REG - Victoria PLC - Final Results <Origin Href="QuoteRef">VCP.L</Origin> - Part 1
RNS Number : 2951QVictoria PLC29 August 201429 August 2014
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Final Results
for the year ended 29 March 2014 and Notice of AGM
Victoria PLC (AIM: VCP), a manufacturer, supplier and distributor of design-led carpets and other floorcoverings, is pleased to announce its full year results for the year ended 29 March 2014.
The Annual Report and Accounts are being posted to shareholders today and are also available on the Company's website at www.victoriaplc.com.
Financial Highlights
Year ended
Year ended
29 March
30 March
2014
2013
Revenue
71.39m
70.91m
Operating profit/(loss) before exceptional items*
2.58m
(0.50)m
Profit/(loss) before tax and exceptional items*
2.05m
(0.96)m
Profit/(loss) before tax *
2.28m
(3.34)m
Net debt
1.48m
7.51m
Earnings/(loss) per share
Basic
24.52p
(39.56)p
Basic adjusted
27.12p
(10.95)p
* from continuing operations
Operational Highlights:
Acquisition of Westex seamlessly integrated and significantly earnings enhancing for the Group
The UK achieved like-for-like sales growth of 1.7% to 28.21m (2013: 27.73m), excluding the impact of Westex
Australian sales were marginally down by 1.1% on the prior year at A$65.40m, impacted by slower economic growth and the competitive trading environment
Ongoing focus on generating cash, including the sale and leaseback of certain properties, has significantly reduced the Group's debt levels at the end of the year
New product ranges successfully launched in the period to address evolving market trends
Geoff Wilding, Chairman of Victoria PLC commented:
"2014 marked a significant improvement in Victoria's financial position. Much of the underlying improvement has come from our relentless day-to-day focus on costs, margins and sales growth.
We were very pleased to acquire Westex, arguably the UK's premium tufted carpet manufacturer.
We completed the rationalisation of our spinning mills in Australia, significantly improving our operational efficiencies in this market.
We are encouraged by the outlook for our business, with the UK residential property market showing signs of increased consumer confidence. The Australian market is also showing signs of economic improvement, which will, in time, translate into consumer confidence and increased demand for carpet.
With the reshaping of the business that has already occurred, together with the improving market conditions and other opportunities that we see, I am optimistic about the Group's future.
Our mission is to create wealth for our shareholders, rewarding them for their investment in and support for the Group."
- Ends -
For more information contact:
Victoria PLC
Geoff Wilding
Alexander Anton
+44 (0) 207 440 7520
Cantor Fitzgerald Europe (Nominated Adviser)
Rick Thompson, David Foreman (Corporate finance)
Richard Redmayne (Corporate broking)
+44 (0) 20 7894 7000
MHP Communications (Financial PR)
Nick Denton
+44 (0) 20 3128 8100
Chairman's Statement
I am pleased to advise shareholders that the financial year for 2014 marked a significant improvement in Victoria's financial position:
Group revenues grew by 0.7% (6.8% in constant currency terms) from 70.91m to 71.39m
Group operating profit before exceptional items from continuing operations increased from a loss of 0.50m to a profit of 2.58m, as a result of continued improvements in like-for-like group profitability and the acquisition of the Globesign group ('Westex')
Group profit before tax and exceptional items from continuing operations increased from a loss of 0.96m to a profit of 2.05m
After exceptional items, the Group recorded a profit before tax from continuing operations of 2.28m, compared with a 3.34m loss before tax in the prior year
Group debt as at year end was 1.48m, compared with 7.51m in 2013, reflecting the successful restructuring of the Group
Review:
There are a number of factors that have contributed to our change in fortunes but I would like to highlight a few specific actions over the period:
Much of the underlying improvement has come from a relentless day-to-day focus on costs, margins, and sales growth. The success of this is a credit to the Group's employees who have needed to adjust in a relatively short time to a new culture and I would like to thank them for their efforts and focus. I would also like to take this opportunity to sincerely thank our retailers whose loyal support and business has been vital to our plans.
We were very pleased to acquire Westex during 2014. Westex is arguably the UK's premium tufted carpet manufacturer, and is run by talented and committed individuals who, I am delighted to say, have committed to remain at the business for a minimum of five years. In 2014, Westex generated profits of 4.53m although the contribution to Victoria's profit before tax was 1.17m, reflecting the fact that we owned the business for just three months of the financial year.
Our ongoing focus on generating cash has significantly reduced the Group's debt levels - from 7.51m at the end of 2013 to 1.48m as at the end of 2014 - even after the payment of 16.00m to the shareholders of Westex.
