Interim Results 2015
25.03.15
Revenue and profitability in line with expectations. Strong cash generation.
Volution Group plc (“Volution” or “the Group” or “the Company”, LSE: FAN), a leading supplier of ventilation products to the residential construction market, today announces its unaudited interim financial results for the 6 months ended 31 January 2015.
| Highlights | 6 months to January 2015 | Pro-Forma 6 months to January 2014 | Change | Change Constant Currency | ||
| Revenue (£000) |
64,349 |
|
58,169 |
|
10.6% |
14.7% |
| Adjusted EBITDA (£000) |
15,038 |
1 |
13,957 |
1,2 |
7.7% |
12.1% |
| Adjusted operating profit (£000) |
13,990 |
1 |
13,095 |
1,2 |
6.8% |
11.2% |
| Adjusted profit before tax (£000) |
12,709 |
1 |
11,812 |
1,2 |
7.6% |
12.4% |
| Reported profit/(loss) before tax (£000) |
7,499 |
|
(8,087) |
|
|
|
| Basic and diluted EPS (p) |
2.94 |
|
(8.20) |
|
|
|
| Adjusted basic and diluted EPS (p) |
4.98 |
1,3 |
4.59 |
1,2,3 |
0.39p |
0.58p |
| Adjusted operating cash flow (£000) |
11,809 |
1,3 |
11,640 |
1,2 |
1.5% |
|
| Interim dividend per share (p) |
1.05 |
|
n/a |
|
n/a |
|
| Net debt (£000) |
31,400 |
1 |
183,193 |
1 |
|
|
The Group uses some alternative performance measures to track and assess the underlying performance of the business. These measures include adjusted EBITDA, adjusted operating profit, adjusted profit before tax, adjusted basic and diluted EPS and adjusted operating cash flow. For a definition of all adjusted and non-GAAP measures, see the glossary of terms at note 20.
Notes:
1. Details of adjusted EBITDA, adjusted operating profit and adjusted profit before tax can be found in note 7.
2. To provide a more meaningful comparison of our performance in the current period we have presented the prior period including pro-forma adjustments to reflect the cost of public ownership and the current debt structure. More information on the adjustments can be found in note 8.
3. On the 23 June 2014, a share for share exchange converted the entire share capital (after reorganisation) of Windmill Topco Limited to new ordinary shares of Volution Group plc. The weighted average number of shares has been calculated assuming the share for share exchange took place as from 1 August 2013. The pro-forma EPS assumes the same weighted average number of shares in the 6 months to 31 January 2014 as in the 6 months to January 2015 to ensure we are showing a consistent comparison.
Overview
Financial highlights
- Results are in line with our expectations and ahead on a constant currency basis.
- Revenue in the 6 months was £64.3 million, a 10.6% increase (14.7% at constant currency).
- Revenue growth comprised of 0.5% organic revenue growth (3.8% at constant currency), with inorganic revenue growth of 10.1% (10.9% at constant currency) as a result of acquisitions.
- Ventilation Group revenue growth including acquisitions was 18.5% at constant currency, with a particular highlight being UK Residential New Build growth of 16.6%.
- OEM (Torin-Sifan) results declined as revenue fell due to a difficult end market for boiler spares during the mild winter.
- Adjusted Operating Profit increased by 6.8% to £14.0 million (11.2% at constant currency) a margin of 21.7% of revenues (H1 2014: 22.5%).
- The Group’s reported pre-tax profit of £7.5 million (H1 2014: loss of £8.1 million) improved significantly, mainly as a consequence of lower finance cost of £1.3 million (H1 2014: £15.0 million).
- Continued strong cash generation reduced net debt to £31.4 million.
- Maiden interim dividend of 1.05 pence per share.
Strategic highlights
- Organic revenue growth was driven by a 16.6% increase in UK Residential New Build and strong growth in private UK Residential RMI supported through upselling and partially offset by a softer public housing market.
- Integration of inVENTer is progressing well with a number of new sales agent appointments in Germany already gaining traction with sales.
- OEM (Torin-Sifan) new EC/DC motorised impellor manufacturing site commissioned and operational in October 2014.
- In February 2015: New Group bank facility of £90 million, reducing gross debt and financing costs as well as providing more flexibility for potential acquisitions.
Interim dividend declaration and policy
- The Board has declared a maiden interim dividend of 1.05 pence per share. This dividend will be paid on 14 May 2015 to shareholders on the register at the close of business on 7 April 2015.
- Our dividend policy remains to target a dividend of approximately 30% of the Group’s adjusted net income for each financial year.
Commenting on the Group’s first half performance, Ronnie George, Chief Executive Officer, said:
“It is pleasing to see our results in line with our expectations and our continuing strong cash generation. Sales growth of 16.6% in UK Residential New Build systems was the highlight of our first half and we are beginning to see the benefits of our actions to improve sales in Germany.
New product innovation and development is key to underpinning our organic growth and a number of new product launches are nearing completion and will further assist revenue growth in the second half of 2015. This will continue to strengthen our position as one of the leading players in the European market for ventilation products, including heat recovery systems.”
Outlook
“Despite foreign exchange challenges, the first half was in line with our expectations and we remain confident of making continued progress in the second half.”