VICTORIA PLC

Earnings Release • Jul 30, 2015

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RNS Number : 4971U

Victoria PLC

30 July 2015

30 July 2015

Victoria PLC

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

Preliminary Results

for the year ended 28 March 2015, Board Change 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 preliminary results for the year ended 28 March 2015.

Financial and Operational Highlights

		Year ended	Year ended
		28 March	29 March
		2015	2014
Revenue		£128.30m	£71.39m
Operating profit before exceptional items and intangible amortisation		£8.88m	£2.65m
Underlying profit before tax and exceptional items 1		£7.46m	£2.12m
Profit before tax and exceptional items		£6.97m	£2.05m
Exceptional items		£(9.92)m	£0.23m
(Loss)/profit before tax		£(2.95)m	£2.28m
Net debt		£36.28m	£1.48m
(Loss)/earnings per share
Basic		(38.15)p	24.52p
Basic adjusted 2		45.50p	27.12p
1. Underlying profit before tax and exceptional items is before the deduction of £0.49m in respect of non-cash charges relating to: 1) intangible asset amortisation on recent acquisitions and 2) The Business Growth Fund redemption premium interest and share option charges not considered to form part of the Group's underlying profit.  2. Basis of calculation is set out in Note 2.

·     Underlying pre-tax earnings has increased 251.9% to £7.46m (2014: £2.12m).

·     Successful integration of the acquired businesses in the year - Abingdon Flooring group and Whitestone Weavers group. Both acquisitions have been materially earnings-enhancing and value-creating.

·     Exceptional items include a non-cash charge of £7.55m relating to the Contract for Differences. The special dividend of £2.92 per share in July 2014 permitted the termination of the Contract for Differences between the Company and Camden Holdings Limited, with the resulting obligation being settled in shares in the Company rather than cash in July 2014 as described in the Half-year report.

·     UK sales were up 181.1% with annualised like for like increase of 1.5%; operating margin improvement from 6.1% to 6.6% due to improved manufacturing efficiencies and continued focus on reducing the overhead cost base.

·     Australia faced considerable economic headwinds from a slowdown in mining and fall in commodity prices. Despite these factors, Australia sales and operating profit remained flat even after A$0.84m of additional occupancy costs from the sale and leaseback initiatives in late FY14.

·     The Group obtained £10m unsecured long term capital from the Business Growth Fund during the year. Post year end, the Company restructured its existing facilities and entered into a new multi-currency revolving facility with Barclays and HSBC; which provides substantial headroom for future growth.

·     Free cash flow to be deployed towards acquisitions of other high quality flooring manufacturers so the Board has decided that no dividend will be payable for FY15.

·     Appointment of Whitman Howard as joint broker to assist with communications with the investor community.

·     The outlook for the UK segment remains positive with scope for further operational synergies in the year ahead. The UK market is showing signs of growth, aided by a recovery in the residential housing market.

·     In Australia, building construction and house renovations has picked up significantly and together with continued strength in house prices in the major markets of New South Wales and Victoria States should provide a strong lead into FY16.

Geoff Wilding, Chairman of Victoria PLC commented:

"During 2015 Victoria's financial position continued to improve. Our three recent acquisitions - Westex, Abingdon and Whitestone - have been materially earnings-enhancing and value-creating for shareholders. Operational synergies are already being achieved across the businesses and we expect the acquisitions to deliver additional operational efficiency improvements in future years.

"Our focus is on maximising the Group's return on capital employed. Operational management - all of whom are shareholders - are committed to carefully managing working capital to optimise free cash-flow while growing earnings, through providing enhanced products and services to customers. We believe this combined approach should ensure Victoria experiences above-average sector performance in the years ahead.

"There are good opportunities to continue to grow earnings in the UK and abroad via further carefully scrutinised, high quality acquisitions and organically via a committed sales focus and operational synergies. This is what we intend to deliver for shareholders in FY16.

"Finally, I would like to express my genuine appreciation for the support, advice and commitment of Finance Director and Company Secretary, Terry Danks, who retires at the end of July. I'm sorry to see him go and wish him a long and enjoyable retirement."

- Ends -

For more information contact:

Victoria PLC Geoff Wilding Alexander Anton	+44 (0) 207 440 7520
Cantor Fitzgerald Europe (Nominated Adviser and Broker) Rick Thompson, Phil Davies, David Foreman, Michael Reynolds (Corporate Finance) David Banks, Tessa Sillars (Corporate Broking)	+44 (0) 20 7894 7000
Whitman Howard Limited (Joint Broker) Niall Devins, Ranald McGregor-Smith MHP Communications (Financial PR) Nick Denton	+44 (0) 20 7659 1234 +44 (0) 20 3128 8100

Chairman's Statement

In the run-up to the Sydney Olympics in 2000 the British Men's Rowing Eight tested every proposal, every change, every decision against one simple criterion: "Will it make the boat go faster?" The outcome was a gold medal.

