REG - Victoria PLC - Interim Results
29/11/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221129:nRSc8499Ha&default-theme=true
RNS Number : 8499H Victoria PLC 29 November 2022
For Immediate Release 29 November 2022
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Interim Results
for the six months ended 1 October 2022
Record Revenue and Operating Profits
Victoria PLC (LSE: VCP) the international designers, manufacturers and
distributors of innovative floorcoverings, is pleased to announce its interim
results for the six months ended 1 October 2022.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
H1 FY23
Continuing operations
H1 FY22
Revenue £776.1m +58.7% £489.0m
Underlying EBITDA(1) £100.1m +18.5% £84.5m
Underlying operating profit(1) £61.1m +4.3% £58.6m
Operating profit £82.0m +196.2% £27.7m
Profit / (loss) before tax £53.1m +1,731.0% £2.9m
Net debt(2) £651.4m £519.3m
Net debt / EBITDA(3) 3.4x 3.3x
Earnings / (loss) per share:
- Diluted 36.69p (2.68)p
- Diluted adjusted(1) 17.87p 24.32p
(1) Underlying performance is stated before exceptional and non-underlying
items. In addition, underlying profit before tax and adjusted EPS are also
stated before non-underlying items within finance costs
(2) Net debt shown before right-of-use lease liabilities, preferred equity,
bond issue premia and the deduction of prepaid finance costs
(3) Leverage shown consistent with the measure used by our lending banks
· 7.7% like-for-like organic revenue growth, plus acquisitions, led to
Victoria achieving a record operating performance
· Broadly stable like-for-like operating margins, notwithstanding
inflationary pressures. Reported margins were impacted as anticipated by the
mix-effect from the acquisition of businesses that currently have lower
margins. This mix-effect is expected to reduce as integration synergies are
realised - as Victoria has successfully achieved with previous acquisitions
· Proactive management of raw materials and energy successfully
mitigated both inflationary pressures and supply chain constraints
· Completion of the acquisition of the rugs and UK carpet divisions of
Balta to make Victoria Europe's largest manufacturer of soft flooring.
Integration is well underway to realise the material potential synergy
benefits of this acquisition
· Despite these significant investments, leverage has been maintained
in-line with the Group's financial policy
· Although macro-economic conditions are challenging, the Board
continues to be confident that synergy gains and proactive management actions
will enable Victoria's financial performance for FY2023 to be in line with
market consensus expectations
Geoff Wilding, Executive Chairman of Victoria PLC commented:
"Integration of recent acquisitions is proceeding apace and on schedule.
Consequently, the Board believes cash flow, after exceptional costs relating
to the integration projects, will be in excess of £100 million in H2.
In the near term it is likely that disposable incomes in some markets will
come under further pressure, from higher interest rates and inflation and the
resulting weakening consumer demand may make additional price increases to
offset higher input costs more difficult for the Company to implement.
Nevertheless, whilst acknowledging these challenges, I am pleased to say that
the Board continues to be confident that synergy gains and proactive
management actions will enable Victoria's financial performance for FY2023 to
be in line with market consensus expectations and the outlook for the business
remains positive."
For more information contact:
Victoria PLC +44 (0) 1562 749 610
Geoff Wilding, Executive Chairman
Philippe Hamers, Group Chief Executive
Brian Morgan, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) +44 (0) 207 496 3095
Rick Thompson, Phil Davies, Alex Bond
Berenberg (Joint Broker) +44 (0) 203 207 7800
Ben Wright, Richard Bootle
Peel Hunt (Joint Broker) +44 (0) 207 418 8900
Adrian Trimmings, Andrew Clark
Buchanan Communications (Financial PR) +44 (0) 20 7466 5000
Charles Ryland, Chris Lane, Jack Devoy
About Victoria
Established in 1895 and listed since 1963 and on AIM since 2013 (VCP.L),
Victoria PLC, is an international manufacturer and distributor of innovative
flooring products. The Group, which is headquartered in Kidderminster, UK,
designs, manufactures, and distributes a range of carpet, flooring underlay,
ceramic tiles, LVT (luxury vinyl tile), artificial grass and flooring
accessories.
Victoria has operations in the UK, Spain, Italy, Belgium, the Netherlands,
Germany, Turkey, the USA, and Australia and employs approximately 6,500 people
across 31 sites. Victoria is Europe's largest carpet manufacturer and the
second largest in Australia, as well as the largest manufacturer of underlay
in both regions.
The Group's strategy is designed to create value for its shareholders and is
focused on consistently increasing earnings and cash flow per share via
acquisitions and sustainable organic growth. (Further information about
Victoria can be found on its website, www.victoriaplc.com
(http://www.victoriaplc.com) .)
Chairman & CEO's Statement
There is a supposed curse "May you live in interesting times."
Few would argue that we are presently living in "interesting times". Yet,
despite the fact that the current uncertain environment creates a meaningful
business risk, it simply isn't possible to predict the future with sufficient
precision to effectively manage this risk.
Our response to this conundrum has been to ensure that Victoria's management
remains agile and the business flexible, even as it has grown to have an
annual revenue exceeding £1.5 billion. We have maintained the highly
decentralised and scalable, 'team of teams' management structure that was
first put in place at Victoria ten years ago and remains a key competitive
advantage.
Being nimble ensures Victoria continues to be well placed to quickly adapt to
rapidly changing conditions. Shareholders have seen the benefit of this
adaptability in the turmoil that followed the Brexit vote in 2016, Covid
lockdowns in 2020, supply chain disruptions in 2021, and inflation and
consumer uncertainty in 2022. Over this time, under all conditions, Victoria's
earnings and operating cash flow per share continued to increase.
Diluted adjusted EPS(2) Underlying operating cash flow per share(2,3) Diluted adjusted EPS(2) Underlying operating cash flow per share(2,3)
Full Year Pence £ Full Year Pence £
FY15 10.47 0.30 FY19 35.25 0.86
FY16 16.32 0.40 FY20 28.24 0.78
FY17 24.42 0.48 FY21 30.21 0.77
FY18 30.61 0.64 FY22 40.21 0.96
Consequently, the Board is pleased to report that trading for the half year to
1 October 2022 continued to meet the Board's expectations, with like-for-like
("LFL") organic revenue growth of c.7.7% across the Group, and Victoria
continuing to win share in some markets. Overall, the Group has achieved
revenue of £776.1 million, versus £489.0 million in the comparative period
last year (+58.7%), and underlying EBITDA of £100.1 million compared with
£84.5 million last year (+18.5%). These operating results were again a record
level for Victoria, as can be seen in the below table.
