Annual Report and Accounts
for the 52 weeks ended 28 March 2020
www.victoriaplc.com
stock code: VCP
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27632 11 August 2020 7:11 pm Proof 2Victoria PLC Annual Report and Accounts 2020Stock Code: VCPIFCRead the Victoria snapshot on pages 02 and 03 GROUP FINANCIAL AND OPERATIONAL HIGHLIGHTSREVENUE FROM CONTINUING OPERATIONS (£m)19181734.348.870.577.120OPERATING PROFIT* (£m)WELCOME TO VICTORIA PLCVictoria is a designer, manufacturer and distributor of innovative flooring products.BY APPOINTMENT TOHER MAJESTY THE QUEENCARPET MANUFACTURERSVICTORIA CARPETS LTDKIDDERMINSTER191817325.7417.5566.8621.52019181729.440.857.350.720PRE-TAX PROFIT* (£m)19181724.430.635.328.420DILUTED ADJUSTED EARNINGS PER SHARE* (pence)• Like-for-like organic revenue growth achieved of +0.4% across the Group, despite double-digit revenue declines in March due to Covid-19 lockdowns.• Underlying EBITDA* on a pre-IFRS 16 basis of £107.2m, representing a record margin of 17.3% and organic margin improvement of 70bps.• Strong cash generation continues with £39.2m of underlying free cash flow during 2020, which equated to a 51% conversion from underlying operating profit.• Year-end leverage was 3.0x (FY2019: 3.2x), highlighting that the Group de-levered despite the Covid-19 impact in March.• The Group refinanced its bank debt with long-dated senior secured notes (“bonds”). These bonds are not due before July 2024 and carry no maintenance financial covenants, placing the Group in a strong financial position.* Underlying and before exceptional items and Covid-19 related credit loss provisionVictoria Carpets Annual Report 2020.indd 311/08/2020 19:11:53 OUR MISSION STATEMENT
TO CREATE
WEALTH
FOR OUR
SHAREHOLDERS
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CONTENTS
Business and Performance
Group financial and operational
highlights
A snapshot of Victoria PLC
Chairman and CEO review
Strategic report
Financial review
Our Governance
Board of Directors
Directors’ report
Statement of Directors’ responsibilities
Our Financials
Independent auditor’s report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated and Company
balance sheets
Consolidated and Company
statements of changes in equity
Consolidated and Company
statements of cash flows
Significant accounting policies
Notes to the accounts
Other Information
Shareholder information
Glossary
IFC
02
04
12
16
28
29
33
34
44
45
46
47
48
49
59
104
105
Read the Financial review on pages 16 to 27
Visit our corporate website www.victoriaplc.com
www.victoriaplc.com
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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
UK & Europe Ceramic Tiles
Australia
45%
39%
16%
UK & Europe Soft Flooring
UK & Europe Ceramic Tiles
Australia
28%
65%
7%
UK & Europe Soft Flooring
UK & Europe Ceramic Tiles
Australia
41%
49%
10%
UNITED KINGDOM & EUROPE SOFT FLOORING
m2 flooring sold^
REVENUE^
OPERATING PROFIT*^ Employees
£282.0m £21.7m 1,410
25.1m
m2 underlay sold^
46.1m
UNITED KINGDOM & EUROPE CERAMICS
REVENUE^
OPERATING PROFIT*^ Employees
£243.9m £51.5m 1,652
m2 flooring sold^
35.1m
AUSTRALIA
REVENUE^
OPERATING PROFIT*^ Employees
£95.6m £5.8m
348
m2 flooring sold^
m2 underlay sold^
7.9m
15.9m
* Underlying and before exceptional items and Covid-19 related credit loss provision, and before unallocated central expenses
^ From continuing operations
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LOCATION OF OPERATIONS
The Group has operations in the UK, Europe and Australia, employing approximately
3,400 people at more than 20 sites.
UNITED KINGDOM AND EUROPE
Oss, Netherlands
Sales & marketing
Distribution
Aalten, Netherlands
Sales & marketing
Ronse, Belgium
Sales & marketing
Dumfries,
Dumfries & Galloway
Accessories production
Distribution
Hartlepool,
County Durham
Sales & marketing
Distribution
Keighly,
West Yorkshire
Underlay production
Sales & marketing
Distribution
Hemel Hempstead,
Hertfordshire
Distribution
Kidderminster,
West Midlands
Head Office
Sales & marketing
Distribution
Castellon, Spain
Ceramics production
Sales & marketing
Distribution
Sassuolo, Italy
Ceramics production
Sales & marketing
Distribution
Cleckheaton,
West Yorkshire
Carpet production
Sales & marketing
Distribution
Rossendale,
Lancashire
Underlay production
Sales & marketing
Distribution
Newport,
South Wales
Carpet production
Sales & marketing
Distribution
AUSTRALIA
EBITDA BY GEOGRAPHY
UK
Spain
France
Australia
Rest of Europe
Other
30%
23%
11%
7%
15%
14%
Melbourne
Carpet production
Sales & marketing
Distribution
Sydney
Underlay production
Sales & marketing
Distribution
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03
* Based on underlying EBITDA split by selling destination
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Chairman and CEO review
OVERVIEW AND COVID-19
There is an old Yiddish adage which, loosely translated, says “If you want
to make God laugh, tell him your plans”. It is safe to say that when Victoria
developed its business plan for 2020/21 at the start of this year, we did not
factor in the complete economic shutdown in most of the various countries
in which we operate. So, although most of the resulting financial impact on
Victoria occurred post-balance date, due to its materiality we will begin this
year’s Review with some commentary on the effect of Covid-19 and the ensuing
government action has had on our company.
We are pleased to confirm that Victoria is weathering the massive disruption of the last four months in a strong financial and
market position, due to a number of prompt and decisive management actions, together with some inherent advantageous
characteristics of the Company as a whole. Victoria has more than adequate financial liquidity, and revenues and earnings
recovered rapidly once we were able to restart operations. The key reasons for this positive outcome are summarised below:
• The operational management teams in the businesses reacted quickly and decisively when the various lockdowns were
announced. Many of our managers have been through a number of recessions over their long careers and although
the circumstances were obviously different, their experience mattered as they adapted positively to rapidly changing
conditions.
• From the moment the factories were shut down, the operational managers started planning on how they would restart.
This advance planning ensured we were able to react instantly to the end of lockdown and rapidly recover revenues and
win market share whilst tightly managing costs.
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• The benefit of the geographic
diversification of both our
manufacturing plants and customers
was readily apparent, as different
countries began and ended their
lockdowns at different times,
spreading the impact over time.
• Victoria’s low operational gearing
has been a clear advantage. We
have highlighted in previous annual
reports that Victoria benefits from
low operational gearing, with just
c. 10% of our total cost base being
fixed. As revenues declined, costs
fell simultaneously. Interestingly,
many companies in cyclical sectors
have coped with the crisis better
than businesses more used to – and
geared up for – consistent revenues.
Although the cyclicality in flooring
manufacturing and distribution is less
pronounced than what one might
expect – especially in the mid-high
end refurbishment market that
Victoria focuses on – the operational
flexibility that management have
developed has helped Victoria during
the lockdown.
• Victoria’s raw material suppliers are
diversified and tend to be local to
the factories they supply. Therefore,
we have experienced no supply or
pricing disruption.
• The Group has a highly diversified
and credit-worthy customer
base, although the Board has
conservatively increased the
provision for credit losses (i.e. bad
debts) by £2.8 million. Together
with careful management by the
finance team, Victoria’s cash position
remained robust throughout the
crisis and Victoria has not accessed
any government credit-line schemes
and does not have any need to raise
capital for normal operating activities.
• Bond refinancing. As discussed
last year, Victoria is comfortable
using appropriate levels of debt to
improve growth rates and returns
to shareholders. However, we are
prudent in our approach and last year
refinanced our bank debt with long-
dated senior secured notes (“bonds”).
These bonds are not due before July
2024 and, in themselves, carry no
maintenance financial covenants,
and provide an expandable capital
structure appropriate for our
acquisitive strategy.
Nevertheless, in a Group normally
generating average monthly revenues
of c. £50 million and EBITDA of c. £10
million, and with March usually being
one of the best trading months of the
year, the impact of the lockdown was
to turn what was potentially a very
good year into only a good year.
FY2020 OPERATIONAL REVIEW
Turning commentary now to
operational matters through FY2020.
In summary, we are confident that as
a result of our actions the Group has
stronger operations, more efficient
production facilities, better market
positioning and – notwithstanding the
short term impact of Covid-19 – higher
margins, and greater organic growth
than two years ago, when the share
price was more than three times what
it is today. The impact of some of these
gains can be seen in the table below.
We will set out the good progress that
has been made in each division of the
Group in the balance of this Review,
but firstly we will highlight a few key
events during the financial year.
• Successful bond issue. In two
steps (July 2019 and January 2020),
Victoria issued a total of €500 million
Senior Secured Notes (“bonds”),
which completely refinanced the
Company’s previous bank loans with
long-dated, flexible bonds. Both
issues were heavily oversubscribed,
and the January issue was sold at
a 5% premium to the face value,
reflecting the strength of Victoria’s
financial position.
Underlying
EBITDA per
share1,2
£
Underlying
EBITDA
margin1
%
Diluted
adjusted
EPS2
pence
Underlying
operating
cash flow
per share2,3
£
0.27
0.39
0.50
0.64
0.79
0.86
12.5%
12.6%
13.8%
15.2%
16.8%
17.3%
10.47
16.32
24.42
30.61
35.25
28.42
0.30
0.40
0.48
0.64
0.86
0.78
EBITDA by geography1
UK %
79.5%
79.3%
75.1%
48.3%
25.8%
26.9%
Aus %
20.5%
20.7%
23.6%
22.0%
9.7%
7.5%
Eur %
–
–
1.3%
29.7%
64.5%
65.6%
Year
FY15
FY16
FY17
FY18
FY19
FY20
1 In this report, underlying EBITDA in FY20 is stated before the impact of IFRS 16 and increase in credit loss provision at the year-end, following the Covid-19
pandemic.
2 Number of shares based on diluted, weighted-average calculation consistent with diluted EPS, FY15 adjusted for 5-for-1 share split; FY16 and FY20 figures for
continuing operations.
3 Underlying operating cash flow equal to underlying EBITDA less non-cash items plus movement in working capital.
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• Margin uplift. Following the decision
in late 2018 to accept a temporary
reduction to operating margins in the
UK to drive top-line growth during
2019, we are pleased to confirm
that as planned margins increased
by 170bps in FY2020 alongside
revenues increasing to £282 million
(FY2019: £273m) against a backdrop
of marked general softness in the
market – and despite the lockdown
in March, which severely limited
revenues, impacting margins and
earnings in what is normally a very
good trading month.
• Acquisition. The successful
integration of Saloni into our Spanish
ceramics business was followed
by the acquisition of Ceramica
Ibero in August 2019. Work on fully
integrating its production facilities,
with the resulting synergy benefits,
is expected to be completed this
year and Victoria’s shareholders
will benefit from the successful
integration.
UK & Europe Soft Flooring – 45%
of revenue
For much of FY2020, trading
conditions in the UK remained
challenging with mid-single digit
percentage decline in the residential
flooring market across both soft and
hard flooring product categories. This is
not something to be overly concerned
about as flooring is a cyclical business
and carpet sales increase or decrease
each year due to any number of
factors. Following the December 2019
UK election, we saw the return of a
stronger carpet market (which remains
steady at about two-thirds of residential
flooring sold) until the Covid-19
lockdown in March.
Nonetheless, we are pleased to advise
that, despite the tough market and
the dramatic fall in sales in March
following the lockdown, Victoria’s
revenues grew to £282 million (FY2019:
£273m) alongside a 170bps margin
gain – as anticipated in the report to
shareholders last year. All of the UK
businesses performed satisfactorily in
achieving this outcome, but some are
worthy of particular comment.
A core element of our UK growth
strategy, made possible due to the
scale of our business, is our logistics
operation, Alliance Flooring Distribution.
18 months ago, we made the decision
to invest heavily in logistics, accepting
the consequential temporary loss of
some margin, in the belief that our
customers – flooring retailers – would
highly value reliable on-time delivery
of carpet, cut precisely to size for a
specific consumer order. This has
meant that they can hold less inventory,
freeing up cash from their working
capital, and devote more space in their
stores to point of sale rather than using
it to warehouse product, and reduce
waste, improving their margins. (Carpet
is produced in rolls 25m long. However,
houses rarely need exactly a full roll and
retailers would invariably be left with a
typical leftover 2-3m “short end”, which
would be thrown away. In contrast,
given our high volume of orders
and sophisticated cutting planning
software, our wastage is much lower).
And this is exactly how it has turned out.
In addition to the above like-for-like
margin gains this year, we have at the
same time materially improved our
competitive position as evidenced by
our robust organic sales performance
in an otherwise declining market in
the last two years (at first due to the
uncertainty caused by Brexit and
latterly Covid-19). Quite simply we
have benefitted from a greater share of
wallet from existing retailers alongside
new retailers deciding to buy from
the Victoria Group due to our service
proposition.
However, as discussed in previous
shareholder communications, the early
stages of this logistics transformation
were not, to put it mildly, as flawlessly
executed as they might have been. To
fix the problems, we promoted one of
our existing managers, Phil Yates, into
the role of Head of Logistics about 18
months ago. As any tradesman hired
to fix a botched DIY job will tell you, it is
easier if they had done the job from the
beginning. However, Phil set-to it with
enthusiasm and the effect has been
remarkable. The cost of delivering an
order has been reduced significantly and
on-time deliveries, which fell to less than
50% at one point of the transformation
in 2018, have recovered to over 90% –
directly, and positively impacting sales.
Even our managers, who are invariably
more demanding and critical than our
customers, are singing Phil’s praises.
Furthermore, efficiency gains have
meant that despite revenue growth
we now have 15-20% spare capacity
(depending on the time of year) in
our logistics operation, permitting
continued organic growth without extra
capex or one-off costs. Our logistics
turnaround has been a fantastic
achievement and yet we are confident
Phil will deliver further improvements
this year.
Interfloor produces premium quality
underlay that improves the longevity,
underfoot ‘feel’, and sound insulation
of carpet and LVT. John Cooper
has successfully led this business
for Victoria since it was acquired in
September 2015 but in FY2020, he
achieved something quite extraordinary.
While FY2020 revenues were down
nearly 7% on last year’s £73 million
due to the March lockdown, and the
business faced some raw material
cost headwinds for much of the year,
operating profits were up by c. 23%
due to John’s relentless focus on
productivity.
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Importantly, this was achieved without
any material increase in capital
employed in the business, meaning
Interfloor has now returned over
£45 million of underlying operating
profit – two-thirds of its purchase
price – to Victoria in four and a half
years. It is because of the enthusiasm,
knowledge, and execution ability of
operational managers like John that
Victoria will continue to succeed
and out-compete other flooring
manufacturers.
Following a record year in FY2019,
Dave Droomers led GrassInc to
another record year – despite the
lockdown. Focussing on the rapidly
growing domestic and commercial
landscaping sector, GrassInc designs
its own unique artificial turf products,
imports the necessary raw materials,
and contracts the manufacturing to
specialist factories in Europe. In the
fast-moving artificial turf sector this
approach has important advantages
in terms of flexibility, speed to market,
operational leverage, and technology
upgrades.
On the subject of management
retention, we are pleased to be able to
confirm that, even after the conclusion
of their earn-outs, Victoria has lost no
managers other than to retirement and,
in one sad case, missing following a
boating trip. Victoria’s culture, where
managers still feel – and are – running
their own business, enables us to retain
the services of some extraordinarily
talented individuals.
In summary, the FY2020 gains in our
UK & Europe Soft Flooring division
(which would have been even greater
but for the lockdowns in March, which
is usually a good trading month) have
been pleasing. However, what is
even more pleasing is that – beyond
the impact of lockdowns – we can
see opportunities to improve further
earnings and cash flow during the
current financial year, which will be
underpinned by UK government
actions to improve the housing market,
including the recently announced
reduction in stamp duty: moving house
is a key driver of spending on flooring.
UK & Europe Ceramic Tiles –
39% of revenue
March is typically one of the strongest
(and frequently the strongest) months
of the year for ceramic tile sales
and the early March lockdown of
our manufacturing plants alongside
nominal government support in Italy
and Spain significantly impacted sales
and earnings. Nevertheless, excluding
the contribution of Ibero, which was
acquired in August 2019, EBITDA from
our Ceramic Tiles division increased
by 9.7% on a constant currency basis
in FY2020.
Despite the disappointing finish to
the year due to the lockdowns, solid
progress was made by our operational
management team.
In the interim financial report, we stated
that one of our key objectives in the
remainder of FY2020 was to find a
cost-effective solution to Serra’s needs
for additional production capacity to
avoid constraining its considerable
growth opportunities. We are pleased
to advise this was achieved in late
February using a legal structure unique
to Italy, which enabled us to lease
the operations of a nearby business,
complete with its plant, equipment
and brands, from a virtually defunct
company called Ceramiche Ascot. This
agreement is a 7-year lease with a free
option to acquire once the lease rentals
are paid. Since the end of lockdown,
revenues at our Italian operation have
recovered very quickly (nearly 100%
of output is exported globally) and
the management team is taking full
advantage of the additional capacity
this lease arrangement has provided.
In Spain, the integration of Saloni,
acquired in 2018 is now complete
and the management has turned its
attention to integrating Ibero, which
was acquired in August 2019. Ibero’s
low initial EBITDA margin (c. 10%) at
acquisition had the effect of reducing
our average ceramics margin by about
70bps, although this will normalise as a
result of the integration project, which
will increase Ibero’s earnings.
We are also pleased to advise that,
with the exception of Saloni, which has
a greater focus on commercial contract
work than the rest of our ceramic
tile business, revenues have also
recovered quickly in this division with
the ending of the various European
lockdowns.
Finally, we thought it might be helpful
for shareholders to understand a little
more about the competitive landscape
in which our ceramics businesses
operate as we are sometimes asked
about the threat of product from low-
cost countries such as Turkey and
China. While we are not complacent
about any competition, there are
a number of factors that materially
mitigate the threat:
• Firstly, the advantage of operating in
a typically low-cost region is not as
great as one might think. The raw
materials used in the production of a
ceramic tile are largely international
commodities with scale having
the greatest impact on the price
paid. Furthermore, our factories
are extremely well-invested and
automated, with the resulting
efficiency minimising the price
advantage of cheap labour.
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• Secondly, whatever small cost
advantage that might exist is
invariably offset by the cost of
transporting the extremely heavy
and bulky product to northern and
eastern European markets.
• Most importantly, mainstream
ceramic tiles retail for €5 to €50
per square metre. This wide price
range shows that tiles are not a
commodity product, where price
is the sole determinant of demand,
but rather that key drivers are brand,
provenance, style, and quality – where
our businesses have a sustainable
competitive advantage over those
based in low-cost regions.
Australia – 16% of revenue
Challenging market conditions
continued in Australia for much of
FY2020. After nearly 20 years of
consistent growth, the last two years
have seen sub-par performance. Our
local management team has taken
a number of actions to mitigate the
impact on our business, including,
introducing new product lines and
efficiency initiatives (most notably,
the reorganisation of our underlay
manufacturing onto a single site in
Sydney, as previously disclosed, which
was completed in Q3).
As mentioned in the Interim Report, an
election in May 2019 saw a refreshed
government, which acted to restore
consumer confidence and activity in
the residential property market. These
actions have begun to beneficially
impact trading conditions and, with the
exception of March and April, which
were somewhat subdued to the initial
impact of Covid-19, we have seen
stronger performance since December
2019. Whilst sales in H1 declined by
c. 5% year-on-year, they rebounded in
H2 with growth of c. +4% (both on a
constant currency basis).
We are fortunate to have a high-
quality management team in Australia,
overseen by an experienced local
board of directors, and notwithstanding
the uncertainty brought by Covid-19,
we are expecting an improved
performance from our Australian
business in the current financial year.
also help us build a high-quality
management team. As mentioned
earlier in this report Victoria has had
no manager resign following the end of
their earn-out – despite most managers
being financially independent – other
than for retirement. Our culture enables
us to retain the services of some
extraordinarily talented individuals.
ACQUISITIONS
Although some small bolt-on
acquisitions were completed in FY2020
to fill a gap in our product range,
provide additional capacity, or grow
our distribution base, Victoria made
no strategic acquisitions, primarily
because we were unable to identify
opportunities that met our key “value
for money” requirement.
However, we have made a
considerable and sustained effort over
recent years to build relationships
with the owners of other flooring
companies – especially where there
is tangible synergy potential with
our existing operations. Many family
business owners – even those of size
– are intensely private individuals and
are very reluctant to run formal sale
processes via an investment bank or
accounting firm, with the associated
disclosure requirements and publicity.
The value of these relationships,
alongside our strong financial position
and reputation for straightforward
dealings, is that owners view Victoria
as a reliable transaction partner and
we often see unique opportunities.
However, additionally, the events of
the last few months have given rise to
new or increased sale imperatives with
some business owners, and we expect
to see some very interesting and
materially value-creating opportunities
develop in the future.
We think it is worth highlighting
that, apart from the earnings growth
that acquisitions deliver to Victoria,
our focus on buying well-managed
businesses means acquisitions
FINANCIAL STATEMENTS
We thought it might be helpful to
comment briefly on three items in the
Financial Statements: Goodwill and
Intangible Assets, Non-underlying
Costs, and Net Debt. The better
shareholders are informed, the
greater confidence they can have in
the judgements they form about the
business.
Goodwill and Intangible Assets
Due to their high return on tangible
assets, we have paid significantly
more than the net tangible assets
for almost all our acquisitions. As
required by IFRS, our consolidated
balance sheet will show this difference
as various categories of intangible
assets (brands, customer lists, etc) and
goodwill. This amount has become a
substantial figure, £191 million. Each
year IFRS requires Victoria to amortise
a portion of the acquired intangible
assets – currently amounting to £25
million per annum – and assess the
value of goodwill for impairment using
assumptions around future earnings.
These non-cash charges appear as a
non-underlying ‘expense’ in the income
statement, and are generally not tax
deductible.
The various Covid-19 related economic
shutdowns across the world this year
have impacted the assumptions in
assessing goodwill and, although it is
very unlikely that the global disruption
experienced to date has had any
impact on the long term value of the
business, the Board has deemed
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it prudent to reduce the value of
goodwill on the consolidated balance
sheet by £50 million alongside the
annual amortisation of intangible
assets. This non-cash accounting
adjustment has no impact whatsoever
on Victoria’s financial strength or our
ability to generate strong returns
and positive cash flow from the
businesses acquired. In fact, provided
our managers keep building their
businesses, true economic goodwill
and the value of our brands and
customer relationships will continue to
grow – even as accounting value of the
latter falls, eventually to zero.
While none of this means that a high
proportion of goodwill on a balance
sheet is automatically a good thing,
Victoria’s board does not subscribe to
the view of some investors that less
goodwill and more tangible assets is
better. Here’s why:
Business A generates £1m of profit
using tangible assets of £4 million.
Business B generates the same
£1m of profit using tangible assets of
£10 million. Both businesses can be
bought for 10x profits, or £10 million.
Under IFRS, Business A would
be recorded on our consolidated
balance sheet with £6 million of
intangible assets and goodwill.
Business B will have no goodwill and
instead will show a ‘reassuring’ value
of £10m of ‘solid’ tangible assets.
But look what happens over time.
We’ll assume that in both cases
the assets wear out over 10 years
and need to be replaced. Both
businesses will have generated £10m
of total profits over that period but
Business A needs only £4 million to
replace its assets, leaving £6 million
to be distributed to its shareholders.
Business B, however, requires the
full £10 million to replace its assets,
leaving nothing for the shareholders
or capital for growth.
Furthermore, growth and inflation
accentuate the problem. If, over
the 10 years, both businesses
double in size, Business B will not
only need to find the £10 million to
replace its worn-out plant, but also
an additional £10 million to fund the
growth (compared to only £4 million
+ £4 million for Business A), hence it
finishes the decade in debt whereas
Business A will generate surplus
free cash.
And yet there are, incredibly, still people
who will recommend only investing in
Company B.
There is one very important qualification
to this statement: a high level of
goodwill is not automatically a good
thing. Overpaying for a business (the
overpayment will appear as excessive
goodwill) destroys the economic
argument set out above. That is why
we have walked away from numerous
opportunities over the last six years –
even where the actual business was
an extraordinary one, but the price
was excessive. Victoria will only pay an
acquisition price that creates wealth for
our shareholders.
So, what does this mean in practice
for Victoria’s shareholders? Below is a
table setting out Victoria’s Return on
Tangible Capital for the last five years.
This shows the ability of the company
to generate consistent returns in
excess of 25% – despite a very
substantial increase in the capital base
– over the long term, producing cash
that we can continue to deploy to grow
the value of the company.
Other Exceptional and
Non-underlying Costs
Each year we will record some other
Exceptional and Non-underlying Costs
in our financial statements. Some of
these are real cash costs, others are
accounting adjustments that have no
impact on our current or future cash
generation. However, by definition,
none of them relate to the underlying
trading activities of the business, and
many would stop entirely were we to
stop making acquisitions.
I have highlighted below a number of
key items. (Further detail can be seen
in the Financial Review section of this
Annual Report.)
The first three are cash costs:
(i)
In FY2020 a total of £3.5 million
(FY2019: £12.7m) was spent
across the Group on one-off,
exceptional reorganisation costs
(e.g. redundancy payments, closure
costs, relocation expenses). Unlike
some of the other Exceptional and
Non-underlying Costs, this is real
cash being spent so it is important
to understand that these costs
and investments have not been
driven by technology or structural
change; it is purely to optimise
performance and realise operational
synergies following an acquisition,
and the payback period will be
less than two years. These costs
largely relate to final stages of the
large synergy projects detailed in
last years’ annual report, that were
completed early in FY2020.
In £m
FY16
FY17
FY18
FY19
FY20
Pro-forma
underlying EBIT1
Net tangible
operating assets2
Return on tangible
operating assets
28.2
40.3
76.7
76.9
82.0
83.4
102.6
228.1
280.3
294.4
33.9%
39.3%
33.6%
27.4%
27.9%
1 EBIT shown pro-forma for acquisitions in the year, before exceptional and non-underlying items, and
before the impact of IFRS16
2 Net tangible operating assets comprise tangible fixed assets and working capital
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Chairman and CEO review
(ii) Exceptional acquisition-related
expenses such as due diligence,
fees to advisors, legal costs,
etc. were £2.2 million in FY2020
(FY2019: £1.8m). Obviously, these
would immediately drop to nil if we
stopped our acquisition activity.
However, the value creation to the
Group by continuing to grow is
substantial and, to our minds, the
one-off cost incurred in making
an acquisition is more than offset
by the additional earnings that
accrue to the Group in perpetuity
as a result. Shareholders can
expect to see a similar level of new
acquisition-related exceptional
costs in the years ahead but, by
the same token, shareholders
can equally expect the increase
in Earnings Per Share and Cash
Flow Per Share to exceed organic
growth rates. In other words, if the
fees are factored in, the additional
earnings from acquisitions must
also be taken into account.
(iii) At the time of our successful
inaugural bond issue in July 2019,
we decided to take no chances
and undertook the refinancing
on an underwritten basis, with a
‘backup’ facility provided by the
issuing banks at a one-off cost of c.
£6m, which could be drawn if the
bond process did not go to plan.
Thankfully this was not required,
and clearly issuing the bonds was
the right decision – as the Covid-19
crisis has proven.
The balance of the items had no impact
on Victoria’s FY20 cash position;
(iv) The successful bond refinancing
replaced existing bank loans, and
therefore the up-front fees prepaid
on those loans at the time that
they were taken were immediately
expensed, rather than amortised
over their remaining term as
originally intended. This largely non-
cash accounting charge was a not
inconsiderable £4.4 million.
June quarter, but is expected to then
immediately reduce once that quarter is
excluded (this time next year)
(v) Due to exchange rate movements,
there was a Sterling translation
difference in the period on foreign
currency debt (essentially the
bonds) of £13.0 million.
(vi) The cancellation this year of an old
LTIP scheme for certain individuals
resulted in a bizarre one-off charge
of £5.9 million even though no-one
received any benefit, the company
incurred no liability or wrote-off any
asset, no cash changed hands, and
no tax benefit was received.
Furthermore, the business made a
small disposal in FY2020, the effect
of which is shown as a discontinued
operation in the accounts. One of our
UK businesses included a sub-scale
distribution operation which had little
long-term potential for Victoria and so
we decided to sell it. Although we were
able to sell it for real cash (proceeds
of £0.9 million for a business that was
break-even at the PBT level), a loss
from discontinued operations of £2.0
million was recorded reflecting the
difference between the sale price and
its accounting net asset value.
Leverage – Perception
versus Reality
Victoria finished the year with £365.9
million of net financial debt (before IFRS
16), with leverage reducing to a very
comfortable 3.0x underlying EBITDA
(albeit the company’s bond financing
no longer has mandatory maintenance
covenants) and we note that, following
recent reviews, all three rating
agencies maintained Victoria’s pre-
Covid-19 credit ratings (albeit with a
‘negative outlook’ due to the economic
environment). The Net Debt/EBITDA
ratio will, of course, spike higher during
FY2021 due to the inclusion of the
In the last Annual Report, I commented
on the simplistic approach of some
investors and commentators with
respect to leverage. Rather than
analysing the financial characteristics
of the business carrying the debt, a
lazy ‘rule of thumb’ is deployed, where
a generic multiple of X times EBITDA
is “too high” for a business, Y times, is
“ok”. Earnings consistency, operational
leverage, cash conversion, capex
requirements, the terms of the debt
(e.g. covenant headroom and duration)
are all overlooked in favour of applying
the rule of thumb.
The essential flaw in this thinking has
become abundantly clear in the last
four months. More than 50 LSE-listed
companies previously regarded as
having prudent debt levels (at least,
according to the ‘rule of thumb’) of
less than 2x or 2.5x EBITDA have
needed to seek debt covenant
waivers and raise large amounts
of equity at distressed prices. This
has done permanent and significant
damage to the future returns of all
their shareholders, but it has been
particularly catastrophic for those
shareholders unable or unwilling to
invest further capital.
In contrast, Victoria has faced no
liquidity pressures whatsoever. In the
most severe, deep, unpredicted, and
sudden economic downturn in
history, we did not need to seek
covenant waivers, renegotiate loan
terms, seek government loans, or raise
additional capital.
In the very firm opinion of the Board,
Victoria’s debt is appropriate for its
business.
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greater business value in the future. I
am certain we are building a stronger
business by steadily and consistently
increasing cash flow per share and
earnings per share. Our return on
tangible capital employed – the best
measure of our ability to generate cash
on the capital invested in the business
over a sustained period – is a very
good 25%. Furthermore, in a sector
with annual revenues in Europe of
more than €23 billion, the opportunity
to continue to create transformational
value by selectively acquiring high
quality businesses at fair prices and
delivering synergies in what remains
a highly fragmented, industry is
undiminished. In time, we are confident
this value will again be reflected in
the company’s market capitalisation,
although the translation will be erratic
and the precise timing cannot be
predicted.
Geoffrey Wilding
Executive Chairman
Philippe Hamers
Chief Executive Officer
29 July 2020
DIVIDEND POLICY
We have previously pointed out
that well run flooring manufacturers
generate significant cash – even
when growing – due to attractive
supplier terms, quality debtors, long
life expectancy of key plant, low
technological change and other factors.
In FY2020, Victoria’s underlying pre-
tax operating cash flow was £97.6
million, representing 92% of underlying
EBITDA, and underlying free cash flow
(i.e. after interest, tax, replacement
capex, and asset disposals) was
£39.2 million, representing 51% of
underlying EBIT. Over the last seven
years we have consistently converted
operating profits into cash (after paying
tax), and then reinvested this cash into
further acquisitive and organic growth
opportunities.
The Board has consistently stated
Victoria has no intention of paying a
dividend for the foreseeable future as
we remain of the view that the most
wealth will be created for shareholders
by deploying the free cash-flow
generated by the Group businesses
within the Group. The reasons for
this were set out in some detail in last
year’s Annual Report.