At Victoria we quite like that level of focus (and the result!) and Victoria's management are encouraged to test every operational change, every capex proposal, every decision they make against the equally simple criteria: "Will it help us make more money?"

We won't always get it right but this benchmark helps us avoid fuzzy, value-destroying thinking and ensures we never forget why we are in business.

So I am pleased to advise shareholders that Victoria's financial position continues to improve with underlying pre-tax earnings for FY15 of £7.46m (as shown in the Operating and Financial Review). The Group will however record an after-tax loss of £4.52m due primarily to the accounting impact of the Contract for Differences following the payment of the £2.92 per share special dividend in July 2014. The charge for the Contract for Differences was flagged in the half-year report and had no impact on cash or the Group's underlying earnings. Other key numbers are:

·     Group revenues grew by 79.7% (84.1% in constant currency terms) from £71.39m to   £128.30m

·     Group EBITDA before exceptional items increased from £5.14m to £11.88m 

·     Group operating profit before exceptional items and intangible amortisation increased from £2.65m to £8.88m

·     After exceptional items, the Group recorded a loss after tax of £4.52m, compared with £1.61m profit after tax in the prior year

·     Net debt as at year end was £36.28m (2014: £1.48m).  Debt to EBITDA for covenant purposes was less than two times at year end.

I do not intend to review the last 12 months in particular detail. What we do is simple: we purchase raw materials, skilled people make it into carpet, and then we sell it and distribute it. There is nothing complicated in our business or our financial structure but we do focus on maximising the Group's return on capital employed. Operational management - all of whom are shareholders - are committed to growing earnings and carefully managing their working capital to optimise free cash-flow. I feel truly privileged to be working with such a talented and motivated team. It makes my job extraordinarily simple. I do my best to keep out of their way and let them get on with working their magic. This approach seems to be working with the Group delivering record underlying profits.

Their excellent work has generated capital we have been able to usefully deploy by acquiring two superb businesses during FY15: Abingdon Flooring group and the Whitestone Weavers group. Both these acquisitions have been materially earnings-enhancing and value-creating for shareholders.

Yet that is not the whole story. By focussing on acquiring only the best businesses, Victoria has also gained the services of some of the most talented managers in the sector. This is important. Although it is a core part of our operating philosophy for Victoria's businesses to continue operating autonomously, the managers do work together and by doing so their collective skills - and those of their staff - are developing operational synergies: ways to grow earnings, while providing enhanced products and services to customers.  This, we believe, will continue to ensure Victoria experiences above-average sector performance.

The Group obtained £10m unsecured long term capital from the Business Growth Fund during the year. Since the year end we have also successfully arranged new banking facilities, which replaced the pre-existing bank debt. Given our intention to continue to grow the Group through acquisitions, these new multi-currency revolving facilities, provided by Victoria's existing Group bankers, Barclays and HSBC, provide substantial headroom for future growth. This is helpful as over the last couple of years I have visited literally dozens of flooring manufacturers and know there is a lot of opportunity to continue to grow Victoria.

To assist our communication with shareholders and the wider investor community, I'm pleased to announce the appointment of Whitman Howard as joint broker to Victoria.

In summary, while one always wishes more had been accomplished, I am pleased with progress to date. Yet the opportunity in front of us remains large with further potential to grow earnings in the UK and abroad via carefully scrutinised acquisitions and organically via a committed sales focus. This is what we intend to deliver for shareholders in FY16.

Dividend

One of the fabulous things about carpet manufacturers - and the thing that motivated legendary investor, Warren Buffet, to buy US carpet maker, Shaw Industries - is the cash they can generate. The equipment is relatively cheap to buy and lasts a long time. The time between manufacturing a roll of carpet and being paid for it is relatively short.  Raw materials can also be bought on attractive payment terms. These characteristics are evidenced by Victoria's operational cash-flow exceeding its EBITDA for each of the last two years.

So, in the medium term, we expect Victoria to be capable of paying an attractive dividend. However in the short term, as mentioned earlier in this statement, it is the Board's view that we will create the most wealth for shareholders by deploying the free cash-flow generated by the existing businesses within the Group towards acquiring other high quality flooring manufacturers.

