Preliminary results 2017

Strong revenue growth of 20% and adjusted EPS up 8%.

Recent acquisitions integrating well, supplementing continued organic growth.

Volution Group plc (“Volution” or “the Group” or “the Company”, LSE: FAN), a leading supplier of ventilation products to the residential and commercial construction markets, today announces its audited financial results for the 12 months ended 31 July 2017.

The Group uses some alternative performance measures to track and assess the underlying performance of the business. These measures include adjusted operating profit, adjusted profit before tax, adjusted basic and diluted EPS and adjusted operating cash flow. For a definition of all the adjusted and non-GAAP measures, please see the glossary of terms in note 18. A reconciliation to reported measures is set out in note 2.

Financial highlights

• Strong revenue growth of 19.8% (14.5% at constant currency):
  • Organic revenue growth of 7.3% (2.1% at constant currency); and
  • Inorganic revenue growth of 12.5% (12.4% at constant currency).
• Adjusted operating profit increased by 9.6% to £35.6 million (4.2% at constant currency).
• As anticipated, adjusted operating profit margin declined by 1.7 percentage points, partly as a consequence of new acquisitions.
• Reported profit before tax declined by 2.5% to £17.9 million (2016: £18.4 million), resulting predominantly from the increased amortisation of acquired intangible assets and a movement in the fair value of derivative financial instruments.
• Adjusted operating cash flow was very strong at £35.9 million (2016: £31.1 million).
• Net debt to adjusted EBITDA ratio of 0.9x after two acquisitions completed in the year.
• Adjusted basic and diluted EPS growth of 7.9% to 13.6 pence (2016:12.6 pence).
• Reported basic and diluted EPS declined by 10.3% to 7.0 pence (2016: 7.8 pence).
• Full year dividend of 4.15 pence per share, up 9.2%.

Strategic highlights

• Two acquisitions completed during the year, strengthening our position in existing geographies, with all integration activity for recent acquisitions progressing well.
  • Acquisition of Breathing Buildings Limited completed in December 2016. Breathing Buildings has been pioneering natural and hybrid ventilation systems since 2006, with which it has become very successful within the new build education sector. The acquisition has widened our capability with a leader in natural and hybrid ventilation for commercial buildings, strengthened our product range and broadened our channel to market; and
  • Acquisition of VoltAir System AB completed in May 2017. VoltAir System has a strong presence in the residential and commercial new build ventilation markets in Sweden in the growing market for energy efficient air handling units. The business is highly complementary to our strong position in the Nordic residential refurbishment ventilation products market.
• OEM (Torin-Sifan) launched its new high-efficiency Revolution 360 range of EC fans into volume production during the year which offers benefits in both high-efficiency and low noise to the European heating, ventilation & air conditioning industry.

Commenting on the Group’s performance, Ronnie George, Chief Executive Officer, said:

“I am delighted to announce these strong results today which continue our ambition of delivering consistent revenue and profit growth. We continued our successful acquisition strategy completing two acquisitions in the year, both of which extended our market reach in existing geographies and we also delivered good organic growth. These strong results translated in to excellent operational cash generation with our conversion rate exceeding the already high rate in the prior year.”

Outlook

The new financial year has started well with organic growth ahead of that achieved in the same period in the prior year. Our significant investment in new product development as well as specific initiatives in both public and private RMI are translating into benefits as anticipated. As a result, the Board is confident of delivering good progress in this financial year.