Interim Results

RNS Number : 7662P

Victoria PLC

22 November 2016

 

22 November 2016

Victoria PLC

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

Interim Results

Strong Performance Continues - Well Positioned For Further Growth

Victoria PLC (LSE: VCP) the international designers, manufacturers and distributors of innovative floorcoverings, is pleased to announce its consolidated interim results for the 26 weeks ended 1 October 2016.

Financial and Operational Highlights

Continuing operations	H1 FY17	H1 FY16	Growth
Revenue	£153.4m	£105.6m	+45%
Underlying EBITDA1	£20.2m	£12.6m	+60%
Underlying operating profit1	£14.4m	£7.9m	+82%
Operating profit	£12.0m	£6.4m	+88%
Underlying profit before tax1	£12.3m	£6.4m	+92%
Profit before tax	£8.4m	£3.9m	+115%
Net debt	£67.7m	£80.5m	-16%
Adjusted net debt / EBITDA2	1.93x	2.25x
Earnings per share3:
- Basic adjusted	10.43p	6.59p	+58%
- Basic	6.57p	0.88p	+647%

Victoria's successful growth has continued:

·     Group revenues for the six months ending 1 October 2016 grew by 45% from £105.6m to £153.4m

·     Like-for-like revenues grew by 8.0% (4.9% on a constant currency basis)⁴

•      Underlying operating profit increased from £7.9m to £14.4m

•      Underlying profit before tax substantially increased from £6.4m to £12.3m

•      Net debt as at the half year was £67.7m, representing a very comfortable 1.93x annualised EBITDA² (2015 H1: 2.25x)

•      Acquisition of Ezi Floor on 30 September 2016 for initial cash consideration of £6.5m and deferred consideration of £6.5m, plus contingent cash consideration of up to a further £6.5m wholly dependent on improved EBITDA over the next four years

1. Underlying performance is stated before the impact of exceptional items, amortisation of acquired intangibles and asset impairment within operating profit.  Underlying profit before tax and adjusted EPS are also stated before non-underlying items within finance costs (comprising mark-to-market adjustments, BGF redemption premium charge and deferred consideration fair value adjustments)

2. Adjusted net debt / EBITDA as measured in relation to the Group's bank facility covenants

3. Basic and basic adjusted earnings per share calculations set out in Note 7

4. Like-for-like revenue growth based on a complete half year of revenue for all businesses acquired excluding Ezi Floor.  Figures are adjusted for the 26 week period to 1 October 2016 as compared to the 27 week prior period

Geoff Wilding, Executive Chairman of Victoria PLC commented:

"During the last six months we remained focused on executing our plan, with the acquisition of Ezi Floor extending the Group's underlay offering and earnings.  The Board continues its effective cash management whilst at the same time being quick to identify and implement potential commercial and margin enhancing synergies across the Group as we gain market share both in the UK and Australia. With no shortage of acquisition opportunities in the UK and Europe, the Board is confident it can continue to grow Victoria and create more wealth for shareholders."

For more information contact:

Victoria PLC Geoff Wilding, Executive Chairman Michael Scott, Group Finance Director	[phone]
Cantor Fitzgerald Europe (Nominated Adviser & Broker) Rick Thompson, Phil Davies, Michael Reynolds (Corporate Finance) Mark Westcott, Caspar Shand- Kydd ( Sales) finnCap (Joint Broker) Matt Goode, Grant Bergman (Corporate Finance) Tim Redfern (Corporate Broking)	[phone] [phone]
Buchanan Communications Charles Ryland, Victoria Hayns, Jane Glover	[phone]

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Chairman's Statement

The first half of this financial year was another successful trading period of continued growth and performance for Victoria. Despite the prognostications of the doom-sayers, Brexit has had no discernible impact on demand for our products in the UK with like-for-like revenues up 3.5%. Growth in Australia continues apace (up 8.9% AUD like-for-like). We remain confident in achieving all of our objectives for the financial year.

Ezi Floor

Underlay is sold alongside nearly two-thirds of carpet sales in the UK and, as such, some 18 months ago we formed the view that an underlay manufacturer would be an ideal addition for Victoria.

September 2015 saw the initiation of this strategy, with the acquisition of underlay manufacturer Interfloor. Over the last year, in particular with a focus on minimising costs, Interfloor has become a highly valuable contributor to the Group's earnings.

