TIDMVCP
RNS Number : 9166R
Victoria PLC
10 November 2021
For Immediate Release 10 November 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Victoria PLC
('Victoria' or the 'Group')
Acquisition of B3 Ceramics Danismanlik ("Graniser")
A substantial low-cost manufacturing platform
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative flooring, is pleased
to announce the further expansion of its existing ceramic tile
business and operations, having agreed to acquire Graniser, a
mid-market manufacturer and exporter of ceramic tiles based in
Izmir, Turkey (the "Acquisition") .
Key terms of the Acquisition
-- Graniser prepares and files audited statutory financial
accounts in Turkey, which were audited by Deloitte from 2013 to
2019, with KPMG appointed in 2020. The accounts are prepared in
Turkish Lira, with c. 70% of Graniser's revenue denominated in
Euros.
-- For the 12 months ended 31 December 2020, Graniser generated
audited revenues of EUR59.3 million [1] (c. GBP52.8m 1 ). Current
normalised EBITDA is approximately EUR9 million (c. GBP7.7m 2
).
-- Total consideration to be paid on completion is EUR8.4
million (GBP7.1 m [2] ), which will be funded entirely from the
Group's cash balances. In addition, Graniser has approximately
EUR39.8 million (c. GBP33.7m(2) ) of net debt (including
shareholder loans), which will be repaid on completion.
-- Completion is subject to procedural approval by the Turkish
competition authorities and is expected to take place in December
2021.
On completion, the Acquisition will be immediately earnings
accretive.
Overview of Graniser
Established in 1997, Graniser has been ultimately owned 75% by
the Austrian investment company, Bancroft Group and 25% by the
European Bank of Reconstruction and Development since 2012. It has
robust financial reporting structures in place and its financial
statements have been audited by either Deloitte or KPMG for the
last eight years.
The company manufactures ceramic tiles from a single 75,000
square meter production facility it owns, close to Izmir port, a
major export hub. This factory, which incorporates a cogeneration
power plant to improve efficiency and generate energy savings, has
a current annual production capacity of 20.8 million square meters,
which is not fully utilised, with the opportunity to expand output
considerably with limited capital expenditure. (By comparison,
Victoria's existing ceramic tile operations have an annual
production capacity of 52 million sqm).
Exports, predominantly to the USA, Israel, the UK, and Germany,
accounted for c. 63% of sales in 2020 and c. 75% is expected in
2021, resulting in a significant proportion of Euro and US
Dollar-denominated income and Turkish Lira-denominated costs.
Graniser has an experienced and well-respected management team,
which will be fully integrated with Victoria's well-established
ceramic tiles management team.
Strategic rationale for the Acquisition
(a more detailed presentation is available on Victoria's website
at https://www.victoriaplc.com/reports/)
The acquisition of Graniser continues Victoria's successful
strategy of growing its business with earnings-accretive
acquisitions, and using scale and the Group's industry expertise to
drive further profit increases via cost savings and revenue
growth.
1. Manufacturing diversification
-- Graniser diversifies Victoria's ceramic tiles manufacturing
footprint into a significantly lower energy, labour and raw
material price environment, alongside strict quality
governance.
-- Targeted capex, identified during commercial due diligence,
is expected to deliver a >75% increase in Graniser's earnings
over the next 3 years.
2. Commercial synergies
-- Graniser and Victoria Ceramics will benefit from exposure to
each other's commercial markets. Graniser will provide further
export potential to the Middle East (an 800 million(3) sqm per
annum growing ceramics market) for Victoria. Victoria's ceramic
tiles division, in particular its Italian operations, will open
high-growth European DIY markets for Graniser.
-- The enlarged ceramic tile operations will leverage Victoria's
existing brand and design strengths with product ranges
manufactured in a low-cost environment to drive margins and top
line growth.
-- Graniser will continue to operate an independent brand with
its own management team, reporting within the Group's ceramics
management structure.
The Board believes that Graniser 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 of Victoria,
commented:
"Victoria's ceramic tiles business continues to go from strength
to strength. The low-cost manufacturing environment that Graniser
offers will give Victoria the ability to leverage its manufacturing
expertise and brand strength to further drive operating
margins."
Geoff Wilding, Executive Chairman of Victoria, said:
"Following completion of the Acquisition, Victoria will have
invested c. GBP201 million in the current financial year to add
approximately GBP35 million of EBITDA to the Group. Victoria's
strategy of achieving scale through acquisitions and using that
scale to extract operational synergies continues to deliver value
for the Group and its shareholders.
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 earning accretive acquisitions."
(1) Applying a GBP:EUR exchange rate of 1.18
(2) Leverage ratios calculated in-line with the Group's debt
facilities
(3) Freedonia Global Flooring Report
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
Singer Capital Markets (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, the USA,
and Australia and employs approximately
4,000 people across more than 26 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 .)
About Graniser
G raniser was established in 1997 and is
engaged in the business of manufacturing
and distributing ceramic and porcelain
floor and wall tiles. Since then, the business
has developed as a US-wide online flooring
product designer and distributor with an
absolute commitment to customer service
and environmental sustainability .
Graniser has its headquarters in Izmir/Turkey
and has a capacity of more than 20 million
sqm (across 11 kilns and 20 production
lines). Graniser produces and sells single
and double - fired wall, floor and glazed
tiles in various sizes and over 5,000 varieties
from its factory which is near Izmir, in
the Aegean Region, Turkey and serving customers
around the world.
It is a major exporter of ceramic tiles,
accounting for c.7% of Turkey's total ceramic
exports.
Further information about Graniser can
be found on its website https://www.graniser.com.tr/en
.
[1] 2020 Revenue of 477.1mm Turkish Lira converted to EUR and
GBP at 2020 average rate of 8.04 TL/EUR and 9.03 TL/GBP,
respectively.
[2] Converted to GBP at a rate of 1.18 GBP/EUR.
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