Therefore, as in previous years,
we have resolved not to pay a final
dividend for FY2020.
superbly – both in the lockdown and
the re-start phases – and revenues and
earnings have recovered very quickly
following the end of lockdown. This
has placed the company in a strong
position to capitalise on the increasing
number of opportunities over the
balance of the year.
And what do these opportunities
look like?
Firstly, government spending stimuli
focussed on construction and
increasing housing transactions, plus
the natural desire of consumers to
redecorate their living space after
spending three or four months locked
down inside it, will, we believe,
generate demand for flooring. Certainly,
current signs are very encouraging –
even in those geographies that have
now been out of lockdown for three or
more months.
Secondly, the events of the last few
months have caused some private
company owners to reassess their
priorities and we are seeing some
interesting, value-creating opportunities
to acquire high quality businesses on
attractive terms.
It is therefore our view that Victoria
will finish this year as a stronger, more
competitive business.
SUMMARY FROM
THE CHAIRMAN
OUTLOOK
Notwithstanding Sam Goldwyn’s
admonition, “Forecasts are dangerous
– particularly those about the future”,
we thought we would share our views
of the outlook for Victoria.
The executive board of Victoria
collectively owns approximately
one-fifth of the company. Our reward
comes from being owners maximising
long term value, not as salaried
managers or fee-earning directors.
Most importantly, Victoria has proven
its resilience in the last few months:
financial liquidity has remained strong,
operational management has reacted
From time to time this leads to
decisions which may or may not find
short term favour with the share market
but which we are confident will create
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Strategic report
BUSINESS OVERVIEW
Victoria PLC is a designer, manufacturer and distributor of innovative flooring
products. The Group is headquartered in the UK, with operations across
the UK, Spain, Italy, the Netherlands, Belgium and Australia, employing
approximately 3,400 people at more than 20 sites.
The Group designs and manufactures a wide range of wool and synthetic broadloom carpets, ceramic tiles, flooring
underlay, LVT (luxury vinyl tile) and hardwood flooring products, artificial grass, carpet tiles and flooring accessories.
A review of the performance of the business is provided within the Financial Review.
BUSINESS MODEL
VICTORIA’S BUSINESS MODEL IS UNDERPINNED BY FIVE INTEGRATED PILLARS:
1.
Superior customer offering
Offering a range of leading quality and complementary flooring products across a number of different brands,
styles and price points, focused on the mid-to-upper end of the market or specialist products, as well as providing
market-leading customer service.
2.
Sales driven
Highly motivated, independent and appropriately incentivised sales teams across each brand and product range,
ensuring delivery of a premium service and driving profitable growth.
3.
Flexible cost base
Multiple production sites with the flexibility, capacity and cost structure to vary production levels as appropriate,
in order to maintain a low level of operational gearing and maximise overall efficiency.
4.
Focused investment
Appropriate investment to ensure long-term quality and sustainability, whilst maintaining a focus on cost of capital
and return on investment.
5.
Entrepreneurial leadership
A flat and transparent management structure, with income statement ‘ownership’ and linked incentivisation,
operating within a framework that promoted close links with each other and with the PLC Board to plan and
implement the short and medium-term strategy.
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STRATEGY
The Group’s successful strategy in
creating wealth for its shareholders
has not changed and continues to be
to deliver profitable and sustainable
growth, both from acquisitions and
organic drivers.
In terms of acquisitions, the Group
continues to seek and monitor good
opportunities in key target markets
that will complement the overall
commercial offering and help to drive
further improvement in our KPIs.
Funding of acquisitions is primarily
sought from debt finance to maintain
an efficient capital structure, insofar
as a comfortable level of facility and
covenant headroom is maintained.
Organic growth is fundamentally driven
by the five pillars of the business model
highlighted above. In addition, the
Group continues to seek and deliver
synergies and transfer best operating
practice between acquired businesses,
both in terms of commercial upside,
and cost and efficiency benefits to drive
like-for-like margin improvement.
KEY PERFORMANCE
INDICATORS
The KPIs monitored by the Board
and the Group’s performance against
these are set out in the table below
and further commented upon in the
Chairman and CEO Review and the
Financial Review.
Revenue
% growth at constant currency
Underlying EBITDA post IFRS1
Underlying EBITDA pre IFRS1
% Margin1
Underlying operating profit
% margin
Operating cash flow2
% conversion against underlying EBITDA1
Free cash flow3
% conversion against underlying operating profit
Underlying EBITDA per share1
Earnings per share (diluted, adjusted)
Operating cash flow per share2
Adjusted net debt / EBITDA4
2020
£’m
621.5
10.2%
118.1
107.2
17.3%
77.1
12.4%
97.6
92%
39.2
51%
85.52p
28.42p
77.85p
3.0x
2019
£’m
574.4
36.9%
n/a
96.6
16.8%
70.5
12.3%
105.7
109%
50.4
72%
78.67p
35.25p
86.10p
3.2x
1 EBITDA is stated before the increase in credit loss provision
2 Operating cash flow shown before interest, tax and exceptional items
3 Before investment in growth capex, acquisitions and exceptional items
4 Applying our banks’ adjusted measure of financial leverage
SECTION 172(1) STATEMENT
Section 172 of the Companies Act
2006 requires a Director of a company
to act in the way they consider, in good
faith would be most likely to promote
the success of the company for the
benefit of the members as a whole.
In doing this, section 172 requires a
Director to have regard, among other
matters, to:
• The likely consequences of any
decisions in the long term;
• The interests of the company’s
employees;
• The need to foster the company’s
business relationships with suppliers,
customers and others;
• The impact of the company’s
operations on the community and
the environment;
• The desirability of the company
maintaining a reputation for high
standards of business and conduct;
and
• The need to act fairly between
shareholders of the company.
During the year ended 28 March 2020
the Directors consider they have,
individually and collectively, acted in a
way that is most likely to promote the
success of the Company for the benefit
of its shareholders as a whole and
have given due consideration to each
of the above matters in discharging
their duties under section 172. The
stakeholders we consider in this regard
are our employees, our shareholders,
bondholders and other investors, and
our customers and suppliers. The
board recognises the importance of the
relationships with our stakeholders in
supporting the delivery of our strategy
and operating the business in a
sustainable manner.
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Strategic report
Directors are briefed on their duties
as part of their induction and they can
access professional advice on these
from an independent advisor throughout
the period a director holds office. The
directors fulfil their duties partly through
a governance framework; the Board
has adopted the Quoted Companies
Alliance (“QCA”) Code and the Group’s
application of this code is detailed on
the Group’s website.
The Board recognises the importance
of building and maintaining
relationships with all of its key
stakeholders in order to achieve long-
term success.
Further details of our stakeholder
engagement are set out below:
Employees
Our employees are integral to the
successful delivery on the Group’s
strategy. Employees knowledge,
skills and experience are key to
maintaining our strong customer and
supplier relationships. As such, the
Group is focused on the recruitment,
development, retention, and reward of
its employees.
Employees are encouraged to
attend training courses and there is
regular consultation with employee
representatives to ensure that
employees are informed of all matters
affecting them.
Within the bounds of law, regulation
and commercial confidentiality,
information is shared to all levels of staff
about matters that affect the progress
of the Group and are of interest and
concern to them as employees.
Shareholders and bondholders
The company engages with its
shareholders and bondholders
principally via a Regulatory Information
Service, its investor website, formal
company meetings and investor
roadshows. The Company’s contact
details, telephone, email and
correspondence address, are listed
on its website for investors’ use. The
Company also provides an email
alert service on its website to which
investors and other interested parties
can subscribe, to receive company
announcements when they are
released.
The Directors actively seek to build
a relationship with institutional
shareholders and bondholders. The
Chairman, Chief Executive Officer
and Chief Financial Officer make
presentations to institutional investors
and analysts each year immediately
following the release of the full-year and
half-year results.
The AGM is the main forum for
dialogue between retail shareholders
and the Board. The Board are available
to answer questions raised by
shareholders.
The Board as a whole is kept informed
of the views and concerns of major
shareholders by briefings from the
Chairman. Any significant investment
reports from analysts are also
circulated to the Board. The Chairman
and Chief Financial Officer are available
to meet with major shareholders and
bondholders if required to discuss
issues of importance to them.
Customers
Our customers are of paramount
importance and the Group seeks to
retain customers and establish long
and lasting relationships with them,
built on mutual respect and trust. The
Group is focused on producing quality
flooring products at competitive prices
for our customers.
We meet with our customers regularly
to ensure we are offering the right
products and level of service and
responding to customer feedback to
ensure we meet their expectations.
Our customer relationships and
manufacturing flexibility also aid
diversification of our product portfolio.
Our close relationships with our
customers provide us with valuable
feedback, enabling us to adapt
quickly to changes in end-consumer
preferences.
Suppliers
Victoria endeavours to forge strong
relationships with suppliers built on
honesty, fairness, and mutual respect.
We meet with key suppliers on a
regular basis and take reasonable
steps to ensure our suppliers comply
with our standards, such as those
relating to environmental responsibility,
modern slavery, data protection,
human rights, and ethics.
Community and the environment
As a manufacturing and distribution
business, there is a risk that some
of the Group’s activities could have
an adverse impact on the local
environment. Policies are in place to
mitigate these risks, and all of the
Group businesses are committed to full
compliance with all relevant health and
safety and environmental regulations.
PRINCIPAL RISKS
AND UNCERTAINTIES
The Board and senior management
team of Victoria identifies and monitors
principal risks and uncertainties on an
ongoing basis. These include:
Covid-19 – The issues surrounding
Covid-19 have the capacity to impact
companies’ earnings by interrupting
supply chains, workforce sustainability,
and demand. Unquestionably a decline
in demand is the most relevant risk to
Victoria.
The Group is well positioned to
manage this short-term risk and
uncertainty; the key reasons being:
1. Victoria enjoys comparatively low
operational gearing across its
businesses;
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2. The Group’s supply chain is highly
diversified and invariably localised
to the key manufacturing plants.
Our access to raw materials
remains secure and we will be able
to meet demand as it arises;
3. The Group have a highly
experienced and motivated
operational management team
with a track record of successfully
navigating through deep economic
downturns;
4. The wide geographic spread of
both our manufacturing operations
and, more importantly, our
customers means that the virus’s
impact on Group revenue (and
its subsequent recovery) is likely
to occur at varying times and not
simultaneously;
5. In FY20 Victoria issued a total of
€500 million of Senior Secured
Notes (“bonds”). These bonds are
not due before July 2024 and, in
themselves, carry no maintenance
financial covenants;
6. Victoria has a strong balance
sheet with sufficient cash on hand
to support the business in even
the most severe scenarios we
have modelled. Victoria has not
accessed any government credit-
line schemes and does not foresee
any current need to raise capital for
normal operating activities.
Competition – the Group operates in
mature and highly competitive markets,
resulting in pressure on pricing and
margins. Management regularly review
competitor activity to devise strategies
to protect the Group’s position as far
as possible.
Economic conditions – the operating
and financial performance of the Group
is influenced by specific economic
conditions within the geographic areas
within which it operates, in particular
the Eurozone, the UK and Australia.
Economic risks in any one region is
mitigated by the independence of the
Group’s three divisions. The Group
remains focused on driving efficiency
improvements, cost reductions and
ongoing product development to adapt
to the current market conditions.
Key input prices – material adverse
changes in certain raw material prices
– in particular wool and synthetic
yarn, polyurethane foam, and clay –
could affect the Group’s profitability.
A proportion of these costs are
denominated in US Dollars, a currency
in which the Group has no income. Key
input prices are closely monitored and
the Group has a sufficiently broad base
of suppliers to remove arbitrage risk, as
well as being of such a scale that it is
able to benefit from certain economies
arising from this. Whilst there is some
foreign exchange risk beyond the
short-term hedging arrangements that
are put in place, the Group experiences
a natural hedge from multi-currency
income as the vast majority of
the Group’s cost base remains in
domestic currency (Euros, Sterling and
Australian Dollars).
Acquisitions – acquisition-led growth
is a key part of the Group’s ongoing
strategy, and risks exist around the
future performance of any potential
acquisitions, unforeseen liabilities, or
difficulty in integrating into the wider
Group. The Board carefully reviews
all potential acquisitions and, before
completing, carries out appropriate
due diligence to mitigate the financial,
tax, operational, legal and regulatory
risks. Risks are further mitigated
through the retention and appropriate
incentivisation of acquisition
targets’ senior management. Where
appropriate the consideration is
structured to include deferred and
contingent elements which are
dependent on financial performance for
a number of years following completion
of the acquisition.
Other operational risks – in common
with many businesses, sustainability of
the Group’s performance is subject to
a number of operational risks, including
major incidents that may interrupt
planned production, cyber security
breaches and the recruitment and
retention of key employees. These risks
are monitored by the Board and senior
management team and appropriate
mitigating actions taken.
CORPORATE RESPONSIBILITY
Victoria PLC is committed to being
an equal opportunities employer and
is focused on hiring and developing
talented people.
The health and safety of our
employees, and other individuals
impacted by our business, is taken very
seriously and is reviewed by the Board
on an ongoing basis.
A Company statement regarding
the Modern Slavery Act 2015 is
available on the Company’s website at
www.victoriaplc.com.
As a manufacturing and distribution
business, there is a risk that some
of the Group’s activities could have
an adverse impact on the local
environment. Policies are in place
to mitigate these risks, and all of
the businesses within the Group are
committed to full compliance with
all relevant health and safety and
environmental regulations.
On behalf of the Board
Geoffrey Wilding
Executive Chairman
29 July 2020
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Financial review
The Group’s continuing operations
delivered consolidated revenues of
£621.5 million (FY19: £566.8m) and
underlying operating profit of £77.1
million (FY19: £70.5m) (this profit figure
is after a Covid-19 related increase in
credit loss provision at the year-end of
£2.8 million; see further details below).
The implied lower underlying operating
margin is not reflective of organic
performance, rather it is largely due
to the full-year effect of the prior-year
acquisition of Ceramica Saloni (which
was a lower-margin business) and the
smaller current-year acquisitions. The
Group posted a net, post-exceptional
operating loss of £6.5 million (FY19:
profit of £23.9m) reflecting, in particular,
a goodwill impairment of £50 million,
made following the onset of the
Covid-19 pandemic.
HIGHLIGHTS
During the year ended 28 March
2020, the Group was largely focused
on its organic and financial position,
following two previous financial years
with significant investment in both the
ceramic tile segment and operational
restructuring to deliver synergies.
Previous operational changes –
discussed at length in last year’s annual
report – were embedded, and the
Group’s refinancing was completed.
Four corporate acquisitions were
made in the year, albeit significantly
smaller than in previous years and
with operationally driven rationale
rather than strategic growth driven
(discussed in more detail later). Two
were made into the UK & Europe
Soft Flooring division and two into the
UK & Europe Ceramic Tiles division
(one – in Italy – being a business and
assets lease arrangement with an
option to acquire, which meets the
criteria for full consolidation under IFRS
3) . In addition, the Group made a
small disposal within the UK & Europe
Soft Flooring division, of a regional
wholesale operation with total revenues
of c. £7 million.
Group revenue from
continuing operations
£621.5m
£566.8m
£417.5m
£325.7m
FY17
FY18
FY19
FY20
Group underlying EBIT from
continuing operations
£77.1m
£70.5m
£48.8m
£34.3m
FY17
FY18
FY19
FY20
Note: EBIT figures shown before movement in
credit loss provision
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During the year, the Group successfully
approached the debt capital markets
for new financing in the form of secured
corporate bonds. This debt refinancing
exercise, a process initiated during
the prior year, was completed in two
phases in July 2019 and January 2020.
The Board believes that the bond
market provides a good fit for Victoria
for various reasons, as previously
disclosed: (i) providing long-dated
money, (ii) with a fixed coupon, and
(iii) a covenant-lite instrument with no
maintenance financial covenants, all
of which to provide flexibility, resilience
and greater certainty during an
economic downturn.
The year ended with a significant
change in global market environments,
with the Covid-19 pandemic and
ensuing human and economic crisis.
The Group has taken significant
steps to protect our people and our
businesses. In hindsight, the previous
decision to employ a financial structure
that provides the Group with maximum
financial flexibility was a certainly
fortuitous one. Aside from the credit
loss provision and goodwill impairment
mentioned above, the direct impact
of Covid-19 on the underlying results
for the year ended March 2020 was
of course limited due to timing, albeit
unfortunately still a significant hit to
performance in the final month.
NEW ACCOUNTING STANDARD
This year the Group adopted IFRS
16 regarding accounting for leases,
applying the modified retrospective
approach in transitioning from the
previous standard. All previously
recognised operating leases were
fair valued initially as at 31 March
2019. ‘Right-of-use’ assets and
corresponding lease liabilities being
recognised on the balance sheet, with
no net impact on net assets as at this
date. The previous operating lease
expense in the income statement
has been replaced with two costs:
depreciation of the right-of-use assets
and a finance expense relating to
the unwinding of the present value
discount on the lease liabilities.
The impact of adoption on the FY20
accounts is summarised below.
Initial asset recognised
(as at 31 March 19)
Initial liability recognised
(as at 31 March 19)
EBITDA
EBIT
PBT
IFRS 16
impact
+£56.1m
+£57.3m
+£10.9m
+£1.5m
-£1.0m
Given the previous linear operating
lease charge has been replaced in part
with a non-linear charge in the form
of the finance expense, which for any
given lease will reduce over time as the
liability is paid down, it is natural that
the initial impact on PBT is negative.
The net cash flow impact is of course
unchanged, as the commercial lease
contracts themselves are unaffected by
this accounting adjustment.
DIVISIONAL UNDERLYING
PERFORMANCE
Group sales from continuing operations
grew in the year by c. +10%, driven in
particular by acquisitions. Underlying
organic growth was c. +0.4%, however
this was adversely impacted by
Covid-19 towards the end of the year,
with March sales c. -9% down on the
prior year on a like-for-like basis.
The majority of the acquisitive growth
was in the UK & Europe Ceramic Tiles
division, which has therefore become
a larger component of the Group,
contributing c. 40% of overall Group
revenue in the year (and more on a fully
pro-forma basis for the aforementioned
acquisitions).
Divisional sales performance
£100.0m
£193.9m
£95.6m
£243.9m
£272.9m
£282.0m
FY19
FY20
UK & Europe Soft Flooring
UK & Europe Ceramic Tiles
Australia
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UK & EUROPE SOFT FLOORING
Revenue
Underlying EBITDA
Margin %
Underlying EBITDA (pre IFRS 16)
Margin %
Underlying EBIT
Margin %
Increase in credit loss provision
Note: figures from continuing operations and stated before impact of increase in credit loss provision
Sales from continuing operations in
the UK & Europe Soft Flooring division
increased by £9.1 million (+3.3%) year-
on-year. The majority of this increase
relates to contribution from two small
acquisitions made in the year, of
G Tuft and Estillon. Overall organic
sales performance was flat, as sales in
March 2020 were materially adversely
impacted by Covid-19, seeing a c.
-12% like-for-like decline in the month.
G Tuft is a small carpet commission
manufacturing business, which was
acquired in May 2019 as an operational
and defensive move. Its manufacturing
capacity is only approximately one
third of our South Wales site following
the investments made to the latter in
2018, but nevertheless it has a very
well-invested factory. It was an existing
and growing supplier to the Group
for the outsourced tufting of certain
outsourced carpet products, and by
the time of acquisition approximately
70% of G Tuft’s sales were to Victoria
group companies. Hence the Board
decided that it was important to
acquire the operation as a protective
measure. Furthermore, its acquisition
has created some further opportunities
for synergies with our other carpet
factories.
Estillon is a small underlay and flooring
accessories distributor based in the
Netherlands with annual revenues of
c. €10m. It was acquired in November
2019 and has been combined with our
UK-based underlay business to leverage
cross-selling opportunities for our
existing products in Continental Europe.
During the year there was a
discontinued operation, relating to
the disposal of a small UK distribution
business, A&A Carpets, which was no
longer a strategic fit for the division.
This business previously formed the UK
business’ North West carpet wholesale
UK and Europe Soft Flooring EBITDA margin bridge
2.3%
14.6%
14.0%
1.7%
(0.2)%
(0.6)%
10.8%
FY19
Organic
IFRS 16
impact
Acquisitions
FY20
pre-CLP
Credit loss
provision
FY20
2020
£282.0m
£41.3m
14.6%
£34.8m
12.3%
£21.7m
7.7%
£1.7m
2019
£272.9m
n/a
n/a
£29.5m
10.8%
£17.0m
6.2%
£0.1m
Growth
3.3%
17.8%
27.4%
operation, with the division now
focused on its branded offering in the
region. A&A had total annual revenues
in FY19 of £7.6 million and PBT of £0.1
million. It was sold in January 2020
for total consideration of £0.9 million.
This consideration was at a discount to
book value, and the Group recognised
a one-off loss from discontinued
operations in the year of £2.0 million.
Both G Tuft and Estillon were lower
margin businesses than the UK &
Europe Soft Flooring division, hence
their acquisition has naturally had
a relative margin-diluting effect.
Furthermore, as a result of Covid-19,
there has been an increase in the
division’s credit-loss provision of £1.7
million, as a prudent measure to
account for potential future bad debts
in the current economic environment.
The impact of this provision and the
acquisitions together was a c. 80bps
margin dilution.
In like-for-like terms, the division has
delivered a 170bps increase in margin
over the prior year. This has been
driven by the operational efficiency
benefits arising from prior year synergy
projects, in particular the consolidation
and investment in our South Wales
carpet factory and new UK distribution
network with hubs in the South,
Midlands and North. Notwithstanding
Covid-19, the Board would expect
some further annualised margin
improvement to come.
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UK & EUROPE CERAMIC TILES
Revenue
Underlying EBITDA
Margin %
Underlying EBITDA (pre IFRS 16)
Margin %
Underlying EBIT
Margin %
Increase in credit loss provision
Note: figures from continuing operations stated before impact of increase in credit loss provision
Sales in the UK & Europe Ceramic
Tiles division increased by £50.0 million
(+25.7%) year-on-year. The majority
of this increase relates to the full-year
effect of Ceramica Saloni, which was
acquired in August 2018 and so only
contributed eight months in the prior
year. Furthermore, there has been a
smaller contribution from two new
acquisitions, of Ibero and Ascot.
Organic sales growth in the year,
excluding the above acquisitions, has
been c. +2.3% (at constant currency).
This is despite the month of March
seeing a c. –9% decline year-on-year
due to Covid-19. This growth has been
due in particular to strong performance
in the European DIY retail segment,
which has continued to see very high
demand for our products and has also
remained more resilient to Covid-19.
Ibero is a high-end ceramic tile
manufacturer and distributor located
close to the Group’s incumbent
Spanish businesses, Keraben and
Saloni, with annual revenues of
c. €30 million. Its product range
includes more specialist designs and
its addition to our Spanish business
helped to fill a small product portfolio
gap in a complementary area. Since
completion of the acquisition in
August 2019, a synergy programme
has been developed to integrate the
operations of Keraben and Ibero to
maximise utilisation of the respective
factories. However this plan, originally
due to start during Q4 FY20, has been
delayed due to Covid-19.
Ascot is a medium-to-high end ceramic
tile manufacturer and distributor located
close to the Group’s incumbent Italian
business, Serra. In an arrangement
unique to Italian Law, the business
and factory of Ascot were leased (by a
new, wholly-owned shell company) in
UK and Europe Ceramic Tiles EBITDA margin bridge
30.7%
0.3%
0.9%
28.0%
27.6%
(3.9)%
(0.4)%
FY19
Organic
IFRS 16
impact
Acquisitions
FY20
pre-CLP
Credit loss
provision
FY20
Note: Acquisitions impact relates to margin dilution of Saloni, Ibero and Ascot
2020
£243.9m
£68.3m
28.0%
£66.2m
27.1%
£51.5m
21.1%
£1.0m
2019
£193.9m
n/a
n/a
£59.5m
30.7%
£48.3m
24.9%
£0.1m
Growth
25.7%
11.3%
6.5%
February 2020 for seven years at a total
cost of €11.5 million, but with a free
option to acquire. This arrangement was
entered into to help resolve the capacity
issues that Serra has been facing,
with the business experiencing strong
sales growth and higher demand for its
products than it is able to satisfy with
its own manufacturing facilities. As it is
expected that the option to fully acquire
the business and assets of Ascot will be
exercised, it has been accounted for as
a business combination under IFRS 3.
Notwithstanding Covid-19, the Group’s
various ceramic tile brands continue
to see strong positions in their core
markets within Europe, which is
bolstered by accelerated growth in DIY.
Furthermore, additional organic margin
improvements are expected as the
operational integrations of Ibero and
Ascot are completed.
Saloni, Ibero and Ascot are all
historically lower margin businesses
than the Group’s original ceramic tile
businesses, Keraben and Serra, hence
these acquisitions have had a relative
margin-diluting effect on the division.
Furthermore, the UK & Europe Ceramic
Tile division has also seen an increase
in credit loss provision of £1.0 million
following the Covid-19 pandemic.
Removing the impact of these three
businesses, as well as the credit loss
provision, shows a stable underlying
margin performance in the incumbent
ceramic tile businesses.
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AUSTRALIA
Revenue
Underlying EBITDA
Margin %
Underlying EBITDA (pre IFRS 16)
Margin %
Underlying EBIT
Margin %
Increase in credit loss provision
2020
£95.6m
£10.3m
10.8%
£8.1m
8.5%
£5.8m
6.1%
£0.1m
2019
Growth
(4.4)%
(15.1)%
(15.1)%
£100.0m
n/a
n/a
£9.6m
9.6%
£6.8m
6.8%
£0.1m
Note: figures from continuing operations and stated before impact of increase in credit loss provision
The Australia division continued to see challenging market conditions during the first half of FY20, continuing from the prior year,
as shown in our interim results with a c. -5% year-on-year decline in revenue at that point. However, this trend reversed during
H2 and for the full year the overall decline reduced to c. -1% (at constant currency), with revenue growth of c. +4% in H2.
The revenue decline also in H1 had an adverse impact on margins for the division, resulting from operational leverage effects
and a decision to avoid cutting further costs, given our anticipation of a return to growth in H2.
The outlook for the Australia market continues to be positive, with the division having seen the least impact from Covid-19.
GROUP UNDERLYING PERFORMANCE SUMMARY
Revenue
Underlying EBITDA
Margin %
Underlying EBITDA (pre IFRS 16)
Margin %
Underlying EBIT
Margin %
Underlying PBT
Margin %
Note: figures from continuing operations and stated before impact of increase in credit loss provision
Increase in credit loss provision
Underlying PBT after credit loss provision
Growth
9.7%
11.1%
9.4%
(11.5)%
2020
£621.5m
£118.1m
19.0%
£107.2m
17.3%
£77.1m
12.4%
£50.7m
8.2%
2019
£566.8m
n/a
n/a
£96.6m
17.0%
£70.5m
12.4%
£57.3m
10.1%
(£2.8m)
£48.0m
(£0.3m)
£57.1m
In FY20, the consolidated Group delivered underlying EBITDA of £118.1 million (before an increase in credit loss provision
of £2.8 million following the onset of the Covid-19 pandemic), albeit on a pre-IFRS 16 basis this equates to £107.2 million
(FY19: £96.6m). On the same basis, underlying EBIT was £77.1 million (FY19: £70.5m). This represents an average organic
improvement in operating margin of c. 70bps.
Total underlying interest cost on loans and notes (bonds) in the year was £21.5 million (FY19: £11.5m), increasing as a result
of both debt-funded growth (including a full-year of interest costs on funding for the acquisition of Saloni, as well as the
smaller acquisitions this year) and the Group’s change in capital structure from bank debt to bonds. The new bonds, issued
in two tranches, have a coupon of 5.25%, but including the effect of issue premia have a weighted average cost of c. 4.5%.
This compares to previous bank debt with an average cost of c. 3%. This is, in effect, the cost of the flexibility and certainty
(i.e. lack of maintenance financial covenants) that the new capital structure brings to the Group.
After taking into account the amortisation of prepaid finance costs and the interest cost associated with the IFRS 16 right-of-use
lease liability, the Group’s underlying PBT was £50.7 million before the increase in credit loss provision, and £48.0 million after.
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EXCEPTIONAL AND NON-UNDERLYING ITEMS
Being a Group with an acquisition-led growth strategy, it is very common to have a number of exceptional and non-
underlying items in the accounts.
Exceptional items are one-offs that will not continue or repeat in the future, for example the legal and due diligence costs for
a business acquisition, as whilst further such costs might arise if new acquisitions are undertaken, they will not arise again on
the same business and would disappear if the Group adopted a purely organic strategy.
Following the onset of the Covid-19 pandemic, as at the March 2020 year-end, we have written-off £50 million of goodwill,
which represents c. 20% of the pre-impairment balance. This amount is an exceptional cost in the income statement and is
clearly a non-cash item.
Other than goodwill impairment, exceptional costs in FY20 were substantially lower than FY19 due to the completion of the
2018-19 operational synergy projects outlined last year.
Exceptional items
Acquisition and disposal related costs
Reorganisation costs
Bond issue and related structuring costs
Negative goodwill arising on acquisition
Pension adjustment
Gain on sale of investment property
Total exceptional items before goodwill impairment
Exceptional goodwill impairment
Total exceptional items
2020
£’m
(2.2)
(3.5)
–
5.8
–
–
0.1
(50.0)
(49.9)
2019
£’m
(1.8)
(12.7)
(7.3)
–
(0.4)
1.8
(20.4)
–
(20.4)
Non-underlying items are ones that do continue or repeat, but which are not deemed to fairly represent the underlying
business. Typically they are non-cash in nature and / or will only continue for a finite period of time. There were two non-
underlying items in the year:
• Non-cash share incentive plan charge – the charge under IFRS 2 relating to the pre-determined fair value of the senior
management share incentive scheme put in place on 10 April 2018. This charge is non-cash as the scheme cannot be
settled in cash. During FY20, the Group has been reviewing its LTIP schemes and a number of senior managers exited
the 2018 scheme (subsequently entering a new scheme as announced on 26 June 2020; see Note 29 – post balance
sheet events). Participants exiting the 2018 scheme requires the Group to recognise an ‘accelerated’ accounting charge
under IFRS 2, whereby the remaining amount of pre-determined fair value not already charged to the income statement
in previous periods must be fully charged in the year. This is the reason for the much larger figure in FY20 of £5.9 million
(FY19: £1.9m). As a result, going forward the charge in relation to the 2018 scheme will be reduced, albeit replaced with
any equivalent charge for new scheme(s).
• Amortisation of acquired intangibles – the amortisation over a finite period of time of the fair value attributed to, primarily,
brands and customer relationships on all historical acquisitions under IFRS. It is important to note that these charges are
non-cash items and that the associated intangible assets do not need to be replaced on the balance sheet once fully
written-down. Therefore, this cost will ultimately disappear from the Group income statement.
Other non-underlying operating items
Acquisition-related performance plan charge
Non-cash share incentive plan charge
Amortisation of acquired intangibles
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2020
£’m
–
(5.9)
(25.0)
(30.9)
2019
£’m
(1.5)
(1.9)
(22.5)
(25.9)
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In addition to the above operating items, there were a number of non-underlying financial items in the year.
Non-underlying financial costs
Release of prepaid finance costs
Underwriting fees and costs relating to previous bank facilities
Write-down of derivative asset representing value of bond embedded call option
Unsecured loan redemption premium credit
Deferred consideration liabilities, unwinding of present value and other adjustments
Mark to market adjustments on foreign exchange forward contracts
Non-underlying financial items before translation difference on foreign currency loans
Translation difference on foreign currency loans
2020
£’m
4.4
6.5
7.3
(0.2)
3.4
(3.2)
18.2
13.0
31.2
2019
£’m
3.1
–
–
–
7.2
0.7
11.0
3.6
14.6
• Release of prepaid finance costs – when any new debt funding is raised, we account for the attributable one-off, up-front
costs (e.g. bank or bookrunner fees, legal costs, accounting and rating fees) as a prepayment that is amortised over
the expected life of the debt. If that debt is then refinanced earlier than originally expected, any remaining prepayment is
‘released’ in one go as a financial cost in the income statement. This ‘release’ is a non-cash item, as the associated costs
were already paid at the time of the new funding. In FY20, this happened twice – when refinancing the previous bank loan
with the inaugural corporate bond issue in July 2019, and subsequently when refinancing the remaining bank loan with
additional bonds in January 2020.