Therefore we have resolved not to pay a final dividend for FY15.

Terry Danks Retirement

Finally, I would like to express my genuine appreciation for the support, advice and commitment of Finance Director and Company Secretary, Terry Danks, who retires at the end of July.

Terry first joined Victoria Carpets (the manufacturing subsidiary) as Chief Accountant in 1985. His first responsibility was to replace the quill pens and abacuses in use at Victoria with an IT-based accounting and operating system and has led the inevitable continual changes ever since.  He was appointed the Finance Director of Victoria Carpets in 1989 and his subsequent involvement in the acquisitions of Westwood Yarns (1989), Munster Carpets (2002) & Navan Carpets (2003) has proven to be useful as Victoria PLC embarked upon its acquisition strategy in 2013.

Terry's enthusiastic embrace of the change in direction at Victoria following the board changes in October 2012 has made my job immeasurably easier.  He already had plans in place to retire at the time of my appointment but allowed me to change his mind and agreed to stay for 12 months, which I managed to drag out to nearly three years. During this period he was appointed to the PLC board and has materially contributed to the growth in the value of Victoria PLC. I'm sorry to see him go and wish him a long and enjoyable retirement.

Given our plans for growth, the Board is being especially selective in deciding upon a replacement and, while this process continues, have established an interim arrangement to ensure the smooth running of the finance function.

Operating and Financial Review

Operational Review

United Kingdom

The UK operating segment achieved sales growth of 181.1% from £33.05m to £92.91m, principally through the acquisitions of the Abingdon Flooring group and Whitestone Weavers group during the period, and the first full year effect of Westex which was acquired in the fourth quarter of the prior year. Having said that, it is important to note that underlying UK performance, also improved as illustrated in the table below. This sets out reported revenue and operating profit together with the annualised revenue and operating profit to demonstrate the underlying performance had the acquired companies been part of the Group throughout the 2015 and 2014 financial periods.

	Reported		Reported		Growth		Annualised		Annualised		Growth
	2015		2014				2015		2014
	£'m		£'m				£'m		£'m
UK Revenue	92.91		33.05		181.1%		158.12		155.86		1.5%
UK Operating profit	8.43		1.58		434.4%		10.36		9.48		9.3%
Operating margin	9.1%		4.8%				6.6%		6.1%

On an annualised basis, operating margins have increased from 6.1% to 6.6%, which, together with a 1.5% increase in revenue, delivered a 9.3% growth in UK operating profit. This can be attributed to a combination of improved manufacturing efficiencies and an ongoing focus on reducing the overhead cost base. Further operational synergies have been achieved in the latter stages of the financial year as a result of the acquisitions, which are anticipated to deliver additional operational efficiency improvements in future years.

As a result of the above, the UK recorded a profit before tax and exceptional items of £8.28m (2014: £1.57m).

Australia

Revenues in Australia were flat due to considerable economic headwinds from the significant slowdown in mining and fall in commodity prices. The subsequent significant depreciation of the Australian Dollar against the US Dollar materially increased the cost of raw materials, placing margins under considerable pressure.

Despite these factors, the business maintained its operating profit even after bearing the A$843,000  full year impact of occupancy costs resulting from the sale and leaseback initiatives in late FY14.

	2015		2014		Growth
	A$m		A$m
Revenue	65.64		65.40		0.4%
Operating profit	2.88		2.88		0.0%
Operating margin	4.4%		4.4%

The business focus on productivity improvements, cost management and stronger supplier relationships combined with sale price increases to deliver an operating profit in line with the previous year despite the challenges and implications noted above.

Further operational improvements at the Bendigo spinning mill continued to build on prior year advances.

Outlook

UK

The outlook for the Group's UK segment remains positive. As mentioned above, there is scope for further operational synergies to be realised in the year ahead.

The UK carpet market appears to be growing and in the process of recovery from the depths of the recession.  The wider economic environment in Europe presents some possible threats to this, firstly through potential economic shocks and secondly through the strength of Sterling against the Euro aiding continental imports.  Despite this, the UK carpet market is showing signs of growth, aided by a recovery in the residential housing market.

Australia 

Building construction and house renovations activity has picked up significantly and together with continued strength in housing prices in the major markets of New South Wales and Victoria States should provide a strong lead into FY16. The weakening Australian Dollar against key global currencies due to weaker commodity demand and prices will see an increase in raw material costs for local producers and importers alike. It is likely that regulatory efforts to cool the housing market will slow the market next year but overall the outlook for the short to medium term is positive.

