8/19/2019 Victoria PLC: - The carpet maker with a strong price performance
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Victoria PLC: - The carpet maker with a strongprice performance
Date: 29/03/16
Share price: 1,403 Market cap (£m):
255.
P/E: 5 !e"e#$e%& 2016 (pr'ecte): 253
E*$it+ (£m): 53 et e-t (£m): 1
aret price: £10£15/&hare -etee# #' a# 30th $+
a# a &hare price ' £6.50/&hare -+ +eare#.
Disclaimer
+ reai# thi& rep'rt, +'$ aree that the $&e ' the re&earch
pr'$ce -+ 7a-r'ck !e&earch i& at +'$r '# ri&k. 8# #'
partic$ar e"e#t i +'$ h' 7a-r'ck !e&earch 'r aiate
part+ ia-e 'r trai# '&&e& ca$&e -+ it& #i#&.
hi& rep'rt i& #'t i#"e&tme#t a"ice, rec'mme#ati'# 'r
&'icitati'# t' -$+ 'r &e a#+ &ec$ritie&. 7a-r'ck !e&earch i&
#'t a rei&tere i#"e&tme#t a"i&'r i# a#+ $ri&icti'#. ;'$
aree t' ' +'$r '# re&earch a# $e iie#ce -e're maki#
a#+ i#"e&tme#t eci&i'# ith re&pect t' &ec$ritie& c'"ere
ithi# thi& rep'rt. + reai# thi& rep'rt +'$ ha"e the
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i#"e&tme#t k#'ee t' critica+ a&&e&& the i#'rmati'#,a#a+&i&, chart& a# 'pi#i'#& i"e#.
<& ' the p$-icati'# ate ' thi& rep'rt, 7a-r'ck !e&earch
'e& #'t h' a#+ p'&iti'#, '# 'r &h'rt, hether irect+ 'r
i#irect+, i# the i&&$er%& &ec$ritie&, $#e&& &tate i# the
i&c'&$re.
=$r re&earch a# rep'rt i#c$e& 'rar''ki# &tateme#t&,
e&timate&, pr'ecti'#&, a# 'pi#i'#& prepare ith re&pect t'
am'# 'ther thi#&, certai# acc'$#ti#, ea, a# re$at'r+
i&&$e& the i&&$er ace& a# the p'te#tia impact ' th'&e i&&$e&
'# it& $t$re -$&i#e&&, #a#cia c'#iti'# a# the re&$t& ''perati'#&, a& e a& m're e#era+, the i&&$er%& a#ticipate
'perati# per'rma#ce, acce&& t' capita market&, market
c'#iti'#&, a&&et& a# ia-iitie&. S$ch &tateme#t&, e&timate&,
pr'ecti'#& a# 'pi#i'#& ma+ pr'"e t' -e &$-&ta#tia+
i#acc$rate a# are i#here#t+ &$-ect t' &i#ica#t ri&k& a#
$#certai#tie& -e+'# 7a-r'ck !e&earch%& c'#tr'.
=$r re&earch a# rep'rt e>pre&&e& '$r 'pi#i'#&, hich e ha"e
-a&e $p'# e#era+ a"aia-e i#'rmati'#, e re&earch,
i#ere#ce& a# e$cti'#& thr'$h '$r $e iie#ce a#
a#a+tica pr'ce&&. 7a-r'ck !e&earch -eie"e& a i#'rmati'#
c'#tai#e herei# i& acc$rate a# reia-e, a# ha& -ee#
'-tai#e r'm p$-ic &'$rce& e -eie"e t' -e acc$rate a#
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reia-e. ?'e"er, &$ch i#'rmati'# i& pre&e#te @a& i&,Aith'$t arra#t+ ' a#+ ki#, hether e>pre&& 'r impie,
7a-r'ck !e&earch make& #' repre&e#tati'#, e>pre&& 'r
impie, a& t' the acc$rac+, timei#e&&, 'r c'mpete#e&& ' a#+
&$ch i#'rmati'# 'r ith rear t' the re&$t& t' -e '-tai#e
r'm it& $&e. < e>pre&&i'#& ' 'pi#i'# are &$-ect t' cha#e
ith'$t #'tice, a# 7a-r'ck !e&earch i& #'t '-iate t'$pate 'r &$ppeme#t a#+ rep'rt& 'r a#+ ' the i#'rmati'#,
a#a+&i& a# 'pi#i'# c'#tai#e i# them.
Summary of ndings
<. Bict'ria PC &hare price i a 10 -aer i# t' +ear& 'r &a
it& market "a$e i#crea&e -+ 1 time& r'm £15m t' £255m.
