Annual Report and Accounts
for the 52 weeks ended 29 March 2014
www.victoriaplc.com
stock code: VCP
23346.02 27 August 2014 8:35 AM Proof 8
23346.02 27 August 2014 8:35 AM Proof 8
Mission Statement
To create wealth for our
Shareholders
23346.02 27 August 2014 8:35 AM Proof 8
Welcome to Victoria PLC
Contents
Victoria PLC is a manufacturer,
supplier and distributor of design-
led carpets, carpet tiles and other
floorcoverings, targeting the mid
to high-end markets in which we
operate.
Group Financial Highlights
Continuing operations
Revenue
Operating profit/(loss) before exceptional items
Finance costs
Profit/(loss) before tax and exceptional items
Exceptional items
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Net debt
2014
£m
71.39
2.58
(0.53)
2.05
0.23
2.28
(0.67)
1.61
1.48
2013
£m
70.91
(0.50)
(0.46)
(0.96)
(2.38)
(3.34)
0.74
(2.60)
7.51
Strategic Report
Our Business and Performance
Group Financial Highlights
Chairman’s Statement
Operating and Financial Review
Our Governance
Directors
Directors’ Report
Corporate Governance Statement
Statement of Directors’ Responsibilities
Our Financials
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated and Company Balance
Sheets
Consolidated and Company Statements
of Changes in Equity
Consolidated and Company Statement of
Cash Flows
Significant Accounting Policies
Notes to the Accounts
Five Year Record
Shareholder Information
Glossary
01
02
04
09
10
13
14
15
16
16
17
18
19
20
26
51
52
53
Principal Subsidiaries and their Directors
IBC
See further information online:
www.victoriaplc.com
Use you phone’s QR code app
to go to our website
BY APPOINTMENT TO
HER MAJESTY THE QUEEN
CARPET MANUFACTURERS
VICTORIA CARPETS LTD
KIDDERMINSTER
01
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.com
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 number of factors that have contributed to
our change in fortunes but I would like to highlight a few
specific actions over the period:
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.
• Much of the underlying improvement has come from a
• As part of our strategy to dispose of non-core and
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
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.
02
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 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.
Geoffrey Wilding
Executive Chairman
28 August 2014
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
Existing UK
Westex
Australia (A$)
Australia (£)
PLC
Total
Notes:
2012
308
3,341
4,786
3,134
(859)
5,924
2013
(1,820)
3,698
3,104
2,027
(705)
3,200
2014
403
4,538
2,876
1,686
(682)
5,945
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
03
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comStrategic Report - Our Business and Performance Image: Victoria UK: Strathmore
Operating and Financial Review
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.
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
04
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Image: Victoria UK: Strathmore
Financial Review
The Group’s financial performance for the year end 29 March 2014 is summarised as follows:
Revenue
Operating profit/(loss) before exceptional items from continuing operations
Finance Costs
Profit/(loss) before tax and exceptional items from continuing operations
Exceptional items
Profit/(loss) before tax from continuing operations
Tax
Profit/(loss) after tax from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) for the period
Net debt
Exceptional Items
The exceptional items for the year end 29 March 2014 are summarised below:
2014
£m
71.39
2.58
(0.53)
2.05
0.23
2.28
(0.67)
1.61
0.12
1.73
1.48
Profit on sale of properties
Contract for Differences
Restructuring of Australia’s spinning mills
Acquisition costs
Move to AIM
Incentive plan
General Meeting costs
Write off of certain intangible assets
2013
£m
70.91
(0.50)
(0.46)
(0.96)
(2.38)
(3.34)
0.74
(2.60)
(0.18)
(2.78)
7.51
2014
£m
3.30
(1.63)
(0.78)
(0.66)
–
–
–
–
0.23
%
Change
0.7%
618.3%
15.2%
312.9%
109.7%
168.3%
190.8%
161.9%
158.2%
162.1%
-80.3%
2013
£m
–
–
(0.87)
–
(0.23)
(0.23)
(0.60)
(0.44)
(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 as disclosed in the Directors’ Report.
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.
05
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www.victoriaplc.comStrategic Report - Our Business and Performance Operating and Financial Review continued
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. A full reconciliation of
factors impacting the tax rate in the period is detailed in Note 6 of the financial statements.
Cash Flow and Debt
Operating profit/(loss) from continuing operations and before exceptional items
Depreciation and non-cash items
Foreign exchange
Movement in working capital
Operating cash flow (before exceptional items)
EBITDA*
2014
£m
2.58
2.55
0.06
4.32
9.51
5.14
2013
£m
(0.50)
2.77
0.12
2.12
4.51
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.
Operating cash flow (before exceptional items)
Interest paid
Corporation tax paid
Capital Expenditure
Free cash flow (before exceptional items)
Proceeds on disposal of property, plant and equipment
Acquisition of Westex
Dividends paid
Restructuring of Australia’s spinning mills
Dividends and sales proceeds from Colin Campbell
General Meeting, AIM and Incentive Plan costs
Other items
Net cash flow
Opening net debt
Closing net debt
2014
£m
9.51
(0.53)
(0.40)
(0.53)
8.05
11.70
(12.84)
(0.56)
(0.78)
0.50
–
(0.04)
6.03
(7.51)
(1.48)
2013
£m
4.51
(0.46)
(0.51)
(0.85)
2.69
0.10
–
(0.63)
(0.87)
–
(1.06)
0.01
0.24
(7.75)
(7.51)
Victoria UK: Rustic Jewels
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 section.
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).
06
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 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.
Going concern
The consolidated financial statements have been prepared on a going concern basis. The Group’s business activities,
together with the factors likely to affect its future development, performance and position, are set out in the Chairman’s
Statement and the Operating and Financial Review. In addition, note 26 to the financial statements includes details of the
Group’s financial instruments, hedging activities and its exposure to and management of credit risk, liquidity risk, currency
risk and interest rate risk.
Having reviewed the Group’s budgets, projections and funding requirements, and taking account of reasonable possible
changes in trading performance, the Directors believe they have reasonable grounds for stating that the Group has
adequate resources to continue in operational existence for the foreseeable future.
The Directors are of the view that the Group is well placed to manage its business risks. Accordingly, the Directors
continue to adopt the going concern basis in preparing the Annual Report and Accounts.
Accounting standards
The financial statements have been produced in accordance with International Financial Reporting Standards (IFRS), as
endorsed and adopted for use in the EU. There have been no changes to IFRS this year that have a material impact on
the Group’s results. There have been no changes in the accounting policies of the Group and its subsidiaries this year.
Victoria UK: Rustic Jewels
07
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comStrategic Report - Our Business and Performance Operating and Financial Review continued
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.
Sales growth (constant currency)
Operating margin (pre exceptional items)
Return on operating assets (pre exceptional items)
Earnings/(loss) per share (basic adjusted)
Net debt to EBITDA*
Interest cover (against EBITDA*)
* Earnings before interest, tax, depreciation, amortisation and exceptional items.
Principal risks and uncertainties
The principal risks facing the business are set out as follows:
2014
6.8%
3.6%
7.1%
27.1p
2013
-7.9%
-0.6%
-0.9%
-11.0p
2012
4.6%
3.5%
5.6%
23.7p
0.3 times
9.7 times
3.3 times
4.8 times
1.4 times
12.1 times
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
28 August 2014
08
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Directors
Geoffrey Wilding
Executive Chairman
Alexander Anton
Non-executive Director
Geoff Wilding BSc is a former investment banker. He set
up his own investment company in New Zealand in 1989.
He is also a director of Chorus Law Limited.
Geoff was appointed Executive Chairman at the General
Meeting on 3 October 2012.
Alexander Anton, a member of the founding family of
Victoria, was appointed to the main Board in 1995 and is a
former Chairman. He is currently a Trustee of The Queen’s
Club, London and Chairman of Legacy Portfolio.
Alexander was appointed to the Board at the General
Meeting on 3 October 2012.
Andrew Harrison
Non-executive Director
Terry Danks
Executive Director
Andrew Harrison has more than 20 years experience as a
solicitor in private practice, specialising in company law. He
has advised on a wide variety of corporate transactions,
including management buy-outs and buy-ins, corporate
acquisitions and disposals and listed company take-overs.
Andrew was appointed to the Board at the General
Meeting on 3 October 2012 and is the Senior Independent
Non-executive Director.
Appointed as Company Secretary to Victoria PLC in 1993
and appointed to the Board in May 2014. Terry joined
Victoria Carpets in 1985 as Chief Accountant and has
been responsible for both the accounting and IT function
within that company. Terry was subsequently appointed as
Finance Director of Victoria Carpets in 1989. Terry has a
breadth of experience and knowledge of the industry and
his high standards of financial control are invaluable to the
Group.
09
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Governance Alexander Anton is also deemed by the Panel on
Takeovers and Mergers to form part of the concert party
formed in December 2011. At 29 March 2014 the concert
party held 22.5% of the issued shares in the Company.
In accordance with the Company’s Articles of Association,
the Director retiring by rotation at the 2014 Annual General
Meeting is Andrew Harrison who, being eligible, offers
himself for re -election pursuant to Article 86.
Also in accordance with the Company’s Articles of
Association, Terry Danks who was appointed on 15 May
2014 offers himself for election.
No Director, either during or at the end of the financial year,
was materially interested in any significant contract with the
Company or any subsidiary undertaking, with the exception
of:
— A contract for differences (‘CFD’) between the Company
and Geoffrey Wilding which received shareholder
approval at a General Meeting on 20 February 2013.
This was entered into on 19 April 2013 and remained in
force at the year end.
— The CFD was subsequently terminated on 29 July 2014
(detailed further in Post Balance Sheet Events section
below).
The Company has made qualifying third party indemnity
provisions for the benefit of its Directors which were made
during the year following approval at the 2005 AGM and
which remain in force at the date of this report.
Directors’ Report
The Directors present their Annual Report and the audited
financial statements for the Group for the year ended
29 March 2014.
Principal activities and business review
The Group’s principal activities are the manufacture,
distribution and sale of floorcoverings.
A review of the business during the financial year and its
future development is included in the Strategic Report on
pages 2 to 8.
Results and dividends
The results include those of Victoria PLC and its
subsidiaries for the full year and are set out in the financial
statements on pages 16 to 50.
Profit attributable to shareholders
Total dividend paid in the financial year
Retained Profit
£000
1,725
563
1,162
A special dividend of £2.92 pence per share was paid
to shareholders on 25 July 2014 following approval by
shareholders at a General Meeting on 9 July 2014.
Consequently the Directors do not recommend the
payment of a final dividend for the financial year ended
29 March 2014.
Financial risk management
Details of the Group’s financial risk management policies
are set out in Note 26.
Directors and their interests
The current Directors of the Company together with their
biographical details are listed on page 9.
