Wavin N.V., leading supplier of plastic pipe systems and solutions in Europe, today announces its Second Half Year and Full Year 2006 results.
Full year 2006
Revenue increased 12.8% to EUR 1.5 billion, organically 9.5%
Ebitda(1) up 20.1% to EUR 196.3 million
Further improvement of Ebitda margin to 13.1% (2005: 12.3%)
Net profit (including non-recurring items) of EUR 73.4 million
Net debt decreased to EUR 598 million at year end (EUR 654 million in October 2006 post IPO)
Proposed dividend of EUR 0.35 per share

Second half year 2006
H2 2006 revenue increased by 8.9% to EUR 767.2 million
H2 2006 Ebitda(1) of EUR 106.7 million, up 11.6% compared to H2 2005
H2 2006 Ebitda margin improved to 13.9%

Philip Houben, Wavin CEO commenting on the strong results:
“All the attention for Wavin’s IPO, last October, almost concealed the excellent performance of the company over the year. In 2006 Wavin realised the highest revenue, operational result and net profit in its history. Overall construction activity across Europe was favourable. Market conditions were particularly advantageous in the emerging economies of Central- and Eastern Europe where Wavin now derives more than 17% of its revenue. The substitution trend from traditional materials such as copper towards plastics continued in 2006, and supported our strong growth in the Hot & Cold segment. Wavin improved its performance in all regions and in both business units. We see this as clear proof that our strategy of focus on value added products and solutions, continued expansion into attractive geographic areas and improvement of operational efficiency, has paid off“.


Revenue
Revenue increased by 12.8% to EUR 1,501 million in 2006. Organic growth was a strong 9.5%. In the Building & Installation (above-ground pipe systems and solutions) revenue grew by EUR 110.2 million to EUR 536.6 million, up 25.8%. In the Civils & Infrastructure (below-ground pipe systems and solutions) overall revenue increased by EUR 71.9 million to EUR 904.4 million, an improvement of 8.6%.
All regions showed revenue improvement compared to last year. Significant growth was again registered in the Central and Eastern European area. UK/Ireland, Wavin’s largest region, developed in line with expectations. In the North West Europe region Wavin noted an emerging recovery in the German construction sector.

EBITDA
Ebitda in 2006 was EUR 196.3 million, an improvement of 20.1% over 2005.
Excluding acquisition impact, Ebitda improved 15.2%. As a percentage of revenue, the Ebitda margin over 2006 increased from 12.3% to 13.1%. Main drivers behind this strong performance were above average growth in high margin regions and product segments, an improved product mix in the civils sector and benefits from the operational efficiency programs.

Non-recurring items in operating result
Non-recurring items of negative EUR 16.6 million in 2006 (2005: negative EUR 11.4 million) include exceptional costs for the integration of Hepworth in the UK and the optimisation of the manufacturing footprints in Scandinavia, the Benelux and Germany, adding up to EUR 10.4 million. Furthermore certain foundations related to the Wavin Group granted EUR 5.1 million in shares to fund an employee share plan. Under IFRS, these costs were charged to the results but they were fully reimbursed by the foundations, resulting in a positive equity movement of EUR 5.1 million

Financing costs and tax
Net financing cost in 2006 amounted to EUR 84.1 million (2005: EUR 48.6 million). Pre-IPO financial expenses include the pre-IPO interest cost on the leveraged financing facility, interest on shareholder loans, dividends on preference shares as well as the non-recurring cost of EUR 21.4 million related to the unwinding of the pre IPO financing structure. The unwinding of the interest instruments of the previous EUR 865 million senior debt facility led to a non-recurring positive contribution of EUR 10.8 million. Post-IPO financing expenses are mainly interest costs of drawings under the new EUR 750 million facility.

Income tax expense decreased to EUR 6.3 million in 2006. The reduction of the Dutch corporate income tax rate from 29.6% to 25.5% resulted in a non-recurring and non-cash reduction of deferred tax liabilities of EUR 11.4 million.

Associates
Wavin realised a non-recurring profit on the disposal of associates of EUR 39.0 million. These associates were Iplex (Australia and New Zealand), Espace Real Estate S.A. and Alphavin (Switzerland). The share of profits from associates subsequently decreased to EUR 3.3 million.

Net profit
Based on a strong operational performance, net profit in 2006 jumped EUR 43.7 million to EUR 73.4 million. Excluding non-recurring items, net profit was EUR 47.4 million, an increase of 26.1% compared to 2005. The total profit attributable to equity holders of Wavin N.V. rose 149.8% to EUR 71.7 million. Reported earnings per share in 2006 were EUR 0.92, whereas recurring earnings per share amounted to EUR 0.59.

Cash flow
Wavin recorded a strong EUR 35.7million improvement in free operating cash flow to EUR 174.9 million in 2006.
Net working capital was up 3.3% from last year, fully due to an increased activity level. As percentage of revenue, net working capital decreased slightly. Depreciation was EUR 50.8 million, up EUR 7.1 million from 2005, whilst amortisation dropped EUR 11.2 million to EUR 10.3 million.
The sale of associates had a positive cash flow impact of EUR 73.1 million. Net cash from investing activities was EUR 4.3 million. Investments in capital goods were EUR 50.9 million. The level of capital expenditures was slightly lower compared to 2005 due to timing differences of projects initiated in the course of 2006.
Net cash flow from financing activities included the issue of new shares for a total of EUR 150 million of which the proceeds have been used for the reduction of net debt. The conversion of preference shares of EUR 70 million resulted in a further reduction of interest bearing loans.

Net debt
Since October 2006, Wavin significantly strengthened its financial position. Interest bearing debt was reduced by issuing new shares during the IPO (EUR 150 million) and converting preference shares into ordinary shares (EUR 70 million). Net debt dropped from EUR 909 million on 31 December 2005 to EUR 654 million post IPO. Due to a strong operating cash flow in the remainder of the year, net debt reduced further to EUR 598 million at the end of 2006. The company was within the covenants as described in the credit facility. The net debt to EBITDA ratio (leverage) dropped to 3.0 at year end and the debt to equity ratio improved to 2.0.

Dividend
At the Annual General Meeting of shareholders on 20 April 2007, Wavin will propose a dividend of EUR 0.35 per share, payable at the discretion of the shareholders in stock or cash.

Employees
In spite of the strong revenue growth, the number of people employed at year end decreased with 1.6% from 6,813 in 2005 to 6,704 in 2006, as a result of integration projects.

Outlook 2007
All signs point toward a continuation of favourable market conditions across Europe in 2007 albeit at a lower pace of growth than we experienced in 2006.
Wavin expects to - again - outperform the growth indications of the European construction market thanks to its good market position in especially Central and Eastern Europe and the ongoing substitution trend in favour of plastics.
Barring unforeseen circumstances, we foresee a revenue growth of 5-8% with Ebitda margins at least equal to the level of 2006. In 2007 the company will have significantly lower restructuring costs and financing charges than last year. Hence, in spite of the fact that 2006 net profit included significant non-recurring benefits, we expect 2007 net profit to be ahead of the previous year.

Financial Calendar
On 20 April 2007 at 14.00 CET, Wavin N.V. will hold its Annual General Meeting of shareholders at the Rosarium, Amstelpark 1, 1083 HZ, Amsterdam.