• Underwriting fees and costs relating to previous bank facilities – as part of the July 2019 refinancing, an underwritten bank
facility was obtained to provide certainty around that process, but ultimately was never used. This item relates to the one-
off bank fees associated with the underwrite, plus deferred costs relating to the previous bank facilities. As these fees were
not directly attributable to the new corporate bonds, they were taken straight to the income statement as non-underlying
finance costs as opposed to being treated as a prepayment (as explained above).
• Fair value adjustment to notes redemption option – the corporate bonds issued in FY20 mature in FY25. However, the
company can repay early if it pays a redemption premium, the level of which varies over time (a very high cost within
the first two years, then comparatively lower and stepping-down for the remaining term). Under IFRS 9, this ‘embedded
call option’ must be separately valued as an asset on the balance sheet. However, due to the significant capital markets
downturn following the onset of the Covid-19 pandemic, the effective value of this call option at the year-end was £nil (as
the theoretical cost of refinancing the Group’s debt at that time had significantly increased), hence the asset was written-off
in the income statement as a non-underlying finance cost.
• Unsecured loan redemption premium credit – Non-cash credit relating to the £2.1 million redemption premium on the BGF
loan and option. During the year it was agreed with the BGF to defer payment from December 2019 to December 2021,
resulting in a credit to the income statement.
• Deferred consideration liabilities, unwinding of present value and other adjustments – these non-cash costs relate to the
revaluation of deferred consideration and contingent earn-outs, either due to the unwinding of the applicable present value
discount (on both), or changes in forecast business performance (on contingent earn-outs).
• Mark to market adjustments on foreign exchange forward contracts – across the group we analyse our upcoming currency
requirements (for raw material purchases) and offset the exchange rate risk via a fixed, diminishing profile of forward
contracts out to 12 months. This non-cash cost represents the mark-to-market movement in the value of these contracts
as exchange rates fluctuate.
• Translation difference on foreign currency loans – this represents the impact of exchange rate movements in the translation
of non-Sterling denominated debt into the Group accounts. The key item in this regard is the Euro denominated €500m
2024 corporate bonds.
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OPERATING PROFIT AND PBT
The table below summarises the underlying and reported profit of the Group, further to the commentary above on underlying
performance and non-underlying items.
Operating profit and PBT
Underlying operating profit (before credit loss provision)
Reported operating (loss) / profit (after exceptional items)
Underlying profit before tax (before credit loss provision)
Reported loss before tax (after exceptional items)
2020
£’m
77.1
(6.5)
50.7
(64.0)
2020
Margin %
12.4%
(1.0)%
8.2%
(10.3)%
2019
£’m
70.5
23.9
57.3
(3.8)
2019
Margin %
12.4%
4.2%
10.1%
(0.7)%
Reported operating profit (earnings before interest and taxation, before movement credit loss provision) declined to a loss
of £6.5 million, having been impacted by higher exceptional and non-underlying items during the year, in particular the
£50 million impairment of goodwill, material one-off refinancing costs and significant FX movements on foreign currency
loans. After removing these items, underlying operating profit (before movement in credit loss provision) was £77.1million,
representing a 9% increase over the prior year.
TAXATION
The reported tax charge in the year of £4.2 million was distorted by the impact of the exceptional and non-underlying costs,
many of which have been treated as non-deductible for tax purposes. On an underlying basis, the tax charge for the year
was £12.4 million against adjusted profit before tax of £48.0 million, implying an underlying effective tax rate of 25.8%.
EARNINGS PER SHARE
As a result of the material exceptional and non-underlying costs in the year as detailed above, the Group delivered a basic
loss per share of 55.97p (2019: 6.44p). However, adjusted earnings per share (before non-underlying and exceptional items)
on a fully-diluted basis was 28.42p (2019: 35.25p). The decline compared with the prior year mirrors the decline in underlying
PBT noted above, being primarily due to an increase in financing costs and Covid-19 related credit loss provision more than
offsetting the 9% increase in underlying operating profit.
Earning per share
Basic loss per share
Diluted adjusted earnings per share
2020
(55.97p)
28.42p
2019
(6.44p)
35.25p
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OPERATING CASH FLOW
Cash flow from operating activities before interest, tax and exceptional items was £97.6 million which represents a
conversion of 92% of underlying EBITDA (pre-IFRS 16).
Operating and free cash flow
Underlying operating profit
Add back: underlying depreciation & amortisation
Underlying EBITDA before credit loss provision
Payments under right-of-use lease obligations
Non-cash items
Underlying movement in working capital
Operating cash flow before interest, tax and exceptional items
% conversion against underlying operating profit
% conversion against underlying EBITDA (pre-IFRS 16)
Interest paid
Corporation tax paid
Capital expenditure – replacement / maintenance of existing capabilities
Proceeds from fixed asset disposals
Free cash flow before exceptional items
% conversion against underlying operating profit
% conversion against underlying EBITDA (pre-IFRS16)
2020
£’m
77.1
41.0
118.1
(11.6)
(0.8)
(8.0)
97.6
127%
92%
(25.0)
(8.6)
(25.4)
0.7
39.2
51%
37%
2019
£’m
70.5
26.1
96.6
–
(0.8)
9.9
105.7
150%
109%
(16.5)
(16.2)
(23.5)
0.9
50.4
72%
52%
Pre-exceptional free cash flow of the Group – after interest, tax and net replacement capex – was £39.2 million. Compared
with underlying operating profit (i.e. post-depreciation), this represents a conversion ratio of 51%. The difference in free cash
flow conversion versus the prior year is due to timing differences in working capital movements.
A full reported statement of cash flows, including exceptional and non-underlying items, is provided on page 48.
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NET DEBT
As at 28 March 2020, the Group’s net debt position was broadly flat compared with the prior year-end on a constant
currency basis. Free cash flow of £39.2million was generated in the year, of which £11.8 million was invested in organic
growth / synergy initiatives and £26.8million in acquisition-related expenditure (including the four small aforementioned
acquisitions). However, there was an adverse translational impact of £24.8 million due to the significant strengthening of the
Euro versus Sterling during the final month of the financial year. As a result, as reported in Sterling, year-end net debt was
£365.9 million (2019: £339.9m).
Free cash flow to movement in net debt
Free cash flow before exceptional items (see above)
Capital expenditure – growth
Exceptional reorganisation cash cost
Investment in organic growth / synergy projects
Acquisitions of subsidiaries
Net proceeds of equity raise
Total debt acquired or refinanced
Deferred and contingent consideration payments
Exceptional M&A costs
Acquisitions related expenditure
Exceptional bond issue & structuring costs
Proceeds from discontinued operations
Proceeds from disposal on investment property
Other exceptional cash items
Other debt items
Translation differences on foreign currency cash and loans
Other exceptional items
Total movement in net debt
Opening net debt
Closing net debt
2020
£’m
39.2
(8.4)
(3.5)
(11.8)
(11.0)
–
(1.5)
(12.1)
(2.2)
(26.8)
–
1.0
–
1.0
(2.8)
(24.8)
(27.6)
(26.0)
(339.9)
(365.9)
2019
£’m
50.4
(20.9)
(11.5)
(32.5)
(82.6)
59.3
(68.0)
(8.9)
(1.8)
(102.0)
(7.3)
–
2.0
(5.3)
(0.6)
8.7
8.2
(81.2)
(258.7)
(339.9)
BRIDGE OF OPENING TO CLOSING STATUTORY NET DEBT
£78.2m
£448.5m
£339.9m
£26.8m
£11.8m
£1.8m
£341.1m
(£9.9m)
£24.8m
£365.9m
£14.3m
(£39.2m)
Opening
net debt
Free cash
flow before
exceptional
items
Acquisitions
related
expenditure
Expansionary
capex
and organic
synergy
initiatives
Other
exceptional
items
Net debt
before
impact
of FX
Translation
differences
on foreign
currency cash
and loans
Closing
net debt
Bond
issue
premia
Prepaid
finance costs
Closing net
financial
liability
Obligations
under
right-of-use
leases
(incremental)
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Financial review
Applying our banks’ adjusted measure of financial leverage, the Group’s year end net debt to EBITDA ratio was 3.0x (2019:
3.2x). This deleveraging reflects the growth of the business during the year with net debt remaining broadly flat on a constant
currency basis.
Current leverage is consistent with our financial strategy to use a sensible but cautious level of debt in the overall funding
structure of the Group.
Net debt
Net cash and cash equivalents
Senior secured debt (at par)
Unsecured loans
Finance leases and hire purchase arrangements (pre IFRS 16)
Net debt before obligations under right-of-use leases
Adjusted net debt / EBITDA
Bond issue premium – cash
Bond issue premium – non-cash (related to embedded redemption option)
Pre paid finance costs
Obligations under right-of-use leases (incremental)
Statutory net debt (net of prepaid finance costs)
2020
£’m
174.7
(523.4)
(15.6)
(1.6)
(365.9)
3.0x
(7.5)
(6.8)
9.9
(78.2)
(448.5)
2019
£’m
60.2
(386.9)
(11.6)
(1.6)
(339.9)
3.2x
–
–
3.6
–
(336.3)
ACCOUNTING STANDARDS
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as
endorsed and adopted for use in the EU. With the exception of IFRS 16, as described in this Financial Review, there have
been no changes to IFRS standards this year that have a material impact on the Group’s results. No forthcoming new IFRS
standards are expected to have a material impact on the financial statements of the Group.
GOING CONCERN
The consolidated financial statements for the Group have been prepared on a going concern basis. See page 31 of the
Directors Report for further detail.
Michael Scott
Group Finance Director
29 July 2020
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Board of Directors
GEOFFREY WILDING
PHILIPPE HAMERS
Executive Chairman
Chief Executive Officer
MICHAEL SCOTT
Group Finance Director
Geoffrey Wilding BSc is a former
investment banker. He set up his own
investment company in New Zealand in
1989. Geoff was appointed Executive
Chairman at the General Meeting on
3 October 2012 and is a member of
the Nominations Committee.
Philippe Hamers was appointed to the
Board on 20 March 2017. Philippe
has over 25 years’ experience in the
flooring industry and headed Europe’s
largest carpet manufacturing operation
at Balta Group, for the previous six and
a half years. Prior to joining the Balta
Group he was General Manager of the
Tufted and Woven Division of Beaulieu
International Group.
Michael was appointed to the Board
of Victoria PLC on 4 January 2016.
Prior to this, Michael spent eight years
at Rothschild where, as part of their
Global Financial Advisory business, he
worked across a wide range of public
and private company transactions,
mergers and acquisitions and debt
and equity-related fund raisings. He
qualified as a Chartered Accountant
with PricewaterhouseCoopers and
holds an Engineering degree from the
University of Cambridge.
ANDREW HARRISON
GAVIN PETKEN
ZACHARY STERNBERG
Non-executive Director
Non-executive Director
Andrew Harrison has more than twenty
years as a solicitor in private practice,
specialising in company law. He has
advised on a wide variety of corporate
transactions, including management
buy-outs and buy-ins, corporate
acquisitions and disposals and listed
company take-overs.
Andrew was appointed to the Board at
the General Meeting held on 3 October
2012 and is the Senior Independent
Non-executive Director.
Gavin is the BGF Head of Investment
South, Wales and Quoted, responsible
for leading BGF’s investment and
portfolio teams in London, Bristol,
Reading, Cardiff, Milton Keynes,
Nottingham and Birmingham, covering
London, the South East, the South
West, the Midlands, Wales and East
Anglia. Gavin is also a member of
BGF’s national executive leadership
team, national investment committee
and responsible for managing BGF’s
UK wide investment activity into public
companies, BGF Quoted.
Gavin was appointed to the Board in
September 2014 and is a member
of the Audit and Remuneration
Committees.
Non-executive Director
Zachary is the co-founder of The
Spruce House Partnership, a private
investment partnership based in New
York with $3 billion of assets under
management, which seeks to invest
alongside and support management
teams that are focussed on growing
the per share value of their companies
over the very long-term. He graduated
in accounting from The Wharton
School, University of Pennsylvania.
Zachary was appointed to the Board
in May 2019 and is a member of
the Remuneration and Nomination
Committees.
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Directors’ report
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The Directors present their Annual
Report and the audited financial
statements for the Group for the year
ended 28 March 2020.
PRINCIPAL ACTIVITIES AND
STRATEGIC REPORT
The Group’s principal activities are the
manufacture, distribution and sale of
floorcoverings.
The Company is required by the
Companies Act 2006 to prepare a
Strategic Report that includes a fair
review of the Group’s business, the
development and the performance
of the Group’s business during the
year and its future development, of
the position of the Group at the end
of the financial year to 28 March 2020
and a description of the principal risks
and uncertainties faced by the Group.
The Strategic Report can be found on
pages 12 to 15.
RESULTS AND DIVIDENDS
The results include those of Victoria
PLC and its subsidiaries for the full
year and are set out in the financial
statements on pages 44 to 104.
£m
DIRECTORS AND THEIR INTERESTS
The current Directors of the Company together with their biographical details are
listed on page 28.
The Directors of the Company who held office at 28 March 2020 had the following
interests in the Ordinary shares of the Company:
Geoffrey Wilding (a)
Philippe Hamers
Michael Scott
Andrew Harrison
Zachary Sternberg (b)
Gavin Petken
28 March 2020
30 March 2019
Beneficial
22,438,650
185,000
416,726
207,725
18,570,000
–
Non-
Beneficial
–
–
–
–
–
–
Beneficial
22,438,650
125,000
416,726
189,725
–
–
Non-
Beneficial
–
–
–
–
–
–
(a) Geoffrey Wilding and his family are discretionary beneficiaries of The Camden Trust which in turn
owns Camden Holdings Limited. Camden Holdings Limited is the owner of the above shareholding of
22,438,650 Ordinary Shares and as a result Mr. Wilding is the beneficial owner of this shareholding.
(b) Zachary Sternberg has an indirect beneficial ownership in Victoria Plc via the Spruce House
Partnership LP shareholding. As at 28 March 2020, The Spruce House Partnership LP shareholding in
Victoria Plc was 18,570,000 Ordinary Shares.
In accordance with the Company’s Articles of Association, the Directors retiring
by rotation at the 2020 Annual General Meeting are Andrew Harrison and Philippe
Hamers whom, being eligible, offer themselves for re-election pursuant to Article 86.
Zachary Sternberg was appointed as a director of the Company on 22 May 2019.
Alexander Anton retired as a director of the Company on 5 June 2019.
No Director, either during or at the end of the financial year, was materially
interested in any significant contract with the Company or any subsidiary
undertaking, with the exception of Gavin Petken, who is the Business Growth
Fund’s (‘BGF’) Head of Investment. On 30 September 2014 the Company entered
into a £10m 2021 unsecured loan facility with the BGF.
(70.2)
DIRECTORS’ INSURANCE AND INDEMNITIES
–
(70.2)
The Company maintains directors’ and officers’ liability insurance which gives
appropriate cover for any legal action brought against its directors. In accordance
with section 236 of the Companies Act 2006, qualifying third- party indemnity
provisions are in place for the directors in respect of liabilities incurred as a result
of their office, to the extent permitted by law. Both the insurance and indemnities
applied throughout the financial year ended 28 March 2020 and through to the
date of this report.
Loss attributable to
shareholders
Total dividend paid in the
financial year
Retained loss
The Directors do not recommend the
payment of a final dividend for the
financial year ended 28 March 2020.
FINANCIAL RISK MANAGEMENT
Details of the Group’s financial risk
management policies are set out in
Note 26.
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DIRECTORS’ EMOLUMENTS
The emoluments of all Directors for the financial year ended 30 March 2020 were:
Executive
Geoffrey Wilding
Philippe Hamers
Michael Scott
Non-executive
Andrew Harrison
Gavin Petken *
Zachary Sternberg (from appointment on 22 May 2019)
Alexander Anton (until resignation on 5 June 2019)
Salary/
Fees
£000
Benefits in
kind
£000
65
572
132
35
35
30
6
875
–
–
6
–
–
–
–
6
Share
based
payment
charge
£000
2,093
1,256
1,084
–
–
–
–
4,433
Bonus
£000
73
55
44
–
–
–
–
172
Total
2020
£000
2,232
1,883
1,266
35
35
30
6
5,486
Total
2019
£000
523
848
494
35
35
–
35
1,970
* There is no annual fee payable directly to Mr Petken in respect of his services to the Company. He is the Business Growth Fund’s (‘BGF’) Head of Investment
South, Wales and Quoted and the Company entered into a £10m loan agreement with the BGF in September 2014. BGF receive an annual fee of £35,000
which is commensurate with that paid to the Company’s other non-executive directors.
The share-based payment charge shown is a supplementary disclosure and relates to a long-term incentive plan established
in April 2016. Further details on the scheme are set out in Note 5 ‘Staff Costs’.
The National Insurance Contributions made in respect of the Directors during the year ended 28 March 2020 amounted to
£84,894 (2019: £64,287).
DIRECTORS’ PENSION ENTITLEMENTS
No Director who held office during the year ended 28 March 2020 was a member of a money purchase scheme.
SIGNIFICANT SHAREHOLDERS
As at 28 March 2020, the Company is aware of the following holdings of significant shareholders in the Company (as defined
in the AIM rules).
Name
Invesco Ltd
Camden Holdings Ltd (a)
The Spruce House Partnership LP (b)
Camelot Capital Partners
Mubadala Investment Company PJSC
Holding
35,067,868
22,438,650
18,570,000
7,694,103
3,780,611
%
27.97%
17.89%
14.81%
6.14%
3.01%
(a) Geoffrey Wilding (Executive Chairman) and his family are discretionary beneficiaries of The Camden Trust which in turn owns Camden Holdings Limited.
(b) Zachary Sternberg (Non-executive director) has an indirect beneficial ownership in Victoria Plc via the Spruce House Partnership LP shareholding.
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EMPLOYEES
Employees are encouraged to
attend training courses and there is
regular consultation with employee
representatives to ensure that
employees are informed of all matters
affecting them. Applications for
employment by disabled persons are
given full and fair consideration having
regard to their particular aptitudes and
abilities. Appropriate training within their
capabilities is provided for disabled
employees seeking career development.
Employees who become disabled
during their employment have continued
in employment wherever possible.
Additional information on how the Board
engages with its employees and other
stakeholders can be found in our S172
statement within the Strategic Report.
POLITICAL DONATIONS
The Company made no political
donations during the year in line with its
policy (2019: £nil).
FINANCIAL INSTRUMENTS
The Group’s financial risk management
objectives and policies are set
out within Note 26 of the financial
statements. Note 26 also details the
Group’s exposure to foreign exchange,
share price, interest, credit, capital and
liquidity risks. This note is incorporated
by reference and deemed to form part
of this report.
TAXATION STATUS
The Directors are advised that the
Company is not a ‘close company’
within the provisions of the Income and
Corporation Taxes Act 1988.
CORPORATE GOVERNANCE
STATEMENT
From September 2018 all AIM
companies are required to set out
details of a recognised corporate
governance code that the Board of
directors has chosen to apply, how
they comply with that code, and where
it departs from its chosen corporate
governance code an explanation for
doing so.
The Board decided to adopt the
Quoted Companies Alliance (“QCA”)
Code as our guide. The Group’s
application of this code is detailed
in the Corporate Governance
Statement on the Group’s website
at www.victoriaplc.com/corporate_
governance_statement/. As required
under AIM Rule 26, the information in
this statement is reviewed annually.
AUDIT QUALITY REVIEW
During the year, an Audit Quality
Review Team (AQRT) from the FRC
undertook an inspection of Grant
Thornton’s audit of the Group financial
statements for the year ended 30
March 2019. As part of that process,
the Audit Committee Chairman spoke
with the AQRT to share the Audit
Committee’s perspective on the
quality of Grant Thornton’s audit. On
completion of the review, the Audit
Committee received and considered
the AQRT’s final report on its inspection
and discussed it with the audit partner.
The report gave the Committee no
concerns over the quality objectivity or
independence of the audit.
GOING CONCERN
The consolidated financial statements
for the Group have been prepared on a
going-concern basis.
The Group’s business activities,
together with the factors likely to affect
its future development, performance
and position, are set out in the
Chairman and CEO Statement, the
Strategic Report and this Financial
Review. In addition, Note 26 to the
Accounts includes details of the
Group’s financial instruments and its
exposure to and management of credit
risk, liquidity risk, currency risk and
interest rate risk.
The Board remains satisfied with the
group’s funding and liquidity position.
The group has not breached any
financial covenants during the year
ended 28 March-2020 in any period
where covenant testing applied.
A detailed “bottom-up” budgeting
exercise for FY21, comprising profit
and loss and cash flow forecasts, was
undertaken and approved by the Board
prior to the outbreak of Covid-19. A
further detailed “bottom-up” forecasting
exercise was completed in May-2020 to
take into account sensitivity analysis for
the potential impact of Covid-19 across
the Group and stress tested to consider
a more extreme downside case. This
forecast extends to March 2023.
The coronavirus pandemic will have an
impact on our business during FY21.
As explained in the Strategic Report on
page 14, Covid-19 has the capacity to
impact earnings by interrupting supply
chains, workforce sustainability, and
demand; a decline in demand being
the most relevant risk to the Group.
In the short term, due to lockdowns
across the UK and Europe the
business saw a significant reduction in
sales versus the prior year in March,
April and May. The Group has however
experienced a substantial recovery to
normal levels of activity and demand
in June.
The Group was quick to react to
the coronavirus pandemic from
an operational standpoint, closing
operations where necessary and
minimising costs and cash outflows,
including stopping all non-essential
operating and capital expenditure.
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Directors’ report
Going forward, the Group recognises
the risks of reduced demand and
therefore revenues and subsequent
impact on operating margins when
compared to prior years, from the
potential direct and indirect effects
on consumer activity continuing for a
longer term period.
The Group’s cash position as at the
year ended 28 March 2020 was
£176.8m, compared with £66.4m as at
30 March 2019. The Group’s cash and
available undrawn credit lines remains
in excess of £100m throughout the
forecast period to March-23 even
under what management considers an
extreme downside case.
During the year the Group refinanced
it’s bank facilities with €500m of
Senior Secured Notes (“bonds”), and
these bonds are not due before July
2024, and, in themselves, carry no
maintenance financial covenants.
The Group also has access to a £75m
multi-currency revolving credit facility
(‘RCF’) maturing in 2024, which was
fully drawn as at year end. A single
leverage financial covenant applies to
the RCF facility if it is drawn in excess
of 40% at out September and March
test dates. Considering the above, in
all modelled downside scenarios the
Group maintains a significant level
of liquidity headroom throughout the
forecast period such that there is no
relevant period where the covenant test
is expected to apply.
The Directors are therefore of the
view that the Group is well placed to
manage its business risks. Accordingly,
the Directors continue to adopt the
going concern basis in preparing the
Annual Report and Accounts.
AUDITOR
Each person who is a Director at the
date of approval of this Annual Report
confirms that:
(a) so far as the Director is aware,
there is no relevant audit
information of which the Company’s
Auditors are unaware; and
(b) the Director has taken all steps
that he ought to have taken as a
Director in order to make himself
aware of any relevant audit
information and to establish that the
Company’s Auditors are aware of
that information.
The above is in accordance with the
provisions of Section 418(2) of the
Companies Act 2006.
Grant Thornton UK LLP has expressed
its willingness to continue in office
as Auditors and a resolution to
reappoint them will be proposed at the
forthcoming Annual General Meeting.
ANNUAL GENERAL MEETING
Notice of the 2020 Annual General
Meeting to be held on 10 September
2020, together with a description of
the business to be discussed at the
AGM, is set out in the accompanying
Notice. The Notice of this year’s Annual
General Meeting will be available to
view on the Company’s website at
www.victoriaplc.com.
The Directors consider that each of the
proposed resolutions to be considered
at the Annual General Meeting are in
the best interests of the Company and
its shareholders and are most likely to
promote the success of the Company
for the benefit of its shareholders as
a whole. The Directors unanimously
recommend that shareholders vote
in favour of each of the proposed
resolutions, as the directors intend
to do in respect of their own
shareholdings.
POST BALANCE SHEET EVENTS
In June 2020 a new long-term
management incentive scheme was
established for senior management.
This has resulted in the grant of nil cost
options to the scheme participants,
which, when exercised, will convert into
1.25 million ordinary shares (1% of the
total Victoria PLC shares at the time of
issue). The participants will be able to
exercise these options in June 2024
provided they are still employed by the
Group at that time. Participants will be
entitled to sell 50% of the shares at this
time, whilst the remaining shares must
be held for a minimum period of 12
months.
The board directors Philippe Hamers
(Group Chief Executive) and Michael
Scott (Group Finance Director) are
participants in the plan and have
been granted 245,000 and 200,000
incentive shares respectively.
By Order of the Board
David Cressman
Company Secretary
29 July 2020
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Statement of Directors’
responsibilities
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The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the
Group and the Company and enable
them to ensure that the financial
statements comply with the Companies
Act 2006. They are also responsible for
safeguarding the assets of the Group
and the Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The Directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
On behalf of the Board
Michael Scott
Group Finance Director
29 July 2020
The Directors are responsible for
preparing the Strategic Report, the
Directors’ Report and the financial
statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year.
Under that law, the Directors have
elected to prepare the Group financial
statements in accordance with
International Financial Reporting
Standards (IFRSs) as adopted by the
European Union and have also chosen
to prepare the parent company financial
statements under the IFRSs as adopted
by the European Union. Under company
law, the Directors must not approve
the accounts unless they are satisfied
that they give a true and fair view of the
state of affairs and profit or loss of the
Group and Company for that period. In
preparing these financial statements the
Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• state that the financial statements
comply with IFRSs as adopted by
the European Union subject to any
material departures disclosed and
explained in the financial statements;
and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue in
business.
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Independent auditor’s report
to the members of Victoria PLC
OPINION
OUR OPINION ON THE FINANCIAL STATEMENTS IS UNMODIFIED
We have audited the financial statements of Victoria PLC (the ‘Company’) and its subsidiaries (the ‘Group’) for the 52
week period ended 28 March 2020, which comprise the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated and company balance sheets, the consolidated and company statements
of changes in equity, the consolidated and company statements of cash flows, the significant accounting policies and
notes to the accounts. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Company
financial statements, as applied in accordance with the provisions of the Companies Act 2006
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at
28 March 2020 and of the Group’s loss for the period then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial
statements’ section of our report. We are independent of the Group and the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
THE IMPACT OF MACRO-ECONOMIC UNCERTAINTIES ON OUR AUDIT
Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those
arising as a consequence of the effects of macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and
challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the
going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic
environment and the Group’s future prospects and performance.
Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this
report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their
impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the
Group’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all
possible future implications for a Group associated with these particular events.
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CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
In our evaluation of the directors’ conclusions, we considered the risks associated with the Group’s business model,
including effects arising from macro-economic uncertainties such as Covid-19 and Brexit, and analysed how those risks
might affect the Group’s resources or ability to continue operations over the period of at least twelve months from the date
when the financial statements are authorised for issue. In accordance with the above, we have nothing to report in these
respects.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material
uncertainty in this auditor’s report is not a guarantee that the Group will continue in operation.
OVERVIEW OF OUR AUDIT APPROACH
• Overall materiality: £2,300,000, which represents approximately 4.7% of the Group’s
profit before tax after excluding exceptional items, amortisation of acquired intangibles,
non-cash share incentive plan charge and non-underlying finance costs, at the planning
stage of the audit;
• Key audit matters were identified as going concern, acquisition accounting, impairment
of goodwill, accuracy of defined benefit pension scheme liabilities and accuracy,
completeness and presentation of the application of IFRS 16;
• Full scope audit procedures were performed by the Group audit team on the financial
information of significant components in the United Kingdom and by component
auditors in respect of significant components in Spain, Italy and Australia. The Group
audit team performed specified procedures on certain components in the Netherlands
and the United Kingdom, and performed analytical procedures over non-significant
components in the Netherlands, Belgium, France, Portugal and the United Kingdom;
and
• We issued group instructions to component auditors in respect of their full scope audit
of the significant components, except for those significant components audited by the
group team.
GRANT THORNTON
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matter.
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Key Audit Matter – Group
How the matter was addressed in the audit – Group
GOING CONCERN
As stated in ‘the impact of macro-economic uncertainties on our
audit’ section of our report, Covid-19 is one of the most significant
economic events currently faced by the UK, and at the date of this
report its effects are subject to unprecedented levels of uncertainty.
This event could adversely impact the future trading performance
of the company and as such increases the extent of judgement
and estimation uncertainty associated with management’s decision
to adopt the going concern basis of accounting in the preparation
of the financial statements.
As such we identified going concern as a significant risk, which
was one of the most significant assessed risks of material
misstatement.
Our audit work included, but was not restricted to:
• obtaining management’s base case forecasts and covenant
calculations covering the period to March 2022. We assessed
how these forecasts were compiled, including assessing the
accuracy of management’s forecasts by applying appropriate
sensitivities to the underlying assumptions;
• assessing the reliability of management’s forecasting by
comparing the accuracy of actual financial performance to
forecast information obtained in the prior period;
• obtaining management’s most severe downside scenario to
assess the potential impact of Covid-19. We evaluated the
assumptions applied, including the reduction in revenue, the
reduction in payroll expenditure and the resulting effect on
working capital during the estimated period of Covid-19, for
reasonableness and determined whether they had been applied
accurately. We also considered whether the assumptions are
consistent with our understanding of the business;
• assessing management’s determination of the impact of the
mitigating factors available to them to restrict the cash impact
of the pandemic. This assessment included the corroboration
of mitigating actions taken by management to relevant
documentation and the review of the application in the revised
forecasts for accuracy;
• performing sensitivity analysis on management’s most severe
downside scenario to determine the reduction in EBITDA that
would lead to elimination of the headroom in their original cash
flow forecasts and a breach in banking covenants; and
• assessing the adequacy of the going concern disclosures
included within the Accounting Policies of the Financial
Statements.
KEY OBSERVATIONS
Based on the procedures performed, we have identified no issues
regarding management’s assessment of the impact of Covid-19 on
liquidity requirements, sales volumes, and KPIs. We have nothing
to report in addition to that stated in the ‘Conclusions relating to
going concern’ section of our report.
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Key Audit Matter – Group
How the matter was addressed in the audit – Group
ACQUISITION ACCOUNTING, INCLUDING
ACCURACY OF ACQUIRED INTANGIBLES
During the period, the Group acquired the trade and assets of
Ceramica Ibero and entered into an arrangement to lease the
business of Ceramiche Ascot S.p.A. These business combinations
have had a material impact on the financial statements, resulting
in the recognition of goodwill and intangible assets upon
consolidation of these entities.
Goodwill of £5.5m (negative) and £8.3m and intangible assets of
£7.4m and £16.9m were recognised as a result of the business
combinations entered into.
The intangible assets are valued using discounted cash flow
forecasts, which require judgement by the Directors around key
assumptions such as revenue growth, discount rates, brand
royalty rates, customer attrition and long term growth rates.
On initial recognition, the assets and liabilities acquired in a
business combination are included in the consolidated balance
sheet at their fair values,which are also used as the basis
for subsequent measurement in accordance with the group
accounting policies. Determining the fair value of certain assets
and liabilities requires judgement to be exercised by the Directors.
