REG - Victoria PLC - Half Yearly Report <Origin Href="QuoteRef">VCP.L</Origin>
RNS Number : 1398XVictoria PLC17 November 201417 November 2014
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Half Year Results
for the 26 weeks ended 27 September 2014
Victoria PLC (AIM: VCP), a manufacturer, supplier and distributor of design-led carpets and other floorcoverings, is pleased to announce its Half Year results for the 26 weeks ended 27 September 2014.
Financial Highlights
H1 2014
H1 2013
Revenue
40.51m
34.53m
Operating profit before exceptional items*
2.78m
0.68m
Profit before tax before exceptional items*
2.40m
0.50m
Exceptional items
(8.12m)
(0.53m)
Loss before tax
(5.72m)
(0.03m)
Net debt
20.20m
2.97m
(Loss)/Earnings per share
Basic
(66.60p)
0.90p
Basic adjusted
19.31p
6.16p
* from continuing operations
Group revenue increased by 17.3% to 40.51m (23.7% in constant currency terms). The acquisition of Globesign Limited ('Westex') in H2 of the prior year is the key contributor to this like for like improvement.
The Group reported a record H1 profit before tax from continuing operations (pre exceptional items*) of 2.40m compared to a profit of 0.50m for the same period last year.
Exceptional items included a 7.55m charge in relation to the Contract for Differences between the Company and Camden Holdings Limited which was terminated in July 2014. Of the 8.12m exceptional charge in the period, 7.87m related to non-cash items.
Net debt has increased by 18.72m from the year end to 20.20m following the special dividend payment of 20.70m in July 2014.
The Group remained cash generative from operating activities.
Post period end, the Group attracted significant long term capital from the Business Growth Fund of 10m.
Operational Highlights:
The Group continued to focus on generating cash, whilst looking for opportunities to further improve the efficiency of the significantly expanded operations.
New product ranges successfully launched in the period to address evolving market trends.
The acquisition of Abingdon Flooring Limited ('Abingdon') was completed three days post period end, broadening the Group's product range and providing the opportunity for significant operational synergies. Abingdon was one of the UK's largest privately owned manufacturers of quality carpets, producing a wide range of products under their market leading brands of Stainfree, Wilton Royal and Distinctive Flooring. For the financial year ended 31 March 2014 Abingdon generated turnover of 75.1m, operating profit of 2.5m and profit before tax of 2.2m.
Geoff Wilding, Chairman of Victoria PLC commented:
"Progress continues at Victoria, with a record H1 profit of 2.4m before exceptional items.
"Although Victoria has grown significantly in the last 12 months, the Group's revenues still represents only a tiny fraction of the markets in which it trades. There is both potential for sales to increase in line with the market and the opportunity to grow market share.
"The board believes it has an appropriate strategy to further improve the Group's performance and is focussed on its execution."
- 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, Michael Reynolds (Corporate Finance)
David Banks (Corporate Broking)
+44 (0) 20 7894 7000
MHP Communications (Financial PR)
Nick Denton
Vicky Watkins
+44 (0) 20 3128 8100
Chairman's Statement
I am pleased to report to shareholders that progress has continued to be made at Victoria and the Group's trading performance in the first half of the current financial year has been encouraging.
Key financial and operational highlights from the first half include:
A record H1 profit of 2.4m before exceptional items. Despite significant increase in some raw material prices, particularly wool, a continued focus on operational efficiencies and the full integration of Westex into the Group has resulted in a very satisfactory outcome.
Payment of a special dividend in July 2014 brought the total dividends received by shareholders in the last 12 months to 3. Camden Holdings Limited subsequently terminated its Contract for Differences with 100% of the proceeds reinvested into the Company by way of a share subscription.
Net debt increased since the end of the financial year to 20.2m. However, the Group remained cash generative during this period and the increased debt is due solely to the payment of the special dividend in July 2014.
On 30 September 2014 (three days after the half year end) Victoria completed the acquisition of Abingdon Flooring Limited. Abingdon was one of the UK's largest privately owned manufacturers of quality carpets, producing a wide range of products under their market leading brands of Stainfree, Wilton Royal and Distinctive Flooring. All key senior management will be remaining with the business and it will continue to operate independently, whilst benefiting from the synergies of an enlarged Group, in its ongoing drive for growth. For the financial year ended 31 March 2014 Abingdon generated turnover of 75.1m, operating profit of 2.5m, profit before tax of 2.2m and net assets were 8.2m (Year ended 31 March 2013: turnover 70.3m, operating profit of 1.6m, profit before tax of 1.4m).
