SIMONDS GROUP LIMITED — Interim / Quarterly Report 2015

Feb 25, 2015

Level 4, 570 St Kilda Road Melbourne VIC 3004 Telephone +61 3 9682 0700 Facsimile +61 3 9682 0800 www.simondsgroup.com.au

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ASX ANNOUNCEMENT

SIMONDS GROUP HALF YEAR RESULTS REAFFIRM PROSPECTUS FORECASTS

Melbourne, 26 February 2015 : Simonds Group Limited (ASX: SIO) is pleased to announce its inaugural half year results as a listed company. The results for the six months ended 31 December 2014 (1H15) confirmed that the company is on track to meet its prospectus forecasts, with 1H15 pro forma Net Profit After Tax of $9.2 million generated.

Commenting on the 1H15 results, Simonds Managing Director & CEO Paul McMahon said: “The results for the first half of the 2015 financial year were ahead of internal management plans and confirmed that the company is on track to meet its prospectus forecasts. Listing on ASX was a key milestone in Simonds’ history and positions the company ahead of its next period of growth.”

1H15 financial highlights

• Successfully listed on ASX on 17 November 2014

• Statutory results:

• Revenue of $299.2 million – record half year result for the company

• EBITDA of $15.7 million loss

• EBIT of $17.7 million loss

• NPAT of $20.8 million loss

• Pro-forma results:

• Revenue of $299.2 million

• EBITDA of $15.8 million

• EBIT of $13.7 million

• NPAT of $9.2 million

• Strong balance sheet with minimal debt and $30.0 million liquidity (facility headroom + cash)

1H15 operational highlights

• Simonds Homes growth strategy being successfully executed in Queensland and New South Wales

• Continued strong revenue and margins in Victoria and South Australia

• Expansion of Builders Academy Australia (BAA) footprint into Queensland and New South Wales through the acquisition of City-Wide Building and Training Services in January 2015

• Commencement of $3.3 million technology-led operational efficiency project

A record half for Simonds

Over 1H15 Simonds achieved its highest ever half year revenue in the company’s history, with $299.2 million generated over the past six months. The strong top line result, combined with the company’s ongoing efficiency initiatives saw Simonds deliver strong growth in pro-forma EBITDA to $15.8 million, and NPAT of $9.2 million.

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“A continued focus on delivering a strong, profitable sales pipeline in both our Simonds Home residential and Builders Academy Australia businesses has led to a very positive interim result and re-affirms our confidence in the outlook for the Simonds Group,” said Mr McMahon.

Simonds Homes achieved strong growth in site starts across Victoria, Queensland, South Australia and New South Wales over 1H15, with a total of 1,217 sites commenced. Simonds Homes’ 1H15 Residential revenue was $281.7 million.

“The first half was showcased in our Residential business by the opening of our Metropolitan display home in Camberwell, the growth in Queensland displays and the commencement of our NSW retail operations. The strong growth reflects our weekly emphasis on sales, consistent site starts, on-going commitment to quality and customer service,” added Mr McMahon.

The company’s building and construction training business, Builders Academy Australia (BAA), generated 1H15 revenue of $10.9 million. Growth was driven by BAA’s growing reputation as a focussed building and construction training provider backed by a targeted marketing campaign and its affiliation with a leading trade partner. Course enrolments for the six month period averaged 287 per month and 702 participants completed their course in 1H15.

“BAA is well positioned to generate growing returns. Student numbers in Vitoria continued to grow over the past six months, with the acquisition of City-Wide Building and Training Services providing growth avenues across Queensland and New South Wales,” said Mr McMahon.

The results achieved by Simonds across all key financial metrics over 1H15 put the company on track to meet prospectus forecasts for FY15 .

Strong balance sheet

Simonds’ capital light business model continues to deliver strong, sustainable returns on equity. With substantial cash reserves and liquidity, no bank debt and only $2 million in asset finance leases, this puts the company in a strong financial position with sufficient capacity to fund growth plans.

