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More sensationalist tabloid trash, this time an article in The Times today.
Contrary to the headline which suggested that Victoria’s board was expected to be “carpeted” at the General Meeting today, 97% of shareholders voted in favour of the two resolutions, accepting the annual accounts, and reappointing the auditors.
Last week’s FT article about Qasim Karim is tabloid trash.
The story focuses on the criminal activities 13 years ago of the younger brother of two of Victoria’s managers. Not the Victoria managers themselves, but their younger brother, who has never worked for Victoria.
The two older brothers, Batash and Saqib, are successfully managing two of Victoria’s smaller subsidiaries, Hanover and Ezi Floor, which together account for around 2% of Victoria’s group revenue.
Qasim’s quoted comment that Victoria also tried to acquire his paints, varnishes and sealants business 12 months ago is delusional nonsense. Victoria is not in the business of paints, varnishes and sealants.
It is interesting that The FT turned off the comments on the Qasim Karim article, and interesting that shorters loaded up the day before the article was published.
You have to wonder who is motivating whom to publish such sensationalist tabloid rubbish.
What the article does inadvertently do is destroy one of the theories propagated by the shorters, that Hanover and Ezi Floor were not acquisitions at all but elaborate accounting frauds, which the investigative journalist who wrote this article has clearly shown is not the case.
The criminal activities of younger brother Qasim Karim 13 years ago are of no relevance whatsoever to the future prospects of Victoria PLC. The market has clearly recognised this with the share price having gone up 25% in the week since the article was published.
The shorters lost money last time they manipulated the share price down with their baseless rumours and trolls, and they’re going to lose money again this time.
How unfortunate that the FT article is having the opposite effect and sending us up.
£5 plus is coming. AIM is turning. Close the shorts
The family just keeps on getting larger. It seems VCP missed a trick on not buying out Qasim Karim's business too. Another one for GT not to audit....
https://www.ft.com/content/49b2d1d2-7c17-4d7c-ac9f-1e1db8540c18
It really is amazing that any company managed to get an unqualifed audit report during Covid, including all of VCP's other UK subsidiaries, and Headlam, in its sector, apart from Ezifloor....Just bad luck I guess.
Don't you think that just brushing it off as a nothing burger is a bit questionable too?
So many of the inter related stuff rings bells to me. These transactions shouldn't read like an iffy game for all the family IMHO
This morning’s RNS confirms that Grant Thornton are being reappointed as the group’s auditors, contrary to the recent short-seller claims that they had resigned or had refused to be reappointed. Yet another irrefutable example of the malicious misinformation the short sellers spread in an attempt to manipulate the share price.
Grant Thornton would not have agreed to continue as auditors if the accounting issues identified in the audit report were serious or endemic.
Https://brevarthanresearch.substack.com/p/victoria-plc-questions-for-the-auditors
Who cares its 400k...... lol read the agm statement
never seen such a silly drop in a long time..... back to £5 when the shorts are done IMO
Awaiting the audit, but also the building trade has greatly suffered too. I read there is sure to be a bloodbath this week regarding Barratt's 'top wigs' being rewarded far too much considering the present sp . Maybe VCP will drop a little lower. But also it might be best to top up now if holding already pre their post this week !!
Still waiting for an audit appointment announcement. I guess we will know by Friday! Not sure how a listed entity can carry out without an auditor...
Yeah those ratings agencies are definitely ahead of the curve. After they called the subprime crisis didn't they? Didn't they?!!
Rating agency Fitch has reviewed Victoria PLC’s financials and market dynamics, including non-public information, and “has affirmed Victoria PLC's Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook and Victoria's senior secured notes at 'BB+'”
“The rating balances Victoria's high leverage with the group's good diversification and strong market position. Victoria's exposure towards higher-end customers supports its ability to pass on incremental costs without a major impact on their volumes in a recessionary environment.”
“The Stable Outlook reflects the group's strong ability to integrate its new acquisitions, resulting in incremental EBITDA across the rating horizon to 2026.”
Fitch is one of the top three ratings agencies in the world and has undergone rigorous analysis of Victoria to arrive at its Stable Outlook rating.
Who are we going to believe, the monotonously repetitive commentary of self-interested short sellers, or the considered analysis of impartial professionals like Fitch, Peel Hunt, Berenberg, and Singer?”
Don't you think that the market has reacted adversely to the sharp increase in borrowing, at a time when money has become expensive, and general market conditions which look like they will be tough for some time. US and much of EU is recession bound. Baldy's did a good deal for a low end producer of shed fodder. Yet another family who will be glad to be out of it, as so many are in the area. IMHO
The irrational hysteria in these chat rooms and even in the mainstream media around accounting issues relating to £400K of revenue has resulted in a share price which represents an EBITDA multiple for the Group of only 7x (taking into account £658m of Debt, £238m of Preference Shares, £600m of Market Cap and expected 2023/24 EBITDA of £214m) which is very low for a company with Revenues of £1.5B and a portfolio of businesses spread across the UK, Spain, Italy, The Netherlands, Belgium, Turkey and Australia.
