Preliminary Results 2020
Preliminary Announcement of Final Results for the year ended 31 July 2020
Record cash generation in 2020 and strong start to new financial year
Volution Group plc (“Volution” or “the Group” or “the Company”, LSE: FAN), a leading international designer and manufacturer of energy efficient indoor air quality solutions, today announces its audited financial results for the 12 months ended 31 July 2020.
|Adjusted operating profit (£m)||33.7||42.1||(19.8)%|
|Adjusted profit before tax (£m)||31.2||39.9||(21.6)%|
|Adjusted EPS (pence)||12.1||16.0||(24.4)%|
|Reported operating profit (£m)||18.2||24.7||(26.1)%|
|Reported profit before tax (£m)||14.6||23.1||(37.1)%|
|Reported basic EPS (pence)||4.9||9.2||(46.7)%|
|Adjusted operating cash flow (£m)||43.4||36.9||17.5%|
|Net debt (£m)||74.21||74.6||0.4|
|Net debt (excluding lease liabilities(£m))||51.1||74.6||23.5|
|Total dividend per share (pence)||─||4.90||(100)%|
1 2020 includes lease liabilities of £23.1 million due to adoption of IFRS 16
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 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 reconciliation to reported measures is set out in note 2.
- Adjusted operating cash generation of £43.4 million, the highest recorded in the Group’s history benefiting from geographic diversity and asset light business model
- Like-for-like net debt reduced by £23.5 million from £74.6 million to £51.1 million
- Adjusted operating margins expanded strongly pre COVID-19 and still delivered a full year margin of 15.6% despite pandemic
- Revenue fell by 8.1% impacted by COVID-19 in the second half
- UK revenue hardest hit by COVID-19 resulting in 17.6% (cc) fall, but with good recovery through June and July
- Organic revenue growth of 7.5% constant currency (cc) in Central Europe and 3.9% (cc) in Australasia
- Inventory initiatives delivered £3.8 million improvement, £1.8 million from our OEM business
- Business continuity maintained throughout with efficient adjustment to remote working for office staff, and production facilities remaining open and adapted to be “COVID-secure”
- Streamlining and restructuring initiatives completed in the UK, coupled with continuing focus on Operational Excellence in our flagship facility in Reading, which will underpin continued margin expansion in the new financial year
- Capability and range enhancement in the Nordics with addition of ducting manufacturing competence in Denmark to complement our Air Connection business
- Strong organic growth in Germany further underpinned by the successful launch of our wireless controls infrastructure for decentralised heat recovery
- The integration and development of our Australasian businesses continues to go well, with enhancement to our product offering and an increasingly supportive growth tailwind from the regulatory environment
Our products save energy, reduce carbon emissions and help to build healthy sustainable homes and buildings
- 56% of plastic used in our own manufacturing facilities is from recycled sources
- 59% of our revenue is from low-carbon, energy saving products
Commenting on the Group’s performance, Ronnie George, Chief Executive Officer, said:
“Our financial year 2020 started very well, however the second half of the year was dominated by the global pandemic and the effects on demand from COVID-19. Our priority throughout has been and will continue to be the safety and wellbeing of our employees, customers and suppliers. We reacted with speed and agility to the impact of COVID-19 with uninterrupted supply of our essential products and services. We were proud to provide ventilation solutions at the rapidly converted Nightingale Hospital at the Excel, as well as several other similar projects around the UK. Whilst revenues were lower in the second half of the financial year, our asset-light flexible model, wide geographic diversity coupled with our decisive actions enabled us to deliver a record operating cash generation in the year.
Whilst the lower revenues in the second half of the year resulted in a lower level of profitability, we accelerated the implementation of pre-planned and new initiatives to improve our cost base in line with our target to improve operating margins to 20%. Excellent progress has been made with these initiatives and we are confident of delivering the expansion in operating margins delivered through our focus on Operational Excellence.
On behalf of the Board I want to thank our outstanding and committed employees. Their flexibility and adjustment throughout the global pandemic as well as an unwavering attention to providing first class customer service has provided a strong footing from which to move forwards.”
We have seen strong organic revenue growth of 7% in the first two months of the new financial year, driven by our geographic diversity, structural drivers in the form of more stringent air quality regulations, our market leading positions and a strong demand in the refurbishment markets from customers upgrading their ventilation solutions. The self-help and streamlining measures we implemented last year, together with continuing operational efficiencies, have also delivered a significant increase in our operating margins in all three of our geographic regions.
The Board is pleased with the strong start to the new financial year, and is comfortable with the market expectations for FY21, however, the outlook remains uncertain. The COVID-19 pandemic continues to impact on our markets, and in the UK the ongoing negotiations to finalise a trade agreement with the EU are a concern. We do believe that our geographic diversity, underpinned by the considerable improvement in both our direct and indirect cost base, will enable us to make further progress.
For further information:
Volution Group plc
Ronnie George, Chief Executive Officer
+44 (0) 1293 441501
Andy O’Brien, Chief Financial Officer
+44 (0) 1293 441536
Liberum Capital Limited
+44 (0) 203 100 2222
James Macey White
+44 (0) 207 353 4200
A virtual presentation will be held at 9.30am today, Thursday 8 October. Please contact email@example.com to register and for instructions on how to connect to the conference.
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 8 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 international designer and manufacturer of energy efficient indoor air quality solutions.
Volution Group comprises 16 key brands across three regions:
UK: Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing Buildings, Torin-Sifan.
Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection, inVENTer, Ventilair.
Australasia: Simx, Ventair.
For more information, please go to: www.volutiongroupplc.com
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.
For more information, please go to: www.volutiongroupplc.com