Victoria : Annual Report and Accounts 2022

Annual Report and Accounts

for the 52 weeks ended 2 April 2022

www.victoriaplc.com

stock code: VCP

WELCOME TO VICTORIA PLC

Victoria is a designer, manufacturer and distributor of innovative flooring products.

GROUP FINANCIAL AND OPERATIONAL HIGHLIGHTS

BY APPOINTMENT TO

HER MAJESTY THE QUEEN CARPET MANUFACTURERS VICTORIA CARPETS LTD KIDDERMINSTER

REVENUE (£m)					UNDERLYING OPERATING PROFIT (£m)*
22						22
				1,019.8	107.9
21		662.3			21	79.8
20		621.5			20	77.1
19		566.8				19	70.5

IFRS REPORTED OPERATING PROFIT / (LOSS) £m	ADJUSTED NET DEBT / EBITDA **
22	53.6		22	2.7x
21	45.9			21	3.1x
	(8.5)
20				20	3.0x
19	23.9				19		3.2x

• 2022 was the ninth consecutive record year for Victoria in terms of revenue and underlying operating profit, despite challenging operational conditions due to supply chain constraints and significant inflationary pressures.
• Five value-adding acquisitions completed during the year
  - one in the UK & Europe Soft Flooring division, three in the UK & Europe Ceramic Tiles division, and one in the US forming a new North America division.
• Record annual revenue of £1,020 million (FY21: £662.3m) was achieved, including like-for-like organic growth of +19.2%.
• Underlying EBITDA grew by +27.8% over the prior year to £162.8 million.
• Notwithstanding the significant increase in EBITDA on an absolute basis, the underlying EBITDA margin % was
  16.0% due to two key mathematical factors:
  (1) acquisition mix effect of c. -190bps - our acquisition targets generally had significantly lower margins than the incumbent group on acquisition; and
  (2) cost inflation pass-through effect of c. -180bps - unprecedented cost inflation during the year was, to the extent not mitigated by operational measures, passed onto customers but without any mark-up, thereby protecting absolute profits but not % margins.

After accounting for these factors, the residual organic movement in margin was c. +50bps.

• After accounting for non-underlying operating and finance items, the Group generated a loss before tax of £12.4 million (FY21: £7.5m). A detailed description of non- underlying items is provided in the Financial Review, and a reconciliation of underlying metrics to IFRS metrics in the Appendix.
• Strong cash generation with £34.2 million of underlying free cash flow, which equated to a 32% conversion from underlying operating profit. The group increased capex following Covid-19 related reductions in the prior year, and also increased investment into raw materials as a precautionary measure to protect our production schedules in the case of possible supply chain disruption.
• Successful £150 million incremental issue of preferred equity to Koch Equity Development, with beneficial changes in terms including a 100bps reduction in coupon.
• Year-endnet leverage (as measured by our lending banks) was 2.66x, with the Group's senior debt consisting entirely of fixed rate, covenant-lite bonds falling due in August 2026 and March 2028.
• A resilient balance sheet, with cash and undrawn credit lines at the year-end, even after adjusting for the post year-end acquisition of Balta, in excess of £200 million.

• underlying and before exceptional and non-underlying items
• applying our lending banks' measure of financial leverage

Read the Victoria snapshot on pages 02 and 03

Victoria PLC Annual Report and Accounts 2022

Stock Code: VCP

OUR MISSION STATEMENT

TO CREATE WEALTH FOR OUR SHAREHOLDERS

Read the Financial review on pages 18 to 29

Visit our corporate website www.victoriaplc.com

Business and Performance

CONTENTS

Business and Performance

Group financial and operational	IFC
highlights
A snapshot of Victoria PLC	02
Chairman and CEO review	04
Strategic report	13
Financial review	18
Environmental, Social and Governance	30
Report

Our Governance

Board of Directors	40
Directors' report	41
Statement of Directors' responsibilities	45

Our Financials

Independent auditor's report	46
Consolidated income statement	61
Consolidated statement	62
of comprehensive income
Consolidated and Company	63
balance sheets
Consolidated and Company	64
statements of changes in equity
Consolidated and Company	65
statements of cash flows
Significant accounting policies	66
Notes to the accounts	75

Other Information

Shareholder information	131
Registered offices of subsidiaries	132
Glossary	133
Appendix	134

www.victoriaplc.com

01

A snapshot of Victoria PLC

OVERVIEW

The Group designs, manufactures and distributes a wide range of carpets, ceramic tiles, underlay, LVT (luxury vinyl tile), artificial grass and flooring accessories.

REVENUE		OPERATING PROFIT		EMPLOYEES
UK & Europe Soft Flooring	41.5%	UK & Europe Soft Flooring	41.3%	UK & Europe Soft Flooring	30.7%
UK & Europe Ceramic Tiles	36.4%	UK & Europe Ceramic Tiles	43.2%	UK & Europe Ceramic Tiles	58.8%
Australia	10.8%	Australia	10.8%	Australia	7.6%
North America	11.3%	North America	4.7%	North America	2.9%

UK & EUROPE SOFT FLOORING

Revenue	Employees	m2	flooring sold	m2 underlay sold
£423.1m	1,508	35.6m	54.1m
UK & EUROPE CERAMIC TILES
Revenue	Employees	m2	flooring sold
£371.6m	2,891	51.8m
AUSTRALIA
Revenue	Employees	m2	flooring sold	m2 underlay sold
£109.5m	371	8.9m	14.2m
NORTH AMERICA
Revenue	Employees	m2	flooring sold
£115.6m	143	4.6m

02

Victoria PLC Annual Report and Accounts 2022

Stock Code: VCP

Business and Performance

LOCATION OF OPERATIONS

The Group has operations in the UK, Europe, Turkey, the USA and Australia, employing approximately 4,900 people at more than 27 sites.

UNITED KINGDOM

EUROPE

Dumfries,

Hartlepool,

OSS,

Genemulden, Netherlands

Dumfries & Galloway

County Durham

Netherlands

Artificialgrass

Accessories production

Sales & marketing

Sales & marketing

Manufacturing

Distribution

Distribution

Distribution

Uden,Netherlands

Dewsbury,

Waregem,

Sales & marketing

Aalten, Netherlands

West Yorkshire

Keighley,

Belgium

Sales & marketing

Carpet production

West Yorkshire

Carpet and Rugs

Sales & marketing

Manufacturing

Underlay production

Distribution

Sales & marketing

Rahden,

Distribution

Ronse,

Germany

Izmir, Turkey

Belgium

Artificial grass

Ceramics production

Rossendale,

Sales & marketing

Manufacturing

Lancashire

Usak, Turkey

Underlay production

Rugs Manufacturing

Sales & marketing

Distribution

Newport,

South Wales

Carpet production

Hemel Hempstead,

Sales & marketing

Sassuolo, Italy

Alfonsine, Italy

Kidderminster,

Hertfordshire

Castellon, Spain

Distribution

West Midlands

Distribution

Ceramics production

Ceramics production

Ceramics production

Head Office

Sales & marketing

Sales & marketing

Sales & marketing

Sales & marketing

Distribution

Distribution

Distribution

Distribution

AUSTRALIA	NORTH AMERICA
	Sydney
				Los Angeles, California		Atlanta, Georgia
	Underlay production
	Sales & marketing		Distribution	Rugs distribution
	Distribution

Melbourne

Carpet production

Sales & marketing

Distribution

San Diego, California

LVT & Wood Flooring

Sales & Marketing

Distribution

www.victoriaplc.com

03