H1, Financial Year 2023 2022 2021 2020 2019 2018
Revenue £776.1m £489.0m £305.5m £312.9m £273.4m £189.5m
Pre IFRS 16 Underlying EBITDA £88.9m £75.1m £44.9m £53.8m £45.4m £24.6m
Post IFRS 16 Underlying EBITDA £100.1m £84.5m £52.4m £58.5m
Although Victoria experienced continued significant inflation in raw material
and energy prices during the period, the earnings impact was largely mitigated
by management's actions (detailed in the H1 Overview section). The reported
margin of 13.0% was the result of the dilutive effects of acquisitions made
during the period. This will be offset by synergy benefits and operational
improvements as the businesses are integrated into Victoria, as has been seen
in previous years with earlier acquisitions.
H1 OVERVIEW
Inflation
The last six months saw a continuation of double-digit inflationary pressures
in certain costs - most notably energy and polypropylene carpet fibre. We
chose to support our customers by sharing the impact of higher input costs
with them whilst successfully protecting our cash margin through a combination
of actions:
· Victoria has a long-proven ability to increase prices and
successfully did so up to four times across each product area during FY2022 to
protect earnings. We continued to increase prices where it proved absolutely
necessary in FY2023
· As noted above, management is laser-focussed on delivering a number
of carefully planned synergy projects that will increase operating margins,
mitigating some inflationary pressures
· We actively hedge or otherwise manage key input costs to provide
management with time to adapt our business and prices to higher input costs,
ensuring margins are protected
· Product engineering in partnership with our customers has helped us
achieve targeted price points, whilst still achieving a satisfactory profit
for Victoria.
Our objective remains to manage the business so as to ensure an attractive
return on equity for shareholders, after taking into account the effects of
inflation.
Demand
Unsurprisingly, some flooring markets (notably the UK) are not as buoyant as
last year. Nevertheless, as a result of the acquisition strategy that has been
carefully executed over the last eight years, Victoria is now geographically
diversified and demand in some countries is mitigating softer demand
elsewhere.
Victoria is additionally fortunate with the experience of its senior
operational management who have leveraged their decades in the industry by
adapting readily to current macro-economic conditions. Actions such as product
engineering, enhanced operational efficiencies, and the acceleration of
synergistic projects are being implemented across the Group to drive savings
and ensure earnings and cash flow remain satisfactory.
The Group also benefits from structurally low operational gearing with over
half of its cost base made up of raw materials, which is, of course, wholly
variable with revenue. A further one third of costs (energy, labour,
marketing, logistics) are semi-variable. The result is that if sales were ever
to decline, the majority of costs 'automatically' fall as well, reducing the
impact of lower sales on profits.
The Board remains confident in the future of the business. Consumers have
demanded flooring ever since some Palaeolithic cave-dweller decided mud was a
sub-optimal surface for the cave and, irrespective of any short-term
headwinds, the long-term trend for flooring remains relentlessly positive at
c.2.6% per annum (albeit volume growth was 4.9% in 2021). Consequently, any
potential period of subdued demand should have little impact on the long-term
value of Victoria.
Integration
Careful integration of acquisitions is core to Victoria's strategy and the
most important component of our value creation strategy.
As an example, our United Kingdom carpet business was built through six
acquisitions over eight years. Subsequent to the acquisitions, all
manufacturing and distribution has been fully integrated into
industry-leading, scaled operations, improving earnings and driving our
purchase multiple down significantly - even after taking into account capex
and reorganisation costs. It is important to note that none of our
acquisitions require integration to be financially attractive (they can all
stand on their own two legs), but this is always at the forefront of our
diligence and post-acquisition plan. The time and money we spend following an
acquisition generates far higher returns for Victoria's shareholders than the
capital spent on the acquisition.
We expect that the integration of our most recent acquisitions will lead to
significant growth in profits over the next several years (without the
necessity of a significant improvement in macroeconomic conditions). This is
currently our team's primary focus and will remain the focus during the rest
of FY2023 and FY2024.
Cashflow & Liquidity
Net operating cash flow before interest, tax and exceptional items was £22.1
million for the half year ended 1 October.
It is a core element of our organic growth strategy for Victoria to be a
reliable partner for our customers - capable of maintaining supply of product
under all circumstances. The profit a retailer makes on flooring that cannot
be supplied is precisely zero and the disruption to a construction schedule
due to the unavailability of flooring can be crippling. Reliability is
consequently highly prized by our customers.
To that end, shareholders will recall that in early 2021, the Group invested
heavily in raw materials to ensure Victoria could maintain its production
schedules in the face of severe disruption to global supply chains. This
investment delivered very good organic growth last year with like-for-like
revenue increasing by an exceptional 19.2% as we took advantage of the supply
difficulties many of our competitors were experiencing to grow our market
share.
We are pleased to confirm that supply chains have now largely normalised and
consequently Victoria is steadily reducing its raw material inventory to
normal levels, which is unlocking the cash invested last year.
However (unfortunately in the current world there is always a 'however'),
shareholders will be acutely aware of 2022's energy security concerns -
particularly for natural gas, which is a critical element in the manufacture
of ceramic tiles. These fears have abated a little in recent weeks (as have
gas prices), but to protect our reputation as a reliable supplier we have
selectively built up levels of finished goods to enable us to maintain normal
service levels for our customers for up to three months in the event of
extreme prices that make production uneconomic or severe gas rationing. Due to
the flexibility of our factories, reducing inventory levels in the future is
straightforward and inexpensive but, over the winter period, we will maintain
higher than normal levels of finished goods.
The measures described above, which total a c.£60 million investment are
temporary and therefore it remains the Board's expectation that the Group will
be highly cash generative in the months ahead (with £100 million positive
cash flow after exceptional costs expected in H2) as the business continues to
have strong earnings and working capital returns to normal. The Board will
seek to deploy that cash in a manner that maximises the medium-term returns
for shareholders.
Victoria continued to maintain a strong liquidity position and the Group
finished the period with cash and undrawn credit lines in excess of £250
million. Furthermore, almost all Victoria's debt financing takes the form of
long-dated Senior Notes ("bonds") which, in themselves, have no financial
maintenance covenants, and with the earliest tranche not due for repayment
until 2026.
Capital Allocation
Victoria's primary strategy for maximizing shareholder value over the next 12
months is to optimise free cash flow generation. This cash can subsequently be
deployed in a number of ways: funding organic growth (working capital and
capex), debt reduction, acquisitions, paying dividends, and share buybacks.
Prioritising these alternatives at a given point in time is a critical
decision as capital allocation is, over time, the single largest determinant
of value creation at a company.
Since the beginning of FY2023 Victoria has repurchased 1,842,250 shares, all
of which have been retained in treasury. Although these share purchases are
not the start of a formal and regular programme to return capital to
shareholders, if the Company is able to repurchase shares at prices that (a)
are well below the Board's view of their value, and (b) will provide a return
to the company greater than the alternative uses for the Group's cash at that
point in time, and (c) provide a return greater than its cost of capital, then
further buybacks may be actively considered.
