Victoria Plc · LSE:VCP
Victoria — Investor Presentation (April 2016)
24 slides from Victoria's investor presentation, April 2016
Slide 1: Objective: to create wealth for shareholders
Objective: to create wealth for shareholders April 2016
Slide 2: Carpet/Flooring Industry
CARPET/FLOORING INDUSTRY 4 dominant markets: • North America • Australasia • UK • Europe Carpet Market (at manufacturing): 1. IBIS World 2. Eurostat Total Victoria Group Australasia $813 million1 $140 million UK £945 million1,3 £160 million3 Europe €1,200 million2 <€10 million 3. Excludes underl
Slide 3: Key Revenue Drivers
KEY REVENUE DRIVERS UK Housing Sales 1223 1228 Redecorating 917 848 880 869 932 1000 • UK: 26.4 million households (2/3 owner-occupied) • Australia: 8.1 million households • Households replace carpet on average every 9 years Housing Transactions 2008 2009 2010 2011 2012 2013 2014 2015 • Steady growt
Slide 4: Sales Leadership
SALES LEADERSHIP What recession? 220.0 210.0 Revenues (£millions) (constant currency) 200.0 190.0 180.0 170.0 160.0 150.0 2009 2010 2011 2012 2013 2014 2015 Year 4
Slide 5: Victoria PLC's Wealth Creation Strategy
VICTORIA PLC’s WEALTH CREATION STRATEGY SYNERGIES TURNAROUND SCALE - GROW DIVIDEND CORE THROUGH MARGINS YIELD BUSINESS ACQUISITIONS 8%-10%-12% 5
Slide 6: Turnaround Core Business
TURNAROUND CORE BUSINESS • New Board Nothing magic appointed and strategic review Cost savings 2012 • Cut costs • Dispose of • Headcount obsolete stock • Suppliers • Sale and leaseback of assets • SKU reduction • New product Price increases = volumes down, margins up 2013 launches • Improve work
Slide 7: Scale - Acquisitions
SCALE - ACQUISITIONS Consolidator in a highly-fragmented, inefficient industry • Aging owners Acquisition • > 250 UK and European flooring manufacturers 2013 of Westex Highly selective acquisitions • Competitive advantage (channels, distribution, product) • Growing Acquisition 2014 of Abingdon •
Slide 8: Synergies
SYNERGIES Retain individual brands, sales teams, distribution channels, management, etc. • Co-operation, not integration • Carpet isn’t just carpet = brand distinction important for retailers • Manageable size – responsiveness, flexibility • Customer-facing = autonomous High level integration dr
Slide 9: Dividend Yield
DIVIDEND YIELD Warren Buffet acquired Shaw Industries (world’s 2nd largest carpet mfr) for its free cash flow Operating free cash-flow = 105% of EBITDA. Why? • Plant longevity (Grandad’s axe) • Plant relatively inexpensive • Consolidate production capability (e.g. Australian spinning mills) • Pr
Slide 10: Group Operational Structure
GROUP OPERATIONAL STRUCTURE PLC • Holding company • Capital allocation Operating Companies “OpCo” • Operational responsibility • Profits PLC • Cash generation Customer-facing OpCo 1 OpCo 2 OpCo 3 Production synergies Logistics, Manufacturing, Purchasing Volkswagen AG 10
Slide 11: Competitive Strengths
COMPETITIVE STRENGTHS NOW: Management team Brands • Proven • Highly motivated Distribution • More than 3,000 customers: – independent retailers, – buying groups, – distributors, – large retailers (JLP, Carpetright, ScS etc.) DELIVERING: Logistics/Service • Sales density lowers delivery cost a
Slide 12: Appendices
APPENDICIES Finance Review – debt position, earnings, balance sheet Shareholder Register Business overview – fast facts
Slide 13: Financial Review
Financial Review
Slide 14: Debt Position
DEBT POSITION The Group has remained strongly cash generative from operating activities Supportive bankers – HSBC and Barclays - £125m facility (including accordion) Bank debt/EBITDA <2.25x at November 2015 Interest cover: • 6.1x FY16 • 7.2 x FY17 • (Analyst consensus) Net debt • £61.5m at
Slide 15: Income Statement
INCOME STATEMENT Income Statement 2017F* 2016F* 2015 2014 2013 £’000 Revenue 311,300 256,100 128,304 71,386 70,909 Gross profit 101,600 82,900 41,609 20,842 17,230 EBITDA 32,400 23,500 11,883 5,135 2,331 Depreciation (5,900) (4,900) (3,003) (2,484) (2,700) Operating profit/(loss) (pre amortisation &
Slide 16: Balance Sheet
BALANCE SHEET Balance Sheet 3 Oct-15 28 Mar-15 29 Mar-14 30 Mar-13 £’000 Goodwill, Intangibles, investments and deferred tax asset 82,459 17,422 9,309 1,751 Property, plant & equipment 29,432 22,489 18,681 23,778 Non-current assets 111,891 39,911 27,990 25,529 Current assets 108,472 74,301 50,906 33
Slide 17: Shareholder Register
SHAREHOLDER REGISTER
Slide 18: Victoria PLC Shareholder Register
VICTORIA PLC SHAREHOLDER REGISTER Holding as of Rank Investor Name 29 Jan 16 % 1 Mr Geoff Wilding 6,087,730 33.47 - Private Investors (UK) 1,243,367 6.83 2 Old Mutual Global Investors 1,088,904 5.99 3 Hargreave Hale 1,040,787 5.72 4 Schroder Investment Management 1,011,180 5.56 5 BlackRock Investmen
Slide 19: The Business
THE BUSINESS
Slide 20: Site Overview
SITE OVERVIEW County Durham Sales & marketing, Distribution West Yorkshire Production Sales & marketing, Distribution Kidderminster, West Midlands Head office Production Sales & marketing, Distribution (two sites) Lancashire Underlay production Sales & marketing, Distribution Melbourne (three sites)
Slide 21: Board of Directors
BOARD OF DIRECTORS Geoff Wilding Michael Scott Chairman Group Finance Director Geoff Wilding is a former investment banker. Prior to his appointment in January 2016, He set up his own investment company in New Michael spent eight years at Rothschild where, Zealand in 1989. Geoff was appointed as par
Slide 22: Fast Facts
FAST FACTS Victoria is an international designer, manufacturer and distributor of Key products innovative floorcoverings Established in 1895, it listed on the London Stock Exchange in 1963. It set up its first factory in Australia in 1954. It now operates from three sites in the state of Victo
Slide 23: Worcester Road, Kidderminster, Worcestershire DY10 1JR England Enquiries: +44 (0) 207 440 7520
Worcester Road, Kidderminster, Worcestershire DY10 1JR England Registered in England No. 282204 Enquiries: +44 (0) 207 440 7520 Geoff Wilding, Executive Chairman Michael Scott, Group Finance Director www.victoriaplc.com 23
Slide 24: Disclaimer
DISCLAIMER • The information contained in this confidential document (“Presentation”) has been prepared by Victoria PLC (the “Company”). It has not been fully verified and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authorised person