Thursday 13 March 2025
VOLUTION GROUP PLC
Interim results for the six months ended 31 January 2025
Good organic growth and largest acquisition to date completed; FY earnings expected to be
ahead of consensus
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, today announces its unaudited interim financial results for the six months ended 31 January 2025.
RESULTS SUMMARY
|
|
Unaudited 6 months to 31 January 2025 |
Unaudited 6 months to 31 January 2024 |
Change |
|
Revenue (£m) |
187.8 |
172.5 |
+8.9% |
|
|
|
|
|
|
42.6 |
38.6 |
+10.4% |
|
|
Adjusted operating profit margin (%)1 |
22.7% |
22.4% |
+0.3pp |
|
Adjusted profit before tax (£m)1 |
38.6 |
35.0 |
+10.4% |
|
Adjusted basic EPS (pence)1 |
15.3 |
13.7 |
+11.7% |
|
Adjusted operating cash flow (£m)1 |
47.9 |
38.8 |
+23.4% |
|
|
|
|
|
|
Statutory operating profit (£m) |
31.6 |
33.7 |
(6.2)% |
|
Statutory profit before tax (£m) |
25.7 |
29.0 |
(11.3)% |
|
Statutory basic EPS (pence) |
9.5 |
11.1 |
(14.4)% |
|
Interim dividend per share (p) |
3.4 |
2.8 |
+21.4% |
|
|
|
|
|
|
Return on Invested Capital (ROIC)1 |
25.0% |
27.7% |
(2.7)pp |
|
Adjusted operating cash flow conversion1 |
110% |
98% |
+12.0pp |
FINANCIAL HIGHLIGHTS
· Group revenue up 8.9%; +4.0% (cc) organic, +6.6% inorganic and -1.7% impact from foreign exchange translation
· Adjusted operating profit of
· Statutory profit before tax down 11.3% to
· Adjusted operating cash flow up 23.4% on prior year to
· Strong Balance Sheet (leverage ex-leases at 1.5x) and robust ROIC of 25% after spending
· Interim dividend up 21.4% to
OPERATIONAL HIGHLIGHTS
· Fantech acquisition completed 2 December 2024, integration progressing well with strong local management team, first 2 months trading good
· Strong organic growth in
· Procurement and engineering component cost out initiatives, improved product mix, and good factory efficiencies have delivered an organic enhancement to profit margins
· Focus on inventory optimisation delivering results via inflow of working capital and logistics / storage cost efficiencies
· New Regional Leadership structure (
HEALTHY AIR, SUSTAINABLY
· Recycled plastics usage increased to 84.6% (H1 2024: 77.0%) driven by further progress in the
· Low-carbon revenue proportion diluted by acquisition of Fantech, with 67.8% of revenue (70.4% excluding Fantech) from low-carbon, energy saving products (H1 2024: 70.5%)
· Received certification of our SBTi aligned carbon reduction targets, absolute scope 1 and 2 GHG emissions reduce 63% by FY2034 (from a FY2023 base year) and absolute scope 3 GHG emissions reduce 58.8%
· Good progress on health and safety improvements and awareness, reportable accident frequency rate down to 0.15 (FY 2024: 0.20)
Commenting on the Group's performance, Ronnie George, Chief Executive Officer, said:
"With these results, we have once again demonstrated our ability to outperform our markets. We delivered a strong performance in the first half, with good organic growth supplemented by two months of contribution from Fantech, our largest acquisition to date. Our adjusted operating margin was ahead of the prior year, whilst our adjusted earnings growth and cash performance were strong. These results are testament to our leading market positions, broad geographic exposure, and our relentless focus on sales and product initiatives and customer service excellence. Although the general economic backdrop remained weak, we continued to benefit from our structural growth drivers: ever tightening building regulations, increasing awareness of the importance of indoor air quality, and the need to reduce energy costs. I am hugely proud to lead our organisation and to witness daily the passion and commitment our employees show in providing our customers with leading solutions to improve indoor air quality.
We have good momentum going into the second half, supported by our ongoing growth initiatives, focus on efficiency and costs, and the benefits that Fantech is bringing to the Group. As a result, the Board expects earnings for the Full Year to be ahead of consensus1."
Note:
1. The Board believes adjusted earnings per share market forecasts for the year ending 31 July 2025 are in the range 30.3p - 31.3p with a consensus of 30.8p.
-Ends-
For further information:
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Enquiries: |
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Volution Group plc |
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Ronnie George, Chief Executive Officer |
+44 (0) 1293 441501 |
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Andy O'Brien, Chief Financial Officer |
+44 (0) 1293 441536 |
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FTI Consulting |
+44 (0) 203 727 1340 |
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Richard Mountain |
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Susanne Yule |
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A meeting for analysts will be held at 09:30am GMT today, Thursday 13 March 2025, at the offices of Berenberg, 60 Threadneedle Street,
A copy of this announcement and the presentation given to analysts will be available on our website www.volutiongroupplc.com on Thursday 13 March 2025.
Volution Group plc Legal Entity Identifier: 213800EPT84EQCDHO768.
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 29 key brands across three regions:
Continental
For more information, please go to: www.volutiongroupplc.com
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such words as "will", "anticipate", "estimate", "expect", "project", "intend", "plan", "should", "may", "assume" and other similar words. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause our actual results to differ materially from those expressed or implied by these statements. The Company undertakes no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise.
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
Volution has again delivered a strong revenue and adjusted profit performance in the first half of the year. The backdrop in our end markets continues to be characterised by inflationary risks, higher than usual interest rates and low levels of construction activity, especially in the area of new build projects. Nevertheless, we continue to benefit from the ongoing tightening of building regulations and an increasing awareness of the importance of indoor air quality, and our leading market positions and company initiatives enabled us to outperform the wider market.
With over 2,200 employees in the Group, our strong performance would not have been possible without the outstanding commitment and efforts in each of our local markets. We have yet again made excellent progress with our purpose of providing "Healthy air, sustainably".
In recent half and full year updates it has become commonplace to comment on the challenging end market conditions in which we operate. I am proud to have led an organisation that has consistently delivered revenue and earnings growth and is a testament to our increasing geographic and end market diversity. In the first half of the year, we delivered organic growth of 4.0% (cc), in the middle of our long term 3-5% range, and completed the largest acquisition in our history.