Financial Review

The Group's financial performance for the year ended 28 March 2015 is summarised as follows:

	2015		2014		%
	£m		£m		Change
Revenue	128.30		71.39		79.7%
Underlying operating profit	8.88		2.65		235.0%
Underlying finance costs	(1.42)		(0.53)		167.2%
Underlying profit before tax and exceptional items	7.46		2.12		251.9%
Intangible amortisation	(0.27)		(0.07)		285.7%
Business Growth Fund redemption premium interest	(0.16)		------		n.a
Business Growth Fund share option charge	(0.06)		------		n.a
Reported profit before tax and exceptional items	6.97		2.05		239.9%
Exceptional items	(9.92)		0.23		-4394.4%
(Loss)/profit before tax from continuing operations	(2.95)		2.28		-229.5%
Tax	(1.57)		(0.67)		133.8%
(Loss)/profit after tax from continuing operations	(4.52)		1.61		-381.2%

Reported profit before tax and exceptional items of £6.97m is after charging £0.49m for the non-cash items listed in the table which are not considered to form part of the Group's underlying profitability. Underlying profit before tax of £7.46m is therefore presented to highlight the Group's underlying profitability in the period.

Exceptional Items

The exceptional items for the year ended 28 March 2015 are summarised below:

			2015		2014
			£m		£m
Contract for Differences			(7.55)		(1.63)
Acquisition costs			(0.40)		(0.66)
Deferred consideration			(1.97)		------
Profit on sale of properties			------		3.30
Restructuring of Australia's spinning mills			------		(0.78)
			(9.92)		0.23

The Contract for Differences between the Company and Camden Holdings Limited was terminated in the year and resulted in the issue of 7,087,730 new shares on 29 July 2014 to Camden Holdings Limited. Camden Holdings Limited is owned by the Camden Trust of which Geoff 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 prior year. The exceptional charge in the year also includes £0.15m of related professional fees. Apart from the professional fees incurred, this is a non-cash item.

Acquisition costs in the period relate to professional fees associated with the acquisitions of the Abingdon Flooring group in September 2014 and the Whitestone Weavers group in January 2015.

Deferred consideration in respect to acquisitions is measured under IFRS 3, initially at fair value discounted for the time value of money. Subsequently, deferred consideration is re-measured at each half year and year end to unwind the time value of money and for changes to the earn-out value arising from actual and forecast business performance. Such adjustments, which are non-cash items, are reflected in the income statement within administrative costs.

Taxation

The tax charge in the year was £1.57m against a reported pre-tax loss of £2.95m, giving an effective tax rate of negative 53.2%. This is distorted by the £9.92m charge for exceptional items in the period, all of which have been treated as non-deductible for tax. The underlying effective tax rate measured against profit before tax and exceptional items of £6.97m is 22.5%.

The Group's tax rate is above the prevailing UK standard rate of 21% 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

			2015		2014
			£m		£m
Operating profit from continuing operations and before exceptional items			8.61		2.58
Depreciation and non-cash items			3.20		2.55
Foreign exchange			(0.03)		0.06
Movement in working capital			0.86		4.32
Operating cash flow (before exceptional items)			12.64		9.51
EBITDA *			11.88		5.14
Operating cash flow conversion % (against EBITDA*)			106.4%		185.1%
* Earnings before interest, tax, depreciation, amortisation and exceptional items.

The Group achieved strong operating cash flows in the period (before exceptional items), with cash generation exceeding EBITDA (before exceptional items). The cash impact of exceptional items in the year was £0.55m, resulting in operating cash flows after exceptional items of £12.09m.

Working capital was reduced by £0.86m in the period and remains a key area of focus. Inventory management is the key contributor to the working capital improvement, with underlying inventory levels reducing year on year by £1.42m after adjusting for the opening inventory balances on the acquisitions during the year.

			2015		2014
			£m		£m
Operating cash flow (before exceptional items)			12.64		9.51
Interest paid			(1.42)		(0.53)
Corporation tax paid			(2.11)		(0.40)
Capital Expenditure			(1.39)		(0.53)
Free cash flow (before exceptional items)			7.72		8.05
Proceeds on disposal of property, plant and equipment			0.82		11.70
Acquisitions			(15.01)		(12.84)
Dividends paid			(20.69)		(0.56)
Issue of share capital			1.54		------
Deferred earn-out payments			(1.00)		------
Restructuring of Australia's spinning mills			------		(0.78)
Dividends and sale proceeds from Colin Campbell			------		0.50
Other items			(0.06)		(0.04)
Net cash flow			(26.68)		6.03
Opening net debt			(1.48)		(7.51)
Opening debt balances from acquisitions			(8.12)		------
Closing net debt			(36.28)		(1.48)

Interest, corporation tax and capital expenditure have all increased year on year reflecting the expansion of the Group in the second half of the year with the completion of two acquisitions. 

