Reported earnings for Volution Group (FAN) were constrained by nearly £7m in amortisation and fair value adjustments, which isn't altogether surprising given that the ventilation specialist has been taking advantage of a fragmented European market. Deals to bring in NVA Services and Energy Technique have driven up market share in the UK, complementing strengthening organic growth rates in the Nordic region and central Europe. But continuing weakness in the domestic residential repair, maintenance and improvement (RMI) market dampened an otherwise encouraging performance.
The impact of recent acquisitions is obvious when you set organic revenue growth of 2.3 per cent (at constant currencies) against a rate of 17 per cent once you include the acquisitions. The benefits of group expansion are also reflected in a marked increase in cash flows, facilitating a double-digit hike in the half-year dividend.
However, there are drawbacks, at least initially. The group has completed nine acquisitions since September 2012, but the businesses aren't bedded-in overnight, as it takes time for synergies and cross-selling benefits to accrue. As a consequence, the adjusted operating profit margin declined by 2.3 percentage points, although chief executive Ronnie George told the IC that management was "pleasantly surprised" at the rate of margin expansion at the acquired businesses.
Liberum gives pre-tax profits and adjusted EPS of £34.3m and 13.5p, respectively, for the year to July (up from £31.3m and 12.6p in 2016).
| VOLUTION (FAN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 182.5p | MARKET VALUE: | £363m | |
| TOUCH: | 181.25-182.5p | 12-MONTH HIGH: | 193p | LOW: 133p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 78p* | NET DEBT: | 26% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 70.1 | 8.0 | 3.6 | 1.20 |
| 2017 | 88.5 | 8.8 | 3.6 | 1.35 |
| % change | +26 | +10 | -1 | +13 |
Ex-div: 30 Mar Payment: 4 May *Includes intangible assets of £179m, or 90p a share. | ||||
