(Alliance News) - Victoria PLC on Friday said there was "no wrong-doing whatsoever" at its Hanover Flooring unit after comments from its auditor marred the firm's annual results.
Chair Geoff Wilding, ahead of the Worcester, England-based flooring, designer, manufacturer and distributor's annual meeting, said that its annual results were overshadowed by a "considerable reaction" to its auditor's qualified opinion regarding Hanover Flooring Ltd.
Auditor Grant Thornton UK LLP identified "risk factors of fraud" as it handed its qualified opinion. A qualified opinion essentially means that, save for some exceptions, a company's financial numbers are an accurate representation.
Victoria published annual results earlier in September, which showed that revenue surged 43% to a record GBP1.46 billion in the year ended April 1 from GBP1.02 million the year prior. The full annual report followed roughly a week later, released after the market close last Friday.
Grant Thornton's statement, included in the annual report, noted that "potential irregularities" were found at Hanover, adding that "inadequate accounting records were retained". It added that it had spotted "instances of non-compliance with high value dealer regulations", essentially a money laundering supervision.
Wilding responded that there was "no wrong-doing whatsoever" at Hanover that impacts the firm's financial statements, explaining that Hanover represents less than 1.3% of the group's revenue.
He also said that Hanover's issue was "predominantly one of having heightened financial risk due to inadequate accounting records associated with no more than GBP400,000 of customer receipts".
"From the extensive work undertaken by ourselves and a 'Big-Four' accounting advisor, we are very clear that all payments due have been received, no money is unaccounted for and Victoria has suffered no loss. We are also very clear that there are no other such concerns across the rest of the group and our auditors have confirmed that these accounts give a true and fair view of the company," he said.
Regarding its current trading activity, Victoria confirmed that its first quarter was in line with forecasts and consistent with consensus expectations for financial 2024. It also continues to expect a GBP20 million increase in annual earnings before interest, tax, depreciation and amortisation from integration projects. Its Ebitda in the previous financial year totalled GBP196.0 million.
It also expects free cash flow to rise sharply in the second half of financial 2024 and in financial 2025.
Shares in Victoria were up 2.8% at 541.64 pence each in London on Friday afternoon.
By Sabrina Penty, Alliance News reporter
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Victoria (VCP)