The net cash outflow from acquisitions in the period of £15.01m relates to the acquisitions of the Whitestone Weavers group and the Abingdon Flooring group and comprises the initial cash consideration and cash equivalents acquired of £14.61m and related professional fees of £0.40m.

The acquisitions were funded using facilities provided by the Company's long-standing bankers, Barclays Bank, and from a newly-signed fully-subordinated £10m 2022 unsecured loan note facility provided by the Business Growth Fund.

The Company made a special dividend payment of £2.92 per share in July 2014 resulting in a cash outflow of £20.69m.

Net debt levels increased by £34.80m during the financial year to £36.28m (2014: £1.48m).

Future funding

In April 2015 the Company entered into a new multi-currency revolving credit facility with its existing Group bankers, Barclays and HSBC, which has replaced existing facilities. The agreement also includes an Accordion facility option to further increase available credit which provides substantial headroom for future growth.

The new facility is subject to various financial covenants measured against Group results and all lending covenants have been satisfied to date.

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 28 March 2015. 

		2015		2014		2013
Sales growth (constant currency)		84.1%		6.8%		-7.9%
Operating margin (pre exceptional items)		6.7%		3.6%		-0.6%
Return on operating assets (pre exceptional items)		15.3%		7.1%		-0.9%
Earnings/(loss) per share (basic adjusted)		44.3p		27.1p		-11.0p
Net debt to EBITDA*		1.8 times		0.3 times		3.3 times
Interest cover (against EBITDA*)		7.2 times		9.7 times		4.8 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 28 March 2015

						52 weeks ended 28 March 2015		52 weeks ended 29 March 2014
					Notes	£000		£000
Continuing operations
Revenue					1	128,304		71,386
Cost of sales						(86,695)		(50,544)
Gross profit						41,609		20,842
Distribution costs						(22,423)		(13,804)
Administrative expenses (including exceptional items and intangible amortisation)						(20,928)		(7,914)
Other operating income						432		3,688
Operating (loss)/profit						(1,310)		2,812
Comprising:
Operating profit before exceptional items					1	8,880		2,651
Intangible amortisation						(270)		(70)
Exceptional items					3	(9,920)		231
					.
Finance costs						(1,643)		(531)
Comprising:
Interest charges						(1,419)		(531)
Business Growth Fund redemption premium interest and share option charge						(224)		------
(Loss)/profit before tax					1	(2,953)		2,281
Taxation						(1,571)		(672)
(Loss)/profit for the period from continuing operations						(4,524)		1,609
Profit for the period from discontinued operations					1	------		116
(Loss)/profit for the period						(4,524)		1,725
(Loss)/earnings per share -		pence		basic	2	(38.15)		24.52
				diluted	2	(38.15)		24.52
(Loss)/earnings per share from continuing operations  - pence				basic	2	(38.15)		22.87
				diluted	2	(38.15)		22.87

Consolidated Statement of Comprehensive Income
For the 52 weeks ended 28 March 2015
						52 weeks ended 28 March 2015		52 weeks ended 29 March 2014
						£000		£000
Exchange differences on translation of foreign operations						(756)		(5,078)
Amounts which may be subsequently reclassified to profit or loss						(756)		(5,078)
(Loss)/profit for the period						(4,524)		1,725
Total comprehensive loss for the period						(5,280)		(3,353)

