Good afternoon, and welcome to the Victoria PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode.

Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send.

The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so.

Before we begin, I'd like to submit the following poll, and now I'd like to hand you over to the management team. Geoff, good afternoon, sir.

Good afternoon. Thanks, everybody, for joining the call, and we'll get straight into it so that we have a little bit more time for Q&A at the end.

I'll get Alec to take you through the financial overview of the year, and then we'll pick up.

Right. Thanks, Geoff.

Great. Just to start with a couple of headlines.

Obviously, since we updated at the half year, the revenue outlook was probably a little bit softer than we'd anticipated. Revenue for full year '26 was 1 billion .045.

That's revenue down about 6%. Volume was a little bit softer than that, down almost 9%, really reflecting just that tough macro environment.

We'll come on to more recent trading, which has been a lot more positive, but, yeah, I think that lower volume has been the main driver of performance last year. EBITDA came in at 92.3 million.

That is broadly in line with the guidance that we provided back in February. We have aimed to be relatively conservative on the balance sheet movements at the end of the year, we think that is a good clean number.

A little bit of margin compression there, which we'll come on to explain later. Clearly, financing has been a big focus for the year overall.

Net debt was just over a billion at 1.03063. We will spend a bit of time in the presentation talking you through the different steps to the refinancing.

Obviously, delighted to announce the 90% acceptance on our refinancing yesterday, and we'll explain that in a little bit more detail. Clearly, leverage also came up a little bit during the year to 11.5 times.

Obviously, partly we are reducing that, we will explain that in more detail later. Geoff, just for exec summary.

Sure. As Alec just mentioned, the second half of the year was weaker than we expected.

A lot of that was driven from the war in Iran breaking out towards the very end of the year, and that caused quite a sharp drop-off in both commercial demand and consumer demand. The final few months of the year were much weaker than we expected.

However, the one encouraging factor during that period was that we were able to improve the average selling price which demonstrates the desirability of the group's products for consumers. The main focus of the business over the last 12 months has been executing the various profit improvement programs that we had in place.

We have outlined those to you in the half year and also the full year result last year, what those projects are. We've made good progress.

Most are on track or ahead of schedule, and although the lower volumes that the market is showing at the present time means that the impact is somewhat damped, we are very comfortable that the projects will deliver the upturn in earnings in the medium term. Alec going to take you through the refinancing shortly and the details of it, because I know we want to get a clean balance sheet for everybody to understand exactly what the moving parts have been, I'll leave that to him.

Lastly, the start of this year has been very, very encouraging. We've managed to achieve volume growth.

Most of that has been in Australia and the UK, where some of our competitors have been struggling badly, and we've made major market share gains. Volumes up 3%.

We've put prices up as well, we've achieved 7% revenue growth. The profitability for the quarter was ahead of Q1 of last year, and that's particularly encouraging because Q1 of last year was the best quarter the company had during FY26.

Being ahead of that for the first quarter of this year, comfortably ahead of it, is very encouraging. You can take this?

Obviously, a lot going on on the balance sheet over the last 12 months, I'll step everyone through that. Look, a lot of detail here.

We'll try to stay kind of at the headline level. Obviously, we can kind of dip into any further Q&A after that.

Two main steps this year. Last summer, we basically refinanced all of our 2026 maturities.

That was both our super senior RCF and the 2026 bonds. That was done through an exchange, and basically extended out the maturities out to 2029.

Then, obviously, more recently, we announced, yeah, an extension of those 2028 bonds, which is the next maturity, as well as a refinancing of Koch's preferred equity, which had the option to convert into ordinary equity in November. Delighted to be able to kind of effectively refinance about £1.2 billion of liabilities, which, look, I think it's a great achievement for the team central and local management.

Thank you for everyone that's supported that. Yesterday, we announced 90% approval from the bondholders.

There is still about 3, 4 months before that completes, which we are expecting to happen early in H2, but subject to the shareholder vote, we're now very confident that that will progress. Now, in terms of kind of what that brings to the business, two transactions, in combination, extends out our debt maturities significantly, our first maturity is now only in 2029.

This gives a great runway for the operational improvements that we are making. Geoff and I will talk through some of those through the rest of the presentation.