. <t the &ame time, it& &ae& i& 'reca&t (i#c$e& 2016%& &ae&)
t' $mp -+ 255 i# the a&t +ear&. ?'e"er, there are #'
c'#&i&te#t ear#i#&.
. Shareh'er& ma+ ha"e recei"e £3/&hare i# &pecia i"ie#
-ack i# 2014, -$t Mr 7ii# t''k a rear ' '"er m &hare&
(e*$i"ae#t t' £100m i# "a$e).
D. he '#+ #a#cia item that ha& i#crea&e m're tha# it& &hare
price i& the #et e-t p'&iti'# hich $mpe r'm £m &i#ce the
arri"a ' Mr 7ii# t' £1m t'a+ (ate&t i#terim re&$t&).
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E. here i& a ack ' #a#cia tra#&pare#c+ i# &'me ac*$i&iti'#&.F'r e>ampe, G'-e&i# Cimite &a &tra#e aterta> pr't&
H$ct$ati'# r'm £10m i# 2014 t' £2m i# 2015.
F. he -e&t ac*$i&iti'# it mae i& <-i#'# F''ri# Cimite
-eca$&e it ha& a &tr'# pr$e#t -$&i#e&& ith &tr'# i#ce#ti"e&
t' rear the c'mpa#+ (i taret& meet e>pectati'#).
G. he p$rcha&e ' 8#terH''r Gr'$p ' £65m i& (i# '$r 'pi#i'#)
the 'r&t ac*$i&iti'# -eca$&e 'perati# ca&h H' mi#$&
@i#tere&t paiA a"erae £1.5m per +ear hie it t''k '# #et
e-t ' £50m.
?. De&pite, the&e -$&i#e&&e& reate ac*$i&iti'#& there are #'
&trate+ t' create &+#er+ -etee# &$-&iiarie&.
8. 8#'ri# the I$e&t ac*$i&iti'#, a the re&t i i#crea&e
Bict'ria PC%& &hareh'er&% $# -+ £6.2m that c'&t the
c'mpa#+ £104m. hi& i& -eca$&e 8#terH''r%& e*$it+ i& a
#eati"e £19m.
. G''i a# i#ta#i-e a&&et& acc'$#t 'r 0 'r m're '
the c'mpa#+%& #'#c$rre#t a&&et&.
1. Victorias re!enue growth is "ust a collection of
ac#uisitions
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@he &t'ck market i& e ith i#i"i$a& h' k#' the price' e"er+thi#, -$t the "a$e ' #'thi#.A
J Phillip $isher
Bict'ria PC i& a mei$m&iKe arpet ma#$act$rer i# the L
ith pr'ecte re"e#$e at +eare# March 2016 ' £253m. he
achie"eme#t a&#%t r'm i##'"ati'# a# 'ra#ic r'th, -$t
r'm &eecte ac*$i&iti'#&, -'th i# the L a# a-'ar.
Charts comparing sales growth and market cap%
Source: Bict'ria PC.
<ppare#t+, &hareh'er& ere reari# the c'mpa#+ 'r
r'i# &ae& ith a 10 time& i#crea&e i# market "a$ati'#
$ri# the pa&t t' +ear&, -$t m'&t imp'rta#t+ ma#aeme#t
ma#ae& t' ret$r# a &pecia i"ie# e*$i"ae#t t' £3/&hare.
Chart showing special di!idends payout ga!e in!estors
condence to own the stock
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Source: Bict'ria PC.
Sa+, thi& i& a @'#etimeA ea t' &ati&+ a @c'#tract 'r
iNere#ceA 'r the i#c'mi# E=, Ge'N 7ii#&, i# hich he
a& c'#tracte t' ei"er a £3/&hare ret$r# t' &hareh'er& i#
t' +ear& 'r ri&k $p t' £100,000 pa+me#t t' Bict'ria PC (m're
r'm the &tar E= ater).
?'e"er, per'rma#ce ha&#%t -ee# '', reari# the r'th
i# #et ear#i#& a# a ''k at the reati'# -etee# the
c$m$ati"e r'th i# #et ear#i#& a# &ae& &i#ce 2006 a"e
$& thi& i&ti#cti'#:
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<& &ae& re, the r'th i# #et ear#i#& ha& -ee# tre#i#
'er. ?ere%& a &imiar chart that i#c$e& the forecast sales
and earnings 'r the peri' e#i# i# March 2016:
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Gi"e# the&e ac*$i&iti'#& a& '#e i# 2015 it '$ #'t &$rpri&e
a#+'#e i Bict'ria PC achie"e& the&e re&$t&, -$t the a+ it
'e& a-'$t achie"i# the&e re&$t& that c'$ p$t Bict'ria PC
i# &'me #a#cia i&tre&& 'i# 'rar.