Separately, the Board is aware that Victoria's outstanding senior secured
bonds are currently trading at substantial discounts to their principal
amounts, as is common across the market. In order to reduce future cash
interest payments, as well as future amounts due at maturity or upon
redemption, the Company may, from time to time, purchase such bonds for cash
in open-market purchases and/or privately negotiated transactions. The amounts
involved in any such transactions may be material.
Finally, the Board wishes to emphasise that any future share or bond purchases
will be made without jeopardising the Group's cash position and liquidity.
OPERATIONAL REPORT BY DIVISION
Over the last 10 years, Victoria has grown from a UK-centric £75 million
(revenues) carpet manufacturer to a global flooring company with annual
revenues exceeding £1.5 billion. The Group is Europe's largest carpet
manufacturer with best-in-class logistics; it is one of the largest artificial
turf manufacturers and distributors with more than €100 million of sales; it
has built a €500+ million ceramics business with sites in Spain, Italy and
Turkey that generates industry-leading margins; and, most recently, developed
a US distribution business that will contribute more than $400 million of
sales to the Group from tiles, LVT, wood, rugs, and artificial turf. This
scale of business provides a platform for material earnings and cash flow
growth purely from operational improvements and synergy projects.
UK & Europe - Soft Flooring
The shape of our UK & European soft flooring business altered dramatically
in April with the completion of the purchase of the rugs and UK carpet
divisions of Balta Group, together with the internationally-known brand,
"Balta". This acquisition catapulted Victoria to the position of Europe's
largest carpet and rug manufacturer with revenue for the six months of £372.0
million.
Integration of Balta is proceeding apace in order to realise the full benefit
this scale advantage offers. As expected, there will be some exceptional costs
associated with the reorganisation (largely redundancy and factory closure
costs) but the cash impact is expected to be zero due to the disposal of
assets that will become surplus (primarily real estate) once the integration
is completed. The Board anticipates the synergy gains to be no less than €15
million per annum (+2% margin for the division) in 24 months from now.
The UK flooring market has softened this year from the extraordinarily strong
demand of 2021/22, although Victoria continues to benefit from predominantly
serving mid-high price points where demand has been noticeably more resilient.
Significantly higher input costs (primarily raw materials) were experienced in
H1 and, as it has done in the past, Victoria shared the impact with its
customers to protect market share. The outcome has been a temporary margin
compression to 10.0% - an effect accentuated by the inclusion of Balta's
contribution for the first time (Balta's historically lower margin of 4.5% has
depressed the division's margin by 3.6%, although this is expected to change
as integration takes effect). However, as the lower inflation of raw materials
experienced in more recent months feeds though into the cost of finished goods
and the reorganisation of Balta takes effect, margin growth will resume, which
together with our larger market share, ensures the medium-term outcome will be
a continuation of Victoria's ten-year trend of becoming a larger, more
profitable and more stable business.
UK & Europe - Ceramic Tiles
Energy, and gas in particular, is a key cost in the manufacture of ceramic
tiles, with the largest component being the use of gas in the kilns. This has,
obviously, been a challenge over the last six months with energy prices
materially elevated throughout the period and spiking to all-time highs in
August.
The Group has successfully mitigated the impact of higher gas prices through a
combination of continual improvements to customer service, product
engineering, hedging, carefully negotiated supply agreements, and - where
necessary - price increases and/or energy surcharges. The ongoing integration
of recent acquisitions and the resulting efficiency gains together with
investment in energy co-generation plants has also contributed to the robust
performance for the period.
Furthermore, many of Victoria's competitors who lack our scale or efficiency
have been forced to suspend operations during this period. However, our lower
cost structure has enabled us to keep our factories in production and
significantly outpace softening demand by supplying customers who have been
unable to access product from their usual suppliers. We have also made
important inroads into the US tile market this year with new supply agreements
being signed with major US retailers and we expect this market to be an area
of significant growth over the years ahead.
Consequently, although there are variances between the different businesses,
across the division, margins have remained broadly flat with the prior year.
Total revenue growth of 39.4% to £254.4 million includes LFL organic growth
of 15.6%, with the balance due to the acquisition of Graniser.
The Turkish ceramic tiles business, Graniser, which was acquired in February
2022 has delivered volumes and profitability in line with our expectations. At
the time of acquisition, about 70% of Graniser's revenue was derived from
export and our plan for this business is to replace the remaining 30% of
domestic sales with export. Accordingly, a c.€9 million exceptional capex
plan has been actioned to further align the quality of both the tile produced
and its packaging with European and American standards. The plan, which is
already in process and with completion targeted by December 2023, is then
expected to deliver EBITDA upside of more than €4 million per annum.
North America
Victoria's North America division now consists of two businesses: CALI and
International Wholesale Tiles Inc, which together have annual revenue of
c.US$260 million. However, it is worth noting that, including exports from our
European factories, total annual revenue derived from the US market now
exceeds $400 million per annum (c.25% of Victoria's total revenue). This
constitutes valuable geographic diversification.
CALI, which was acquired in June 2021, continues to make good progress on all
fronts.
In October, CALI launched a 250,000 square foot company operated distribution
centre in Summerville, South Carolina to further improve service and
efficiency in the Eastern United States.
While the launch of CALI's new distribution centre is part of a broader
operational excellence plan (and other company-run distribution centers will
be opened in the coming years) we are already experiencing very positive
results. During the two months ended September 2022, CALI achieved 24% fewer
fulfilment errors versus the same period in 2021 (and a similar reduction in
transportation errors). As a result, customer satisfaction measures improved
significantly, increasing from 62% in August and September of 2021 to 81.5% in
the same period in 2022.
This year, CALI launched two new product categories, sourced from Group
companies: rug and artificial turf, and expanded its offerings in vinyl,
laminate and wood. In October, CALI became a core supplier to a major
cooperative group of dealers, bringing CALI over 2,500 new potential store
fronts. CALI has also made significant progress in its home centre channel,
where it expanded its partnerships and is in the process of rolling out new
product categories across 750+ national home improvement stores.
As a result of these initiatives, CALI's revenue is more than 20% higher than
when Victoria acquired the business.
Although completion occurred shortly after the half-year balance date, we
thought we would briefly cover the acquisition of Florida-based distributor
International Wholesale Tiles ("IWT").
Even with domestic production running at 100% of capacity, the US needs to
import 65% of its ceramic tiles and IWT is one of a number of businesses
across the country that fill this function. We were attracted to the business
by its focussed and committed management (who have successfully grown revenue
by 11.6% CAGR for the last 10 years), its highly diversified customer base,
its focus on Florida, which has well above average economic and population
growth, the significant synergy opportunities utilising our European
factories, and high cash conversion.