Although Victoria has long owned its factories, it is difficult to see any genuine competitive advantage in ownership of the land and buildings. Victoria is a carpet manufacturer, not a property investor, and the Board has formed the view that the capital locked up in real estate is generally better employed in carpet manufacturing and distribution operations. There will be circumstances where it is worthwhile to retain ownership of the real estate, but during 2014 we have sold our operational real estate in Australia and the Company's property at Kidderminster, by way of sale and lease back.
In last year's report to shareholders I outlined the proposed rationalisation of the Company's spinning mills in Australia to one site at Bendigo and this consolidation has now been completed. Costs associated with this move totalled 0.78m in 2014 but it has significantly improved operating efficiencies in Australia, ensuring we remain competitive.
As part of our strategy to dispose of non-core and underperforming assets we have successfully sold the Canadian interior decorating retailer, Colin Campbell, realising a small premium to the carrying value. The business had never generated a meaningful return to Victoria and it did not have any strategic value so in 2013 we bought out the other 50% shareholder, which enabled us to deal freely with the business - a move which resulted in us being able to achieve a sale.
Post balance sheet date the Board was delighted to deliver on its commitment to shareholders at the time of its appointment and be able to pay a special dividend of 2.92 per share in July - bringing the total payment to shareholders since they approved the Contract for Differences ("CFD") to 3.00 per share. This act also enabled the CFD to be terminated and remove any uncertainty around this arrangement. 100% of the proceeds of the CFD were reinvested into Victoria demonstrating my commitment to, and confidence in, the future of the business.
Dividend
The very large dividend paid in July 2014 has led to the decision that a final dividend will not be paid this year. However the Board would like to send a clear signal to shareholders of the Company's commitment to paying dividends as part of its plan to create wealth for shareholders and it is intended to recommence dividends next year.
Board Changes
As announced in May 2014, the Board of Victoria was further strengthened with the appointment of Terry Danks, the existing Company Secretary of the Group and Finance Director of Victoria Carpets Limited.
Outlook
We are encouraged by the improving UK residential property market. Although new homes are a useful source of revenue, by far the most important driver of carpet sales is home-owners redecorating/refurbishing their homes. Consumer confidence and home sales are the underlying factors for this activity.
After a very difficult couple of years there are also promising signs of economic improvement in Australia, which will, in time, translate into consumer confidence and increasing demand for carpet.
To help shareholders understand the underlying earnings of Victoria I have set out in the table below a summary of the operating profits of each component of the Group.
EBIT 000's
2012
2013
2014
Existing UK
308
(1,820)
403
Westex
3,341
3,698
4,538
Australia (A$)
4,786
3,104
2,876
Australia ()
3,134
2,027
1,686
PLC
(859)
(705)
(682)
Total
5,924
3,200
5,945
Notes:
1. Westex earnings are for the 12 months ending 28 February of each year (their former balance sheet date); all other earnings are for Victoria's financial year
2. All numbers exclude exceptional items
3. Existing UK incorporates Victoria Carpets Limited and Westwood Yarns Limited
Our Mission
I would like to finish this report by highlighting Victoria PLC's commitment to create wealth for shareholders. It is the benchmark against which all management and board decisions are measured. The means by which we do this is by the manufacture and distribution of some of the finest floor coverings in the UK and Australia, but the objective is to reward shareholders for their investment in, and support for, Victoria PLC.
I am pleased to say that over the last 18 months many of the Group's management have bought shares (most of them for the first time) on market with their own cash reflecting their belief in Victoria PLC. Their personal investment ensures they think and act in the best interests of shareholders because they are shareholders.
In summary, with the reshaping of the business that has already occurred, together with the improving market conditions and other opportunities that we see, I am optimistic about the Group's future.
Operating and Financial Review
Operational Review
United Kingdom
Whilst the improving UK economic position has been well documented during this financial period, market conditions remain highly competitive and consumers remain cautious over spend on high value items after a sustained period of below inflationary wage growth.
With the market trend towards less expensive products, Victoria launched a number of product ranges in the financial period to reflect this.
The UK achieved like for like sales growth of 1.7% from 27.73m to 28.21m, which excludes the impact of the acquisition of Westex.
The UK underlying operating performance (excluding Westex) has improved from an operating loss of 1.82m in 2013 to an operating profit of 0.40m in 2014. The turnaround in performance is driven by an improvement in gross margin and a continued focus on reducing the cost base, including the full year benefit of cost saving initiatives undertaken in the second half of 2013.
The UK completed a sale and leaseback of the manufacturing facility in Kidderminster in March 2014, receiving cash of 5.80m.