I think we've had good progress this year, somewhat masked by the kind of lower volumes in the market, but that is certainly coming through very tangibly. It also significantly reduces our balance sheet liabilities by over £300 million, both for our external partners, whether that's customers, suppliers, and also our shareholders, we think that is a great step forwards.

Then, finally, it also reduces our ongoing finance costs and PIK dividends by about £34 million. That also includes a £5 million cash interest reduction, so, again, very helpful to keep more cash in the business and reduce those ongoing costs.

Now, I think overall what this demonstrates is that actually we do have very strong access to finance. We're very lucky to have a diverse capital structure, lots of different lenders of different types.

Actually, what the last 12 months have shown is their kind of ongoing support for the business. Hopefully, their approval of this process is also demonstrate their belief in the recovery profile of the business, which again we'll hope to demonstrate in the coming months.

Now, as part of the transactions, Koch will become our largest shareholder. They will take approximately a 24.9% stake in the equity, and they'll be providing an additional board member.

I think a couple of points to note there. It's part of that process that's been very fulsome.

They have gone through a full diligence process with both Geoff and I and also the local teams. Look, I think I'm sure they'd agree that actually the local management teams are impressive, and kind of key point in their belief in the business.

Going forward, we're looking forward to the additional skills that they'll be bringing to the board. Very pleased to have them on board for the next phase of the journey.

Next page just goes into a little bit more detail on the maths. I think we can probably talk through that in more detail on the next page.

Key thing for the '28s, they're exchanging their 2028 bonds into new 2031 maturity notes at 75 cents in the euro. They're also receiving 34.8 million shares, which is approximately 19% of the equity.

Then there are some work fees as part of that transaction as well. On the Koch side, the balance sheet value of the pref at the end of March was £394 million.

In return for that, they are getting just over €20 million of those new 2031 notes. They're reducing the pref balance down to £50 million of amended pref, again with an extended maturity of 2031.

As we touched on, they'll increase their equity stake up to 24.9%. The final piece is that they will receive a contingent value rights.

This is a financial derivative that will sit on the balance sheet. We estimate that will have a value of about £34 million.

We are still working through the accounting and tax treatment of that, but obviously taking external advice in providing that number. It has a redemption value of £270 million.

That is basically offset against the value of the new shares that they have been given. The way to think about that is it's a value protection mechanism for their equity value, so as their share price recovers, the liability comes down.

I think that's a novel and unique way of providing that protection whilst demonstrating that belief in recovering the business. Now, the CVR has a couple of trigger rights in that.

Once we deliver £400 million of cumulative EBITDA from closing, or if the market cap gets to £800 million, that has the right to convert. I think in those situations, I think all the shareholders will be very pleased by the progression of the business at that stage, worth being aware of, but not a particular constraint.

Going on to the next page. I did that on my laptop rather than the screen.

A relatively busy page, I'll just give you a bit of an outline of what's here. On the left-hand side, that is the pre-transaction balance sheet and interest rate values as at March, and then on the right-hand side, it's what happens post-transaction.

The key changes are obviously with the 2028s and with pref, middle and bottom of the page. I think the key punch lines there really highlighted in green, the net indebtedness goes from that 1,267, which excludes the lease liabilities, and that goes down to £945 million, so that's that broadly £300 million reduction in balance sheet liabilities.

Then the ongoing servicing cost of that capital will reduce from about 125 million down to 91. Now, at the bottom there, we've also just brought out that maturity profile extension.

Left-hand side is how the maturity profile looks this time last year, and obviously we've now pushed that out again to give that operational recovery runway. On the interest going forward, I think it's worth noting the new 2031 bonds, the interest there is paid in PIK, okay, so that will help us retain more cash within the business.

The same for the preferred equity. The new lower value has a lower PIK dividend rate of only 8%, the ongoing cost of that is much reduced.

Moving on to 2026. This page gives us the usual overview of performance.

Look, I think, as we touched on at the start, key driver of the year has really been the lower volumes, which has fed through to lower revenues. I think, in particular, the second half was weaker than anticipated.

Obviously, we're all aware lots of macro noise, not only reducing economic activity, but also putting a little bit of a dent in consumer confidence. In the final quarter, we probably were more conservative on stock provisioning, particularly in our ceramics division.