Due to the significant financial statement impact of the
acquisitions, as well as the high level of judgement required in
determining the appropriate accounting treatment and high level
of estimation in determining the fair value of the consideration
and certain assets acquired and liabilities assumed, we therefore
identified acquisition accounting, including accuracy of acquired
intangibles, as a significant risk, which was one of the most
significant assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• documenting our understanding of management’s process
for evaluating the valuation of goodwill and intangibles and
assessing the design effectiveness of relevant controls;
• assessing whether the accounting policies adopted by the
directors are in accordance with the requirements of IFRS 3
‘Business Combinations’ and IAS 38 ‘Intangible Assets’;
• obtaining an understanding of the nature and terms of the
acquisitions through review of legal agreements and discussion
with management;
• testing whether management’s assessment as to whether the
lease of the business of Ceramiche Ascot S.p.A transferred
control to the Group is in accordance with the financial reporting
framework, including IFRS 10, and whether it was correctly
applied during the period;
• re-performing management’s calculation of the fair value of the
consideration, including the estimated value of the deferred and
contingent consideration transferred less the net recognised
amount of identifiable assets acquired and liabilities assumed,
ensuring this is in accordance with the requirements of IFRS 3;
• using our auditor’s expert to evaluate and challenge the
assumptions used in the valuation of intangible assets acquired
through the Ceramica Ibero business combination, including
discount rates, growth rates and forecast future trading
performance, in the calculation of the fair value of the intangible
assets recognised;
• testing the completeness and accuracy of the data used in
the intangible asset valuation relating to the Ceramica Ibero
acquisition by agreeing this data to pertinent supporting
documentation such as long-term growth forecasts;
• testing the completeness and accuracy of the data used in the
provisional intangible asset valuation relating to the lease of the
business of Ceramiche Ascto S.p.A by agreeing this data to
pertinent supporting documentation such as intangible asset
valuations carried out on comparable transactions; and
• testing significant fair value adjustments made to the amount
of assets and liabilities acquired and assessing the adequacy
of disclosures in respect of the acquisition with respect to the
requirements of IAS 38 and IFRS 3.
• the Group’s accounting policy on business combinations is
shown on page 49 and intangible assets is shown on page 53
and related disclosures are included in note 23 to the financial
statements.
KEY OBSERVATIONS
• Based on our audit work, we found that the assumptions and
judgements used in management’s measurement of acquired
intangibles were reasonable and that the associated amounts
recognised were materially accurate. We found no material
errors in the underlying calculations.
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IMPAIRMENT OF GOODWILL
The process for assessing whether an impairment exists under
International Accounting Standard (IAS) 36 ‘Impairment of Assets’
is complex. When carrying out the goodwill impairment review,
determining the recoverable amount for each cash-generating unit
(“CGU”) requires management to make judgements over several
key inputs in the value-in-use discounted cash flow models. These
include revenue growth, discount rates and long-term growth rates.
We therefore identified impairment of goodwill as a significant risk,
which was one of the most significant assessed risks of material
misstatement.
Our audit work included, but was not restricted to:
• documenting our understanding of management’s process for
evaluating the impairment of intangible assets and assessing the
design effectiveness of related key controls;
• testing whether the Group’s accounting policy was in
accordance with the requirements of IAS 36, and whether the
policy had been applied correctly in management’s assessment
of goodwill impairment;
• testing the mathematical accuracy of management’s model and
management’s reconciliation of these forecasts to those used in
the going concern assessment;
• testing the key underlying assumptions for the financial period
2021 budget (FY21);
• challenging management on the COVID-19 impacted revenue
and margin assumptions in the cash flow forecast and the
implied growth rates for FY21 and corroborating to relevant
evidence such as external market data to support these
assumptions;
• using our auditor’s expert to assess the discount rates and long-
term growth rates used in the forecast including comparison to
economic and industry forecasts where appropriate;
• Testing the accuracy of management’s forecasting through a
comparison of budget to actual data and historical variance
trends and investigating the cash flows for exceptional or
unusual items or assumptions; and
• testing the sensitivity analysis performed by management in
respect of the key assumptions, such as discount and growth
rates, to corroborate management’s conclusions that there was
sufficient headroom in their goodwill impairment assessment
for the ‘UK and Europe – Soft furnishings’, ‘Australia’ and
‘Ceramics Italy’ CGUs and in order to challenge the accuracy of
management’s estimate of the impairment loss on the ‘Ceramics
Spain’ CGU’.
The Group’s accounting policy on goodwill is shown on page
50 and related disclosures are included in note 9 to the financial
statements.
KEY OBSERVATIONS
Based on our audit work, we found that the assumptions made,
and estimates used by management in their assessment of
goodwill impairment were balanced and supportive of the goodwill
impairment posted by management. We found no material errors
in the underlying calculations.
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Key Audit Matter – Group
How the matter was addressed in the audit – Group
ACCURACY OF DEFINED BENEFIT PENSION
SCHEME LIABILITIES
The Group operates a defined benefit pension scheme that
provides benefits to a number of current and former employees. At
28 March 2020 the defined benefit pension scheme’s net liability
was £6.3m. The gross value of the pension scheme liabilities
amounted to £28.4m.
The valuation of the pension liabilities in accordance with IAS 19
‘Employee Benefits’ involves significant judgement and is subject
to complex actuarial assumptions. Small variations in assumptions
can lead to a materially different defined benefit pension scheme
liability being recognised within the Group financial statements.
We therefore identified accuracy of defined benefit scheme
liabilities as a significant risk, which was one of the most significant
assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• documenting our understanding of management’s process
and methodology used for valuing the defined benefit pension
scheme, measuring the relevant pension liabilities and assessing
the design effectiveness of relevant controls;
• testing whether the Group’s accounting policy for defined
benefit pension schemes was in accordance with the financial
reporting framework, including IAS 19, and whether it was
correctly applied during the period;
• testing the accuracy and appropriateness of the data and inputs
used in the period end valuation;
• utilising the work of an auditor’s expert to challenge the
assumptions used, including discount rates, growth rates and
mortality rates; and
• challenging the calculation methods employed in the calculation
of the pension liability.
The Group’s accounting policy on retirement benefit costs,
including defined benefit schemes is shown on page 52 and
related disclosures are included in note 20 to the financial
statements.
KEY OBSERVATIONS
Based on our audit work, we found the valuation methodologies,
including the inherent actuarial assumptions, to be balanced and
consistent with the expectation of our auditor’s expert. We found
no material errors in calculations or in the accuracy of the defined
benefit pension scheme liability at 28 March 2020.
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ACCURACY, COMPLETENESS AND PRESENTATION OF THE
APPLICATION OF IFRS 16
IFRS 16 ‘Leases’ has been adopted in the financial statements
for the period ended 28 March 2020, for which the Group has
performed an assessment of the impact that the new accounting
standard will have on its balance sheet.
This is the first year of application of the standard and significant
judgements and estimates have been applied in the determination
of its impact, specifically in determining the most appropriate
discount rate.
Management has performed an exercise to summarise all property,
equipment and other lease data so that it can be assessed for any
IFRS 16 implications.
Where the implicit rate of interest in a lease was not readily
determinable, the incremental borrowing rate (IBR) method was
adopted.
Due to both the level of judgement exercised by the directors in
determining the IBR, as well as the financial statement impact
of transitioning to the new standard, we identified the accuracy,
completeness and presentation of the application of IFRS 16 as
a significant risk, which was one of the most significant assessed
risks of material misstatement.
Our audit work included, but was not restricted to:
• assessing the design effectiveness of the relevant controls in
place throughout the transition process;
• using the work of an auditor’s expert in assessing the
appropriateness of the discount rates applied;
• testing the accuracy of a sample of the underlying lease data
used in management’s calculation by agreeing significant
lease terms to original lease agreements or other supporting
documentation;
• obtaining supporting contractual information for transactions
considered to be potentially indicative of unrecorded lease
liabilities and testing whether they met the definition of a leasing
arrangement under IFRS 16;
• re-performing the calculations used in management’s lease
liability schedules to test the arithmetical accuracy;
• testing the reconciliation between the Group’s operating
lease commitments and the IFRS 16 assessment to evidence
completeness; and
• assessing the disclosures in the financial statements to
determine whether they are appropriate and sufficient for the
requirements of the new accounting standard.
The Group’s accounting policy on IFRS 16 is shown on page 57
and related disclosures are included in note 11 to the financial
statements.
KEY OBSERVATIONS
Based on our audit work, we found the discount rates used by
management, including the valuation assumptions, to be balanced
and consistent with the expectation of our auditor’s expert. We
found no material errors in the underlying IFRS 16 calculations
We did not identify any key audit matters relating to the audit of the financial statements of the Company.
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OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the
nature, timing and extent of our audit work and in evaluating the results of that work.
Materiality was determined as follows:
Materiality measure
Group
Financial statements as a whole
£2,300,000, which represents approximately
4.7% of the Group’s profit before tax after
excluding exceptional items, amortisation
of acquired intangible, non-cash share
incentive plan charge and non-underlying
finance costs This benchmark is considered
the most appropriate because this is a key
performance measure used by the Board
of Directors to report to investors on the
financial performance of the Group.
Materiality for the current period is lower than
the level that we determined for the period
ended 30 March 2019 as a result of the
decrease in the current period of the Group’s
profit before tax after excluding exceptional
items, amortisation of acquired intangibles
and other non-underlying finance costs.
Company
£1,610,000, which is based on 0.5% of the
Company’s total assets, restricted to 70%
of Group materiality. This benchmark was
considered to be the most appropriate as we
consider that it reflects the Company’s status
as a non-trading holding company.
Materiality for the current period is lower
than the level that we determined for the
period ended 30 March 2019 to reflect the
Company’s decreased total assets in the
current period.
Performance materiality used to drive the
extent of our testing
Specific materiality
70% of financial statement materiality.
70% of financial statement materiality.
We determined a lower level of materiality for
certain areas such as non-underlying items,
Directors’ remuneration and related party
transactions outside of the normal course of
business.
We determined a lower level of materiality
for Directors’ remuneration and related party
transactions outside of the normal course of
business.
Communication of misstatements to the
audit committee
£115k and misstatements below that
threshold that, in our view, warrant reporting
on qualitative grounds.
£80,500 and misstatements below that
threshold that, in our view, warrant reporting
on qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit approach was a risk-based approach founded on a thorough understanding of the Group’s business, its
environment and risk profile. The components of the Group were evaluated by the Group audit team based on a measure
of materiality, considering each as a percentage of the Group’s total assets, revenue and underlying profit before taxation, to
assess the significance of the component to determine the planned audit response.
A full scope audit approach for all components evaluated as significant was determined based on their relative materiality
to the Group and our assessment of the audit risk. For significant components requiring a full scope approach we or the
component auditors, evaluated the controls over the financial reporting system identified as part of our risk assessment,
reviewed the appropriateness of the financial statement production process and addressed critical accounting matters. For
all significant risks identified we documented our understanding of management’s process for evaluating the applicable risk
and assessed the design effectiveness of relevant controls. We sought, wherever possible, to rely on the effectiveness of
the Group’s internal controls in order to reduce the extent of substantive testing. We then undertook substantive testing on
significant transactions and material account balances.
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In order to address the audit risks identified during our planning procedures, the Group audit team performed a full scope
audit on the financial information of the Company, Victoria PLC (in the United Kingdom), and of other significant component
entities in the United Kingdom, and component auditors performed a full scope audit on the financial information of other
significant components in Spain, Italy and Australia. The operations that were subject to full-scope audit procedures totalled
81% of consolidated revenues and 89% of consolidated underlying profit before taxation.
We also determined that specified procedures were to be carried out by the Group audit team in respect of certain entities
based in the Netherlands and United Kingdom where significant risks of material misstatement had been identified.
The remaining operations of the Group were subjected to analytical procedures with a focus on the audit risks identified
above and the significance to the Group’s balances.
Detailed audit instructions were issued to the component auditors of the reporting components where a full scope approach
had been identified, except for those significant components audited by the group team. The instructions highlighted the
significant risks to be addressed through the audit procedures and detailed the information that we required to be reported
to the Group audit team. The Group audit team conducted a review of the work performed by the component auditors, and
communicated with all component auditors throughout the planning, fieldwork and concluding stages of the Group audit.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included in the
Annual Report and Accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
OUR OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 IS UNMODIFIED
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT UNDER THE COMPANIES ACT 2006
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
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• the Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the statement of directors’ responsibilities set out on page 33, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
David White
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Birmingham
Date: 29 July 2020
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Consolidated income statement
For the 52 weeks ended 28 March 2020
52 weeks ended 28 March 2020
52 weeks ended 30 March 2019
Underlying
performance
£m
Notes
Non-
underlying
items
£m
Reported
numbers
£m
Underlying
performance
£m
Non-
underlying
items
£m
Reported
numbers
£m
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating income
Operating profit / (loss)
Comprising:
Operating profit before credit loss provision,
non-underlying and exceptional items
Increase in credit loss provision
Amortisation of acquired intangibles
Other non-underlying items
Exceptional goodwill impairment
Other exceptional items
Finance costs
Comprising:
Interest on loans and notes
Amortisation of prepaid finance costs and
accrued interest
Unwinding of discount on right-of-use lease
liabilities
Fair value adjustment to notes redemption
option
Translation difference on foreign currency loans
Other finance items
Profit / (loss) before tax
Taxation (charge) / credit
Profit / (loss) for the period from continuing
operations
(Loss) / profit from discontinued operations
1
2
2
2
2
3
3
3
3
3
3
4
6
621.5
(395.1)
226.4
(73.2)
(82.9)
4.0
–
–
–
621.5
(395.1)
566.8
(364.8)
226.4
202.0
–
–
–
–
(80.8)
–
(73.2)
(163.7)
4.0
(69.2)
(65.7)
3.1
–
(47.4)
1.1
566.8
(364.8)
202.0
(69.2)
(113.1)
4.2
74.3
(80.8)
(6.5)
70.2
(46.3)
23.9
77.1
(2.8)
–
–
–
–
–
–
(25.0)
(5.9)
(50.0)
0.1
77.1
(2.8)
(25.0)
(5.9)
(50.0)
0.1
70.5
(0.3)
–
–
–
–
–
–
(22.5)
(3.4)
–
(20.4)
70.5
(0.3)
(22.5)
(3.4)
–
(20.4)
(26.3)
(31.2)
(57.5)
(13.1)
(14.6)
(27.7)
(21.5)
–
(21.5)
(11.5)
–
(11.5)
(1.4)
(3.1)
(4.5)
(2.1)
(2.6)
–
–
(0.1)
(4.4)
–
(7.3)
(13.0)
(6.5)
48.0
(12.4)
(112.0)
8.2
35.6
(103.8)
(6.5)
(2.6)
(7.3)
(13.0)
(6.6)
(64.0)
(4.2)
(68.2)
–
–
–
(0.2)
57.1
(13.9)
43.2
–
–
(3.6)
(7.9)
(60.9)
9.7
(51.2)
–
–
(3.6)
(8.1)
(3.8)
(4.2)
(8.0)
0.1
24
–
(2.0)
(2.0)
–
0.1
Profit / (loss) for the period
35.6
(105.8)
(70.2)
43.2
(51.1)
(7.9)
Earnings / (loss) per share – pence
basic
diluted
7
7
28.42
28.42
(55.97)
35.27
(55.97)
35.25
(6.44)
(6.44)
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Consolidated statement of
comprehensive income
For the 52 weeks ended 28 March 2020
Loss for the period
Other comprehensive income / (expense)
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit pension scheme
Decrease in deferred tax asset relating to pension scheme liability
Items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
Retranslation of overseas subsidiaries
Items that may be reclassified subsequently to profit or loss
Other comprehensive income
Total comprehensive expense for the period attributable
to the owners of the parent
Note
20
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
(70.2)
(7.9)
1.4
(0.1)
1.3
3.6
3.6
4.9
1.8
(0.3)
1.5
(0.6)
(0.6)
0.9
(65.3)
(7.0)
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Consolidated and Company
balance sheets
As at 28 March 2020
Non-current assets
Goodwill
Intangible assets other than goodwill
Property, plant and equipment
Right-of-use lease assets
Investment property
Investments in subsidiaries
Trade and other non-current receivables
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other current payables
Current tax liabilities
Obligations under right-of-use leases – current
Other financial liabilities
Total current liabilities
Non-current liabilities
Trade and other non-current payables
Obligations under right-of-use leases – non-current
Other non-current financial liabilities
Deferred tax liabilities
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Foreign exchange reserve
Other reserves
Total equity
Group
Company
28 March
2020
£m
30 March
2019
£m
28 March
2020
£m
30 March
2019
£m
Notes
9
10
11
11
12
12
14
19
13
14
17
15
6
16
16, 17
15
16
16
19
20
21
22
22
22
22
191.0
248.9
211.6
78.5
0.2
–
–
6.4
736.6
165.4
144.1
176.8
486.3
1,222.9
242.0
–
11.8
4.9
258.7
17.5
68.0
540.6
71.2
6.3
703.6
962.3
260.6
6.3
288.7
(42.9)
5.9
2.6
260.6
223.7
241.4
190.6
–
0.2
–
–
5.8
661.7
140.5
116.0
66.4
322.9
984.6
168.6
–
–
10.4
179.0
19.5
–
392.3
66.1
7.8
485.7
664.7
319.9
6.3
288.7
20.6
2.3
2.0
319.9
–
0.2
–
6.0
0.1
178.0
481.3
1.4
667.0
–
35.8
115.4
151.2
818.2
14.7
–
0.3
–
15.0
–
5.8
538.7
–
–
544.5
559.5
258.7
6.3
288.7
(38.9)
–
2.6
258.7
–
0.3
–
–
0.1
51.4
577.9
0.2
629.9
–
34.4
19.0
53.4
683.3
2.5
–
–
2.1
4.6
–
–
388.6
–
–
388.6
393.2
290.1
6.3
288.7
(6.9)
–
2.0
290.1
The loss of the Company for the year determined in accordance with the Companies Act 2006 was £37,345,000
(2019: loss of £8,954,000).
Company Registered Number (England & Wales) 282204.
The financial statements on pages 44 to 104 were approved by the Board of Directors and authorised for issue on 29 July 2020.
They were signed on its behalf by:
Michael Scott
Group Finance Director
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Consolidated statement of
changes in equity
For the 52 weeks ended 28 March 2020
At 31 March 2018
Loss for the period to 30 March 2019
Other comprehensive income for the period
Retranslation of overseas subsidiaries
Total comprehensive loss
Issue of share capital
Exercise of share options
Share-based payment charge
Transactions with owners
At 30 March 2019
Loss for the period to 28 March 2020
Other comprehensive income for the period
Retranslation of overseas subsidiaries
Total comprehensive loss
Transfer between reserves
Share-based payment charge
Transactions with owners
At 28 March 2020
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Foreign
exchange
reserve
£m
Other
reserves
£m
5.9
–
–
–
–
0.4
–
–
0.4
6.3
–
–
–
–
–
–
–
6.3
229.8
–
–
–
–
58.9
–
–
58.9
288.7
–
–
–
–
–
–
–
288.7
26.7
(7.9)
1.5
–
(6.4)
–
0.3
–
0.3
20.6
(70.2)
1.3
–
(68.9)
5.3
–
5.3
(42.9)
2.9
–
–
(0.6)
(0.6)
–
–
–
–
2.3
–
–
3.6
3.6
–
–
–
5.9
0.3
–
–
–
–
–
(0.3)
2.0
1.7
2.0
–
–
–
–
(5.3)
5.9
0.6
2.6
Company statement of
changes in equity
For the 52 weeks ended 28 March 2020
At 31 March 2018
Loss for the period to 30 March 2019
Total comprehensive loss
Issue of share capital
Exercise of share options
Share-based payment charge
Transactions with owners
At 30 March 2019
Loss for the period to 28 March 2020
Total comprehensive loss
Transfer between reserves
Share-based payment charge
Transactions with owners
At 28 March 2020
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Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other
reserves
£m
5.9
–
–
0.4
–
–
0.4
6.3
–
–
–
–
–
6.3
229.8
–
–
58.9
–
–
58.9
288.7
–
–
–
–
–
288.7
1.8
(9.0)
(9.0)
–
0.3
–
0.3
(6.9)
(37.3)
(37.3)
5.3
–
5.3
(38.9)
0.3
–
–
–
(0.3)
2.0
1.7
2.0
–
–
(5.3)
5.9
0.6
2.6
Total
equity
£m
265.6
(7.9)
1.5
(0.6)
(7.0)
59.3
–
2.0
61.3
319.9
(70.2)
1.3
3.6
(65.3)
–
5.9
5.9
260.6
Total
equity
£m
237.8
(9.0)
(9.0)
59.3
–
2.0
61.3
290.1
(37.3)
(37.3)
–
5.9
5.9
258.7
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Consolidated and Company
statements of cash flows
For the 52 weeks ended 28 March 2020
Group
Company
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
Note
Cash flows from operating activities
Operating (loss) / profit
Adjustments for:
Depreciation and amortisation of IT software
Amortisation of acquired intangibles
Negative goodwill arising on acquisition
Goodwill impairment
Asset impairment
Amortisation of government grants
Profit on disposal of property, plant and equipment
Profit on disposal of investment property
Loss on disposal of associates
Share incentive plan charge
Acquisition-related performance plan charge
Defined benefit pension
Net cash flow from operating activities before movements in
working capital, tax and interest payments
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Cash generated by continuing operations before tax
and interest payments
Interest paid on loans and notes
Interest relating to right-of-use lease assets
Income taxes paid
Net cash flow from discontinued operations
Net cash inflow from operating activities
Investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Loan to subsidiary companies
Proceeds on disposal of property, plant and equipment
Deferred consideration and earn-out payments
Acquisition of subsidiaries net of cash acquired
Proceeds from disposal of subsidiaries
Proceeds from disposal of investment property
Net cash used in investing activities
Financing activities
Increase in long-terms loans (net of refinancing costs)
Issue of share capital
Repayment of reverse factoring facility acquired with Saloni
Repayment of obligations under finance leases / hire purchase
Payments under right-of-use lease obligations
Net cash generated in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
Comprising:
Cash and cash equivalents
Bank overdrafts
(6.5)
40.9
25.0
(5.8)
50.0
–
(0.5)
(0.2)
–
–
5.9
–
(0.1)
108.7
(4.4)
(10.8)
10.0
103.5
(25.0)
(2.6)
(8.6)
0.1
67.4
(32.7)
(1.1)
–
0.7
(12.1)
(11.0)
0.9
–
(55.3)
109.0
–
–
–
(9.0)
100.0
112.1
60.2
2.4
174.7
17
17
176.8
(2.1)
174.7
23.9
25.6
22.8
–
–
0.5
(0.7)
(0.1)
(1.8)
0.7
1.9
1.5
0.3
74.6
(13.8)
7.1
17.0
84.9
(16.5)
–
(16.2)
0.2
52.4
(43.7)
(0.7)
–
0.9
(8.9)
(82.6)
–
2.0
(133.0)
43.9
59.3
(13.4)
(1.0)
–
88.8
8.2
53.1
(1.1)
60.2
66.4
(6.2)
60.2
(8.4)
0.5
–
–
–
–
–
–
–
–
4.5
–
–
(3.4)
–
–
0.4
(3.0)
(24.4)
(0.2)
–
–
(27.6)
–
(0.1)
11.3
–
–
–
–
–
11.2
111.2
–
–
–
(0.4)
110.8
94.4
19.0
2.0
115.4
115.4
–
115.4
(9.9)
0.1
–
–
–
–
–
–
(1.8)
–
1.1
–
–
(10.5)
–
(0.2)
–
(10.7)
(15.6)
–
–
–
(26.3)
–
(0.1)
(54.1)
–
–
–
–
1.9
(52.3)
45.2
59.3
–
–
–
104.5
25.9
(6.7)
(0.2)
19.0
19.0
–
19.0
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Significant Accounting Policies
BASIS OF ACCOUNTING
The financial statements have
been prepared in accordance with
International Financial Reporting
Standards (IFRS) as adopted by the
EU, IFRIC interpretations and the parts
of the Companies Act 2006 that apply
to companies reporting under IFRS.
The financial statements have been
prepared on the historical cost basis,
except for certain financial instruments
which are recorded at fair value in
accordance with IFRS9. Land and
buildings were professionally valued
at 4 April 2004 and this valuation was
adopted as deemed cost on adoption
of IFRS. The accounting policies have
been applied consistently in the current
and prior year. The principal accounting
policies adopted are set out below.
BASIS OF PREPARATION
The consolidated financial statements
have been prepared on a going
concern-basis. The Strategic Report on
pages 12 to 15 sets out the justification
for this basis of preparation.
BASIS OF CONSOLIDATION
The consolidated financial statements
incorporate the financial statements of
the Company and entities controlled by
the Company (its subsidiaries). Control
is achieved where the Company is
exposed, or has the rights, to variable
returns from its involvement with the
investee and has the ability to affect
those returns through its power over
the investee.
The results of subsidiaries acquired
or disposed of during the year are
included in the consolidated income
statement from the effective date of
acquisition or up to the effective date of
disposal, as appropriate.
All intra-group transactions, balances,
income and expenses are eliminated
on consolidation.
The Company has taken advantage of
the exemption provided under section
408 of the Companies Act 2006 not to
publish its individual income statement
and statement of comprehensive
income and related notes.
BUSINESS COMBINATIONS
Business combinations are accounted
for using the acquisition method as at
the acquisition date, which is the date
on which control is transferred to the
Group.
The consideration transferred for
the acquisition of a subsidiary is the
fair values of the assets transferred,
the liabilities incurred and the equity
interests issued by the Group. The
consideration transferred includes
the fair value of any asset or
liability resulting from a contingent
consideration arrangement. Identifiable
assets acquired and liabilities and
contingent liabilities assumed in the
business combination are measured
initially at their fair values at the
acquisition date.
The Group measures goodwill at the
acquisition date as:
• the fair value of the consideration
transferred; less
• the net recognised amount of the
identifiable assets acquired and
liabilities assumed.
Costs related to acquisition, other than
those associated with the issue of debt
or equity securities that the Group
incurs in connection with a business
combination, are expensed as incurred.
If the contingent consideration is
classified as equity, it is not remeasured
and settlement is accounted for within
equity. Otherwise, subsequent changes
to the fair value of the contingent
consideration are recognised in profit
or loss.
INVESTMENTS IN ASSOCIATES
An associate is an entity over which
the Group has significant influence
but not control or joint control. This is
generally the case where the Group
holds between 20% and 50% of the
voting rights.
The results and assets and liabilities
of associates are incorporated in
these financial statements using the
equity method of accounting. Under
the equity method, the investments
are initially recognised in the Balance
Sheet at cost and thereafter adjusted
for post-acquisition changes in the
Group’s share of the net assets of
the associate, less any impairment
in value. The carrying values of
investments in associates include any
acquired goodwill. The goodwill is
included within the carrying amount
of the investment and is assessed for
impairment as part of the investment.
If the Group’s share of losses in an
associate exceeds its investment in
the associate, the Group does not
recognise further losses, unless it has
incurred obligations to do so or made
payments on behalf of the associate.
INVESTMENTS IN
SUBSIDIARIES AND
ASSOCIATES HELD BY
THE COMPANY
Investments in subsidiaries and
associates held by the Company are
included at cost less accumulated
impairment.
Goodwill
Goodwill represents the excess of the
fair value of the cost of a business
acquisition over the Group’s share of
the fair value of assets and liabilities
acquired as at the date of acquisition.
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Significant Accounting Policies
Discontinued operations
A discontinued operation is a
component of the Group that either
has been disposed of or is classified as
held for sale, and;
• represents a separate major line of
business or geographical area of
operations;
• is part of a single co-ordinated plan
to dispose of a separate major line
of business or geographical area of
operations; or
• is a subsidiary acquired exclusively
with a view to trade.
Profit or loss from discontinued
operations, including prior year
components, are presented as a
single movement in the statement of
comprehensive income. This amount,
which comprises the post-tax profit or
loss of discontinued operations and the
post-tax gain or loss resulting from the
disposal, is further analysed in Note 24
to the accounts.
Segmental reporting
The Group’s internal organisation and
management structure and its system
of internal financial reporting to the
Board of Directors are based on the
geographical locations and operational
characteristics of its businesses.
The chief operating decision-maker
has been identified as the Board of
Directors.
Non-current assets held for sale
Non-current assets (and disposal
groups) classified as held for sale are
measured at the lower of the assets’
previous carrying amount and fair value
less costs to sell.
For the purposes of assessing
impairment, assets are grouped at
the lowest levels for which there are
separately identifiable cash flows (cash-
generating units). Goodwill is allocated
to those cash-generating units that are
expected to benefit from synergies of
the related business combination and
represent the lowest level within the
Group at which management controls
the related cash flows.
Goodwill with an indefinite useful
life is tested for impairment at least
annually. All other individual assets
or cash-generating units are tested
for impairment whenever events or
changes in circumstances indicate
that the carrying amount may not be
recoverable.
An impairment loss is recognised for
the amount by which the asset’s or
cash-generating unit’s carrying amount
exceeds its recoverable amount. The
recoverable amount is the higher of
fair value, reflecting market conditions
less costs to sell and value in use,
based on an internal discounted cash
flow evaluation. Impairment losses
recognised for cash-generating units, to
which goodwill has been allocated, are
credited initially to the carrying amount
of goodwill. Any remaining impairment
loss is charged pro rate to the other
assets in the cash-generating unit. With
the exception of goodwill, all assets are
subsequently reassessed for indications
that an impairment loss previously
recognised may no longer exist.
If the impairment is subsequently
reversed, the carrying amount, except
in the case of goodwill, is increased to
the revised estimate of its recoverable
amount, limited to the carrying value
that would have been determined
had no impairment been recognised
previously. Impairment losses in respect
of goodwill are not subsequently
reversed.
Investment properties
Investment properties are valued on
an historical costs basis. In adopting
this historical cost approach, the
requirements to disclose fair value are
set out in Note 12.
Revenue recognition
The group enters into contracts with
customers involving one performance
obligation being the sale of flooring
products. Revenue is measured
by reference to the fair value of
consideration receivable by the
Group for goods supplied, excluding
VAT, trade discounts and rebates in
accordance with IFRS 15. Revenue
from the sale of goods is recognised at
a point in time when promised goods
have been transferred to a customer at
which point the performance obligation
is considered to have been satisfied.
The customer is considered to obtain
control of the promised goods at the
point of delivery.
The standalone selling price of
the product sold to a customer is
clearly determined from the contract
entered into. The total transaction
price is estimated as the amount of
consideration to which the group
expects to be entitled in exchange
for transferring the promised goods
after deducting trade discounts
and volume rebates which create
variability in the transaction price. In
determining the variable consideration
to be recognised, trade discounts and
volume rebates are estimated based on
the terms of the contractually agreed
arrangements and the amount of
consideration to which the group will
be entitled in exchange for transferring
the promised goods to the customer.
Variable consideration is estimated
using the ‘most likely amount’ method.
Payment terms are between 30 and 60
days, therefore the impact of the time
value of money is minimal.
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Cash and cash equivalents
Cash comprises amounts held
short-term on deposit with financial
institutions.
Cash equivalents comprises short-
term highly liquid corporate bonds with
maturities of three months or less from
inception that are readily convertible
into known amounts of cash and which
are subject to an insignificant risk of
changes in value.
Bank overdrafts that are repayable on
demand are included as a component
of cash and cash equivalents for the
purpose of the cash flow statement.
Interest income
Interest income is accrued on a time
basis, by reference to the principal
outstanding and at the effective interest
rate applicable, which is the rate that
exactly discounts estimated future cash
receipts through the expected life of
the financial asset to that asset’s net
carrying amount.
Dividend income
Dividend income from investments is
recognised when the shareholders’
rights to receive payment have been
established.
Leasing
Lease accounting under IFRS16
(applicable after 31 March 2019)
The Group recognises right-of-use
assets at cost and lease liabilities at
the lease commencement date based
on the present value of future lease
payments. The right of use assets are
depreciated over the shorter of the
asset’s useful life and the lease term
on a straight-line basis in line with the
Group’s accounting policy for property,
plant and equipment. The lease
liabilities are recognised at amortised
cost using the effective interest rate
method. The discount rates used
reflect the incremental borrowing rate
specific to the lease.
Lease accounting under IAS17
(applicable before 31 March 2019)
Rentals payable under operating leases
are charged to profit or loss on a
straight-line basis over the term of the
relevant lease. Benefits received and
receivable as an incentive to enter into
an operating lease are also spread on a
straight-line basis over the lease term.