Following the success of Interfloor, we acquired another underlay manufacturer, Ezi Floor, on 30 September this year. This is a very entrepreneurial and successful business and its acquisition means Victoria is now able to provide a full range of underlay products across the market. Whilst, as with previous acquisitions, Interfloor and Ezi Floor will remain largely independent in terms of marketing and sales, we are highly confident operational synergies can be achieved between these two businesses and believe Ezi Floor will also make a material contribution to Victoria's earnings.

Acquisitions

Buying a company is easy; making it successful is another matter entirely. Many acquisitions fail to meet expectations and, understandably, many investors are sceptical of a business plan that incorporates acquisitions as part of its strategy. I have completed literally dozens of acquisitions in my business career, making my share of mistakes, but the end product achieved in several sectors over many years has been the creation of significant shareholder wealth.

So, the fact remains that acquisitions can be - and have been - a powerful tool for growing a business and opening new market opportunities.

Having said that, we have made just six acquisitions in four years. This steady pace enables us to ensure each acquired business is properly integrated into Victoria before we proceed with securing the next earnings enhancing deal.

At the risk of boring shareholders with repetition, let me once again set out the key criteria Victoria uses when assessing a potential acquisition opportunity. This list is not exhaustive and sometimes we will not acquire a business that meets all our criteria simply because of some indefinable factor that makes us uncomfortable with proceeding.

1.    We never buy struggling businesses or turnarounds. The time and energy expended on a turnaround is rarely worth it;

2.    Modern, well-equipped factories. As a company, Victoria is extremely focussed on cash generation. It is free cash that allows us to pay down debt, fund growth, whether acquisitions or organic, and progressively return capital to shareholders through dividends or share buybacks. So, the last thing we want to have to do after buying a business is spend all the cash it generates bringing the factory up to standard.

3.    Committed, talented and honest management. Anyone can lease a factory and buy the machinery to make carpet (or other flooring). The difference between the average business and the extraordinary businesses Victoria acquires is the management;

4.    Broad distribution channels. Victoria's  sales are overwhelmingly made to literally thousands of retailers. We like the security this diversity provides; and pay close attention to customer concentration when considering a potential acquisition.

5.    A fair price. To quote Warren Buffet, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. We recognise that quality businesses are rarely 'cheap' but shareholders can take comfort from the fact that we will not overpay. Ever.

Debt

Debt is a business tool like any other. Properly used it can transform growth and shareholder returns and, given the very high levels of cash generation by the business, Victoria makes use of prudent levels of debt to grow the business and improve earnings.

We have consistently demonstrated over the last four years that, while there is a significant seasonal profile in Victoria's net debt (our working capital levels peak in September each year due to the increase in demand during the pre-Christmas rush, plus the timing of our deferred consideration payments are substantially weighted to H1), overall cash generation is aligned to annual earnings. Management across the entire Victoria Group is very focussed on cash generation, which gives the Board the confidence to appropriately deploy debt to fund acquisitions.

Outlook

Both markets in which Victoria trades - the UK and Australia - continue to perform well.

The Australian flooring market is experiencing very good demand from consumers. Although Australia housing stock is about one-third that of the UK, the houses themselves are about three times the size of the average UK house and therefore the addressable market is quite similar in size. I have been delighted by the performance of both our historical business in Australia and Quest, the acquisition we made in August 2015.

The UK, which is about 75% of our business, also continues to trade well. Brexit has had no discernible impact on demand for product and, with some 60% of carpet sold in the UK imported - primarily from Europe - weaker Sterling has benefited us by making our main competitors product materially more expensive whilst less than 20% of our cost base is in Euros or US dollars.

Unlike most other retail purchases, consumers typically only decide to invest in a new carpet for their home once every seven to nine years. As a result, consumers have little awareness as to what a square metre of carpet "should" cost. It is for that reason that the price at which we can sell product is governed moreover by the price point of our competitors than consumers expectations. This, therefore, makes it easier to pass on any production-based inflationary pressures due to all manufacturers broadly being in the same position; all seeking to increase prices at similar inflection points.

In the same regard, as consumer spend for carpet averages at £300-500 per room, any marginal increase in price per square metre will have limited impact on them deciding whether or not to proceed with the purchase.