You can kind of see that in the profitability. However, we have begun to see volumes recover volumes and revenue recover, as Geoff mentioned, in Q1.

That is the first time that has been consistent since I arrived at the business over a year ago. Really pleasing to see that, and we'll come on to the reasons, but, it is outperformance of our local peers, particularly pleasing on that front.

In terms of profitability, it is worth noting that as we transition the rugs manufacturing from Belgium to Turkey, that has obviously had an impact, our rugs division produced £9.5 million less EBITDA than the year before. Then 2025 also benefited from about £10 million of hedging benefits.

Obviously, the combination of those two things account for the majority of that EBITDA decline. Given our guidance on how volume impacts our profitability, you can see that actually a lot of hard work has been done across the business to improve the cost base of the business.

Excluding those two things, actually EBITDA margin improved slightly by 0.3% despite that significant volume decline. Good performance by the team in terms of what we can control, and we'll obviously keep on pushing forward with those business improvements wherever we can.

Just very quickly on this slide, I think what this brings out, it splits the volume and pricing dynamic by division. Sorry, two sets of slides.

You can see, in every case, really it is actually the volume decline here. The left-hand bar in each case, that has generally been the main driver.

I think in North America, a little bit of mix shift there, which is what's bringing down that ASP, rather than any pricing action. Generally, across the businesses, it's a reasonable environment for price changes, but we do obviously have quite a broad portfolio, and so a little bit of that change is really driven by mix.

Within ceramics, we have previously mentioned that we were kind of exiting some lower profitability product lines. Possibly counter-intuitively, those were actually some of the higher price items within our Italian business in particular, and so that's really what's brought down the ASP in ceramics.

The rest of the business, actually, trend-wise, probably on a positive there. Here we can see the breakout of the EBITDA change.

Again, that is largely margin compression. Obviously, because of the operational gearing in the business, as you get the volumes come down, the margins do compress, because of the gross profit that drops at the bottom.

You can see we have at the center looks to be saving costs, and so actually that was an area of improvement through the year. Just quickly to touch on exceptionals.

Clearly, a lot of moving parts here, won't touch on everything. The orange items are the cash items, whilst the headline numbers are obviously very large, actually the cash impact is much smaller than that.

Key ones there really the reorganization costs. We talked about a lot of business changes going on throughout the year.

Broadly, about £21 million in costs there. Then, obviously, the refinancing has incurred a number of costs, just over £20 million of cash costs for the refi.

There will be more refi costs as we go through FY27, which will largely land in H2 this year. Worth noting, we have taken provisions for the changes in Belgium, which is an exceptional provision charge of about £30 million.

There are also exceptional impairment charges, which is effectively goodwill and other write-downs related to historical investments, which are no longer supported by the cash flow forecast. Moving on to cash flow itself.

Again, relatively fulsome slide, not proposing to go through every block. I think just to pick out the key items there.

In the kind of first teal bar, that is demonstrating the working capital inflow. We discussed at Christmas that we were targeting a £40 million inflow in steady state.

Here is there really around receivables, inventory, which are in our control, new processes put in place across the divisions. The team have done a great job actually chasing down overdue payments.

That is now actually pretty well controlled. While that benefit has already flowed through, on the inventory side, generally we are looking at SKU reduction and making sure that we are using raw materials effectively in terms of the products that we are designing.

That has been a driver of that inflow. Teams have been working on the supplier side, I think a lot of our partners having very constructive in that.

We are being more disciplined around asking for longer payment terms there. Again, that will begin to flow through as we go through this year, with a slightly longer transition, I guess, to get the benefit of that.

Now, as Geoff mentioned, we are beginning to see volume growth, having taken half of that original £40 million target by March, I think the guidance for the year ahead is that we are looking to be working capital neutral. That is, effectively, higher efficiency in our working capital offsetting the growth that we are expecting in the coming months.

Other points to mention just on interest costs here. Just over £30 million there in cash interest costs.

As you'll remember, we have the ability to elect for PIK on those first priority notes, which we did for the first payment in February. We will do that again in the August payment, we only pay 1% cash interest for those bonds for this period.

The first full cash coupon will be due in February, from that point it will be all cash pay. On CapEx for the year, you can see that split out between maintenance of about £40 million and expansionary CapEx of £16 million.