Foreign currencies
The individual financial statements of
each Group entity are presented in
the currency of the primary economic
environment in which the entity
operates (its functional currency).
For the purpose of the consolidated
financial statements, the results and
financial position of each entity are
expressed in Sterling, which is the
functional currency of the Company,
and the presentation currency for the
consolidated financial statements.
In preparing the financial statements
of the individual entities, transactions
in currencies other than the entity’s
functional currency (foreign currencies)
are recorded at the rates of exchange
prevailing on the dates of the
transactions. At each balance sheet
date, monetary items denominated
in foreign currencies are retranslated
at the rates prevailing on the
balance sheet date. Non-monetary
items carried at fair value that are
denominated in foreign currencies
are retranslated at the rates prevailing
on the date when the fair value was
determined. Non-monetary items that
are measured in terms of historical
cost in a foreign currency are not
retranslated.
Exchange differences arising on the
settlement of monetary items, and on
the retranslation of monetary items,
are included in profit or loss for the
period. Exchange differences arising
on the retranslation of non-monetary
items carried at fair value are included
in profit or loss for the period except for
differences arising on the retranslation
of non-monetary items in respect of
which gains and losses are recognised
in equity. For such non-monetary items,
any exchange component of that gain
or loss is also recognised in equity. In
order to hedge its exposure to certain
foreign exchange risks, the Group
enters into forward contracts and
options (see below for details of the
Group’s accounting policies in respect
of such derivative financial instruments).
For the purpose of presenting
consolidated financial statements,
the assets and liabilities of the
Group’s foreign operations (including
comparatives) are expressed in Sterling
using exchange rates prevailing on
the balance sheet date. Income and
expense items (including comparatives)
are translated at the average exchange
rates for the period, unless exchange
rates fluctuated significantly during that
period, in which case the exchange
rates at the dates of the transactions
are used. Exchange differences arising,
if any, are classified as equity. Such
translation differences are recognised in
profit or loss in the period in which the
foreign operation is disposed of.
Government grants
Government grants relating to property,
plant and equipment are treated
as deferred income, and released
to profit or loss over the expected
useful lives of the assets concerned.
Other government grants, including
those towards staff training costs, are
recognised in profit or loss over the
periods necessary to match them with
the related costs and are deducted in
reporting the related expense.
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Significant Accounting Policies
Retirement benefit costs
(a) Defined contribution schemes
Payments to defined contribution
retirement benefit plans are charged as
an expense as they fall due. Payments
made to state managed retirement
benefit schemes are dealt with as
payments to defined contribution plans
where the Group’s obligations under
the plans are equivalent to those arising
in a defined contribution retirement
benefit plan.
(b) Defined benefit schemes
Typically defined benefit plans define
an amount of pension benefit that an
employee will receive on retirement,
usually dependent on one or more
factors such as age, years of service
and compensation.
The liability recognised in the Balance
Sheet in respect of defined benefit
pension plans is the present value of
the defined benefit obligation at the
end of the reporting period less the
fair value of plan assets. The present
value of the defined benefit obligation
is determined by discounting the
estimated future cash outflows using
interest rates of high quality corporate
bonds that are denominated in the
currency in which the benefits will be
paid, and that have terms to maturity
approximating to the terms of the
related pension obligation.
Actuarial gains and losses arising
from experience adjustments and
changes in actuarial assumptions are
charged or credited to equity in other
comprehensive income in the period
in which they arise, net of the related
deferred tax.
Administrative expenses incurred
by the Trustees in connection with
managing the Group’s pension
schemes are recognised in the
Consolidated Income Statement.
Taxation
Income tax expense represents the
sum of the tax currently payable and
deferred tax.
The tax currently payable is based on
taxable profit for the year. Taxable profit
differs from profit as reported in the
income statement because it excludes
items of income or expense that are
taxable or deductible in other years and
it further excludes items that are never
taxable or deductible. The Group’s
liability for current tax is calculated
using tax rates that have been enacted
or substantively enacted by the balance
sheet date.
Deferred tax is recognised on
differences between the carrying
amounts of assets and liabilities in
the financial statements and the
corresponding tax bases used in the
computation of taxable profit, and are
accounted for using the balance sheet
liability method. Deferred tax liabilities
are generally recognised for all taxable
temporary differences and deferred
tax assets are recognised to the
extent that it is probable that taxable
profits will be available against which
deductible temporary differences can
be utilised. Such assets and liabilities
are not recognised if the temporary
difference arises from goodwill or from
the initial recognition (other than in a
business combination) of other assets
and liabilities in a transaction that
affects neither the taxable profit nor the
accounting profit.
In respect of IFRS 16 leases, each
lease is considered as a single
transaction in which the asset and
liability are linked so that there is no
net temporary difference at inception
and subsequently deferred tax is
recognised on the net temporary
difference arising on settlement of the
liability and the amortisation of the right
of use asset plus the finance charge on
the lease liability.
Deferred tax liabilities are recognised
for taxable temporary differences
arising on investments in subsidiaries
and associates, and interests in joint
ventures, except where the Group
is able to control the reversal of the
temporary difference and it is probable
that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax
assets is reviewed at each balance
sheet date and reduced to the extent
that it is no longer probable that
sufficient taxable profits will be available
to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax
rates that are expected to apply in
the period when the liability is settled
or the asset realised. Deferred tax is
charged or credited to profit or loss,
except when it relates to items charged
or credited to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right to set off current tax
assets against current tax liabilities and
when they relate to income taxes levied
by the same taxation authority and the
Group intends to settle its current tax
assets and liabilities on a net basis.
Property, plant and equipment
Land and buildings held for use in
the production or supply of goods
or services, or for administrative
purposes, are stated in the balance
sheet at their deemed cost, being
the fair value at the date of adoption
of IFRS, less any subsequent
accumulated depreciation and
subsequent accumulated impairment
losses. Depreciation on buildings is
charged to profit or loss.
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Other fixed assets are stated at cost
less accumulated depreciation and
any accumulated impairment losses.
Depreciation is charged so as to write
off the cost or valuation of assets,
other than land and properties under
construction, less any anticipated
residual value, over their estimated
useful lives.
Assets held under finance leases are
depreciated over their expected useful
lives on the same basis as owned
assets or, where shorter, the term of
the relevant lease. The expected useful
lives of assets are:
Buildings: 50 years
Plant and equipment: 3 to 20 years
Fixtures and equipment: 3 to 20 years
Motor vehicles: 4 to 5 years
Sampling assets: 2 to 5 years
The gain or loss arising on the disposal
or retirement of an item of property,
plant and equipment is determined
as the difference between the sales
proceeds and the carrying amount of
the asset and is recognised in profit
or loss.
Sampling assets consist of a variety of
product samples and sample books,
as well as point of sale stands. The
group places these assets with retail
customers for the purpose of helping
to generate future consumer sales, and
therefore sales for the Group. Sampling
assets are included within the category
‘Fixtures, vehicles and equipment’ as
shown in note 11.
Intangible assets
(i) Intangible assets acquired in
a business combination
Intangible assets acquired in a business
combination and recognised separately
from goodwill are initially recognised at
their fair value at the acquisition date,
which is regarded as their cost.
Subsequent to initial recognition,
intangible assets acquired in a business
combination are reported at cost
less accumulated amortisation and
accumulated impairment losses, on the
same basis as intangible assets that
are acquired separately.
(ii) Amortisation of intangible assets
Amortisation is charged to the income
statement on a straight-line basis over
the estimated useful lives of intangible
assets. The expected useful lives of
intangible assets are:
Customer relationships: 10 to 20 years
Brand names: 20 to 35 years
Developed technology: 4 years
Amortisation commences from the date
the intangible asset becomes available
for use.
(iii) Derecognition of intangible assets
An intangible asset is derecognised on
disposal, or when no future economic
benefits are expected from use or
disposal. Gains or losses arising from
derecognition of an intangible asset,
measured as the difference between
the net disposal proceeds and the
carrying amount of the asset, are
recognised in profit or loss when the
asset is derecognised.
(iv) Impairment of tangible and
intangible assets
At each balance sheet date, the
Group reviews the carrying amounts
of its tangible and intangible assets
to determine whether there is any
indication that those assets have
suffered an impairment loss. If any
such indication exists, the recoverable
amount of the asset is estimated in
order to determine the extent of the
impairment loss (if any). Where it is not
possible to estimate the recoverable
amount of an individual asset, the
Group estimates the recoverable
amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of
fair value less costs to sell and value
in use. In assessing value in use,
the estimated future cash flows are
discounted to their present value using
a pre-tax discount rate that reflects
current market assessments of the time
value of money and the risks specific to
the asset.
If the recoverable amount of an asset
(or cash-generating unit) is estimated
to be less than its carrying amount,
the carrying amount of the asset
(cash-generating unit) is reduced to its
recoverable amount. An impairment
loss is recognised immediately in profit
or loss, unless the relevant asset is
carried at a revalued amount, in which
case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss
subsequently reverses, the carrying
amount of the asset (cash-generating
unit) is increased to the revised
estimate of its recoverable amount, but
so that the increased carrying amount
does not exceed the carrying amount
that would have been determined had
no impairment loss been recognised for
the asset (cash-generating unit) in prior
years. A reversal of an impairment loss
is recognised immediately in profit or
loss, unless the relevant asset is carried
at a revalued amount, in which case
the reversal of the impairment loss is
treated as a revaluation increase.
Inventories
Inventories are stated at the lower of
cost and net realisable value. Cost
comprises direct materials and, where
applicable, direct labour costs and
those overheads that have been
incurred in bringing the inventories to
their present location and condition.
Cost is calculated using the weighted
average method. Net realisable value
represents the estimated selling price
less all estimated costs of completion
and costs to be incurred in marketing,
selling and distribution.
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Significant Accounting Policies
Business growth fund loan and
share option
The Group’s fully subordinated £10m
2021 loan facility with the Business
Growth Fund (‘BGF’) includes a
redemption premium of £2.1m payable
in 2019 and a warrant owned by the
BGF to acquire 3,730,000 shares in
Victoria PLC at 57.2p per share (figures
adjusted for the five for one share split
effective 12 September 2016). This
facility has been accounted for using
split accounting to recognise separate
debt and equity components.
The warrant was redeemed in
November 2017. During the year,
payment of the BGF redemption
premium was deferred from December
2019 to December 2021.
The debt component is recognised on
the date of inception or modification
at the fair value of a similar liability
that does not have an equity
conversion option. The equity element
is recognised as the difference
between the fair value of the financial
instrument as a whole and the fair
value of the debt component. Any
directly attributable transaction costs
are allocated to the equity and debt
components in proportion to their initial
carrying amounts.
Subsequently, the debt component is
measured at amortised cost using the
effective interest rate method.
In September 2017 the terms of the
BGF loan agreement were modified.
The changes to the loan agreement
were determined to give rise to a
substantial modification, and as such
has been accounted for under IFRS9
‘extinguishment accounting’.
In adopting extinguishment accounting
the Group has:
• De-recognised the existing liability and
recognised a new liability at fair value.
• Recognised a gain or loss equal
to the difference between the
carrying value of the old liability and
the fair value of the new liability.
The unamortised element of the
transactions costs from the original
loan have also been included in the
determination of the gain or loss.
• Calculated a new effective interest
rate for the modified liability which will
be used in future periods.
In November 2017 the BGF exercised
the share option in full, acquiring
3,730,000 shares. Following the issue
of the shares in the period, the equity
component was transferred from other
reserves to share premium.
Share-based payments
The equity settled share based
incentive programme allows certain
Group employees to exchange growth
shares issued in the intermediate
holding company Victoria Midco
Holdings Limited into Ordinary Shares
in Victoria PLC of equivalent value. The
fair value of the growth shares is based
on growth in the share price of Victoria
PLC above a hurdle, and is measured
using an appropriate valuation model
(Black-Scholes or Monte Carlo) at
grant date. The fair value is spread over
the vesting period, representing the
Company’s best estimate of the time
in which the participant will exchange
growth shares for Ordinary Shares
in the Company, with the charge to
the income statement recognised
as an employee expense, and a
corresponding increase in equity.
Acquisition related performance
plan charge
As part of the acquisition of Keraben
Grupo S.A.U., the senior management
team of the business invested in a
new incentive structure under Victoria
ownership. This investment has
been structured through the holding
company of Keraben, Kinsan Trade
S.L, within which there are 82,093
B ordinary shares owned by certain
individuals. The fair value of the B
shares is linked to the future operating
profit performance of Keraben over a
five year period.
The shares are considered to have no
value other than through redemption
in cash and redemption is based on
EBITDA performance and not linked to
share price. Due to this along with the
nature of the leaver provisions within
the contractual terms of the B shares,
notwithstanding that the incentive
structure is linked to the acquisition
of Keraben, this is accrued for and
held within short-term liabilities. The
expected uplift in fair value is spread
over the five year term.
Exceptional items
Operating costs which are material
by virtue of their size or incidence and
are not expected to be recurring are
disclosed as exceptional items.
Non-underlying items
Non-underlying items are material non-
trading income and costs and non-
underlying finance costs as defined
by the Directors. They are disclosed
separately in the Consolidated Income
Statement where in the opinion of
the Directors such disclosure is
necessary in order to fairly present
the results for the period. Determining
the presentation of an item as non-
underlying is considered to be a
significant judgement in the preparation
of the annual report.
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Non-underlying items comprise:
FINANCE COSTS
OPERATING INCOME AND
COSTS
(a) Acquisition-related performance
plan charge
Charge relating to the accrual of
expected liability under the acquisition-
linked performance plan with the
Keraben senior management team,
the liability of this scheme can go up
or down based on their performance
and customary leaver provisions apply.
Given this plan is linked directly to the
acquisition, the related charges are
treated as non-underlying.
(b) Non-cash share incentive
plan charge
A share-based long-term incentive
plan was put in place for senior
management in April 2018. This plan is
based on share price performance over
a five year period, and is redeemable
through the issue of Victoria PLC
shares only. Given the non-cash nature
of this scheme and the fact that any
expected share issue is accounted
for in the assessment of fully diluted
earnings per share, the corresponding
IFRS2 charge is treated as a non-
underlying cost. See note 5 for further
details of the scheme.
(c) Amortisation of acquired
intangibles
The amortisation of intangible assets
arising from business combinations is
non–cash in nature and, unlike other
assets, is not expected to result in a
future capital cost to the business in
relation to replacement or renewal.
(a) Release of prepaid finance costs
Certain one-off costs in relation to
arrangement of new debt facilities
are held on the balance sheet
against the relevant debt liability and
amortised over the life of the facility. On
refinancing of facilities, any outstanding
prepaid costs are released to the
income statement as the previous
facility is extinguished and treated as a
non-underlying finance cost.
(b) Underwriting fees and costs
relating to previous bank
facilities
Fees paid in relation to an underwritten
bank facility that was obtained to
provide certainty around the refinancing
process in July-2019 plus deferred
costs relating to the previous bank
facilities and refinancing process. The
nature of these costs are non-recurring
and not considered to form part of
the underlying performance of the
business.
(c) Fair value adjustment to notes
redemption option
Any fair value adjustment to embedded
derivates is shown as a non-underlying
financial item.
(d) Unsecured loan redemption
premium credit
During the year, payment of the BGF
redemption premium was deferred
from December 2019 to December
20021, resulting in a one off income.
As such , this has been treated as a
non-underlying financial income.
(e) Unwinding of present value of
deferred and contingent earn-out
liabilities
Contingent consideration in respect of
acquisitions is measured under IFRS
3, initially at fair value discounted for
the time value of money. Subsequently,
the present value is reassessed to
unwind the time value of money. Such
adjustments are non-cash in nature
and are not considered to form part
of the underlying performance of the
business.
Deferred consideration in respect
of acquisitions is measured under
IFRS 3 at amortised cost. Such
adjustments are non-cash in nature
and are not considered to form part
of the underlying performance of the
business.
(f) Other adjustments to present
value of contingent earn-out
liabilities
Any changes to contingent earn-
outs arising from actual and forecast
business performance are reflected
as other adjustments to present value
of contingent earn-out liabilities. Such
adjustments are non-cash in nature
and are not considered to form part
of the underlying performance of the
business.
(g) Mark-to market adjustments on
foreign exchange contracts
The mark to market valuation of
forward foreign exchange contracts
is entirely dependent on closing
exchange and interest rates at the
balance sheet date, and therefore
not considered to form part of
the underlying performance of the
business.
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Significant Accounting Policies
(h) Translation differences on foreign
(i) Assets held at amortised cost
currency loans
The impact of exchange rate
movements on foreign currency
loans presented in Sterling within the
balance sheet of the Company or of its
consolidated UK subsidiaries is treated
as a non-underlying finance cost.
FINANCIAL INSTRUMENTS
(a) Financial assets
The Group’s financial assets fall into the
categories discussed below, with the
allocation depending on the purpose
for which the asset was acquired.
Although the Group occasionally uses
derivative financial instruments in
economic hedges of currency rate risk,
it does not hedge account for these
transactions.
Unless otherwise indicated, the
carrying amounts of the Group’s
financial assets are a reasonable
approximation of their fair values.
The Group derecognises a financial
asset only when the contractual rights
to the cash flows from the asset expire;
or it transfers the financial asset and
substantially all the risks and rewards of
ownership of the asset to another entity.
They arise principally through the
provision of goods and services to
customers (e.g. trade receivables) and
deposits held at banks but may also
incorporate other types of contractual
monetary asset. They are initially
recognised at fair value plus transaction
costs that are directly attributable
to the acquisition or issue and
subsequently carried at amortised cost
as reduced by appropriate allowances
for estimated unrecoverable amounts.
The effect of discounting on these
financial instruments is not considered
to be material.
The group makes use of a simplified
approach to accounting for trade and
other receivables and records the loss
allowance as lifetime expected credit
losses. These are expected shortfalls in
contractual cash flows, considering the
potential for default at any point during
the lifetime of the financial instrument.
The group uses its historical experience,
external indicators and forward-looking
information to calculate expected credit
loss using a provision matrix.
The group oversees impairment of
trade receivables on a collective
basis as they possess shared credit
risk characteristics and they have
been grouped on the number of days
overdue. See note 14 for an analysis
of how the impairment requirements of
IFRS9 have been applied.
Assets held at amortised cost in the
company includes loans issued to
other group companies. They are
initially recognised at fair value less
transaction costs that are directly
attributable and subsequently at
amortised cost reduced by appropriate
allowances for credit losses.
For loans with other group companies
that are repayable on demand,
expected credit losses are based on
the assumption that repayment of the
loan is demanded at the reporting date
in accordance with IFRS 9.
For other loans with group companies
where the credit risk is deemed to be
low a 12-month expected credit loss is
recognised in accordance with IFRS 9.
(ii) Fair value through profit or loss
This category comprises “in the
money” foreign exchange derivatives
and interest rate swaps to the extent
that they exist (see (b)(ii) for “out of the
money” derivatives). They are carried
in the balance sheet at fair value with
changes in fair value recognised in the
income statement.
The fair value of the Group’s foreign
exchange derivatives is measured
using quoted forward exchange rates
and yield curves derived from quoted
interest rates matching maturity of the
contracts.
(b) Financial liabilities
The Group classifies its financial
liabilities into one of two categories
depending on the purpose for which
the liability was incurred. Although
the Group uses derivative financial
instruments in economic hedges
of currency risk, it does not hedge
account for these transactions.
Unless otherwise indicated, the
carrying amounts of the Group’s
financial liabilities are a reasonable
approximation of their fair values.
The Group derecognises financial
liabilities when, and only when, the
Group’s obligations are discharged,
cancelled or they expire.
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(i) Financial liabilities measured at
amortised cost
These liabilities include the
following items:
• Trade payables and other short-
term monetary liabilities, which
are initially recognised at fair
value and subsequently carried at
amortised cost.
• Bank borrowings and loan notes
are initially recognised at fair value
net of any transaction costs directly
attributable to the issue of the
instrument. Such interest bearing
liabilities are subsequently measured
at amortised cost. Interest is
recognised as a finance expense in
the income statement.
• Deferred, non-contingent
consideration payable in relation
to acquisitions, which is initially
recognised at fair value and
subsequently carried at amortised
cost.
(ii) Fair value through profit or loss
These liabilities include the following
items:
• “Out of the money” foreign exchange
derivatives and interest rate swaps
to the extent that they exist (see (a)(ii)
for “in the money” derivatives). They
are carried in the balance sheet at
fair value with changes in fair value
recognised in finance income or
expense. Other than these derivative
financial instruments, the Group does
not have any liabilities held for trading
nor has it designated any financial
liabilities as being at fair value
through profit or loss.
The methods used for calculating
the fair value of the Group’s interest
rate and foreign exchange derivatives
have been described in (a)(ii) above.
• Contingent consideration payable
in relation to acquisitions, which
are carried in the balance sheet at
fair value with changes in fair value
recognised in finance income or
expense.
(c) Share capital
The Group’s Ordinary shares are
classified as equity instruments. Share
capital includes the nominal value
of the shares. Any share premium
attaching to the shares are shown as
share premium.
(d) Embedded derivatives
The Group recognises an embedded
derivate separate from the host
contract where the economic
characteristics and risks of the
embedded derivative are not closely
related to those of the host liability
contract and the host financial liability
contract itself is not measured at
fair value through profit or loss. The
embedded derivative is bifurcated
and reported at fair value at inception,
with gains and losses recognised on
financial assets/ liabilities at fair value
through profit or loss. The host financial
liability contract will continue to be
accounted for in accordance with
the appropriate accounting standard.
The carrying amount of an embedded
derivative is reported in the same
balance sheet line items as the host
financial liability contract.
INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
ADOPTED FOR THE FIRST TIME
IN THE YEAR
There were no new standards or
amendments to standards adopted
for the first time this year that had
a material impact on the results for
the group, with the exception of the
adoption of IFRS 16 ‘Leases’ – this
impact is discussed further below:
IFRS16 ‘LEASES’
The Group adopted IFRS16 on 31
March 2019, applying the Standard’s
modified retrospective approach and
therefore the prior year comparative
figures in these financial statements
have not been restated as a
consequence of adopting IFRS 16 for
the first time this period. The Group
has also applied the practical expedient
in IFRS16 to not reassess whether a
contract is, or contains, a lease at the
date of initial application.
The Group’s results have been
impacted by the adoption of IFRS
16, which introduces a single, on-
balance sheet lease accounting model
for lessees. Previously, the Group
recognised operating lease expenses
on a straight-line basis over the term of
the lease, and recognised assets and
liabilities only to the extent that there
was a timing difference between actual
lease payments and the expense
recognised. A lessee now recognises a
right-of-use asset representing its right
to use the underlying asset and a lease
liability representing its obligation to
make lease payments.
At the start of the current accounting
period, on 31 March 2019, the Group
recognised an initial right-of-use asset
of £56.1m and liability of £57.3m. The
lease liability on transition has been
calculated based on the net present
value of the future expected capital
payments under the group’s lease
obligations discounted at the group’s
incremental borrowing rate as at 31
March 2019. The right of use asset
has been calculated based on the
lease liability adjusted for prepaid and
accrued lease payments as at 31
March 2019. The weighted average
lessee’s incremental borrowing rate
applied to lease liabilities recognised
in the statement of financial position at
the date of initial application is 3.8%.
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Significant accounting policies
As a result of adopting IFRS 16, Group PBT for the period was adversely impacted by £1.0m. Charges relating to operating
leases (£10.9m), which previously were recognised on a straight-line basis have been replaced with a depreciation charge
(£9.3m) to the right-of-use asset, plus an interest expense (£2.6m) representing the unwinding of discount on the lease
liability. The interest follows a logarithmic profile resulting in a higher initial charge, and reduces over the period of the lease.
This change in treatment has no impact on the cash flows of the business.
The key effects on the current year’s consolidated income statement and balance sheet can be summarised as follows:
Income statement
Underlying EBITDA
Underlying depreciation and amortisation of IT software
Exceptional and non-underlying items in operating profit
Operating profit
Net finance costs
Profit before tax
Taxation
Profit for the period
Balance Sheet
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Translation reserve
Share capital and other reserves
Total equity
2020 on a
consistent
basis with
2019
£m
107.2
(31.7)
(83.6)
(8.0)
(55.0)
(63.0)
(4.2)
(67.2)
659.4
486.3
1,145.7
(249.3)
(634.8)
(884.2)
261.6
6.5
255.1
261.6
Effect of
IFRS 16
£m
As reported
this year
£m
10.9
(9.3)
–
1.5
(2.5)
(1.0)
–
(1.0)
77.2
–
77.2
(9.4)
(68.8)
(78.1)
(1.0)
(0.6)
(0.4)
(1.0)
118.1
(41.0)
(83.6)
(6.5)
(57.6)
(64.0)
(4.2)
(68.2)
736.6
486.3
1,222.9
(258.7)
(703.6)
(962.3)
260.6
5.9
254.6
260.6
There are recognition exemptions for short term leases and leases of low-value items and the group has decided to make
use of these exemptions.
Future adoption of international financial reporting standards
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing
standards have been published by the IASB but are not yet effective and have not been applied early to the Group. These
standards are not expected to have a material impact on the results for the Group.
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Notes to the accounts
1. SEGMENTAL INFORMATION
The Group is organised into three operating divisions: the sale of soft flooring products in UK & Europe; ceramic tiles in UK
& Europe and the sale of soft flooring products in Australia. The entities that comprise each division are combined into one
reporting segment on the basis that they share economic characteristics.
Geographical segment information for revenue, operating profit and a reconciliation to entity net profit is presented below.
Income statement
Revenue
Underlying operating profit
before movement in credit
loss provision
Movement in credit loss
provision
Non-underlying
operating items
Exceptional goodwill
impairment
Other exceptional
operating items
Operating (loss) / profit
Underlying net finance
costs
Translation difference on
foreign currency loans
Fair value adjustment to
notes redemption option
Other non-underlying
finance costs
Loss before tax
Tax
(Loss) / profit from
discontinued operations
Loss for the period
52 weeks ended 28 March 2020
52 weeks ended 30 March 2019
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
282.0
243.9
95.6
–
621.5
272.9
193.9
100.0
–
566.8
21.7
51.5
5.8
(1.9)
77.1
17.0
48.3
6.9
(1.7)
70.5
(1.7)
(1.0)
(0.1)
–
(2.8)
(0.1)
(0.1)
(0.1)
–
(0.3)
(3.8)
(18.8)
(1.7)
(6.6)
(30.9)
(5.1)
(17.7)
(2.0)
(1.1)
(25.9)
–
(50.0)
–
–
(50.0)
–
–
–
–
–
(1.0)
3.7
15.2
(14.6)
(0.7)
3.3
(1.9)
0.1
(7.4)
(4.7)
(10.4)
(6.5)
4.4
25.8
(2.4)
2.4
(5.9)
(8.7)
(26.3)
(13.0)
(7.3)
(10.9)
(64.0)
(4.2)
(2.0)
(70.2)
(20.4)
23.9
(13.1)
(3.6)
–
(11.0)
(3.8)
(4.2)
0.1
(7.9)
Management information is reviewed on a segmental basis to operating profit.
During the year, no single customer accounted for 10% or more of the Group’s revenue. Inter-segment sales in the year and
in the prior year between the UK & Europe and Australia were immaterial.
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Notes to the accounts
1. SEGMENTAL INFORMATION (CONTINUED)
The Group’s revenue for the period was split geographically as follows:
Revenue
UK & other European countries
Spain
Italy
Australia
Materially all revenue within ‘UK & other European countries’ relate to the UK.
52 weeks
ended 28
March 2020
£m
52 weeks
ended 30
March 2019
£m
282.0
209.3
34.6
95.6
621.5
272.9
167.9
26.0
100.0
566.8
Balance sheet
As at 28 March 2020
As at 30 March 2019
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Australia
£m
Central
£m
Total
£m
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Australia
£m
Central
£m
Total
£m
274.8
717.0
78.2
152.9
1,222.9
233.1
634.6
75.0
41.9
984.6
(124.3)
150.5
(255.2)
461.8
(26.3)
51.9
(556.5)
(403.6)
(962.3)
260.6
(94.8)
138.3
(159.7)
474.9
(20.8)
54.2
(389.4)
(347.5)
(664.7)
319.9
Total Assets
Total
Liabilities
Net Assets
The Group’s non-current assets as at 28 March 2020 were split geographically as follows:
Non-current assets
UK & other European countries
Spain
Italy
Australia
Materially all non-current assets within ‘UK & other European countries’ relate to the UK.
As at 28
March 2020
£m
As at 30
March 2019
£m
178.4
432.6
86.1
39.5
736.6
129.7
451.7
44.7
35.6
661.7
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1. SEGMENTAL INFORMATION (CONTINUED)
Other segmental information
52 weeks ended 28 March 2020
52 weeks ended 30 March 2019
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
Depreciation and amortisation
of IT software (including
depreciation of right-of-use
lease assets)
Amortisation of acquired
intangibles
19.6
16.8
4.7
24.3
18.6
35.4
4.5
1.7
6.2
–
40.9
12.5
11.1
2.7
– 26.3
–
–
25.0
65.9
4.7
17.2
16.1
27.2
1.7
4.4
– 22.5
– 48.8
52 weeks ended 28 March 2020
52 weeks ended 30 March 2019
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
UK &
Europe
Soft
Flooring
£m
UK &
Europe
Ceramic
Tiles
£m
Unallocated
central
expenses
£m
Total
£m
Australia
£m
13.1
16.9
2.7
(0.5)
(0.1)
(0.1)
0.3
0.7
12.9
17.5
–
2.6
–
–
32.7
20.1
19.5
4.5
– 44.1
(0.7)
(0.4)
(0.1)
(0.2)
–
(0.7)
0.1
1.1
0.2
0.5
–
0.1
0.8
0.1
33.1
19.9
19.9
4.3
0.1 44.2
Capex – PPE
(incl. finance lease / HP)
Disposals of property, plant
and equipment
Capex – intangibles
(incl. finance lease / HP)
Total capital expenditure
(cash-flow)
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Notes to the accounts
2. EXCEPTIONAL AND NON-UNDERLYING ITEMS
Exceptional items
(a) Acquisition and disposal related costs
(b) Reorganisation costs
(c) Bond issue and related structuring costs
(d) Negative goodwill arising on acquisition
(e) Pension adjustment
(f) Gain on sale of investment property
Total exceptional items before goodwill impairment
(g) Exceptional goodwill impairment
Total exceptional items
Non-underlying items
(h) Acquisition-related performance plan charge
(i) Non-cash share incentive plan charge
(j) Amortisation of acquired intangibles
2020
£m
(2.2)
(3.5)
–
5.8
–
–
0.1
(50.0)
(49.9)
–
(5.9)
(25.0)
(30.9)
2019
£m
(1.8)
(12.7)
(7.3)
–
(0.4)
1.8
(20.4)
–
(20.4)
(1.5)
(1.9)
(22.5)
(25.9)
All exceptional items are classified within administrative expenses.
(a) Professional fees in connection with prospecting, completing acquisitions and disposals during the period.
(b) Various fees, redundancy and other one-off costs in relation to synergy projects and performance improvement
programmes from the previous period that were completed in the year.
(c) One-off advisory, legal and structuring costs incurred in the prior year.
(d) Negative goodwill arising on consolidation of subsidiaries acquired during the period, achieved through favourable
bilateral negotiations.
(e) Guaranteed Minimum Pension one-off equalisation charge on the sole defined benefit pension scheme in the Group
(within Interfloor) in the prior year.
(f) Gain on the sale of property held as an investment in the prior year.
(g) One-off goodwill impairment charge, see note 9 for further details.
(h) Charge relating to the accrual of expected liability under the acquisition-linked performance plan with the Keraben senior
management team in the prior year.
(i) Non-cash, IFRS2 share-based payment charge in relation to the long-term management incentive plan that was put into
place in April 2018. During the year some of the participants exited the scheme, resulting in a one-off accelerated charge.
(j) Amortisation of intangible assets, primarily brands and customer relationships, recognised on consolidation as a result of
business combinations.