Nonetheless we continue to maintain tight control over costs and inventory to ensure that the Group is well positioned should selling conditions change. To that end, I thought it might be helpful for shareholders to understand the level of variability in our cost base. Victoria is more lowly geared operationally than I suspect some shareholders appreciate. Over half of Victoria's cost base fluctuates directly with sales (e.g. raw materials and energy) and a further circa 30% is capable of being varied within a few weeks (e.g. labour, logistics and marketing costs), should conditions change.

Growth in earnings per share will continue from both organic improvements and acquisitions. There is no shortage of opportunities both in the UK and Europe - although we take care to only proceed once we are confident the last acquisition has been properly integrated. Our strong positive cash-flow, together with supportive bankers and shareholders ensure further acquisition-based growth can be funded. By maintaining very strict criteria and strong price discipline, I am confident acquisitions will continue to be earnings enhancing and a useful tool to both strengthen the Group and create wealth for shareholders.

Therefore, once again, I am pleased to say the Board faces the balance of the financial year with a positive outlook.

	Condensed Consolidated Income Statement
	For the 26 weeks ended 1 October 2016 (unaudited)
				26 weeks ended 1 October 2016				27 weeks ended 3 October 2015 (1)				53 weeks ended 2 April 2016 (Audited)
				Underlying performance	Non- underlying items	Reported numbers		Underlying performance	Non- underlying items	Reported numbers		Underlying performance	Non- underlying items	Reported numbers
								re-stated	re-stated	re-stated
			Notes	£000	£000	£000		£000	£000	£000		£000	£000	£000
	Continuing operations
	Revenue		3	153,405	-	153,405		105,607	-	105,607		255,174	-	255,174
	Cost of sales			(103,007)	-	(103,007)		(70,365)	-	(70,365)		(169,930)	(249)	(170,179)
	Gross profit			50,398	-	50,398		35,242	-	35,242		85,244	(249)	84,995
	Distribution costs			(29,285)	-	(29,285)		(22,754)	-	(22,754)		(49,852)	(157)	(50,009)
	Administrative expenses (including intangible amortisation)			(6,997)	(2,440)	(9,437)		(4,732)	(1,525)	(6,257)		(13,753)	(3,787)	(17,540)
	Other operating income			291	-	291		130	-	130		292	-	292
	Operating profit/(loss)			14,407	(2,440)	11,967		7,886	(1,525)	6,361		21,931	(4,193)	17,738
	Comprising:
	Operating profit before exceptional items and intangible amortisation		3	14,407	-	14,407		7,886	-	7,886		21,931	-	21,931
	Intangible amortisation			-	(1,946)	(1,946)		-	(197)	(197)		-	(2,315)	(2,315)
	Asset impairment			-	-	-		-	-	-		-	(160)	(160)
	Exceptional items		3,4	-	(494)	(494)		-	(1,328)	(1,328)		-	(1,718)	(1,718)
	Finance costs		5	(2,116)	(1,470)	(3,586)		(1,531)	(975)	(2,506)		(3,714)	(4,734)	(8,448)
	Profit/(loss) before tax			12,291	(3,910)	8,381		6,355	(2,500)	3,855		18,217	(8,927)	9,290
	Taxation		6	(2,802)	395	(2,407)		(1,458)	-	(1,458)		(4,302)	961	(3,341)
	Profit/(loss) for the period from continuing operations			9,489	(3,515)	5,974		4,897	(2,500)	2,397		13,915	(7,966)	5,949
	Loss for the period from discontinued operations			-	-	-		-	(1,746)	(1,746)		-	(2,132)	(2,132)
	Profit/(loss) for the period			9,489	(3,515)	5,974		4,897	(4,246)	651		13,915	(10,098)	3,817
	Earnings per share from continuing operations (2)
	basic (pence)		7			6.57				3.23				7.22
	diluted (pence)		7			6.46				3.29				7.11
	Earnings per share (2)
	basic (pence)		7			6.57				0.88				4.63
	diluted (pence)		7			6.46				0.98				4.60

(1) Re-stated to reflect the new accounting policy adopted in relation to expenditure on sampling assets and the change in accounting treatment of the Business Growth Fund Loan to split the debt and equity components. The effects of these changes were detailed in Note 31 of the Annual Report and Accounts for the 53 weeks ended 2 April 2016.

(2) The prior year earnings per share metrics have been recalculated to reflect the five for one share split which was effective from 12 September 2016.