Victoria's Board believes that IWT presents an excellent strategic fit with
Victoria's existing business and will have strong long term growth prospects
as part of the Group.
Australia
Australia represents around 8% of Group underlying EBITDA. Following 18 months
of very difficult trading conditions due to government-mandated Covid
lockdowns that only ended in October 2021, the Australian market is
experiencing good trading conditions this year. Victoria's Australian
operations recorded LFL revenue growth of +15.5% in H1 as consumers take
advantage of savings accumulated during the lockdowns. Inflation on input
prices has also been less severe than in Europe and earnings were also up
15.8% to £8.2 million for the period.
The outlook remains positive - particularly for the Dunlop LVT brands, where
the new collection and better service proposition have been very well
received. The Group is fortunate in having very strong management at Victoria
Australia, Quest, and Dunlop Flooring, who have developed plans to ensure
further improved performance next year. The Board has a high degree of
confidence in them to deliver these improvements.
OUTLOOK
Operations
The Board is confident in the successful future of Victoria despite
challenging economic conditions for the immediate future.
This is not misplaced optimism but is based upon some distinct features of the
sector and competitive advantages of Victoria itself:
· Flooring is a core global industry, and Victoria's products are
universally needed and over time demand is consistent, predictable, and
increasing
· The Company benefits from highly effective operational management.
Their decades of experience mean that they have lived through several economic
cycles and they know how to respond to changing conditions to protect the
business
· Victoria has highly diversified economic exposure with manufacturing
facilities in eight countries (Spain, the UK, Belgium, the Netherlands,
Germany, Australia, Turkey, and Italy), but it exports product all over the
world, reducing the Group's exposure to any one economy
· Victoria is one of the sector's most cost-efficient producers, with
the advantage of modern and well-invested factories. The Group's
industry-leading operating margins provide room for manoeuvre against
struggling competitors
· Low operational gearing. Over half of Victoria's cost base fluctuates
directly with sales (e.g. raw materials and energy) and a further circa 30% is
capable of being varied within a few weeks (e.g. labour, logistics and
marketing costs), should conditions change
· Financial resilience. With cash balances and undrawn credit-lines
exceeding £250 million, long-dated 'covenant-lite' bond debt, and growing
free cash flow after all exceptional costs, Victoria is strongly positioned to
ride-out and capitalise upon any economic turbulence
· The Group's focus on mid-to-high product ranges and emphasis on the
residential repair and remodel end market have historically manifested in
dampened revenue volatility for Victoria (relative to some competitors who
focus more on builder or commercial end-markets)
Acquisitions
The focus of Victoria's management team is firmly on operations and
integrating recent acquisitions because doing so will, by far, deliver the
highest return on capital and management time given there are meaningful
synergies to be realised, which will drive material earnings and
cash-flow growth over the next two years.
Having said that, we are also aware that present macro-economic conditions
will not last. A favourite aphorism of Abraham Lincoln was apparently, "This
too shall pass". Therefore, we continue to maintain existing active dialogues
and relationships with potential sellers and actively seek out new possible
acquisition opportunities as Victoria remains the natural 'home of choice' for
owner-operator businesses. If you believe Victoria is the right home for your
business, we encourage you to give us a call.
CONCLUSION
Despite the macro-economic fears, our fellow investors can rest assured that
Victoria has been structured with resilience in mind and is well positioned to
navigate a variety of economic environments. Whilst we cannot predict
precisely when global macro-economic conditions will improve, we can predict
that Victoria is well positioned to benefit from that moment and we are
therefore confident in stating that the Company will continue to create wealth
for shareholders.
Condensed Consolidated Income Statement
For the 26 weeks ended 1 October 2022 (unaudited)
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021 52 weeks ended 2 April 2022
(audited)
Underlying Non- Reported Underlying Non- Reported Underlying Non- Reported
performance
underlying
numbers
performance
underlying
numbers
performance
underlying
numbers
items
items
items
Notes £m £m £m £m £m £m £m £m £m
Revenue 3 771.5 4.6 776.1 489.0 - 489.0 1,019.8 - 1,019.8
Cost of Sales (541.5) (12.6) (554.0) (315.6) (4.7) (320.3) (657.5) (5.5) (663.0)
Gross profit 230.0 (8.0) 222.0 173.4 (4.7) 168.7 362.3 (5.5) 356.8
Distribution costs (56.9) (0.2) (57.1) (50.6) - (50.6) (108.2) - (108.2)
Administrative expenses (119.6) 29.1 (90.5) (66.3) (26.2) (92.5) (148.3) (51.7) (200.0)
Other operating income 7.6 - 7.6 2.1 - 2.1 2.1 2.9 5.0
Operating profit 61.1 20.9 82.0 58.6 (30.9) 27.7 107.9 (54.3) 53.6
Comprising:
Operating profit before non-underlying and exceptional items 61.1 - 61.1 58.6 - 59.4 107.9 - 107.9
Amortisation of acquired intangibles 4 - (21.0) (21.0) - (16.0) (16.0) - (32.4) (32.4)
Other non-underlying items 4 - (13.4) (13.4) - (7.4) (7.4) - (15.0) (15.0)
Exceptional items 4 - 55.3 55.3 - (7.5) (7.5) - (6.9) (6.9)
Finance costs 5 (21.3) (7.6) (28.9) (17.5) (7.3) (24.8) (34.1) (31.9) (66.0)
Comprising:
Interest on loans and notes 5 (17.7) - (17.7) (14.2) - (14.2) (27.9) - (27.9)
Amortisation of prepaid finance costs and accrued interest 5 (1.5) - (1.5) (1.1) - (1.1) (2.3) - (2.3)
Unwinding of discount on right-of-use lease liabilities 5 (2.0) - (2.0) (2.2) - (2.2) (3.8) - (3.8)
Preferred equity items 5 - (14.3) (14.3) - (10.4) (10.4) - (33.0) (33.0)
Other finance items 5 (0.1) 6.7 6.6 - 3.1 3.1 (0.1) 1.1 1.0
Profit / (loss) before tax 39.8 13.3 53.1 41.1 (38.2) 2.9 73.8 (86.2) (12.4)
Taxation (charge) / credit 6 (9.7) 4.1 (5.6) (10.3) 4.3 (6.0) (18.1) 18.1 -
Profit / (loss) for the period 30.1 17.4 47.5 30.8 (33.9) (3.1) 55.7 (68.1) (12.4)
Earnings / (loss) per share - pence basic 7 40.76 (2.68) (10.61)
diluted 7 36.69 (2.68) (10.61)