Around that £55 top level, we're expecting to keep that flat for the year, guiding £55 CapEx for FY27. The second teal bar is on asset disposals.

The teams have been asked to remain focused on cash generation. Some of those are small property assets, some of those are old bits of machinery.

That process has begun. We'll come on to our asset sale target for the year ahead, but people are already getting on with that, which is great to see.

In terms of other bars there, exceptions and real, we talked about kind of cash impact about £28 million. In terms of exceptional real and M&A, also flag that 12.5 of M&A expenditure, that is largely the final material deferred M&A payments, which were made in December.

Going forward, very limited deferred payments to be made on historical M&A. Obviously, the right-hand side of the page there, there are a number of non-cash movements in the debts, broadly £80 million between the FX, PIK interest, and non-cash movements.

Those floating bars just providing that bridge for you. Okay.

This page, we've largely touched on it already in terms of how the balance sheet will progress. Small senior net debt reduction as part of the transaction, which is the right-hand column, and obviously the preferred equity, you can see on the bottom right-hand side, reducing very significantly.

I don't think we need to spend any more time on that. Geoff, I think back over to you for the operational review.

Thanks. I'll just begin with a more general comment, and then we'll get into the individual businesses, because we've made some key management changes in the last 6 months where it was felt that the business could benefit from renewed energy and experience in the senior management team.

There are we've made changes in the UK flooring business, in the rugs division, and also in our ceramics business, and we're we're starting to see some results from that. The UK business is making some very strong market share gains since the start of this year.

One of our major competitors has struggled and continues to struggle with the difficult trading conditions, and the management team, our management team, are capitalizing on that. The growth that we're securing is essentially down to having superior product availability and our best-in-class logistics service that we have set up a number of years ago and talked about frequently, Corvaliance.

I think we'll continue to see good growth in the in the UK flooring business this year, both in revenue and also in profitability. It's it's very, very encouraging.

The rugs business, the focus remains on execution of the transition of the manufacturing from Belgium to Turkey. We have Turkey is a much lower cost environment to manufacture.

There's savings in labor and energy. We are well advanced.

This is a project that was begun about 14, 15 months ago. It's scheduled to complete in calendar Q3, we've got a couple of months to go.

It's been a very substantial project. We've we've had to dismiss some 600 employees in Belgium.

We've had to hire nearly 300 new employees in Turkey. We've moved some 40-odd looms, which is, and these looms are generally the size of a house.

These these are big piece of kit. Trying to do that while maintaining customers' service to customers has been probably more challenging than we expected.

The the managing director that runs the division makes the analogy that it's it's kind of like having to change the the wheel, a flat tire, on a car while the car's still driving along the road. We we certainly underestimated the inefficiency as production scaled down in Belgium, and that this led to higher production costs, and also disruption in shipping goods to customers.

You can see that in the the drop in earnings in the rugs business, which you can just go to the next slide. Yeah.

You can see that the drop in volume and earnings in the rugs business. However, I'm pleased to say customers continue to value the product that's made by Balta, and as a result, they've continued to place orders.

There's now a back order book of nearly 4 months. As the looms come into production in Turkey, we'll start to catch that up, and we're expecting, obviously, a that will dramatically change these numbers, both in terms of volume and margin and profitability.

The ceramics division, if I talk briefly about Italy first, the big change we've made in Italy is we consolidated production onto one fewer site. That happened in March of this year, and the savings from that consolidation is about 6 million a year.

That's been fully in effect since the 1st of April. The it has left us with one empty site in Italy that we will look now to sell.

That won't be a sale and leaseback. It'll just be a sale of an empty piece of real estate, and I'll come on to that a little bit later on.

In Spain, the key project has been the installation and commissioning of the V4 production line. This has started in production.

It is a much more efficient piece of equipment than the equipment it replaces. As it scales up production over the next few months, margins will improve and profitability will improve in the ceramics business in Spain.

We're expecting a much better result this year of the in the ceramics division, not relying on any major macro recovery in demand, but more because of the cost savings that we've put through the business in the last 12 months. Go straight in.

You can see that Australia has continued to produce well. I am and remain delighted with the consistent performance of Australia.

