TIDMVCP
RNS Number : 3305X
Victoria PLC
04 May 2021
For Immediate Release
4 May 2021
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')
Acquisition of Edel Group BV
Continued European Expansion
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative flooring, is delighted
to announce the substantial expansion of its existing artificial
landscaping grass business with the acquisition of Edel Group BV
("Edel"), the Netherlands-based designers, manufacturers, and
distributers of artificial grass and carpets.
Key terms of the Acquisition
-- For the year ended 31 December 2020, Edel generated unaudited
total revenues of EUR47.6 million (GBP41.4m(1) ) (2019: EUR44.3m)
and normalised EBITDA of EUR10 million (GBP8.7m(1) ) (2019:
EUR7.9m).
-- This represents an above 20% operating margin.
-- Total consideration paid was EUR49.4 million (GBP42.9m(1) ).
In addition, Edel has approximately EUR20.0 million (GBP17.4m(1) )
of net debt.
-- The purchase price was funded entirely from the Group's cash
balances. Victoria's leverage remains in line with our stated
financial policy following completion, with the ratio of total net
debt to pro-forma EBITDA(2) of c. 3.3x and senior net debt to
pro-forma EBITDA of c. 3.0x.
-- Edel is an exceptionally well invested business with
state-of-the-art and well-maintained yarn extrusion, tufting and
backing production facilities located in the Netherlands and
Germany, making it a best-in-class producer.
The acquisition of Edel will be immediately
earnings-accretive.
Strategic rationale for the Acquisition
Established in 1918, Edel primarily supplies artificial grass
for domestic and landscaping purposes across Europe, a market in
which Victoria already has a strong presence following its February
2017 acquisitions of Avalon and GrassInc. This is a high-growth
sector of the industry with European demand for artificial grass
expected to achieve double-digit growth from 82.4m m(2) in 2020 (up
from c.60m m(2) at the time of the Avalon and GrassInc acquisition)
to 110.6m m(2) in 2023 (10.3% p.a. in volumes) AMI Consulting (2020
). Additionally, Edel supplies carpet backing services utilising
the same equipment.
Edel operates through three business units:
-- Schramm, based in Rahden, Germany: yarn extrusion for artificial grass;
-- United Works, located in Genemuiden, Netherlands: tufting and
backing of artificial grass and backing of carpets; and
-- Royal Grass, based in Uden, Netherlands: the marketing and
sales of super-premium artificial grass for landscaping and leisure
end-markets.
Following very good revenue growth of 7% p.a. over the previous
three years, Edel displayed remarkable resilience during 2020, with
revenues growing by 7.4%, despite Covid-19, alongside a
corresponding increase in earnings. Demand for domestic landscaping
artificial grass increased as consumers confined to their homes,
focused on home and garden improvement.
The outlook for domestic demand remains positive with growing
consumer acceptance of artificial grass due to enhanced realism and
increasing awareness of its advantages when compared with natural
grass, including limited maintenance and water requirements.
Furthermore, there is a backlog in municipal and commercial
landscaping applications (e.g. road verges and hotels), school and
play areas and sports landscapes, which were deferred during
2020.
The integration of Edel with Victoria's existing artificial
grass business will create the largest premium landscaping grass
group in Europe with revenues of more than EUR77 million and
significant opportunities for value-creating commercial and
operating synergies:
-- Victoria currently outsources the production of c.4 million
m(2) of artificial grass. Capitalising on the manufacturing
capabilities of Edel and insourcing this production will increase
the margin on Victoria's existing artificial grass revenue.
-- Both Edel and Victoria have extensive, but largely
non-overlapping distribution networks across Europe and the
directors believe there is a real opportunity to grow the combined
revenues by collaboration on sales and distribution.
-- The increased scale of the integrated business will reduce
raw material costs and improve productivity at the factories, with
a consequential improvement in operating margin. The Board does not
envisage significant integration costs.
-- Like all companies acquired by Victoria, Edel will continue
to operate with a significant degree of autonomy under experienced
and committed managers, whilst benefiting from being part of a much
larger group in its ongoing drive for profitable growth.
The Acquisition of Edel is another step in Victoria's strategy
of growing its business with earnings-enhancing acquisitions, and
then using available synergies to drive further increases in margin
and revenue. The Board believes that Edel presents an excellent
strategic fit with Victoria's existing business and will have
strong long term growth prospects as part of the Group.
Philippe Hamers, Group Chief Executive, commented:
"Victoria's 2017 investment in the premium artificial
landscaping grass sector has been very successful and this
acquisition represents an opportunity to create Europe's largest
and most profitable business in the sector. The addition of
production facilities benefits our customers by enabling them to
source locally in Europe, avoiding inflationary and disruptive
imports from the Far East. Furthermore, the outlook for this
product category is positive due to growing consumer acceptance and
increasing demand for sustainable products that address climate
change.
Geoff Wilding, Executive Chairman, said:
"Victoria has, so far this financial year, invested a little
over GBP90 million to add approximately GBP17 million of EBITDA to
the Group. We continue to have substantial amounts of capital to
deploy and are in active discussions with additional high-quality
opportunities to grow our business. Therefore, shareholders can
expect further acquisitions in the weeks and months ahead."
(1) Applying a GBP:EUR exchange rate of 1.150
(2) Leverage ratios calculated in-line with the Group's debt
facilities
The person responsible for arranging the release of this announcement on behalf of the Company
is Michael Scott, Group Finance Director.
For more information contact:Victoria PLC
Geoff Wilding, Executive Chairman
Philippe Hamers, Group Chief Executive
Michael Scott, Group Finance Director +44 (0) 1562 749 610
N+1 Singer (Nominated Adviser and Joint
Broker)
Rick Thompson, Phil Davies, Alex Bond +44 (0) 207 496 3095
Berenberg (Joint Broker)
Ben Wright, Mark Whitmore, Tejas Padalkar
Peel Hunt (Joint Broker)
Adrian Trimmings, Andrew Clark +44 (0) 203 207 7800
Buchanan Communications (Financial PR) +44 (0) 207 418 8900
Charles Ryland, Chris Lane, Vicky hayns,
Tilly Abraham +44 (0) 20 7466 5000
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 and Australia
and employs approximately 3,700 people
across more than 25 sites. Victoria is
the UK'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.)
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