The Directors of the Company who held office at 29 March
2014 had the following interests in the Ordinary shares of
the Company:
29 Mar 2014
30 Mar 2013
Beneficial
Non-
beneficial
Beneficial
Non-
beneficial
Alexander Anton
71,075*
80,000
71,075*
80,000
Geoff Wilding
Andrew Harrison
—
—
—
—
—
—
—
—
* This includes 47,500 shares held in trust of which Alexander Anton is the
beneficiary
10
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Directors’ emoluments
The emoluments of all Directors for the financial year ended 29 March 2014 were:
Executive
Geoffrey Wilding
Non-executive
Alexander Anton
Andrew Harrison
Former Directors
Alan Bullock (until 31 August 2012)
Ian Davies (until 8 August 2012)
Barry Poynter (until 31 August 2012)
Katherine Innes Ker (until 3 October 2012)
Sir Bryan Nicholson (until 8 August 2012)
David Garman (8 August 2012 to
3 October 2012)
Roger Hoyle (8 August 2012 to 31 August 2012)
Salary/Fees
£000
Benefits in kind
£000
Bonus
£000
Total
2014
£000
Total
2013
£000
65
35
35
—
—
—
—
—
—
—
135
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
65
35
35
—
—
—
—
—
—
—
135
45
30
17
80
61
109
33
12
6
2
395
Directors’ pension entitlements
None of the Directors who held office at 29 March 2014 were members of the money purchase schemes. Contributions
paid by the Group in respect of such schemes in the prior year were:
Alan Bullock (until 31 August 2012)
Ian Davies (until 8 August 2012)
Barry Poynter (until 31 August 2012)
2014
£000
—
—
—
—
2013
£000
20
8
10
38
11
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Governance Auditor
Each person who is a Director at the date of approval of
this Annual Report confirms that:
a. So far as the Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware;
and
b. The Director has taken all steps that he ought to have
taken as a Director in order to make himself aware of
any such relevant audit information and to establish that
the Company’s Auditor is aware of that information.
The above is in accordance with the provisions of Section
418 of the Companies Act 2006.
Nexia Smith & Williamson has expressed its willingness to
continue in office as Auditor and a resolution to reappoint
them will be proposed at the forthcoming Annual General
Meeting.
Annual General Meeting
Notice of the 2014 Annual General Meeting to be held on
24 September 2014, together with a description of the
business to be discussed at the AGM, is set out in the
accompanying Notice. The proposed resolutions relate to
standard matters that are dealt with at every AGM.
On behalf of the Board
Terry A Danks
Director and Secretary
28 August 2014
Directors’ Report continued
Employees
Employees are encouraged to attend training courses and
there is regular consultation with employee representatives
to ensure that employees are informed of all matters
affecting them. Applications for employment by disabled
persons are given full and fair consideration having regard
to their particular aptitudes and abilities. Appropriate
training within their capabilities is provided for disabled
employees seeking career development. Employees who
become disabled during their employment have continued
in employment wherever possible.
Taxation status
The Directors are advised that the Company is not a
‘close company’ within the provisions of the Income and
Corporation Taxes Act 1988.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern
basis in preparing the accounts.
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 approval by
shareholders at a General Meeting on 9 July 2014.
(b) Contract for Differences (‘CFD’)
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 9 July
2014, shareholders approved the issue of 7,087,730 new
shares in settlement of the liability under the CFD upon
termination.
The shares were issued on 29 July 2014 to Camden
Holdings Limited, a company owned by The Camden
Trust, of which Geoffrey Wilding is the settlor and
discretionary beneficiary. As a result of this, Camden
Holdings Limited own 50% of the enlarged ordinary share
capital.
(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
accounts at 29 March 2014 and was subsequently sold
after the year-end for its written down value.
12
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Corporate Governance Statement
As an AIM listed group, Victoria PLC is not required to comply with the UK Corporate Governance Code. The Group
applies certain principles of good governance it believes appropriate to a group of its size.
On behalf of the Board
Terry A Danks
Director and Secretary
28 August 2014
13
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Governance Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Director’s Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors
are required to prepare the Group financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and Article 4 of the IAS regulation and have also chosen to prepare the parent
company financial statements under the IFRSs as adopted by the European Union. Under company law, the Directors
must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group and Company for that period. In preparing these financial
statements the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state that the financial statements comply with IFRSs as adopted by the European Union subject to any material
departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006, and as regards
the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of
the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website, www.victoriaplc.com. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
Terry A Danks
Director and Secretary
28 August 2014
14
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Independent Auditor’s Report
to the Members of Victoria PLC
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Strategic Report
and the Directors’ Reports for the financial year for which
the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Sancho Simmonds
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Chartered Accountants and Statutory Auditor
25 Moorgate, London, EC2R 6AY, United Kingdom
28 August 2014
We have audited the financial statements of Victoria PLC
for the 52 weeks ended 29 March 2014 which comprise
the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated
and Company Balance Sheets, the Consolidated
and Company Statements of Changes in Equity, the
Consolidated and Company Statements of Cash Flows
and the related notes 1 to 30. The financial reporting
framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union
and, as regards the parent company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors’
Responsibilities set out on page 14, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Financial
Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the FRC’s website at www.frc.
org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the parent company’s affairs
as at 29 March 2014 and the Group’s profit for the 52
week period then ended;
• the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
15
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Governance Consolidated Income Statement
For the 52 weeks ended 29 March 2014
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating income
Operating profit/(loss)
Analysed between:
Operating profit/(loss) before exceptional items
Exceptional items
Finance costs
Profit/(loss) before tax
Taxation
Profit/(loss) for the period from continuing operations
Profit/(loss) for the period from discontinued operations
Profit/(loss) for the period
Earnings/(loss) per share — pence
basic
diluted
Earnings/(loss) per share from continuing operations — pence
basic
diluted
52 weeks
ended
29 March
2014
Notes
£000
1
2
1
1,2
3
1,4
6
1,14
8
8
8
8
71,386
(50,544)
20,842
(13,804)
(7,914)
3,688
2,812
2,581
231
(531)
2,281
(672)
1,609
116
1,725
24.52
24.52
22.87
22.87
52 weeks
ended
30 March
2013
Re-stated
£000
70,909
(53,679)
17,230
(14,041)
(6,230)
168
(2,873)
(498)
(2,375)
(465)
(3,338)
738
(2,600)
(182)
(2,782)
(39.56)
(39.56)
(36.97)
(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
Exchange differences on translation of foreign operations
Amounts which may be subsequently reclassified to profit or loss
Profit/(loss) for the period
Total comprehensive loss for the period
52 weeks
ended
29 March
2014
£000
(5,078)
(5,078)
1,725
(3,353)
52 weeks
ended
30 March
2013
£000
1,597
1,597
(2,782)
(1,185)
16
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
Consolidated and Company Balance Sheets
As at 29 March 2014
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Investment property
Investment in subsidiary undertakings
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash at bank and in hand
Assets held for sale
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Other financial liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Share-based payment reserve
Total equity
Group
Company
29 March
2014
£000
30 March
2013
£000
29 March
2014
£000
30 March
2013
£000
Notes
10
11
12
13
13
19
15
16
12,14
17
18
17
18
19
20
21
21
21
2,735
4,953
18,681
180
—
1,441
27,990
21,203
13,964
—
15,192
547
50,906
78,896
17,496
1,162
5,406
24,064
7,716
11,267
1,210
20,193
44,257
34,639
1,772
909
31,958
—
34,639
—
248
23,778
180
—
1,323
25,529
20,866
11,163
361
1,091
389
33,870
59,399
9,624
—
7,709
17,333
1,954
890
749
3,593
20,926
38,473
1,758
829
35,724
162
38,473
—
—
—
180
27,126
285
27,591
—
16,177
—
13,151
—
29,328
56,919
3,128
—
5,267
8,395
6,804
9,733
—
16,537
24,932
31,987
1,772
909
29,306
—
31,987
—
—
4,966
180
3,322
—
8,468
—
4,281
—
—
56
4,337
12,805
229
—
4,246
4,475
—
500
471
971
5,446
7,359
1,758
829
4,669
103
7,359
Company Registered Number (England & Wales) 282204
The financial statements on pages 16 to 50 were approved by the Board of Directors and authorised for issue on
28 August 2014.
They were signed on its behalf by:
Geoffrey Wilding
Executive Chairman
17
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Consolidated Statement of Changes in Equity
For the 52 weeks ended 29 March 2014
At 31 March 2013
Profit for the period
Other comprehensive loss for the period
Transactions with owners:
Dividends paid
Movement in share based payment reserve
Transfer of share based payment reserve to
retained earmings
Issue of share capital in connection with exercise
of share options under LTIP plan
At 29 March 2014
At 1 April 2012
Loss for the period
Other comprehensive income for the period
Transactions with owners:
Dividends paid
Movement in share-based payment reserve
Deferred tax on share option scheme
Issue of share capital in connection with exercise
of share options under LTIP plan
Share
capital
£000
1,758
—
—
1,758
—
—
—
14
1,772
1,736
—
—
1,736
—
—
—
22
Share
premium
£000
829
—
—
829
—
—
—
80
909
829
—
—
829
—
—
—
—
Retained
earnings
£000
35,724
1,725
(5,078)
32,371
(563)
—
150
—
31,958
37,575
(2,782)
1,597
36,390
(627)
—
(39)
—
At 30 March 2013
1,758
829
35,724
Company Statement of Changes in Equity
For the 52 weeks ended 29 March 2014
Share-based
payment
reserve
£000
162
—
—
162
—
(12)
(150)
—
—
180
—
—
180
—
(18)
—
—
162
Share
capital
£000
1,758
—
1,758
—
—
14
1,772
1,736
—
1,736
—
—
—
22
1,758
Share
premium
£000
829
—
829
—
—
80
909
829
—
829
—
—
—
—
829
Retained
earnings
£000
4,669
25,097
29,766
(563)
103
—
29,306
5,802
(467)
5,335
(627)
—
(39)
—
4,669
Share-based
payment
reserve
£000
103
—
103
—
(103)
—
—
113
—
113
—
(10)
—
—
103
At 31 March 2013
Profit for the period
Transactions with owners:
Dividends paid
Transfer of share based payment reserve to
retained earnings
Issue of share capital in connection with exercise
of share options under LTIP plan
At 29 March 2014
At 1 April 2012
Loss for the period
Dividends paid
Movement in share-based payment reserve
Deferred tax on share option scheme
Issue of share capital in connection with exercise
of share options under LTIP plan
At 30 March 2013
18
23346.02 27 August 2014 8:35 AM Proof 8
Total
equity
£000
38,473
1,725
(5,078)
35,120
(563)
(12)
—
94
34,639
40,320
(2,782)
1,597
39,135
(627)
(18)
(39)
22
38,473
Total
equity
£000
7,359
25,097
32,456
(563)
—
94
31,987
8,480
(467)
8,013
(627)
(10)
(39)
22
7,359
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Consolidated and Company Statements of Cash Flows
For the 52 weeks ended 29 March 2014
Notes
23
Net cash inflow/(outflow) from operating activities
Investing activities
Purchases of property, plant and equipment
Dividend received from Colin Campbell & Sons Limited
Proceeds from disposal of Colin Campbell & Sons
Limited
Proceeds on disposal of property, plant and equipment
Acquisition of subsidiary, net of cash acquired, at Group
level
Net cash (used)/generated in investing activities
Financing activities
Increase in long term loans
Issue of share capital
Repayment of obligations under finance leases/HP
Dividends paid
Net cash generated/(used) in financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
24
Group
Company
52 weeks
ended
29 March
2014
£000
7,093
(531)
179
324
11,696
(12,176)
(508)
10,488
94
(14)
(563)
10,005
16,590
(6,475)
(190)
9,925
52 weeks
ended
30 March
2013
£000
1,611
52 weeks
ended
29 March
2014
£000
13,263
52 weeks
ended
30 March
2013
£000
(1,049)
(850)
—
—
96
—
(754)
500
—
(327)
(627)
(454)
403
(6,920)
42
(6,475)
—
179
324
5,600
(16,000)
(9,897)
9,233
94
—
(563)
8,764
12,130
(4,246)
—
7,884
—
—
—
8
—
8
500
—
—
(627)
(127)
(1,168)
(3,078)
—
(4,246)
19
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Significant Accounting Policies
Basis of Accounting
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU, IFRIC
interpretations and the parts of the Companies Act 2006
that apply to companies reporting under IFRS.