The acquisition of Westex in December 2013 has contributed sales of 4.83m and an operating profit of 1.17m in the period post acquisition. The annual operating profit of Westex over the past three years is shown within the Chairman's Statement.
As a result of the above, the UK recorded a profit before tax and exceptional items of 1.57m compared to a loss before tax and exceptional items of 2.03m in 2013.
Australia
The Australian economy continues to be impacted by the slowdown in the resources sector and a softening in prices as a result of slowing growth in key markets of China and India. The retail and building & construction sectors are showing progress whilst manufacturing and service sectors continue to struggle.
The direction of the Australian Dollar is critical to the health of the manufacturing sector and to competitiveness in the resources sector and overall unemployment rates. There has been considerable volatility in both the Australian Dollar and New Zealand Dollar during the year and experts are divided over their future direction.
The continued low interest rate environment has fostered significant increases in house prices in both Australia and New Zealand with many major cities showing double digit growth over the past 12 months. This activity has boosted approval and commencements in new building construction in 2014, and driven the turnover and clearance rates of existing properties. Most recent data indicates that building and property activity levels are now moderating heading into 2015.
Sales in the period of A$65.40m were below prior year by 1.1% (A$66.14m), impacted by tough economic conditions and the competitive trading environment.
Whilst reported operating profit has reduced by A$0.23m to A$2.88m on lower sales, the like for like operating profit, after adjusting for property leasing costs during the period was in line with prior year. Cost saving initiatives across the business also delivered and contributed to the underlying operating profit, offsetting additional costs in third party logistics following the failure of a long term partner.
The exit from and closure of the Castlemaine Mill freed up key assets to be transferred to the Bendigo Mill, increasing that plant's capacity and reducing operating costs by year end.
The company completed sale and leasebacks of the manufacturing facility in Dandenong and spinning mill at Bendigo realising cash of A$10.50m in the financial year. The sale of the Castlemaine Mill was completed post year end in May 2014 for A$1.0m.
The company has achieved a significant reduction in working capital, with inventory reduced by A$4.29m (20.9%).
Canada
As noted in the Chairman's Statement, the Group disposed of its Canadian operation Colin Campbell at the end of the financial period. The Canadian operation contributed operating profit of 5k in the period and 77k in prior year. The sale of the business in March 2014 realised a 111k profit.
Financial Review
The Group's financial performance for the year end 29 March 2014 is summarised as follows:
2014
2013
%
m
m
Change
Revenue
71.39
70.91
0.7%
Operating profit/(loss) before exceptional items from continuing operations
2.58
(0.50)
618.3%
Finance Costs
(0.53)
(0.46)
15.2%
Profit/(loss) before tax and exceptional items from continuing operations
2.05
(0.96)
312.9%
Exceptional items
0.23
(2.38)
109.7%
Profit/(loss) before tax from continuing operations
2.28
(3.34)
168.3%
Tax
(0.67)
0.74
190.8%
Profit/(loss) after tax from continuing operations
1.61
(2.60)
161.9%
Profit/(loss) from discontinued operations
0.12
(0.18)
163.7%
Profit/(loss) for the period
1.73
(2.78)
162.1%
Net debt
1.48
7.51
-80.3%
Exceptional Items
The exceptional items for the year end 29 March 2014 are summarised below:
2014
2013
m
m
Profit on sale of properties
3.30
------
Contract for Differences
(1.63)
------
Restructuring of Australia's spinning mills
(0.78)
(0.87)
Acquisition costs
(0.66)
------
Move to AIM
------
(0.23)
Incentive plan
------
(0.23)
General Meeting costs
------
(0.60)
Write off of certain intangible assets
------
(0.44)
0.23
(2.37)
The Group sold its carpet manufacturing facilities in both Australia and the UK during the year and the spinning mill in Bendigo, Australia. These properties are now under operating leases varying from 10 to 20 year terms. The property sales realised a profit of 3.30m, which is recorded in other operating income.
The Contract for Differences charge of 1.63m represents the fair value assessment of the contract at the year-end date and associated professional fees in the period. The fair value calculation was based on the principles of the contract and the market capitalisation as at the year end. Also taken into account were a number of conditions still to be met before the contract could be exercised. The conditions were eventually satisfied in July 2014 resulting in the issue of 7,087,730 ordinary shares for the benefit of Geoffrey Wilding (through Camden Holdings Limited).
The smaller of the two spinning mills in Australia was closed in the first half period to meet reduced volume requirements for woollen yarns as a result of the continuing consumer trend away from wool to synthetic carpets.
Acquisition costs in the period relate to professional fees associated with the acquisition of Westex in December 2013.