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3. FINANCE COSTS
Underlying finance items
Interest on bank facilities and notes
Interest on unsecured loans
Interest payable on Hire Purchase and Finance Leases
Interest income
Total interest on loans and notes
Amortisation of prepaid finance costs on loans and notes
Unwinding of discount on right-of-use lease liabilities
Net interest expense on defined benefit pensions
Non-underlying finance items
(a) Release of prepaid finance costs
(b) Underwriting fees and costs relating to previous bank facilities
(c) Fair value adjustment to notes redemption option
(d) Unsecured loan redemption premium credit
(e) Unwinding of present value of deferred and contingent earn-out liabilities
(f) Other adjustments to present value of contingent earn-out liabilities
(g) Mark to market adjustments on foreign exchange forward contracts
Non-underlying interest costs before translation difference on foreign currency loans
(h) Translation difference on foreign currency loans
2020
£m
2019
£m
20.7
0.8
–
–
21.5
2.1
2.6
0.1
26.3
4.4
6.5
7.3
(0.2)
2.6
0.8
(3.2)
18.2
13.0
31.2
11.0
0.8
0.1
(0.4)
11.5
1.4
–
0.2
13.1
3.1
–
–
–
2.9
4.3
0.7
11.0
3.6
14.6
(a) Non-cash charge relating to the release of prepaid costs on previous bank facilities.
(b) Fees paid in relation to an underwritten bank facility that was obtained to provide certainty around the recent refinancing
process plus deferred costs relating to the previous bank facilities and refinancing process.
(c) Fair value adjustment to embedded derivative representing the early redemption option within the terms of the €500m
senior secured notes. See note 16 for further details.
(d) Unsecured loan redemption premium credit – Non-cash credit relating to the £2.1 million redemption premium on the
BGF loan and option. During the year it was agreed with the BGF to defer payment from December 2019 to December
2021, resulting in a credit to the income statement.
(e) Non-cash costs relating to the revaluation of deferred consideration and contingent earn-outs relating to historical
business acquisitions. Deferred consideration is measured at amortised cost, while contingent consideration is measured
under IFRS 3 at fair value. Both are discounted for the time value of money. The present value is then remeasured at
each half year and in relation to the appropriateness of the discount factor and the unwind of this discount.
(f) Non-cash changes to contingent earn-outs arising from actual and forecast business performance are reflected as other
adjustments to present value of contingent earn-out liabilities on historical business acquisitions.
(g) Non-cash fair value adjustments on foreign exchange forward contracts.
(h) Net impact of exchange rate movements on third party and intercompany loans.
See financial review for further details of these items.
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Notes to the accounts
4. PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
After charging / (crediting):
Net foreign exchange losses
Depreciation of property, plant and equipment (see Note 11)
Depreciation of right-of-use lease assets (see Note 11)
Amortisation of intangible assets (see Note 10)
Staff costs (see Note 5)
Cost of inventories recognised as an expense
Profit on sale of fixed assets
Government grants (see Note 25)
Operating lease rentals
Auditor’s remuneration
Fees payable to the Company's Auditor in respect of audit services:
The audit of the Group consolidated accounts
The audit of the Company's subsidiaries pursuant to legislation
Total audit fees
Audit-related assurance services
Tax compliance services
Taxation advisory services
Services relating to corporate finance transactions (either proposed or entered into) by or on behalf of the
Company or any of its associates
Total non-audit fees
2020
£m
0.6
30.3
10.2
25.5
123.2
341.2
0.2
(0.5)
0.9
2020
£m
0.12
0.49
0.61
0.04
0.08
0.07
0.22
0.41
5. STAFF COSTS
Wages and salaries
Social security costs
Share-based employee remuneration (including accelerated IFRS 2
charge)
Other pension costs
Group
Company
2020
£m
96.7
16.7
5.9
3.9
123.2
2019
£m
88.2
13.8
1.9
3.8
107.7
2020
£m
0.8
0.1
5.9
–
6.8
2019
£m
0.1
25.8
–
22.8
107.7
282.1
0.1
(0.7)
9.2
2019
£m
0.07
0.42
0.49
0.04
0.08
0.08
0.16
0.36
2019
£m
0.7
0.1
1.1
–
1.9
Directors’ remuneration is included as part of the staff costs above. Directors’ remuneration is disclosed separately on page
30 of the Directors’ Report and forms part of these financial statements.
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5. STAFF COSTS (CONTINUED)
Average number employed (including executive directors of subsidiaries):
Directors
Sales and marketing
Production, logistics and maintenance
Finance, IT and administration
Share-based payment schemes
Group
Company
2020
67
513
2,566
264
3,410
2019
56
482
2,293
212
3,043
2020
2019
6
–
–
3
9
6
–
–
2
8
C Shares scheme
On 8 June 2017, the Group Finance Director, Michael Scott, was awarded 5,350 C shares and certain other employees
1,070 C shares in connection with a share-based incentive plan. The C shares were exercisable between 1 July 2019 and
30 June 2020 at an exercise price of £6.75. None of the C shares were exercised in the year ended 28 March 2020 or in the
period to 30 June 2020, at which point the C shares lapsed.
I Shares scheme
On 10 April 2018, a new long-term incentive plan was introduced to incentivise senior employees. The plan involves the
issue of up to 100,000 ordinary shares in Victoria Midco Holdings Limited.
The Plan will operate for a five year period, with the value of the Incentive Shares linked to cumulative Total Shareholder
Return (“TSR”) delivered each year above a hurdle, being the current market capitalisation of the Company increased
annually by 20% p.a. on a compounding basis (i.e. within each annual period shareholders have to receive a return of 20%
before the participants benefit from the Plan).
At the end of the Plan, the Incentive Shares can be exchanged for new ordinary shares in Victoria, (at the then prevailing
share price averaged over the month prior to exchange). While the Company has the ability to buy back Incentive Shares
after 3 years (it is not anticipated that this right will be exercised), participants can only choose to exchange at the end of the
full five-year period of the Plan. Customary good and bad leaver provisions will apply.
On 10 April 2018, the Group issued 73,855 I shares (‘I1 Shares’). On 1 April 2019, a further 4,350 I shares were issued (‘I2
Shares’).
To fair value the share awards, a Monte Carlo model has been applied as this is considered the most appropriate model
when TSR performance conditions exist in a share scheme. The key inputs and assumptions applied in this model for the I1
and I2 Shares respectively are set out in the table below:
Inputs and Assumptions
Grant date
Victoria PLC share price at grant
Expected term
Risk free rate (continuously compounded)
Expected dividend yield
Expected volatility
I1 Shares
I2 Shares
10 April 2018
£7.31
5.4 years
1.10%
0.0%
26.00%
1 April 2019
£4.52
4.4 years
0.80%
0.0%
30.00%
Based on this model, the aggregate fair value of the I1 and I2 Shares was assessed to be £9.8m and £0.4m respectively. The
fair value of the I shares are charged to the income statement over the vesting period of the scheme, which is expected to be
5.4 years for the I1 shares and 4.4 years for the I2 shares, with a corresponding credit to equity as the charge is non-cash.
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Notes to the accounts
5. STAFF COSTS (CONTINUED)
The expected volatility assumption has been determined with consideration to the historical share price volatility over a
period commensurate with the expected maximum term of the I shares and the historical volatility of industry comparator
companies.
During the year ended 28 March 2020, a number of the participants exited the scheme, including certain of the Company’s
directors who were awarded I1 Shares. The I1 shares cancelled during the period are detailed in the table below:
Name
Geoffrey Wilding
Philippe Hamers
Michael Scott
Other employees
I1 Shares
At 30-Mar-19
I1 Shares
cancelled
I1 Shares
forfeited
I1 Shares
At 28-Mar-20
19,230
11,540
9,230
33,855
73,855
19,230
11,540
9,230
10,775
50,775
–
–
–
7,690
7,690
–
–
–
15,390
15,390
In the year ended 28 March 2020, none of the I1 shares were exercisable. Of the 73,855 I1 shares issued, 50,775 have
been cancelled and 7,690 shares forfeited in respect of a leaver, with 15,390 I1 shares remaining as at 28 March 2020.
For the participants exiting the share scheme in the period, the remaining share based payment charge allocated to those
participants has been accelerated and charged in full to the income statement in the year. For the participant who left
the Group in the year, this has been accounted for as a forfeiture of the shares and therefore the cumulative share based
payment charge recognised up to the point of leaving has been reversed and credited to the income statement in the year.
In the year ended 28 March 2020, none of the I2 shares were exercisable and all of the I2 shares issued remained in place as
at 28 March 2020.
6. TAXATION
Current tax charge / (credit)
– Current year UK
– Current year overseas
– Adjustments in respect of prior years
Deferred tax
– Credit recognised in the current year
– Adjustments in respect of prior years
– Effect of rate change
Total tax
2020
£m
2019
£m
–
8.7
–
8.7
(4.9)
(0.1)
0.5
(4.5)
4.2
0.1
6.7
(0.1)
6.7
(2.7)
–
0.2
(2.5)
4.2
Corporation tax is calculated at the applicable percentage of the estimated assessable profit for the year in each respective
geography. This is 19% in the UK; 25% in the Netherlands and Spain; 27.9% in Italy; 30% in Australia; and 29% in Belgium.
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6. TAXATION (CONTINUED)
The tax charge for the year can be reconciled to the profit per the income statement as follows:
Loss before tax from continuing operations
Tax credit at the UK corporation tax rate of 19% (2019: 19%)
Tax effect of items that are not deductible / non-taxable in determining
taxable profit
Effect of different tax rates of subsidiaries operating in other jurisdictions
Deferred consideration fair value remeasurement non taxable
Effect of change in rate
Effect of change in future tax rate enacted on deferred tax recognised on
intangible assets
Tax losses not recognised as a deferred tax asset
Adjustments to prior periods
Tax charge and effective tax rate
2020
2019
£m
(64.0)
(12.2)
13.6
2.9
0.2
0.6
(0.8)
–
(0.1)
4.2
%
19.0
(21.2)
(4.5)
(0.3)
(0.9)
1.2
–
0.1
(6.6)
£m
(3.8)
(0.7)
1.3
1.0
1.1
0.2
0.6
0.8
(0.1)
4.2
7. EARNINGS PER SHARE
The calculation of the basic, adjusted and diluted earnings / loss per share is based on the following data:
Loss attributable to ordinary equity holders of the parent entity
Exceptional and non-underlying items:
Amortisation of acquired intangibles
Other non-underlying items
Exceptional goodwill impairment
Other exceptional items
Release of prepaid finance costs
Fair value adjustment to notes redemption option
Translation difference on foreign currency loans
Other non-underlying finance items
Tax effect on adjusted items where applicable
(Loss) / earnings for the purpose of basic and adjusted earnings per share
Loss attributable to ordinary equity holders of the parent entity from
discontinued operations
(Loss) / earnings for the purpose of basic and adjusted loss / earnings per
share
Basic
2020
£m
(68.2)
Adjusted
2020
£m
(68.2)
–
–
–
–
–
–
–
–
–
(68.2)
(2.0)
(70.2)
25.0
5.9
50.0
(0.1)
4.4
7.3
13.0
6.5
(8.2)
35.6
–
35.6
Basic
2019
£m
(8.0)
–
–
–
–
–
–
–
–
–
(8.0)
0.1
(7.9)
%
19.0
(35.1)
(27.0)
(29.7)
(5.4)
(16.2)
(21.6)
2.5
(113.5)
Adjusted
2019
£m
(8.0)
22.5
3.4
–
20.4
3.1
–
3.6
7.9
(9.7)
43.2
–
43.2
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Notes to the accounts
7. EARNINGS PER SHARE (CONTINUED)
Weighted average number of shares
Weighted average number of shares for the purpose of basic and adjusted earnings per share
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
2020
Number
of shares
(000’s)
125,398
–
125,398
2019
Number
of shares
(000’s)
122,739
64
122,803
The potential dilutive effect of the share options has been calculated in accordance with IAS 33 using the average share
price in the period.
The Group’s earnings / loss per share are as follows:
Earnings / loss per share from continuing operations
Basic loss per share
Diluted loss per share
Basic adjusted earnings per share
Diluted adjusted earnings per share
Loss per share from discontinued operations
Basic loss per share
Diluted loss per share
Earnings / loss per share
Basic loss per share
Diluted loss per share
Basic adjusted earnings per share
Diluted adjusted earnings per share
2020
Pence
(54.38)
(54.38)
28.42
28.42
(1.60)
(1.60)
(55.97)
(55.97)
28.42
28.42
2019
Pence
(6.44)
(6.44)
35.27
35.25
–
–
(6.44)
(6.44)
35.27
35.25
8. RATES OF EXCHANGE
Australia – A$
Europe – €
2020
2019
Average
Year end
1.8685
1.1442
2.0202
1.1152
Average
1.8049
1.1344
Year end
1.8377
1.1624
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9. GOODWILL
Cost
At 1 April 2018
Arising on acquisition
Exchange movements
At 30 March 2019
At 31 March 2019
Arising on acquisition
Exchange movements
At 28 March 2020
Accumulated impairment
At 30 March 2019
Exceptional impairment in the year
At 28 March 2020
Net Book Value
At 28 March 2020
At 30 March 2019
£m
188.1
40.1
(4.5)
223.7
223.7
11.0
6.3
241.0
–
(50.0)
(50.0)
191.0
223.7
Goodwill is attributed to the businesses identified below for the purpose of testing impairment. These businesses are the
lowest level at which goodwill is monitored and represent cash generating units (“CGUs”). The CGUs within a reported
segment share similar characteristics to each other and to the other businesses within that segment.
Previously CGUs were determined to be individual acquisitions which had been made historically, however in the current
year these were reassessed in light of an increasing amount of integration, both in terms of operations and management.
Consequently, the cash flows of each individual business are no longer distinguishable and as a result, the CGUs assessed
in 2020 are aligned to the group reporting divisions, with the exception of the ‘UK & Europe – Ceramic Tiles division’. This
division is split between a CGU representing the Spanish operations and a CGU representing the Italian operations, which
are distinct from one another in terms of geography and, to an extent, management.
The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
Cash Generating Units
UK & Europe – Soft Flooring
UK & Europe – Ceramic Tiles (Spain)
UK & Europe – Ceramic Tiles (Italy)
Australia
2020
£m
47.0
107.4
23.7
12.9
191.0
2019
£m
44.0
151.0
14.5
14.2
223.7
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired.
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Notes to the accounts
9. GOODWILL (CONTINUED)
The recoverable amounts of the goodwill have been determined based on value in use calculations. The key assumptions
for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices
and direct costs during the period. These assumptions have been sensitised as part of current year testing procedures. The
discount rates used of: 12% for the ‘UK & Europe – Soft Flooring’ CGU; 13.5% for the Spanish part of the ‘UK & Europe
– Ceramic Tiles’ CGU; 13.25% for the Italian part of the ‘UK & Europe – Ceramic Tiles’ CGU; and 13.9% for the ‘Australia’
CGU are estimated using pre-tax weighted-average costs of capital that reflect current market assessments of the time value
of money, based on risks specific to the markets in which the businesses operate. The primary reasons for the difference in
rates between the divisions are the differences in underlying risk-free rates and cost of debt across the different geographies.
The calculation uses cash flow projections extrapolated from the budget for the year ending March 2021. At the end of the
discrete forecast period, a terminal value is calculated based on terminal growth rate assumptions of: 2.25% for the ‘UK &
Europe – Soft Flooring’ CGU; 1.3% for the Spanish part of the ‘UK & Europe – Ceramic Tiles’ CGU; 1.75% for the Italian part
of the ‘UK & Europe – Ceramic Tiles’ CGU; and 2.75% for the ‘Australia’ CGU.
Primarily as a result of the Covid-19 pandemic and the associated uncertainties, we have reduced our forecast assumptions
and the recoverable amount of all of the CGUs were reduced. As a consequence, the ‘UK & Europe – Ceramic Tiles (Spain)
CGU was assessed to have a recoverable amount of £478.3m, being its value in use. In calculating the value in use, a
discount rate of 13.5% and a terminal growth rate of 1.3% were applied. As the value in use was lower than the carrying
value of its assets, an impairment to goodwill of £50.0m was recognised, and charged through the income statement during
the period. If a discount rate of 0.5% higher had been used, the resulting impairment implied would have been greater by
£19.9m; whereas if a discount rate of 0.5% lower had been used, the resulting impairment implied would have been lower
by £21.6m.
No reasonably possible changes in assumptions in the value in use calculations for the other CGUs would generate an
impairment.
Goodwill comprises intangible assets that do not qualify for separate recognition, in particular the existing workforce.
None of the goodwill is expected to be tax deductible.
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10. INTANGIBLE ASSETS
Group
Cost
At 1 April 2018
Additions
Business combinations
Exchange difference
At 30 March 2019
At 31 March 2019
Additions
Business combinations
Exchange difference
At 28 March 2020
Amortisation
At 1 April 2018
Charge for the period
Exchange difference
At 30 March 2019
At 31 March 2019
Charge for the period
Exchange difference
At 28 March 2020
Net book value
At 28 March 2020
At 30 March 2019
At 1 April 2018
Company
Cost
At 31 March 2019
Additions
At 28 March 2020
Amortisation
At 31 March 2019
Charge for the period
At 28 March 2020
Net book value
At 28 March 2020
At 30 March 2019
At 1 April 2018
www.victoriaplc.com
Customer
relationships
£m
Brand
names
£m
Other
acquired
intangibles
£m
IT
software
£m
178.9
–
47.1
(4.5)
221.5
221.5
–
20.1
6.1
247.7
15.7
18.0
(0.4)
33.3
33.3
19.1
0.4
52.8
194.9
188.2
163.2
44.2
–
11.3
(1.1)
54.4
54.4
–
4.1
1.8
60.3
2.4
3.3
(0.1)
5.6
5.6
4.7
0.1
10.4
49.9
48.8
41.9
4.8
–
–
(0.1)
4.7
4.7
–
–
0.1
4.8
0.4
1.2
–
1.6
1.6
1.2
–
2.8
2.0
3.1
4.4
1.0
0.7
0.1
(0.1)
1.7
1.7
1.1
0.2
0.1
3.1
0.1
0.3
–
0.4
0.4
0.5
0.1
1.0
2.1
1.3
0.9
Group
Total
£m
228.9
0.7
58.5
(5.8)
282.3
282.3
1.1
24.4
8.1
315.9
18.6
22.8
(0.5)
40.9
40.9
25.5
0.6
67.0
248.9
241.4
210.4
Customer
relationships
£m
Brand
names
£m
Other
acquired
intangibles
£m
IT
software
£m
Company
Total
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.4
–
0.4
0.1
0.1
0.2
0.2
0.3
0.2
0.4
–
0.4
0.1
0.1
0.2
0.2
0.3
0.2
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Notes to the accounts
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 April 2018
Additions
Transfers
Disposals
Business combinations
Exchange differences
At 30 March 2019
At 31 March 2019
Additions
Transfer of assets reclassified to right-of-use leases
Disposals
Business combinations
Divestments
Exchange differences
At 28 March 2020
Accumulated depreciation
At 1 April 2018
Charge for the period
Impairment
Disposals
Exchange differences
At 30 March 2019
At 31 March 2019
Charge for the period
Transfer of assets reclassified to right-of-use leases
Disposals
Divestments
Exchange differences
At 28 March 2020
Net Book Value
At 28 March 2020
At 30 March 2019
At 31 March 2018
The Company holds no property, plant and equipment.
Freehold
land and
buildings
£m
Plant and
machinery
£m
Fixtures,
vehicles and
equipment
£m
75.6
1.7
0.2
–
18.5
(2.3)
93.7
93.7
0.8
–
(0.1)
0.1
–
3.5
98.0
1.4
1.9
0.1
–
(0.4)
3.0
3.0
2.2
–
–
–
0.3
5.5
92.5
90.7
74.2
89.7
29.1
(0.3)
(5.4)
15.8
(3.7)
125.2
125.2
18.5
(4.7)
(6.1)
17.2
(0.5)
2.4
152.0
33.7
13.3
0.4
(4.9)
(2.2)
40.3
40.3
16.5
(3.3)
(5.6)
(0.4)
–
47.5
104.5
84.9
56.0
21.2
13.3
–
(6.5)
–
(0.2)
27.8
27.8
11.4
(1.2)
(11.5)
1.0
(1.2)
(0.3)
26.0
8.5
10.7
–
(6.3)
(0.1)
12.8
12.8
11.6
(0.5)
(11.5)
(1.0)
–
11.4
14.6
15.0
12.7
Total
£m
186.5
44.1
–
(11.9)
34.3
(6.2)
246.7
246.7
30.7
(5.9)
(17.7)
18.3
(1.7)
5.6
276.0
43.6
25.9
0.5
(11.2)
(2.7)
56.1
56.1
30.3
(3.8)
(17.1)
(1.4)
0.3
64.4
211.6
190.6
142.9
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11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
RIGHT OF USE ASSETS
Group
Cost
At 31 March 2019 being date of adoption of IFRS 16
Transfer of assets previously classed as finance leases
Business combinations
Additions
Exchange differences
At 28 March 2020
Accumulated depreciation
At 31 March 2019 being date of adoption of IFRS 16
Charge for the period
Exchange differences
At 28 March 2020
Net Book Value
At 28 March 2020
At 31 March 2019 being date of adoption of IFRS 16
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
vehicles and
equipment
£m
48.2
–
16.6
8.2
(0.7)
72.3
–
6.5
(0.1)
6.4
65.9
48.2
0.1
1.4
1.1
0.2
–
2.8
–
0.7
–
0.7
2.1
1.5
7.8
0.7
0.3
4.6
–
13.4
–
3.0
(0.1)
2.9
10.5
8.5
Total
£m
56.1
2.1
18.0
13.0
(0.7)
88.5
–
10.2
(0.2)
10.0
78.5
58.2
The group took advantage of the exemptions available not to capitalise short-term leases with a duration of less than 12
months or low value leases with a total cash outflow of less than £5,000. These leases have therefore been treated as off-
balance sheet operating leases. The expense in the year relating to operating leases has been disclosed in note 4.
The related right-of-use lease liabilities and maturity analysis are presented in note 16.
Interest expense on right-of-use lease liabilities is disclosed in note 3.
The total cash outflow for right-of-use leases is disclosed in the consolidated cash flow statement.
Company
Cost
At 31 March 2019 being date of adoption of IFRS 16
At 28 March 2020
Accumulated depreciation
At 31 March 2019 being date of adoption of IFRS 16
Charge for the period
At 28 March 2020
Net Book Value
At 28 March 2020
At 31 March 2019 being date of adoption of IFRS 16
Capital expenditure authorised and committed at the period end:
Contracts placed
www.victoriaplc.com
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
vehicles and
equipment
£m
6.4
6.4
–
0.4
0.4
6.0
6.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2020
£m
0.5
Total
£m
6.4
6.4
–
0.4
0.4
6.0
6.4
2019
£m
1.7
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12. FIXED ASSET INVESTMENTS
Investment property
Investment in subsidiaries
Investment in associates
Group
Company
2020
£m
0.2
–
–
2019
£m
0.2
–
–
2020
£m
0.1
178.0
–
2019
£m
0.1
51.4
–
Note
(a)
(b)
(c)
(a) Investment property held in the Company’s prior year opening balance sheet relates to the legacy ownership of two
small areas of land in Kidderminster and the surrounding area, held at cost. One of the sites was sold in February 2019 for
£2,005,000, resulting in an exceptional gain on sale in the prior year.
The remainder of investment property in the Group’s opening balance sheet relates to properties obtained as part of the
acquisition of Keraben, held at their total fair value at the date of acquisition, and the fair value at 28 March 2020 of the
remaining properties is deemed to be materially unchanged from prior year.
(b) Victoria PLC owns directly or indirectly the whole of the allotted ordinary share capital of the following subsidiary companies.
The increase in the year represents: a capital contribution in Victoria Midco Holdings Limited (£123.4m); a capital increase in
Millennium Weavers NV (£1.7m); and the allocation of share-based payment charges to the relevant subsidiaries (£1.5m).
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12. FIXED ASSET INVESTMENTS (CONTINUED)
As at 28 March 2020
Victoria Midco Holdings Limited
Victoria Carpets Limited
Whitestone Carpets Holdings Limited
View Logistics Limited
Abingdon Flooring Limited
Alliance Flooring Distribution Limited
Distinctive Flooring Limited
Venture Floorcoverings Limited
Globesign Limited
Westex (Carpets) Limited
Interfloor Limited
Ezi Floor Limited
The Victoria Carpet Company Pty Limited
Primary Flooring Pty Limited
Quest Flooring Pty Ltd
Victoria Bidco BV
Avalon BV
GrassInc BV
Millennium Weavers N.V
Ceramiche Serra S.p.A
Kinsan Trade, S.L.
Keraben Grupo S.A.U
Sandover Investments, S.L.U
Ceramica Saloni, S.A.
Sanicova, S.L.
Saloni Portugal Materiais De Construcao LTDA
Saloni UK Limited
Saloni France S.A.S.
The Victoria Carpet Company Limited
Munster Carpets Limited
V-Line Carpets Limited
Carpet Line Direct Limited
Whitestone Weavers Limited
Thomas Witter Carpets Limited
Gaskell Mackay Carpets Limited
Interfloor Group Limited
Interfloor Operations Limited
Tacktrim Limited
Stikatak Limited
Flooring at Home Limited
Keraben Guatemala
Kerainvest S.L.
G-Tuft Limited
G-Tuft (2015) Limited
G-Tuft (Holdings) Limited
Iberoceramica S.L.U.
Estillon B.V
Estillon SARL
Estillon GMBH
Ascot Gruppo Ceramiche SRL
Country of
incorporation
and operation
Nature of
business
Ownership
England
England
England
England
England
England
England
England
England
England
England
England
Australia
Australia
Australia
The Netherlands
The Netherlands
The Netherlands
Belgium
Italy
Spain
Spain
Spain
Spain
Spain
Portugal
England
France
England
Ireland
England
England
England
England
England
England
England
England
England
England
Holding Company
Carpet distributor
Holding Company
Carpet distributor
Carpet manufacturer
Logistic Services
Flooring distributor
Carpet distributor
Holding Company
Carpet manufacturer
Underlay manufacturer
Underlay manufacturer
Carpet manufacturer
Underlay manufacturer
Carpet manufacturer
Holding Company
Artificial grass distributor
Artificial grass distributor
Carpet distributor
Ceramic tile manufacturer
Holding Company
Ceramic tile manufacturer
Holding Company
Ceramic tile manufacturer
Ceramic tile distributor
Ceramic tile distributor
Ceramic tile distributor
Ceramic tile distributor
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Guatemala Ceramic tile manufacturing services
Non-trading
Carpet manufacturer
Non-trading
Holding Company
Ceramic tile manufacturer
Underlay manufacturer
Underlay distributor
Underlay distributor
Ceramic tile manufacturer
Spain
England
England
England
Spain
The Netherlands
France
Germany
Italy
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
www.victoriaplc.com
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Notes to the accounts
12. FIXED ASSET INVESTMENTS (CONTINUED)
(c) Victoria PLC indirectly holds investments in the following associate companies.
As at 28 March 2020
Keraben Bolivia, S.R.L.
Easylay Systems Limited
The aggregate result for the associated undertakings during the period was immaterial.
Due to the immaterial nature of these investments, further detailed disclosures have been omitted.
13. INVENTORIES
Inventories held at year-end
Raw materials
Work-in-progress
Finished goods
Percentage
ownership
50%
20%
2020
£m
34.9
4.0
126.5
165.4
2019
£m
30.5
3.8
106.2
140.5
During the year to 28 March 2020, the total movement in stock provisions resulted in a charge to the income statement of
£570,000 (2019 credit: £996,000).
The Company held no inventories at either year-end. There is no material difference between the balance sheet value of
inventories and their replacement cost.
14. TRADE AND OTHER RECEIVABLES
Amounts falling due within one year:
Group
Company
Trade debtors
Amounts owed by subsidiaries
Other debtors
Prepayments and accrued income
Amounts falling due after one year:
Amounts owed by subsidiaries
2020
£m
123.6
–
16.6
3.9
144.1
2019
£m
100.9
–
10.4
4.7
116.0
2020
£m
–
33.3
2.4
0.1
35.8
Group
Company
2020
£m
–
–
2019
£m
–
–
2020
£m
481.3
481.3
2019
£m
–
34.3
–
0.1
34.4
2019
£m
577.9
577.9
Where intercompany loans have been formally documented, interest is charged on amounts owed by subsidiaries to the
Company at market rates. Specific repayment terms attached to all intercompany loans were formally documented during the
year and the classification between amounts falling due within one year and more than one year are reflective of these terms.
The Company does not expect credit losses arising from subsidiaries to be a material amount.
Current trade debtors not considered to be overdue represent amounts due from customers that are not overdue in
accordance with the specific credit terms agreed with those customers. The expected credit loss arising on current debtors
not overdue is considered to be immaterial.
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The above amounts are stated net of an allowance (net of VAT) of £6,649,000 (2019: £3,890,000) made for doubtful debts
and expected credit losses. The movement of this allowance account during the year is summarised below:
Opening balance at 31 March 2019
Acquisition opening balances
Increase in provisions
Recovered against provisions
Exchange differences
Closing balance at 28 March 2020
2020
£m
3.9
–
2.7
(0.1)
0.1
6.6
2019
£m
2.0
3.4
0.3
(1.5)
(0.3)
3.9
In light of Covid 19, the Group reassessed its potential future credit risk across its key customer categories as at 28 March
2020. This resulted in an increase in credit loss provision of £2.8m (2019: £0.3m). An analysis of the age of trade receivables
can be seen in the table below:
Current
1-30 days overdue
31-60 days overdue
> 60 days overdue
Total
2020
£m
74.3
33.1
9.9
12.8
130.1
2019
£m
67.0
24.0
7.0
6.8
104.8
The main factors in assessing the appropriate allowance for doubtful debt and credit losses are the age of the balances held
and the profile of the customers. Furthermore, specific trade receivables are written-off when there is considered to be little
likelihood of recovering the debt. The Directors consider that the carrying amount of all receivables, including those impaired,
approximates to their fair value. Further information concerning credit risk, along with an analysis of liquidity and market risks
is provided in Note 26.
15. TRADE AND OTHER PAYABLES
Amounts falling due within one year:
Trade creditors
Amounts due to subsidiaries
Deferred and contingent earn-out liabilities
Other creditors
Accruals
Acquisition-related performance plan liability
Deferred income
Amounts falling due after one year:
Deferred and contingent earn-out liabilities
Deferred income
Acquisition-related performance plan liability
Other creditors
www.victoriaplc.com
Group
Company
2020
£m
152.3
–
31.9
33.3
17.0
7.4
0.1
242.0
Group
2020
£m
7.1
2.1
1.5
6.8
17.5
2019
£m
102.4
–
16.6
28.9
13.6
7.1
–
168.6
2019
£m
12.5
2.0
1.4
3.5
19.5
2020
£m
–
5.5
–
3.9
5.3
–
–
14.7
2019
£m
–
–
–
1.0
1.5
–
–
2.5
Company
2020
£m
2019
£m
–
–
–
–
–
–
–
–
–
–
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Notes to the accounts
15. TRADE AND OTHER PAYABLES (CONTINUED)
Deferred and contingent earn-out liabilities (Group and Company) are in connection with the acquisitions of Ezi Floor Limited,
Grass Inc B.V., Ceramiche Serra S.p.A, Estillon B.V, Iberoceramica S.L.U. & Ascot Gruppo Ceramiche SRL. Under IFRS
13 Fair Value Measurement this is classified under the fair value hierarchy as Level 3. The deferred and contingent earn-out
liabilities falling due after one year of £7.1m is split as follows: between one to two years £6.2m and between two to five
years £0.9m.
Deferred income relates to government grants as shown in Note 25.
Acquisition-related performance plan liability relates to the expected liability under the acquisition-linked performance plan
with the Keraben senior management team. As part of the Keraben acquisition terms, the senior management team were
required to invest €8.3m into a performance plan linked to the financial results of the target business over a five year period.