?'e"er, e"e# i Bict'ria PC ma#ae& t' achie"e the&e
re&$t&, the market ha& $+ price i# 2016%& market
e>pectati'# a# the# &'me.
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8# &ecti'# 2, e i ''k i#t' the etai& ' Bict'ria PC
ac*$i&iti'#& &i#ce the arri"a ' Ge'N 7ii#.
Credit where credit is due
hi#& are #'t a -a 'r 'er &hareh'er& (th'&e h' ha"e
recei"e the &pecia i"ie#&). heir 'rii#a i#"e&tme#t '$
ha"e -ee# pai -ack ('r m'&t ' it, a#+a+) a# there're,
h'i# Bict'ria PC &hare& i& a ri&kree i#"e&tme#t.
?'e"er, he# +'$ are a #e &hareh'er (th'&e h' ha"e#%t
recei"e the @&pecia i"ie#&A), the# there i& a '' cha#ce
thi& c'mpa#+ -ei#& t' &ee a a i# it& &t'ck price.
e' are the #i#& ' Bict'ria PC.
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2. The &Three year' ac#uisition rule
<& me#ti'#e, 8 ha"e &tate the r'th ' Bict'ria PC i& '#
t' it& r'i# aicti'# t' ac*$iri# -$&i#e&&e&. <t r&t a#ce,
m'&t ' the&e ac*$i&iti'#& make &e#&e, a# ith'$t ''ki# at
each ac*$i&iti'# i#epth +'$ c'$ c'#c$e that &+#er+ i&there, a& the+ are a reate -$&i#e&&e&.
he 8#"e&t'r hr'#ice i a &$mmar+ ' Bict'ria PC
ac*$i&iti'#& here:
Acquisitions under Wilding
Last reported financials (£m) EV multiples
Date Cost (£m) Revenue Ebitda AV Revenue Ebitda
Westex Dec 13 12.2 18.7 5.6 17.2 0.65 2.18
Abingdon Sep 14 14.66 75.1 3.4 8.2 0.20 4.31
Whitestone Weavers an 15 8.05 33.! 2.2 5.! 0.24 3.66
"#est A#g 15 11.5 28.1 3.3 2.06 0.41 3.48
$nter%&oor Sep 15 65 72.3 10.0 15 0.!0 6.4!
!otal"#ean $$$%&$ ''%$ '&%' &%*+ ,%&- &%&
So#rce' Whit(an )o*ard ana&+sis, -ictoria p&c, co(pan+ acco#nts
..: 7e&te> i& a &$-&iiar+ ' G'-e&i# Cimite.
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?ere i& m+ i#terpretati'#:
(c#uisitions Costs
)*m+
,et prot
)*m+
,et
assets
)*m+
P. P/
G'-e&i#
Cimite
£16m 2 (56
eek&)
£10.4m 1.53
<-i#t'#
F''ri#
Cimite
14.66 2.1 .456 6.9 1.3
7hite&t'#e
7ea"er&
Gr'$p
12.3 3.34 (i#
the r&t 9
m'#th&),
&' 'r 12
m'#th& it&
4.45
6.344 2. 1.94
8#terH''r
Gr'$p
65 0.320 19 e e
I$e&t arpet
Ma#$act$rerPt+ Cimite
11.5 #/a #/a
'ta 119.46Source: 'mpa#+check.c'.$k a# 8#"e&tiate.c'.$k.
he $&e ' E8D< i& t'' 'te# mi&eai#. here're, '#e
&h'$ -e c'#&er"ati"e. ?'e"er, i '#e a& t'ether the
c'&t& ' ac*$i&iti'# (i#'ri# the *$e&t ac*$i&iti'#) it c'me& t'
£10m that i& pr'$ci# #et ear#i#& ' £.23m i"i# a P/E '
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13.1. Mea#hie, the price t' -''k c'me& i# at a# e>pe#&i"e1.4 time&.
(c#uisitions Deferred
considerations
De0t Cash
G'-e&i#
Cimite
Lp t' £m i# 3
+ear& (&ee
-e' 'retai&)
£0m £0m
<-i#t'#
F''ri# Cimite
Lp t' £4.5m i# 3
+ear& (&ee
-e' 'r
etai&)
£0.9m £0.5m
7hite&t'#e
7ea"er& Gr'$p
£1.5m £3.39m £3.3m
8#terH''r Gr'$p #/a £55m £5.4m
I$e&t arpet
Ma#$act$rer
Pt+ Cimite
<O10.5m
(£4.9m) i# three
+ear&
#/a
Source: 'mpa#+check.c'.$k.