Taxation
The tax charge in the year was 0.67m (2013: tax credit of 0.74m), equivalent to an effective tax rate of 28.0%. The Group's tax rate is above the prevailing UK standard rate of 23% impacted by a number of factors including a higher standard rate of 30% in Australia and expenses that are not deductible in determining taxable profit.
Cash Flow and Debt
2014
2013
m
m
Operating profit/(loss) from continuing operations and before exceptional items
2.58
(0.50)
Depreciation and non-cash items
2.55
2.77
Foreign exchange
0.06
0.12
Movement in working capital
4.32
2.12
Operating cash flow (before exceptional items)
9.51
4.51
EBITDA *
5.14
2.33
Operating cash flow conversion % (against EBITDA*)
185.1%
193.7%
* Earnings before interest, tax, depreciation, amortisation and exceptional items.
The Group generated significant operating cash flows in the period (before exceptional items) relative to EBITDA (before exceptional items), driven by a continued focus on reducing working capital levels. In particular, underlying inventories levels have decreased year on year by 4.86m after excluding the impact of the additional inventory on the Group balance sheet following the acquisition of Westex in the period.
2014
2013
m
m
Operating cash flow (before exceptional items)
9.51
4.51
Interest paid
(0.53)
(0.46)
Corporation tax paid
(0.40)
(0.51)
Capital Expenditure
(0.53)
(0.85)
Free cash flow (before exceptional items)
8.05
2.69
Proceeds on disposal of property,plant and equipment
11.70
0.10
Acquisition of Westex
(12.84)
------
Dividends paid
(0.56)
(0.63)
Restructuring of Australia's spinning mills
(0.78)
(0.87)
Dividends and sales proceeds from Colin Campbell
0.50
------
General Meeting, AIM and Incentive Plan costs
------
(1.06)
Other items
(0.04)
0.01
Net cash flow
6.03
0.24
Opening net debt
(7.51)
(7.75)
Closing net debt
(1.48)
(7.51)
Capital expenditure was relatively modest at 0.53m (2013: 0.85m) and significantly below depreciation levels. The Group is well invested with modern plant and equipment and capital expenditure requirements are expected to remain below depreciation levels in the new financial period.
The net cash inflow of 11.70m in the period on disposal of property, plant and equipment principally relates to the sale and leaseback of the properties noted earlier in this review.
The net cash outflow arising in respect to the acquisition of Westex was 12.84m, comprising an initial cash consideration of 16.00m and 0.66m of associated professional fees, partly offset by 3.82m opening cash in Westex.
Net debt levels reduced by 6.03m during the financial year to 1.48m (2013: 7.51m).
Future funding
The Group's annual renewal of its Australia facilities took place in November 2013 and there are no problems anticipated in renewing these facilities on similar terms in November 2014.
The Group's UK facilities comprise a committed 3 year revolving credit facility expiring in July 2015, a new term loan facility to finance the Westex acquisition expiring in December 2016 and an overdraft facility. The facilities are subject to financial covenants measured against Group results and all lending covenants were satisfied at all quarterly test dates throughout the year. There are no problems anticipated in renewing the 3 year revolving credit facility which expires in less than 12 months from the date of this report.
The current facilities across the Group provide sufficient capacity in Australian Dollars, Sterling and Euros to cover all anticipated capital expenditure and working capital requirements in the year ahead.
Key performance indicators (KPI's)
The KPI's monitored by the Group Board are set out in the table below for the year ended 29 March 2014.
2014
2013
2012
Sales growth (constant currency)
6.8%
-7.9%
4.6%
Operating margin (pre exceptional items)
3.6%
-0.6%
3.5%
Return on operating assets (pre exceptional items)
7.1%
-0.9%
5.6%
Earnings/(loss) per share (basic adjusted)
27.1p
-11.0p
23.7p
Net debt to EBITDA*
0.3 times
3.3 times
1.4 times
Interest cover (against EBITDA*)
9.7 times
4.8 times
12.1 times
* Earnings before interest, tax, depreciation, amortisation and exceptional items.
Principal risks and uncertainties
The principal risks facing the business are set out as follows:
Competition
The Group companies operate in mature and highly competitive markets, resulting in pressure on pricing and margins. Management regularly review competitor activity to devise strategies to protect the Group's position as far as possible.
Global Economic conditions
The operating and financial performance of the Group is influenced by economic conditions in the geographic areas it operates, particularly the UK, Eurozone, Australia and the USA. The Group remains focussed on driving operational efficiency improvements, cost reductions and ongoing product development to adapt to the current market and economic conditions.