It's been a remarkably consistent business and growing business now for 15 years, and we're seeing again good growth this year because another major competitor in that part of the world has has continued to struggle quite badly, and we've we've picked up market share gains there, and that's flowing through into the FY27 performance. The US has in the last 2 years, and it's has suffered from very low housing transactions due to high mortgage rates in the US.

Mortgage rates have been up around 6% plus, and that has that has constrained housing transactions severely, which flows straight through to impact on the flooring sector. However, the business has, since the since balance date, in other words in this financial year, our North American business has secured two major customer wins that are already giving the business a material boost in revenues and earnings.

You can expect to see a much improved result out of North America in this financial year. I'd mentioned earlier that we're looking to sell some real estate.

This slide sort of gives a quick summary of of the key pieces of real estate. We're targeting this year to sell 70 million of of real estate.

We've sold or completed, you will have seen an announcement I think last week, we've completed on one piece of real estate, which was €34 million. There are two more pieces of real estate that are on the market.

Some others will be placed on the market shortly, and we've are quite confident that this year, given the quality of the real estate and the location, we will achieve 70 million of real estate sales during the this financial year.

The pictures on the right-hand side, just a selection of properties we're looking at. That is a broad mix of things across UK, Italy, and Spain.

Okay. On the right-hand side, don't know if you can see my cursor, but the pictures on the right, first is a manufacturing site, top right, which would be a sale and leaseback.

Bottom right, just an example of some of the unused lands that we do own that has adjacency to a commercial park, planning on that is going through to increase the value. Bottom left here is a large distribution site.

Just off the right of the picture is actually one of our largest manufacturing sites. Effectively, some of that is covered and uncovered distribution space.

As part of the consolidation within that business, that site will become free. Again, that can be sold on sale and leaseback.

Then the pictures in the top left of the right-hand side are basically three of our Italian assets. Look like big buildings, but are relatively small sales, but we are working through those over the coming weeks and months.

That portfolio is what underpins that 70 million target through the course of FY27. There will be some additional sales in FY28, but it will be a smaller number.

Okay. Look, final slide here before handing over to Q&A.

This is the current trading and outlook. Really great performance in Q1.

Revenue up 7%, Geoff mentioned, and volumes up 3%. This is all kind of market share or largely market share based.

Profitability also up versus our most profitable quarter of last year, really strong start. I think that's what gives us confidence in the year ahead.

This is kind of a theme that we were hoping, slash expecting, probably this time last year of smaller competitors beginning to struggle with an extended cycle. I think it is a good demonstration that actually we do not need aggressive market growth to take share and grow volumes over the next couple of years.

It's good to see that coming through right now. That is all about winning new clients and pushing to kind of white space within our local market.

As we look at the guidance for the year ahead, it is really about what we have already achieved rather than hoping we're going to do more of that for the balance of the year. Obviously, the Iran conflict has flared up a little bit over the last few days.

I think the way to think about that, obviously, the biggest impact there really is around input cost prices. We are a user of diesel and petrol for moving things around.

That hits your P&L very quickly, obviously, because petrol prices go up. You then also have gas input prices on ceramics side, very ballpark, the cost of a tile is about 20% energy normally.

Then on the synthetic carpet side, obviously that is made from oil derivatives as well. Now, the teams have a pretty well-established playbook from the Ukraine disruption a few years ago.

I think we've been very pleased with how quickly everyone reacted. In some markets, that has meant price increases where that's been relevant.

In others, actually we use it as an opportunity to kind of reposition our price points within markets. That is being very proactively managed.

Clearly, there is a bit of a disconnect between the speed at which raw input prices rise and how quickly those prices can flow through to our customers, there is a little bit of margin headwind if things continue to be volatile. In total, we're guiding to at least £115 million EBITDA in the year ahead.

That's obviously good, strong growth. That is primarily driven by those market share gains being offset by temporary margin dilution from those higher energy input prices.

Obviously, the lower starting volumes at the start of this year has meant that certain EBITDA improvement initiatives that were slated for FY27, we will probably only get the full benefit of those into FY28 and '29 now, pushing back some of the synergy gains we were targeting. That's already factored into the 115.

We are assuming a gradual easing of energy prices. I don't think any of us can sit here today and say hand on heart we know which way that goes and how quickly.

