TIDMVCP
RNS Number : 6703W
Victoria PLC
13 February 2017
For Immediate Release 13 February 2017
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 Avalon BV & GrassInc. BV
Entry into the European Flooring Market with a new high growth
product
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative floor coverings, is
delighted to announce the acquisition of Avalon BV ("Avalon") and
GrassInc. BV ("GrassInc") ("the Acquisitions"), the
Netherlands-based designers, producers, and distributers of
artificial grass for a total initial cash consideration of EUR11.2
million (GBP9.7m(1) ) and deferred consideration of EUR5.1 million
(GBP4.4m(1) ) to be funded from cash and the Group's existing bank
facilities. Additional contingent cash consideration is payable
dependent on certain financial targets being met over the next four
years.
The Acquisitions will be immediately earnings-accretive.
Established in 2010 (Avalon) and 2011 (GrassInc.) the
Acquisitions primarily supply artificial grass for domestic and
landscaping purposes across Europe. This is a very high growth -
and high margin - segment of the flooring market. Total European
demand for artificial grass was approximately 50 million square
metres in 2015, with the market for domestic grass forecast to grow
15% year on year through to 2019 and landscaping forecast demand to
grow 11% year on year through to 2019(2) .
For the year ended 31 December 2016, the Acquisitions generated
unaudited total revenues of EUR20.4 million (GBP17.6m(1) ) and EBIT
of EUR4.2 million (GBP3.6m(1) ). Total net assets acquired on
completion were approximately EUR5.7 million (GBP4.9m(1) ).
Victoria's net debt to EBITDA ratio(3) remains less than 2x
following completion.
Strategic rationale for the Acquisitions
The Acquisitions continue Victoria's strategy of growing its
business with earnings-enhancing acquisitions, and then using
available synergies to drive further increases in profits. The
Board believes that the Acquisitions present an excellent strategic
fit with Victoria's existing business and will have strong long
term growth prospects as part of the Group.
There is significant opportunity for a number of commercial,
operational and financial synergies, which are expected to create
value for Victoria's shareholders:
-- The production of artificial grass is almost identical to
carpet manufacturing, using the same machinery, the same processes,
and similar fibres.
-- There is significant existing and growing demand in the UK
for artificial grass. Victoria has a very strong distribution
network - it sells to over 3,000 independent retailers - and we
believe there is a real opportunity to grow the revenues of the
Acquisitions by accessing that distribution network with both
branded and white-label artificial grass products.
-- These Acquisitions better position Victoria with its large
European peers, the majority of which already own capabilities in
this field.
-- The existing experienced management teams will remain with
the business for a minimum term of four years. Like all companies
acquired by Victoria, the Acquisitions will continue to operate
with a significant degree of autonomy, whilst benefiting from being
part of a much larger group in their ongoing drive for profitable
growth.
-- The Board does not envisage significant integration costs arising from the Acquisitions.
-- In line with the Group's growth strategy, these acquisitions
represent Victoria's first entry into the European flooring market,
offering cross-border collaboration on sales and distribution
experience. It furthermore extends the Group's capabilities in
another type of flooring, artificial grass, which is a very high
growth flooring segment in UK and Europe.
As such, the Acquisitions are expected to be immediately
earnings enhancing and opportunities to improve margins and
revenues will be pursued at the earliest opportunity.
The enlarged Group now has approximately 1,800 employees and
operates from 12 sites in the UK & Europe, and five in
Australia.
Key terms of the Acquisitions
The total consideration for the Acquisitions comprises:
-- Initial cash consideration of EUR11.2 million (GBP9.7m(1) );
-- Deferred cash consideration of EUR5.1 million (GBP4.4m(1) )
payable in instalments over four years;
-- Contingent cash consideration of up to approximately EUR8.8
million (GBP7.6m(1) ) dependent on improved EBITDA and other
criteria over the next four years.
The Acquisitions are being funded entirely from cash and the
Group's existing bank facilities.
Geoff Wilding, Chairman of Victoria PLC, commented:
"This represents the first of several acquisitions we will be
making in Europe and it elevates our status as being a supplier of
innovative flooring products to our growing customer base. There is
already significant demand from our existing UK customers for
artificial grass, which is currently being met by our competitors
and we are therefore confident there are material revenue synergies
for Avalon and Grass Inc. from our UK operations.
Philippe Hamers, Victoria's incoming CEO, has enormous
experience of taking European-manufactured flooring product into
the UK and we look forward to the earnings-enhancing revenues this
acquisition will bring while we continue to actively search for
valuable acquisitions of this kind across Europe."
For more information contact:
Victoria PLC
Geoff Wilding, Chairman
Michael Scott, Group Finance Director +44 (0) 1562 749 300
Cantor Fitzgerald Europe (Nominated Adviser and Broker)
Rick Thompson, Phil Davies, Michael Reynolds (Corporate Finance)
Mark Westcott, Caspar Shand-Kydd (Sales) +44 (0) 20 7894 7000
finnCap (Joint Broker)
Matt Goode, Carl Holmes +44 (0) 20 7220 0500
(Corporate Finance)
Tim Redfern
(Corporate Broking)
Buchanan Communications (Financial PR)
Charles Ryland, Victoria Hayns, Jane Glover +44 (0) 20 7466 5000
1. Exchange rate GBP1:EUR1.16
2. Source: AMI Research
3. Net debt / EBITDA as measured in relation to the Group's bank facility covenants
About Victoria PLC
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, designs, manufactures and
distributes a range of carpet, underlay, artificial grass and
flooring accessories. In addition, it markets and distributes a
range of complementary LVT (luxury vinyl tile) and hardwood
flooring products produced by third-party manufacturers. Victoria
has operations in the UK, the Netherlands and Australia and employs
approximately 1,800 people across 17 sites. Victoria is the UK's
largest carpet manufacturer and the second largest in
Australia.
The Group's strategy is designed to create wealth for its
shareholders, focussed on constantly increasing earnings per share
via acquisitions and sustainable organic growth. Growth for the
Group is fundamentally driven by three aims:
-- achieving a leading position in UK, Europe and Australia;
-- continuing to seek and deliver cross-business synergies to
drive like-for-like margin improvement; and by
-- consolidating a fragmented market place with earning-enhancing acquisitions.
The Group's subsidiaries, as set out segmentally, include:
UK & Europe: Abingdon Flooring Ltd, Alliance Distribution
Ltd, Carpet Line Direct Ltd, Ezifloor
Limited, Gaskell Mackay Carpets Ltd,
Interfloor Group Ltd, Thomas Witter
Carpets Ltd, Victoria Carpets Ltd,
View Logistics Ltd, Westex (Carpets)
Ltd, Whitestone Weavers Ltd, Avalon
Grass BV, Grass Inc. BV.
Australia: Dunlop Flooring Pty Ltd, Quest Carpet
Manufacturers Pty Ltd, and The Victoria
Carpet Co. Pty Ltd
This information is provided by RNS
The company news service from the London Stock Exchange
END
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