Abingdon is a very well run business that both broadens the product range of the Group and provides the opportunity for significant operational synergies. Victoria has now made two acquisitions aimed at delivering a comprehensive product offering to our retailers. Although we have identified - and are executing - a number of earnings-enhancing synergies, each business will continue to retain management autonomy. It is our view that this provides flexibility, ensures accountability, and keeps management closer to the customer where needs are more readily identified and met.
Also on 30 September 2014 the Business Growth Fund invested 10m in the form of a fully subordinated Growth Bond. This long term capital provides the Company with considerable flexibility in terms of its financing arrangements.
Outlook
We are increasingly encouraged by market conditions.
Although consumer confidence in the markets in which Victoria operates (Australia and the UK) is not high, there are signs that it is improving.
The single most critical driver of carpet sales are housing transactions - the number of houses bought/sold in a market. Although there is a time delay between the two events (typically around 18 months) housing sales are higher in both Australia and the UK than they have been for a number of years.
Shareholders should be encouraged to hear that many employees have in recent months become shareholders - bought with their personal cash - and the motivation, commitment, and belief in the business this engenders should not be underestimated.
Although Victoria has grown significantly in the last 12 months, the Group's revenues still represents only a tiny fraction of the markets in which it trades. This means that not only is there potential for sales to grow as the market grows, but there is also the opportunity to grow market share.
This is not to say we will have it all our own way. Competition remains intense and raw material prices are increasing, both of which keep margins under pressure. We are therefore constantly exploring ways to operate more efficiently. Our increased scale is helping materially with this task.
The Board believes it has an appropriate strategy to further improve the Group's performance and is focussed on its execution.
Risks
It is a key function of the board to identify and manage, where possible, material risks to the business. These risks include market demand, competitive pressures, IT and key plant failure, raw material prices, loss of key staff, and regulatory or legislative changes.
Half-year dividend
As indicated at the time of the Annual Report, the Board has decided it will not declare an interim dividend this year given the very substantial special dividend paid in July 2014.
Geoff Wilding
Chairman
Condensed Consolidated Income Statement
For the 26 weeks ended 27 September 2014 (unaudited)
26 weeks ended
27 Sep 2014
26 weeks ended
28 Sep 2013
Restated
52 weeks
ended
29 Mar 2014
(Audited)
Notes
000
000
000
Continuing operations
Revenue
3
40,506
34,527
71,386
Cost of sales
(27,157)
(25,295)
(50,544)
Gross profit
13,349
9,232
20,842
Distribution costs
(7,492)
(6,918)
(13,804)
Administrative expenses
(11,397)
(2,361)
(7,914)
Other operating income
203
202
3,688
Operating (loss)/profit
(5,337)
155
2,812
This number includes:
Operating profit before exceptional items
3
2,782
683
2,581
Exceptional items
4
(8,119)
(528)
231
Finance costs
(381)
(188)
(531)
(Loss)/profit before tax
3
(5,718)
(33)
2,281
Taxation
5
(576)
(23)
(672)
(Loss)/profit for the period from continuing operations
(6,294)
(56)
1,609
Profit for the period from discontinued operations
----
119
116
(Loss)/profit for the period
(6,294)
63
1,725
(Loss)/earnings per share - pence
basic
6
(66.60)
0.90
24.52
diluted
6
(66.60)
0.89
24.52
The Consolidated Income Statement for the 26 weeks ended 28 September 2013 has been re-stated due to the sale of Colin Campbell & Sons Limited on 28 March 2014, which is now shown separately under discontinued operations.