Condensed Consolidated Statement of Comprehensive Income For the 26 weeks ended 1 October 2016 (unaudited)
					26 weeks ended 1 October 2016	27 weeks ended 3 October 2015	53 weeks ended 2 April 2016
						(re-stated)	(Audited)
					£000		£000
Profit for the period					5,974	651	3,817
Other Comprehensive (expense)/income:
Items that will not be reclassified to profit or loss:
Actuarial (losses)/gains on pension scheme					(6,550)	329	(152)
Increase/(decrease) in deferred tax asset relating to pension scheme liability					1,214	(60)	53
Total items that will not be reclassified to profit or loss					(5,336)	269	(99)
Items that may be reclassified subsequently to profit or loss
Currency translation gains/(losses)					1,716	(1,533)	708
Totals items that may be reclassified subsequently to profit or loss					1,716	(1,533)	708
Other comprehensive (expense)/income for the year, net of tax					(3,620)	(1,264)	609
Total comprehensive income/(loss) for the year attributable to the owners of the parent					2,354	(613)	4,426

Condensed Consolidated Balance Sheet
As at 1 October 2016 (unaudited)
					1 October 2016	3October  2015	2 April 2016
						(re-stated)	(Audited)
					£000	£000	£000
Non-current assets
Goodwill					48,949	68,389	37,205
Intangible assets					42,174	8,661	43,476
Property, plant and equipment					41,220	35,206	38,811
Investment property					180	180	180
Deferred tax asset					4,818	3,148	3,287
Total non-current assets					137,341	115,584	122,959
Current assets
Inventories					63,261	54,679	58,970
Trade and other receivables					46,415	45,767	42,562
Cash at bank and in hand					21,501	7,846	19,078
Other financial assets					374	180	384
Total current assets					131,551	108,472	120,994
Total assets					268,892	224,056	243,953
Current liabilities
Trade and other payables					70,488	60,493	66,913
Current tax liabilities					3,750	2,630	2,891
Other financial liabilities					617	3,644	596
Total current liabilities					74,855	66,767	70,400
Non-current liabilities
Trade and other payables					14,850	10,735	11,524
Other financial liabilities					87,617	84,690	78,522
Deferred tax liabilities					8,393	1,681	9,129
Retirement benefit obligations					9,734	2,665	3,345
Total non-current liabilities					120,594	99,771	102,520
Total liabilities					195,449	166,538	172,920
Net assets					73,443	57,518	71,033
Equity
Share capital					4,548	4,370	4,548
Share premium					52,467	44,164	52,462
Retained earnings					15,695	8,302	13,341
Other reserves					733	682	682
Total equity					73,443	57,518	71,033

Condensed Consolidated Statement of Changes in Equity
For the 26 weeks ended 1 October 2016 (unaudited)
					Share	Share	Retained	Other	Total
					capital	premium	earnings	reserves	equity
					£000	£000	£000	£000	£000
At 28 March 2015 (re-stated)					3,639	10,144	8,915	682	23,380
Profit for the period to 3 October 2015					----	----	651	----	651
Other comprehensive loss for the period					----	----	(1,264)	----	(1,264)
Total comprehensive loss					----	----	(613)	----	(613)
Issue of share capital					731	34,020	----	----	34,751
Transactions with owners					731	34,020	----	----	34,751
At 3 October 2015 (re-stated)					4,370	44,164	8,302	682	57,518
At 28 March 2015 (re-stated)					3,639	10,144	8,915	682	23,380
Profit for the period to 2 April 2016					----	----	3,817	----	3,817
Other comprehensive income for the period					----	----	609	----	609
Total comprehensive income					----	----	4,426	----	4,426
Issue of share capital					909	42,318	----	----	43,227
Transactions with owners					909	42,318	----	----	43,227
At 2 April 2016					4,548	52,462	13,341	682	71,033
At 3 April 2016					4,548	52,462	13,341	682	71,033
Profit for the period to 1 October 2016					----	----	5,974	----	5,974
Other comprehensive loss for the period					----	----	(3,620)	----	(3,620)
Total comprehensive income					----	----	2,354	----	2,354
Issue of share capital					----	5	----	----	5
Movement in other reserves					----	----	----	51	51
Transactions with owners					----	5	----	51	56
At 1 October 2016					4,548	52,467	15,695	733	73,443

