Preliminary Results 2018

Revenue growth of 11.1% and adjusted EPS up 6.6%

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 2018.

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

• Revenue growth of 11.1% (11.1% at constant currency):
  • Organic revenue growth of 2.8% (2.4% at constant currency); and
  • Inorganic revenue growth of 8.3% (8.7% at constant currency).
• Adjusted operating profit increased by 4.1% to £37.1 million (4.1% at constant currency) driven by acquisitions.
• Adjusted operating profit margin declined by 1.3 percentage points as anticipated due to, the acquisition of businesses with lower margins than the Group, foreign exchange driven input cost inflation and a decline in higher margin UK RMI (public) sector revenue.
• Exceptional costs associated with the reorganisation of our Ventilation business in the UK, including the relocation of our facility in Reading, were significantly higher than anticipated at £5.0 million (2017: £0.6 million).
• Reported profit before tax of £16.7 million (2017: £17.9 million) down on prior year mainly as a result of higher exceptional costs.
• Adjusted operating cash inflow was good at £34.4 million (2017: £35.9 million).
• Refinancing of banking facilities. The Group now has in place a £120 million multicurrency revolving credit facility and in addition an accordion facility of up to £30 million, maturing December 2021.
• Full year dividend of 4.44 pence per share, up 7.0% (2017: 4.15 pence) reflecting continued strength of the business.

Strategic and operational highlights

Acquisitions

• Four acquisitions completed during the year, strengthening our position in existing regions and broadening our reach into new geographies, with all integration activity progressing well.
  • Simx Limited, acquired in March 2018; the market leading residential ventilation products supplier in New Zealand for both new and refurbishment applications with channel access enabling us to place many of our existing Group products into this market.
  • AirFan B.V., acquired in May 2018; a small distributor, based in the Netherlands, of primarily residential ventilation products, providing the Group with additional access to the Dutch heating, ventilation and air-conditioning market.
  • Oy Pamon Ab, acquired in July 2018; a leading designer, manufacturer and supplier of Mechanical Ventilation with Heat Recovery products primarily for the Finnish new build and refurbishment construction markets, further strengthening our leading position in the Nordics.
  • Air Connection ApS, acquired in July 2018; a leading supplier of branded ventilation products to the Danish market, increasing our exposure to the Danish ventilation market and enabling us to introduce other Group products.
• Our acquisitions have continued to increase our geographic diversity. On a pro-forma basis revenue from UK customers is now 47.4% of total Group revenue.

Organic growth

• Consolidation of our Slough and Reading facilities into a single new, purpose built injection moulding and fan assembly facility at Suttons Business Park in Reading, UK is nearly complete despite operational disruption during the transition. The consolidation increases our capacity headroom in RMI and Residential New Build sectors.
• Good progress in our German business with the launch of our new Xenion decentralised heat recovery ventilation system.
• Further extension of our public housing range of ventilation equipment for the refurbishment market in the UK, helping us to gain new customers in spite of the current funding cutbacks in this sector.

 OEM (Torin-Sifan)

• OEM (Torin-Sifan) has seen a good take up of its new high-efficiency Revolution 360 range of EC fans (EC3), with further capacity investment underway to support the growth in sales.

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

“We have made excellent progress with our strategy, with four acquisitions completed in the second half of the year. Two acquisitions in the Nordics have increased our market exposure to this attractive region as well as further enriching our product portfolio. The acquisition of our long term partner in Australasia, Simx, has integrated well with several new product launches under way and has further diversified our geographic spread of markets. In the UK, the factory rationalisation project moving from two existing facilities into our new purpose built factory in Reading, resulted in a significant level of disruption to our customer service and additional cost; however, the move was substantially completed in July and efficiency improvements continue. I believe that with this new facility we have substantial capacity headroom to underpin our further organic growth, specifically relating to the residential markets. Despite the extra costs incurred for this project, we delivered another year of good cash generation.”

Outlook

The new financial year has started as expected and we will continue to focus on optimising the performance at our new factory in Reading, UK, continue the integration of the four acquisitions completed in the financial year and launch several innovative new products.

Whilst being mindful of various market challenges that we continue to face, and with the uncertainty in the UK with regard to the UK leaving the European Union, we remain confident in making further good progress with our strategy in the year.

-Ends-

For further information: 

Enquiries:

Volution Group plc
Ronnie George, Chief Executive Officer
+44 (0) 1293 441501

Ian Dew, Chief Financial Officer
+44 (0) 1293 441536

Tulchan Communications
James Macey White
David Ison
+44 (0) 207 353 4200

A meeting for analysts will be held at 9.30am today, Thursday 11 October, at the offices of Tulchan Communications, 85 Fleet Street, London EC4Y 1AE. Please contact volutiongroup@tulchangroup.com to register to attend or for instructions on how to connect to the meeting via conference facility.

A copy of this announcement and the presentation given to analysts will be available on our website www.volutiongroupplc.com from 7.00 am on Thursday 11 October.

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

Volution Group plc Legal Entity Identifier: 213800EPT84EQCDHO768.

Note to Editors:

Volution Group plc (LSE: FAN) is a leading supplier of ventilation products to the residential and commercial construction markets in the UK, the Nordics, Central Europe and Australasia.

The Volution Group operates through two divisions: the Ventilation Group and the OEM (Torin-Sifan) division. The Ventilation Group comprises 15 key brands - Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing Buildings, Fresh, PAX, VoltAir, Welair, Kair, Air Connection, inVENTer, Ventilair and Simx, focused primarily on the UK, the Nordic, Central European and Australasian ventilation markets. The Ventilation Group principally supplies ventilation products for residential and commercial ventilation applications. The OEM (Torin-Sifan) division supplies motors, fans and blowers to OEMs of heating and ventilation products for both residential and commercial construction applications in Europe.

Cautionary statement regarding forward-looking statements

This document may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such words as "will", "anticipate", "estimate", "expect", "project", "intend", "plan", "should", "may", "assume" and other similar words. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause our actual results to differ materially from those expressed or implied by these statements. The Company undertakes no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise.

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