The acquisition of the Fantech Group of companies, based in
At the end of December 2024, we also completed the purchase of the final 25% of shares in ClimaRad in
On 10 September 2024, the Group refinanced its bank debt. The Group now has in place a new
With debt leverage at 1.5x, proforma LTM Fantech, we have good headroom to continue to pursue new opportunities for further growth. We adopt a disciplined and focussed approach to opportunities and with the acquisition of Fantech, activities in
Our industry continues to benefit from helpful regulatory tailwinds, where decarbonising of new and existing buildings is essential in delivering against long term country specific emission reduction targets. Awareness of the importance of high quality, energy efficient and increasingly heat recovery ventilation for health inside buildings grows every year. The
During the first half of the year, we have continued to strengthen our management organisation to ensure that we have the bandwidth and capability to grow. We have appointed two significant regional Managing Director roles in
During the period we have experienced some inflationary pressures across all aspects of our supply chain. These input cost pressures in both materials and labour costs, as well as currency headwinds, were offset through our ongoing operational excellence programmes. Procurement and technical led value engineering and innovation component cost out initiatives have yielded substantial benefits. Alongside an improved product mix, factory efficiency and operating leverage gains and further success with our cross-selling initiatives we have delivered an organic enhancement to both our gross and operating profit margins. The operational excellence programme extends into our working capital performance which has assisted in underpinning a strong operating cash conversion in the period. Further gains are expected from these initiatives helping us to offset the impact of the substantial increase in national insurance from 6 April 2025 in the
Our local and agile market teams and wide product portfolio underpinned by excellent levels of customer service, gives us confidence in the pricing power of our local market leading brands.
In October 2024 we completed our fourth Group wide Management Development Programme (MDP) and planning is underway to kick off MDP 5 later in calendar year 2025. This well-established training and development programme has yielded excellent results with many of our participants growing into more senior roles and engendering significant loyalty and retention.
Results
Revenue grew by 8.9%, 10.6% on a constant currency (cc) basis, organic growth of 4.0% at cc, inorganic growth of 6.6% with a negative impact of 1.7% from foreign currency translation.
Adjusted operating profit increased 10.4% to
Adjusted profit before tax was
Adjusted basic earnings per share increased by 11.7% to
Adjusted operating cash inflow increased to
Acquisitions
On 2 December 2024 we acquired Fantech, in
Regulatory Drivers and indoor air quality
Regulations aimed at improving energy performance of buildings continue to be a supportive trend in our markets as shown by our performance in
In the
Following the recast of the Energy Performance of Buildings Directive, article 3 requires all EU countries to establish a National Building Renovation Plan to be submitted to the Commission by 31 December 2025. These will be assessed and returned with any recommendations for a final plan due by 31 December 2026. The plans are designed to ensure the renovation of the national stock of residential and non-residential buildings into highly efficient and decarbonised stock by 2050.
In
In
Focus on sustainability
We are proud to announce that the Science Based Targets initiative (SBTi) has assessed and approved our Company's Near-Term and Net-Zero targets. This recognition reaffirms our dedication to ambitious, science-based climate action aligned with global efforts to limit temperature rise to 1.5°C.
The proportion of our revenue from low carbon, energy saving products was 67.8%. Excluding Fantech it would have been 70.4%, consistent with prior year (H1 2024: 70.5%). Excluding Fantech our proportion of sales of heat recovery products increased to 32.8% (H1 2024: 30.7%).
The proportion of recycled plastics used in our manufacturing increased to 84.6% (H1 2024: 77.0%). This was driven primarily by the
Keeping our colleagues safe remains our highest priority, and we are pleased that our reportable accident frequency rate has decreased to 0.15 per 100,000 hours worked compared to 0.20 for FY24.
Interim dividend
The Board has declared an interim dividend of
Outlook
With these results, we have once again demonstrated our ability to outperform our markets. We delivered a strong performance in the first half, with good organic growth supplemented by two months of contribution from Fantech, our largest acquisition to date. Our adjusted operating margin was ahead of the prior year, whilst our adjusted earnings growth and cash performance were strong. These results are testament to our leading market positions, broad geographic exposure, and our relentless focus on sales and product initiatives and customer service excellence. Although the general economic backdrop remained weak, we continued to benefit from our structural growth drivers: ever tightening building regulations, increasing awareness of the importance of indoor air quality, and the need to reduce energy costs. I am hugely proud to lead our organisation and to witness daily the passion and commitment our employees show in providing our customers with leading solutions to improve indoor air quality.
We have good momentum going into the second half, supported by our ongoing growth initiatives, focus on efficiency and costs, and the benefits that Fantech is bringing to the Group. As a result, the Board expects earnings for the Full Year to be ahead of consensus.
Ronnie George
Chief Executive Officer
12 March 2025
Regional Review
|
|
|
|
|
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|
Market sector revenue |
6 months to 31 Jan 2025 £m |
6 months to 31 Jan 2024 £m |
Growth % |
Growth (cc) % |
|
|
|
|
|
|
|
|
|
Residential |
55.1 |
49.5 |
11.4 |
11.4 |
|
|
Commercial |
14.4 |
15.2 |
(5.5) |
(5.5) |
|
|
Export |
6.8 |
5.7 |
20.1 |
21.6 |
|
|
OEM |
7.0 |
7.4 |
(5.7) |
(4.8) |
|
|
Total |
83.3 |
77.8 |
7.1 |
7.3 |
|
|
Adjusted operating profit |
21.4 |
18.9 |
13.5 |
|
|
|
Adjusted operating profit margin (%) |
25.7 |
24.3 |
1.6pp |
|
|
|
Statutory operating profit |
20.5 |
17.8 |
14.9 |
|
|
Residential revenue growth of 11.4% in the first half of the year was an outstanding performance along with Export (growth of 21.6% at cc) and more than offset the more difficult commercial and OEM end market. The residential performance is especially pleasing when considering the strong growth that we have consistently delivered in recent years.
We continue to prioritise excellent customer service and product stock availability as a key ingredient of our business model. In residential ventilation our preference for, and focus on, the distribution route to market has helped us to consistently scale volumes and gain market share.
Residential
Revenue in our Residential sector was up 11.4% to
Segmenting our
Since the publicity around Awaab Ishak's sad death in 2020 and the significant increase in awareness of the risks to health of mould and condensation in residential dwellings, we have seen a positive and prolonged period of activity in the sector focussing on improving the quality of the housing stock. We are pleased to report that whilst there is a significant catch-up period necessary to fully achieve what is commonly referred to as a "decent homes" standard, the industry has made a huge effort to place insulation, ventilation and improved indoor air quality and living standards at the centre of the refurbishment strategy. The significant volume of dwellings in need of upgrade and the added problem of relatively expensive heating costs and affordability issues has made the problem more pressing.
Volution, mainly through our market leading Vent-Axia brand, has developed a leading range of social housing ventilation solutions. Unrivalled in the supply of decentralised heat recovery and with the widest range of continuous running ventilation devices in this market, we are benefitting from a positive market and making new account gains. Utilising our key distributor relationships to ensure stock is always close to the contractor we are proud to work with the largest and smallest merchants in the
In private refurbishment we are also experiencing the same increasing awareness about indoor air quality. With considerable success in growing our positive input ventilation ranges and again partnering through our key distributors to position and communicate our wide product portfolio it has been another successful period. Our sales of more traditional intermittent exhaust fan ranges are moving towards continuous, more energy efficient solutions and this trend is expected to continue for the long term.