We have factored in a fairly conservative level of oil and gas into how we're budgeting that. Other key pieces of guidance on cash flow.

Property and asset sales targeting about £70 million. CapEx will remain in line with last year, about 55.

Then as we execute that move from Belgium to Turkey, some other initiatives, we expect about £55 million of cash exceptionals through the year. Along with working capital neutrality, as we've touched on previously, that basically means we're looking to have cash levels remaining flat through the year.

There will be a little bit of increase in debt due to kind of the PIK interest that we are incurring. I think well set for the year ahead.

At this point, it's probably worth saying what is happening a bit further out. As we've said, the V4 plant, which we are now calling SAFAN, and the move from Belgium to Turkey, which is Project Himalaya, the run-rate benefits of those will come through in FY28.

Okay. As well as any kind of volume or pricing growth that we'd expect to see then, we will get those cost improvements in FY28, please don't forget about those as you're building your models.

Then just a reminder that for each 5% of volume growth, we would typically expect to get about £20 million of EBITDA improvement. I guess over to you, Geoff, to summarize and then move onto any questions.

I'll do the summary at the end, but we'll take questions in a minute.

That's great. Thank you very much for the presentation.

Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your Investor dashboard.

As you can see, we have received a number of questions throughout today's presentation. Could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end?

Okay. Thank you.

I'll read the first question, and then I think I'll hand over to Alec to answer. First question is, the company's guiding for earnings up about 30% in FY27 with further improvements in FY28 and '29.

Why should investors believe that Victoria has reached an inflection point after several difficult years? It's a fair question, and the most encouraging evidence is that we've already seen the first signs of recovery.

Q1 FY27 delivered growth in both volumes and revenue, with profitability ahead of the prior year, even though that was the optimum quarter of FY26. I think that demonstrates that the operational improvements made during FY26 are beginning to translate into financial performance.

The important thing to appreciate is that the ongoing recovery in earnings is not dependent solely on a market rebound. We have improved our manufacturing footprint, we've reduced costs, integrated the acquisitions more effectively, and the result of that is that our cost base is lower, our productivity is higher, and we're more efficient.

All those initiatives are entirely within our control and continue to be delivered. I think we can safely say that we are through an inflection point at the company.

Alec, there's a question, revenue for the coming year. We've talked about earnings being up 30%, but what about revenue?

It's broadly high single digits, right? Probably approaching £100 million of growth is what we're targeting.

The majority of that is kind of market share and gains, as we mentioned, in the UK and Australia, plus the strong growth in the US. I think there is a little bit of outperformance we saw in Q1 in the grass business as well, which is basically off the back of very poor weather, which never a good reason, but poor weather last year, which didn't repeat this year.

That is part of the reason for the outperforming over the last few months.

Okay. We're asked how much upside exists if the flooring market recovers.

I've commented previously in notes to shareholders that prior to 2022, the sector had a 25-year track record of volume growth of 1.5% to 3% per annum, and price increases contributing another 2% to 3%. Now, we've only got data going back for the 25 years, but that was consistent right across that period.

Since 2022, demand's been negative for each of the last 4 years. Absent structural changes in the sector, and we're confident there aren't any—in other words, people will still continue to need and buy flooring—reversion to the mean's powerful concept.

That suggests to us that volume could be 20%-plus higher than it is today. The important factor for Victoria is that we have quite high operational leverage in the business at the current level of volume.

As Alec said a couple of minutes ago, every incremental increase in volume straight flows through very strongly into profitability, such that I think we have a view that every 5% increase in volume contributes approximately 20% £20 million of operating profit. If we think that volume is currently 20% below where it should be, or maybe 25%, there is very material upside for the business as demand recovers.

What will drive that will be a factor of three main things: housing transactions, consumer discretionary spending, and interest rates. Alec, you have to read out the questions.

My voice is getting croaky.

A very long room with a lot of zoom, it's hardly. Had a question.

Does yesterday's announcement of consent solicitation mean less debt or shares will be issued than originally planned? If so, how much less?

The announcement yesterday was that at least 90% of bondholders have consented. What that means is that we can implement that consent solicitation, and we know that that will succeed when we get the documents out.

