Interim Results 2017
20.03.17
Strong results with revenue growth of 26% and adjusted EPS up 14%.
Continued execution of our strategy: organic growth with strategic acquisitions.
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 unaudited interim financial results for the 6 months ended 31 January 2017.
| Financial Results | 6 months to January 2017 | 6 months to January 2016 | Movement | Movement in Constant Currency |
| Revenue (£000) |
88,478 |
70,142 |
26.1% |
19.3% |
| Adjusted operating profit (£000) |
17,134 |
15,207 |
12.7% |
7.7% |
| Adjusted profit before tax (£000) |
16,535 |
14,597 |
13.3% |
8.0% |
| Reported profit before tax (£000) |
8,815 |
8,040 |
9.6% |
0.2% |
| Adjusted basic and diluted EPS (pence) |
6.54 |
5.73 |
14.1% |
7.4% |
| Reported basic and diluted EPS (pence) |
3.61 |
3.64 |
(0.8)% |
(11.4)% |
| Adjusted operating cash flow (£000) |
16,414 |
11,439 |
43.5% |
|
| Interim dividend per share (pence) |
1.35 |
1.20 |
12.5% |
|
| Net debt (£000) |
40,621 |
38,988 |
|
|
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 20, a reconcilation to reported measures set out in note 8.
Financial highlights
- Strong revenue growth of 26.1% (19.3% at constant currency):
- Organic revenue growth of 8.9% (2.3% at constant currency); and
- Inorganic revenue growth of 17.2% (17.0% at constant currency).
- Ventilation Group revenue grew organically by 10.0% (3.1% at constant currency) underpinned by strong results in the Nordics, Central Europe, Residential New Build in the UK and Exports from the UK.
- UK Residential RMI revenue grew by 11.3% helped by acquisitions; an organic decline of 4.5%.
- OEM (Torin-Sifan) revenue grew by 3.0% (decline of 2.7% at constant currency).
- Adjusted operating profit increased by 12.7% to £17.1 million (7.7% at constant currency).
- As anticipated, adjusted operating profit margin declined by 2.3 percentage points, mainly as a consequence of new acquisitions.
- Reported profit before tax of £8.8 million (H1 2016: £8.0 million).
- Adjusted operating cash inflow was very strong at £16.4 million (H1 2016: £11.4 million).
- Interim dividend of 1.35 pence per share, up 12.5% compared to H1 2016.
- Adjusted basic and diluted EPS growth of 14.1% to 6.54 pence (H1 2016: 5.73 pence).
- Reported basic and diluted EPS declined by 0.8% to 3.61 pence (H1 2016: 3.64 pence). The decline of 0.8% is mainly the result of increased amortisation of acquired intangible assets, a loss on fair valuing financial instruments of £0.2 million (H1 2016: a gain of £0.7 million) and a change in the rate of deferred tax.
Strategic highlights
- The acquisition of Breathing Buildings was completed in December 2016, widening Volution’s capability with a market leader in natural and hybrid ventilation for commercial buildings, in particular focusing on new construction for Education. All integration activity is progressing in line with our internal plans.
- The acquisition of National Ventilation and Airtech, in May 2016, increased our share of the UK Residential RMI market. Integration is progressing very well with the introduction of new products from the wider Volution Ventilation Group in to their offering.
- The introduction of the new range of “Sentinel Kinetic Advance” heat recovery systems to the UK and Continental Europe is gaining traction and the development of higher airflow products to the range is underway.
- OEM (Torin-Sifan) has commenced sales, while later than planned, of the new three phase, Electronically Commutated (EC3) motors, with further momentum in sales expected in H2 2017.
Commenting on the Group’s performance, Ronnie George, Chief Executive Officer, said:
“We have delivered another strong set of results with excellent cash generation continuing to support our strategy to grow organically and by acquisitions. Nordic and Central Europe sectors’ organic growth was very pleasing and the integration of our recent acquisition of Breathing Buildings is proceeding well.
We continue to focus on developing our wide product portfolio across our increasing market reach; including our application software-controlled fan now being sold successfully in the Nordics, UK and Central Europe, and our “Sentinel Kinetic Advance” heat recovery unit is selling in both the UK and Central Europe.”
Outlook
“The second half of 2017 has started in line with our expectations, and despite the uncertainty in the UK following the decision to leave the European Union and the continuing weakness in UK Public Residential RMI, we remain confident in delivering further good growth in 2017 in line with our strategy.”