Victoria (VCP) Trading Update summary

Trading performance and market conditions

• H1 revenue and underlying EBITDA expected to be lower due to continued soft flooring demand, with EBITDA circa £50 million, down from £64.9 million in H2 FY2024.

• Flooring market demand has declined 20-25%, but Victoria has outperformed the market and improved competitiveness in the UK.

• H2 trading anticipated to be stronger, supported by management actions and slight demand improvement, though earnings likely below consensus.

• Margins impacted by low demand and operational leverage, but pricing remains stable and cost optimization is underway.

• Recent positive data in end markets, such as increased mortgage approvals and rising house prices, signal potential demand recovery.

Management initiatives and cost optimization

• Merged UK carpet brands and consolidated underlay operations, delivering annual savings of about £5 million.

• Relocated production capacity and cut costs in Belgium, with expected additional €6.1 million annual savings from FY2026.

• Group-wide procurement launched, targeting £500 million in purchasing, with £5 million annual earnings increase and further savings expected in FY2026.

• Major ceramics production reorganization underway, aiming for £16-19 million annual earnings improvement post-FY2026.

• Combined, these actions are expected to drive a £25 million earnings increase as demand recovers, supporting EBITDA margin recovery.

Liquidity, refinancing, and outlook

• Group liquidity remains strong, with cash and undrawn credit lines exceeding £250 million.

• Debt advisers appointed for refinancing of Senior Secured Notes due August 2026; legal advisers retained.

• Management remains focused on productivity and cost reduction, positioning for growth as macroeconomic conditions improve.

• No fundamental change in the flooring industry; current low demand attributed to macroeconomic factors.

• Victoria is prepared for growth without significant additional cost as recovery approaches.