City round-up: Bodycote; Franchise Brands; Yourgene Health
Bodycote, the Macclesfield-based provider of heat treatment and specialist thermal processing services, achieved a strong first half performance, modestly ahead of expectations, it revealed today.
Revenues in the six months to June 30, 2023, jumped 17.2% from £358.5m to £420.1m, while the pre-tax profit of £55.2m was up on the previous year’s £41.6m.
The group also reduced net debt levels from £57.5m to £26.6m.
The interim dividend will improve by five per cent from 6.4p per share last yar to 6.7p per share.
During the reporting period Bodycote said energy surcharges continue to recover energy cost inflation, while price increases were successfully implemented, covering labour and other cost inflation.
Revenues improved in group divisions, with specialist technologies achieving a 13% increase, emerging markets up by 10%, civil aerospace ahead by 10%, oil and gas showing a 46% improvement, and automotive managing an eight per cent increase.
The group said it is delivering on all strategic priorities and is on track to achieve a margin in excess of 20% over the medium term.
Chief executive Stephen Harris, who, in May, announced plans to retire, said: “We have delivered a strong performance in the first half, which was modestly ahead of our expectations and with broad-based growth across most of our end markets.
“In particular, we achieved good progress in our strategic focus areas of specialist technologies, emerging markets, civil aerospace and electric vehicles. We continue to manage inflationary cost pressures well through energy surcharges and price increases.
“The group remains on track to achieve a margin in excess of 20% over the medium term.”
He added: “Cash conversion improved and net debt reduced in the period. The strength of our balance sheet continues to provide options to drive shareholder value, in line with our disciplined capital allocation framework.
“The strong first half performance underpins our confidence in delivering progress for the full year.
“Looking beyond 2023, the board remains confident in the group’s prospects for continued profitable growth.”
Franchise Brands, the Macclesfield-based multi-brand franchise business, said it made progress in the first half of its financial year, and is on target to meet board expectations.
Turnover leapt by 57% to £69.751m, while adjusted pre-tax profits were up by 45% at £8.597m in the six months to June 30, 2023, helped by the acquisition of Pirtek Europe in April, which doubled the size of the group and has expanded operations into 10 countries.
The interim dividend of 1p per share is an 11% increase on the previous year’s dividend, reflecting the board’s confidence in the growth prospects for the enlarged group.
Whilst the Pirtek business is still in the early stages of being integrated, Pirtek sales and profits reached record levels in most markets, and the business performed in line with expectations.
The short-term focus is on optimising effectiveness of the group’s businesses through utilising shared resources alongside significant strategic opportunities through leveraging international footprint.
There is strong continued momentum in Metro Rod and Metro Plumb delivering system sales growth of 24% to £35.3m – Metro Plumb system sales grew by 31%.
The Filta International core business performed well – system sales were up 16% on a like-for-like basis with strategic growth initiatives gaining traction – waste oil sales were held back by reduced market prices.
B2C division was in line with expectations, despite a challenging franchise recruitment environment. It is no longer being actively marketed for sale.
The outlook for the remainder of the year is positive and the group anticipates its full year performance to be at least in line with expectations.
Its deleveraging profile is ahead of schedule and it fully expects the acquisition facilities to be repaid within five years.
Executive chairman, Stephen Hemsley, said: “The group has made significant progress in the first half of 2023, including the acquisition of Pirtek Europe, doubling the size of the group. We now operate seven franchise brands in 10 countries in the UK, continental Europe and North America, generating annualised system sales of approximately £400m.
“Our Metro Rod and Metro Plumb brands are growing rapidly, with the potential for accelerated growth of their small share of very large markets. Filta is an almost unique business, with virtually no direct competition and a huge potential market in the US, and Pirtek has a significant opportunity to grow its existing markets and services and expand its range of services and the markets it serves.”
He added: “With the Pirtek Europe acquisition and existing businesses performing well, we are confident in a ful -year outturn at least in line with expectations and in the significant potential for growth across our main franchise brands beyond the current year.
“Further, the acquisitions of Pirtek and Filta have significantly advanced our ambition of building a market-leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and Continental Europe.”
The group also announced the appointment of Mark Fryer to the board as chief financial officer, with effect from August 2, 2023.
He is an experienced CFO with 25 years of public company and private equity experience as CFO in global manufacturing and business service companies. He has been CFO of FTSE Small Cap and FTSE 250 companies, as well as companies quoted on the AIM market. Mark’s experience includes extensive M&A, operational and business improvement experience in complex international environments across a wide range of sectors, including waste, business services, industrial services, franchising, manufacturing and electronics.
His recent roles include Group CFO of Augean plc, Dialight plc and Manganese Bronze Holdings plc, and he worked overseas in several of these roles. Prior to that he spent 11 years in finance and corporate finance roles with GKN plc and Cable and Wireless plc. Mark began his career with EY and is a member of the Institute of Chartered Accountants of England and Wales.
With the appointment of Mark Fryer as CFO, Andrew Mallows will step down from his role of interim CFO and from the board and will be returning to his former role as group commercial director (non-board).
Stephen Hemsley said: “We are pleased to welcome Mark to the group. His extensive experience in senior finance positions within listed, international and business services companies will be invaluable as we continue to drive the group’s growth across 10 countries following the acquisitions of Pirtek and Filta. I would also like to thank Andrew Mallows for his tremendous contribution as interim CFO.”
Mark Fryer said: “I look forward to working with Stephen and the team to build on the group’s expanded platform of market-leading franchise businesses and driving shareholder value over the coming years.”
Manchester-based molecular diagnostics group, Yourgene Health, has recommended its shareholders vote in favour of its proposed £16.7m takeover by Anglo-French biotechnology group, Novacyt, which was announced earlier this month.
A court meeting and general meeting is taking place in Manchester on August 17.
Ahead of this, the company released a trading update today in which it said it expects 2023 results to be in line with expectations of £19m in revenues and an EBITDA loss of £4.5m.
Trading since year-end continues to support market expectations for fiscal year 2024 and Yourgene’s expectations, with a core revenue growth rate of 20% or greater. Yourgene expects FY24 adjusted EBITDA to be in line with market expectations.
In January 2023, Yourgene completed a capital raising generating net cash proceeds of approximately £6.8m. As at March 31, 2023, Yourgene had an unaudited cash balance of £2.8m.
As at June 26, 2023, Yourgene’s unaudited cash balance was £1.88m, with an unaudited bank debt of £2.5m. As at July 24, 2023, Yourgene’s unaudited cash balance was £1.3m, with an unaudited bank debt of £2.3m. Yourgene continues to manage its working capital prudently, it said.
As announced on June 13, 2023, Yourgene has agreed to the conditional disposal of its Taiwanese subsidiary for proceeds of up to $4m (approximately £3.2m), comprising an initial payment of $1m payable on the closing date. This transaction is expected to complete in September 2023, subject to receiving regulatory approval from the Taiwanese government.
Yourgene expects to publish its audited results for FY23 in September 2023.