<&', the c'mpa#+ i& ia-e 'r a $rther £1.9m i# pa+'$t&, i
a it& &$-&iiarie& met their mie&t'#e taret&. $t, m're
'rr+i#+, it t''k '# #et e-t ' £50m r'm the&e ac*$ire
&$-&iiarie&. he #a#ce c'&t& i#c$rre i& appr'>imate+ £6.6m
per a##$m (m'&t ' it r'm the ac*$i&iti'# ' 8#terH''r).
1ini-summary
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8#'ri# the I$e&t ac*$i&iti'#, Bict'ria pai £104m a# t''k '##et e-t ' £50m (p'&&i-+ m're) 'r £.3m i# #et ear#i#& a#
a that a& t' i#crea&e &hareh'er&% eath -+ *2%3m
(c#uisitions in-depth
(c#uisition 4: 5lo0esign Limited
he £m -'#$& pa+me#t& t' G'-e&i# i '#+ happe# he#
E8D< a"erae& £4.2m per a##$m, a# #et pr't e>cee& the
thre&h' ' £2.m per a##$m.
?'e"er, thi& i& #'t a# i#ce#ti"e t' r' it& i"i&i'# -eca$&e
acc'ri# t' 'mpa#+check.c'm, the c'mpa#+ a& area+
a"erai# £2.m i# aterta> pr't& r'm 2011 t' 2013.
he e-&ite 'mpa#ie&h'$&e.c'm ha& i#& '# G'-e&i#
Cimite acc'$#t&, here there are are part& ' it& i#c'me
&tateme#t mi&&i#. <&', the aterta> pr't& ' £10m (2014)
a# £2m (2015) c'mi# r'm i"ie#& recei"a-e r'm a
h'+'#e &$-&iiar+ i& $#e>pai#e.
F$rtherm're, there i& #' e>pa#ati'# h+ there i& a ri&e i# t'ta
ia-iitie& r'm £2.m i# 2013 t' £11m t'a+ he# a c'mpa#+
i& ch$r#i# '$t pr't&.
(F'r $rther e>pa#ati'#& a# i$&trati'# ' G'-e&i# Cimite,
cick here.)
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(c#uisition 3: (0ingdon $looring Limited
8 <-i#'# F''ri# achie"e& £9.5m i# E8 '"er three +ear&
(a# a"erae ' £3.2m), the# it i reap a# e>tra £4.5m i#
$rther pa+me#t&, hich Bict'ria i& ia-e t' pa+ £1.5m each
+ear.
F'r Bict'ria, <-i#'# i& their -e&t ac*$i&iti'# t' ate -eca$&e
the i#ce#ti"e i& there (r'm 2011 t' 2014, the c$m$ati"e E8
came i# at £5.05m) a# 2015%& E8 i& £2.9m.
(c#uisition 6: 7hitestone 7ea!ers 5roup
he -reak'# ' thi& ac*$i&iti'# i& it pa+& £5.4m $pr'#t,
a# the re&t ' the pa+me#t& are &che$e a& ''&:
<. £2.21m '# 31 March 2015 (pai)Q
. £1.4m -+ <pri 2016Q
. £2.53m -+ a#$ar+ 201.
he c'mpa#+ i make a#'ther £1.5m ' eerre
c'#&ierati'# i taret& are met -+ the &$-&iiarie&. 7ater&t'#e
7ea"er& r'$p e#erate £33.9m i# &ae&, -$t the #a#cia
&$-&iiarie& acc'$#t& are a -it 'N.
he&e are 7hite&'me re"eati'#&:
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7hite&t'#e i& the 'pp'&ite ' G'-e&i# -eca$&e $#er the@7hite&t'#e 7ea"er Gr'$pA there a& a &eri'$& ack '
#a#cia tra#&pare#c+ ('r e>ampe, &'me &$-&iiarie& i#c'me
&tateme#t& are mi&&i# #a#cia ata).
$t, e"e# ith the tra#&pare#c+, &'me ' it& #a#cia
&tateme#t& ' #'t make &e#&e. ake it& &$-&iiar+, Ga&ke
Macka+, a& a# e>ampe, i# 2014 it ha &ae& ' £5.3m a# the
#i#e m'#th& t' 2015 &ae& ere £4.3m ('r £5.3m a##$a+).
$t he# +'$ ''k at it& -aa#ce &heet r'm 2013 t' 2015 it
''k& ike the c'mpa#+ i& i#i# '# it& 'perati'#& ith
trae e-t'r& a# creit'r& ai# -+ appr'>. 0 each.
a#i-e a&&et& are '# -+ 40. (See ta-e -e')
7e ca# make the &ame a&&$mpti'# a-'$t Bie C'i&tic& ith
&ae& ' £3.2m i# 2014 a# the #i#e m'#th& t' 2015 &ae& ere
£2.9m ('r £3.m 'r the $ +ear). (See ta-e -e')
Ta0le showing the changes in tangi0le assets8 de0tors8
and creditors:
5askell 1ackay View Logistics a#i-e a&&et& Deci#e r'm
£16,33 (2013) t'
£90,656 (2015).