Despite the weaker new build construction activity reported by housebuilders in the
Commercial
Revenue in our Commercial sector was down 5.5% to
Despite a disappointing revenue decline in the first half of the year we have made good progress with our strategic initiatives. New, stronger leadership in commercial ventilation sales has been in place since spring 2024. A revamp and improved focus of the commercial team has reinvigorated our approach and whilst the revenue decline is disappointing, we are now seeing a strong increase in our project order intake. The success of our focus on order intake under our Vent-Axia and Breathing Building brands has necessitated a capacity expansion investment in one of our
Export
Revenue in our Export sector was up 20.1% (21.6% at cc) to
Following a strong performance in the prior year our third-party exports from the
OEM
Revenue in our OEM sector was down 5.7% (down 4.8% at cc) to
Following a difficult two-year period we have now fully implemented the turnaround plan in OEM. Operating from our now consolidated single location in
Continental
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Market sector revenue |
6 months to 31 Jan 2025 £m |
6 months to 31 Jan 2024 £m |
Growth % |
Growth (cc) % |
|
|||
|
Continental |
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|
|
|
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|||
|
Nordics |
23.9 |
25.4 |
(5.8) |
(3.2) |
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|||
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|
44.2 |
43.1 |
2.7 |
5.7 |
|
|||
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Total Continental Europe revenue |
68.1 |
68.5 |
(0.5) |
2.4 |
|
|||
|
Adjusted operating profit |
16.4 |
16.6 |
(0.9) |
|
|
|||
|
Adjusted operating profit margin (%) |
24.1 |
24.2 |
(0.1)pp |
|
|
|||
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Statutory operating profit |
13.7 |
13.6 |
0.9 |
|
|
|||
Revenue in Continental Europe was
Adjusted operating margins were broadly unchanged at 24.1% (H1 2024: 24.2%).
The European market can be characterised as experiencing generally weak demand, especially in areas of new construction. Our organic growth of 2.4% at cc was therefore a pleasing result.
Nordics
Revenue in the Nordics was
The Nordic market continues to be challenging. New build construction has been weak with our revenues in both
Revenue in
In
Having increased our RMI exposure we are confident that we are well positioned in
ClimaRad in
It was a similar story in
Our revenue from aluminium heat exchangers, sold under our Energy Recovery Industries (ERI) brand, relies heavily on new construction projects, which have been continued to be weaker in
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Market sector revenue |
6 months to 31 Jan 2025 £m |
6 months to 31 Jan 2024 £m |
Growth % |
Growth (cc) % |
Organic Growth (cc) % |
|
|||
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|
|
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|||
|
Residential |
26.8 |
24.8 |
7.9 |
10.8 |
(1.1) |
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Commercial |
9.6 |
1.4 |
572.6 |
576.1 |
(11.9) |
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Total |
36.4 |
26.2 |
38.8 |
41.7 |
(1.7) |
|
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|
Adjusted operating profit |
7.8 |
6.3 |
24.3 |
|
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|
|||
|
Adjusted operating profit margin (%) |
21.4 |
23.9 |
(2.5) |
|
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|
|||
|
Statutory operating profit |
2.3 |
5.5 |
(57.3) |
|
|
|
|||
Revenue in
We were delighted to complete the acquisition of the Fantech Group of companies in
Our 200-day integration process is well advanced, aided by the quality of both the management and operating systems. We have made excellent progress with the process and have already identified several exciting product cross selling initiatives which will roll out in the second half of the year. Fantech Group companies also share common component sourcing, and the innovation and procurement teams are working on initiatives to reduce material input costs. Having spent a considerable time "evaluating" the opportunity to acquire the group, the first months of trading and integration have confirmed our high expectations in full.
Fantech entered the Group at the beginning of December 2024, so in the first half of the year we have benefitted from just two months of trading. December and January are off season months in the region and so the overall contribution to the Group's performance in the first two months is typically lower than a normal two-month period.
Organic activity in the region can be broadly characterised as a continuing weak economy and revenue performance in
In
Since last updating on the regional performance in our full year results for 2024 I have had the opportunity to visit our operating companies on several occasions. With the strong leadership that came into the group with the Fantech acquisition, and a newly hired leader in
FINANCIAL REVIEW
|
|
6 months ended 31 January 2025 |
6 months ended 31 January 2024 |
||||
|
|
Statutory £m |
Adjustments £m |
Adjusted results £m |
Statutory £m |
Adjustments £m |
Adjusted results £m |
|
Revenue |
187.8 |
─ |
187.8 |
172.5 |
─ |
172.5 |
|
Gross profit |
91.7 |
4.2 |
95.9 |
87.6 |
─ |
87.6 |
|
Administration and distribution costs excluding the costs listed below |
(53.3) |
─ |
(53.3) |
(49.0) |
─ |
(49.0) |
|
Amortisation of intangible assets acquired through business combinations |
(4.9) |
4.9 |
─ |
(4.8) |
4.8 |
─ |
|
Costs of business combinations |
(1.9) |
1.9 |
─ |
(0.1) |
0.1 |
─ |
|
Operating profit |
31.6 |
11.0 |
42.6 |
33.7 |
4.9 |
38.6 |
|
Re-measurement of financial liability |
(0.4) |
─ |
(0.4) |
(0.3) |
─ |
(0.3) |
|
Re-measurement of contingent consideration |
(3.1) |
3.1 |
─ |
(1.3) |
1.3 |
─ |
|
Net gain on financial instruments at fair value |
1.2 |
(1.2) |
─ |
0.2 |
(0.2) |
─ |
|
Other net finance costs |
(3.6) |
─ |
(3.6) |
(3.3) |
─ |
(3.3) |
|
Profit before tax |
25.7 |
12.9 |
38.6 |
29.0 |
6.0 |
35.0 |
|
Income tax |
(6.8) |
(1.5) |
(8.3) |
(7.0) |
(1.0) |
(8.0) |
|
Profit after tax |
18.9 |
11.4 |
30.3 |
22.0 |
5.0 |
27.0 |
The Group uses some alternative performance measures to track and assess the underlying performance of the business. These measures include adjusted operating profit, adjusted operating profit margin, adjusted profit before tax, adjusted basic EPS, adjusted operating cash flow, return on invested capital and adjusted operating cash flow conversion. The reconciliation of the Group's statutory profit before tax to adjusted measures of performance is summarised in note 2 to the interim condensed consolidated financial statements. For a definition of all the adjusted and non-GAAP measures, please see the glossary of terms in note 16 to the interim condensed consolidated financial statements.