The financial statements have been prepared on the
historical cost basis, except for certain financial instruments
which are recorded at fair value in accordance with IAS39.
Land and buildings were professionally valued at 4 April
2004 and this valuation was adopted as deemed cost
on adoption of IFRS. The accounting policies have been
applied consistently in the current and prior year. The
principal accounting policies adopted are set out below.
Basis of preparation
The consolidated financial statements have been prepared
on a going concern-basis. The Strategic Report on page 7
sets out the justification for this basis of preparation.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled
by the Company (its subsidiaries). Control is achieved
where the Company has the power to govern the financial
and operating policies of an entity so as to obtain benefits
from its activities.
The results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement
from the effective date of acquistion or up to the effective
date of disposal, as appropriate.
All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
The Company has taken advantage of the exemption
provided under section 408 of the Companies Act 2006
not to publish its individual income statement and related
notes.
Business combinations and goodwill
Business combinations are accounted for using the
acquisition method as at the acquisition date, which is
the date on which control is transfered to the Group. The
consideration transferred for the acquisition of a subsidiary
is the fair values of the asset transferred, the liabilities
incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in the business combination
are measured initially at their fair values at the acquisition
date.
The Group measures goodwill at the acquisition date as:
• The fair value of the consideration transferred;
less
•
the net recognised amount of the identifiable
assets acquired and liabilities assumed.
Costs related to acquisition, other those associated with
the issue of debt or equity securities that the Group incurs
in connection with a business combination, are expensed
as incurred.
If the contingent consideration is classified as equity, it is
not remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes to the fair value
of the contingent consideration are recognised in profit or
loss.
Segmental Reporting
The Group’s internal organisation and management
structure and its system of internal financial reporting to the
Board of Directors are based on the geographical locations
of its businesses. The chief operating decision-maker has
been identified as the Board of Directors.
Non-current assets held for sale
Non-current assets and disposal groups are classified
as held for sale if their carrying amount will be recovered
through a sale transaction rather than through continuing
use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group)
is available for immediate sale in its present condition.
Management must be committed to the sale, which should
be expected to qualify for recognition as a completed sale
within one year from the date of classification. Non-current
assets (and disposal groups) classified as held for sale
are measured at the lower of the assets’ previous carrying
amount and fair value less costs to sell.
Investment Property
The investment properties are valued on an historical cost
basis, having been professionally valued at 4 April 2004
on adoption of IFRS, and is considered to be the deemed
cost.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable
for goods and services provided in the normal course of
business, net of discounts and sales related taxes. Sales
of goods are recognised when goods are despatched.
Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts
20
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
Dividend income from investments is recognised when
the shareholders’ rights to receive payment have been
established.
Leasing
Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.
Assets held under finance leases are recognised as
assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum
lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges
and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the
liability.
Finance charges are charged to profit or loss.
Rentals payable under operating leases are charged to
profit or loss on a straight-line basis over the term of the
relevant lease. Benefits received and receivable as an
incentive to enter into an operating lease are also spread
on a straight-line basis over the lease term.
Where sale and operating leaseback transactions are
entered into, the transaction is treated as a disposal and
any profit or loss is recognised immediately in the income
statement. The determination of the treatment of the
subsequent leasing arrangement is dependent on whether
substantially all of the risks and rewards of ownership are
transferred to the lessee.
Foreign currencies
The individual financial statements of each Group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of each entity
are expressed in Sterling, which is the functional currency
of the Company, and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded
at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary
items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items,
are included in profit or loss for the period. Exchange
differences arising on the retranslation of non-monetary
items carried at fair value are included in profit or loss for
the period except for differences arising on the retranslation
of non-monetary items in respect of which gains and
losses are recognised in equity. For such non-monetary
items, any exchange component of that gain or loss is
also recognised in equity. In order to hedge its exposure
to certain foreign exchange risks, the Group enters into
forward contracts and options (see below for details of the
Group’s accounting policies in respect of such derivative
financial instruments).
For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Group’s foreign
operations (including comparatives) are expressed in
Sterling using exchange rates prevailing on the balance
sheet date. Income and expense items (including
comparatives) are translated at the average exchange
rates for the period, unless exchange rates fluctuated
significantly during that period, in which case the exchange
rates at the dates of the transactions are used. Exchange
differences arising, if any, are classified as equity. Such
translation differences are recognised in profit or loss in the
period in which the foreign operation is disposed of.
Government grants
Government grants relating to property, plant and
equipment are treated as deferred income, and released
to profit or loss over the expected useful lives of the assets
concerned. Other government grants, including those
towards staff training costs, are recognised in profit or loss
over the periods necessary to match them with the related
costs and are deducted in reporting the related expense.
Retirement benefit costs
Payments to defined contribution retirement benefit plans
are charged as an expense as they fall due. Payments
made to state managed retirement benefit schemes are
dealt with as payments to defined contribution plans where
the Group’s obligations under the plans are equivalent to
those arising in a defined contribution retirement benefit
plan.
21
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Significant Accounting Policies continued
Property, plant and equipment
Land and buildings held for use in the production or supply
of goods or services, or for administrative purposes, are
stated in the balance sheet at their deemed cost, being
the fair value at the date of adoption of IFRS, less any
subsequent accumulated depreciation and subsequent
accumulated impairment losses. Depreciation on buildings
is charged to profit or loss.
Fixtures and equipment are stated at cost less
accumulated depreciation and any accumulated
impairment losses. Depreciation is charged so as to write
off the cost or valuation of assets, other than land and
properties under construction, less any anticipated residual
value, over their estimated useful lives.
Assets held under finance leases are depreciated over
their expected useful lives on the same basis as owned
assets or, where shorter, the term of the relevant lease.
The expected useful lives of assets are:
Buildings 50 years
Plant and equipment 3 to 20 years
Fixtures and equipment 3 to 20 years
Motor vehicles 4 to 5 years
The gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Intangible assets
i.
Intangible assets acquired in a business
combination
Intangible assets acquired in a business combination
and recognised separately from goodwill are initially
recognised at their value at the acquisition date, which
is regarded as their cost.
Subsequent to initial recognition, intangible assets
acquired in a business combination are reported at
cost less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible
assets that are acquired separately.
Taxation
Income tax expense represents the sum of the tax
currently payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
income statement because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is recognised on differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in
the computation of taxable profit, and are accounted for
using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset realised. Deferred tax is charged or credited to profit
or loss, except when it relates to items charged or credited
to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net
basis.
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Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
ii. Amortisation of intangible assets
Amortisation is charged to the income statement on
a straight-line basis over the estimated useful lives of
intangible assets. Amortisation commences from the
date the intangible asset becomes available for use.
iii. Derecognition of intangible assets
An intangible asset is derecognised on disposal,
or when no future economic benefits are expected
from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in profit or
loss when the asset is derecognised.
iv. Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the
carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that
reflects current market assessments of the time value
of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-
generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior
years. A reversal of an impairment loss is recognised
immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a
revaluation increase.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost comprises direct materials and,
where applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to their
present location and condition. Cost is calculated using the
weighted average method. Net realisable value represents
the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling
and distribution.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-
based payment. In accordance with IFRS 1, IFRS 2 has
been applied to all grants of equity instruments after
7 November 2002 that were unvested at 1 January 2005.
The Group issues equity settled share-based payments to
certain employees. Equity settled share-based payments
are measured at fair value (excluding the effect of non-
market based vesting conditions) at the date of grant. The
fair value determined at the grant date of the equity settled
share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate
of the shares that will eventually vest and adjusted for the
effect of non-market based vesting conditions.
Fair value is measured by use of the Black-Scholes model.
The expected life used in the model has been adjusted,
based on Management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
The liability in respect of equity-settled amounts is included
in equity.
Exceptional Items
Non-recurring transactions which are material by virtue of
their size or incidence are disclosed as exceptional items.
23
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Significant Accounting Policies continued
Financial instruments
(a) Financial assets
The Group’s financial assets fall into the categories
discussed below, with the allocation depending on the
purpose for which the asset was acquired. Although
the Group occasionally uses derivative financial
instruments in economic hedges of currency rate risk,
it does not hedge account for these transactions. The
Group has not classified any of its financial assets as
held to maturity.
Unless otherwise indicated, the carrying amounts
of the Group’s financial assets are a reasonable
approximation of their fair values.
The Group derecognises a financial asset only when
the contractual rights to the cash flows from the
asset expire; or it transfers the financial asset and
substantially all the risks and rewards of ownership of
the asset to another entity.
i. Loans and receivables
These assets are non-derivative financial assets
with fixed or determinable payments that are not
quoted in an active market. They arise principally
through the provision of goods and services to
customers (e.g. trade receivables) and deposits
held at banks but may also incorporate other types
of contractual monetary asset. They are initially
recognised at fair value plus transaction costs that
are directly attributable to the acquisition or issue
and subsequently carried at amortised cost less
provision for impairment, where appropriate.
The effect of discounting on these financial
instruments is not considered to be material.
Impairment provisions are recognised when there
is objective evidence (such as significant financial
difficulties on the part of the counterparty or default
or significant delay in payment) that the Group
will be unable to collect all of the amounts due
under the terms receivable; the amount of such
a provision being the difference between the net
carrying amount and the present value of the
future expected cash flows associated with the
impaired receivable. For trade receivables, such
provisions are recorded in a separate allowance
account with the loss being recognised within
distribution expenses in the income statement. On
confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is
written off against the associated provision.
ii. Fair value through profit or loss
This category comprises only “in the money”
foreign exchange derivatives to the extent that they
exist (see (b)(ii) for “out of the money” derivatives ).