!'&e r'm £06,4
(2013) t' £925,969
(2015). rae e-t'r& Deci#e r'm
£2,339,104 (2013)
Deci#e r'm
£1,012,224 (2013)
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t' £1,004 (2015). t' £1,245 (2015). rae creit'r& Deci#e r'm
£1,9,36 (2013)
t' £65,95 (2015).
Deci#e r'm
£1,03,5 (2013)
t' £150,94 (2015).Source: 'mpa#+check&.c'm, Ga&ke Macka+ a# Bie
C'i&tic& acc'$#t&.
he '#+ time +'$ &ee c'ap&i# e-t'r& a# creit'r& i& he#
a -$&i#e&& i& i#i# '# it& 'perati'#& a& 'pp'&e t' a
heath+ -$&i#e&& ith r'i# &ae&.
8# a &eparate ca&e, Ga&ke Macka+ &a it& ca&h -aa#ce
m+&teri'$&+ $mpi# r'm £41,360 t' £1.439m i# a +ear a#
#i#e m'#th&, e&pite maki# £00k i# aterta> pr't& $ri#
the peri'.
(F'r $rther i#'rmati'# h+ thi& '$ -e imp'&&i-e $#e&& it%&
'#e -+ i#ecti# ca&h t' Ga&ke, the# cick here.)
<&', 7hite&t'#e 7ea"er& Cimite (#'t t' -e c'#$&e ith
@r'$pA) &a a &$e# $mp i# aterta> pr't& r'm £33,256
i# 2014 t' £2.645m. hat a& '# t' a# item cae
@e>cepti'#a 'ther 'perati# i#c'meA ' £2.2m, hich, '
c'$r&e, i& $#e>pai#e a# it hepe t' i#crea&e it& e*$it+ r'm
£2.665m t' £5.3m i# '#e +ear
1ini-summary of 7hitestone 7ea!ers 5roup
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F$rtherm're, the c'&t ' ac*$iri# 7hite&t'#e 7ea"er& Gr'$p'r £12.3m &h'$ rai&e &$&pici'#, e&pecia+ he# it i& maki#
£4m i# #et pr't, a'# ith £3m i# ca&h.
,%/%: he <-i#'# ac*$i&iti'# ' £14.66m a& he# it ha&
=C; £2m i# #et pr't a# £0.6m i# ca&h. 8t &h'$ te +'$
either Bict'ria i& "er+ '' at #e'tiati# the -e&t ea 'r
&'methi# i&#%t riht.
(c#uisition 9: nter;oor 5roup
8 Bict'ria PC a& '' at #i# the -e&t @reate -$&i#e&&e&A
t' -$+ the# thi& '#e &h'$ #'t -ee# mae at a, et a'#e 'r a
price ta ' £65m. e' i& h' the ea a& #a#ce a&
''&:
<. £30.m thr'$h a 2.5m &hare& pr'cee at £12.30/&hare ith
a# aiti'#a 402,633 &hare& R &ame price ' £5m.
. <&', it pace 11,035 &hare& rai&i# £.m 'r 'rki#
capita.
8#terH''r ha& #et &ae& ' £2.29m a# E8D< ' £10.02m at
the e# ' 30 Ma+ 2015.
8, +'$ c'#&ier it& aterta> pr't&, the# it ''k& ike thi&:
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Source: 8#terH''r Gr'$p Cimite.
M're $re#t+, 8#terH''r a& pa+i# £6.255m i# i#tere&t c'&t&
(i#c$i# pe#&i'# c'&t&) i# 2015 a# thi& ha"e & it&
'perati# pr't& ' £5.446m. ?ih i#tere&t c'&t& are aa+&
a&&'ciate ith a -$&i#e&& -ei# hea"i+ i# e-t a# 8#terH''r
'e& £55.633m. he a##$a i#tere&t rate i& a& ''&:
<. £32.5m ' 'a# $e -+ Fe-r$ar+ 2022, it i#c$r& a# i#tere&t '
C8=! (1 H''ri#), p$& 6.5. 8t a& a-e t' re#a#ce a&
mat$rit+ a& $e i# <$$&t 2015.
. 8#tere&t '# the remai#i# £22,05,000 'a# #'te& i& at 0
per a##$m. =# repa+me#t, the 0 'a# #'te& ra#k pari pa&&$
ith the 10 'a# #'te&.
