Volati interim report January-March 2017
Q1 January–March 2017.
- Net sales increased 12.4% to SEK 743.6m (661.3)
- EBITA rose 4.3% to SEK 40.1m (38.4)
- Organic EBITA growth totalled 10.1%
- Net profit after tax increased 59.1% to SEK 27.6m (17.4)
- Earnings per common share after deduction of preference share dividends amounted to SEK 0.15 (0.03)
- The Annual General Meeting will be held on 18 May 2017 at 4:00 p.m. at Nalen in Stockholm.
Comments from the CEO
Volati continued to progress favourably in the first quarter. Our business units trended positively and delivered organic EBITA growth of around 10% in the quarter and posted a total LTM EBITA of SEK 320m. Net profit after tax rose substantially during the quarter due to the considerable reduction in our financing costs following the new share issue at the end of last year, which explains the sharp rise in earnings per share. As we have described previously, the capital raised also results in an initial decline in the return on equity until we have set the capital to work through new acquisitions.
In the Consumer Business Area, it was particularly pleasing to note the positive effect in the first quarter on Besikta of the acquisition of ClearCar in the spring of 2016, which has significantly exceeded our expectations. The Industry Business Area has declined slightly during the quarter, primarily because of the positive earnings impact for Corroventa in the corresponding year earlier period due to the winter flooding, mainly in the UK. The businesses in the Trading Business Area posted stable results for the quarter in a slightly weaker market.
Evaluating numerous acquisition possibilities
We are continuing to build Volati according to our own approach — to support business units with their development and to search in a structured manner for new companies to complement the Group. We evaluate a considerable number of new companies each year to identify the acquisition category that suits Volati: stable businesses with healthy cash flows that we can acquire at reasonable valuations. Our perception is that the acquisition multiples, particularly for larger companies, remains generally high. In this market, it is important to focus on doing the right things and remaining true to our defined acquisition principles.
For us, this means continuing to do what we have done so successfully for the last 14 years. We continuously evaluate interesting acquisition objects and, to date, we have looked at some 60 companies of which a number are undergoing continued evaluation. We have a proven business model and know that opportunities will arise to acquire good companies at reasonable valuations. However, one of Volati’s core principles is that we would rather turn down a good deal than risk making a bad one.
We have historically acquired companies at a weighted-average EV/EBITDA multiple of 5.8. These companies share several qualities: they have proven business models, leading market positions and strong cash flows. However, they are seldom growth companies, at least not at the time when we acquire them. Yet we have still grown rapidly as a Group by reinvesting cash flows from existing operations in new acquisitions in parallel with succeeding to grow mature companies organically.
Focus on long-term performance
Volati has business units in various industries and markets, and these units’ sales and earnings trends are impacted by a number of different factors — from seasonal variations and market activities to investments that we implement today to build robust and profitable operations for tomorrow. This means focusing on control and evaluation of the businesses over time, which is where we have a strong track record. For example, since 2013, Volati has generated an average annual organic growth in net sales of 4% and in EBITA of 14% per year.
Volati creates an environment in which good companies improve over time through a focus on value creation, skilled employees, knowledge sharing and disciplined capital allocation. The development of the vehicle inspection operation Besikta is a typical example of how Volati thinks and works, and how we view the long-term potential of a business. Since the acquisition in 2013, Volati has worked methodically with the new management to build an operation with high quality and a strong brand that is now the second largest company in the Swedish vehicle inspection market.
It is fantastic to continue building Volati in 2017 with so many positive preconditions in place. We have stable, profitable businesses that generate healthy cash flows, and with healthy cash funds we look forward to acquiring more good companies at the right prices and at the right moment.
Mårten Andersson, CEO
Mårten Andersson, VD Volati AB, +46 72-735 42 84, firstname.lastname@example.org
Volati AB (publ)
Engelbrektsplan, 114 34 Stockholm, Sweden, Phone: +46 8-21 68 40
Volati is a Swedish industrial group formed in 2003, comprising some 40 operating companies divided into twelve business units organised in three business areas: Trading, Consumer and Industry. Volati acquires mainly companies with proven business models, leading market positions and strong cashflow at reasonable valuations and develops these with an emphasis on long-term value creation. Volati’s strategy is to build on the identity and entrepreneurial spirit of the companies, adding, leadership, expertise, processes and financial resources. Volati has operations in 16 countries, with a total of about 1,200 employees and annual sales of approximately SEK 3.2bn. Volati’s ordinary shares and preference shares are listed on Nasdaq Stockholm. Further information is available at www.volati.se.