By way of comparison, the single Spanish ceramic tiles producer Baldocer, with revenues of around €200m, sold last week for €425m plus an Earn Out arrangement, representing an EBITDA multiple of around 10x.
At 10x EBITDA Victoria’s share price would be over £10.
As is often the case, the market has way over-reacted to a bit of bad news which is obviously in fact quite immaterial, creating a great buying opportunity for more savvy investors.
Seems to be no doubt that they've gone on a massive shopping spree using other folks' money. That's possible of course, provided that the acquisitions work. The Saloni plant in Spain is colossal, mothballing that suggests that they've got production capacity way beyond their sales ability, not that surprising if you factor in the Indian producers taking their lunch. Pretending to be upmarket, whilst delivering nothing special to the consumer market, is again possible in upbeat economic conditions. In more hard pressed times, they'll get battered by the giants of the Pamesa and Stylnul groups IMHO. Don't know about carpets, have no experience of the old flea trap area.
Given static share numbers, this suggests that the Fixed Assets were acquired at prices including a lot of intangible value.
The related debt is very real, however.
As the Iceberg (Aug 2022) note says
"..Victoria also has no tangible equity (minus £302m) if you exclude intangible assets from acquisitions. This is because debt, largely senior secured notes and preferred equity, was used to pay for most deals. As a result, total debt was 120x higher at the end of FY22 at £1bn, versus £8.6m at the end of FY13.
Even worse is the free cash flow. The group’s total FCF for the last 10 financial years was minus £493m. Peers Headlam Group and Mohawk Industries, on the other hand, produced £246m and $2.1bn (~£1.6bn), respectively..."
E&OE, NAI
No position.
ATB
VCP net debt progression
£m 255 326 449 462 732 1,066
Net Fixed Assets
£m 149 197 297 286 357 627
Book Value
£m 266 302 241 208 203 119
Average Shares
m 103 123 125 129 117 116
Book Value ps
p 226 241 192 178 173 103
You make it seem so incredibly insignificant, and yet an audited accounts timescale was missed. Would a matter that required such a small adjustment really have delayed a matter that the law demands?
You take a strict supporting view at all times, that's your right.
The sceptical view is that debt has massively increased, and that spending in the sector is subject to harsher economic times.
Jury out.
The company has provided a full statement regarding the audit issues. In summary;
The issues apply only to one very small subsidiary (Hanover), which represents “less than 1.25% of total group revenue”, and less than £400K of payments that were applied to Hanover customer accounts could not be properly reconciled to original invoices. In other words, the issue is quite immaterial and doesn’t change the underlying value of the group whatsoever, despite the shorts’ desperate attempt to make it sound like it does.
“There is no wrong-doing at Hanover and nor are the auditors alleging this”.
The company has “identified the issue, allocated additional finance resources, and is putting appropriate controls in place and the issue is not ongoing.”
The scope of the audit was limited by the company because it became obvious that the auditors were not going to get to the bottom of the immaterial issue they were digging into in time to meet the company’s statutory obligation of publishing the audit report by the end of September, six months after the balance date, which could have been a more significant problem.
It is interesting to note that the same shorts have in the past made a huge fuss about the shorts driven “Iceberg Report”, which ridiculously claimed in another desperate attempt to discredit the company that Hanover didn’t even exist as an acquisition. The auditors have clearly had Hanover under the microscope for months, and have concluded that a very small percentage of its revenue cannot be properly reconciled to individual invoices, clearly confirming that Hanover does exist. The shorts that were previously urging that the shares were over-valued because Hanover doesn’t exist are now urging that the shares are over-valued because a very small percentage of Hanover’s revenue cannot be reconciled.
GT are a bit conflicted, since they allegedly failed to pick up the 2 x questionable acquisitions subject of Iceberg's article, one of which is named again in the current furore.
Do they 'double down' or 'fess up ?
Tough call.
Iceberg flagged VCP's debt levels as one of their other concerns, btw.
That research was from last year extrader. Having said that, the matters raised were never answered by the company.
I notice that Winny and Sharepoppets have got the knife in again, but I don't subscribe so I can't see what items he has identified as iffy.
As I said before, debt has risen year on year. By a HUGE amount. In an era of high interest rates, that has to falg up concerns doesn't it?
Bargain price seems to have been shortly after 10.00 @ £4 - 20 for some fortunate investors. £1 - 30 dearer to by now, so some may have certainly missed the boat. Company will prosper eventually. I can wait a couple of years.
PS One of the companies named by Iceberg - Hanover Flooring Limited - appears to be the same company that is the subject of Grant Thornton's currently qualified opinion, mentioned in today's FT article.
A 30 second google search ' vcp audit issues' threw up this lead
https://iceberg-research.com/2022/08/03/victoria-plc-vcp-ln-mites-under-the-rug/
suggesting some irregularities, involving 2 specific acquisitions
Companies Victoria claimed to have bought were in fact its own existing subsidiaries.
Victoria made these entities look unrelated i.e., their names were changed before ‘acquisition’.
At the least, Iceberg's dossier raises questions, AFAICS.
NAI, DYOR etc etc
I have no position.