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 27 September 2014 (unaudited)
26 weeks
ended
27 Sep 2014
26 weeks
ended
28 Sep 2013
52 weeks
ended
29 Mar 2014
(Audited)
000
000
000
Exchange differences on translation of foreign operations
(388)
(4,514)
(5,078)
Other comprehensive loss for the period
(388)
(4,514)
(5,078)
(Loss)/profit for the period
(6,294)
63
1,725
Total comprehensive loss for the period
(6,682)
(4,451)
(3,353)
Condensed Consolidated Balance Sheet
As at 27 September 2014 (unaudited)
As at
27 Sep 2014
As at
28 Sep 2013
As at
29 Mar 2014
(Audited)
000
000
000
Non-current assets
Goodwill
2,735
----
2,735
Intangible assets
4,848
236
4,953
Property, plant and equipment
17,530
20,518
18,681
Investment property
180
180
180
Deferred tax asset
1,415
1,199
1,441
Total non-current assets
26,708
22,133
27,990
Current assets
Inventories
21,582
17,174
21,203
Trade and other receivables
13,863
11,432
13,964
Current tax asset
----
70
----
Cash at bank and in hand
362
3,098
15,192
Assets held for sale
----
329
547
Total current assets
35,807
32,103
50,906
Total assets
62,515
54,236
78,896
Current liabilities
Trade and other payables
17,092
12,001
17,496
Current tax liabilities
774
----
1,162
Other financial liabilities
11,968
5,818
5,406
Total current liabilities
29,834
17,819
24,064
Non-current liabilities
Trade and other payables
6,876
1,500
7,716
Other financial liabilities
8,593
251
11,267
Deferred tax liabilities
950
651
1,210
Total non-current liabilities
16,419
2,402
20,193
Total liabilities
46,253
20,221
44,257
Net assets
16,262
34,015
34,639
Equity
Issued share capital
3,544
1,758
1,772
Share premium
8,138
829
909
Retained earnings
4,580
31,273
31,958
Share-based payment reserve
----
155
----
Total equity
16,262
34,015
34,639
Condensed Consolidated Statement of Changes in Equity
For the 26 weeks ended 27 September 2014 (unaudited)
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
----
----
63
----
63
Other comprehensive loss for the period
----
----
(4,514)
----
(4,514)
1,758
829
31,273
162
34,022
Transactions with owners:
Movement in share-based payment reserve
----
----
----
(7)
(7)
At 28 September 2013
1,758
829
31,273
155
34,015
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 30 March 2014
1,772
909
31,958
----
34,639
Loss for the period
----
----
(6,294)
----
(6,294)
Other comprehensive loss for the period
----
----
(388)
----
(388)
1,772
909
25,276
----
27,957
Transactions with owners:
Dividends paid
----
----
(20,696)
----
(20,696)
Issue of share capital in settlement of the liability under the Contract for Differences upon termination
1,772
7,229
----
----
9,001
At 27 September 2014
3,544
8,138
4,580
----
16,262
Condensed Consolidated Statement of Cash Flows
For the 26 weeks ended 27 September 2014 (unaudited)
26 weeks
ended
27 Sep
2014
26 weeks
ended
28 Sep 2013
52 weeks
ended
29 Mar 2014
(Audited)
Notes
000
000
000
Net cash inflow from operating activities
8a
1,680
4,457
7,093
Investing activities
Purchases of property, plant and equipment
(285)
(40)
(531)
Proceeds on disposal of property,
plant and equipment
570
17
11,696
Dividends received from Colin Campbell & Sons Limited
----
179
179
Proceeds from disposal of Colin Campbell & Sons Limited
----
----
324
Acquisition of subsidiary, net of cash acquired
----
----
(12,176)
Net cash generated/(used) in investing activities
285
156
(508)
Financing activities
(Decrease)/ increase in long term loans
(2,638)
(500)
10,488
Issue of share capital
----
----
94
Repayment of obligations under finance leases/HP
(27)
(77)
(14)
Dividends paid
(20,696)
----
(563)
Net cash (used)/generated in financing activities
(23,361)
(577)
10,005
Net (decrease)/increase in cash and cash equivalents
(21,396)
4,036
16,590
Cash and cash equivalents at beginning of period
9,925
(6,475)
(6,475)
Effect of foreign exchange rate changes
(1)
(161)
(190)
Cash and cash equivalents at end of period
8b
(11,472)
(2,600)
9,925
Notes to the Condensed Half-year Financial Statements
For the 26 weeks ended 27 September 2014 (unaudited)
1. General information
These condensed consolidated financial statements for the 26 weeks ended 27 September 2014 have not been audited or reviewed by the Auditor. They were approved by the Board of Directors on 14 November 2014.
The information for the 52 weeks ended 29 March 2014 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 Auditor's 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 52 weeks ended 29 March 2014, 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 20 to 25 of the Group's audited financial statements for the 52 weeks ended 29 March 2014.
Having reviewed the Group's projections, and taking account of reasonably 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.
The Directors are of the view that the Group is well placed to manage its business risks despite the current challenging economic and market conditions. 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 UK and Australia.