The way that is structured is that anyone who does not consent basically has their bonds written down to zero. That process will happen over the next few months.

As we sit here today, we don't know if people won't turn up. If they don't, I guess 10% of the 166 million is about €16 million of potential reduction.

I think it's worth noting the company does own approximately €8 million of bonds. Those were purchased earlier in H2.

Obviously, the reason for that was a block of bonds became available. Clearly, we were very keen to secure voting percentages, and so we kind of took the opportunity to make sure those didn't fall into the wrong hands.

Obviously, as we go through that consent, we won't be able to vote into that, and so that debt will get written down to zero. That is held on the balance sheet of March netted down anyway, doesn't change the March number.

If you're projecting forward, you should assume that bond or new 2PN level is lower by that 8 million '28s, which will turn into 6 million lower 2PNs.

Why should investors believe margins can recover? I think margins have been temporarily depressed by exceptionally low volumes and some very dramatic changes in input costs, particularly energy and oil-based raw materials over the last 3 or 4 years.

That has begun with the war in Ukraine, which drove up energy prices dramatically and raw material input prices, and obviously Iran has happened more recently. That's been the reason for the compression in the margins.

However, historically, Victoria's generated EBITDA margins in the mid to high teens for nearly a decade. I would suggest that the evidence exists that that is a realistic possibility and as demand recovers and as we put through some of these productivity improvements.

It's important that despite the much lower demand and the operational leverage impact of that lower demand, our belief, which we've shared previously with investors, that we can secure another 50 million of savings beyond where we were last year, is sufficient to restore mid-teen EBITDA margins even before there's a cyclical recovery. The margins are currently running at about 9%.

We put through another 50 million of savings, which we think is achievable, or we believe is achievable, that gets us to mid teens even before there is a recovery in volume, and which will drive margins up further because of operational leverage. In the future, margins will benefit from both the delivery of the productivity improvements and also a recovery in demand.

Go on that one?

Yeah.

The next one is, with many competitors under pressure, do you see opportunities to emerge from this downturn with a structurally stronger competitive position? I think the simple answer is yes, right?

Across our markets, we have different market shares. I think where we are a larger player, that is obviously the bigger opportunity.

As we sit at group, we have choices about where we deploy capital. I think we are looking to be very disciplined around where we put more money to work.

As with everything, you usually get better returns where you are already strongest. Certainly we've highlighted the UK and Australia as areas where we are able to push into space where smaller competitors are struggling.

Yes, I think we will be able to double down on that in most of our geographies. Had a question on net cash flow change from Turkey in FY27, Turkey savings minus Belgium costs.

In terms of the actual transition itself, we've obviously completed that first Belgium sale. The net proceeds there were probably close to £25 million.

We are looking to do another one of the three sales within the year. That will mean that the vast majority of the transition costs are covered in FY27.

Third and final sale in Belgium will probably slip into FY28, at which point the transition costs will have been all covered.

Asked if acquisitions are still part of the long-term strategy. I think the immediate focus of the management team is on execution of the various internal projects to improve earnings and delever the business.

That is what we are fully focused on today. However, even over the last 2 or 3 years, we've maintained contact with potential opportunities in the industry.

I'm not going to rule out the possibility to conduct leverage-enhancing acquisitions or divestments where it is possible to get a very attractive price for a non-core asset. Acquisitions, divestments remain part of the strategy, but I think we're focused in the short term fully on just executing these projects.

Just to clarify, when we say leverage-enhancing, we mean deleveraging. Obviously, there are opportunities that come at very low multiple, if we can fund those that actually delevers the business.

Clearly, synergies are a big part of that. I would be surprised if those end up being kind of big swings, right?

Kind of the clearer and quicker execution opportunities will be the smaller ones. We're certainly open to those as and when they come up.

I think there is a big focus on capital discipline within the business. Clearly, we need to be comfortable on the level of liquidity that we are rebuilding.

We also have the opportunity to invest in our own debt, when we look at those kind of senior bonds, those trade at a 20%-plus yields. That's obviously an attractive opportunity as we sit here today, and so we are going to look at the kind of benchmarking between external investments and call it internal investment when we're making those decisions.

Who's next?

You choose. My eyes are struggling.

It's a long day.