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De&pite, &ae& ' £2.3m, 8#terH''r ha"e #e"er mae a ce#t i#pr't a# ha"e a #eati"e e*$it+ p'&iti'# ' £19m.
here a& a rea p'&&i-iit+ that 8#terH''r c'$ ha"e -ee# i#
ami#i&trati'#, -$t Bict'ria PC &a"e the a+, i#&tea it c'$
ha"e ac*$ire it 'r a racti'# ' the price
(8 +'$ a#t t' rea a-'$t the '"er&tateme#t ' 8#terH''r%&
ca&h H', cick here.)
(c#uisition <: =uest Carpet 1anufacturer Pty Limited
8t i& a# <$&traia# carpet maker hich a& &#appe $p 'r
£11.5m ith a $rther eerre pa+me#t ' £4.9m t' -e pai
'$t i# the #e>t three +ear&.
< e k#' a-'$t I$e&t carpet i& it ha re"e#$e ' £2.1m
a# (#'rmai&e, hate"er that mea#&) E8D< ' £3.3m.
6% The 0iggest winner is 5eo> 7ilding?
Shareh'er& &ti thi#k Mr. 7ii# et& pai £65,000 per +ear.
8#&tea, the "a$e i& c'&er t' £100m (appare#t+ £90m, rea
-e')
+ reai# the c'#tract care$+, +'$ '$ k#' that Mr
7ii# i& re*$ire t' pa+ £20,000. 8# the c'#tract, he i& t'
ei"er £3/&hare t' &hareh'er& i# t' +ear& 'r 'reit -+
pa+i# a $rther £100,000 t' the -$&i#e&&. ' he ha& $e
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hi& e# ' the -arai# (hate"er mea#& #ece&&ar+), Mr 7ii#rear i& 50 ' the e#tire -$&i#e&& '# a# i&&$e ' ,0,30
&hare& t' hi& pri"ate h'i# cae ame# ?'i#& Cimite.
<t c$rre#t price&, (,0,30 £14.03/&hare) T £99,440,52.
<# i# <$$&t ' 2015, Mr 7ii# &' 1m &hare& t' @&ati&+A
i#&tit$ti'#a ema#, hie p'cketi# a c'' *44%4@<m% he
$e &ti h'& 41 ' Bict'ria PC.
7ho is the highest rewarded 0oss in the AB
he hihe&t pai E= i& Sir Marti# S'rre, at £43m i# 2014, -$t
he '$#e 7PP -+ taki# '"er a# e>i&ti# -$&i#e&& a#
t$r#i# it i#t' a marketi# c'mpa#+ i# 195 (&' he 'e& #'t
*$ai+). <&', 7PP a& 'rth £20.6-# i# market capitai&ati'#,
1 time& m're tha# Ge'N 7ii#%& c'mpa#+.
S', there're the #e>t @ree"a#tA hihe&t pai -'&& i& e# Ba#
e$re#, the E= ' She at £1.2m a# -+ he &tarte 'rki#
at She &i#ce 193.
', the '#+ *$e&ti'# remai#& i&: @7i Mr 7ii# @'U'aA
the re&t ' hi& h'i#&VA
he $+ mae £11m mi#$& the £20,000. here're, 8 '$#%t
-e &$rpri&e i Mr 7ii# h'& '# t' hi& remai#i# &hare&.
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9% ow does Victoria PLC stack up
<&&$mi# the @#$m-er&A are acc$rate, et $& c'mpare
"a$ati'# metric& aai#&t it& peer&.
Bict'ria ike& t' $&e E8D< a& a "a$ati'# mea&$reme#t a#,
e"e# '# that -a&i& there i& a# '"er"a$ati'#:
Victoria eadlam Topp Tiles owden
EoineryPrice t'
E8D<
26 11. 11.96 14
Source: M'r#i#&tar.
<ai#&t &imiar -$&i#e&&e& (i# the area ' h'$&eh'
acce&&'rie&), Bict'ria i& tice a& e>pe#&i"e '# it& @a"'$riteA
metric. he rea mea&$re i& #et mari#&& a# '# that -a&i&,
Bict'ria &h'e rea eak#e&&:
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2011 2012 2013 2014 2015
5.00
0.00
5.00
10.00
15.00
VictoriaFs ac#uisition uncompetiti!e ac#uisitions
Bict'ria PCD (E)
?'e# 'i#er+ (E)
/'pp& /ie& (E)
?eaam (E))G+
Source: M'r#i#&tar.
=ka+, &' ear#i#& are #'t terric, -$t &$re+ Bict'ria ha& *$ait+
a&&et -acki# r'm the am'$#t ' ac*$i&iti'#& the+ are maki#.
S', a ''k at price t' e*$it+ '$ -e a $&e$ mea&$reme#t.
