The global drive to improve new building energy efficiency standards is, in part, about stopping heat from escaping. But airtight rooms bring problems of their own, which is where Volution (FAN) and its patented ventilation systems come in.
In its financial year to July 2019, the group continued to benefit from carbon emission reduction efforts for new UK housing. Revenue in this division rose 8.6 per cent to £27.8m, while repair, maintenance and improvement (RMI) sales to public housing markets rose 5.3 per cent to £15.6m. Although the group thinks tighter regulations should drive demand everywhere it does business, the recent performance suggests Volution should be insulated from any dent to domestic building activity.
Still, a respectable 3.5 per cent like-for-like sales growth at constant currencies is only one part of the earnings growth story. Headline profits were boosted by expansion in Australia, while full commissioning of the Reading facility meant margins gradually improved throughout the period. Hoping to lift profitability further, executives’ attention has now turned to small efficiency improvements, via an “operational excellence” drive.
Analysts at Peel Hunt, who see the shares as “too cheap”, expect adjusted earnings per share of 18.5p for the 12 months to July 2020, up from 16.9p for FY2019.
| VOLUTION (FAN) | ||||
| ORD PRICE: | 176p | MARKET VALUE: | £348m | |
| TOUCH: | 172-176p | 12-MONTH HIGH: | 195p | LOW: 140p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 88.8p* | NET DEBT: | 42% | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 130 | 15.5 | 5.9 | 3.30 |
| 2016 | 155 | 18.4 | 7.8 | 3.80 |
| 2017 | 185 | 17.9 | 7.0 | 4.15 |
| 2018 | 206 | 16.7 | 6.7 | 4.44 |
| 2019 | 236 | 23.1 | 9.2 | 4.90 |
| % change | +15 | +38 | +37 | +10 |
| Ex-div: | 21 Nov | |||
| Payment: | 18 Dec | |||
| *Includes intangible assets of £213m, or 108p a share | ||||