Are you experiencing any increase in direct sales to retailers rather than via distributors? Do you want to take that one on?

Look, I'm assuming this refers to the UK business and given the sort of well-known difficulties a major distributor is in at the present time. We are certainly seeing growth in revenue in the UK and market share gains.

Our business strategy in the UK is to supply retailers. We regard retailers as our partners, and our focus is on continuing to supply retailers who then in turn supply consumers and some of the individual sole traders doing fitting.

We are not going to now or in the future compete with our retailers.

Okay. Next one's just on Koch.

Said why would Koch feel comfortable becoming a larger shareholder, and what near-term upside do they see? Look, I think, as we kind of talked about earlier, we have spent a lot of time with the Koch team over the last probably 3 to 6 months.

That has been kind of a full diligence exercise meeting most of the local management teams. Look, I think they have done a good job to understand the key drivers of the business.

Clearly, they are big industrialists themselves. I think they do understand that we operate in cyclical markets, and that actually they buy into that recovery longer term.

I think we are pretty well aligned in terms of strategy as well. I think the opportunity for integration savings as well is also exciting to them.

As said earlier, we are looking forward to them having a bit more involvement on the board and the kind of skills that they can bring to us going forward, because I think that'll be for the benefit of all shareholders. Yeah.

Koch are good partners. We don't necessarily see eye-to-eye on everything, as you can imagine, but I cannot ask for better partner than Koch on the business.

The current board appointee of Koch has been extremely helpful over the last 18 months with some of these projects, providing support and analysis and advice. I'm very pleased that we have Koch as a partner, and look, they're economic creatures.

They did not do the refinancing deal that you see because of soft squishy reasons. They did it purely because they can see the potential upside of Victoria as the market recovers and as the projects get executed.

The result of that will be a very significant recovery in earnings. Because of the high financial leverage in the business at the moment, the recovery in earnings will drive equity value creation very, very quickly.

Yep. Come on.

Couple of different questions on asset sales. People asking the split of sale and leasebacks and pure sales in the real estate.

That is broadly 50-50, so, yeah, look, I think kind of about that. That is what we're looking at there.

Then a question about revenue decline in UK soft flooring. The soft flooring division is combined UK artificial grass and rugs.

What we've seen last year was particularly a reduction in the rugs business, as Geoff touched on. Within the UK itself, we've seen double-digit growth in the first quarter, so that's not broken out for you in the numbers, but, yeah, very clear that that is coming through.

Look, we've actually run out of time, Alec. There's been a flood of questions.

We've only got 2 minutes left to go, I think, or 3 minutes might be. I think what we'll need to do is probably pause the questions.

What I'll endeavor to do today is get the questions uploaded and along with answers, because there's actually some very good questions here and quite a lot of detail, but we've just simply run out of time in the hour that we had to answer them all.

That's great. Thank you for answering those questions.

You can't miss this, and of course, the company can review all questions submitted today and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which knows particularly important to the company, Geoff, could I please just ask you for a few closing comments?

Look, I think the key thing for us today and for you as investors is twofold. One, can we deliver on the project plans?

Can we execute on them? Because they have a very, very material impact, obviously, on earnings as they come through both in FY27 and through into FY28.

That would be one significant question I would be asking is can the company deliver on those? Firstly, I think the signs from outside are encouraging.

We've had a very good Q1, a very, very good Q1. Yet we're still waiting for the two major projects to start delivering through into their numbers.

I feel very good about this year. We have been deliberately conservative in our guidance this year.

You will have heard Alec saying that we expect to generate at least 115 million of EBITDA. That we have deliberately been conservative.

We're acutely aware that in the last 3 years we have missed numbers on a number of occasions, and we need to rebuild trust with the markets. From 2012 through until 2022, we had something like 43 consecutive profit upgrades, bar one.

For 10 years, the company consistently delivered profit upgrades, and what we saw in the equity value reflected that. After 3 years of poor results, we are acutely aware of the need to rebuild trust, and so we've pitched our guidance conservatively, and we'll see how the year unfolds.

Thank you very much for joining today. We'll get as many of these questions answered for you and posted on the Investor Meet website before the end of the day.

That's great. Thank you for updating investors today.

Could I please ask investors not to close the session, as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company.

On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.