They are carried in the balance sheet at fair value
with changes in fair value recognised in finance
income or expense. Other than these derivative
financial instruments, the Group does not have any
assets held for trading nor has it designated any
financial assets as being at fair value through profit
or loss.
The fair value of the Group’s foreign exchange
derivatives is measured using quoted forward
exchange rates and yield curves derived from
quoted interest rates matching maturity of the
contracts.
(b) Financial liabilities
The Group classifies its financial liabilities into one of
two categories depending on the purpose for which
the liability was incurred. Although the Group uses
derivative financial instruments in economic hedges
of currency risk, it does not hedge account for these
transactions.
Unless otherwise indicated, the carrying amounts
of the Group’s financial liabilities are a reasonable
approximation of their fair values.
The Group derecognises financial liabilities when, and
only when, the Group’s obligations are discharged,
cancelled or they expire.
24
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
i.
Financial liabilities measured at amortised
cost
These liabilities include the following items:
• Trade payables and other short-term monetary
liabilities, which are initially recognised at fair
value and subsequently carried at amortised
cost.
• Bank borrowings and loan notes are initially
recognised at fair value net of any transaction
costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are
subsequently measured at amortised cost.
Interest is recognised as a finance expense in
the income statement.
ii. Fair value through profit or loss
This category comprises only “out of the money”
derivatives to the extent that they exist (see (a)(ii)
for “in the money” derivatives). They are carried in
the balance sheet at fair value with changes in fair
value recognised in finance income or expense.
Other than these derivative financial instruments,
the Group does not have any liabilities held for
trading nor has it designated any financial liabilities
as being at fair value through profit or loss.
The methods used for calculating the fair value of the
Group’s interest rate and foreign exchange derivatives have
been described in (a)(ii) above.
Also included within this category is a CFD, which is
carried in the balance sheet at fair value with changes in
fair value recognised in finance income or expense.
(c) Share Capital
The Group’s Ordinary shares are classified as equity
instruments. Share capital includes the nominal value
of the shares. Any share premium attaching to the
shares are shown as share premium.
Adoption of new and revised standards
“IFRS 13, Fair value measurement” and “IAS 1
(Amendment) Presentation of financial statements”
have been adopted in the year but they have only had
a presentation and disclosure impact on these financial
statements.
Other than this, there have only been minor improvements
to existing International Financial Reporting Standards
and interpretations that are effective for the first time in
the current financial year that have been adotped by the
Group. These have had no impact on its consolidated
results or financial position.
Standards, amendments and interpretations that are
expected to be effective for periods beginning on or after
1 April 2014 for standards, amendments subject to EU
endorsement:
•
•
•
IFRS 10, Consolidated financial statements
IFRS 12, Disclosure of interests in other entities
IFRS 15, Revenue from contracts with
customers (effective for periods beginning
on or after 1 January 2017, subject to EU
endorsement)
•
IAS27 (Revised), Separate financial statements
The Directors are currently assessing the impact of these
on the Group’s results, assets and liabilities. The Directors
do not consider that any other standards, amendments or
interpretations issued by the IASB, but not yet applicable,
will have a significant impact on the financial statements.
25
23346.02 27 August 2014 8:35 AM Proof 8
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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
Exceptional
Segmental
operating
operating
items
profit
£000
£000
Finance
costs
£000
Revenue
£000
33,047
38,339
71,386
1,577
1,686
3,263
—
1,824
1,824
(9)
(138)
(147)
Profit
before
tax*
£000
1,568
3,372
4,940
For the 52 weeks ended 30 March 2013
Exceptional
Segmental
operating
operating
items
(loss)/profit
£000
£000
Finance
costs
£000
Revenue
£000
27,729
(1,820)
43,180
70,909
2,027
207
(442)
(1,082)
(1,524)
(206)
(154)
(360)
Loss
before
tax*
£000
(2,468)
791
(1,677)
(682)
(1,593)
(384)
(2,659)
(705)
(851)
(105)
(1,661)
71,386
2,581
231
(531)
2,281
70,909
(498)
(2,375)
(465)
(3,338)
(672)
1,609
738
(2,600)
5
111
116
77
(259)
(182)
71,386
2,586
342
(531)
1,725
70,909
(421)
(2,634)
(465)
(2,782)
UK
Australia
Unallocated
central
expenses
Total
continuing
operations
Tax
Profit/(loss)
after tax from
continuing
activities
Profit(loss)
from
discontinued
operations*
Profit/(loss) for
the period
* 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.
26
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
1 Segmental information continued
Balance Sheet
UK
Australia
Assets held for sale
Unallocated central assets/liabilities
As at 29 March 2014
As at 30 March 2013
Segment
assets
£000
55,877
22,000
547
472
78,896
Segment
liabilities
£000
24,739
11,022
—
8,496
44,257
Segment
assets
£000
22,203
36,627
389
180
59,399
Segment
liabilities
£000
7,965
7,912
—
5,049
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
Depreciation and amortisation
UK
Australia
No other significant non-cash expenses were deducted in measuring segment results.
Capital expenditure
UK
Australia
52 weeks
ended
29 March
2014
£000
904
1,650
2,554
52 weeks
ended
29 March
2014
£000
304
227
531
52 weeks
ended
30 March
2013
£000
792
1,960
2,752
52 weeks
ended
30 March
2013
£000
593
257
850
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23346.02 27 August 2014 8:35 AM Proof 8
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Notes to the Accounts continued
2. Exceptional Items from continuing operations
(a) Contract for Differences
(b) Profit on sale of properties
(c) Restructuring of Australia’s spinning mills
(d) Acquisition costs
(e) Move to AIM
(f)
Incentive plan
(g) General Meeting costs
(h) Write off of certain intangible assets
52 weeks
ended
29 March
2014
£000
(1,631)
3,297
(780)
(655)
—
—
—
—
52 weeks
ended
30 March
2014
£000
—
—
(869)
—
(233)
(227)
(604)
(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 as detailed in note 30 ‘Post balance sheet events’.
(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. Refer to
Note 11 ‘Intangible assets’ for further detail.
28
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 3. Finance costs
Interest on loans and overdrafts wholly repayable within five years
Hire purchase and finance lease interest
4 Profit/(loss) on ordinary activities before taxation
After charging/(crediting)
Net foreign exchange losses/(gains)
Depreciation of property, plant and equipment (see Note 12)
Amortisation of intangible assets (see note 11)
Staff costs (see note 5)
Cost of inventories recognised as an expense
(Profit)/loss on sale of fixed assets
Government grants (see note 25)
Operating lease rentals
Auditors’ remuneration:
Fees payable to the Company’s Auditor for the audit of the Company’s annual financial
statements
The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Other services pursuant to legislation
Tax services
Total non-audit fees
5 Staff Costs
Wages and salaries
Social security costs
Other pension costs
Termination benefits
52 weeks
ended
29 March
2014
£000
52 weeks
ended
30 March
2013
£000
500
31
531
2014
£000
152
2,484
70
19,565
50,544
(3,324)
(315)
495
16
69
85
54
13
67
2014
£000
17,300
1,242
1,023
—
19,565
426
39
465
2013
£000
(479)
2,700
52
18,795
53,679
13
(369)
555
16
54
70
—
6
6
2013
£000
16,203
1,134
1,160
298
18,795
Directors’ remuneration is included as part of the staff costs above. Directors’ remuneration is disclosed separately in
the Directors’ Report on page 11 and forms part of these financial statements.
Termination benefits in 2013 were in respect of former directors Mr A Bullock and Mr B Poynter.
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23346.02 27 August 2014 8:35 AM Proof 8
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5 Staff Costs continued
Average number employed (including executive directors of subsidiaries)
Directors
Sales and Marketing
Production
Logistics
Maintenance
Finance, IT and Administration
Pension costs
2014
11
68
378
53
33
42
585
2013
10
74
333
47
37
41
542
The Group operates a number of money purchase pension schemes. The companies and the employees contribute
towards the schemes.
The total pension cost for the Group was £1,023,000 (2013: £1,160,000), of which £345,000 (2013: £364,000)
relates to the UK schemes. The total contributions outstanding at year end was £nil (2013: nil).
6 Tax
Current tax
— Current year UK
— Current year overseas
— Adjustments in respect of prior years
Deferred tax (note 19)
— Credit recognised in the current year
— Adjustments in respect of prior years
— Effect of rate change
Total tax
2014
£000
168
1,243
(2)
1,409
(836)
30
69
(737)
672
2013
£000
—
165
(52)
113
(854)
12
(9)
(851)
(738)
Corporation tax is calculated at 23% and 30% (2013: 24% and 30%) of the estimated assessable profit/(loss) for the
year in the UK and Australia respectively.
30
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 6 Tax continued
The tax charge/(credit) for the year can be reconciled to the profit/(loss) per the income statement as follows:
Profit/(loss) before tax
Tax at the UK corporation tax rate of 23% (2013: 24%)
Tax effect of investment in Colin Campbell & Sons Limited
(discontinued operation)
Tax effect of items that are not deductible/non taxable in
determining taxable profit
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Effect of change in rate
Movement in deferred tax on revalued land no longer required
Crystallisation of rollover gain on plant and machinery
Profit on disposal of UK property non taxable
Profit on sale of Colin Campbell & Sons Limited non taxable
Tax adjustments in relation to share options
Tax losses not recognised for deferred tax
Adjustments to prior periods
Tax expense/(credit) and effective tax rate for continuing
operations
7 Dividends
2014
£000
2,397
551
(1)
591
234
69
(947)
29
(159)
(14)
(2)
293
28
672
2014
%
23.0
(0.0)
24.6
9.7
2.9
(39.5)
1.2
(6.6)
(0.6)
(0.1)
12.2
1.2
28.0
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 30 March 2013 paid during the period
6.0p per share (2013: 7.0p)
Interim dividend for the year ended 29 March 2014 paid during the period 2.0p per share
(2013: 2.0p)
Proposed final dividend for the year ended 29 March 2014 of 0.0p per share (2013: 6.0p)
2013
£000
(3,520)
(845)
44
38
53
(9)
(6)
—
—
—
22
5
(40)
(738)
2014
£000
422
141
563
—
2013
%
24.0
(1.3)
(1.1)
(1.5)
0.3
0.2
—
—
—
(0.6)
(0.1)
1.1
21.0
2013
£000
486
141
627
422
A special dividend of 292p per share was paid on 25 July 2014. The total value of the dividend paid was £20.7m.
The special dividend is further detailed in note 30 ‘Post balance sheet events’.