Results review
Group revenue for the six months ended 31 January 2025 grew 8.9% to
Adjusted operating profit grew by 10.4% to
Statutory operating profit declined by 6.2% to
· Amortisation of acquired inventory (Fantech) fair value adjustment of
· Amortisation of intangible assets acquired through business combinations was
· Cost associated with business combinations were
Adjusted profit before tax was
Statutory profit before tax was
· Re-measurement of contingent consideration was
· Gain due to the fair value measurement of financial instruments, gain of
Adjusted basic earnings per share increased by 11.7% to
Cash generation in the period was excellent, underpinned by strong working capital performance, with adjusted operating cash conversion of 110% (H1 2024: 98%).
The Board has declared an interim dividend of
Finance costs
Adjusted finance costs increased to
Statutory net finance costs were
Currency impact
Aside from Sterling, the Group's key trading currencies for our non-
The average rates of Sterling versus our principal non-Sterling trading currencies are shown in the table below.
|
|
Average rate H1 FY25 |
Average rate H1 FY24 |
Movement |
|
|
|
Euro |
1.194 |
1.158 |
3.1% |
|
|
|
Swedish Krona |
13.684 |
13.382 |
2.3% |
|
|
|
New Zealand Dollar |
2.158 |
2.073 |
4.1% |
|
|
|
Australian Dollar |
1.9624 |
1.920 |
2.2% |
|
|
As at 31 January 2025 the Group had borrowings of
Transactional foreign exchange exposures arise principally in the form of US$ denominated purchases from our suppliers in
Taxation
Our underlying effective tax rate, on adjusted profit before tax, was 21.5%. This compares with a full year FY2024 rate of 21.8%, the decrease of 0.3 percentage points being attributable to increased levels of patent box relief in the
Moving forward with the higher rate of tax in
Cash flow and net debt
Group cash conversion, defined as adjusted operating cash flow as a percentage of adjusted earnings before interest, tax and amortisation (see note 16) was 110% (H1 2024: 98%).
Working capital decreased by
Capital expenditure in the period was
Dividend payments in the period were
Acquisition spend consisted of
Net debt at 31 January 2025 was
|
|
6 months to 31 January 2025 £m |
6 months to 31 January 2024 £m |
|
|
|
Opening net debt at 1 August |
(57.6) |
(89.3) |
|
|
|
Movements from underlying business operations: |
|
|
|
|
|
Adjusted EBITDA1 |
48.7 |
43.9 |
|
|
|
Movement in working capital |
1.0 |
(2.5) |
|
|
|
Share-based payments |
1.0 |
0.9 |
|
|
|
Capital expenditure |
(2.8) |
(3.5) |
|
|
|
Adjusted operating cash flow: |
47.9 |
38.8 |
|
|
|
- Interest paid net of interest received |
(3.0) |
(2.8) |
|
|
|
- Income tax paid |
(8.2) |
(7.2) |
|
|
|
- Business combination related operating costs |
(1.9) |
(0.1) |
|
|
|
- Dividend paid |
(12.3) |
(10.9) |
|
|
|
- Purchase of own shares by the Employee Benefit Trust |
(1.3) |
(2.7) |
|
|
|
- FX on foreign currency loans/cash |
2.5 |
(0.8) |
|
|
|
- Issue costs of new borrowings |
(1.8) |
─ |
|
|
|
- Lease liabilities |
(12.7) |
1.2 |
|
|
|
- Payments of lease liabilities |
(2.2) |
(1.8) |
|
|
|
|
|
|
|
|
|
Movements from acquisitions: |
|
|
|
|
|
- Acquisition of remaining 25% of ClimaRad |
(29.5) |
─ |
|
|
|
- Acquisitions in the year, net of cash acquired |
(106.7) |
(8.6) |
|
|
|
|
|
|
|
|
|
Closing net debt at 31 January |
(186.8) |
(84.2) |
|
|
|
|
|
6 months to 31 January 2025 £m |
6 months to 31 January 2024 £m |
|
|
|
Bank debt |
(158.9) |
(71.3) |
|
|
|
Cash |
10.7 |
17.1 |
|
|
|
Net debt (excluding lease liabilities) |
(148.2) |
(54.2) |
|
|
|
Lease liabilities |
(38.6) |
(30.0) |
|
|
|
Closing net debt at 31 January |
(186.8) |
(84.2) |
|
1 A reconciliation of the Group's statutory profit before tax to adjusted measures of performance are shown in detail in note 2 to the interim condensed consolidated financial statements.
Reconciliation of adjusted operating cash flow
|
|
6 months to 31 January 2025 £m |
6 months to 31 January 2024 £m |
|
Net cash flow generated from operating activities |
40.6 |
35.0 |
|
Capital expenditure |
(2.8) |
(3.5) |
|
|
8.2 |
7.2 |
|
Cash flow relating to business combination costs |
1.9 |
0.1 |
|
Adjusted operating cash flow |
47.9 |
38.8 |
Bank facilities, refinancing and liquidity
On 10 September 2024, the Group refinanced its bank debt. The Group now has in place a new
At 31 January 2025, the Group had
High returns on invested capital (ROIC)
The Group's ROIC (pre-tax) for the period was 25.0%, measured as adjusted operating profit for the last 12 months (LTM) divided by average net assets, after adding back net debt, acquisition related liabilities, and historic goodwill and acquisition related amortisation charges (net of the associated deferred tax). The measure also excludes the goodwill and intangible assets arising from the original transaction that created the Group when it was bought out via a leveraged buy-out transaction by private equity house Towerbrook Capital Partners in 2012.
The reduction in ROIC from 27.7% at FY24 to 25.0% is attributable to the acquisition of Fantech and ClimaRad. Excluding these acquisition impacts our "organic" business ROIC would have increased by 1pp driven by further margin expansion and good working capital and balance sheet discipline.
Although, at the time of entry to the Group acquisitions will be dilutive to ROIC, our track record of improving the returns post acquisition, coupled with continued organic growth and strong margins, provides us with confidence of maintaining Group ROIC above 20% over the medium term while continuing to invest to grow the business.
Returns to shareholders
Our adjusted basic earnings per share for the period was
Going concern
After reviewing the Group's current liquidity, net debt, covenants, financial forecasts and stress testing of potential risks, the Board confirms there are no material uncertainties which impact the Group's ability to continue as a going concern for the period to 31 July 2025 and these interim condensed consolidated financial statements have therefore been prepared on a going concern basis.