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 1 October 2022 (unaudited)
26 weeks ended 26 weeks ended 52 weeks ended
1 October 2022
2 October 2021
2 April 2022
(audited)
Note £m £m £m
Profit / (loss) for the period 47.5 (3.1) (12.4)
Other comprehensive income
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit pension scheme 0.9 0.2 1.6
Items that will not be reclassified to profit or loss 0.9 0.2 1.6
Items that may be reclassified subsequently to profit or loss:
Hyperinflation adjustments 32.1 - -
Retranslation of overseas subsidiaries 16.6 1.3 3.5
Items that may be reclassified subsequently to profit or loss 48.7 1.3 3.5
Other comprehensive income 49.6 1.5 5.1
Total comprehensive income / (expense) for the period attributable to the 97.1 (1.6) (7.3)
owners of the parent
Condensed Consolidated Balance Sheet
As at 1 October 2022 (unaudited)
1 October 2022 2 October 2021 2 April 2022
(audited)
£m £m £m
Non-current assets
Goodwill 258.8 236.5 244.6
Intangible assets other than goodwill 335.1 263.5 259.7
Property, plant and equipment 433.7 234.0 256.0
Right-of-use lease assets 169.0 99.6 99.6
Investment property 0.2 0.2 0.2
Deferred tax assets 23.5 18.5 27.2
Total non-current assets 1,220.3 852.3 887.3
Current assets
Inventories 415.7 241.4 280.7
Trade and other receivables 315.9 194.4 223.8
Cash and cash equivalents 78.4 178.3 273.6
Total current assets 810.0 614.1 778.1
Total assets 2,030.3 1,466.4 1,665.4
Current liabilities
Trade and other current payables 427.3 285.3 337.2
Current tax liabilities 8.5 8.4 0.7
Obligations under right-of-use leases - current 23.3 14.4 16.9
Other financial liabilities 42.2 34.5 25.2
Total current liabilities 501.2 342.6 380.0
Non-current liabilities
Trade and other non-current payables 11.5 12.8 7.5
Obligations under right-of-use leases - non-current 132.7 94.8 88.7
Other non-current financial liabilities 683.5 647.3 646.0
Preferred equity 222.2 77.8 207.9
Preferred equity - contractually-linked warrants 46.4 5.8 46.4
Deferred tax liabilities 132.6 71.6 81.4
Retirement benefit obligations 5.5 6.1 4.9
Total non-current liabilities 1,234.4 916.2 1,082.8
Total liabilities 1,735.6 1,258.8 1,462.8
Net Assets 294.7 207.6 202.6
Equity
Share capital 6.3 6.3 6.3
Retained earnings 229.5 195.8 187.3
Foreign exchange reserve 19.7 0.9 3.1
Other reserves 39.2 4.6 5.9
Total equity 294.7 207.6 202.6
Condensed Consolidated Statements of Cash Flows
For the 26 weeks ended 1 October 2022 (unaudited)
26 weeks ended 26 weeks ended 52 weeks ended
1 October 2022 2 October 2021 2 April 2022
(audited)
£m £m £m
Cash flows from operating activities
Operating profit 82.0 27.7 53.6
Adjustments For:
Depreciation and amortisation of IT software 39.6 25.9 55.2
Amortisation of acquired intangibles 21.0 16.0 32.4
Negative goodwill arising on acquisition (61.5) - (6.9)
Acquisition-related performance plan charge 4.0 - 7.1
Amortisation of government grants (0.4) (0.2) (0.5)
Profit on disposal of property, plant and equipment (1.1) (0.1) (2.9)
Share incentive plan charge 1.2 1.0 2.3
Defined benefit pension - (0.1) (0.1)
Net cash flow from operating activities before movements in working capital, 84.8 70.2 140.2
tax and interest payments
Change in inventories (7.8) (26.1) (51.8)
Change in trade and other receivables (32.5) (14.0) (29.9)
Change in trade and other payables (23.8) 26.1 55.5
Cash generated by continuing operations before tax and interest payments 20.7 56.2 114.0
Interest paid on loans and notes (20.4) (16.1) (28.4)
Interest relating to right-of-use lease assets (2.0) (2.2) (3.8)
Income taxes paid (7.3) (6.6) (13.7)
Net cash (outflow) / inflow from operating activities (9.0) 31.3 68.1
Investing activities
Purchases of property, plant and equipment (40.8) (29.9) (51.3)
Purchases of intangible assets (0.5) (0.7) (2.0)
Proceeds on disposal of property, plant and equipment 2.4 2.0 5.3
Deferred consideration and acquisition-related performance plan payments (3.5) (12.0) (12.7)
Acquisition of subsidiaries net of cash acquired (57.3) (140.3) (127.9)
Net cash used in investing activities (99.7) (180.9) (188.6)
Financing activities
Repayment of borrowings (60.7) (23.4) (89.8)
Issue of preferred equity - - 150.0
Preferred equity ticking fee - - (7.0)
Buy back of ordinary shares (6.2) - (0.6)
Payments under right-of-use lease obligations (11.5) (6.7) (15.0)
Repayment of acquisition-related capital investment to Keraben senior mgmt - - (7.2)
team
Net cash (used) / generated in financing activities (78.4) (30.1) 30.4
Net decrease in cash and cash equivalents (187.2) (179.7) (90.1)
Cash and cash equivalents at beginning of period 258.0 344.8 344.8
Effect of foreign exchange rate changes 2.7 2.9 3.3
Cash and cash equivalents at end of period 73.5 167.9 258.0
Comprising:
Cash and cash equivalents 78.4 178.3 273.6
Bank overdrafts (4.9) (10.4) (15.6)
73.5 167.9 258.0
Condensed Consolidated Statement of Changes in Equity
For the 26 weeks ended 1 October 2022 (unaudited)
Share Retained Foreign exchange reserve Other Total
capital
earnings
reserves
equity
£m £m £m £m £m
At 3 April 2021 6.3 198.7 (0.4) 3.6 208.2
Loss for the period to 2 April 2022 - (12.4) - - (12.4)
Other comprehensive income for the period - 1.6 - - 1.6
Retranslation of overseas subsidiaries - - 3.5 - 3.5
Total comprehensive (loss) / income - (10.8) 3.5 - (7.3)
Buy back of ordinary shares - (0.6) - - (0.6)
Share-based payment charge - - - 2.3 2.3
Transactions with owners - (0.6) - 2.3 1.7
At 2 April 2022 6.3 187.3 3.1 5.9 202.6
Profit for the period to 1 October 2022 - 47.5 - - 47.5
Other comprehensive income for the period - 0.9 - - 0.9
Hyperinflation - - - 32.1 32.1
Retranslation of overseas subsidiaries - - 16.6 - 16.6
Total comprehensive income - 48.4 16.6 32.1 97.1
Buy back of ordinary shares - (6.2) - - (6.2)
Share-based payment charge - - - 1.2 1.2
Transactions with owners - (6.2) - 1.2 (5.0)
At 1 October 2022 6.3 229.5 19.7 39.2 294.7
At 3 April 2021 6.3 198.7 (0.4) 3.6 208.2
Loss for the period to 2 October 2021 - (3.1) - - (3.1)
Other comprehensive income for the period - 0.2 - - 0.2
Retranslation of overseas subsidiaries - - 1.3 - 1.3
Total comprehensive (loss) / income - (2.9) 1.3 - (1.6)
Share-based payment charge - - - 1.0 1.0
Transactions with owners - - - 1.0 0.9
At 2 October 2021 6.3 195.8 0.9 4.6 207.6
1. General information
These condensed consolidated financial statements for the 26 weeks ended 1
October 2022 have not been audited or reviewed by the Auditor. They were
approved by the Board of Directors on 28 November 2022.
