Victoria PLC (VCP.LSE)

[Recaster]

A look at a UK company chaired by a New Zealand entrepreneur who has created one of the largest flooring companies in Europe.

https://recastinvestor.substack.com/p/basic-analysis-victoria-plc-vcplse

[Gerald]

I recall reading a interesting short report on this company a little while back: https://iceberg-research.com/2022/08/03/victoria-plc-vcp-ln-mites-under-the-rug/

Probably biggest red flag is the dodgy acquisitions, but also a bunch of others including never really generating any cashflow, pretty questionable and flashy management, inventory, debt etc etc.

This good meme I saw recently probably applies here too.


14373

[Recaster]

I recall reading a interesting short report on this company a little while back: https://iceberg-research.com/2022/08/03/victoria-plc-vcp-ln-mites-under-the-rug/

Probably biggest red flag is the dodgy acquisitions, but also a bunch of others including never really generating any cashflow, pretty questionable and flashy management, inventory, debt etc etc.

This good meme I saw recently probably applies here too.


14373

Yes indeed. Iceberg have been short the stock.

One thing I've been looking at is the negative goodwills on acquisitions. The accounting rules such as IFRS 3 allow this to be put through as profit in the period of acquisition.

In the interim accounts which have just been released the negative goodwill is around 61.5m pounds for the six month period against total earnings of 47.5m.

My feeling is they are structuring these acquisitions to produce negative goodwill gains to pad their income statements and appear profitable. They categorise these entries under exceptional items.

[Recaster]

The interims have just come out for Victoria PLC and some stuff that is concerning. In particular the use of negative goodwill under IFRS 3 to generate positive earnings through takeovers which IMO places them on an acquisition treadmill. Also the recast negative operating cash flow which the company pitched as positive by removing the interest and tax.

Check it out here:

https://recastinvestor.substack.com/p/update-victoria-plc-vcplse

[Valuegrowth]

https://finance.yahoo.com/news/good-victoria-plc-lon-vcp-050648696.html

[Recaster]

Yes, the problem with Simply Wall St is that they don't look at earnings quality. Their ROE figure takes earnings as a given.

The company's use of negative goodwill on acquisitions as the principle earnings source is highly questionable (although legal).