Andy O'Brien
Chief Financial Officer
12 March 2025
Principal Risks and Uncertainties
The Directors have reviewed the principal risks and uncertainties which could have a material impact on the Group's performance. Whilst there has been an increase in global economic uncertainty, the Directors have concluded that they has been no material change from those described in Volution's Annual Report 2024, which can be found at www.volutiongroupplc.com.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
The condensed consolidated set of financial statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period; and any changes in the related party transactions described in the Annual Report 2024 that could do so.
The full list of current Directors can be found on the Company's website at www.volutiongroupplc.com.
By order of the Board
Ronnie George Andy O'Brien
Chief Executive Officer Chief Financial Officer
12 March 2025 12 March 2025
Independent Review Report to Volution Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Volution Group Plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim results of Volution Group Plc for the 6 month period ended 31 January 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
· the Interim Condensed Consolidated Statement of Financial Position as at 31 January 2025;
· the Interim Condensed Consolidated Statement of Comprehensive Income for the period then ended;
· the Interim Condensed Consolidated Statement of Cash Flows for the period then ended;
· the Interim Condensed Consolidated Statement of Changes in Equity for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results of Volution Group Plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Interim results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial statements in the Interim results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
12 March 2025
Interim Condensed Consolidated Statement of Comprehensive Income
For the period ended 31 January 2025
|
|
Notes |
Unaudited 6 months to 31 January 2025 |
Unaudited 6 months to 31 January 2024 |
|
Revenue from contracts with customers |
3 |
187,833 |
172,479 |
|
Cost of sales |
|
(96,107) |
(84,859) |
|
Gross profit |
|
91,726 |
87,620 |
|
Administrative and distribution expenses |
|
(58,182) |
(53,824) |
|
Operating profit before separately disclosed items |
|
33,544 |
33,796 |
|
Costs of business combinations |
|
(1,945) |
(116) |
|
Operating profit |
|
31,599 |
33,680 |
|
Finance income |
|
1,319 |
49 |
|
Finance costs |
|
(3,724) |
(3,198) |
|
Re-measurement of financial liabilities |
11 |
(455) |
(304) |
|
Re-measurement of future consideration |
11 |
(3,057) |
(1,270) |
|
Profit before tax |
|
25,682 |
28,957 |
|
Income tax |
5 |
(6,831) |
(7,004) |
|
Profit after tax |
|
18,851 |
21,953 |
|
|
|
|
|
|
Other comprehensive expense |
|
|
|
|
Other comprehensive income that may be reclassified to profit or loss in subsequent periods: |
|
|
|
|
Exchange differences arising on translation of foreign operations |
|
(4,992) |
(422) |
|
Gain/(loss) on currency loans relating to the net investment in foreign operations |
|
2,774 |
338 |
|
Other comprehensive loss for the period |
|
(2,218) |
(84) |
|
Total comprehensive income for the period, net of tax |
|
16,633 |
21,869 |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
Basic earnings per share |
6 |
9.5p |
11.1p |
|
Diluted earnings per share |
6 |
9.4p |
11.0p |
Interim Condensed Consolidated Statement of Financial Position
At 31 January 2025
|
|
Notes |
31 January 2025 Unaudited |
31 July 2024 Audited |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
10 |
31,599 |
30,193 |
|
Right-of-use assets |
|
35,014 |
24,894 |
|
Intangible assets - goodwill |
7 |
238,800 |
171,340 |
|
Intangible assets - others |
8 |
128,667 |
76,902 |
|
|
|
434,080 |
303,329 |
|
Current assets |
|
|
|
|
Inventories |
|
73,963 |
53,112 |
|
Trade and other receivables |
|
69,666 |
55,239 |
|
Other financial assets |
|
988 |
─ |
|
Income tax assets |
|
─ |
392 |
|
Cash and short-term deposits |
|
10,677 |
18,243 |
|
|
|
155,294 |
126,986 |
|
Total assets |
|
589,374 |
430,315 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(61,486) |
(46,653) |
|
Refund liabilities |
|
(12,986) |
(10,847) |
|
Income tax |
|
(3,742) |
(3,940) |
|
Other financial liabilities |
11 |
(34,365) |
(22,068) |
|
Interest-bearing loans and borrowings |
12 |
(5,894) |
(14,363) |
|
Provisions |
|
(1,958) |
(1,450) |
|
|
|
(120,431) |
(99,321) |
|
Non-current liabilities |
|
|
|
|
Interest-bearing loans and borrowings |
12 |
(190,510) |
(71,630) |
|
Provisions |
|
(472) |
(819) |
|
Deferred tax liabilities |
|
(27,970) |
(12,622) |
|
|
|
(218,952) |
(85,071) |
|
Total liabilities |
|
(339,383) |
(184,392) |
|
Net assets |
|
249,991 |
245,923 |
|
Capital and reserves |
|
|
|
|
Share capital |
|
2,000 |
2,000 |
|
Share premium |
|
11,527 |
11,527 |
|
Treasury shares |
|
(2,143) |
(2,250) |
|
Capital reserve |
|
93,855 |
93,855 |
|
Share-based payment reserve |
|
5,117 |
5,427 |
|
Foreign currency translation reserve |
|
(8,470) |
(6,252) |
|
Retained earnings |
|
148,105 |
141,616 |
|
Total equity |
|
249,991 |
245,923 |
The interim condensed consolidated financial statements of Volution Group plc (registered number: 09041571) were approved by the Board of Directors and authorised for issue on 12 March 2025.