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8. Earnings/(loss) per share
The calculation of the basic, adjusted and diluted earnings/(loss) per share is based on the following data:
Profit/(loss) attributable to ordinary equity holders
of the parent entity
Exceptional items (net of tax effect):
Profit on sale of Australia properties
Profit on sale of UK property
Contract for Differences
Profit on sale of investment in Colin Campbell & Sons Limited
Acquisition costs
Restructuring of Australia’s spinning mills
Move to AIM
Incentive plan
General Meeting costs
Write off of certain intangible assets
Impairment of investment in associate company
Earnings for the purpose of basic and adjusted
earnings per share
Earnings for the purpose of basic and adjusted earnings per
share from continuing operations
Weighted average number of shares
Basic
2014
£000
Adjusted
2014
£000
Basic
2013
£000
Adjusted
2013
£000
1,725
1,725
(2,782)
(2,782)
—
—
—
—
—
—
—
—
—
—
—
(1,823)
(693)
1,631
(111)
633
546
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,725
1,609
1,908
(2,782)
1,792
(2,600)
—
—
—
—
—
608
177
173
459
336
259
(770)
(588)
2014
Number of
shares (’000)
2013
Number of
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:
Basic adjusted and diluted adjusted
Basic and diluted
Basic adjusted and diluted adjusted from continuing operations
Basic and diluted from continuing operations
2014
Pence
27.12
24.52
25.47
22.87
2013
Pence
(10.95)
(39.56)
(8.36)
(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. The new share issue is further detailed in
note 30 ‘Post balance sheet events’.
9 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:
Australia — A$
Canada — C$
32
2014
Average
Year-end
1.7057
1.6816
1.7988
1.8401
2013
Average
1.5317
1.5841
Year-end
1.4565
1.5427
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
10 Goodwill
At cost
2014
£000
2,735
2013
£000
—
The goodwill has been generated from the acquisition of Globesign Limited in December 2013 and is included within
the UK segment.
The group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired. The recoverable amount of the goodwill has been determined based on a value in use calculation. The
key assumptions for the value in use calculation are those regarding the discount rates, growth rates and expected
changes to selling prices and direct costs during the period. The discount rate of 18.14% is estimated using pre-tax
rates that reflect current market assessments of the time value of money and the risks specific to the market in which
Globesign operates. The calculation uses cash flow projections extrapolated from the budget for the year ending 28
March 2015. A terminal value was calculated based on a terminal growth rate assumption of 2.5%.
As at 29 March 2014 no impairment provision was considered necessary.
Goodwill comprises intangible assets that do not qualify for separate recognition, in particular the existing workforce.
None of the goodwill is expected to be tax deductible.
11 Intangible assets
Cost
At 1 April 2012
Exchange differences
At 30 March 2013
At 31 March 2013
Additions (see Note 22)
Exchange differences
Intangible assets derecognised
At 29 March 2014
Amortisation
At 1 April 2012
Exchange differences
Charges for the period
Impairment
At 30 March 2013
At 31 March 2013
Exchange differences
Charges for the period
Intangible assets derecognised
At 29 March 2014
Net book value
At 29 March 2014
At 30 March 2013
At 31 March 2012
Customer
Relationships
£000
Brand Names
£000
C&H Distribution
Limited
£000
323
—
323
323
322
—
322
322
2,291
2,484
—
(75)
2,539
147
—
16
36
199
199
—
40
(75)
164
2,375
124
176
—
(75)
2,731
146
—
16
36
198
198
—
30
(75)
153
2,578
124
176
400
—
400
400
—
—
(400)
—
10
—
20
370
400
400
—
—
(400)
—
—
—
390
Group
Total
£000
1,045
—
1,045
1,045
4,775
—
(550)
5,270
303
—
52
442
797
797
—
70
(550)
317
4,953
248
742
33
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Notes to the Accounts continued
11 Intangible assets continued
The intangible assets brought forward at 31 March 2012 were acquired with the trade and assets of Munster Carpets
and Navan Carpets and relate to customer lists acquired and the brand names. They are amortised over 20 years.
The addition of £4,775,000 of intangibles in the current period is in respect of the acquisition of Globesign Limited in
December 2013 and comprises £2,484,000 for the brand name (Westex Carpets) and £2,291,000 for the customer
list. The brand name is being amortised over 35 years and the customer list over 20 years.
The amortisation charge is included within administrative expenses in the Income Statement.
12 Property, plant and equipment
Property, plant and equipment
Group
Freehold
land and
buildings
£000
Plant and
machinery
£000
Fixtures,
vehicles
and
equipment
£000
Freehold
land and
buildings
£000
Total
£000
Company
Fixtures,
vehicles
and
equipment
£000
3,464
60,219
5,506
Cost
At 1 April 2012
Exchange differences
Additions
Disposals
At 30 March 2013
At 31 March 2013
Exchange differences
Acquisition
Additions
Transfers
Assets transferred to ‘assets
held for sale’ (See Note 14)
Disposals
At 29 March 2014
Accumulated depreciation
At 1 April 2012
Exchange differences
Charge for the year
Disposals
At 30 March 2013
At 31 March 2013
Exchange differences
Charge for the year
Transfers
Assets transferred to ‘assets
held for sale’ (See Note 14)
Disposals
At 29 March 2014
Net Book Value
At 29 March 2014
At 30 March 2013
At 31 March 2012
11,780
283
—
—
12,063
12,063
(795)
7,396
10
275
(955)
(9,115)
8,879
942
19
122
—
1,083
1,083
(74)
258
231
(408)
(815)
275
8,604
10,980
10,838
34
44,975
1,634
97
(257)
46,449
46,449
(5,574)
459
144
(275)
—
(149)
41,054
118
753
(808)
3,527
3,527
(400)
220
377
—
—
(195)
3,529
2,035
850
(1,065)
62,039
62,039
(6,769)
8,075
531
—
(955)
(9,459)
53,462
31,814
2,485
35,241
1,178
2,218
(251)
34,959
34,959
(4,125)
1,881
(231)
—
(108)
32,376
8,678
11,490
13,161
79
360
(705)
2,219
2,219
(270)
345
—
—
(164)
2,130
1,399
1,308
979
1,276
2,700
(956)
38,261
38,261
(4,469)
2,484
—
(408)
(1,087)
34,781
18,681
23,778
24,978
—
—
—
5,506
5,506
—
—
—
—
—
(5,506)
—
480
—
60
—
540
540
—
60
—
—
(600)
—
—
4,966
5,026
23346.02 27 August 2014 8:35 AM Proof 8
Total
£000
5,543
—
—
(37)
5,506
5,506
—
—
—
—
—
(5,506)
—
516
—
60
(36)
540
540
—
60
—
—
(600)
—
—
4,966
5,027
37
—
—
(37)
—
—
—
—
—
—
—
—
—
36
—
—
(36)
—
—
—
—
—
—
—
—
—
—
1
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 12 Property, plant and equipment continued
Included within fixed assets are the following:
Held under finance leases:
Cost at 29 March 2014
Accumulated depreciation at 29 March 2014
Depreciation charged in year
Held under finance leases:
Cost at 30 March 2013
Accumulated depreciation at 30 March 2013
Depreciation charged in year
There were no assets under hire purchase agreement at 29 March 2014 or 30 March 2013.
Capital expenditure authorised and committed at the period end:
Contracts placed
Group
fixtures,
vehicles and
equipment
£000
650
257
118
729
220
143
2013
£000
6
Group
2014
£000
—
The Company held no assets under finance lease or hire purchase agreements and had no capital commitments at
either year end.
13 Fixed asset investments
Investment property
Investment in subsidiaries
Group
Company
2014
£000
180
—
2013
£000
180
—
2014
£000
180
27,126
2013
£000
180
3,322
Note
(a)
(b)
a) Investment property
Investment property relates to land, therefore no depreciation charge has been applied.
b) Investment in subsidiaries
The investment represents shares in subsidiaries at cost.
Victoria PLC owns directly or indirectly the whole of the allotted ordinary share capital of the following principal
subsidiary companies.
Victoria Carpets Limited
Westwood Yarns Limited
Globesign Limited
Westex (Carpets) Limited
The Victoria Carpet Company Pty Limited
Country of incorporation
and operation
England
England
England
England
Australia
Nature of
business
Carpet manufacture
Yarn manufacture
Holding Company
Carpet manufacture
Carpet manufacture
35
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials
Notes to the Accounts continued
14 Assets held for sale
(a) During the year, the Company acquired the remaining 50% interest in Colin Campbell & Sons Limited, which was
subsequently sold on the 28 March 2014.
Group
Company
Cost of investment
Return of capital
Share of post-acquisition profits (retained by Colin Campbell
& Sons Limited)
Impairment of investment in associate company
Proceeds on disposal
Profit on disposal
(a) Investment in Colin Campbell & Sons Limited sold during
the year
(b) The Castlemaine mill in Australia was sold post year end
for proceeds amounting to net book value
2014
£000
101
(45)
416
(259)
324
111
—
547
547
2013
£000
101
(45)
592
(259)
—
—
389
—
389
15 Inventories
Raw materials
Work-in-progress
Finished goods
2014
£000
101
(45)
—
—
324
268
—
—
—
2013
£000
101
(45)
—
—
—
—
56
—
56
Group
2014
£000
4,296
1,957
14,950
21,203
2013
£000
6,454
673
13,739
20,866
The Company held no inventories at either year end. There is no material difference between the balance sheet value
of inventories and their replacement cost.
16 Trade and other receivables
Amounts falling due within one year:
Trade debtors
Amounts owed by subsidiaries
Amounts owed by associated company
Other debtors
Prepayments and accrued income
Group
2014
£000
2013
£000
12,807
10,667
—
—
14
1,143
13,964
—
106
55
335
Company
2014
£000
—
15,693
—
—
484
2013
£000
—
4,213
—
—
68
11,163
16,177
4,281
The average credit period taken on sale of goods is 54 days (2013: 55 days). No interest is charged on past due
receivables.
Amounts owed by subsidiaries to the Company are not considered to be impaired.
The above amounts are stated net of an allowance (net of VAT) of £218,000 (2013: £212,000) made for estimated
irrecoverable amounts from sale of goods. The movement of this allowance account during the year is summarised
below:
36
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 16 Trade and other receivables continued
Opening balance at 31 March 2013
Increase in provisions
Written off against provisions
Recovered amounts
Exchange differences
Closing balance at 29 March 2014
2014
£000
212
196
(159)
(8)
(23)
218
2013
£000
174
103
(64)
(6)
5
212
An analysis of the age of trade receivables that are past due at the reporting date but not impaired can be seen in the
table below:
1–30 days overdue
31–60 days overdue
> 60 days overdue
Total
An analysis of the age of impaired trade receivables is as follows:
1–30 days overdue
31–60 days overdue
> 60 days overdue
Total
2014
£000
1,241
117
216
1,574
2014
£000
99
4
118
221
2013
£000
2,687
78
94
2,859
2013
£000
185
19
197
401
The main factors in assessing the impairment of trade receivables are the age of the balance and the circumstances
of the individual customer. The directors consider that the carrying amount of all receivables, including those impaired,
approximate to their fair value.