Condensed Consolidated Statements of Cash Flows
For the 26 weeks ended 1 October 2016 (unaudited)
					26 weeks ended 1 October 2016	27 weeks ended 3 October 2016	53 weeks ended 2 April 2016
						(re-stated)	(Audited)
				Notes	£000	£000	£000
Cash flows from operating activities
Operating profit from continuing operations					11,967	6,361	17,738
Adjustments for:
- Depreciation charges					5,829	4,689	10,347
- Amortisation of intangible assets					1,946	197	2,315
- Goodwill adjustment					----	----	(43)
- Asset impairment					----	----	160
- Profit on disposal of property, plant and equipment					(1)	(129)	(143)
- Defined benefit pension cash contributions					(221)	----	----
- Exchange rate difference on consolidation					235	(425)	594
Net cash flow from operating activities before movements in working capital					19,755	10,693	30,968
Change in inventories					(1,592)	(3,666)	(7,767)
Change in trade and other receivables					(1,190)	(683)	215
Change in trade and other payables					(3,034)	2,495	7,628
Cash generated by continuing operations					13,939	8,839	31,044
Interest paid					(1,841)	(1,392)	(3,243)
Income taxes paid					(2,721)	(1,627)	(3,243)
Net cash flow from discontinued operations					----	65	65
Net cash inflow from operating activities					9,377	5,885	24,623
Investing activities
Purchases of property, plant and equipment					(6,030)	(4,896)	(9,752)
Proceeds from disposal of Westwood Yarns Limited					----	-----	431
Proceeds on disposal of property, plant and equipment					48	827	1,034
Deferred consideration and earn-out payments					(8,332)	(5,155)	(7,453)
Acquisition of subsidiaries net of cash acquired					----	(16,478)	(19,265)
Net cash used in investing activities					(14,314)	(25,702)	(35,005)
Financing activities
Increase/(decrease) in long term loans					7,385	(657)	(4,573)
Issue of share capital					----	34,592	43,043
Repayment of obligations under finance leases/HP					(475)	(539)	(650)
Net cash generated by financing activities					6,910	33,396	37,820
Net increase in cash and cash equivalents					1,973	13,579	27,438
Cash and cash equivalents at beginning of period					19,078	(8,502)	(8,502)
Effect of foreign exchange rate changes					450	(177)	142
Cash and cash equivalents at end of period				8	21,501	4,900	19,078

Notes to the Condensed Half-Year Financial Statements

1	General information
	These condensed consolidated financial statements for the 26 weeks ended 1 October 2016 have not been audited or reviewed by the Auditors.  They were approved by the Board of Directors on 21 November 2016.
	The information for the 53 weeks ended 2 April 2016 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 Auditors' 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 53 weeks ended 2 April 2016, 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 27 to 33 of the Group's audited financial statements for the 53 weeks ended 2 April 2016.
	Having reviewed the Group's projections, and taking account of reasonable 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.
	Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements of the Group.
3	Segmental information
	The Group is organised into two operating divisions, the sale of floorcovering products in the UK and Australia.
	Geographical segment information for revenue, operating profit and a reconciliation to entity net profit is presented below.

Income statement
	26 weeks ended 1 October 2016					27 weeks ended 3 October 2015
	UK	Australia	Unallocated central expenses	Total		UK	Australia	Unallocated central expenses	Total
						re-stated	re-stated		re-stated
	£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
Revenue from continuing operations	112,082	41,323	-----	153,405		81,069	24,538	-----	105,607
Underlying operating profit	11,062	4,141	(796)	14,407		6,420	1,964	(498)	7,886
Non-underlying operating items	(1,578)	(368)	-----	(1,946)		(197)	-----	-----	(197)
Exceptional operating items	-----	-----	(494)	(494)		-----	-----	(1,328)	(1,328)
Operating profit from continuing operations	9,484	3,773	(1,290)	11,967		6,223	1,964	(1,826)	6,361
Underlying interest charges				(2,116)					(1,531)
Non-underlying finance costs				(1,470)					(975)
Profit before tax from continuing operations				8,381					3,855
Tax				(2,407)					(1,458)
Profit after tax from continuing operations				5,974					2,397
Loss from discontinued operations *				-----					(1,746)
Profit for the period				5,974					651
* Loss from discontinued operations relates to the disposal of Westwood Yarns Limited, which was sold on 2 October 2015. Management information is reviewed on a segmental basis to operating profit.
Other segmental information
	26 weeks ended 1 October 2016					27 weeks ended 3 October 2015
	UK	Australia	Unallocated central liabilities	Total		UK	Australia	Unallocated central liabilities	Total
						re-stated	re-stated		re-stated
	£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
Depreciation (from continuing operations)	4,612	1,217	-----	5,829		3,755	934	-----	4,689
Amortisation of acquired intangibles	1,578	368	-----	1,946		197	-----	-----	197
	6,190	1,585	-----	7,775		3,952	934	-----	4,886
	26 weeks ended 1 October 2016					27 weeks ended 3 October 2015
	UK	Australia	Unallocated central expenditure	Total		UK	Australia	Unallocated central expenditure	Total
						re-stated	re-stated		re-stated
	£'000	£'000	£'000	£'000		£'000	£'000	£'000	£'000
Capital expenditure (from continuing operations)	5,092	938	-----	6,030		4,298	598	-----	4,896

