historical cost profit on ordinary activities before taxation 1,294 574 1,563 Historical cost profit for the period retained after taxation and dividends 897 401 636 -7- Victoria P.L.C. Consolidated Balance Sheet six months to 28 September 2002 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Fixed assets Tangible assets 17,134 16,208 16,430 Investments in associated undertaking 274 269 287 17,408 16,477 16,717 Current assets Stock 8,696 8,180 8,008 Debtors 7,205 6,074 6,294 Cash 237 270 307 16,138 14,524 14,609 Less: current liabilities Creditors due within one year 8,703 7,529 7,004 Net current assets 7,435 6,995 7,605 Total assets less current liabilities 24,843 23,472 24,322 Less: Creditors due after one year 2,707 2,691 2,490 Provisions for liabilities and charges 881 956 1,038 Net assets 21,155 19,825 20,764 Capital and reserves (equity) Share capital 1,736 1,736 1,736 Share premium account 829 829 829 Revaluation reserve 2,006 1,980 2,061 Profit and loss account 16,584 15,280 16,168 Total shareholders' funds 21,155 19,825 20,794 -8- Victoria P.L.C. Consolidated Cash Flow Statement six months to 28 September 2002 Note Six months to Six months to Year to 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Net cash inflow from operating activities 4 1,708 2,342 4,783 Returns on investment and servicing of finance Dividend received from Associate 8 - - Interest paid (50) (85) (147) Hire purchase interest (73) (100) (190) (115) (185) (337) Taxation UK corporation tax paid (90) (189) (397) Overseas tax paid (129) (74) (209) (219) (263) (606) Capital expenditure and financial investment Payments to acquire tangible fixed assets (1,914) (1,265) (1,633) Receipts from sales of tangible fixed assets 14 25 35 (1,900) (1,240) (1,598) Equity dividends paid (486) (451) (451) Financing Debt due within one year (Repayment of)/increase in secured loans - (201) (225) Increase in/(repayment of) long-term loans 87 84 (280) Capital element of finance lease and hire purchase payments (420) (466) (705) Receipts from financing of assets 533 9 54 200 (574) (1,156) Increase/(decrease) in cash (812) (371) 635 -9- Victoria P.L.C. Notes to the Interim Statement 1. Basis of preparation The results for the year ended 30 March 2002 are extracts from the Group report and accounts as filed with the Registrar of Companies. These were audited and reported upon without qualification under Section 235 of the Companies Act 1985. 2. Earnings per share The earnings per share for the six month period to 28 September 2002 are based on 6,943,556 shares in issue throughout the period. The same number of shares were in issue throughout the six months ended 29 September 2001 and the year ended 30 March 2002. 3. Dividends No interim dividend is proposed (September 2001: nil; March 2002: 7.0 pence). 4. Reconciliation of operating profit to net cash inflow from operating activities Six months to Six months to Year to 28 September 2002 29 September 2001 30 March 2002 Unaudited Unaudited Audited £'000 £'000 £'000 Operating profit 1,422 738 2,373 Depreciation charges 754 707 1,287 Loss/(profit) on sale of fixed assets (1) (6) 6 Decrease/(increase) in working (238) 973 659 capital Exchange rate difference on (229) (70) (409) consolidation Net cash inflow from operating 1,708 2,342 4,783 activities 5. Exchange rates The results of the Australia subsidiary have been translated at an exchange rate of A$2.8703 to £1 being the rate prevailing at 28 September 2002 (September 2001: A$2.9781; March 2002: A$2.6682). This information is provided by RNS The company news service from the London Stock Exchange R MGMMMRRFGZZM

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