Victoria PLC: - The carpet maker with a strong price performance

Tuesday, Mar 29 2016 by

The following is an equity research on Victoria PLC, below is a brief summary of the findings, click the link below to read the full report. 

Share price: 1,403                                   Market cap (£m): 255.

P/E: 57                                  Revenue’s 2016 (projected): 253

Equity (£m): 53                                                Net debt (£m): 81

Target price: £10-£15/share between now and 30th July and a share price of £6.50/share by year-end.  

Summary of findings

A. Victoria PLC share price did a 10 bagger in two years or saw its market value increase by 17 times from £15m to £255m.

B. At the same time, its sales is forecast (includes 2016’s sales) to jump by 255% in the last years. However, there are no consistent earnings.

C. Shareholders may have received £3/share in special dividend back in 2014, but Mr Wilding took a reward of over 7m shares (equivalent to £100m in value).

D. The only financial item that has increase more than its share price is the net debt position which jumped from £7m since the arrival of Mr Wilding to £81m today (latest interim results).

E. There is a lack of financial transparency in some acquisitions. For example, Globesign Limited saw strange after-tax profits fluctuation from £10m in 2014 to £2m in 2015.

F. The best acquisition it made is Abingdon Flooring Limited because it has a strong prudent business with strong incentives to reward the company (if targets meet expectation).

G. The purchase of Interfloor Group of £65m is (in our opinion) the worst acquisition because operating cash flow minus “interest paid” average £1.5m per year while it took on net debt of £50m.

H. Despite, these businesses related acquisitions there are no strategy to create synergy between subsidiaries.

I. Ignoring the Quest acquisition, all the rest will increase Victoria PLC’s shareholders’ fund by £6.2m that cost the company £104m. This is because Interfloor’s equity is a negative £19m.

J. Goodwill and intangible assets account for 70% or more of the company’s non-current assets.

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Victoria PLC is a designer, manufacturer and distributor of flooring products. The Company's principal activities are the manufacture, distribution and sale of floorcoverings. Its segments include UK and Australia. It manufactures wool and synthetic broadloom carpets, carpet tiles, underlay and flooring accessories. In addition, it markets and distributes a range of luxury vinyl tile (LVT) and hardwood flooring products produced by third-party manufacturers. Its product offering in the United Kingdom ranges from both crafted, woven Wilton carpets to Tufted carpets in a myriad of fashion colors and styles. Its stock range offerings cover saxonies, tonals, velvets, twists and natural loop pile styles for residential use. The Company supplies its products to the mid to high end residential market and contract sector both in the United Kingdom and overseas. Its subsidiary, Munster Carpets Limited, is engaged in the manufacture and distribution of floorcoverings for the contract market. more »

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Headlam Group Plc is a United Kingdom-based company, which is engaged in the marketing, supply and distribution of a range of floorcovering products. The Company's operations are focused on providing customers, principally independent floorcovering retailers and contractors, with a range of floorcovering products supported by a next day delivery service. The Company operates through 56 operating segments in the United Kingdom and five operating segments in Continental Europe. Each operating segment is a trading operation aligned to the sales, marketing, supply and distribution of floorcovering products. The Company's activities and facilities are located throughout the United Kingdom, France, Switzerland and the Netherlands. Its business in France operates from approximately two distribution centers and over 20 service centers, and the businesses in Switzerland and the Netherlands each operate from a single distribution center. more »

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Topps Tiles Plc is a United Kingdom-based retailer of tiles. The Company is engaged in the retail distribution of ceramic and porcelain tiles, natural stone, and related products. It operates in the Topps Tiles stores and online business segment. It supplies tiles and associated products to both trade and retail customer base, primarily for the refurbishment of the United Kingdom domestic housing. Its product categories include new products, bathroom wall tiles, kitchen wall tiles, mosaic tiles, kitchen floor tiles, bathroom floor tiles, ceramic tiles, porcelain tiles, underfloor heating, wet rooms, outdoor tiles, fireplace tiles and metro tiles. Its brands include Tile Adhesive, Tile Grout, Tile Preparations, Hardiebacker Board, Rubi Tools and Accessories, Warmup, and Homelux Tiles Trims. It offers tiles in various colors, such as beige tiles, black tiles, blue tiles, brown tiles, cream tiles and gold tiles. It has over 350 stores across the United Kingdom. more »

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  Is LON:VCP fundamentally strong or weak? Find out More »

3 Posts on this Thread show/hide all

lightningtiger 30th Mar '16 1 of 3

Your statement above is totally incorrect for 29th March. The share price is not 1403, it should be 1502p at close.
The market cap is not 255M it is 273,8M and the p/e ratio is clearly seen at the left hand side of the graph below is 15.1 and not 57 as you state above.
Whilst everybody is entitled to an opinion about a company can we please have the facts correct thanks.

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herbie47 30th Mar '16 2 of 3

In reply to post #125614

The article was obviously written before Easter. The 15.1 P/E ratio is a forward PE, the last full years figures were negative.

Interfloor £65m acquisition, on the face it does not look a good deal.

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Orangetree 30th Mar '16 3 of 3

Yes, I have written this report before Easter.
Don't people find it suspicious that Mr. Wilding (an NZ native) would come along as CEO to effectively deliver a £3/share special dividend, and then get rewarded for 50% (7.1m shares) of the entire company?
The guy sold his 1m share in the summer last year for £11m! And the best paid publicly-listed CEO is Shell boss Mr. Berden at £18m and has been working for Shell for over 30 years while Mr. Wilding been around for 2 years!
Even Steve Jobs didn't get as much a reward when he came back to revive Apple's fortunes!

In fact, I believe the owner could have easily implemented the same strategy as Mr. Wilding.

Blog: Walbrock Research
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