Key input prices
Material adverse changes in certain raw material prices, in particular wool prices, could affect the Group's profitability. These prices are closely monitored and forward contracts placed to help manage shorter term volatility.
Geoffrey Wilding
Executive Chairman
Consolidated Income Statement
For the 52 weeks ended 29 March 2014
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
Re-stated
Notes
000
000
Continuing operations
Revenue
1
71,386
70,909
Cost of sales
(50,544)
(53,679)
Gross profit
20,842
17,230
Distribution costs
(13,804)
(14,041)
Administrative expenses
(7,914)
(6,230)
Other operating income
3,688
168
Operating profit/(loss)
2,812
(2,873)
Analysed between:
Operating profit/(loss) before exceptional items
1
2,581
(498)
Exceptional items
3
231
(2,375)
.
Finance costs
(531)
(465)
Profit/(loss) before tax
1
2,281
(3,338)
Taxation
(672)
738
Profit/(loss) for the period from continuing operations
1,609
(2,600)
Profit/(loss) for the period from discontinued operations
1
116
(182)
Profit/(loss) for the period
1,725
(2,782)
Earnings/(loss) per share -
pence
basic
2
24.52
(39.56)
diluted
2
24.52
(39.56)
Earnings/(loss) per share from continuing operations - pence
basic
2
22.87
(36.97)
diluted
2
22.87
(36.97)
The prior year Consolidated Income Statement was re-stated due to the sale of Colin Campbell & Sons Limited, which is now shown separately under discontinued operations.
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 29 March 2014
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
000
000
Exchange differences on translation of foreign operations
(5,078)
1,597
Amounts which may be subsequently reclassified to profit or loss
(5,078)
1,597
Profit/(loss) for the period
1,725
(2,782)
Total comprehensive loss for the period
(3,353)
(1,185)
Consolidated and Company Balance Sheets
As at 29 March 2014
Group
Company
29 March
2014
30 March
2013
29 March
2014
30 March
2013
000
000
000
000
Non-current assets
Goodwill
2,735
------
------
------
Intangible assets
4,953
248
------
------
Property, plant and equipment
18,681
23,778
------
4,966
Investment property
180
180
180
180
Investment in subsidiary undertakings
------
------
27,126
3,322
Deferred tax asset
1,441
1,323
285
------
Total non-current assets
27,990
25,529
27,591
8,468
Current assets
Inventories
21,203
20,866
------
------
Trade and other receivables
13,964
11,163
16,177
4,281
Current tax assets
------
361
------
------
Cash at bank and in hand
15,192
1,091
13,151
------
Assets held for sale
547
389
------
56
Total current assets
50,906
33,870
29,328
4,337
Total assets
78,896
59,399
56,919
12,805
Current liabilities
Trade and other payables
17,496
9,624
3,128
229
Current tax liabilities
1,162
------
------
------
Other financial liabilities
5,406
7,709
5,267
4,246
Total current liabilities
24,064
17,333
8,395
4,475
Non-current liabilities
Trade and other payables
7,716
1,954
6,804
------
Other financial liabilities
11,267
890
9,733
500
Deferred tax liabilities
1,210
749
------
471
Total non-current liabilities
20,193
3,593
16,537
971
Total liabilities
44,257
20,926
24,932
5,446
Net assets
34,639
38,473
31,987
7,359
Equity
Share capital
1,772
1,758
1,772
1,758
Share premium
909
829
909
829
Retained earnings
31,958
35,724
29,306
4,669
Share-based payment reserve
------
162
------
103
Total equity
34,639
38,473
31,987
7,359
Consolidated Statement of Changes in Equity
For the 52 weeks ended 29 March 2014
Share
Share
Retained
Share-based
Total
capital
premium
earnings
payment
equity
reserve
000
000
000
000
000
At 31 March 2013
1,758
829
35,724
162
38,473
Profit for the period
----
----
1,725
----
1,725
Other comprehensive loss for the period
----
----
(5,078)
----
(5,078)
1,758
829
32,371
162
35,120
Transactions with owners:
Dividends paid
----
----
(563)
----
(563)
Movement in share-based payment reserve
----
----
----
(12)
(12)
Transfer of share-based payment reserve to retained earnings
----
----
150
(150)
----
Issue of share capital in connection with exercise of share options under LTIP plan
14
80
----
----
94
At 29 March 2014
1,772
909
31,958
----
34,639
At 1 April 2012
1,736
829
37,575
180
40,320
Loss for the period
----
----
(2,782)
----
(2,782)