On behalf of the Board
Ronnie George Andy O'Brien
Chief Executive Officer Chief Financial Officer
Interim Condensed Consolidated Statement of Changes in Equity
For the period ended 31 January 2025
|
|
Share capital |
Share premium |
Treasury shares |
Capital reserve |
Share-based payment reserve |
Foreign currency translation reserve |
Retained earnings |
Total Equity |
|
At 31 July 2023 (Audited) |
2,000 |
11,527 |
(2,390) |
93,855 |
5,584 |
(1,225) |
116,894 |
226,245 |
|
Profit for the period |
─ |
─ |
─ |
─ |
─ |
─ |
21,953 |
21,953 |
|
Other comprehensive loss |
─ |
─ |
─ |
─ |
─ |
(84) |
─ |
(84) |
|
Total comprehensive income |
─ |
─ |
─ |
─ |
─ |
(84) |
21,953 |
21,869 |
|
Purchase of own shares |
─ |
─ |
(2,732) |
─ |
─ |
─ |
─ |
(2,732) |
|
Exercise of shares options |
─ |
─ |
2,872 |
─ |
(1,214) |
─ |
(1,658) |
─ |
|
Share-based payment including tax |
─ |
─ |
─ |
─ |
852 |
─ |
─ |
852 |
|
Dividend paid |
─ |
─ |
─ |
─ |
─ |
─ |
(10,879) |
(10,879) |
|
At 31 January 2024 (Unaudited) |
2,000 |
11,527 |
(2,250) |
93,855 |
5,222 |
(1,309) |
126,310 |
235,355 |
|
Profit for the period |
─ |
─ |
─ |
─ |
─ |
─ |
20,844 |
20,844 |
|
Other comprehensive income |
─ |
─ |
─ |
─ |
─ |
(4,943) |
─ |
(4,943) |
|
Total comprehensive income |
─ |
─ |
─ |
─ |
─ |
(4,943) |
20,844 |
15,901 |
|
Share-based payment including tax |
─ |
─ |
─ |
─ |
205 |
─ |
─ |
205 |
|
Dividend paid |
─ |
─ |
─ |
─ |
─ |
─ |
(5,538) |
(5,538) |
|
At 31 July 2024 (Audited) |
2,000 |
11,527 |
(2,250) |
93,855 |
5,427 |
(6,252) |
141,616 |
245,923 |
|
Profit for the period |
─ |
─ |
─ |
─ |
─ |
─ |
18,851 |
18,851 |
|
Other comprehensive loss |
─ |
─ |
─ |
─ |
─ |
(2,218) |
─ |
(2,218) |
|
Total comprehensive income |
─ |
─ |
─ |
─ |
─ |
(2,218) |
18,851 |
16,633 |
|
Purchase of own shares |
─ |
─ |
(1,325) |
─ |
─ |
─ |
─ |
(1,325) |
|
Exercise of share options |
─ |
─ |
1,432 |
─ |
(1,348) |
─ |
(84) |
─ |
|
Share-based payment including tax |
─ |
─ |
─ |
─ |
1,038 |
─ |
─ |
1,038 |
|
Dividend paid |
─ |
─ |
─ |
─ |
─ |
─ |
(12,278) |
(12,278) |
|
At 31 January 2025 (Unaudited) |
2,000 |
11,527 |
(2,143) |
93,855 |
5,117 |
(8,470) |
148,105 |
249,991 |
Treasury shares
The treasury shares reserve represents the cost of shares in Volution Group plc purchased in the market and held by the Volution Employee Benefit Trust to satisfy obligations under the Group's share incentive schemes.
Capital reserve
The capital reserve is the difference in share capital and reserves arising from the use of the pooling of interest method for preparation of the financial statements in 2014. This is a non-distributable reserve.
Share-based payment reserve
The share-based payment reserve is used to recognise the fair value of equity-settled share-based payments provided to key management personnel, as part of their remuneration.
Foreign currency translation reserve
For the purpose of presenting consolidated financial information, the assets and liabilities of the Group's foreign operations are expressed in GBP using exchange rates prevailing at the end of the reporting period. Income and expenses are translated at the average exchange rate for the period. Exchange differences arising are classified as other comprehensive income and are transferred to the foreign currency translation reserve. All other translation differences are taken to profit and loss with the exception of differences on foreign currency borrowings to the extent that they are used to finance or provide a hedge against Group equity investments in foreign operations, in which case they are taken to other comprehensive income together with the exchange difference on the net investment in these operations.
Interim Condensed Consolidated Statement of Cash Flows
For the period ended 31 January 2025
|
|
Notes |
Unaudited 6 months to 31 January 2025 |
Unaudited 6 months to 31 January 2024 |
|
Operating activities |
|
|
|
|
Profit for the period after tax |
|
18,851 |
21,953 |
|
Adjustments to reconcile profit for the period to net cash flow from operating activities: |
|
|
|
|
Income tax |
|
6,831 |
7,004 |
|
Gain on disposal of property, plant and equipment and intangible assets |
|
(80) |
(78) |
|
Amortisation of acquired inventory fair value adjustment |
|
4,133 |
─ |
|
Re-measurement of financial liability relating to business combinations |
|
455 |
304 |
|
Re-measurement of future consideration relating to business combinations |
|
3,057 |
1,270 |
|
Finance income |
|
(1,319) |
(49) |
|
Finance costs |
|
3,724 |
3,198 |
|
Share-based payment expense |
|
1,038 |
852 |
|
Depreciation of property, plant and equipment |
10 |
2,319 |
2,212 |
|
Depreciation of right of use assets |
|
2,732 |
2,254 |
|
Amortisation of intangible assets |
8 |
5,989 |
5,666 |
|
Working capital adjustments: |
|
|
|
|
Decrease/(Increase) in trade and other receivables |
|
1,217 |
(2,468) |
|
Decrease in inventories |
|
5,318 |
2,879 |
|
Amortisation of acquired inventory fair value adjustment |
|
(4,133) |
─ |
|
Decrease in trade and other payables |
|
(2,083) |
(2,541) |
|
Movement in provisions |
|
656 |
(328) |
|
Cash generated by operations |
|
48,705 |
42,128 |
|
UK income tax paid |
|
(2,500) |
(2,500) |
|
Overseas income tax paid |
|
(5,708) |
(4,732) |
|
Net cash flow generated from operating activities |
|
40,497 |
34,896 |
|
Investing activities |
|
|
|
|
Payments to acquire intangible assets |
8 |
(753) |
(911) |
|
Purchase of property, plant and equipment |
10 |
(2,142) |
(2,774) |
|
Proceeds from disposal of property, plant and equipment and intangible assets |
|
124 |
240 |
|
Payments to acquire subsidiaries, net of cash acquired |
9 |
(106,629) |
(8,498) |
|
Interest received |
|
134 |
49 |
|
Net cash flow used in investing activities |
|
(109,266) |
(11,894) |
|
Financing activities |
|
|
|
|
Repayment of interest-bearing loans and borrowings |
|
(57,261) |
(27,223) |
|
Proceeds from new borrowings |
|
169,119 |
19,505 |
|
Repayment of VMI debt acquired |
|
(130) |
(100) |
|
Consideration paid for 25% of ClimaRad |
|
(29,509) |
─ |
|
Issue costs of new borrowings |
|
(1,799) |
─ |
|
Interest paid |
|
(3,095) |
(2,811) |
|
Payment of principal portion of lease liabilities |
|
(2,225) |
(1,830) |
|
Dividend paid |
|
(12,278) |
(10,879) |
|
Purchase of own shares |
|
(1,325) |
(2,732) |
|
Net cash flow generated from / (used in) financing activities |
|
61,497 |
(26,070) |
|
Net decrease in cash and cash equivalents |
|
(7,272) |
(3,068) |
|
Cash and cash equivalents at the start of the period |
|
18,243 |
21,244 |
|
Effect of exchange rates on cash and cash equivalents |
|
(294) |
(1,093) |
|
Cash and cash equivalents at the end of the period |
|
10,677 |
17,083 |
Notes to the Interim Condensed Consolidated Financial Statements
For the period ended 31 January 2025
Volution Group plc (the Company) is a public limited company and is incorporated and domiciled in the UK (registered number: 09041571). The share capital of the Company is listed on the London Stock Exchange. The address of its registered office is Fleming Way, Crawley, West Sussex RH10 9YX.
