Shares in ventilation product supplier Volution (FAN) are up 3.2% today at 176p as it beats analyst expectations on revenue but reports in-line earnings in a trading update.
Volution completed four acquisitions in the year to 31 July, adding 15.6% to revenue in the period. Organic growth was 3%, taking the overall top-line improvement to 18.6% at £154 million.
Currency also pushed sales a few percentage points higher because of a weaker UK currency. Around one-quarter of sales are delivered from outside the country or by export.
Analysts at Canaccord Genuity say the results are solid in the circumstances, adding that Volution's geographical diversification may help mitigate some of the impact of the UK's vote to leave the EU.
'As with most of the peer group there remains continued uncertainty around the UK following the Brexit outcome,' writes analyst Matthew Walker.
'Whilst organic growth in the UK is unlikely to be the main driver in the short term, we continue to believe the diversification of the group is attractive amongst the peer group, particularly as management leverages its product development across its geographies,' the analyst continues.
'Following the outcome of the EU referendum vote we reduced our UK outlook and earlier expectations for full year 2017 by 3%.'
'As a result, we leave our medium-term earnings estimates unchanged for now recognising the slightly dilutive impact of recent acquisitions on the group's operating margin in the first year of ownership,' says Walker.
'M&A remains a key pillar of the strategy and we continue to expect the Group to utilise its strong cash generation to further consolidate the fragmented European market, albeit at a slower rate than full year 2016 as recent acquisitions are integrated.'
'In our view, given the strong cash generation of the group, there could be up to £80m of available headroom to Jul-18 to reach target pro-forma leverage of 1.5x EBITDA.'
Prior to today's trading update, consensus analyst forecasts indicated revenue expectations of £148.15 million in the year to 31 July 2016 and earnings per share (EPS) of 11.99p
Forecasts for the next financial year, according to the average of four analyst estimates collected by Thomson Reuters, are sales of £164.5 million and EPS of 13.2p.
Volution will publish full year results on 11 October.