Victoria eadlam Topp Tiles owden
EoineryPrice t'
E*$it+
4.5 2.33 2.4 10
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+ that mea&$reme#t, Bict'ria%& PC i& #'t #'t'ri'$&+e>pe#&i"e.
<# here%&, h' m$ch '$ that c'&t t' -$+ the c'mpa#+%&
&ae&.
Victoria eadlam Topp Tiles owden
EoineryEB (£m) 334 404. 325 2,14Sae& (£m) 253
(pr'ecte)
654 212 1,220
EB/Sae& 1.32 0.62 1.53 2.31
', it%& the time t' &et apart Bict'ria PC r'm it& peer& -+
c'mpari# it& e-t a# the *$ait+ ' it& a&&et&.
Fir&t, +'$ #ee t' &eparate the iNere#t c'mp'#e#t& ' #'#
c$rre#t a&&et&:
Victoria eadlam Topp Tiles owden
EoineryG''i
(£m)
0. 0 0.245 0
8#ta#i-e&
(£m)
. 10 0 4.6
a#i-e&
(£m)
29.4 102.6 4.1 129.2
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<#, Bict'ria%& a&&et c'mp'&iti'# i& mae $p ' 65 ''ihie it& ri"a& ha"e c'&e t' Ker' ''i '# it& -''k&, hich
mea#& the rea a&&et-acki# ha& #'t r'#.
e>t, +'$ #ee t' acc'$#t 'r it& e-t, ca&h a# e*$it+:
Victoria eadlam Topp Tiles owden
EoineryDe-t (£m) 90 23.1 44. 0a&h (£m) . 49.1 16.6 166.1E*$it+
(£m)
53.5 14. 10.66 29
', +'$ ca# &ee h' m$ch ' the c'mpa#+%& e-t i& -acke
-+ ca&h a# ta#i-e a&&et&:
Victoria eadlam Topp Tiles owden
EoineryHa&h
-acki#
()
.6 212.6 3.1 #/a
a#i-e
a&&et
-acki#
()
32.6 444.1 105.4 #/a
'ta () 41.2 656. 142.5 #/aDe-t/capit
a
0.62 0.11 0.0 #/a
De-t/e*$it
+
1.6 0.125 4.2 #/a
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8t ha& #' e-t.
' the #ake e+e, 'pp& ie& i& the '#e h' i& m'&t at ri&k '
aii# -eca$&e it ha& e"erae it& e*$it+ aai#&t it& e-t&. $t
'pp& ie& e-t i& 3 c'"ere -+ ca&h a# 105 ' ta#i-e
a&&et&.
< '' a+ t' a&&e&& the *$ait+ ' it& i#ta#i-e& 'r ta#i-e&
i& t' ' 'r the $$ar a# ''k 'r @ree ca&h H'A, a# i#
'pp& ie%& ca&e, it mae £9.4m (2014) a# £6.5m (2015) '
ree ca&h H' hich c'$ -e $&e t' pa+ 'N e-t 'r $#
i"ie#&.
?'e"er, that i&#%t the ca&e 'r Bict'ria PC -eca$&e it '#+ ha&
.6 ' e-t -acke -+ ca&h a# 32.6 -+ ta#i-e a&&et&. <#&i#ce it%& ac*$iri# c'mpa#ie&, the# ree ca&h H' i& a #eati"e
£10.m i# 2015 a# it 't 'r&e i# it& ate&t i#terim (a #eati"e
£20m i# ree ca&h H').
<% (fter the pleasure comes the pain
7e me#ti'#e e-t i# the pre"i'$& &ecti'#, -$t +'$ #ee t'
ha"e &'me pre&pecti"e ' the e"erae Bict'ria PC i& c'mi#
$#er.
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0
10
20
30
40
50
60
0
0
90
100
43%94I%63J%J@44%@6J%4 @%J2J%<< J%2
42%2@
6J%2@
JJ%K2
Spending spree
De-t
)*m+
Source: Bict'ria PC.
e're Mr 7ii# arri"e, #a#ce c'&t& ' the -$&i#e&& i# 2013
ere £400,000.
', #a#ce c'&t& are e>pecte t' ri&e -+ £6.6m -+ +eare#
2016 (i# it& i#terim, it a& area+ pa+i# £1.54m) a# m'&t '
it a& c'mi# r'm it& ac*$i&iti'# ' 8#terH''r.
,%/%: he t'ta i#tere&t c'&t& ' #'t i#c$e the I$e&t
ac*$i&iti'#
Dilution of e#uity
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<th'$h, &hareh'er& are '-i"i'$& t' the i#crea&e i# the#$m-er ' &hare& r'm 6.9m t' 1.2m (the rear ' m
&hare& t' Mr 7ii#) i# the a&t e +ear& -+ &e#i# the &hare
price thr'$h the r''.