The unaudited interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 12 March 2025.
1. Basis of preparation
These condensed consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standards (IAS) 34 'Interim financial reporting'. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the Annual Report 2024. The financial information for the half years ended 31 January 2025 and 31 January 2024 do not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and are unaudited.
The annual financial statements of Volution Group plc are prepared in accordance with UK-adopted International accounting standards. The comparative financial information for the year ended 31 July 2024 included within this report does not constitute the full statutory accounts for that period. The Annual Report 2024 has been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report 2024 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 498(2) and 498(3) of the Companies Act 2006.
The accounting policies adopted are consistent with those of the previous financial year except for income tax expense, which is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. They are consistent with those of the corresponding interim reporting period.
Going Concern
The financial statements have been prepared on a going concern basis. The Directors have at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence in the foreseeable future, assessed for the 18-month period ending 31 July 2026.
The financial position remains robust with committed facilities totalling
The base case scenario has been prepared using robust forecasts from each of our operating companies, with each considering the risks and opportunities the businesses face, including the high inflation environment and economic uncertainty across many of the countries in which we operate, and the other principal risks set out in the Annual report 2024.
We have then applied a severe but plausible downside scenario to model the potential concurrent impact of:
- a significant economic slowdown reducing revenue by 15% compared to plan in FY25, with no recovery in FY26, and
- supply chain difficulties or inflationary cost increases reducing gross profit margin by 10%;
A reverse stress test scenario has also been modelled which shows a revenue contraction of >21% in FY25 with no recovery in FY26 without the implementation of any mitigations would be required to breach covenants or compromise liquidity, which is considered by the Directors an extremely remote scenario.
Mitigations available within the control of management include reducing discretionary capex and discretionary indirect costs.
Over the short period of our climate change assessment (aligned to our going concern assessment), we have concluded that there is no material adverse impact of climate change and hence have not included any impacts in either our base case or downside scenarios of our going concern assessment. We have not experienced material adverse disruption during periods of adverse or extreme weather in recent years, and we would not expect this to occur to a material level over the period of our going concern assessment.
The Directors have concluded that the results of the scenario testing combined with the significant liquidity profile available under the revolving credit facility confirm that there is no material uncertainty in the use of the going concern assumption.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
In preparing the interim condensed consolidated financial statements, the areas where judgement has been exercised and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 July 2024, with the addition of certain judgements and estimations applied in the accounting for the Fantech business combination.
The identification and valuation of intangible assets acquired in Fantech required significant judgement. As part of the purchase price allocation (PPA), the Group determined the fair values of identifiable assets and liabilities, including the separately identifiable intangible assets of customer relationships and brands. Management exercised judgement in assessing whether those intangible assets were separately identifiable and that they meet the criteria for recognition under IFRS 3 Business Combinations and in assessing the useful economic life of each asset.
The valuation of acquired intangible assets involved significant estimates and assumptions, including a) The selection of an appropriate discount rate, b) Revenue Growth and customer Attrition Rates for customer valuation, and c) Royalty Rates used for brand valuation. These estimates are inherently uncertain and may be revised during the measurement period as more information becomes available. Changes in these assumptions could materially impact the carrying values of intangible assets, goodwill, and amortization expenses.
New standards and interpretations
Any new standards or interpretations in issue, but not yet effective, are not expected to have a material impact on the Group's net assets or results. Based on the Group's ongoing assessment, the Group does not anticipate any new or revised standards and interpretations that are effective from 1 January 2025 and beyond to have a material impact on its condensed consolidated financial statements.
2. Adjusted earnings
The Board and key management use some alternative performance measures to track and assess the underlying performance of the business. These measures include adjusted operating profit and adjusted profit before tax. These measures are deemed helpful as they remove items that do not reflect the day-to-day trading operations of the business and therefore their exclusion is relevant to an assessment of the day-to-day trading operations, as opposed to overall annual business performance. Such alternative performance measures are not defined terms under IFRS and may not be comparable with similar measures disclosed by other companies. Likewise, these measures are not a substitute for IFRS measures of profit. A reconciliation of these measures of performance to the corresponding statutory figure is shown below.
|
|
6 months to 31 January 2025 |
6 months to 31 January 2024 |
|
Profit after tax |
18,851 |
21,953 |
|
Add back: |
|
|
|
Amortisation of acquired inventory fair value adjustment |
4,133 |
─ |
|
Costs of business combinations |
1,945 |
116 |
|
Re-measurement of future consideration relating to the business combinations |
3,057 |
1,270 |
|
Net (gain)/loss on financial instruments at fair value |
(1,185) |
(196) |
|
Amortisation and impairment of intangible assets acquired through business combinations |
4,935 |
4,796 |
|
Tax effect of the above |
(1,458) |
(1,016) |
|
Adjusted profit after tax |
30,278 |
26,923 |
|
Add back: |
|
|
|
Adjusted tax charge |
8,289 |
8,020 |
|
Adjusted profit before tax |
38,567 |
34,943 |
|
Add back: |
|
|
|
Interest payable on bank loans, lease liabilities and amortisation of financing costs |
3,724 |
3,394 |
|
Re-measurement of financial liability relating to the business combination of ClimaRad |
455 |
304 |
|
Finance income |
(134) |
(49) |
|
Adjusted operating profit |
42,612 |
38,592 |
|
Add back: |
|
|
|
Depreciation of property, plant and equipment |
2,319 |
2,212 |
|
Depreciation of right-of-use asset |
2,732 |
2,254 |
|
Amortisation of development costs, software and patents |
1,054 |
870 |
|
Adjusted EBITDA |
48,717 |
43,928 |
For definitions of terms referred to above see note 16, Glossary of terms.