4	Exceptional Items from continuing operations
						26 Weeks		27 Weeks
						ended  1 Oct 2016		ended  3 Oct 2015
						£000		£000
	(a)  Acquisition costs					494		1,066
	(b)  Bank refinancing costs					-----		262
						494		1,328
	All exceptional items are classified within administrative expenses.
	(a) Professional fees in connection with prospecting and completing acquisitions during the period.
	(b) The prior year bank refinancing cost was in connection with establishing the Company's multi-currency revolving facility with existing Group bankers, Barclays and HSBC.
5	Finance costs
						26 Weeks		27 Weeks
						ended   1 Oct 2016		ended  3 Oct 2015
						£000		£000
	Interest on loans and overdrafts wholly repayable within five years					1,512		900
	Interest payable on BGF loan					572		586
	Hire purchase and finance lease interest					32		45
	Underlying interest costs					2,116		1,531
	(a) BGF loan and option, redemption premium charge					90		90
	(b) Unwinding of present value of deferred and contingent consideration					1,317		885
	(c) Mark to market adjustment on foreign exchange forward contracts					63		-----
	Non-underlying costs					1,470		975
	Total finance costs					3,586		2,506
	(a) Non-cash annual cost of the redemption premium in relation to the BGF loan and option.
	(b) Deferred and contingent consideration in respect to acquisitions is measured under IFRS 3, initially at fair value discounted for the time value of money. The present value is then re-measured at each half-year and year-end to unwind the time value of money.  In addition, any changes arising from actual and forecast business performance are reflected, although such movements form an immaterial portion of the overall annual charge.  All such adjustments are non-cash items.
	(c) Non-cash fair value adjustment on foreign exchange forward contracts.
6	Tax from continuing operations
						26 Weeks		27 Weeks
						ended  1 Oct 2016		ended  3 Oct 2015
						£000		£000
								re-stated
	Current tax
	- Current year  UK					2,392		1,637
	- Current year overseas					1,187		637
						3,579		2,274
	Deferred tax
	- Credit recognised in the current year					(1,236)		(796)
	- Adjustments in respect of prior years					64		(20)
						(1,172)		(816)
	Total tax					2,407		1,458
	The overall corporation tax rate is 22.8% (2015: 22.9%), representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year.

7	Earnings per share
	The calculation of the basic, adjusted and diluted earnings per share is based on the following data:
					26 Weeks	26 Weeks	27 Weeks	27 Weeks
					ended 1 Oct 2016	ended  1 Oct 2016	ended  3 Oct 2015	ended  3 Oct 2015
					Basic	Adjusted	Basic	Adjusted
					£'000	£'000	£'000	£'000
	Profit attributable to ordinary equity holders of the parent entity from continuing operations				5,974	5,974	2,397	2,397
	Exceptional items:
	Amortisation of acquired intangibles				----	1,946	----	197
	Acquisition costs				----	494	----	1,066
	Unwinding of present value of deferred and contingent consideration				----	1,317	----	885
	BGF loan and option, redemption premium charge				----	90	----	90
	Release of prepaid finance costs				----	----	----	262
	Mark to Market adjustment on foreign exchange forward contracts and interest rate swap				----	63	----	----
	Tax effect on adjusted items where applicable				----	(395)	----	----
	Earnings for the purpose of basic and adjusted earnings per share from continuing operations				5,974	9,489	2,397	4,897
	Loss attributable to ordinary equity holders of the parent entity from discontinued operations				----	----	(1,746)	----
	Earnings for the purpose of basic and adjusted earnings per share				5,974	9,489	651	4,897