Consolidated and Company Balance Sheets

As at 28 March 2015

			Group		Company
			28 March 2015	29 March 2014	28 March 2015	29 March 2014
			£000	£000	£000	£000
Non-current assets
Goodwill			6,481	2,735	------	------
Intangible assets			8,858	4,953	------	------
Property, plant and equipment			22,489	18,681	------	------
Investment property			180	180	180	180
Investment in subsidiary undertakings			------	------	38,180	27,126
Deferred tax asset			1,903	1,441	708	285
Total non-current assets			39,911	27,990	39,068	27,591
Current assets
Inventories			40,956	21,203	------	------
Trade and other receivables			30,953	13,964	24,427	16,177
Cash at bank and in hand			2,392	15,192	------	13,151
Assets held for sale			------	547	------	------
Total current assets			74,301	50,906	24,427	29,328
Total assets			114,212	78,896	63,495	56,919
Current liabilities
Trade and other payables			39,066	17,496	4,995	3,128
Current tax liabilities			2,014	1,162	------	------
Other financial liabilities			18,408	5,406	16,206	5,267
Total current liabilities			59,488	24,064	21,201	8,395
Non-current liabilities
Trade and other payables			12,260	7,716	6,757	6,804
Other financial liabilities			20,264	11,267	19,876	9,733
Deferred tax liabilities			2,370	1,210	------	------
Total non-current liabilities			34,894	20,193	26,633	16,537
Total liabilities			94,382	44,257	47,834	24,932
Net assets			19,830	34,639	15,661	31,987
Equity
Share capital			3,639	1,772	3,639	1,772
Share premium			10,144	909	10,144	909
Retained earnings			5,987	31,958	1,818	29,306
Share-based payment reserve			60	------	60	------
Total equity			19,830	34,639	15,661	31,987

Consolidated Statement of Changes in Equity

For the 52 weeks ended 28 March 2015

					Share	Share	Retained	Share-based	Total
					capital	premium	earnings	payment	equity
								reserve
					£000	£000	£000	£000	£000
At 30 March 2014					1,772	909	31,958	----	34,639
Loss for the period					----	----	(4,524)	----	(4,524)
Other comprehensive loss for the period					----	----	(756)	----	(756)
					1,772	909	26,678	----	29,359
Transactions with owners:
Dividends paid					----	----	(20,691)	----	(20,691)
Issue of share capital					1,867	9,235	----	----	11,102
Movement in share-based payment reserve					----	----	----	60	60
At 28 March 2015					3,639	10,144	5,987	60	19,830
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

Company Statement of Changes in Equity

For the 52 weeks ended 28 March 2015

					Share	Share	Retained	Share-based	Total
					capital	premium	earnings	payment	equity
								reserve
					£000	£000	£000	£000	£000
At 30 March 2014					1,772	909	29,306	------	31,987
Loss for the period					------	------	(6,797)	------	(6,797)
					1,772	909	22,509	------	25,190
Transactions with owners:
Dividends paid					------	------	(20,691)	------	(20,691)
Issue of share capital					1,867	9,235	------	------	11,102
Movement in share based payment reserve					------	------	------	60	60
At 28 March 2015					3,639	10,144	1,818	60	15,661
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

Consolidated and Company Statements of Cash Flows

For the 52 weeks ended 28 March 2015

					Group		Company
					52 weeks ended 28 March 2015	52 weeks ended 29 March 2014	52 weeks ended 28 March 2015	52 weeks Ended 29 March 2014
				Notes
					£000	£000	£000	£000
Net cash inflow/(outflow) from operating activities				5	8,557	7,093	(6,430)	13,263
Investing activities
Purchases of property, plant and equipment					(1,391)	(531)	-----	----
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					816	11,696	-----	5,600
Deferred earn-out payments					(1,000)	----	(1,000)	----
Acquisition of subsidiaries					(14,616)	(12,176)	(7,655)	(16,000)
Net cash used in investing activities					(16,191)	(508)	(8,655)	(9,897)
Financing activities
Increase in long term loans					8,596	10,488	16,832	9,233
Issue of share capital					1,543	94	1,543	94
Repayment of obligations under finance leases/HP					(241)	(14)	-----	-----
Dividends paid					(20,691)	(563)	(20,691)	(563)
Net cash (used)/generated in financing activities					(10,793)	10,005	(2,316)	8,764
Net (decrease)/increase in cash and cash equivalents					(18,427)	16,590	(17,401)	12,130
Cash and cash equivalents at beginning of period				6	9,925	(6,475)	7,884	(4,246)
Effect of foreign exchange rate changes					----	(190)	-----	-----
Cash and cash equivalents at end of period				6	(8,502)	9,925	(9,517)	7,884

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 and a reconciliation to entity net profit is presented below.