17 Trade and other payables
Amounts falling due within one year:
Trade creditors
Amounts due to subsidiaries
Other creditors
Accruals
Fair value of Contract for Differences
Deferred income
Group
Company
2014
£000
9,554
—
3,827
2,213
1,605
297
17,496
2013
£000
5,075
—
2,269
1,910
—
370
9,624
2014
£000
—
32
1,000
491
1,605
—
3,128
2013
£000
—
32
—
197
—
—
229
The Contract for Differences charge of £1.61m represents the fair value assessment of the contract as at the year
end date. The CFD has been fair valued using a market approach at 29 March 2014, being the best estimate for
future share price under the efficient market hypothesis. The 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 shares. Under IFRS 13 Fair Value Measurement of the CFD is classified under the fair value hierarchy as
Level 3. The fair value of the CFD will be sensitive to future changes in the share price of the Company.
37
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Notes to the Accounts continued
17 Trade and other payables continued
Amounts falling due after one year:
Other creditors
Deferred income
Group
Company
2014
£000
6,875
841
7,716
2013
£000
550
1,404
1,954
2014
£000
6,804
—
6,804
2013
£000
—
—
—
Other creditors (Group and Company) includes an estimate for contingent earn-out liability of £7,804,000 in
connection with the acquisition of Globesign Limited, with £1,000,000 estimated as due within one year and
£6,804,000 due after one year. Under IFRS 13 Fair Value Measurement this is classified under the fair value hierarchy
as Level 3. Deferred income relates to government grants as shown in note 25.
18 Other financial liabilities
Amounts falling due within one year:
Group
Company
Bank loans and overdrafts
Hire purchase and finance lease creditors
Amounts falling due after more than one year:
Bank Loans
— Between one and two years
— Between two and five years
Hire purchase and finance lease obligations payable
— Between one and two years
— Between two and five years
2014
£000
5,267
139
5,406
Group
2014
£000
4,023
6,965
164
115
11,267
The loans falling due after more than one year are repayable as follows:
— Between one and two years
— Between two and five years
Group
2014
£000
4,023
6,965
2013
£000
7,566
143
7,709
2013
£000
500
—
163
227
890
2013
£000
500
—
2014
£000
5,267
—
5,267
Company
2014
£000
2,768
6,965
—
—
9,733
Company
2014
£000
2,768
6,965
2013
£000
4,246
—
4,246
2013
£000
500
—
—
—
500
2013
£000
500
—
The directors consider that the carrying amounts of other financial liabilities approximate to their fair value.
Bank borrowings in the United Kingdom are secured by way of debentures over the assets; however, the UK
businesses were in a net cash position of £0.19m at the year-end (2013: net borrowings of £7.87m). Bank
borrowings of the Australian subsidiary are secured by a general security agreement over its assets; the Australian
company was in a net borrowing position of £1.25m at the year-end (2013: Net cash position of £1.00m).
The Company has guaranteed the bank borrowings of its UK subsidiaries and there is a Composite Accounting
Agreement between the Company, Victoria Carpets Limited, Westwood Yarns Limited, Globesign Limited, Westex
(Carpets) Limited and Barclays Bank PLC. At the 29 March 2014 the UK subsidiaries were in a net cash position
under the Composite Accounting Agreement of £0.96m (2013: net debt position of £3.12m).
38
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 18 Other financial liabilities continued
The average effective interest rate of borrowings is set out in note 26 ‘Financial instruments’.
Operating lease arrangements
The Group and Company as lessee
Details of operating lease arrangements for the Group and Company are as follows:
Minimum lease payments under operating leases recognised
in income statement for the year.
Group
Company
2014
£000
668
2013
£000
555
2014
£000
1
At the balance sheet date, the Group and Company had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows:
Minimum lease payments
Within one year
In the second to fifth years inclusive
After five years
Present value of minimum lease payments
Within one year
In the second to fifth years inclusive
After five years
Group
Company
2014
£000
1,569
5,521
11,926
19,016
2013
£000
456
687
38
1,181
2014
£000
495
1,988
7,425
9,908
Group
Company
2014
£000
1,382
3,695
3,544
8,621
2013
£000
401
483
18
902
2014
£000
436
1,290
1,655
3,381
2013
£000
—
2013
£000
—
—
—
—
2013
£000
—
—
—
—
Operating lease payments represent rentals payable by the Group and Company principally for vehicles and certain of
its properties. Leases of vehicles are usually negotiated for a term of 3 to 5 years and rentals are fixed for the term of
the lease. Leases of land and buildings are usually negotiated for 5 to 20 years.
19 Deferred taxation
At 1 April 2012
Exchange adjustment
Credit to Income statement (Note 6)
Effect of rate change (Note 6)
Deferred tax on share option scheme taken to equity
At 30 March 2013
At 30 March 2013
Exchange adjustment
Credit to Income statement (Note 6)
Adjustment for acquisition of Globesign Limited
Effect of rate change (Note 6)
Deferred tax on intangible assets acquired
At 29 March 2014
Group
£000
Company
£000
282
(44)
(842)
(9)
39
(574)
(574)
157
(806)
(32)
69
955
(231)
784
—
(332)
(20)
39
471
471
—
(756)
—
—
—
(285)
39
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials
Notes to the Accounts continued
19 Deferred taxation continued
The provision for deferred taxation is as follows:
Capital Allowances
Liability on recovering value through sale
Deferred grant income
Tax losses
Other timing differences
Group
Company
2014
£000
618
(188)
(341)
(838)
518
(231)
2013
£000
1,361
429
(532)
(1,346)
(486)
(574)
2014
£000
(1)
(77)
—
(207)
—
(285)
2013
£000
567
304
—
(402)
2
471
The provision is based on taxation rates of 20% in the UK and 30% in Australia (2013: 23% and 30% respectively).
Effect on UK deferred tax balances of Proposed changes in the UK corporation tax rate
In the 2013 Budget, issued on 20 March 2013, the government announced that the main rate of corporation tax
would be reduced to 20% with effect from 1 April 2015. This rate reduction was substantively enacted for financial
reporting purposes on 2 July 2013. Accordingly, current tax has been provided for at a rate of 23% and deferred tax
has been provided for at a rate of 20% in these financial statements.
Deferred tax assets and liabilities
The deferred tax balances shown on the balance sheet are:
Deferred tax liabilities
Deferred tax assets
20 Share capital
Group
Company
2014
£000
1,210
(1,441)
(231)
2013
£000
749
(1,323)
(574)
2014
£000
—
(285)
(285)
2014
£000
2013
£000
471
—
471
2013
£000
Allotted, called up and fully paid
7,087,730 Ordinary shares of 25p each (2013: 7,033,185)
1,772
1,758
The Company has one class of Ordinary shares which carry no right to fixed income.
The Company issued 54,545 fully paid ordinary shares of 25p each during the year ended 29 March 2014, in
connection with the exercise of share options under the Company’s Long Term Incentive Plan. These shares were
settled in full at the option price.
Capital risk management
The Group considers its capital to comprise its Ordinary share capital, share premium, accumulated retained earnings
and net debt. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a
consistent return for its equity shareholders through a combination of capital growth and distributions.
In order to achieve this objective, the Group monitors its gearing to balance risks and returns at an acceptable level
and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment
needs. In making decisions to adjust its capital structure to achieve these aims, either through altering its dividend
policy, new share issues, or the reduction of debt, the Group considers not only its short-term position but also its
long-term operational and strategic objectives.
The Group is subjected to two financial covenants in connection with its UK bank facilities. These covenants are
tested quarterly and were not breached during the year and have not been subsequently.
40
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
21 Reserves
i. Share Premium and Retained Earnings
52 weeks ended 30 March 2013
At
31 March
2012
£000
Income
statement
£000
Dividends
paid
£000
Other
movements
£000
52 weeks ended 29 March 2014
At
30 March
2013
£000
Income
statement
£000
Dividends
paid
£000
Other
movements
£000
At
29 March
2014
£000
Group
Share Premium
Profit and Loss
Account
Adjustments arising out
of consolidation:
829
—
—
—
829
—
—
80
909
30,710
(2,782)
(627)
(39)
27,262
1,725
(563)
150
28,574
Goodwill
Exchange rates
(1,533)
8,398
—
—
—
—
Retained earnings
37,575
(2,782)
(627)
— (1,533)
1,597
1,558
9,995
35,724
—
—
—
—
— (1,533)
(5,078)
4,917
1,725
(563)
(4,928)
31,958
Company
Share Premium
Retained earnings
829
5,802
—
(467)
—
(627)
—
(39)
829
—
4,669
25,097
—
(563)
80
103
909
29,306
The profit of the Company for the year determined in accordance with the Companies Act 2006 was £25,097,000
(2013: loss of £467,000). The Company is exempt under Section 408 of the Companies Act 2006 from presenting
its own Income statement and Statement of Comprehensive Income.
ii. Share-Based Payment Reserve
Balance at 30 March 2013
Movement in Income Statement in year
Issue of share capital through LTIP scheme- where net settled
Exchange rates
Transfer of share-based payment reserve to retained earnings
Balance at 29 March 2014
Group
Company
2014
£000
162
—
—
(12)
(150)
—
2013
£000
180
—
(22)
4
—
162
2014
£000
103
—
—
—
(103)
—
2013
£000
113
—
(10)
—
—
103
22 Acquisition of subsidiary
On 13 December 2013, the Group acquired the entire issued share capital of Globesign Limited and its wholly
owned subsidiary Westex (Carpets) Limited. The principal activity of Westex (Carpets) Limited is the manufacture and
sale of carpets. The business operates from two dedicated manufacturing locations which include the spinning and
dyeing of yarn and the manufacture of a wide range of carpet types and colours. The acquisition is expected to be
accretive to underlying earnings per share of the Company.
The Group results for the year ended 29 March 2014 included £4.83m of revenue and £1.17m profit before tax from
Globesign Limited.
Consideration
(i)
Initial cash consideration of £16.0m was transferred on acquisition.
(ii) Deferred consideration of up to £8.0m at the end of the third anniversary of the acquisition if Globesign Limited
generates an average EBITDA of £4.2m over the preceding three years. On account payments shall be made half
yearly if certain targets are met.
(iii) Deferred consideration at the end of each of the first, second and third anniversaries of the acquisition being 100
per cent of the profit after tax generated by Globesign Limited in excess of £2.7m.
41
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials
Notes to the Accounts continued
22 Acquisition of subsidiary continued
(iv) Deferred consideration at the end of the fourth and fifth anniversaries of the acquisition being 50 per cent of
the sum by which profits after tax generated by Globesign Limited exceeds the greater of (i) the highest profit
after tax achieved during the previous three years; and (ii) £2.7m.
