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Summary
- Volution Group Plc had reported a surge in revenues of 6.8% during 4M FY21 ended on 30 November 2020.
- The Company had a sustainable revolving credit facility of £150 million as of 02 December 2020.
- The Company had achieved its highest ever adjusted operating cash generation during FY20.
- Volution had signed an agreement to acquire Sweden-based Klimatfabriken on 03 February 2021.
Volution Group Plc (LON:FAN) is the LSE listed building materials stock. The Company is the leading industrial player based out in the UK. FAN’s shares have generated a return of about 42.22% in the last 12 months. The Company is listed on FTSE All-Share Index.
The Company will announce H1 FY21 ending 31 January 2021 interim results on 11 March 2021.
Business Model
FAN is one of the most prominent players of delivering indoor air quality solutions, engaged in the manufacturing and designing of ventilation products. The Company operates across 17 brands through three broad geographic regions.
(Source: Company result)
Recent News
On 03 February 2021, FAN announced that it had signed an agreement for the acquisition of Nordiska Klimatfabriken AB ("Klimatfabriken") in Sweden. The Company would fund this transaction from its existing cash and available Revolving Credit Facilities on a debt-free basis for the total consideration of £3.5 million. The Group would achieve synergy of strengthening its presence in refurbishment ventilation space in the Nordics region through this integration.
Klimatfabriken is focused on the provision of premium low carbon ventilation equipment for the in Sweden’s residential refurbishment market. It had reported SEK 12 million revenue for the FY20 ended on 31 December 2020.
On 18 December 2020, the Company had acquired 75% of the issued share capital of ClimaRad BV for approximately £38 million on a debt-free cash-free basis. The Company would fund this acquisition from its existing cash and sustainable financial headroom of £150 million. FAN would acquire remaining 25% of ClimaRad on or before 28 February 2025 for a cash consideration equivalent to 25x of EBITDA multiple for FY24 ending 31 December 2024.
Trading Update (for four months period from 01 August 2020 to 30 November 2020 (4M FY21), as on 11 December 2020)
- The Company had achieved revenue growth of 6.8% at constant currency to £90.7 million during 4M FY21.
- FAN had achieved operational excellence and delivered an adjusted operating margin of around 20% due to significantly improved business performance across all three geographies.
- Volution had reported UK organic revenue growth of around 3.1% during 4M FY21 driven by resilient performance in residential refurbishment. The public residential refurbishment grew at 6.6% during the period from the comparative period of the prior year driven by its innovative product portfolio. The revenue across commercial segment plunged by 1.2% during the period, while the order book had demonstrated significant growth during the period from its prior year. The OEM business sales grew by 9.4% during the period.
- The Group had delivered 7.9% organic growth at constant currency during 4M FY21 in continental Europe with the Nordics region showing significant growth of 12.9% during the period. Sweden remained the strongest performing region.
- The Company had delivered the strongest performance in Australasia out of all three geographic regions having an increase of 18% in the sales during the period. It had benefitted out of "Healthy Homes Standards" in New Zealand and a strong contribution from the acquisition of Ventair in Australia.
- The Company had a sustainable revolving credit facility of £150 million as of 02 December 2020.
FY20 Financial Highlights (for twelve months period ended 31 July 2020, as on 08 October 2020)
(Source: Company result)
- FAN’s revenue was slipped by 8.1% from £235.7 million during FY19 to £216.6 million during FY20 adversely impacted by Covid-19 pandemic during H2 FY20.
- The Company had achieved revenue growth of 7.5% in Central Europe and 3.9% in Australasia during FY20.
- On the sustainability front, the Company had used 56% of plastic from recycled sources in its manufacturing facilities.
- Regarding the profitability, the adjusted operating profit and adjusted profit before tax had witnessed a substantial decline of 19.8% and 21.6%, respectively during FY20.
- Regarding its financial position, the Company had slightly reduced its net debt to £74.2 million during FY20.
- FAN had shown a 17.5% surge in its adjusted operating cash generation during FY20. It was £43.4 million during FY20, which remained highest ever achieved by the Group.
Share Price Performance Analysis of Volution Group Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Volution Group Plc were trading at GBX 322.00 and were up by close to 0.63% against the previous closing price as on 05 February 2021, (before the market close at 08:48 AM GMT). FAN's 52-week Low and High were GBX 122.46 and GBX 329.00, respectively. Volution Group Plc had a market capitalization of around £633.35 million.
Business Outlook
The Company had anticipated H1 FY21 revenue to witness a surge of 8.5% from an equivalent period of the prior year. It had highlighted regarding the several operational headwinds impacting the business performance such as challenges around UK ports regarding the import and export of raw materials. FAN is highly confident of achieving its FY21 target of reporting operating profit margin of approximately 20% driven by its strong order book.
(Source: Company result)
