Revenues grew by 16 per cent over the half year to September 2019 to £315.9 million at Kidderminster-based Victoria Carpets, versus the same period in the prior year, driven by a combination of organic growth and the acquisition of Saloni, a Spanish manufacturer of mid to high-end ceramic and porcelain tiles, for £86 million in 2018.
The company also reported significantly lower exceptional restructuring costs in the period of £1.8 million and a successful completion of debt refinancing in July, including the inaugural bond issue of €330 million senior secured notes (£293.8m at the period-end exchange rate).
Whilst the company admits these incur a higher rate of interest, it said the new bonds provide significant benefits and protection to the company with a fixed cost over five years, a more flexible and covenant-lite structure, and access to a new, deep and highly-liquid capital market.
However, increased interest costs from the recent bond issue and the additional borrowings following the acquisition of Saloni, together with the accounting impact of IFRS 16, resulted in a two per cent reduction in underlying profit before tax.
The Board expects the full year result to be in line with market expectations.
Geoff Wilding, Executive Chairman of Victoria PLC, said:”Victoria has delivered both revenue growth and margin growth in the first half of our 2020 financial year, in challenging market conditions. Alongside these organic-led gains, we also made a small acquisition in Spain, which, following completion of its integration in the first quarter of next year, is expected to contribute meaningful earnings to Victoria due to operational synergies that will result from the integration.
“We were also pleased to successfully complete our bond issue in July, as this provides the Group with secure, long-term financing to support our continued organic and acquisition-based growth.”