Other comprehensive income for the period
----
----
1,597
----
1,597
1,736
829
36,390
180
39,135
Transactions with owners:
Dividends paid
----
----
(627)
----
(627)
Movement in share based payment reserve
----
----
----
(18)
(18)
Deferred tax on share option scheme
----
----
(39)
----
(39)
Issue of share capital in connection with exercise of share options under LTIP plan
22
----
----
----
22
At 30 March 2013
1,758
829
35,724
162
38,473
Company Statement of Changes in Equity
For the 52 weeks ended 29 March 2014
Share
Share
Retained
Share-based
Total
capital
premium
earnings
payment
equity
reserve
000
000
000
000
000
At 31 March 2013
1,758
829
4,669
103
7,359
Profit for the period
------
------
25,097
------
25,097
1,758
829
29,766
103
32,456
Transactions with owners:
Dividends paid
------
------
(563)
------
(563)
Transfer of share-based payment reserve to retained earnings
------
------
103
(103)
------
Issue of share capital in connection with exercise of share options under LTIP plan
14
80
------
------
94
At 29 March 2014
1,772
909
29,306
------
31,987
At 1 April 2012
1,736
829
5,802
113
8,480
Loss for the period
------
------
(467)
------
(467)
1,736
829
5,335
113
8,013
Transactions with owners:
Dividends paid
------
------
(627)
------
(627)
Movement in share based payment reserve
------
------
------
(10)
(10)
Deferred tax on share option scheme
------
------
(39)
------
(39)
Issue of share capital in connection with exercise of share options under LTIP plan
22
------
------
------
22
At 30 March 2013
1,758
829
4,669
103
7,359
Consolidated and Company Statements of Cash Flows
For the 52 weeks ended 29 March 2014
Group
Company
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
52 weeks
ended
29 March
2014
52 weeks
Ended
30 March
2013
Notes
000
000
000
000
Net cash inflow/(outflow) from operating activities
5
7,093
1,611
13,263
(1,049)
Investing activities
Purchases of property, plant and equipment
(531)
(850)
-----
----
Proceeds from disposal of Colin Campbell & Sons Limited
324
----
324
----
Dividend received from Colin Campbell & Sons Limited
179
----
179
----
Proceeds on disposal of property, plant and equipment
11,696
96
5,600
8
Acquisition of subsidiary, net of cash acquired, at Group level
(12,176)
----
(16,000)
----
Net cash (used)/generated in investing activities
(508)
(754)
(9,897)
8
Financing activities
Increase in long term loans
10,488
500
9,233
500
Issue of share capital
94
-----
94
-----
Repayment of obligations under finance leases/HP
(14)
(327)
-----
-----
Dividends paid
(563)
(627)
(563)
(627)
Net cash generated/(used) in financing activities
10,005
(454)
8,764
(127)
Net increase/(decrease) in cash and cash equivalents
16,590
403
12,130
(1,168)
Cash and cash equivalents at beginning of period
6
(6,475)
(6,920)
(4,246)
(3,078)
Effect of foreign exchange rate changes
(190)
42
-----
-----
Cash and cash equivalents at end of period
6
9,925
(6,475)
7,884
(4,246)
Notes to the Accounts
1 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/(loss) and a reconciliation to entity net profit/(loss) is presented below.
Income statement
For the 52 weeks ended 29 March 2014
For the 52 weeks ended 30 March 2013
Revenue
Segmental
operating
profit
Exceptional
operating
items
Finance
costs
Profit
before
tax*
Revenue
Segmental
operating
(loss)/ profit
Exceptional
operating
items
Finance
costs
Loss
before
tax*
000
000
000
000
000
000
000
000
000
000
UK
33,047
1,577
-
(9)
1,568
27,729
(1,820)
(442)
(206)
(2,468)
Australia
38,339
1,686
1,824
(138)
3,372
43,180
2,027
(1,082)
(154)
791
71,386
3,263
1,824
(147)
4,940
70,909
207
(1,524)
(360)
(1,677)
Unallocated central expenses
(682)
(1,593)
(384)
(2,659)
(705)
(851)
(105)
(1,661)
Total continuing operations
71,386
2,581
231
(531)
2,281
70,909
(498)
(2,375)
(465)
(3,338)
Tax
(672)
738
Profit/(loss) after tax from
continuing activities
1,609
(2,600)
Profit/(loss) from discontinued operations*
5
111
116
77
(259)
(182)
Profit/(loss) for the period
71,386
2,586
342
(531)
1,725
70,909
(421)
(2,634)
(465)
(2,782)
* Profit/(loss) from discontinued operations relates to the Canadian operation Colin Campbell & Sons Limited, which was sold on 28 March 2014. The result is shown net of tax.