Income statement		For the 52 weeks ended 28 March 2015						For the 52 weeks ended 29 March 2014
		Revenue	Segmental operating profit		Exceptional operating items	Finance costs	Profit before tax*	Revenue	Segmental operating profit	Exceptional operating items	Finance costs	Profit before tax*
		£000	£000		£000	£000	£000	£000	£000	£000	£000	£000
UK		92,911	8,427		-	(150)	8,277	33,047	1,577	-	(9)	1,568
Australia		35,393	1,552		-	(155)	1,397	38,339	1,686	1,824	(138)	3,372
		128,304	9,979		-	(305)	9,674	71,386	3,263	1,824	(147)	4,940
Unallocated central expenses			(1,369)		(9,920)	(1,338)	(12,627)		(682)	(1,593)	(384)	(2,659)
Total continuing operations		128,304	8,610		(9,920)	(1,643)	(2,953)	71,386	2,581	231	(531)	2,281
Tax							(1,571)					(672)
(Loss)/profit after tax from
continuing activities							(4,524)					1,609
Profit from discontinued operations*									5	111		116
(Loss)/profit for the period		128,304	8,610		(9,920)	(1,643)	(4,524)	71,386	2,586	342	(531)	1,725

* Prior year 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 UK and Australia were immaterial in the current and comparative periods.

Management information is reviewed on a segmental basis to profit before tax.

Balance Sheet				As at 28 March		As at 29 March
				2015		2014
				Segment	Segment	Segment	Segment
				assets	liabilities	assets	liabilities
				£000	£000	£000	£000
UK				93,527	65,407	55,877	24,739
Australia				19,797	7,939	22,000	11,022
Assets held for sale				----	----	547	----
Unallocated central assets/liabilities				888	21,036	472	8,496
				114,212	94,382	78,896	44,257

Assets held for sale relates to the Castlemaine spinning mill in Australia which was sold in May 2014. 

Other segmental information				52 weeks ended 28 March 2015		52 weeks ended 29 March 2014
				£000		£000
Depreciation and amortisation
UK				1,928		904
Australia				1,345		1,650
				3,273		2,554

No other significant non-cash expenses were deducted in measuring segment results.

				52 weeks ended 28 March 2015		52 weeks ended 29 March 2014
				£000		£000
Capital expenditure
UK				1,049		304
Australia				342		227
				1,391		531

2  (Loss)/earnings per share

The calculation of the basic, adjusted and diluted (loss)/earnings per share is based on the following data:
					Basic	Adjusted	Basic	Adjusted
					2015	2015	2014	2014
					£000	£000	£000	£000
(Loss)/profit attributable to ordinary equity holders of the parent entity					(4,524)	(4,524)	1,725	1,725
Exceptional items (net of tax effect):
Contract for Differences					----	7,554	----	1,631
Acquisition costs					----	398	----	633
Deferred consideration					----	1,968	----	----
Profit on sale of Australia properties					----	----	----	(1,823)
Profit on sale of UK property					----	----	----	(693)
Restructuring of Australia's spinning mills					----	----	----	546
Profit on sale of investment in Colin Campbell & Sons Limited					----	----	----	(111)
Earnings for the purpose of basic and adjusted earnings per share					(4,524)	5,396	1,725	1,908

Weighted average number of shares:

							2015	2014
							Number of	Number of
							shares ('000)	shares ('000)
Weighted average number of ordinary shares for the purposes of basic and adjusted (loss)/earnings per share							11,859	7,036
Effect of dilutive potential ordinary shares: Business Growth Fund share options							120	----
Weighted average number of ordinary shares for the purposes of diluted (loss)/earnings per share							11,979	7,036
The potential dilutive effect of the share options has been calculated in accordance with IAS 33 using the average share price over the period the options have been in existence. The Group's (loss)/earnings per share are as follows:
							2015	2014
							Pence	Pence
Basic adjusted							45.50	27.12
Diluted adjusted							45.05	27.12
Basic							(38.15)	24.52
Diluted							(38.15)	24.52

3  Exceptional Items from continuing operations

						52 weeks ended 28 March 2015		52 weeks ended 29 March 2014
						£000		£000
(a) Contract for Differences						(7,554)		(1,631)
(b) Acquisition costs						(398)		(655)
(c) Deferred consideration						(1,968)		------
(d) Profit on sale of properties						------		3,297
(e) Restructuring of Australia spinning mills						------		(780)
						(9,920)		231
All exceptional items are classified within administrative expenses (except where noted). (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 prior year. The exceptional charge in the period also includes £0.15m of related professional fees. (b) Relate to professional fees in connection with the two acquisitions completed during the year. (c) Deferred consideration in respect to acquisitions is measured under IFRS 3, initially at fair value discounted for the time value of money. Subsequently, deferred consideration is re-measured at each half-year and year end to unwind the time value of money and for changes to the earn-out value arising from actual and forecast business performance. Such adjustments are non-cash items. (d) 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. (e) 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.

