Victoria PLC – Interim Results

Victoria PLC (LSE: VCP) the international designers, manufacturers and distributors of innovative floorcoverings, is pleased to announce its interim results for the 26 weeks ended 28 September 2019.

 

Financial and Operational Highlights

	H1 FY20	H1 FY19	Growth
Revenue	£315.9m	£273.4m	+16%
Underlying EBITDA[1],[2]	£58.5m	£45.4m	+29%
Underlying EBITDA margin1,2 Underlying operating profit1,2	18.5% £39.7m	16.6% £34.0m	+190 bps +17%
Operating profit2	£23.8m	£13.6m	+75%
Underlying profit before tax1,2	£27.5m	£28.2m	-2%
Earnings per share:
– Basic adjusted1,2	16.59p	17.91p	-7%
– Basic2	3.11p	0.58p	+436%
Underlying free cash flow[3]	£23.8m	£23.2m	+6%
Net debt	£364.3m	£342.7m
Capitalised operating leases	£60.3m	–
Total net financial liability	£424.6m	–
Net debt / EBITDA[4]	3.3x	3.1x

Financial highlights

·    Revenue grew by 16% versus the same period in the prior year, driven by a combination of organic growth and contribution from the prior-year acquisition of Saloni.

·    Underlying EBITDA margin rose by circa 190 bps (70bps on a like-for-like basis[5]) from the same period last year to a record 18.5%.

·    Significantly lower exceptional restructuring costs in the period of £1.8m, being the finalisation of prior-year operational synergy projects as previously disclosed.

·    Successful completion of debt refinancing in July, including the inaugural bond issue of €330m senior secured notes (£293.8m at the period-end exchange rate). Whilst incurring a higher rate of interest, the new bonds provide significant benefits and protection to the company with a fixed cost over five years, a more flexible and covenant-lite structure, and access to a new, deep and highly-liquid capital market.

·    Increased interest costs from the recent bond issue and the additional borrowings following the acquisition of Saloni in August 2018, together with the accounting impact of IFRS 16, resulted in a 2% reduction in underlying profit before tax.

·    Net capital expenditure in the period of £17.2m, broadly in line with depreciation.

·    Strong cash generation continues with £23.8m of underlying free cash flow³ for the period, a 6% increase over the previous year, which equates to a 60% conversion from underlying operating profit.

·    Net debt as at 28 September 2019 was £364.3m (excluding lease liabilities), representing 3.3x EBITDA⁴. This followed the leverage-neutral acquisition of Iberoalcorense, S.L in August and is consistent with the Group’s financial policy.  Net debt has been adversely impacted by exchange rate movements in the period, causing a translational increase in Sterling terms of £5.9m.

The Board expects the full year result to be in line with market expectations.

Geoff Wilding, Executive Chairman of Victoria PLC commented:

“Victoria has delivered both revenue growth and margin growth in the first half of our 2020 financial year, in challenging market conditions. Alongside these organic-led gains, we also made a small acquisition in Spain, which, following completion of its integration in the first quarter of next year, is expected to contribute meaningful earnings to Victoria due to operational synergies that will result from the integration.

We were also pleased to successfully complete our bond issue in July, as this provides the Group with secure, long-term financing to support our continued organic and acquisition-based growth.”