The value of this plan can go up or down from the original €8.3m subscription, depending on performance. Customary
leaver provisions apply during the five year period. This investment by management was rolled over from their exit value
under a scheme with the previous private equity owners.
16. OTHER FINANCIAL LIABILITIES
Amounts falling due within one year:
Bank overdrafts
Unsecured loans
Finance leases and hire purchase agreements
Obligations under right-of-use leases
Amounts falling due after one year:
Senior secured debt (net of prepaid finance costs):
– due between one and two years
– due between two and five years
Unsecured loans:
– due between one and two years
– due between two and five years
Finance leases and hire purchase agreements:
– due between one and two years
– due between two and five years
Obligations under right-of-use leases:
– due between one and two years
– due between two and five years
– due over five years
Group
Company
2020
£m
2.1
2.8
–
11.8
16.7
2019
£m
6.2
3.3
0.9
–
10.4
2020
£m
–
–
–
0.3
0.3
Group
Company
2020
£m
–
527.8
12.8
–
–
–
12.4
24.5
31.1
608.6
2019
£m
380.4
1.8
–
9.4
0.4
0.3
–
–
–
392.3
2020
£m
–
527.1
11.6
–
–
–
0.4
1.6
3.8
544.5
2019
£m
–
2.1
–
–
2.1
2019
£m
379.2
–
–
9.4
–
–
–
–
–
388.6
Senior debt as at 28 March 2020 relates to €500m of 2024 senior secured notes, on which a coupon of 5.25% is paid bi-
annually. The notes were issued in two tranches during the year, with the first tranche (€330m) issued at par and the second
(€170m) at a 5% premium. As such, on issuance of the second tranche the Company received incremental proceeds of
€8.5m, which was recognised within the opening value of the liability, and is reduced to €nil at maturity when only the par
value (€170m) is repayable. As at 28 March 2020 this premium is recognised on the balance sheet at £7.5m. The fair value
of the liability as at 28 March was €388.6m, which has been determined based on a quoted price in an active market.
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16. OTHER FINANCIAL LIABILITIES (CONTINUED)
Attached to the notes is an early repayment option, which has been identified as an embedded derivative asset, separately
valued from the host contract. Changes in the Group’s credit rating and market pricing of the notes would have an impact
on the value of the option for early repayment. The redemption price of the repayment option is the par value of the notes
plus any accrued interest, plus the following premia: within the first two years 2.625% plus a make-whole of the fair value of
interest that would otherwise have been payable in that period; in the third year 2.625%; in the fourth year 1.3125%; in the
fifth year 0%.
This option has been valued based on the contractual redemption terms and measuring the Group’s forward assessment
of the notes’ market value based on an option pricing model. The value of the derivative asset at inception of the first and
second tranches of the notes was £2.0m and £5.0m, respectively. The value of the liability recognised for the notes was
increased by a corresponding amount, which is then reduced to par (€500m) at maturity in 2024 using a effective interest
rate method.
As a result, as at 28 March 2020 there is a total liability recognised of £452.9m in relation to notes with a par value of
£448.4m (€500m) repayable in 2024, which includes an additional liability of £6.8m arising as a result of the embedded
derivative recognition and £7.5m relating to the premium on the second tranche. The value of the derivative asset at the year
end was £nil, and therefore an associated non-cash charge was recognised through the income statement for the period of
£7.3m.
Additionally, the Group has a variable rate £75m multi-currency revolving credit facility maturing in 2024, which at the year
end was drawn in full. The prior year €445m term loan provided by Barclays & HSBC was refinanced in the current year with
the senior notes.
The unsecured loans relate to a loan of £1.5m owed to the vendors of the G-tuft business, and the debt component of
the BGF loan on which the coupon is 6%. During the year, payment of the BGF redemption premium was deferred from
December 2019 to December 2021, resulting in a non-underlying financial income of £0.2m (see Note 3).
The Group’s net debt position as at 28 March 2020 was £378.6m (2019: £339.9m), before inclusion of right-of-use lease
liabilities and netting off prepaid finance costs. This figure includes the above £6.8m in relation to the early repayment option
on the notes and £7.5m relating to the 5% issue premium on the second tranche of the notes. The contractual maturities of
financial liabilities and average effective interest rates are set out in Note 26.
17. FINANCIAL ASSETS AND LIABILITIES
The financial assets of the Group comprised:
At 28 March 2020
At 30 March 2019
Financial
assets
held at fair
value
through
profit and loss
£m
Assets not
within the
scope of
IFRS 9
£m
Amortised
cost
£m
Financial
assets
held at fair
value
through
profit and loss
£m
Assets not
within the
scope of
IFRS 9
£m
Amortised
cost
£m
Total
£m
51.9
1.8
109.1
13.5
0.5
176.8
137.8
–
–
314.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
51.9
1.8
109.1
13.5
0.5
176.8
3.9
165.4
141.7
165.4
2.4
2.4
–
169.3
2.4
486.3
11.8
1.7
47.3
5.3
0.3
66.4
105.5
–
–
171.9
–
–
–
–
–
–
–
–
–
–
Total
£m
11.8
1.7
47.3
5.3
0.3
66.4
–
–
–
–
–
–
10.5
140.5
116.0
140.5
–
151.0
–
322.9
79
Group
Cash
Sterling
US Dollars
Euros
Australian Dollars
New Zealand Dollars
Current assets
Trade and other receivables
Current inventories
Forward foreign exchange
contracts
Current assets
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Notes to the accounts
17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
The financial liabilities of the Group comprised:
At 28 March 2020
At 30 March 2019
Other
financial
liabilities
at
amortised
cost
£m
Financial
liabilities
held at fair
value
through
profit and loss
£m
Liabilities
not
within the
scope of
IFRS 9
£m
2.0
–
0.1
2.1
–
–
–
–
–
–
–
–
Other
financial
liabilities at
amortised
cost
£m
Financial
liabilities
held at fair
value
through
profit and loss
£m
Liabilities
not
within the
scope of
IFRS 9
£m
1.1
0.1
5.0
6.2
–
–
–
–
–
–
–
–
Total
£m
2.0
–
0.1
2.1
Total
£m
1.1
0.1
5.0
6.2
202.2
22.5
9.9
234.6
139.8
12.5
8.3
160.6
7.4
–
–
–
11.8
2.8
226.3
7.2
–
–
–
–
68.0
527.8
12.8
615.8
842.1
–
–
–
–
–
–
22.5
6.7
–
–
–
–
–
–
–
6.7
29.2
–
–
–
–
7.4
–
–
–
7.1
–
–
0.9
–
–
9.9
11.8
2.8
258.7
–
3.3
157.3
2.1
16.0
1.5
71.2
6.3
–
–
–
–
81.1
91.0
1.5
71.2
6.3
–
68.0
527.8
12.8
703.6
962.3
4.6
–
–
–
0.7
–
382.2
9.4
396.9
554.2
–
–
0.9
–
–
–
13.4
11.4
–
–
–
–
–
–
–
11.4
24.8
–
–
–
–
7.1
–
0.9
0.9
–
–
8.3
–
3.3
179.0
2.0
18.1
1.4
66.1
7.8
–
–
–
–
77.4
85.7
1.4
66.1
7.8
0.7
–
382.2
9.4
485.7
664.7
Group
Overdraft
Sterling
US Dollars
Euro
Current liabilities
Trade and other payables
Acquisition-related
performance plan liability
Current tax liabilities
Forward foreign exchange
contracts
Finance leases and hire
purchase
Obligations under right-of-use
leases
Unsecured loans
Current liabilities
Non-current liabilities
Trade and other payables
Acquisition-related
performance plan liability
Deferred tax liabilities
Retirement benefit obligations
Finance leases & hire purchase
Obligations under right-of-use
leases
Senior secured debt
Unsecured loans
Non-current liabilities
Total liabilities
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a
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F
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O
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Total
£m
4.4
1.0
13.6
–
19.0
17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
The financial assets of the Company comprised:
At 28 March 2020
At 30 March 2019
Financial
assets
held at fair
value
through
profit and
loss
£m
Assets not
within the
scope of
IFRS 9
£m
Financial
assets
held at fair
value
through
profit and loss
£m
Assets not
within the
scope of
IFRS 9
£m
Amortised
cost
£m
Total
£m
Amortised
cost
£m
41.5
0.2
68.1
5.6
115.4
33.3
–
148.7
481.3
–
481.3
630.0
–
–
–
–
–
–
2.4
2.4
–
–
–
2.4
–
–
–
–
–
41.5
0.2
68.1
5.6
115.4
4.4
1.0
13.6
–
19.0
0.1
33.4
34.3
–
0.1
–
1.4
1.4
1.5
2.4
151.2
481.3
1.4
482.7
633.9
–
53.3
577.9
–
577.9
631.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
34.4
–
0.1
–
0.2
0.2
0.3
–
53.4
577.9
0.2
578.1
631.5
Company
Cash
Sterling
US Dollars
Euros
Australian Dollars
Current assets
Trade and other receivables
Forward foreign exchange
contracts
Current assets
Non-current assets
Amounts owed by subsidiaries
Deferred tax assets
Non-current assets
Total financial assets
The financial liabilities of the Company comprised:
At 28 March 2020
At 30 March 2019
Other
financial
liabilities
at
amortised
cost
£m
Financial
liabilities
held at fair
value
through
profit and
loss
£m
Liabilities
not
within the
scope of
IFRS 9
£m
14.7
–
–
0.3
–
15.0
5.8
527.1
11.6
544.5
559.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
financial
liabilities at
amortised
cost
£m
Financial
liabilities
held at fair
value
through
profit and loss
£m
Liabilities
not
within the
scope of
IFRS 9
£m
1.5
–
–
–
2.1
3.6
–
379.2
9.4
388.6
392.2
–
–
1.0
–
–
1.0
–
–
–
–
1.0
–
–
–
–
–
–
–
–
–
–
–
Total
£m
14.7
–
–
0.3
–
15.0
5.8
527.1
11.6
544.5
559.5
Total
£m
1.5
–
1.0
–
2.1
4.6
–
379.2
9.4
388.6
393.2
81
Company
Current liabilities
Trade and other payables
Current tax liabilities
Forward foreign exchange
contracts
Obligations under right-of-use
leases
Unsecured loans
Current liabilities
Non-current liabilities
Obligations under right-of-use
leases
Senior secured debt
Unsecured loans
Non-current liabilities
Total liabilities
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Notes to the accounts
17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three levels of fair value
hierarchy. The three levels are defined based on the observability of significant inputs to the measurement as follows:
• Level one: quoted prices in active markets for identical assets or liabilities
• Level two: inputs other than quoted prices included within Level one that are observable for the asset or liability, either
directly or indirectly
• Level three: unobservable inputs for the assets or liabilities
All financial assets and liabilities have been identified as Level one with the exception of:
• Forward foreign exchange contracts, which are Level two financial assets/liabilities and all expire within 12 months from
28 March 2020.
The Group has relied upon valuations performed by third party valuations specialists for complex valuations of the forward
exchange contracts. Valuation techniques have utilised observable forward exchange rates corresponding to the maturity of
the contract. The effects of non-observable inputs are not significant for forward exchange contracts.
• Contingent earn-out liabilities, which are Level three liabilities.
The fair value of the contingent earn-out liabilities arising from acquisitions is determined considering the value of estimated
future payments, discounted to present value. Payments are determined by mechanisms set out in each acquisition
agreement, and are generally based on EBITDA performance over a three to four year period. Estimated future payments
are calculated using financial projections based on operational budgets for the next 12 months and then applying growth
assumptions for future years as appropriate. Discount rates are reviewed annually for each acquisition, and range between
11.5% and 18.5%.
The most significant inputs, all of which are unobservable, are the estimated growth rates in future profits and the discount
rates applied. The estimated fair value increases if the estimated growth rates increase or the discount rates decrease. The
overall valuations are sensitive to both assumptions. The Board considers that changing the above unobservable inputs to
reflect other reasonably probable alternative assumptions would not result in a significant change in the estimated fair value.
There were no transfers between level one, level two and level three in 2020 or 2019.
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a
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a
n
F
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Capital
expenditure
£m
Acquisitions
£m
Other
non-cash
changes
£m
Exchange
movement
£m
At
28 March
2020
£m
–
–
–
–
–
–
–
–
–
(1.9)
(10.8)
1.1
–
1.1
–
–
–
–
(1.5)
–
(1.8)
(15.9)
–
–
–
0.9
0.7
1.2
(6.7)
(0.3)
(3.4)
(17.1)
(42.0)
2.4
–
176.8
(2.1)
2.4
174.7
–
–
–
–
–
(27.2)
–
(537.7)
–
–
–
0.7
(2.8)
(12.8)
(11.8)
(68.0)
–
–
(2.7)
–
9.9
17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
Analysis of net debt
Reconciliation of movements in the Group’s net debt position:
Group
Cash and cash equivalents
Bank overdraft
At
31 March
2019
£m
66.4
(6.2)
Cash flow
£m
106.9
4.1
Net cash and cash equivalents
60.2
111.0
Finance leases and hire purchase agreements:
– due in less than one year
– due in more than one year
Senior secured debt:
– due in less than one year
– due in more than one year
Unsecured loans:
– due in less than one year
– due in more than one year
Obligations under right-of-use leases:
– due in less than one year
– due in more than one year
Prepaid finance costs
Net debt including right-of-use lease liabilities, issue
premia and prepaid finance costs
(0.9)
(0.7)
–
–
(1.2)
(385.8)
–
(118.0)
(2.1)
(9.4)
–
–
3.6
1.1
–
9.0
–
9.0
(336.3)
12.1
(12.7)
(18.1)
(69.4)
(24.1)
(448.5)
The cashflows therein included represent the physical cash inflow received by the Group as a result of the refinancing
exercises in the period, the majority of which was directly paid by the new debt holders to the existing debt holders and
therefore did not represent a cash inflow for the company.
Group
Cash and cash equivalents
Bank overdraft
Net cash and cash equivalents
Finance leases and hire purchase agreements:
– due in less than one year
– due in more than one year
Senior secured debt:
– due in less than one year
– due in more than one year
Unsecured loans:
– due in less than one year
– due in more than one year
Reverse factoring facility acquired with Saloni:
– due in less than one year
Net debt
Prepaid finance costs
Net debt including prepaid finance costs
www.victoriaplc.com
At
31 March
2018
£m
Cash flow
£m
Capital
expenditure
£m
Acquisitions
£m
Other
non-cash
changes
£m
Exchange
movement
£m
At
30 March
2019
£m
54.0
(0.9)
53.1
(0.9)
(1.1)
(1.2)
(297.3)
–
(11.3)
–
(258.7)
3.6
(255.1)
9.9
(5.3)
4.6
0.9
–
–
(43.9)
–
–
13.4
(25.0)
4.5
(20.5)
–
–
–
–
(0.3)
–
–
–
–
–
(0.3)
–
(0.3)
3.6
–
3.6
(0.2)
–
–
(54.4)
–
–
(13.4)
(64.4)
–
(64.4)
–
–
–
(0.7)
0.7
–
–
(2.1)
1.9
–
(0.2)
(4.5)
(4.7)
(1.1)
–
(1.1)
–
–
–
9.8
–
–
–
8.7
–
8.7
66.4
(6.2)
60.2
(0.9)
(0.7)
(1.2)
(385.8)
(2.1)
(9.4)
–
(339.9)
3.6
(336.3)
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Notes to the accounts
17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
Senior secured debt and unsecured loans are disclosed in the table excluding prepaid finance costs.
The Group’s policy on Derivatives and Other Financial Instruments is set out in Note 26.
Reconciliation of movements in the Company’s net debt position:
Company
Cash and cash equivalents
Bank overdraft
At
31 March
2019
£m
19.0
–
94.4
–
Cash flow
£m
Capital
expenditure
£m
Acquisitions
£m
Net cash and cash equivalents
19.0
94.4
Senior secured debt:
– due in more than one year
Unsecured loans:
– due in less than one year
– due in more than one year
Obligations under right-of-use leases:
– due in less than one year
– due in more than one year
Prepaid finance costs
Net debt including right-of-use lease liabilities, issue
premia and prepaid finance costs
(382.8)
(120.2)
(2.1)
(9.4)
–
–
3.6
–
–
0.4
–
9.0
(371.8)
(16.4)
Other
non-cash
changes
£m
Exchange
movement
£m
At
28 March
2020
£m
–
–
–
2.0
–
115.4
–
2.0
115.4
(6.8)
(27.2)
(537.0)
2.1
(2.1)
(0.7)
(5.8)
(2.7)
–
–
–
–
–
–
(11.6)
(0.3)
(5.8)
9.9
(16.0)
(25.2)
(429.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The cashflows therein included represent the physical cash inflow received by the Company as a result of the refinancing
exercises in the period, the majority of which was directly paid by the new debt holders to the existing debt holders and
therefore did not represent a cash inflow for the company.
Company
Cash and cash equivalents
Bank overdraft
Net cash and cash equivalents
Senior secured debt:
– due in more than one year
Unsecured loans:
– due in less than one year
– due in more than one year
Net debt
Prepaid finance costs
Net debt including prepaid finance costs
At 31 March
2018
£m
Cash flow
£m
Capital
expenditure
£m
Acquisitions
£m
6.2
(12.9)
(6.7)
13.0
12.9
25.9
(293.0)
(45.2)
–
(11.3)
(311.0)
3.6
(307.4)
–
–
(19.3)
4.5
(14.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
non-cash
changes
£m
Exchange
movement
£m
At 30 March
2019
£m
–
–
–
(0.2)
–
(0.2)
19.0
–
19.0
(54.4)
9.8
(382.8)
(2.1)
1.9
(54.7)
(4.5)
(59.1)
–
–
9.6
–
9.6
(2.1)
(9.4)
(375.3)
3.6
(371.8)
Senior secured debt and unsecured loans are disclosed in the table excluding prepaid finance costs.
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17. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
Amounts falling due within one year:
Group
Company
Deferred earn-out liabilities
Contingent earn-out liabilities
Amounts falling due after one year:
Deferred earn-out liabilities:
– due between one and two years
– due between two and five years
Contingent earn-out liabilities:
– due between one and two years
– due between two and five years
Reconciliation of movement in contingent earn-out liabilities
Contingent earn-out liabilities as at 31 March 2019
Payments made during the period
Unwinding of present value
Other fair value adjustments
Business acquisitions
Exchange rate difference
Contingent earn-out liabilities as at 28 March 2020
2020
£m
9.4
22.5
31.9
Group
2020
£m
0.1
0.3
6.1
0.6
7.1
2019
£m
4.1
12.5
16.6
2019
£m
1.1
–
6.4
5.0
12.5
2020
£m
–
–
–
2019
£m
–
–
–
Company
2020
£m
2019
£m
–
–
–
–
–
–
–
–
–
–
Group
£m
Company
£m
23.9
(5.7)
2.5
0.8
6.9
0.8
29.2
–
(0.1)
–
0.1
–
–
–
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Notes to the accounts
18. OPERATING LEASE ARRANGEMENTS
At the balance sheet date, the Group and Company had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:
Minimum lease payments
Within one year
In the second to fifth years inclusive
After five years
Group
2020
£m
0.3
–
–
0.3
2019
£m
9.2
27.5
19.7
56.4
Company
2020
£m
–
–
–
–
2019
£m
0.5
2.2
5.4
8.1
Operating lease payments represent rentals payable by the Group and Company principally for vehicles and certain of its
properties. Leases of vehicles are usually negotiated for a term of 3-5 years and rentals are fixed for the term of the lease.
Leases of land and buildings are usually negotiated for 5-20 years.
Leases with a duration of over 12 months and a total cost of over £5,000 have been included within right-of-use assets
in accordance with IFRS 16, see Note 11. The adjustment has been applied from 31 March 2019 using the modified
retrospective approach and comparatives have not been restated. The commitment as at 30 March 2019 and the amount
capitalised as a lease liability on transition to IFRS 16 can be reconciled as follows:
Operating lease commitment as at 30 March 2019
Effect of discounting using the incremental borrowing rate
Effect of different lease conditions under IFRS 16
Right-of-use lease liability recognised on transition
Group
£m
Company
£m
56.4
(9.8)
10.7
57.3
8.1
(2.1)
0.4
6.4
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19. DEFERRED TAXATION
At 1 April 2018
Credit to income statement (see Note 6)
Deferred tax in relation to pension scheme
Deferred tax on intangible assets acquired
Adjustment for acquisitions in the year
Exchange adjustment
At 30 March 2019
At 31 March 2019
(Credit) / charge to income statement (see Note 6)
Deferred tax in relation to pension scheme
Deferred tax on intangible assets acquired
Exchange adjustment
At 28 March 2020
The provision for deferred taxation is as follows:
Fixed assets
Investment property
Tax losses
Deferred tax on intangible assets acquired
Deferred tax on defined benefit pension
Other timing differences
Group
£m
Company
£m
50.1
(2.5)
0.3
14.6
(0.7)
(1.5)
60.3
60.3
(4.5)
0.1
6.5
2.4
64.8
Group
Company
2020
£m
1.0
(0.1)
(3.0)
61.3
(1.2)
6.8
64.8
2019
£m
0.4
(0.1)
(1.9)
59.0
(1.3)
4.2
60.3
2020
£m
–
(0.1)
(1.3)
–
–
(1.4)
(0.2)
–
–
–
–
–
(0.2)
(0.2)
(1.2)
–
–
–
(1.4)
2019
£m
–
(0.1)
(0.1)
–
–
(0.2)
The provision is based on taxation rates of 19% in respect of balances relating to the UK businesses, 30% in respect of
balances relating to the Australian businesses, 25% in respect of balances relating to the Dutch businesses, 25% in respect
of balances relating to the Spanish business, 29% in respect of balances relating to the Belgian business, and 27.9% in
respect of balances relating to the Italian business.
Deferred tax assets and liabilities
The deferred tax balances shown on the balance sheet are:
Deferred tax liabilities
Deferred tax assets
Group
Company
2020
£m
71.2
(6.4)
64.8
2019
£m
66.1
(5.8)
60.3
2020
£m
–
(1.4)
(1.4)
2019
£m
–
(0.2)
(0.2)
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Notes to the accounts
20. RETIREMENT BENEFIT OBLIGATIONS
Defined contribution schemes
The Group operates a number of defined contribution pension schemes. The companies and the employees contribute
towards the schemes.
Contributions are charged to the Income Statement as incurred and amounted to £3,877,000 (2019: £3,831,000), of which
£2,245,000 (2019: £2,257,000) relates to the UK schemes. The total contributions outstanding at year-end were £nil (2019:
£nil).
Defined benefit schemes
The Group has two defined benefit schemes, both of which relate to Interfloor Limited.
Interfloor Limited sponsors the Final Salary Scheme (“the Main Scheme”) and the Interfloor Limited Executive Scheme (“the
Executive Scheme”) which are both defined benefit arrangements. The defined benefit schemes are administered by a
separate fund that is legally separated from the Group. The trustees of the pension fund are required by law to act in the
interest of the fund and of all relevant stakeholders in the scheme. The trustees of the pension fund are responsible for the
investment policy with regard to the assets of the fund.
The last full actuarial valuations of these schemes were carried out by a qualified independent actuary as at 31 July 2018.
The contributions made by the employer over the financial period were £136,000 (2019: £95,000) in respect of the Main
Scheme and £nil (2019: £126,000) in respect of the Executive Scheme.
Contributions to the Executive and Main Schemes are made in accordance with the Schedule of Contributions. Future
contributions are expected to be an annual premium of £136,000 in respect of the Main Scheme and £nil contributions
payable to the Executive Scheme. These payments are in line with the certified Schedules of Contributions until they are
reviewed on completion of the triennial valuations of the schemes as at 1 August 2021.
As both schemes are closed to future accrual there will be no current service cost in future years.
The defined benefit schemes typically expose the Company to actuarial risks such as: investment risk, interest rate risk and
longevity risk.
Investment risk
The present value of the defined benefit schemes’ liability is calculated using a discount rate determined by reference to high
quality corporate bond yields; if the returns on schemes’ assets are below this rate, it will create a scheme deficit. Due to the
long-term nature of the schemes’ liabilities, the trustees of the pension fund consider it appropriate that a reasonable portion
of the schemes’ assets should be invested in equity securities to leverage the return generated by the funds.
Interest risk
A decrease in the bond interest rate will increase the schemes’ liability but this will be partially offset by an increase in the
return on the plan’s debt investments.
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20. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan
participants both during and after their employment. An increase in the life expectancy of the schemes’ participants will
increase the schemes’ liability.
The present value of the defined benefit liabilities was measured using the projected unit credit method. The expected rates
of return on plan assets are determined by reference to relevant indices. The overall expected rate of return is calculated by
weighting the individual rates in accordance with the anticipated balance in the plan’s investment portfolio.
Principal actuarial assumptions (expressed as weighted averages) at the consolidated balance sheet date were as
follows:
Discount rate
Revaluation rate of deferred pensioners of CPI or 5% p.a. if less
Pension in payment increases of RPI or 5% p.a. if less
Pension in payment increases of CPI or 3% p.a. if less
Inflation (RPI)
Inflation (CPI)
2020
2.4%
2.0%
2.9%
1.8%
3.0%
2.0%
2019
2.3%
2.3%
3.1%
2.0%
3.3%
2.3%
The assumptions relating to longevity underlying the pension liabilities at the Consolidated Statement of Financial Position
date are based on 115% of the standard actuarial mortality tables and include an allowance for future improvements in
longevity. The assumptions are equivalent to expecting a 65 year-old to live for a number of years as follows:
(i) Current pensioner aged 65: 20.7 years (male), 23.1 years (female).
(ii) Future retiree (aged 45) upon reaching 65: 21.7 years (male), 24.2 years (female).
Amounts recognised in the consolidated income statement in respect of these defined benefit schemes are as follows:
Net interest expense
Curtailments / settlements
Past service cost
Components of defined benefit costs recognised in profit or loss
2020
£m
0.1
(0.1)
–
–
2019
£m
0.2
–
0.5
0.7
The net interest expense has been included within finance costs. The remeasurement of the net defined benefit liability is
included in the statement of comprehensive income. The past service cost relates to a GMP equalisation charge and has
been included within exceptional costs in administrative expenses.
Amounts recognised in the Consolidated Statement of Comprehensive Income are as follows:
The return on plan assets (excluding amounts included in net interest expense)
Actuarial gains arising from changes in demographic assumptions
Actuarial gains / (losses) arising from changes in financial assumptions
Actuarial gains arising from experience adjustments
Remeasurement of the net defined benefit liability
2020
£m
(1.5)
–
2.9
–
1.4
2019
£m
1.1
0.2
(1.1)
1.7
1.9
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Notes to the accounts
20. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
The amount included in the Consolidated Balance Sheet arising from the Group’s obligations in respect of its defined benefit
retirement benefit schemes is as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net liability arising from defined benefit obligation
Deferred tax applied to net obligation
Movements in the present value of defined benefit obligations in the period were as follows:
Opening defined benefit obligation
Interest cost
Remeasurement (gains)/losses:
Actuarial (gains) arising from changes in demographic assumptions
Actuarial (gains) and losses arising from changes in financial assumptions
Actuarial (gains) arising from experience adjustments
Benefits paid and expenses
(Gains) on Settlements/ curtailments
Past service costs
Closing defined benefit obligation
Movements in the fair value of plan assets in the period were as follows:
Opening fair value of plan assets
Interest income
Remeasurement gains:
The return on plan assets (excluding amounts included in net interest expense)
Contributions from the employer
Benefits paid and expenses
Closing fair value of plan assets
2020
£m
(28.4)
22.1
(6.3)
1.2
2020
£m
32.6
0.7
–
(0.1)
(2.9)
–
(1.8)
(0.1)
–
28.4
2020
£m
24.7
0.6
(1.5)
0.1
(1.8)
22.1
The major categories and fair values of plan assets at the end of the reporting period for each category are as follows:
Cash and cash equivalents
LDI
Equities
Property
Multi-Asset Credit Funds
Diversified Growth Funds
Closing fair value of plan assets
2020
£m
0.3
3.9
5.8
1.3
8.7
2.1
22.1
2019
£m
(32.5)
24.7
(7.8)
1.3
2019
£m
33.4
0.8
–
(0.2)
1.1
(1.7)
(1.4)
–
0.5
32.5
2019
£m
24.3
0.6
1.1
0.1
(1.4)
24.7
2019
£m
–
4.1
7.3
1.3
9.6
2.4
24.7
None of the fair values of the assets shown above include any of the employer’s own financial instruments or any property
occupied by, or other assets used by, the employer. All of the schemes assets have a quoted market price in an active
market.
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20. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
The actual return on plan assets was £973,000 (2019: £1,671,000).
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary
increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the
respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
If the discount rate decreased by 0.5% per annum, the defined benefit obligation would increase by 8.8%.
If the rate of inflation increases by 0.5% per annum, the defined benefit obligation would increase by 8.2%.
If the life expectancy increases by one year for both men and women, the defined benefit obligation would increase by
3.9%.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as
it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be
correlated.
In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the
projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined
benefit obligation liability recognised in the Consolidated Balance Sheet.
The Group expects to make a contribution of £136,000 (2019: £136,000) to the defined benefit schemes during the next
financial period.
21. SHARE CAPITAL
Allotted, called up and fully paid
Ordinary shares
2020
£m
2019
£m
6.3
6.3
The Company has one class of Ordinary shares which carry no right to fixed income.
Capital risk management
The Group considers its capital to comprise its Ordinary share capital, share premium, accumulated retained earnings and
net debt. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return
for its equity shareholders through a combination of capital growth and distributions.
In order to achieve this objective, the Group monitors its gearing to balance risks and returns at an acceptable level and
also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In
making decisions to adjust its capital structure to achieve these aims, either through altering its dividend policy, new share
issues, or the reduction of debt, the Group considers not only its short-term position but also its long-term operational and
strategic objectives.
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Notes to the accounts
22. RESERVES
(a) Retained earnings
Retained earnings for the Group as at 28 March 2020 were negative £42,900,000 (2019: £20,563,000).
The loss of the Company for the year determined in accordance with the Companies Act 2006 was £37,345,000 (2019: loss
of £8,954,000). The Company is exempt under Section 408 of the Companies Act 2006 from presenting its own Income
statement and Statement of Comprehensive Income.
(b) Foreign exchange reserve
The foreign exchange reserve for the Group as at 28 March 2020 was £5,900,000 (2019: £2,335,000), in respect of foreign
exchange differences on consolidation of overseas subsidiaries.
(c) Share premium
The share premium account for the Group as at 28 March 2020 was £288,700,000 (2019: £288,700,000), in respect of
premium received on the issuance of equity above the nominal value of the shares issued.
(d) Other reserves
Other reserves for the Group as at 28 March 2020 were £2,600,000 (2019: £1,951,000) and relate to share-based payment
charges (see further details in Note 5).
23. ACQUISITION OF SUBSIDIARIES
(a) Iberoceramica S.L.U.
On 6 August 2019 the Group acquired 100% of the equity of Iberoceramica S.L.U.
Operating from a site in Castellon, (near Valencia), Ibero is strategically close to the Group’s existing Spanish ceramics
manufacturers, Keraben and Saloni. Founded in 1958, it manufactures high quality porcelain ceramic flooring, which is
sold both domestically and internationally. It sells to a combination of wholesalers, retail groups, and independent stores
throughout Continental Europe, North America, and the Middle East.
The Group results for the 52 weeks ended 28 March 2020 include contribution from Ibero of €15.3m (£13.3m1) of revenue
and €0.6m (£0.5m1) of profit before tax (before amortisation of acquired intangibles and acquisition costs). If the acquisition
had been completed on the first day of the financial year Group revenue and profit before tax would have been higher by
€11.8m (£10.3m1) and €0.3m (£0.3m1) respectively.