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:

					2015		2014
					Average	Year end	Average	Year end
Australia - A$					1.8547	1.9184	1.7057	1.7988

5  Reconciliation of operating (loss)/profit to net cash inflow/(outflow) from operating activities

					Group		Company
					2015	2014	2015	2014
					£000	£000	£000	£000
Operating (loss)/profit from continuing operations					(1,310)	2,812	(5,902)	24,163
Adjustments for:
- Depreciation charges					3,003	2,484	----	60
- Amortisation of intangible assets					270	70	----	----
- Fair value charge for Contract for Differences					7,397	1,605	7,397	1,605
- Deferred consideration revaluation					1,968	----	1,301	----
- Profit on disposal of property, plant and equipment					(69)	(3,324)	----	(693)
- Exchange rate difference on consolidation					(27)	55	----	----
Operating cash flows before movements in working capital					11,232	3,702	2,796	25,135
Decrease/(increase) in working capital					857	4,317	(8,112)	(11,488)
Cash generated/ (used) by operations					12,089	8,019	(5,316)	13,647
Interest paid					(1,419)	(531)	(1,114)	(384)
Income taxes paid					(2,113)	(395)	----	----
Net cash inflow/(outflow) from operating activities					8,557	7,093	(6,430)	13,263

6 Analysis of net debt

				At 29 March 2014	Cash flow	Acquisitions	Other non-cash changes	Exchange movement	At 28 March 2015
				£000	£000	£'000	£000	£000	£000
Cash				15,192	(12,800)	----	----	----	2,392
Bank overdraft				(5,267)	(5,627)	----	----	----	(10,894)
Cash and cash equivalents				(9,925)	(18,427)	----	----	----	(8,502)
Finance leases and hire purchase agreements
- Payable less than one year				(139)	241	(773)	(164)	10	(825)
- Payable more than one year				(279)	----	(290)	164	17	(388)
Bank loans
- Bank loans payable less than one year				----	369	(7,058)	----	----	(6,689)
- Bank loans payable more than one year				(10,988)	1,198	----	----	78	(9,712)
Other loans payable more than one year				----	(10,164)	----	----	----	(10,164)
Net debt				(1,481)	(26,783)	(8,121)	----	105	(36,280)

7. Acquisition of subsidiaries

(a) Abingdon Flooring Limited and its wholly owned subsidiaries

On 30 September 2014, the Group acquired the entire issued share capital of Abingdon Flooring Limited and its wholly owned subsidiaries, Alliance Distribution Limited and Distinctive Flooring Limited ('Abingdon Flooring group'). The principal activity of the Abingdon Flooring group is the manufacture and sale of carpets, carpet tiles and hard flooring across the UK. The business operates from facilities in South Wales, Kidderminster and Yorkshire, employing a workforce of more than 500 people. The acquisition is expected to be accretive to the underlying earnings per share of the Company.

The Group results for the year ended 28 March 2015 included £38.4m of revenue and £2.4m profit before tax from the Abingdon Flooring group.

If the acquisition of Abingdon Flooring Group had been completed on the first day of the financial year, Group revenues for the period would have been £36.45m higher and Group profit before tax would have been £0.61m higher.

(b) Whitestone Weavers group

On 14 January 2015, the Group acquired the Whitestone Weavers group of companies, comprising Whitestone Weavers Limited, Carpet Line Direct Limited, Gaskell Mackay Carpets Limited, View Logistics Limited and Thomas Witter Carpets Limited. The principal activity of the Whitestone Weavers Group is the design, sale and distribution of carpets across the UK. The business operates from facilities in Hartlepool, employing a workforce of more than 100 people. The acquisition is expected to be accretive to the underlying earnings per share of the Company.

The Group results for the year ended 28 March 2015 included £7.9m of revenue and £0.7m profit before tax from the Whitestone Weavers Group.

If the acquisition of the Whitestone Weavers Group had been completed on the first day of the financial year, Group revenues for the period would have been £28.56m higher and Group profit before tax would have been £1.12m higher.

8. Post Balance Sheet Events

New bank facilities

The Company has agreed a new multi-currency facility with its existing Group bankers, Barclays and HSBC, which has replaced existing facilities and provides substantial headroom for future growth.

9.  The results have been extracted from the audited financial statements of the Group for the 52 weeks ended 28 March 2015.  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 will publish full financial statements that comply with IFRS.  The audited financial statements incorporate 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 29 March 2014, 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 29 March 2014.

9.  The Annual Report & Accounts will be posted to shareholders in due course.  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 offices of Brown Rudnick LLP, at Clifford Street, London, WS1 2LQ, at 2.00pm on Friday, 25 September 2015.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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