Net assets acquired
Property, plant and equipment
Inventories
Trade and other receivables
Deferred tax asset
Cash
Trade and other payables
Current tax liabilities
Fair value of net assets acquired
Fair value adjustments
Intangible assets (see Note 11)
Deferred tax liability on intangible assets acquired
Total identifiable net assets
Goodwill (see Note 10)
Total consideration
Satisfied by:
Cash
Deferred consideration
The deferred consideration of £7.80m was determined by applying a discounted cash flow model to estimated
future earnings.
Net cash outflow arising on acquisition:
Cash consideration
Cash and cash equivalents acquired
Amounts
recognised
at acquisition
£’000
8,075
5,023
2,985
32
3,824
(2,180)
(510)
17,249
4,775
(955)
21,069
2,735
23,804
16,000
7,804
23,804
(16,000)
3,824
(12,176)
Other than where fair value adjustments have been made, the book value of assets acquired are considered to
approximate to their fair values.
Transaction costs of £655,000 relating to the acquisition of Globesign Limited have been recognised as an expense
and included within administrative expenses in the Income Statement.
If the acquisition of Globesign Limited had been completed on the first day of the financial year, Group revenues for
the period would have been £14.1m higher and Group profit before tax would have been £3.4m higher.
42
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 23 Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities
Operating profit/(loss) from continuing operations
Adjustments for:
— Depreciation charges
— Amortisation of intangible assets
— Impairment of intangible assets
— Fair value charge for Contract for Differences
— (Profit)/loss on disposal of property, plant and equipment
— Exchange rate difference on consolidation
Operating cash flows before movements in working capital
Decrease/(increase) in working capital
Cash generated/(used) by operations
Interest paid
Income taxes paid
Net cash inflow/(outflow) from operating activities
24 Analysis of net debt
Group
Company
2014
£000
2,812
2013
£000
2014
£000
(2,873)
24,163
2,484
2,700
70
—
1,605
(3,324)
55
3,702
4,317
8,019
(531)
(395)
7,093
52
442
—
13
124
458
2,124
2,582
(465)
(506)
1,611
60
—
—
1,605
(693)
—
25,135
(11,488)
13,647
(384)
—
13,263
(1,049)
2013
£000
(714)
60
—
—
—
(8)
—
(662)
(282)
(944)
(105)
—
At
30 March
2013
£000
Cash
flow
£000
Other
non-cash
changes
£000
Exchange
movement
£000
At
29 March
2014
£000
Cash
Bank loans payable less than one year and
overdrafts
Cash and cash equivalents
Finance leases and hire purchase
agreements
— Payable less than one year
— Payable more than one year
Bank loans payable more than one year
Net debt
1,091
14,296
(7,566)
(6,475)
2,294
16,590
(143)
(390)
(500)
(7,508)
14
—
(10,488)
6,116
—
—
—
(37)
37
—
—
(195)
15,192
5
(190)
27
74
—
(89)
(5,267)
9,925
(139)
(279)
(10,988)
(1,481)
The Group’s policy on Derivatives and Other Financial Instruments is set out in note 26 ‘Financial instruments’.
43
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25 Government Grants
During the year ended 29 March 2014, the Group’s Australian operations benefited from government assistance
under the SIP (Strategic Investment Programme) which was accounted for as follows:
Deferred Income at 30 March 2013
Total grant income in the year
Less: Amortisation to deferred income by release through cost of production in the year
Exchange differences
Deferred income at 29 March 2014
Presented in:
Current liabilities
Non-current liabilities
Deferred income at 29 March 2014
2014
£000
1,774
—
(315)
(321)
1,138
297
841
1,138
2013
£000
2,042
—
(369)
101
1,774
370
1,404
1,774
There are no unfulfilled conditions or other contingencies attaching to government assistance.
26 Financial instruments
Background
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group’s objectives, policies and processes for managing those risks and the methods used
to measure them. Further quantitative information in respect of these risks is presented throughout the financial
statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies
and processes for managing those risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
The “financial instruments” which are affected by these risks comprise borrowings, cash and liquid resources used to
provide finance for the Group’s operations, together with various items such as trade debtors and trade creditors that
arise directly from its operations, inter-company payables and receivables, and any derivatives transactions (such as
interest rate swaps and forward foreign currency contracts) used to manage the risks from interest rate and currency
rate volatility.
A contract for differences was entered into during the year and was established to link the performance and reward
of Geoffrey Wilding to the creation of wealth for all shareholders. Under the original terms of the agreement, this was
to be settled in cash, but was subsequently settled post year end in shares (see Note 17) and therefore there is no
on-going exposure to risk.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function.
The Board receives monthly reports through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting
the Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
44
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP 26 Financial instruments continued
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables and investments.
The Group’s exposure to credit risk is primarily attributable to its trade receivables. Credit risk is managed locally by
the management of each business unit. Prior to accepting new customers, credit checks are obtained from reputable
external sources. The amounts presented in the balance sheet are net of allowance for doubtful receivables. An
allowance for impairment is made where there is an identified loss event which, based on previous experience, is
evidence of a reduction on the recoverability of the cash flows.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
low credit risk assigned by international credit-rating agencies.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties
and customers.
The Company has no significant concentration of credit risk, other than with its own subsidiaries, the performances
of which are closely monitored. The Directors confirm that the carrying amounts of monies owed by its subsidiaries
approximate to their fair value.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due.
To achieve this aim, the cash position is continuously monitored to ensure that cash balances (or agreed facilities)
meet expected requirements for a period of at least 90 days.
The Board monitors annual cash budgets and updated forecasts against actual cash position on a monthly basis.
At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources to
meet its obligations under all reasonably expected circumstances.
The maturity of financial liabilities is detailed in note 18 ‘Other financial liabilities’.
Market risk
Market risk arises from the Group’s use of interest bearing and foreign currency financial instruments. It is the risk that
the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest
rate risk) or foreign exchange rates (currency risk).
a) Interest rate risk
The Group finances its operations through a mixture of retained profits, equity capital and bank facilities, including hire
purchase and lease finance. The Group borrows in the desired currency at floating or fixed rates of interest and may
then use interest rate swaps to secure the desired interest profile and manage exposure to interest rate fluctuations.
Interest rate sensitivity
The annualised effect of a 50 basis point decrease in the interest rate at the balance sheet date on the variable rate
debt carried at that date would, all other variables held constant, have resulted in a increase in post-tax profit for the
year of £16,000 (2013: decrease in post-tax loss of £28,000). A 50 basis point increase in the interest rate would, on
the same basis, have reduced the profit for the year by the same amount.
45
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Notes to the Accounts continued
26 Financial instruments continued
Effective interest rate analysis
In respect of income-earning financial assets and interest bearing financial liabilities, the following table indicates their
effective interest rates for the remaining contractual maturity based on the discounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay.
As at 29 March 2014
As at 30 March 2013
Effective
interest
rate
%
Total
£000
0–1
years
£000
1–2
years
£000
2–5
years
£000
Effective
interest
rate
%
Total
£000
0–1
years
£000
1–2
years
£000
2–5
years
£000
Group
Cash and cash
equivalents
Bank loans &
overdraft
Finance lease
and HP
Company
Cash and cash
equivalents
Bank loans &
overdraft
0.08
17,505
17,505
—
—
0.94
1,091
1,091
—
2.99 (18,568)
(8,835)
(2,768)
(6,965)
3.38
(8,066)
(7,566)
(500)
—
—
6.94
3.08
(418)
(66)
(180)
(172)
(1,481)
8,604
(2,948)
(7,137)
7.51
4.03
(533)
(129)
(7,508)
(6,604)
(45)
(545)
(359)
(359)
0.11
13,151
13,151
—
—
—
—
—
—
3.70 (15,000)
(5,267)
(2,768)
(6,965)
2.65
(4,746)
(4,246)
3.70
(1,849)
7,884
(2,768)
(6,965)
2.65
(4,746)
(4,246)
(500)
(500)
—
—
—
Non-interest bearing liabilities
Non-interest bearing liabilities falling due within one year
Details of trade and other payables falling due within one year are set out in note 17.
2014
£000
17,496
2013
£000
9,624
b) Currency risk
The main currency exposure of the Group arises from the ownership of the Australian subsidiary, which accounts for
approximately 32% of the Group’s net assets.
It is the Board’s policy not to hedge against movements in the Sterling/Australian exchange rate.
Other currency exposure derives from trading operations where goods are exported or raw materials and capital
equipment are imported. These exposures may be managed by forward currency contracts, particularly when the
amounts or periods to maturities are significant and at times when currencies are particularly volatile.
46
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26 Financial instruments continued
Currency risk sensitivity
The effect of a 10% strengthening of the Australian Dollar against Sterling over the full year would, all other variables
held constant, have resulted in a increase in Group post-tax profit for the year of £255,000. (2013: decreased Group
post-tax loss by £64,000). A 10% weakening in the exchange rate would, on the same basis, have decreased Group
post-tax profit by £208,000 (2013: increased Group post-tax loss by £52,000).
The effect of a 10% strengthening of the Australia Dollar against sterling at year end rates would have resulted in an
increase to equity of £1,582,000 (2013: an increase of £3,190,000). A 10% weakening in the exchange rate would,
on the same basis, have decreased equity by £1,294,000 (2013: decrease of £2,610,000).
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date are as follows:
Australian Dollar
Liabilities
2014
£000
11,022
2013
£000
7,912
Assets
2014
£000
2013
£000
22,547
36,627
c) Trading
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall
be undertaken.
27 Key sources of estimation uncertainty
In applying the Group’s accounting policies, appropriate estimates have been made in a number of areas and the
actual outcome may vary from the position described in the Group’s and Company’s balance sheets at 29 March
2014. The key sources of uncertainty at the balance sheet date that may give rise to a material adjustment to the
carrying value of assets and liabilities within the next financial year are as follows:
Deferred tax assets (£1,441,000; 2013: £1,323,000)
Deferred tax assets are recognised at the balance sheet date based on the assumption that there is a high
expectation that the asset will be realised in due course. This assumption is dependent on the UK and Australia’s
ability to generate sufficient future taxable profits.
Inventories (£21,203,000; 2013: £20,866,000)
A proportion of inventory is made up of stocks which are not expected to sell for the full normal selling price, either
because they are remnants, come from discontinued ranges, or are below the required quality standard. This
inventory is carried at a value which reflects the Directors’ best estimates of achievable selling prices. The carrying
amount of inventories carried at fair value less costs to sell amounted to £2,021,000 (2013: £1,831,000). During the
year, provisions relating to these stocks increased by £16,000 (2013: an increase of £326,000).
Globesign Limited deferred earn-out consideration
Details of the deferred earn-out consideration are set out under note 22.
Trade receivables
Details of the provision made for non-recoverability of debts due to the Group from the sale of goods are set out
under note 16.
Contract for Differences
The fair value of the CFD at year end was £1.61m. Details of the approach taken to fair value the CFD are set out
under note 17.