The information for the 52 weeks ended 2 April 2022 does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The Auditor's report on those accounts was unqualified and did not
include a reference to any matter to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain statements under
Section 498(2) or 498(3) of the Companies Act 2006.
2. Basis of preparation and accounting policies
These condensed consolidated financial statements should be read in
conjunction with the Group's financial statements for the 52 weeks ended 3
April 2022, which were prepared in accordance with IFRSs as adopted by the
European Union.
These interim financial statements have been prepared on a consistent basis
and in accordance with the accounting policies set out in the group's Annual
Report and Financial Statements for the 52 weeks ended 3 April 2022.
Having reviewed the Group's projections, and taking account of reasonably
possible changes in trading performance, the Directors believe they have
reasonable grounds for stating that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements of the Group.
Hyperinflation accounting
The group applied hyperinflationary accounting for its operations in Turkey.
In March 2022, the three-year cumulative inflation in Turkey exceeded 100% and
as a result, hyperinflationary accounting was applied for the half year
reporting ending 1 October 2022 in respect of the group's operations in
Turkey. The Group's consolidated financial statements include the results and
financial position of its Turkish operations restated to the measuring unit
current at the end of the period, with hyperinflationary gains and losses in
respect of monetary items being reported in finance charges. Comparative
amounts presented in the consolidated financial statements were not restated.
Hyperinflationary accounting needs to be applied as if Turkey has always been
a hyperinflationary economy since acquisition date, hence, the differences
between equity at 2 April 2022 as reported and the equity after the
restatement of the non-monetary items to the measuring unit current at 2 April
2022 were recognised in retained earnings. Graniser and Balta (Turkish
operations) were acquired in February 2022 and April 2022 respectively,
consequently their acquisition opening balance sheets have not been re-indexed
on the basis they are held at fair value.
When applying IAS 29 on an ongoing basis, comparatives in stable currency are
not restated and the effect of inflating opening balances to the measuring
unit current at the end of the reporting period is presented in other
comprehensive income. The inflation rate used by the group is the official
rate published by the Turkish Statistical Institute, TurkStat. The movement in
the publicly available official price index for the half year ended 1 October
2022 was 24% (half year ended 2 October 2021: 9%).
Non-underlying items
Non-underlying items are material non-trading income and costs and
non-underlying finance costs as defined by the Directors. In line with IAS 1
para 85, the non-underlying items are disclosed separately in the Consolidated
Income Statement given, in the opinion of the Directors, such presentation is
relevant to an understanding of the Group's financial performance.
3. Segmental information
The Group is organised into four operating segments: soft flooring products in
UK & Europe; ceramic tiles in UK & Europe; flooring products in
Australia; and flooring products in North America. The Executive Board (which
is collectively the Chief Operating Decision Maker) regularly reviews
financial information for each of these operating segments in order to assess
their performance and make decisions around strategy and resource allocation
at this level.
The UK & Europe Soft Flooring segment comprises legal entities in the UK,
Republic of Ireland, the Netherlands and Belgium, whose operations involve the
manufacture and distribution of carpets, flooring underlay, artificial grass,
LVT, and associated accessories. The UK & Europe Ceramic Tiles segment
comprises legal entities primarily in Spain, Turkey and Italy, whose
operations involve the manufacture and distribution of wall and floor ceramic
tiles. The Australia segment comprises legal entities in Australia, whose
operations involve the manufacture and distribution of carpets, flooring
underlay and LVT. The North America segment comprises legal entities in the
USA, whose operations involve the distribution of hard flooring and LVT.
Whilst additional information has been provided in the operational review on
sub-segment activities, discrete financial information on these activities is
not regularly reported to the CODM for assessing performance or allocating
resources.
No operating segments have been aggregated into reportable segments.
Both underlying operating profit and reported operating profit are reported to
the Executive Board on a segmental basis.
Transactions between the reportable segments are made on an arm length's
basis. The reportable segments exclude the results of non revenue generating
holding companies, including Victoria PLC. These entities' results have been
included as unallocated central expenses in the tables below.
Income statement
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
UK & UK & Australia North Unallocated Total UK & UK & Australia North Unallocated Total
Europe
Europe
America
central
Europe
Europe
America
central
Soft Flooring
Ceramic Tiles
expenses
Soft Flooring
Ceramic Tiles
expenses
£m £m £m £m £m £m £m £m £m £m £m £m
Income statement
Revenue 373.7 257.4 64.2 80.9 - 776.1 214.0 182.5 53.4 39.1 - 489.0
Underlying operating profit 15.7 37.5 5.6 3.7 (1.3) 61.1 27.0 25.9 4.8 2.1 (1.2) 58.6
Non-underlying operating items (17.8) (12.0) (0.9) (2.5) (1.2) (34.4) (4.4) (13.4) (0.9) (3.4) (1.3) (23.4)
Exceptional operating items 57.1 (1.0) (0.1) (0.6) (0.2) 55.3 (4.0) (1.7) (0.1) (1.5) (0.2) (7.5)
Operating profit 55.1 24.5 4.7 0.6 (2.7) 82.0 18.6 10.7 3.9 (2.8) (2.7) 27.7
Underlying net finance costs (21.3) (17.5)
Non-underlying finance costs (7.6) (7.3)
Profit before tax 53.1 2.9
Tax charge (5.6) (6.0)
Profit/(loss) for the period 47.5 (3.1)
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
UK & UK & Australia North Unallocated Total UK & UK & Australia North Unallocated Total
Europe
Europe
America
central
Europe
Europe
America
central
Soft Flooring
Ceramic Tiles
expenses
Soft Flooring
Ceramic Tiles
expenses
£m £m £m £m £m £m £m £m £m £m £m £m
Depreciation of tangible fixed assets and IT software amortisation 15.4 11.2 1.5 0.8 0.1 29.0 5.3 9.2 1.1 0.5 0.1 12.1
Depreciation of right-of-use lease assets 6.1 2.9 1.1 0.3 0.2 10.6 6.3 2.3 1.1 - - 13.8
Amortisation of acquired intangibles 7.1 11.1 0.9 1.9 - 21.0 3.6 10.7 0.9 0.8 - 16.0
28.6 25.2 3.5 3.0 0.3 60.6 15.2 22.2 3.1 1.3 0.1 41.9
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
UK & UK & Australia North Central Total UK & UK & Australia North Central Total
Europe
Europe
America
Europe
Europe
America
Soft Flooring
Ceramic Tiles
Soft Flooring
Ceramic Tiles
£m £m £m £m £m £m £m £m £m £m £m £m
Total capital expenditure (cashflow) 16.7 17.2 2.0 3.0 0.0 38.9 7.5 19.3 1.8 0.1 - 28.6
4. Exceptional and non-underlying items
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
£m £m
Exceptional items
(a) Acquisition related costs (1.9) (4.4)
(b) Reorganisation costs (4.3) (1.2)
(c) Negative goodwill arising on acquisition 61.5 (1.9)
55.3 (7.5)
Non-underlying operating items
(d) Acquisition-related performance plans (4.0) (1.7)
(e) Non-cash share incentive plan charge (1.2) (1.0)
(f) Amortisation of acquired intangibles (21.0) (16.0)
(g) Unwind of fair value uplift to acquisition opening inventory (9.5) (4.7)
(h) Depreciation of fair value uplift to acquisition property (0.2) -
(i) Hyperinflation depreciation adjustment (0.5) -
(i) Net hyperinflation adjustment (excluding depreciation) 1.9 -
(34.4) (23.4)
Total 20.9 (30.9)
(a) One-off third-party professional fees in connection with prospecting and
completing specific acquisitions during the period.