Geographical segment information for revenue, operating profit and a reconciliation to Group net profit is presented below:
For the 26 weeks ended 27 September 2014
For the 26 weeks ended 28 September 2013
Revenue
Segmental operating
profit
Exceptional
operating items
Finance
costs
Profit/ (loss)
before
tax*
Revenue
Segmental
operating
profit
Exceptional
operating
items
Finance
costs
Profit/
(loss)
before
tax*
000
000
000
000
000
000
000
000
000
000
UK
22,145
2,525
----
(1)
2,524
14,050
1
----
(6)
(5)
Australia
18,361
835
----
(82)
753
20,477
918
(528)
(49)
341
40,506
3,360
----
(83)
3,277
34,527
919
(528)
(55)
336
Central costs
----
(578)
(8,119)
(298)
(8,995)
----
(236)
-----
(133)
(369)
Total continuing operations
40,506
2,782
(8,119)
(381)
(5,718)
34,527
683
(528)
(188)
(33)
Tax
(576)
(23)
Loss after tax from continuing activities
(6,294)
(56)
Profit from discontinued operations *
-----
119
119
(Loss)/profit for the period
40,506
2,782
(8,119)
(381)
(6,294)
34,527
802
(528)
(188)
63
* Profit 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 Group's subsidiaries were immaterial in the current and comparative periods.
4. Exceptional items
26 weeks
ended
27 Sep 2014
26 weeks
ended
28 Sep 2013
000
000
(a) Contract for Differences
(7,551)
----
(b) Deferred consideration
(464)
----
(c) Acquisition costs
(104)
----
(d) Restructuring of Australia Spinning Mills
----
(528)
(8,119)
(528)
All exceptional items are classified within administrative expenses.
(a) Relates to the Contract for Differences between the Company and Camden Holdings Limited. The contract was terminated on 28 July 2014 and resulted in the issue of 7,087,730 new shares on 29 July 2014 to Camden Holdings Limited, a company wholly owned by The Camden Trust of which Mr Wilding, Executive Chairman, is the settlor and a discretionary beneficiary. The value of the contract on termination was 9.0m, of which 1.6m was accounted for in the financial period ended 29 March 2014. The exceptional charge in the period also includes 0.15m of related professional fees.
(b) Relates to the increase in the fair value of the deferred consideration payable to the vendors of Globesign Limited. Under IFRS 3, deferred consideration is measured initially at fair value at acquisition date. Subsequently, IFRS 3 requires deferred consideration to be remeasured at each period end. This takes into account changes in the time value of money and any adjustments to future anticipated profit levels which would impact on the value of the earn-out. At this stage, the increase in fair value purely reflects the fact that we are six months closer to settlement of the potential earn-out liability. This charge is a non-cash item in the period.
(c) Relates to professional fees in connection with the acquisition of Abingdon Flooring Limited, which was acquired after the period end on 30 September 2014.
(d) Relates to costs associated with "right-sizing" and reorganising the two Australian 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 period and production ceased at the end of June 2013. Key items of equipment were relocated to the mill at Bendigo, which has improved efficiencies at this mill.
Of the above 8.12m exceptional charge in the current period, 7.87m relates to non-cash items.
5. Tax
26 weeks
ended
27 Sep 2014
26 weeks
ended
28 Sep 2013
000
000
Current tax
- Current year UK
608
----
- Current year overseas
228
121
836
121
Deferred tax
- Current year movement
(260)
(98)
(260)
(98)
Total
576
23
The overall corporation tax is calculated at 24.0% (2013: 26.7%), representing the best estimate of the weighted average corporation tax charge expected for the full financial year.