Intersegment sales between the UK and Australia were immaterial in the current and comparative periods.
Management information is reviewed on a segmental basis to profit/(loss) before tax.
Balance Sheet
As at 29 March
As at 30 March
2014
2013
Segment
Segment
Segment
Segment
assets
liabilities
assets
liabilities
000
000
000
000
UK
55,877
24,739
22,203
7,965
Australia
22,000
11,022
36,627
7,912
Assets held for sale
547
----
389
----
Unallocated central assets/liabilities
472
8,496
180
5,049
78,896
44,257
59,399
20,926
Assets held for sale relates to the Castlemaine spinning mill in Australia which was sold in May 2014. The prior year figure relates to the Canadian operation Colin Campbell & Sons Limited which was sold on 28 March 2014.
Other segmental information
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
000
000
Depreciation and amortisation
UK
904
792
Australia
1,650
1,960
2,554
2,752
No other significant non-cash expenses were deducted in measuring segment results.
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
000
000
Capital expenditure
UK
304
593
Australia
227
257
531
850
2 Earnings/(loss) per share
The calculation of the basic, adjusted and diluted earnings/(loss) per share is based on the following data:
Basic
Adjusted
Basic
Adjusted
2014
2014
2013
2013
000
000
000
000
Profit/(loss) attributable to ordinary equity holders of the parent entity
1,725
1,725
(2,782)
(2,782)
Exceptional items (net of tax effect):
Profit on sale of Australia properties
----
(1,823)
----
----
Profit on sale of UK property
----
(693)
----
----
Contract for Differences
----
1,631
----
----
Profit on sale of investment in Colin Campbell & Sons Limited
----
(111)
----
----
Acquisition costs
----
633
----
----
Restructuring of Australia's spinning mills
----
546
----
608
Move to AIM
----
----
----
177
Incentive plan
----
----
----
173
General Meeting costs
----
----
----
459
Write off of certain intangible assets
----
----
----
336
Impairment of investment in associate company
----
----
----
259
Earnings for the purpose of basic and adjusted earnings per share
1,725
1,908
(2,782)
(770)
Earnings for the purpose of basic and adjusted earnings per share
from continuing operations
1,609
1,792
(2,600)
(588)
Weighted average number of shares:
2014
2013
Number of
Number of
shares ('000)
shares ('000)
Weighted average number of ordinary shares for the purposes of basic and adjusted earnings per share
7,036
7,033
The Group's earnings/(loss) per share are as follows:
2014
2013
Pence
Pence
Basic adjusted and diluted adjusted
27.12
(10.95)
Basic and diluted
24.52
(39.56)
Basic adjusted and diluted adjusted from continuing operations
25.47
(8.36)
Basic and diluted from continuing operations
22.87
(36.97)
The issue of 7,087,730 new shares post year-end on the 29 July would have reduced the Group's earnings per share by 50% had they been in place from the start of the financial period.
3 Exceptional Items from continuing operations
52 weeks
ended
29 March
2014
52 weeks
ended
30 March
2013
000
000
(a)Contract for Differences
(1,631)
------
(b) Profit on sale of properties
3,297
------
(c) Restructuring of Australia's spinning mills
(780)
(869)
(d) Acquisition costs
(655)
------
(e) Move to AIM
------
(233)
(f) Incentive plan
------
(227)
(g) General Meeting costs
------
(604)
(h) Write off of certain intangible assets
------
(442)
231
(2,375)
All exceptional items are classified within administrative expenses (except where noted).
(a) Relates to the fair value of the Contract for Differences between the Company and Geoffrey Wilding signed in April 2013, including related professional fees of 26,000. The contract was terminated on 28 July 2014 and resulted in the issue of 7,087,730 new shares to Geoffrey Wilding (through Camden Holdings Limited) on 29 July 2014.
(b) Relates to the profit from the sale and leaseback of Australia's carpet manufacturing facility and spinning mill in Bendigo, and the profit from the sale and leaseback of the carpet manufacturing facility in Kidderminster, UK. This profit is included as part of other operating income.
(c) Relate to costs associated with the "right-sizing" and reorganising the two 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 of the financial period and ceased production by the end of June 2013. The property is shown under the heading 'assets held for sale' in the accounts at 29 March 2014 and was subsequently sold after the year end for its written down value.
(d) Relate to professional fees in connection with the acquisition of Globesign Limited in December 2013.
(e) Relate to costs incurred in the move from the Official List to the AIM market of the London Stock Exchange.
(f) Relate to professional fees in connection with a proposed incentive remuneration plan subsequently withdrawn.
