Update on investment in Revolve Performance Ltd
Vela Technologies plc
("Vela" or the "Company")
Update on investment in Revolve Performance Limited
The Board of Vela Technologies plc (AIM: VELA), the investing company focused on early-stage and pre-IPO disruptive technology investments, announces that Revolve Performance Limited ("Revolve"), one of Vela's portfolio companies, has provided the board of Vela with an update on Revolve's recent trading performance. In June 2015 Vela invested £50,000 in Revolve and holds a minority interest in the share capital of Revolve.
In the eight months to 30th August 2015, Revolve's trading was broadly in line with budget, with lower sales offset by higher gross margins and lower overheads. EBITDA was also above budget. The Mountune Performance US business showed strong growth in line with the forecast, whilst the Mountune Performance UK and Revolve product development divisions fell short of the budgeted revenues. The Board of Vela has been informed by Revolve that, for the full year to 31st December 2015, management expect EBITDA to be in line with the Revolve's forecasts, with the early outperformance offset by lower final quarter sales in the Revolve divisions.
Mountune Performance US sales have grown in line with their forecasts, with July's sales at a record level of £100,000. There has been a significant uplift in orders from Ford dealerships, helped by a marketing initiative from Ford Performance. Ford distributors in Asia and Australia have also recently ordered Mountune products for the first time. Discussions continue with Mazda and Honda in the US with regards to potential significant motor sport and road car projects.
Mountune Performance UK is performing in line with the prior year. The expected growth did not occur due to a delay in the approval of a Mountune Focus ST upgrade by Ford, stock shortages for some products sourced from the Far East, and the delay of a limited edition Ford Focus programme to 2016. Management expect growth to resume in 2016, with the introduction of new product ranges for Ford RS and Mustang cars.
Gross margin was above Revolve's forecast due to a positive sales mix in the Revolve product development division as well as higher margin programmes in the Mountune Racing division. Overheads are lower than forecast due to lower employment costs in the US, which will increase to forecast levels as staff are recruited before the year end.
Mountune US will shortly be moving to larger premises, enabling it to cope with the planned increase in stock and a broader product range, which will also shortly include the new Ford Mustang and Ford RS ranges just as in the UK. Consideration is being given to opening a satellite office in Detroit in order to have resources near to the Ford headquarters.
Antony Laiker, Executive Director of Vela, made the following statement in respect of this update:
"Revolve was already a well-established business with experienced industry management prior to our investment. The excitement for Vela lies in the potential growth of the Mountune business over the coming years, particularly in the US. We wish the team all the best as they manage this exciting growth business."
The Board of Vela will announce further updates on the investment in Revolve at the appropriate time.
For further information please contact:
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Vela Technologies plc |
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Brent Fitzpatrick, Non-Executive Chairman Antony Laiker, Director
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Tel: +44 (0) 7802 262 443
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Allenby Capital Limited (Nominated Adviser) |
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Nick Athanas/Katrina Perez/James Reeve
Vicarage Capital Limited (Broker) Rupert Williams/Jeremy Woodgate
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Tel: +44 (0) 20 3328 5656
Tel: +44 (0) 20 3651 2910
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This information is provided by RNS
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