6. Earnings per share
The calculation of earnings per ordinary equity share in the parent entity is based on the following earnings and number of shares:
26 weeks
Ended
27 Sep 2014
Basic
26 weeks ended
27 Sep 2014
Adjusted
26 weeks ended
28 Sep 2013
Basic
26 weeks ended
28 Sep 2013
Adjusted
'000
'000
'000
'000
(Loss)/profit attributable to ordinary equity
holders of the parent entity
(6,294)
(6,294)
63
63
Exceptional items (net of tax effect):
Contract for Differences
----
7,551
----
----
Deferred consideration
----
464
----
----
Acquisition costs
104
Restructuring of Australian Spinning Mills
----
----
----
370
Earnings for the purpose of basic,
adjusted and diluted earnings per share
(6,294)
1,825
63
433
Weighted average number of ordinary
shares ('000) for the purposes of basic
and basic adjusted earnings per share
9,450
7,033
Effect of dilutive potential ordinary shares:
Long Term Incentive Plan and Performance Share Plan ('000)
----
70
Weighted average number of ordinary
shares ('000) for the purposes of diluted and diluted adjusted earnings per share
9,450
7,103
The Group's earnings per share are as follows:
Basic adjusted(pence)
19.31
6.16
Diluted adjusted (pence)
19.31
6.10
Basic(pence)
(66.60)
0.90
Diluted (pence)
(66.60)
0.89
7. Dividends
26 weeks
ended
27 Sep 2014
'000
26 weeks
ended
28 Sep 2013
'000
Amounts recognised as distributions to equity holders in the period:
Special dividend of 292.0p per share paid on 25 July 2014
20,696
----
20,696
----
Final dividend for the year ended 30 March 2013 6.0p per share (paid 3 October 2013)
----
422
Interim dividend declared for the year to 29 March 2014 2.0p per share (paid 20 December 2013)
----
141
8. Notes to the cash flow statement
a) Reconciliation of operating (loss)/profit to net cash inflow from operating activities
26 weeks ended
27 Sep
2014
26 weeks ended
28 Sep 2013
52 weeks ended
29 Mar
2014
000
000
000
Operating (loss)/profit from continuing operations
(5,337)
155
2,812
Adjustments for non-cash items:
- Depreciation charges
1,247
1,204
2,484
- Amortisation of intangible assets
105
12
70
- Charge for Contract for Differences
7,397
----
1,605
- Share-based payment charge
----
3
----
- Profit on disposal of property, plant and equipment
(14)
(1)
(3,324)
- Exchange rate difference on consolidation
45
(91)
55
Operating cash flows before movements in working capital
3,443
1,282
3,702
(Increase)/decrease in working capital
(158)
3,193
4,317
Cash generated from operations
3,285
4,475
8,019
Interest paid
(381)
(188)
(531)
Income taxes (paid)/received
(1,224)
170
(395)
Net cash inflow from operating activities
1,680
4,457
7,093
b) Analysis of net debt
At
29 Mar 2014
Cash flow
Other
non-cash
changes
Exchange
movement
At
27 Sep 2014
000
000
000
000
000
Cash
15,192
(14,829)
----
(1)
362
Bank overdrafts
(5,267)
(6,567)
----
----
(11,834)
Cash and cash equivalents
9,925
(21,396)
----
(1)
(11,472)
Finance leases and hire purchase agreements
- Payable less than one year
(139)
27
(27)
5
(134)
- Payable more than one year
(279)
----
27
9
(243)
Bank loans payable more than one year
(10,988)
2,638
----
----
(8,350)
Net debt
(1,481)
(18,731)
----
13
(20,199)
9. Post balance sheet events
(a) Acquisition
The Company acquired Abingdon Flooring Limited and its wholly owned subsidiaries, Alliance Distribution Limited and Distinctive Flooring Limited, on the 30 September 2014 for an initial cash consideration of 7.655m. Additional deferred cash consideration of up to 4.5m will be payable if annual performance targets are achieved over a three year period. For the financial year ended 31 March 2014 the Abingdon Flooring Limited Consolidated Group generated turnover of 75.1m, operating profit of 2.5m, profit before tax of 2.2m and net assets were 8.2m.
(b) 2022 Unsecured Loan Note Facility
The acquisition of Abingdon Flooring Limited and its wholly owned subsidiaries has been funded using facilities provided by the Company's long-standing bankers, Barclays Bank, and a fully subordinated 10m unsecured loan note facility provided by the Business Growth Fund ('BGF'). The Loan Note carries a fixed coupon of 10%, but with no capital repayment for the first five years, and capital then being repaid over the following three years. BGF has also been granted an option over 746,000 new Victoria Plc ordinary shares, representing 5% of the Company's share capital.
10. Rates of Exchange
The result of the Group's overseas subsidiary has 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:
26 weeks
ended
27 Sep 2014
26 weeks
ended
28 Sep 2013
52 weeks
ended
29 Mar 2014
Australia (A$) - average rate
1.8116
1.6162
1.7057
Australia (A$) - period end
1.8621
1.7319
1.7988
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 8 of the Group's 2014 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.
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR BIBPTMBMBBLI
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