Thursday 22 July 2021
Volution Group plc
Pre-close Trading Update for the Financial Year ending 31 July 2021
Strong revenue growth; earnings ahead of market expectations
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 a Pre-close Trading Update for the financial year ending 31 July 2021.
· Revenue expected to be above £270m and full year earnings ahead of market expectations with an adjusted EPS of c.20.5p
· Strong organic revenue growth of more than 20% on a constant currency basis, with total Group revenues expected to be c.15% ahead of FY19
· Margin target maintained in the second half of the year despite supply chain challenges
· Three acquisitions completed in the year adding innovative new low carbon products and routes to market to the Group
· Awarded the London Stock Exchange Green Economy Mark
Group revenue for the year is expected to be above £270m, an increase of approximately 25% compared to prior year and an increase of c.15% on the pre-pandemic 2019 financial year. On a constant currency basis, organic revenue will increase by more than 20% on the prior year, supplemented by inorganic growth from our acquisitions in the year.
UK revenue is expected to grow by over 20% compared to the prior year, with second half growth of almost 50% compared to the pandemic impacted second half of FY20. Residential refurbishment has performed particularly strongly in the year, with upselling of low carbon and silent solutions increasing their share of this category. A strong housing market with increased transactions, householders spending more time at home and greater awareness of the importance of indoor air quality has further supported this important sector of our business. Residential new build activity has been stronger in recent months as housebuilders have increased output to meet demand and our commercial project orderbook is healthy going into the new financial year.
We also expect revenue in Continental Europe to close the year over 20% ahead of prior year on a constant currency basis, with organic constant currency growth of approximately 12%. It should be noted that whilst our UK region was significantly impacted by the Covid-19 pandemic in FY20 our Continental Europe region in FY20 was only marginally down on the prior year. Our Nordics business is expected to deliver organic growth of over 15% constant currency, with a strong performance in both our refurbishment and new build markets. Organic growth for the full year in Central Europe is expected to be approximately 7%, coupled with a very good first seven months of ownership of the ClimaRad business in the Netherlands.
Overall Australasian revenues are expected to deliver excellent organic growth of approximately 35% on a constant currency basis, building on an increase of 22.3% in the prior year. Our strong revenue growth in New Zealand has been supported by the regulatory tailwind from the Healthy Homes Act and the introduction of many new product ranges, whilst in Australia we have enjoyed similarly strong revenue growth through a combination of market share gains supported by the roll out of new product ranges.
Margin performance sustained in spite of supply chain challenges and input cost inflation
As has been well publicised, there have been substantial inflationary pressures impacting the industry through the second half of the year. We have also seen these inflationary impacts, with our key input materials and inbound freight costs sharply increasing. We have largely mitigated this cost pressure, with our strong trade brands and pricing power allowing price increases such that we expect full year adjusted operating margin to be broadly in line with the c.21% delivered in the first half of the year.
Acquisitions integrating well, and further enhance our geographic footprint and product range
In December 2020 we announced the acquisition for £36 million of 75% of ClimaRad BV, the leading provider of de-centralised heat recovery ventilation in the Netherlands, the Group's largest acquisition to date.
The second half of the year has seen us complete two acquisitions in the Nordics, Klimatfabriken in Sweden for £3.5 million and R-TEK in Finland which was acquired in May 2021 for £2.6 million. Klimatfabriken and R-TEK complement our existing strong positions in the Nordic residential refurbishment and Finnish commercial heat recovery markets respectively.
Good operating cash generation has continued this year, and with leverage expected to be c.1.0x at the year end the capacity to continue to pursue attractive acquisitions remains strong.
The Board is delighted with the business performance during the financial year, and expects results to be ahead of the Group's FY21 earnings guidance with an adjusted EPS of c.20.5p.
Ronnie George, Volution Chief Executive Officer, commented:
"We are pleased to report a strong trading performance and our excellent revenue growth, not just versus the prior year but also against FY19, has underpinned a significant improvement in earnings for FY21. Following a challenging year in 2020 I want to thank our incredible and dedicated colleagues for the way in which they have responded to the many opportunities we have worked upon in 2021.
It has been a hugely rewarding year, with three acquisitions completed, promotion to the FTSE 250 in June 2021 and the award of the London Stock Exchange Green Economy Mark validating our market leading position.
Increasing awareness of the importance of indoor air quality, coupled with ever tightening regulations relating to energy efficiency and carbon reduction from buildings, will continue to provide supportive long-term tailwinds for our business."
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) 207 353 4200
James Macey White
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019) 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 17 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, ClimaRad.
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.