(g) Relate to costs in connection with various General Meetings of the Company, resulting in changes to the
Board composition.
(h) Relates to the write off of intangible assets held in relation to 1) the acquisition of certain assets of C&H Distribution and 2) the Munster brand in respect to the UK contract market where it is no longer used.
4 Rates of exchange
The results of overseas subsidiaries 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:
2014
2013
Average
Year end
Average
Year end
Australia - A$
1.7057
1.7988
1.5317
1.4565
Canada - C$
1.6816
1.8401
1.5841
1.5427
5 Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities
Group
Company
2014
2013
2014
2013
000
000
000
000
Operating profit/(loss) from continuing operations
2,812
(2,873)
24,163
(714)
Adjustments for:
- Depreciation charges
2,484
2,700
60
60
- Amortisation of intangible assets
70
52
----
----
- Impairment of intangible assets
----
442
----
----
- Fair value charge for Contract for Differences
1,605
----
1,605
----
- (Profit)/loss on disposal of property, plant and equipment
(3,324)
13
(693)
(8)
- Exchange rate difference on consolidation
55
124
----
----
Operating cash flows before movements in working capital
3,702
458
25,135
(662)
Decrease/(increase) in working capital
4,317
2,124
(11,488)
(282)
Cash generated/ (used) by operations
8,019
2,582
13,647
(944)
Interest paid
(531)
(465)
(384)
(105)
Income taxes paid
(395)
(506)
----
----
Net cash inflow/(outflow) from operating activities
7,093
1,611
13,263
(1,049)
6 Analysis of net debt
At
30 March
2013
Cash flow
Other
non-cash
canges
Exchange
movement
At
29 March
2014
000
000
000
000
000
Cash
1,091
14,296
----
(195)
15,192
Bank loans payable less than one year and overdrafts
(7,566)
2,294
----
5
(5,267)
Cash and cash equivalents
(6,475)
16,590
----
(190)
9,925
Finance leases and hire purchase agreements
- Payable less than one year
(143)
14
(37)
27
(139)
- Payable more than one year
(390)
----
37
74
(279)
Bank loans payable more than one year
(500)
(10,488)
----
----
(10,988)
Net debt
(7,508)
6,116
----
(89)
(1,481)
7. Post Balance Sheet Events
(a) Special Dividend
A special dividend of 2.92 pence per share was paid to shareholders on 25 July 2014, following the approval by shareholders at a General Meeting on 9 July 2014.
(b) Contract for Differences
A CFD between the Company and Geoffrey Wilding was entered into on 19 April 2013, following shareholder approval at a General Meeting of the Company on 20 February 2013. The CFD was subsequently terminated further to satisfying the condition of returning 3 per share to shareholders. At a General Meeting held on 9th July 2014, shareholders approved the issue of 7,087,730 new shares in settlement of the liability under the CFD upon termination. Following this share issue, the percentage of the Company owned by Geoffrey Wilding (through Camden Holdings Limited) is 50%. The proportion of the cost recognised in the financial period was approximately 15%.
(c) Castlemaine Spinning Mill
The Castlemaine spinning mill, in Australia, was closed during the first half of the financial year and ceased production by the end of June 2013. The property is shown under the heading "Assets held for sale" in the financial statements at 29th March 2014 and was subsequently sold after the year-end for its written down value.
8. The results have been extracted from the audited financial statements of the Group for the 52 weeks ended 29 March 2014. The results do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Whilst the financial information included in this announcement has been computed in accordance with the principles of International Financial Reporting Standards ("IFRS") as adopted by the EU, IFRIC interpretations and Companies Act 2006 that applies to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group has published full financial statements that comply with IFRS. The audited financial statements incorporated an unqualified audit report. The Auditor's report on these accounts did not draw attention to any matters by way of emphasis and did not contain statements under S498(2) or (3) Companies Act 2006.
Statutory accounts for the 52 weeks ended 30 March 2013, which incorporated an unqualified auditor's report, have been filed with the Registrar of Companies. The Auditor's report on these accounts did not draw attention to any matters by way of emphasis and did not contain statements under S498(2) or (3) Companies Act 2006. The accounting policies applied are consistent with those described in the Annual Report & Accounts for the 52 weeks ended 30 March 2013.
9. The Annual Report & Accounts are being posted to shareholders today. Further copies will be available from the Company's Registered Office: Worcester Road, Kidderminster, Worcestershire, DY10 1JR or via the website: www.victoriaplc.com.
10. The Annual General Meeting is being held at the Registered Office of the Company, as above, at 11.00am on Wednesday, 24 September 2014.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR DVLFLZVFFBBE
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