(b) One-off costs relating to a number of efficiency projects during the year,
including post-acquisition integration costs in Belgium. In the prior year,
this figure included costs relating to a number of efficiency projects during
the year, including post-acquisition integration costs in Italy and at Edel
Group, plus small incremental restructuring of activities in the UK (primarily
in underlay manufacturing) and Spain (further manufacturing rationalisation).
(c) Negative goodwill of £61.5m arose on the consolidation of the Balta and
Ragolle acquisitions in the period, achieved through favourable bilateral
negotiations. Hanover was acquired during FY21 however in accordance with the
terms of the contract an adjustment to the cash consideration paid on
completion was subsequently assessed and settled. This payment, of £1.9m, was
made following the prior period and was not accounted for at the point of
acquisition, hence is charged to the income statement in the prior period.
(d) Charge relating to the accrual of expected liability under
acquisition-related performance plans.
(e) Non-cash, IFRS2 share-based payment charge in relation to the long-term
management incentive plans.
(f) Amortisation of intangible assets, primarily brands and customer
relationships, recognised on consolidation as a result of business
combinations.
(g) One-off cost of sales charge reflecting the IFRS 3 fair value adjustment
on inventory acquired on new business acquisitions, given this is not
representative of the underlying performance of those businesses.
(h) Cost of sales depreciation charge reflecting the IFRS 3 fair value
adjustment on buildings acquired on new business acquisitions, given this is
not representative of the underlying performance of those businesses.
(I, j) Impact of hyperinflation indexation in the period, see note 2 'Basis of
preparation and accounting policies'. The hyperinflation impact in the period
on revenue was £4.6m (income), cost of sales was £2.9m (charge) and admin
expenses was £0.3m (charge).
5. Finance costs
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
£m £m
Underlying finance items
Interest on bank facilities and notes 17.0 13.8
Interest on unsecured loans 0.7 0.4
Total interest on loans and notes 17.7 14.2
Amortisation of prepaid finance costs on loans and notes 1.5 1.1
Unwinding of discount on right-of-use lease liabilities 2.0 2.2
Net interest expense on defined benefit pensions 0.1 -
21.3 17.5
Non-underlying finance items
(a) Finance items related to preferred equity 14.3 10.4
Preferred equity related 14.3 10.4
(b) Fair value adjustment to notes redemption option 2.7 (1.1)
(c) Unsecured loan redemption premium charge - 0.1
(d) Mark to market adjustments and gains on foreign exchange forward contracts (5.0) (2.4)
(e) Translation difference on foreign currency loans and cash (3.0) 0.3
(f) Other financial expenses (hyperinflation adjustment) 0.5 -
(g) Monetary gain (hyperinflation adjustment) (1.9) -
Other non-underlying (6.7) (3.1)
7.6 7.3
(a) The net impact of items relating to preferred equity issued to Koch Equity
Development during the current and prior periods.
(b) Fair value adjustment to embedded derivative representing the early
redemption option within the terms of the senior secured notes.
(c) Charge relating to the £2.1 million redemption premium on the BGF loan.
The BGF loan, including redemption premium, was fully repaid in the prior
period.
(d) Non-cash fair value adjustments on foreign exchange forward contracts.
(e) Net impact of exchange rate movements on third party and intercompany
loans.
(f) Other finance cost impact of hyperinflation adjustment.
(g) Monetary gain (hyperinflation adjustment) - see note 2 'Basis of
preparation and accounting policies'.
6. Taxation
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
£m £m
Current tax
- Current year UK - 2.4
- Current year overseas 8.8 7.6
8.8 10.0
Deferred tax
- Credit recognised in the current year (3.2) (4.0)
Total tax charge 5.6 6.0
Corporation tax is calculated at the applicable percentage of the estimated
assessable profit for the year in each respective geography. This is 19% in
the UK; 25% in the Netherlands, Belgium and Spain; 23.0% in Turkey; 27.9% in
Italy; 30% in Australia; 12.5% in Ireland an 25% in North America.
The overall effective corporation tax rate on underlying profit is 24.5%
(FY21: 24.5%), representing the best estimate of the weighted average annual
corporation tax rate expected for the full financial year.
7. Earnings per share
The calculation of the basic, adjusted and diluted earnings / (loss) per
share is based on the following data:
26 weeks 26 weeks
ended ended
1 October 2022 2 October 2021
Basic Adjusted Basic Adjusted
£m £m £m £m
Profit / (loss) attributable to ordinary equity holders of the parent entity 47.5 47.5 (3.1) (3.1)
Exceptional and non-underlying items:
Income statement impact of preferred equity - 14.3 - 10.4
Amortisation of acquired intangibles - 21.0 - 16.0
Other non-underlying items - 13.4 - 7.4
Other exceptional items - (55.3) - 7.5
Fair value adjustment to notes redemption option - 2.7 - (1.1)
Translation difference on foreign currency loans - (3.0) - (0.3)
Other non-underlying finance items - (6.4) - (2.3)
Tax effect on adjusted items where applicable - (4.1) - (4.3)
Earnings / (loss) for the purpose of basic and adjusted earnings per share 47.5 30.1 (3.1) 30.8
Weighted average number of shares
26 weeks 26 weeks ended
ended 2 October 2021
1 October 2022
Number Number
of shares
of shares
(000's) (000's)
Weighted average number of shares for the purpose of basic and adjusted 116,464 116,852
earnings per share
Effect of dilutive potential ordinary shares:
Share options and warrants 1,473 1,657
Weighted average number of ordinary shares for the purposes of diluted 117,937 118,509
earnings per share
Preferred equity and contractually-linked warrants 50,493 7,990
Weighted average number of ordinary shares for the purposes of diluted 168,430 126,499
adjusted earnings per share
The potential dilutive effect of the share options has been calculated in
accordance with IAS 33 using the average share price in the period.