	Weighted average number of shares
									2016	2015
									Number of	Number of
									shares ('000)	shares ('000)
									(1)	(1)
	Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share								90,967	74,300
	Effect of dilutive potential ordinary shares:
	BGF share options								2,973	1,215
	Weighted average number of ordinary shares for the purposes of diluted earnings per share								93,940	75,515
	(1) The number of shares in issue increased by  a factor of five on 12 September 2016 following approval  of a five-for-one share split at the AGM on 9 September 2016.  The weighted average number of shares in issue over the period has been determined on this new basis.
	The potential dilutive effect of the share options has been calculated in accordance with IAS 33 using the average share price in the period.
	The Group's earnings/(loss) per share are as follows:
									2016	2015
										re-stated
									Pence	Pence
	Earnings per share from continuing operations
	Basic adjusted								10.43	6.59
	Diluted adjusted								10.10	6.48
	Basic								6.57	3.23
	Diluted 1								6.46	3.29
	Loss per share from discontinued operations
	Basic								----	(2.35)
	Diluted 1								----	(2.35)
	Earnings per share
	Basic adjusted								10.43	6.59
	Diluted adjusted								10.10	6.48
	Basic								6.57	.88
	Diluted 1								6.46	.98
	1 Earnings for the purpose of diluted (basic) earnings per share have been adjusted to add back the Business Growth Fund  ('BGF') redemption premium charge as this cost is only incurred if the BGF share options are not exercised.
	The prior year earnings per share metrics have been recalculated to reflect the five for one share split which was effective from 12 September 2016.

8	Analysis of net debt
				At 2 April 2016	Cash flow	Capital expenditure under finance leases/HP	Other non-cash changes	Exchange movement	At 1 October 2016
				£000	£000	£000	£000	£000	£000
	Cash			19,078	1,973	----	----	450	21,501
	Cash and cash equivalents			19,078	1,973	----	----	450	21,501
	Finance leases and hire purchase agreements
	- Payable less than one year			(596)	264	----	(280)	(5)	(617)
	- Payable more than one year			(513)	211	(657)	280	(20)	(699)
	Bank loans
	- Payable more than one year			(69,280)	(7,385)	----	----	(1,242)	(77,907)
	BGF loan
	- Payable less than one year			----	----	----	----	----	----
	- Payable more than one year			(9,796)	----	----	(163)	----	(9,959)
	Net debt			(61,107)	(4,937)	(657)	(163)	(817)	(67,681)
	Prepaid finance costs			1,067	75	----	(194)	----	948
	Net debt including prepaid finance costs			(60,040)	(4,862)	(657)	(357)	(817)	(66,733)
9	Acquisition of subsidiaries
	Ezi Floor Limited
	On 30 September 2016, the Group acquired UK underlay manufacturer Ezi Floor Limited, for an initial cash consideration of £6.5m and deferred cash consideration of £6.5m, payable in annual instalments over four years.  Additional contingent cash consideration up to a maximum of £6.5m is wholly dependent on improved EBITDA over the next four years. The principal activity of Ezi Floor is the manufacture and distribution of a range of underlay and underlay accessories for both the residential and contract markets. Ezi Floor sells to wholesalers, retail groups, and independent stores throughout the UK. The acquisition is expected to be immediately accretive to the underlying earnings per share of the Company.
	The Group results for the 26 weeks ended 1 October 2016 do not include any revenue or profit from Ezi Floor as it was acquired at the end of the first half period.
	The valuation exercise to identify intangible assets acquired, as required under IFRS3, has not been finalised as at the half year. The valuation will be reflected in the Annual Report and Accounts for the Group for the year ending 1 April 2017 together with the IFRS 3 disclosures. Accordingly, an element of the Goodwill recorded on the balance sheet as at 1 October 2016 will be reclassified to Intangible assets once the IFRS 3 valuation has been completed.
10	Rates of exchange
	The results of the Group's overseas subsidiary has been translated into Sterling at the average exchange rates prevailing during the periods.  The balance sheet is translated at the exchange rates prevailing at the period ends:
							26 Weeks	27  Weeks	53  weeks
							ended 1 Oct 2016	ended    3 Oct 2015	ended  2 April 2016
	Australia (A$) - average rate						1.8196	2.0489	2.0327
	Australia (A$) - period end						1.6942	2.1544	1.8526

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 9 of the Group's 2016 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
Geoffrey Wilding
Chairman
21 November 2016

 

END

 

 

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