TIDMVCP
RNS Number : 0053R
Victoria PLC
25 June 2020
For Immediate Release 25 June 2020
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Victoria PLC
('Victoria' or the 'Group')
Trading Update
Victoria PLC (LSE: VCP) the international designers,
manufacturers and distributors of innovative flooring, is pleased
to provide an update on recent trading following the restart of
operations in all the countries in which the Group has
manufacturing and/or distribution operations.
Current Trading
The Board is pleased to advise that in every geography trading
has exceeded management expectations following the re-start of
operations.
Following a dramatic decline in revenues in March and April due
to government-mandated closure of all of our manufacturing
operations (with the exception of Australia, which is about 14% of
our normal revenues) and many of our customers' shops across
Europe, sales began to recover in mid-May with the easing of
restrictions in some countries. The benefit of our geographic
diversification in both manufacturing and customer locations was
readily apparent, as different countries ended their lockdowns at
varying times.
The Group has methodically re-opened its manufacturing and
distribution operations in all geographies, to meet the current
high acceleration in demand whilst ensuring that costs are not
incurred unnecessarily.
Group revenues have, as a result, steadily increased and over
the last three weeks were approximately 85% of management's
pre-Covid-19 budget. Further recovery is expected as orders begin
to flow to Victoria from UK retailers, who were the last to start
trading as they were only allowed to re-open last week. Revenue
performance by division was as follows:
-- UK & Europe Soft Flooring c. 70%
-- UK & Europe Ceramic Tiles c. 90%
-- Australia c. 105%
It is important to remember that much of our product is exported
outside of its country of manufacture. It is very encouraging that
consumers within countries which did not lock down have shown
consistent demand throughout the period, and those that exited lock
down first (Germany and Austria, for example, who re-opened retail
two months ago) have maintained very good demand following the
initial rapid increase after we restarted operations. That said,
our operations across all divisions remain prepared to react
quickly to any future changes in demand.
Finally, the Board would like to remind shareholders that
Victoria's supply chain is highly diversified and invariably
localised to the key manufacturing plants. Our access to raw
materials has remained secure throughout the period and we will be
able to meet demand as it arises.
Net Debt and Liquidity
Careful stewardship of Victoria's cash by the Group's finance
and treasury team, together with our inherent low operational
gearing, has ensured the Group has maintained a financially robust
position. The Group's net debt position is currently c. GBP370
million and has remained relatively stable since the recent March
year-end, with current cash and undrawn credit lines in excess of
GBP200 million.
The Board is satisfied with the strength of Victoria's financial
position and shareholders will recall that in July 2019 and again
in January 2020 Victoria issued a total of EUR500 million of Senior
Secured Notes ("bonds"). These bonds are not due before July 2024
and, in themselves, carry no maintenance financial covenants.
Victoria has not accessed any government credit-line schemes and
does not foresee any current need to raise capital for normal
operating activities.
Earnings Outlook for 2020/21
It remains premature to provide meaningful earnings guidance for
FY2021, although the Board is considerably more optimistic in
respect of the current financial year than at the time of the last
trading update in March 2020 at the outbreak of the Covid-19
induced disruption. It is important to remember that 93% of
Victoria's revenues are derived from consumers redecorating their
homes, not construction or commercial projects, and consumer demand
for home decorating products appears to be strong across the
world.
This is not altogether surprising, given the extended period
consumers have spent in their home over the last four months, which
is likely to have encouraged the impulse to redecorate.
The Board looks forward to updating shareholders further in due
course
Summary
Whilst trading over the last quarter has, obviously, been
affected, the long-term outlook for the Group remains positive.
Victoria is fortunate to have a highly experienced and motivated
operational management team - many of whom have been successful in
the industry for 30 years or more and the value of this experience
is enormous. Our managers acted decisively and promptly to protect
their business at the start of the lockdown period and were just as
quick to restart operations as customer demand returned at the end
of the lockdown. As a result, Victoria is weathering the storm in
very good shape.
As we look ahead to the short to medium term, the effort we have
made over recent years to build relationships with the owners of
other flooring companies will give rise to some materially
value-creating opportunities. The events of the last few months
have given rise to new or increased imperatives with some business
owners. Our financial position and reputation for straightforward
dealings mean that the owners of other flooring businesses view
Victoria as a reliable transaction partner and we expect to see
some very interesting and attractive opportunities in the months
ahead.
We have a resilient balance sheet, motivated and talented
operational management, fully-developed contingency plans covering
possible future scenarios, and geographic diversity of end markets
and manufacturing facilities. We are, therefore, confident Victoria
will continue to prosper and create wealth for shareholders.
For further information contact:
Victoria PLC Cantor Fitzgerald Europe (Nominated
(+44 (0) 1562 749 610) Adviser and Joint Broker)
Geoff Wilding (+44 (0) 20 7894 7000)
Philippe Hamers Rick Thompson, Phil Davies, Will
Michael Scott Goode (Corporate Finance)
Berenberg (Joint Broker) Peel Hunt (Joint Broker)
(+44 (0) 203 207 7800) (+44 (0) 20 7418 8900)
Ben Wright, Mark Whitmore, Laure Adrian Trimmings
Fine (Corporate Broking) George Sellar
Andrew Clark
Buchanan Communications (Financial
PR)
(+44 (0) 20 7466 5000)
Charles Ryland
Victoria Hayns
Tilly Abraham
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END
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