Exova: Interim management statement Q1 2014

Exova Group plc has released its Interim Management Statement for the period from 1 January 2014 to date.

The financial results correspond to the period from 1 January 2014 to 30 April 2014 and comparative comments reflect comparisons with the corresponding period in 2013.

In April 2014, Exova’s shares were admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange.

As expected, the net primary proceeds of the IPO were applied to reduce debt, with the remaining debt financed through a new term loan, resulting in a significantly reduced Group interest charge going forward.

Highlights

• Results for the period in line with the Board’s expectations at the time of the IPO.
• Revenue growth on a constant currency basis of 6.3%, of which 1.2% organic and the remainder from acquisitions.
• Acquisition of Catalyst Environmental in January 2014 and a calibration business from Raufoss Offshore in May 2014 underscore progress in the acquisitions strategy.
• Solid performance across most clusters underpins confidence in outlook for the full year.

Financial performance

Group organic revenue growth on a constant currency basis was 1.2% for the period. Adjusting this for certain non-recurring revenue items associated with a US transportation client within the Product cluster and for the discontinuation of certain food advisory services in the Health Sciences sector in Europe, underlying revenue growth was 3.2%.

The comparison effect in the product cluster will become more pronounced in the second and third quarters.

Europe

In Europe growth was driven by strong performance in the product cluster and demand for more technically demanding services to the oil and gas industry, offset by client delays affecting the aerospace business and lower levels of activity in some parts of the Oil & Gas and Industrials clusters. Reported revenue growth was supported by the acquisition of Catalyst Environmental in January 2014 and an outsourcing transaction completed with Vestas in late 2013.

The Americas

In the Americas underlying growth (adjusting for prior year non-recurring revenues as above) was solid reflecting steady performance in oil and gas and industrials and health sciences, but with some weakness in certain areas of the aerospace business. In general, sales were adversely affected by the weather in Canada and some parts of the US and some isolated customer delays. Reported revenue growth was supported by the acquisition of Defiance in September 2013.

Rest of world

In the rest of world performance was encouraging reflecting operational improvements and early signs of the expected macro-economic improvement in certain areas of the Middle East.

Acquisitions

The Group continues to pursue its strategy of seeking to complement its organic growth with selected acquisitions. In addition to the acquisition of Catalyst Environmental in the UK in January 2014, the Group completed the acquisition of a calibration business in Norway from Raufoss Offshore in May 2014.

Outlook

Underpinned by solid trading performance across most clusters during the period, the Board remains confident of the Group’s prospects for the balance of 2014 and its expectations for the full year, on a constant currency basis, are unchanged from the time of the IPO.

Ian El-Mokadem, Chief Executive Officer of Exova, commented: "Following on from our successful IPO, we are focusing on our strategy of providing technically demanding services and are positioned well for growth. We are continuing to invest in our laboratories and to extend the range and global reach of our services through selective acquisitions. Having now completed five acquisitions or outsourcing agreements since September 2013 we remain positive about our ability to complement the organic development of the Group by integrating new operations into our network.”

The Group’s half year results to 30 June 2014 will be published on 29 August 2014.

Edited from source by Elizabeth Corner

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