Flooring company Victoria (VCP) has continued to drive revenue and cash profits through acquired assets in the first half of its 2020 financial year. The most recent purchase, Spanish tile manufacturer Ibero Alcorense, bought in August, came too late for any marked impact on earnings, but this was the first full period August 2018 acquisition Saloni to include. Revenue increased in the UK and Europe, up 4 per cent in soft flooring and 49 per cent in the ceramic tiles division thanks to Saloni.
The margin in that division came down from 32.1 per cent a year ago to 28.1 per cent, which finance director Michael Scott said was partly due to the Ibero Alcorense acquisition. Victoria did not give an exact price for the transaction, but said it was “under five times” the company's annual cash profit (Ebitda). Mr Scott told us the tilemaker’s cash profits were €3m-€4m (£2.6m-£3.4m) a year.
Investors can expect this acquisition-heavy strategy to continue after a refinancing in July that saw loans turned into a €330m bond package. This is a more expensive approach, but Mr Scott said the covenant-light deal would allow spending to continue. In contrast to the European improvements, Victoria’s revenue in Australia dropped 6 per cent and the operating profit fell by over a third to £2.1m.
Berenberg expects full-year 2020 cash profits at £123m, a 28 per cent increase on FY2019.
| VICTORIA (VCP) | ||||
| ORD PRICE: | 400p | MARKET VALUE: | £502m | |
| TOUCH: | 390-410p | 12-MONTH HIGH: | 545p | LOW: 319p |
| DIVIDEND YIELD: | NA | PE RATIO: | NA | |
| NET ASSET VALUE: | 258p* | NET DEBT: | 113%** | |
| Half-year to 28 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 273 | 4.6 | 0.58 | nil |
| 2019 | 316 | 5.5 | 3.11 | nil |
| % change | +16 | +20 | +436 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £467m, or 372p a share. **Excludes £62m in lease liabilities. | ||||
