TIDMFAN
RNS Number : 5741G
Volution Group plc
20 July 2023
Thursday 20 July 2023
Volution Group plc
Pre-close Trading Update for the Financial Year ending 31 July
2023
Continued good progress; EPS ahead of consensus; new acquisition
in New Zealand
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 releases a
scheduled Pre-close Trading Update for the financial year ending 31
July 2023 ("FY23" or the "Period").
Good progress; expect adjusted EPS ahead of current market
consensus
Volution has continued to make good progress in the Period and
the Board expects adjusted earnings per share to be towards the top
end of current market forecasts (see note 1).
Good overall organic growth; strong UK performance offsets some
weaker market areas
We are expecting Group organic revenue growth on a constant
currency basis of approximately 5%, despite a challenging
macro-economic backdrop in which the rapid rise in interest rates
has adversely impacted new build construction levels and consumer
confidence. Within this:
-- The UK has delivered our highest rate of organic growth, with
residential revenue performing particularly strongly. Public
refurbishment RMI has benefited from increasing demand arising from
the heightened awareness of health risks associated with mould and
condensation; private RMI demand has proved resilient whilst also
delivering well on price; and new build revenue has benefited from
key account wins and regulatory underpinnings
-- Continental Europe has softened in the second half of the
year with Germany in particular affected by a contraction of new
build activity and the Nordics impacted by both new build weakness
and some earlier, but now completed, destocking in the
refurbishment market. By contrast ClimaRad and ERI have continued
to perform strongly
-- Revenue growth in Australasia has slowed this year after a
number of years of very strong growth.
Strong Group operating margins maintained at c.21%
Whilst material input cost inflation has eased in the year,
inflationary pressures have continued with rising labour costs and
pressures on overhead costs such as facility rent and rates. Strong
pricing discipline along with robust cost control, value
engineering initiatives and good factory efficiency continue to
underpin our operating margin, which is expected to be c. 21% for
FY23.
Two exciting European acquisitions completed
We completed two acquisitions in the year, I-Vent in
Slovenia/Croatia and VMI in France, investing a total of EUR35
million upfront with a potential future contingent consideration of
up to EUR20 million based on stretching growth targets.
Third acquisition; scheduled to complete early in new financial
year
We have signed an agreement to acquire DVS (Proven Systems Ltd)
in New Zealand for initial consideration of NZ$18 million (c.GBP8.7
million) with potential contingent consideration of up to NZ$9
million based on stretching future earnings targets. The
transaction, which has recently received competition authority
approval, is due to complete in August 2023. DVS is a
direct-to-consumer supplier of home ventilation systems, focusing
on mechanical ventilation with heat recovery (MVHR). For the year
ended 31 March 2023, DVS reported unaudited revenues of NZ$18
million and profit before tax of NZ$2 million.
Financial position remains strong
We are expecting a strong year of cash generation, underpinned
by good working capital management, with operating cash conversion
(note 2) expected to be above our targeted level of 90% and
leverage at 31 July 2023 below 1.0x with ample headroom for
continued M&A.
Ronnie George, Volution Chief Executive Officer, commented:
"Volution has delivered another year of good progress against a
backdrop of difficult end markets, again demonstrating the
robustness of our business model and the benefit of the Group's
diverse geographic and end market positioning. Whilst higher
interest rates, leading to higher mortgage rates, are dampening new
build construction demand, RMI, which accounts for approximately
70% of Group revenue, has proved resilient enabling us to deliver
Group organic growth of c.5%.
"The Group's structural growth drivers remain supportive and,
although general end market sentiment is weaker, we continue to see
high levels of interest in our wide range of low carbon ventilation
solutions, driven by consumer awareness of the importance of indoor
air quality, and the regulatory back drop focused on decarbonising
buildings."
Full year results
The full year results for the year ending 31 July 2023 will be
announced on Thursday 5 October 2023.
-ends-
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
+44 (0) 203 727
FTI Consulting 1340
Richard Mountain
Susanne Yule
Note:
1. The Board believes current market forecasts for the year
ending 31 July 2023 to be adjusted earnings per share in the range
of 23.7p to 25.6p with a consensus of 24.4p
2. Cash conversion defined as: Adjusted operating cash flow /
(Adjusted operating profit + amortisation). Leverage defined as
adjusted EBITDA divided by net debt (excl. IFRS16 liabilities)
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 21 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,
Rtek, inVENTer, Ventilair, ClimaRad, ERI Corporation, VMI,
I-Vent.
Australasia: Simx, Ventair, Manrose.
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.
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END
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