@% Se!eral !aluations you should consider for
Victoria PLC
e're the take'"er ' Mr 7ii#, Bict'ria PC a& maki# '#
a"erae 19.49 pe#ce per &hare -etee# 2006 a# 2012, &ae&
ere a"erai# £63.1m i# the &ame peri', -$t the market
"a$ati'# a& a mea&+ £16.1m (a ar cr+ r'm the c$rre#t
£254m "a$e).
<#a+&t& ha"e pr'ecte re"e#$e ' £253.4m he# Bict'ria
rep'rt& it& #e>t a##$a re&$t ater i# the +ear, a'# ith the
'reca&t it i make 1 pe#ce per &hare i# pr't, e*$i"ae#t '
£12m (m're etai -e').
F'r a air c'mpari&'#, Bict'ria PC &h'$ make .2 pe#ce per&hare '# £253.4m i# &ae& i it%& t' em$ate the a-'"e peri'.
here're, a market "a$e ' £1m, 'r £4.45/&hare i& the air
"a$e ' it& -$&i#e&&.
$t i# it& ate&t i#terim re&$t&, it ma#ae& '#+ 1.2 pe#ce per
&hare, &' here i it make 69.2 pe#ce r'm t' match it&
'reca&t ' achie"i# 1 pe#ce per &hare.
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<#'ther a+ t' "a$e the &hare& i& t' acc'$#t 'r the
c'mpa#+%& 'perati# a&&et&.
Ba$e per &hare T ('perati# a&&et& J De-t)/$m-er ' &hare&.
he#, )*4IJ%<m - *JKm+4J%4Km *4%I@ per share.
he a-'"e "a$ati'#& are '# Bict'ria%& pre"i'$& market
"a$ati'# a# acaemic &hare price "a$ati'#.
$t i +'$ ''k at a &imiar&iKe -$&i#e&& ike ?eaam that trae
at 15 time& P/E (reHecti# the c$rre#t -$ market "a$ati'#),
the# ear#i#& at Bict'ria #ee t' -e ar'$# £1m
8 Bict'ria PC achie"e& a £m aterta> pr't& r'm £12m pre
ta> pr't&, the# thi& &ti mea#& t'a+%& "a$ati'# i& @&k+hih.A
a&e '# ?eaam%& m$tipe ' 15 time& ear#i#&, the# t'a+%&
"a$ati'# 'r Bict'ria PC &h'$ c'me i# at )*Jm
*4@m+H*49%I< *2%24share%
hat%& e&pite ?eaam ha& #et ca&h ' £26m, ta#i-e a&&et
-acki# ' '"er £106m, a# ear#& a c'#&i&te#t 45 i# #et
mari#&.
The $uture
7he# Bict'ria rep'rt& it& #a re&$t at the e# ' $+ 2016, #et
ear#i#& '$ #'t -e £12m, -$t '$ ike+ c'me i# ar'$#
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£m£9m acc'ri# t' it& &$-&iiarie&% re&$t& (8 e&timate £1m£1.5m i# #et pr't& 'r I$e&t, i"e# that E8D< i& £3.3m).
Bict'ria ha& #'t re"eae the e*$it+ ' 8#terH''r i& a #eati"e
£19m, a# he# it 'e& the# (i#'ri# the I$e&t ac*$i&iti'#), it
mea#& it ae =C; £6.2m t' e*$it+ r'm it& "e ac*$i&iti'#&.
he# there are tak& a-'$t -$+i# Ca#' arpet&, -$t at the
m'me#t thi& i& &pec$ati'# a# #'thi# m're $#ti Bict'ria PC
make& a# a##'$#ceme#t.
Share price direction
8 preict that -etee# #' a# $+ 2016 the &hare& i trae-etee# £15/&hare a# £10/&hare. <# ater the
a##'$#ceme#t ' it& #a re&$t& the taret price at +eare# i&
£5/&hare.
Post-report
he c'mpa#+ ha& p'&te a $+ear trai# $pate &tati# (pre
ta>) pr't& are ahea ' market e>pectati'#, a# there '$
-e reater #et e-t re$cti'# ith the &hare& p'ppi# $p t'
£15/&hare.
Disclosure
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8 ha"e #' p'&iti'#& i# a#+ &t'ck& me#ti'#e, a# #' pa#& t'i#itiate a#+ p'&iti'#& ithi# the #e>t 2 h'$r&. 8 r'te thi&
artice m+&e, a# it e>pre&&e& m+ 'pi#i'#&. Pea&e ' +'$r
'# re&earch a# &eek pr'e&&i'#a i#"e&tme#t a"ice.
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