UK Flooring Firm Victoria Slides After Delay of Audited Results

2023-08-15 13:54:16.341 GMT
By Libby Cherry and Lars Mucklejohn 

(Bloomberg) -- Bonds and shares in UK-headquartered Victoria Plc slid after the flooring company delayed its audited
results and reported cash generation below its target. The firm’s auditors have “requested further time to
complete their final audit procedures,” Victoria said in a statement on Tuesday. Reasons for the delay by auditor Grant Thornton UK LLP included accounting complexity regarding the reverse carve-out of Belgium-based Balta and ongoing testing of valuations of goodwill, according to executive chairman Geoff Wilding.

“The directors have a high degree of confidence that the numbers that we put in the market today investors can rely on,” Wilding said in a phone interview. Secured euro-denominated notes maturing in August 2026 fell 1.9 cents on the euro to 80.6 cents, according to data compiled by Bloomberg. Shares fell as much as 13%, the most in almost a
year, before paring some of the drop. Grant Thornton did not immediately respond to a request for

Victoria reported unaudited results for the year ended April 1 including £71.3 million of underlying free cash flow.
That missed the company’s target for cash generation of £100 million, which it attributed in part to a delayed divestment of a factory as well as faster-than-anticipated progress on integrating certain acquisitions. The company has operations in countries including the US, Belgium and Turkey.

“Cash flow performance was disappointing with net debt even slightly increasing” in the second half said Felix Fischer, an analyst at Lucror Analytics in emailed comments. However, given that cash flow was impacted by one-off items, it “should revert in due course,” Fischer added. 

Victoria expects free cash flow to increase “sharply” from the second half of 2024, after the integration projects are
completed, according to the statement. The flooring company has been challenged by higher raw material prices, energy and labor costs as inflation has soared, eating into margins. It has also faced softer demand, although
Tuesday’s statement noted “some signs of life” in certain markets in recent months. These include the UK and the south-
eastern states of the US, Wilding said.