The Group's earnings / loss per share are as follows:
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021
Pence Pence
Earnings / loss per share
Basic earnings / (loss) per share 40.76 (2.68)
Diluted earnings / (loss) per share 36.69 (2.68)
Basic adjusted earnings per share 25.85 26.32
Diluted adjusted earnings per share 17.87 24.32
In the current period diluted earnings per share is adjusted for the impact of
the potential future conversion of preferred equity due to this instrument
having a dilutive effect. As a result the £14.3m preferred equity charge in
the period has been added back in the calculation of diluted earnings per
share.
In the prior period diluted earnings per share was not adjusted for the impact
of the potential future conversion of preferred equity due to this instrument
having an anti-dilutive effect, whereby the positive impact of adding back the
associated financial costs to earnings outweighs the dilutive impact of
conversion/exercise.
Diluted adjusted earnings per share does take into account the impact of this
instrument as shown in the table above setting out the weighted average number
of shares.
8. Rates of exchange
The result of the Group's overseas subsidiaries have been translated into
Sterling at the average rate prevailing during the periods. The balance sheets
are translated at the exchange rates prevailing at the period ends:
26 weeks ended 1 October 2022 26 weeks ended 2 October 2021 52 weeks ended 2 April 2022
Australia (A$) - average rate 1.7447 1.8161 1.8269
Australia (A$) - period end 1.7425 1.8649 1.7509
Europe (€) - average rate 1.1701 1.1659 1.1777
Europe (€) - period end 1.1374 1.1683 1.1874
USD ($) - average rate 1.2160 1.3849 1.3627
USD ($) - period end 1.1150 1.3545 1.3114
Turkey (₺) - average rate 20.3012 N/A 18.7879
Turkey (₺) - period end 20.6297 N/A 19.2606
9. Acquisition of subsidiaries
(a) Balta
On 5 April 2022, the Group completed the purchase of the rugs division of
Balta Group, a Belgium-based flooring company along with the purchase of its
UK polypropylene carpet and non-woven carpet businesses and the
internationally known brand 'Balta'.
Total consideration of Balta was €54.1m (£45.2m(1)). Consideration of
€60.4m (£50.5m(1)) was paid on completion and €6.3m (£5.3m(1)) was
received subsequently in July 2022 as a closing cash adjustment. Additionally,
€109.6m (£91.4m(1)) of debt was repaid on completion.
The valuation exercise to identify intangible assets acquired, as required
under IFRS3, has been provisionally applied as at the half year. The final
valuation will be reflected in the Annual Report and Accounts for the Group
for the year ending 1 April 2023, together with the appropriate IFRS 3
disclosures. Identifiable net assets with a total fair value of €124.5m
(£103.9m) and negative goodwill of €70.4m (£58.7m(1)) have provisionally
been recognised. The negative goodwill has been taken to the income statement
in the period.
Within net assets we have provisionally recognised €9.4m (£7.8m(1)) in
relation to the fair value uplift of inventory in accordance with IFRS 3. The
fair value has been assessed as the estimated selling price less any estimated
selling costs, therefore by definition no operating profit is recognised on
sale of the opening inventory. As of 1 October 2022, all of the applicable
inventory had been sold. Given the resulting uplift in cost of sales is not
representative of the underlying performance of the business in relation to
the actual costs incurred in acquiring and producing the inventory, but
instead represents the one-off impact of this fair value accounting adjustment
within the purchase price allocation, this uplift has been separately
disclosed as an exceptional cost.
(b) Ragolle Rugs
On 6 June 2022 the Group acquired 100% of the equity of the Belgium luxury rug
manufacturer Ragolle Rugs NV ('Ragolle').
Ragolle is situated close to Balta and will complement the growing Belgium
operations. It is a producer of high quality wool, viscose, heat set
polypropylene and polyester rugs.
The total cash consideration of €21.4m (£18.2m(2)) was paid on
completion.
The valuation exercise to identify intangible assets acquired, as required
under IFRS3, has been provisionally applied as at the half year. The final
valuation will be reflected in the Annual Report and Accounts for the Group
for the year ending 2 April 2022 together with the appropriate IFRS 3
disclosures. Identifiable net assets with a total fair value of €24.2m
(£20.6m) and negative goodwill of €2.8m (£2.4m(2)) have provisionally been
recognised. The negative goodwill has been taken to the income statement in
the period.
Within net assets we have provisionally recognised €1.4m (£1.2m(2)) in
relation to the fair value uplift of inventory in accordance with IFRS 3. The
fair value has been assessed as the estimated selling price less any estimated
selling costs, therefore by definition no operating profit is recognised on
sale of the opening inventory. As of 1 October 2022, all of the applicable
inventory had been sold. Given the resulting uplift in cost of sales is not
representative of the underlying performance of the business in relation to
the actual costs incurred in acquiring and producing the inventory, but
instead represents the one-off impact of this fair value accounting adjustment
within the purchase price allocation, this uplift has been separately
disclosed as an exceptional cost.
(1) Applying the GBP to EUR exchange rate at the date of acquisition of
1.1990.
(2) Applying the GBP to EUR exchange rate at the date of acquisition of
1.1763.
10. Post Balance Sheet Events
Acquisition of International Wholesale Tile
On 17 October 2022 the Group completed the purchase of International Wholesale
Tile, a Florida based flooring distributor. Total consideration paid on
completion was $28.5m (24.9m(1)), with a further capped contingent payment
payable of the next four years, conditional upon the business achieving
certain growth and earnings targets.
(1) Applying the GBP to USD exchange rate at the date of acquisition of 1.14
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FZMZMMRRGZZZRecent news on Victoria
See all newsREG - Victoria PLC - Holding(s) in Company
AnnouncementREG - Victoria PLC - Purchase of Own Shares
AnnouncementREG - Victoria PLC - Purchase of Own Shares
AnnouncementREG - Victoria PLC - Purchase of Own Shares
AnnouncementREG - Victoria PLC - Purchase of Own Shares
Announcement