TIDMFAN
RNS Number : 5329U
Volution Group plc
30 July 2020
Thursday 30 July 2020
Volution Group plc
Pre-close trading update for year end 31(st) July 2020
GROUP WELL POSITIONED FOR SUSTAINABLE LONG TERM GROWTH AS
INTERNATIONAL FOOTPRINT AND RESILIENT BUSINESS MODEL MITIGATES
IMPACT OF PANDEMIC
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, is pleased to
provide the following update.
Our number one priority remains the safety and well-being of our
employees, suppliers and customers whilst maintaining the supply of
our essential products and solutions, which we have continued to do
on an uninterrupted basis throughout the pandemic.
Highlights
-- Resilient performance underpinned by geographic diversity
-- Continued strong cash generation
-- Streamlining of the U.K. business
-- Positive outlook for growth supported by increasingly beneficial regulatory backdrop
Trading update
Group revenues for the full year are expected to be circa GBP217
million, a decline of approximately 7% on a constant currency (cc)
basis compared to the prior year, with organic revenue down 11% cc
compared to the prior year. Group revenues in the second half will
be in the region of GBP98 million, an organic decline of 19% cc
versus the second half 2019. Activity has steadily recovered in
each month since the impact of COVID-19 was first seen in our
results in April and we currently expect the month of July to
finish around 9% below July 2019, with some sectors of the Group
returning to organic revenue growth.
Our revenue streams in Continental Europe and Australasia have
held up strongly throughout the COVID-19 crisis and have
underpinned the Group's resilient performance in the second half of
the year. Continental Europe revenue declined by 4% cc in the
second half. Our Australasia business is expected to deliver
organic revenue growth of circa 1% cc over the same period,
supported by the recently implemented healthy homes regulations in
New Zealand and the introduction of new products which helped us to
gain market share in Australia. Our Australasian activities are
performing very well and delivered organic growth in the fourth
quarter of 2020 of approximately 16% cc compared to the fourth
quarter of 2019.
Our U.K. revenue, which suffered a substantially more pronounced
impact than elsewhere in the Group, continues to recover. Activity
levels, which in April were 70% behind the prior year, have
improved substantially and exit the year at approximately 19%
behind the prior year. Revenues in the RMI category have recovered
particularly well with activity in July approximately 9% down on
the prior year.
U.K. business streamlining
Prior to COVID-19 we had commenced work on a number of
streamlining reorganisations across the U.K. business, which are
all now underway. Our new flagship injection moulding, ducting
extrusion and fan assembly facility in Reading has continued to
make strong progress over the last year with efficiencies, output
levels and installed capacity. As a result of our ongoing focus on
operational excellence, the streamlining measures across the U.K.
business and an aligning to the current and anticipated levels of
demand, there has been a regrettable reduction in the U.K.
workforce from 1,070 full time employees in April to an expected
circa 950 employees in the first quarter of FY21.
It has been a challenging but considered consultation with
employees, where we are attempting to mitigate the hardship of this
redundancy programme by being supportive of individual
circumstances rather than purely a last in, first out basis. We are
confident that no further reorganisation will be necessary in the
foreseeable future as we anticipate a steady recovery of activity.
The cost of the restructuring in FY20 is expected to be
approximately GBP1.5 million.
Government support including CJRS
We have been utilising the U.K. Government's Coronavirus Job
Retention Scheme (CJRS) for the period from April to July 2020,
though at a reduced level each month as activity and employees have
returned. Whilst we do still envisage activity to be below normal
for the first half of our financial year ending July 2021, and as
such will continue to have some employees on furlough from August
through to October 2020, we will no longer be making any CJRS
claims for these employees in our new financial year, nor will we
be claiming under the January 2021 Job Retention Bonus Scheme.
Robust financial position
Our flexible, asset-light assembly and low fixed cost model,
supported by strong cost and working capital disciplines across the
Group, has ensured that we have continued to generate very strong
operating cashflow throughout the second half of the year. Our net
debt, which reduced by GBP14 million in the first half, has
continued to reduce during the second half and we anticipate year
end leverage to be lower than FY19.
The interim dividend for FY20, which we announced on 24(th)
March had been suspended, will now be cancelled and the Group does
not intend to pay a final dividend for the financial year 2020. We
do however anticipate a return to a dividend pay-out in the new
financial year.
Outlook for growth strategy remains positive
Improving indoor air quality, increasing air infiltration rates
and removing moist, stale and potentially virus laden air from
inside buildings has been an integral part of governments' and
businesses' strategies for safe re-opening and operation across a
range of sectors. Our products and solutions improve air quality
inside buildings. We believe that regulations regarding energy
efficiency, reduction in carbon emissions and improving air quality
will continue to provide a supportive underpinning for the Group's
future growth.
Whilst the reduced activity level has impacted our margins in
the second half, we have continued to make good progress with the
initiatives that will deliver medium term margin expansion,
including plastics and electronics procurement, value engineering
to reduce product costs and factory efficiencies in Reading and
Swindon. We will provide more details over the coming months of
plans to make use of greater quantities of recycled plastics and
substantially reduce the packaging our products are supplied in. By
driving these important projects we not only lessen our impact on
the environment but also reduce costs as we eliminate waste. With
the additional impacts of our streamlining work in the U.K. and
supported by continued activity pick up we anticipate delivering
good margin recovery in our new financial year.
Our cash generation has remained very strong throughout the
period, and we go into FY21 well positioned to invest both in
R&D projects which will deliver exciting and innovative new
product ranges, and in good quality M&A to further leverage the
growth opportunities in our markets.
The Board continues to refrain from giving forward guidance, but
believes that Volution's focus on providing air quality solutions
positions the business well for sustainable long term growth.
Ronnie George, Chief Executive of Volution Group, commented:
"I continue to be impressed with how we have responded to the
COVID-19 crisis. From the outset, we have created a safe
environment for our employees, maintained supply of our essential
products and services and been decisive in tightly managing our
cash and expenses whilst continuing to invest in forward looking
new product development.
As we come to the end of our financial year 2020 there is no
doubt it has been our most challenging since listing the company in
2014. We have however benefitted from the substantial international
diversity and breadth of our revenue streams, with many of our
markets outside of the UK now finishing the year with trading at or
close to normal levels. With an ever increasing awareness of air
quality issues and the critical role ventilation solutions play,
coupled with our considerable self-help operational excellence
initiatives in focus, we are confident of making good progress with
the strategy as we go in to 2021."
-Ends-
For further information:
Enquiries:
Volution Group plc
Ronnie George, Chief Executive
Officer +44 (0) 1293 441501
Andy O'Brien, Chief Financial
Officer +44 (0) 1293 441536
+44 (0) 203 100
Liberum Capital Limited 2222
Neil Patel
Richard Bootle
Edward Phillips
+44 (0) 207 353
Tulchan Communications 4200
James Macey White
David Allchurch
Giles Kernick
Legal Entity Identifier: 213800EPT84EQCDHO768.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) prior to its release as part of this
announcement.
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 16 key brands across the three
regions:
UK: Vent-Axia, Manrose, Diffusion, National Ventilation,
Airtech, Breathing Buildings, Torin-Sifan.
Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection,
inVENTer, Ventilair.
Australasia: Simx, Ventair.
For more information, please go to: www.volutiongroupplc.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTUKOBRRSUBUAR
(END) Dow Jones Newswires
July 30, 2020 02:00 ET (06:00 GMT)
Volution (LSE:FAN)
Historical Stock Chart
From Apr 2024 to May 2024
Volution (LSE:FAN)
Historical Stock Chart
From May 2023 to May 2024