“The Group’s cash and an undrawn bank funding facility of $30.0 million, places the company in a strong financial position for future growth”, said Mr McMahon.

Positive outlook underpinned by focused growth strategy

Simonds Group has a focused growth strategy in place across Simonds Homes and BAA, and the company is delivering on that strategy.

Market conditions for Simonds Homes remain favourable with the industry forecasting continued growth in housing starts across the company’s key markets. Growth continues to be driven by population growth (supported by strong overseas immigration) and low interest rates, whilst unemployment remains relatively low by historic standards.

The Simonds Homes sales pipeline is currently the strongest it has ever been in the company’s 65 year history, at $425 million providing a very strong base for building activity over 2H15.

The key driver of future sales growth will be the expansion of the Simonds Homes display home footprint. Simonds Homes currently operates 105 display homes at 57 display centres across Australia, an 11.7% increase over the position at 30 June 2014. The display home expansion program is aligned to population growth regions and underlying demand for new homes and is being driven substantially by the company’s increasing focus on the Queensland, South Australia and New South Wales markets.

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BAA revenue growth is being driven by growth in participant registrations with 2,773 active participants registered at 31 December 2014.

Growth in the BAA business is being driven by expansion of both its geographic footprint and growth in the range of courses offered. BAA will continue to focus on growth in its existing Victorian operations, but will also look to other states for opportunities to grow both organically and through the acquisition of small providers of building and construction education. BAA’s recent acquisition of CWBTS provides access to both the New South Wales and Queensland markets in Certificate II and III building and construction qualifications.

Commenting on the company’s positive outlook, Mr McMahon said: “With the expected growth in national dwelling starts, strong forward home sales in all regions, and growth in BAA participant registrations, we expect to generate continued growth in both the Simonds Homes and BAA businesses across Australia. We are on track to meet Prospectus pro-forma forecasts for FY15 and are well placed to further grow shareholder value.”

For more information, please contact:

Miche Paterson Partner Newgate Communications 0400 353 762 miche.paterson@newgate.com.au

About Simonds Group (ASX code SIO)

Simonds Group Limited is an ASX listed integrated homebuilder (Simonds Homes) and Registered Training Organisation (Builders Academy Australia).

Simonds Homes is the number one homebuilder in Victoria and currently operates display homes in over 56 locations across Victoria, Queensland and South Australia with plans to expand display homes in New South Wales.

Builders Academy Australia is a Registered Training Organisation with a focus on offering nationally accredited qualifications in building and construction. The origins of Builders Academy Australia date back more than ten years, when the Simonds Group established its training division. Builders Academy Australia offers training programs to over 3,400 participants in Victoria. Embedded within one of Australia’s leading home builders, Builders Academy Australia is ‘builders training builders’, offering a clear career employment pathway for course participants as well as a well-trained network of employees, suppliers and contractors of Simonds Homes.

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Appendix: key metrics

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Simonds Group Simonds Homes Builders Academy
Australia
Revenue Home Starts in 1H2015 Active Participants
$299.2m 1,217 2,773
EBITDA Sales Pipeline Average Course
Enrolments
$15.8m $425m
287
FTE Employees Display Homes Completed participants
105 Homes /
535 57 Locations 702
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1H2015 Pro-forma Financial Highlights

All Amounts $m unless otherwise stated	1H15 Pro- Forma Actual	1H14 Actual	Variance	FY15 Prospectus Pro-Forma Forecast
Revenue	299.2	275.4	+8.6%	638.2
Gross Profit	68.0	59.6	+14.1%	140.7
EBITDA	15.8	6.3	+149.3%	34.0
EBITDA Margin	5.3%	2.3%	+300bps	5.3%
EBIT	13.7	4.4	+214.6%	29.9
NPAT	9.2	2.9	+217.8%	20.4
EPS	6.4 cps	2.1 cps	+207.6%	13.5 cps

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