1 Applying the average exchange rate over the financial year of 1.1442.
Consideration
The consideration for the acquisition comprises:
(i) Initial cash consideration of €9.4m (£8.6m2)
(ii) Contingent consideration of up to €6.2m (£5.7m2) dependent on sales volumes and other performance criteria
2 Applying the GBP to € exchange rate at the date of acquisition of 1.0864.
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23. ACQUISITION OF SUBSIDIARIES (CONTINUED)
Net Assets Acquired
Property, plant and equipment
Right of use lease assets
Trade and other receivables
Inventories
Trade and other payables
Obligations under right of use leases
Book value of net assets acquired
Fair value adjustment on fixed assets
Fair value adjustment on inventories
Intangible assets arising on acquisition (see Note 10)
Deferred tax liability on intangible assets acquired
Fair value of total identifiable net assets
Negative goodwill arising on acquisition (see Note 2)
Total consideration
Satisfied by:
Cash
Contingent consideration
Amounts
recognised at
acquisition
date
£m
8.1
14.2
0.1
12.1
(0.7)
(14.2)
19.6
(2.2)
(3.2)
7.4
(1.8)
19.8
(5.5)
14.3
8.6
5.7
14.3
Other than where fair value adjustments have been made, the book value of assets acquired is considered to approximate
their fair values. Gross trade receivables acquired are considered to equate to the fair value of contractually collectable cash
flows.
After fair value adjustments, negative goodwill of £5.5m is created on the consolidation of Ibero, which was taken to the
income statement in the period.
Transaction costs amounting to £0.5m relating to the acquisition have been recognised as an expense and included in
exceptional administrative expenses in the Group Income Statement.
(b) Ascot Gruppo Ceramiche S.R.L.
On 1 March 2020, Victoria PLC entered into an arrangement to lease the business and manufacturing facilities of Ascot for
seven years, with an associated option to purchase the business.
During the course of FY20, the Group explored opportunities to expand the production capacity for its Italian ceramic tiles
operations, where demand consistently exceeded the maximum manufacturing output of the existing business Ceramiche
Serra.
Operating in Sassuolo, Italy, Ascot is located close to Serra. It manufactures high quality porcelain ceramic flooring, which
is sold both domestically and internationally. It sells to a combination of wholesalers, retail groups, and independent stores
throughout Continental Europe. With excess capacity and the ability to leverage operational synergies, Ascot provides a
solution to the above capacity constraint issue.
Despite the arrangement being structured as a lease with option to purchase, as the Group has full control of the
business and assets of Ascot and intends to exercise the option to acquire, the transaction meets the criteria for business
combination accounting under IFRS3.
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Notes to the accounts
23. ACQUISITION OF SUBSIDIARIES (CONTINUED)
The total consideration is €11.5m (£9.9m), all of which is deferred on completion, with payments being made over the period
of the lease up to the point at which the option to acquire is exercised. The option is exercisable at any time for no cost,
subject to the full remaining balance of the full €11.5m being paid.
While there is no initial payment, under the agreement, the vendors have some flexibility over the timings of the deferred
consideration payments, albeit an adjustment for cost of capital applies if drawn early.
For the year ended 31 December 2018, Ascot reported revenues of €67.1m (£58.6m1) and operating profit of €2.3m (£2.0m1).
This is clearly a period prior to the signing of the lease arrangement and therefore does not include any of the
aforementioned capacity benefits for the Group.
The Group results for the 52 weeks ended 28 March 2020 include contribution from Ascot of €4.8m (£4.2m1) of revenue and
€0.4m (£0.3m1) of profit before tax (before amortisation of acquired intangibles and acquisition costs).
1 Applying the average exchange rate over the financial year of 1.1442.
Consideration
There was no initial cash consideration paid on the date of the transaction.
Net Assets Acquired
Property, plant and equipment
Right of use lease assets
Trade and other receivables
Inventories
Trade and other payables
Obligations under right of use leases
Book value of net assets acquired
Intangible assets arising on acquisition (see Note 10)
Deferred tax liability on intangible assets acquired
Fair value of total identifiable net assets
Goodwill (see Note 9)
Total consideration
Satisfied by:
Cash
Deferred consideration
Amounts
recognised at
acquisition
date
£m
8.8
1.3
6.1
9.7
(35.1)
(1.3)
(10.5)
16.9
(4.8)
1.6
8.3
9.9
–
9.9
9.9
Other than where fair value adjustments have been made, the book value of assets acquired is considered to approximate
their fair values. Gross trade receivables acquired are considered to equate to the fair value of contractually collectable cash
flows. Intangible assets have been attributed values on a provisional basis, with a full purhcase price allocation exercise to be
completed in the next financial year.
After fair value adjustments, goodwill of £8.3m is created on the consolidation of Ascot, which relates to expected future
profits of the business.
Transaction costs amounting to £1.0m relating to the acquisition have been recognised as an expense and included in
exceptional administrative expenses in the Group Income Statement.
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23. ACQUISITION OF SUBSIDIARIES (CONTINUED)
(c) G-tuft Ltd
On 9 May 2019 the Group acquired 100% of the equity of G-tuft (2015) Ltd, a contract carpet manufacturing business
based in the UK. The acquisition was strategically defensive, given at the time of acquisition, approximately 70% of G-tuft
sales were already to Group businesses. On top of this G-tuft provides the Group with additional unutilised manufacturing
capacity.
Cash consideration of £0.6m was paid on completion, with a further £1.0m of deferred consideration paid within the same
financial year. Transaction costs amounting toon £0.1m have been recognised as an expense and included in exceptional
administrative expenses in the Group Income Statement. No separately identified intangible assets were acquired and
negative goodwill of £0.5m was recognised within exceptional income in the Group Income Statement for the period, as a
result of the net assets on acquisition exceeding the purchase price.
(d) Estillon BV
On 8 November 2019 the Group acquired 100% of the equity of Estillon BV, a flooring underlay manufacturer and distributer,
based in The Netherlands. The acquisition strengthens the Group’s position in the European underlay market.
Cash consideration of €3.2m (£2.8m) was paid on completion, and in addiiton there is €1.8m (£1.6m) of contingent earn-out,
and €0.7m (£0.6m) of deferred consideration. Transaction costs amounting to £0.1m have been recognised as an expense
and included in exceptional administrative expenses in the Group Income Statement. Goodwill of €3.0m (£2.6m) was
recognised on consolidation of Estillon (see Note 9) and no separately identified intangible assets were acquired.
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24. DISCONTINUED OPERATIONS
On 3 February 2020 the Group disposed of its wholly owned subsidiary, A&A Carpets Limtied. The Group received cash
consideration of £0.9m, and recognised a loss on disposal of £2.0m (non-cash item).
Income statement of discontinued operations
Revenue
Cost of sales
Distribution costs
Administrative expenses
Operating profit
Finance costs
(Loss) / profit before tax
Taxation
Loss on disposal
(Loss) / profit for the financial year from discontinued operations
Assets and liabilities of discontinued operations
Property plant and equipment
Inventories
Trade and other receivables
Cash & cash equivalents
Total assets
Trade and other payables
Current tax liabilities
Intercompany liabilities
Finance lease and hire purchase agreements
Total liabilities
Net assets
Total consideration
Intercompany write-offs
Net loss on disposal
Cash flows from discontinued operations
Net cash flows from operating activities
Movement in working capital
Net cash flows from financing activities
Net cash flows
Cash and cash equivalents at the beginning of the period
Cash and cash equivalent disposed
Cash and cash equivalents at the end of the period
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
6.3
(4.4)
(1.4)
(0.6)
(0.1)
–
(0.1)
–
(1.9)
(2.0)
7.6
(5.3)
(1.8)
(0.4)
0.1
–
0.1
–
–
0.1
As at
28 March
2020
£m
0.4
2.5
0.9
0.1
3.9
1.0
–
2.0
0.1
3.1
0.8
0.9
2.0
1.9
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
0.1
–
–
0.1
–
(0.1)
–
0.4
(0.2)
–
0.2
(0.2)
–
–
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25. GOVERNMENT GRANTS
Deferred income at 31 March 2019
Grant income received in the year
Amortisation to deferred income by release through cost of production
Adjustment for acquisitions in the year
Exchange adjustment
Deferred income at 28 March 2020
Presented in:
Current liabilities
Non-current liabilities
2020
£m
2.1
0.5
(0.5)
–
0.1
2.2
0.1
2.1
2.2
2019
£m
1.0
1.4
(0.7)
0.4
–
2.1
–
2.1
2.1
There are no unfulfilled conditions or other contingencies attaching to government assistance.
26. FINANCIAL INSTRUMENTS
Background
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note
describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented throughout the financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in
this note.
The “financial instruments” which are affected by these risks comprise borrowings, cash and liquid resources used to provide
finance for the Group’s operations, together with various items such as trade debtors and trade creditors that arise directly
from its operations, inter-company payables and receivables, and any derivatives transactions (such as interest rate swaps
and forward foreign currency contracts) used to manage the risks from interest rate and currency rate volatility.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s finance function. The Board receives monthly reports
through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables and investments.
The Group’s exposure to credit risk is primarily attributable to its trade receivables. Credit risk is managed locally by the
management of each business unit. Prior to accepting new customers, credit checks are obtained from reputable external
sources. Furthermore, in specific areas where a heightened credit risk is perceived, credit insurance is utilised to help
mitigate this risk. A review of credit risk by customer category was undertaken in light of historical rates of credit loss overlaid
with the heightened risk of potential economic fallout from Covid-19.
Trade receivables consist of a large number of customers spread across geographical locations. Furthermore, specific trade
receivables are written-off when there is considered to be little likelihood of recovering the debt.
Further to the above review in light of Covid-19, the Group’s credit loss provision was increased by £1.0m to account for
the heightened risk. The group continues to monitor its exposure to expected credit losses and further disclosure will be
provided in future periods if the Group’s assessment changes.
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26. FINANCIAL INSTRUMENTS (CONTINUED)
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with low
credit risk assigned by international credit-rating agencies.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers.
The Company has no significant concentration of credit risk, other than with its own subsidiaries, the performances of which
are closely monitored. The Directors confirm that the carrying amounts of monies owed by its subsidiaries approximate to
their fair value.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on
its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.
To achieve this aim, the cash position is continuously monitored to ensure that cash balances (or agreed facilities) meet
expected requirements for a period of at least 90 days.
The Board monitors annual cash budgets and updated forecasts against actual cash position on a monthly basis. In
response to Covid-19 a detailed exercise was undertaken to understand the cash consumption of the business through a
range of possible outcomes, including impacts on profit/loss and working capital requirements. This analysis indicated that
the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
The maturity of financial liabilities is detailed in Note 16.
Market risk
Market risk arises from the Group’s use of interest bearing and foreign currency financial instruments. It is the risk that
the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate
risk), foreign exchange rates (currency risk), or market pricing (price risk). The fair value of the loan note prepayment option
embedded derivative will fluctuate based on changes in market pricing, the relative impact of such fluctuations can be
seen by the movement in the period as disclosed in note 16. Fluctuations in foreign currency exchange rates can have a
significant effect on the Group’s reported results.
Market risk arises from the Company’s use of thrd party and intercompany loans denominated in foreign currency.
Fluctuations in foreign currency exchange rates can have a significant effect on the Company’s reported results.
(e) Interest rate risk
The Group finances its operations through a mixture of retained profits, equity capital and bank facilities, including hire
purchase and lease finance. The Group borrows in the desired currency at floating or fixed rates of interest and may then use
interest rate swaps to secure the desired interest profile and manage exposure to interest rate fluctuations.
Interest rate sensitivity
The annualised effect of a 50 basis point decrease in the interest rate at the balance sheet date on the variable rate debt
carried at that date would, all other variables held constant, have resulted in a decrease in post-tax loss for the year of
£160,000 (2019: increase in post-tax profit of £400,000). A 50 basis point increase in the interest rate would, on the same
basis, have increased the loss for the year by the same amount.
Borrowings contractual maturities and effective interest rate analysis
In respect of interest bearing financial liabilities, the following table indicates the undiscounted amounts due for the remaining
contractual maturity (including interest payments based on the outstanding liability at the year end) and their effective interest
rates. The ageing of these amounts is based on the earliest dates on which the Group can be required to pay.
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26. FINANCIAL INSTRUMENTS (CONTINUED)
As at 28 March 2020
As at 30 March 2019
Effective
Interest
Rate
%
Total
£m
0-1
Years
£m
1-2
Years
£m
2-5
Years
£m
Over 5
Years
£m
Effective
Interest
Rate
%
Total
£m
0-1
Years
£m
1-2
Years
£m
2-5
Years
£m
Group
Cash and cash
equivalents
Senior secured debt
and overdraft
Unsecured facilities
Finance leases
and HP
Right-of-use leases
Company
Cash and cash
equivalents
Senior secured debt
Unsecured facilities
Right-of-use leases
0.00% 176.8
176.8
–
–
4.98% (641.1)
(16.3)
6.00%
0.00%
3.31%
–
(79.8)
(560.4)
0.00% 115.4
5.02% (638.8)
(13.2)
6.00%
(6.1)
3.70%
(542.7)
(28.0)
(1.9)
–
(11.8)
135.1
115.4
(25.8)
(0.6)
(0.3)
88.7
(24.5)
(13.8)
–
(12.4)
(50.7)
–
(24.5)
(12.6)
(0.4)
(37.5)
(588.6)
(0.6)
–
(24.5)
(613.7)
–
(588.5)
–
(1.6)
(590.1)
–
–
–
–
(31.1)
(31.1)
–
–
(3.8)
(3.8)
0.00%
66.4
66.4
–
–
3.47%
6.00%
5.74%
0.00%
0.00%
3.50%
6.00%
0.00%
(429.6)
(13.8)
(29.1)
(2.7)
(398.5)
(0.6)
(1.9)
(10.5)
(1.6)
–
(0.9)
–
(0.4)
–
(0.2)
–
(378.4)
33.7
(399.6)
(12.6)
19.0
(418.7)
(13.8)
–
(413.5)
19.0
(21.5)
(2.7)
–
(5.2)
–
(397.2)
(0.6)
–
(397.8)
–
–
(10.5)
–
(10.5)
In addition, the following table summarises the total undiscounted deferred and contingent consideration liabiltiies in relation
to past acquisitions, again aged based on the earliest dates on which the Group can be required to pay.
Total undiscounted obligations
Group
Deferred consideration liabilities
Contingent earn-out liabilities
As at 28 March 2020
As at 30 March 2019
Total
£m
0-1 Years
£m
1-2 Years
£m
2-5 Years
£m
Total
£m
0-1 Years
£m
1-2 Years
£m
2-5 Years
£m
9.9
30.6
40.5
9.4
22.5
31.9
0.2
7.3
7.5
0.3
0.8
1.1
5.3
28.1
33.4
4.1
13.4
17.5
1.2
8.1
9.3
–
6.6
6.6
Non-interest bearing liabilities
Details of trade and other payables falling due within one year are set out in Note 15.
(b) Currency risk
The main currency exposure of the Group arises from the Euro denominated debt.
It is the Board’s policy not to hedge against movements in the Sterling/Australian Dollar and Sterling/Euro exchange rate.
Other currency exposure derives from trading operations where goods are exported or raw materials and capital equipment
are imported. These exposures may be managed by forward currency contracts, particularly when the amounts or periods to
maturities are significant and at times when currencies are particularly volatile.
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26. FINANCIAL INSTRUMENTS (CONTINUED)
Currency risk sensitivity
An analysis of the currency risk exposure arising from financial instruments denominated in a foreign currency is as follows.
A 10% strengthening of the Euro against Sterling closing rate would, all other variables held constant, have resulted in an
increase in Group post-tax loss for the year of £47,698,000 as the net result of the translation impact on Euro denominated
debt. A 10% weakening of the Euro against Sterling closing rate would, all other variables held constant, have resulted in a
decrease in Group post-tax loss for the year of £39,026,000 as the net result of the translation impact on Euro denominated
debt.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (excluding
intercompany balances) at the reporting date are as follows:
Euro
(c) Trading
Liabilities
2020
£m
497.4
2019
£m
379.2
Assets
2020
£m
68.1
2019
£m
13.5
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be
undertaken other than in the corporate bonds held within cash and cash equivalents.
27. KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the financial statements requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised. Information about significant areas of
estimation that have the most significant impact on the financial statements are described in the following notes:
Estimates
Impairment of goodwill (note 9)
Determining whether goodwill balances are impaired requires an estimation of the value in use of the cash-generating units
to which value has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected
to arise from the cash-generating unit and to apply a suitable discount rate in order to calculate present value. On an annual
basis the Group is required to perform an impairment review to assess whether the carrying value of goodwill balances are
less than its recoverable amount. The recoverable amount is based on a calculation of expected future cash flows, which
include estimates of future performance. Detail of assumptions used in the review of goodwill, investments and intercompany
balances are detailed in Note 9.
Measurement of intangible assets (note 10)
Intangible assets are recognised on acquisitions in relation to customer relationships, brands and developed technology. The
fair value of these assets are determined by discounting estimated future net cash flows generated by the asset where no
active market for the assets exists. These are assessed based upon management forecasts for each business in question.
Key assumptions are those regarding discount rates, growth rates, expected changes to selling prices and direct costs,
brand royalty rates and customer attrition. The valuation of acquired intangibles is highly sensitive to these key assumptions,
hence any change to these assumptions could give rise to a significant increase or decrease in the valuation of the intangible
assets acquired. Details of assumptions used in this review are detailed in Note 9.
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27. KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED)
Credit loss provision (Note 14)
Expected credit losses are estimated by management, based on specific risk factors relating to key customer categories.
In light of Covid 19, the Group reassessed its estimate of potential future credit risk for each business unit as at 28 March
2020. This assessment resulted in an increase in credit loss provision of £2.8m for 2020.
Valuation of deferred and contingent earn-out consideration (note 17)
Liabilities are recognised in respect of acquisitions with outstanding deferred or contingent earn-outs at the end of the
period. These are assessed for each relevant business based upon management financial projections for the next 12 months
and applying growth assumptions for future years where relevant. Key assumptions are those regarding discount
rates, growth rates and expected changes to selling prices and direct costs. Further details are set out in Note 17.
Defined benefit obligation (note 20)
The Group has two defined benefit pension schemes. The obligations under the schemes are recognised in the Consolidated
Balance Sheet and represent the present value of the obligation calculated by independent actuaries, with input from the
Directors. These actuarial valuations include assumptions such as discount rates, return on assets and mortality rates. These
assumptions vary from time to time according to prevailing economic conditions.
Due to changing market and economic conditions, the expenses and liabilities actually arising under the scheme in the future
may differ materially from the estimates made on the basis of the actuarial assumptions. The effects of any change to these
assumptions are accounted for in the next financial year as other comprehensive income. The calculation of any charge
relating to retirement benefits is clearly dependent on the assumptions used, which reflects the exercise of judgement.
Further details are set out in Note 20.
Judgements
Embedded derivative (Note 16)
Under IFRS 9, it was determined that the call option in relation to the early redemption of the notes did not satisfy either of
the tests in order to be classified as closely-related to the underlying host contract. Details of the option embedded in the
contract are shown in Note 16.
In assessing the applicable recognition date for the embedded derivative, it was deemed appropriate to apply the loan
commitment scope exclusion as defined in the standard. Consequently, the date of initial recognition was considered to be
the date of drawdown, as opposed to the date of commitment.
As a result of applying the loan commitment scope exclusion, as above, it was deemed appropriate to base the value of the
combined instrument on the proceeds as agreed at the earlier commitment date.
It was deemed appropriate that for the purpose of calculating the host as the residual that, in light of the loan commitment
scope exclusion applied, the embedded option should only be recognised on drawdown and therefore that its initial carrying
value should be the fair value at that date.
Business combinations – Ceramiche Ascot (Note 23)
In accordance with IFRS 10, it was determined that control of the Ascot business was established at the point of the
transaction. Specifically, it was concluded that the Group is exposed to variable returns as a result of entering into the
arrangement and it established power over the business along with the ability to use its power to affect returns. A key factor
in the control assessment carried out was the intention to exercise the business call option. The transaction was therefore
treated as a business combination and accounted for in accordance with IFRS 3.
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28. RELATED PARTIES
Transactions between the Company and its subsidiaries have been eliminated on consolidation.
Identity of related parties
The Group has a related party relationship with its Directors and executive officers.
The Company has a related party relationship with its subsidiaries and its Directors and executive officers.
Transactions with key management personnel
Key management personnel are considered to be the Directors of the Company and its subsidiaries.
As at 28 March 2020, the key management personnel, and their immediate relatives, controlled 34.51% of the voting shares
of the Company.
Details of the Group’s share-based incentive plan, which includes key management personnel, are provided in Note 5.
Furthermore, details of an employee incentive plan in relation to the key management personnel of Keraben, are provided in
Note 15.
The aggregate remuneration of the Group’s key management personnel, including the above incentive schemes, is set out
below for each of the categories specified in IAS 24 Related Party Disclosures.
Short-term employee benefits
Post-employment benefits
52 weeks
ended 28
March 2020
£m
52 weeks
ended 30
March 2019
£m
5.6
0.1
5.7
4.0
0.2
4.2
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28. RELATED PARTIES (CONTINUED)
Transactions with subsidiary undertakings:
Management fees – Victoria Bidco B.V
Management fees – Victoria Carpets Ltd
Management fees – Westex (Carpets) Ltd
Management fees – Abingdon Flooring Ltd
Management fees – View Logistics Ltd
Management fees – Interfloor Group Ltd
Management fees – Ezi Floor Ltd
Management fees – The Victoria Carpet Company Pty Ltd
Management fees – Quest Flooring Pty Ltd
Management fees – Primary Flooring Pty Limited
Management fees – Keraben Grupo S.A.
Management fees – Ceramiche Serra S.p.A
Management fees – Ceramica Saloni, S.A.
Interest receivable – Victoria Bidco B.V
Interest receivable – Victoria Carpets Ltd
Interest receivable – Globesign Ltd
Interest receivable – Abingdon Flooring Ltd
Interest receivable – Whitestone Carpets Holdings Ltd
Interest receivable – Interfloor Group Ltd
Interest receivable – Interfloor Operations Ltd
Interest receivable – Ezi Floor Ltd
Interest receivable – Millennium Weavers N.V
Interest receivable – Primary Flooring Pty Limited
Interest receivable – Keraben Grupo S.A.
Interest receivable – Kinsan Trade, S.L.
Interest receivable – Iberoceramica S.L.U.
Interest receivable – Ceramiche Serra S.p.A
Interest receivable – Sandover Investments, S.L.U
Interest receivable – Ceramica Saloni, S.A.
Interest receivable – Quest Flooring Pty Ltd
Interest receivable – Victoria Midco Holdings Ltd
Dividend Income – Victoria Midco Holdings Ltd
Amounts due from subsidiary undertakings
Amounts due to subsidiary undertakings
52 weeks
ended
28 March
2020
£m
52 weeks
ended
30 March
2019
£m
0.03
0.03
0.03
0.03
0.04
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
1.60
0.35
–
0.54
0.88
0.94
0.62
0.62
0.09
1.11
2.21
3.34
0.17
–
1.32
2.21
0.71
1.27
–
0.03
0.01
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
–
–
–
3.94
0.34
0.05
0.52
0.87
1.15
0.59
0.42
1.03
2.21
3.75
–
0.87
0.97
3.06
0.74
–
1.11
514.6
5.5
612.2
–
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28. RELATED PARTIES (CONTINUED)
Transactions with the Business Growth Fund
Gavin Petken, a Non-Executive Director of Victoria PLC, is the Business Growth Fund’s (“”BGF””) Head of Investment South,
Wales and Quoted. On the 30 September 2014 the Company entered into a £10m unsecured loan facility with BGF, which is
repayable in 2021.
Furthermore, during the year, payment of a redemption premium of £2.1m was deferred from December 2019 to December
2021.
Interest charged to the income statement during the period in relation to the BGF loan was £600,000 (2019: £885,000).
29. POST BALANCE SHEET EVENTS
On 25 June 2020 a new long-term management incentive scheme was established for senior management. This has
resulted in the grant of nil cost options to the scheme participants, which, when exercised, will convert into 1.25 million
ordinary shares (1% of the total Victoria PLC shares at the time of issue). The participants will be able to exercise these
options in June 2024 provided they are still employed by the Group at that time. Participants will be entitled to sell 50% of
the shares at this time, whilst the remaining shares must be held for a minimum period of 12 months.
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VICTORIA PLC REGISTERED
OFFICE
Worcester Road
Kidderminster
Worcestershire
DY10 1JR
COMPANY REGISTERED NO.
(ENGLAND & WALES)
282204
Shareholder information
CORPORATE WEBSITE
DIVIDEND PAYMENTS
The Annual Report, Company
announcements and other information
are available on the Group’s website at:
www.victoriaplc.com
SHAREHOLDER QUERIES
If you have any queries in relation to
Victoria PLC shares, please contact
the Company’s registrars whose details
are as follows: Link Asset Services,
The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU.
Telephone: 0871 664 0300 Overseas:
+44 20 8639 3399 website: www.
linkassetservices.com Calls cost 12p
per minute plus your phone company’s
access charge. Overseas: +44 371
664 0300. Calls outside the UK will be
charged at the applicable international
rate. Lines are open between 9.00 am
– 5.30 pm, Monday to Friday excluding
public holidays in England and Wales.
Website: www.linkassetservices.com
Our registrars have the facility to
pay shareholders’ dividends directly
into their bank accounts, instead of
receiving the dividend payment by
cheque. They are also able to convert
dividend payments into local currency
and send the funds by currency draft
or, again, if preferred, pay them straight
into a bank account.
More information on the above services
can be obtained from our registrar Link
Asset Services.
UNSOLICITED MAIL
The Company is required by law to
make its share register available on
request to the public and organisations
which may use it as a mailing list
resulting in shareholders receiving
unsolicited mail. Shareholders wishing
to limit such mail should write to the
Mailing Preference Service DMA house,
70 Margaret Street, London, W1W 8SS
or register online at www.mpsonline.
org.uk
ADVISERS
Auditor:
Bankers:
Registrar:
Solicitor:
Nominated Adviser
and Joint Broker:
Grant Thornton UK LLP – The Colmore Building, 20 Colmore Circus, Birmingham, B4 6AT
HSBC Bank PLC – Penman Way, Grove Park, Enderby, Leicester, LE19 1SY
Credit Suisse International – One Cabot Square, London, E14 4QJ
National Westminster Bank PLC – 250 Bishopsgate, London, EC2M 4AA
ING – 8-10 Moorgate, London, EC2R 6DA
Banco Bilbao Vizcaya Argentaria – One Canada Square, Floor 44th, Canary Wharf, London E14
5AA
Bank of Ireland – Bow Bells House, 1 Bread Street, London, EC4M 9BE
Link Asset Services – The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Brown Rudnick LLP – 8 Clifford Street, London, W1S 2LQ
N+1 Singer – 1 Bartholomew Lane, London EC2N 2AX
Joh Berenberg Gossler & co.KG – 60 Threadneedle Street, London, EC2R 8HP
Joint Brokers:
Public Relations:
Peel Hunt – Moor House, 120 London Wall, London, EC2Y 5ET
Buchanan Communications – 107 Cheapside, London, EC2V 6DN
www.victoriaplc.com
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Registered offices of subsidiaries
Company
Registered Office Address
Victoria Midco Holdings Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Victoria Carpets Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Whitestone Carpets Holdings Limited Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Ezi Floor Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Alliance Flooring Distribution Limited Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Distinctive Flooring Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
V-Line Carpets Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Carpet Line Direct Limited
Park View Road East, Brenda Road, Hartlepool, Cleveland, TS25 1HT, UK
Flooring at Home Limited
Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
The Victoria Carpet Company Limited Worcester Road, Kidderminster, Worcestershire, DY10 1JR, UK
Abingdon Flooring Limited
Parkway, Pen Y Fan Industrial Estate, Croespenmaen Crumlin, Newport, NP11 4XG, UK
Venture Floorcoverings Limited
Unit 1 Parkway, Crumlin, Newport, Wales,NP11 3XG, UK
Globesign Limited
Castle Mills, Moorend, Cleckheaton, West Yorkshire, BD19 3PS, UK
Westex (Carpets) Limited
Castle Mills, Moorend, Cleckheaton, West Yorkshire, BD19 3PS, UK
Interfloor Limited
Broadway, Haslingden, Rossendale, Lancashire, BB4 4LS, UK
Interfloor Group Limited
Broadway, Haslingden, Rossendale, Lancashire, BB4 4LS, UK
Interfloor Operations Limited
Broadway, Haslingden, Rossendale, Lancashire, BB4 4LS, UK
Tacktrim Limited
Stikatak Limited
Unit 10 Heathhall Industrial Estate, Heathhall, Dumfries, DG1 3PH, UK
Broadway, Haslingden, Rossendale, Lancashire, BB4 4LS, UK
View Logistics Limited
Park View Road East, Hartlepool, Cleveland, TS25 1HT, UK
Whitestone Weavers Limited
Park View Road East, Hartlepool, Cleveland, TS25 1HT, UK
Thomas Witter Carpets Limited
Park View Road East, Hartlepool, Cleveland, TS25 1HT, UK
Gaskell Mackay Carpets Limited
Park View Road East, Hartlepool, Cleveland, TS25 1HT, UK
G-Tuft Limited
Thornhill Road Business Park, Tenter Fields, Dewsbury, West Yorkshire, WF12 9QT, UK
G-Tuft (Holdings) Limited
Thornhill Road Business Park, Tenter Fields, Dewsbury, West Yorkshire, WF12 9QT, UK
G-Tuft (2015) Limited
Thornhill Road Business Park, Tenter Fields, Dewsbury, West Yorkshire, WF12 9QT, UK
The Victoria Carpet Company Pty
Limited
7-29 Gladstone Road, Dandenong, Victoria, 3175, Australia
Primary Flooring Pty Limited
7-29 Gladstone Road, Dandenong, Victoria, 3175, Australia
Quest Flooring Pty Ltd
43-55 Mark Anthony Drive, Dandenong South, Victoria, 3175, Australia
Victoria Bidco BV
7122 AH Aalten, Dinxperlosestraatweg 52, 7122 AH Aalten, The Netherlands
Avalon BV
GrassInc BV
7122 AH Aalten, Dinxperlosestraatweg 52, 7122 AH Aalten, The Netherlands
Landweerstraat-Zuid 95 B, 5349 AK, Oss, The Netherlands
Millennium Weavers N.V
Jean Benaetsstraat, 99 Box 6, 1180, Brussels, Belgium
Ceramiche Serra S.p.A
Via Estense, 10589, Serramazzoni, 41020, Italy
Kinsan Trade, S.L.
Keraben Grupo S.A.U
Ctra Valancia – Barcelona, Km. 44.3, Nules, Castellon, Spain
Ctra Valancia – Barcelona, Km. 44.3, Nules, Castellon, Spain
Sandover Investments, S.L.U
Ctra Valancia – Barcelona, Km. 44.3, Nules, Castellon, Spain
Ceramica Saloni, S.A.
Ctra Alcora, 17, 12006, Castellon, Spain
Saloni Portugal Materiais De
Construcao LTDA
Materiais de Construcao, Lda, Praca Pedro Alvares Cabral, 2C, 2700-608 Amodora,
Portugal
Saloni UK Limited
Saloni France S.A.S.
Unit 130 Business Design Centre, 52 Upper Street, London, N1 0QH, UK
89-91 Rue du Faubourg Saint-Honore, 75008 Paris, France
Munster Carpets Limited
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
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Glossary
BGF
Business Growth Fund
Capex
Capital expenditure
EBIT
Earnings before interest and tax
EBITDA
Earnings before interest, tax, depreciation and amortisation
EPS
FY19
FY20
GMP
H1
H2
IAS
IFRS
KPIs
LFL
LVT
M&A
PBT
TSR
Earnings per share
The 52 weeks ended 30 March 2019
The 52 weeks ended 28 March 2020
Guaranteed minimum pension
The 26 weeks ended 28 September 2019
The 26 weeks ended 28 March 2020
International Accounting Standards
International Financial Reporting Standards
Key performance indicators used to assess the business performance
Like for like
Luxury vinyl tile
Mergers and acquisitions
Profit before taxation
Total shareholder return
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Victoria PLC
Worcester Road
Kidderminster
Worcestershire
DY10 1JR
Tel: +44 (0)1562 749610
www.victoriaplc.com
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