47
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Notes to the Accounts continued
28 Share-based payments
Victoria PLC 2008 Long Term Incentive Plan and 2011 Performance Share Plan
The Group had a Long Term Incentive Plan (LTIP) which was established in 2008 and Performance Share Plan (PSP)
established in 2011 which entitle Executive Directors to purchase shares in the Company subject to achievement of
specific performance conditions.
The following table shows the final LTIP position for the period ended 29 March 2014, with the scheme now having
finished.
At
30 March
2013
Granted in
period
Market
price
on issue
(p)
Earliest
date
of exercise
Expired or
forfeited
in period
Exercised
in period
At
29 March
2014
Victoria PLC 2008 Long
Term Incentive Plan
Alan Bullock
Terry Danks
Shaun Lewis
LTIP:
At start of period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at end of the period
Exercisable at end of the period
76,436
28,495
26,050
—
—
—
— 28/07/2012
76,436
— 28/07/2012
— 28/07/2012
—
—
—
28,495
26,050
—
—
—
Number of shares
2014
Weighted average exercise price (p)
2013
2014
2013
130,981
669,430
170.8
189.3
(76,436)
(54,545)
—
—
—
—
(236,616)
(301,833)
130,981
130,981
—
—
—
—
—
—
—
—
170.8
170.8
The 54,545 of share options exercised in the period were settled in full, resulting in the issue of 54,545 ordinary
shares.
The following table shows the final PSP position for the period ended 29 March 2014, with the scheme now deemed
to have finished.
At
30 March
2013
Granted in
period
Market
price
on issue
(p)
Earliest
date
of exercise
Expired or
forfeited
in period
Exercised
in period
At
29 March
2014
Victoria PLC 2011
Performance Share Plan
Anne Seymour
15,332
—
— 07/12/2014
15,332
—
—
PSP:
At start of period
Granted during the period
Forfeited or expired during the period
Outstanding at end of the period
Exercisable at end of the period
The total stock option charge in the year is £nil (2013: £nil).
Number of shares
2014
Weighted average exercise price (p)
2013
2014
2013
15,332
77,379
—
(15,332)
—
—
—
(62,047)
15,332
—
0.0
—
—
—
—
0.0
—
—
0.0
—
48
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
28 Share-based payments continued
The fair value of the LTIP and PSP rights were calculated at the date of grant using the Black-Scholes model. The
inputs into the Black-Scholes are as follows:
Number of share options awards
Exercise price
Expected volatility
Expected life
Risk-free interest rate
Expected dividend yields
Dec 11
PSP award
Dec 10
LTIP award
Jul 09
LTIP award
77,379
206,192
521,338
0.00
41%
5 years
1.1%
5%
236.0
41%
5 years
2.6%
5%
170.8
41%
5 years
2.6%
5%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous
five years. The expected useful life in the model has been adjusted, based on Management’s best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural considerations.
29 Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation.
Identity of related parties
The Group has a related party relationship with its Directors and executive officers.
The Company has a related party relationship with its subsidiaries and its directors and executive officers.
Transactions with key management personnel
Key management personnel are considered to be the directors of the Company and its subsidiaries.
As at 29 March 2014, the key management personnel, and their immediate relatives controlled 2.00% of the voting
shares of the Company.
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the
categories specified in IAS24 Related Party Disclosures.
Short-term employee benefits
Post-employment benefits
Termination benefits
Group
52 weeks
29 March
2014
£000
1,033
112
—
1,145
52 weeks
30 March
2013
£000
1,107
149
298
1,554
Termination benefits in the period ended 30 March 2013 were in respect of former directors Mr A Bullock and Mr B
Poynter.
49
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Notes to the Accounts continued
29 Related parties continued
Transactions with subsidiary undertakings:
Dividend income — The Victoria Carpet Company Pty Limited
Dividend income — Victoria Carpets Limited
Dividend income — Globesign Limited
Rental income — Victoria Carpets Limited
Amounts due from subsidiary undertakings
Amounts due to subsidiary undertakings
30 Post balance sheet events
(a) Special Dividend
Company
52 weeks
29 March
2014
£000
14,393
2,000
10,000
80
As at
29 March
2014
£000
15,693
32
52 weeks
30 March
2013
£000
842
—
—
80
As at
30 March
2013
£000
4,213
32
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 condtion by returning £3 per share to shareholders. At a General Meeting held on 9 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.
50
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
Five Year Record
Results of continuing operations
Revenue
EBITDA (note a)
Depreciation and amortisation
Operating profit/(loss) (Pre
Exceptional items)
Finance costs
Profit/(loss) before tax and
exceptional items
Exceptional items
Profit/(loss) before tax
Tax
Profit/(loss) from continuing
operations
Profit/(loss) for the period from
discontinued operations
Profit/(loss) attributable to
shareholders
Dividend attributable to the period
ASSETS EMPLOYED
Operating assets
Non-current assets
Net current assets (note b)
Non-current liabilities
Financed by
Share capital and premium
Retained reserves
Shareholders funds
Net debt
ANALYSIS
Return on operating assets
Return on shareholders funds
Earnings per share (basic)
Earnings per share (basic adjusted)
Dividend per share attributable to the
period
Dividend cover (basic)
Dividend cover (adjusted)
%
%
p
p
p
times
times
52 weeks
29 March
2014
£000
52 weeks
30 March
2013
£000
52 weeks
31 March
2012
£000
52 weeks
2 April
2011
£000
52 weeks
3 April
2010
£000
71,386
5,135
(2,554)
2,581
(531)
2,050
231
2,281
(672)
70,909
2,331
(2,752)
(421)
(465)
(886)
(2,634)
(3,520)
738
77,126
5,642
(2,974)
2,668
(461)
2,207
(660)
1,547
(461)
70,503
5,358
(2,962)
2,396
(472)
1,924
—
1,924
(715)
1,609
(2,782)
1,086
1,209
116
(182)
—
1,725
141
(2,964)
563
1,086
729
26,549
17,056
(7,485)
36,120
2,681
31,958
34,639
1,481
36,120
7.15
6.59
24.5
27.1
2.0
11.41
13.53
24,206
23,155
(1,380)
45,981
2,587
35,886
38,473
7,508
45,981
(0.92 )
(9.15 )
(39.6)
(11.0)
8.0
n.a
n.a
26,458
24,144
(2,535)
48,067
2,565
37,755
40,320
7,747
48,067
5.55
3.84
15.6
23.7
10.5
1.49
2.26
—
1,209
625
27,593
21,668
(3,268)
45,993
2,565
37,197
39,762
6,231
45,993
5.21
4.84
17.4
18.3
9.0
1.93
2.04
62,973
4,406
(2,753)
1,653
(565)
1,088
—
1,088
(460)
628
—
628
556
28,636
19,366
(3,556)
44,446
2,565
34,690
37,255
7,191
44,446
3.72
2.92
9.0
9.0
8.0
1.13
1.13
51
Notes
(a) Earnings before interest, tax, depreciation, amortisation and exceptional items.
(b) Excluding net debt, but including fair value of financial instruments where applicable.
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Shareholder Information
Corporate website
The Annual Report, Company announcements and other information are available at www.victoriaplc.com.
Shareholder queries
If you have any queries relating to Victoria PLC shares, please contact the Company’s Registrars whose details are as
follows: Capita Registrars,The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Telephone: 0871 664 0300 Overseas: +44 20 8639 3399 website: www.capitaregistrars.com
Financial calendar
Annual General Meeting
Half year results
Wednesday, 24 September 2014
November 2014
Dividend payments
Our Registrars have the facility to pay shareholders’ dividends directly into their bank accounts, instead of receiving the
dividend payment by cheque. They are also able to convert dividend payments into local currency and send the funds by
currency draft or, again, if preferred, pay them straight into a bank account.
More information on the above services can be obtained from Capita Registrars or downloaded from the Group’s
website: www.victoriaplc.com/victoriaplc/investors/downloads/
Unsolicited mail
The Company is required by law to make its share register available on request to the public and organisations which
may use it as a mailing list resulting in shareholders receiving unsolicited mail. Shareholders wishing to limit such mail
should write to the Mailing Preference Service, DMA House, 70 Margaret Street, London, W1W 8SS or register online at
www.mpsonline.org.uk
Victoria PLC Registered office
Worcester Road
Kidderminster
Worcestershire, DY10 1JR
Company Registered No. (England & Wales)
282204
Advisors
Auditor: Nexia Smith & Williamson – 25 Moorgate, London, EC2R 6AY
Banker: Barclays Bank PLC – PO Box 3333, One Snow Hill, Snow Hill Queensway, Birmingham, B3 2WN
Registrar: Capita Asset Services– The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Solicitor: Brown Rudnick LLP – 8 Clifford Street, London, WS1 2LQ
Stockbroker: Cantor Fitzgerald Europe – 1 America Square, 17 Crosswall, London, EC3N 2LB
Public Relations: MHP Communications – 60 Great Portland Street, London, W1W 7RT
52
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Victoria PLC Annual Report and Accounts 2014Stock Code: VCP
Glossary
CFD
EBIT
EBITDA
Contract for Differences
Earnings before interest and tax
Earnings before interest, tax, depreciation, amortisation and exceptional items
Exceptional Items
Non-recurring transactions which are material by virtue of their size or incidence
IAS
IFRS
LTIP
KPIs
PBT
PSP
International Accounting Standards
International Financial Reporting Standards
Long Term Incentive Plan
Key Performance Indicators used to assess business performance
Profit before taxation
Performance Share Plan
53
23346.02 27 August 2014 8:35 AM Proof 8
www.victoriaplc.comOur Financials Shareholder Notes
54
23346.02 27 August 2014 8:35 AM Proof 8
Victoria PLC Annual Report and Accounts 2014Stock Code: VCP Principal Subsidiaries and their Directors
Victoria Carpets Limited
Manufacture, distribution and sale of carpets
Kidderminster, UK
Neil Glover (Chief Operating Officer)
Terry Danks
Jonathan Stone
The Victoria Carpet Company Pty Limited
Manufacture and sale of carpets
Dandenong, Australia
Michael Oakley (Non-executive Chairman)
Phil Smith (Managing)
Anne Seymour
Michael Davies (Non-executive)
Warwick Whyte (Non-executive)
Westwood Yarns Limited
Manufacture and sale of carpet yarns
Holmfirth, UK
Trevor Chippendale (Managing)
Terry Danks
Westex (Carpets) Limited
Manufacture and sale of carpets
Cleckheaton, UK
John Shirt (Joint Managing)
John Snee (Joint Managing)
Geoffrey Wilding
23346.02 27 August 2014 8:35 AM Proof 8
slugline
Strategic Report - Our Business and Performance Victoria PLC
Worcester Road
Kidderminster
Worcestershire
DY10 1JR
Tel: +44 (0)1562 749300
Fax: +44 (0)1562 749649
www.victoriaplc.com
23346.02 27 August 2014 8:35 AM Proof 8
23346.02 27 August 2014 8:35 AM Proof 8