3. Revenue from contracts with customers
Revenue recognised in the statement of comprehensive income is analysed below:
|
|
6 months to 31 January 2025 |
6 months to 31 January 2024 |
|
Sale of goods |
185,398 |
169,100 |
|
Installation services |
2,435 |
3,379 |
|
Total revenue from contracts with customers |
187,833 |
172,479 |
Sales of goods and installation service revenue in the comparative period has been represented, total revenue from contracts with customers did not change.
|
Market sectors |
6 months to 31 January 2025 |
6 months to 31 January 2024 |
|
UK |
|
|
|
Residential |
55,088 |
49,471 |
|
Commercial |
14,372 |
15,209 |
|
Export |
6,814 |
5,673 |
|
OEM (Torin-Sifan) |
7,018 |
7,441 |
|
Total UK |
83,292 |
77,794 |
|
Nordics |
23,889 |
25,367 |
|
Central Europe |
44,270 |
43,106 |
|
Total Continental Europe |
68,159 |
68,473 |
|
Total Australasia |
36,382 |
26,212 |
|
Total revenue from contracts with customers |
187,833 |
172,479 |
4. Segmental analysis
|
6 months ended 31 January 2025 |
UK |
Continental Europe |
Australasia |
Central / Eliminations |
Consolidated |
|
Revenue from contracts with customers |
|
|
|
|
|
|
Total segment revenue |
98,824 |
86,752 |
37,825 |
(35,568) |
187,833 |
|
Inter-segment revenue |
(15,532) |
(18,593) |
(1,443) |
35,568 |
─ |
|
Revenue from external contracts with customers |
83,292 |
68,159 |
36,382 |
─ |
187,833 |
|
Gross profit |
42,981 |
34,720 |
14,025 |
─ |
91,726 |
|
Results |
|
|
|
|
|
|
Adjusted segment EBITDA |
23,855 |
18,328 |
9,203 |
(2,669) |
48,717 |
|
Depreciation and amortisation of |
(2,438) |
(1,905) |
(1,423) |
(339) |
(6,105) |
|
Adjusted operating profit/(loss) |
21,417 |
16,423 |
7,780 |
(3,008) |
42,612 |
|
Amortisation of intangible assets acquired through business combinations |
(940) |
(2,680) |
(1,315) |
─ |
(4,935) |
|
Amortisation of acquired inventory fair value adjustment |
|
|
(4,133) |
─ |
(4,133) |
|
Business combination-related operating costs |
─ |
─ |
─ |
(1,945) |
(1,945) |
|
Operating profit/(loss) |
20,477 |
13,743 |
2,332 |
(4,953) |
31,599 |
|
Unallocated expenses |
|
|
|
|
|
|
Net finance cost |
─ |
─ |
124 |
(2,529) |
(2,405) |
|
Re-measurement of future consideration |
─ |
(3,057) |
─ |
─ |
(3,057) |
|
Re-measurement of financial liability |
─ |
(455) |
─ |
─ |
(455) |
|
Profit/(loss) before tax |
20,477 |
10,231 |
2,456 |
(7,482) |
25,682 |
|
6 months ended 31 January 2024 |
UK |
Continental Europe |
Australasia |
Central / Eliminations |
Consolidated |
|
Revenue from contracts with customers |
|
|
|
|
|
|
Total segment revenue |
90,350 |
87,079 |
26,241 |
(31,191) |
172,479 |
|
Inter-segment revenue |
(12,556) |
(18,606) |
(29) |
31,191 |
─ |
|
Revenue from external contracts with customers |
77,794 |
68,473 |
26,212 |
─ |
172,479 |
|
Gross profit |
38,981 |
34,917 |
13,722 |
─ |
87,620 |
|
Results |
|
|
|
|
|
|
Adjusted segment EBITDA |
21,291 |
18,472 |
6,928 |
(2,763) |
43,928 |
|
Depreciation and amortisation of |
(2,425) |
(1,902) |
(668) |
(341) |
(5,336) |
|
Adjusted operating profit/(loss) |
18,866 |
16,570 |
6,260 |
(3,104) |
38,592 |
|
Amortisation of intangible assets acquired through business combinations |
(1,050) |
(2,953) |
(793) |
─ |
(4,796) |
|
Business combination-related operating costs |
─ |
─ |
─ |
(116) |
(116) |
|
Operating profit/(loss) |
17,816 |
13,617 |
5,467 |
(3,220) |
33,680 |
|
Unallocated expenses |
|
|
|
|
|
|
Net finance cost |
─ |
─ |
(55) |
(3,094) |
(3,149) |
|
Re-measurement of future consideration |
─ |
(1,270) |
─ |
─ |
(1,270) |
|
Re-measurement of financial liability |
─ |
(304) |
─ |
─ |
(304) |
|
Profit/(loss) before tax |
17,816 |
12,043 |
5,412 |
(6,314) |
28,957 |
5. Income tax
Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year.
Our underlying effective tax rate, on adjusted profit before tax, was 21.5% (H1 2024: 23.0%).
Our statutory effective tax rate for the period was 26.6% (H1 2024: 24.2%).
In June 2023, the UK Government substantively enacted legislation introducing a global minimum corporate income tax rate, to have effect from 2024 in line with the OECD's Pillar Two model framework on large multinational Enterprises with a consolidated Group revenue of
6. Earnings per share (EPS)
Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares. There are 2,077,163 dilutive potential ordinary shares at 31 January 2025 (H1 2024: 3,128,124).
The following reflects the income and share data used in the basic and diluted earnings per share computations:
|
|
6 months ended 31 January 2025 |
6 months ended 31 January 2024 |
|
Profit attributable to ordinary equity holders |
18,851 |
21,953 |
|
|
Number |
Number |
|
Weighted average number of ordinary shares for basic earnings per share |
197,954,910 |
197,102,359 |
|
Effect of dilution from: |
|
|
|
Share options |
2,077,163 |
1,939,674 |
|
Weighted average number of ordinary shares for diluted earnings per share |
200,032,073 |
199,042,033 |
|
Earnings per share |
|
|
|
Basic |
9.5p |
11.1p |
|
Diluted |
9.4p |
11.0p |
|
|
6 months ended 31 January 2025 |
6 months ended 31 January 2024 |
|
Adjusted profit attributable to ordinary equity holders |
30,278 |
26,923 |
|
|
Number |
Number |
|
Weighted average number of ordinary shares for adjusted basic earnings per share |
197,954,910 |
197,102,359 |
|
Effect of dilution from: |
|
|
|
Share options |
2,077,163 |
1,939,674 |
|
Weighted average number of ordinary shares for adjusted diluted earnings per share |
200,032,073 |
199,042,033 |
|
Adjusted earnings per share |
|
|
|
Basic |
15.3p |
13.7p |
|
Diluted |
15.1p |
13.5p |
The weighted average number of ordinary shares has increased as a result of treasury shares held by the Volution Employee Benefit Trust (EBT) during the period. At 31 January 2025, a total of 1,965,923 (31 January 2024: 2,206,186) ordinary shares in the Company were held by the Volution EBT, all of which were unallocated and available for transfer to participants of the Long-Term Incentive Plan, Deferred Share Bonus Plan and Sharesave Plan on exercise. During the period, 225,000 ordinary shares in the Company were purchased by the trustees (6 months to 31 January 2024: 700,000) and 410,291 (6 months to 31 January 2024: 964,914) were released by the trustees.
The shares are excluded when calculating the statutory and adjusted EPS.
Adjusted profit attributable to ordinary equity holders has been reconciled in note 2, adjusted earnings.
See note 16, Glossary of terms, for an explanation of the adjusted basic and diluted earnings per share calculation.
7. Intangible assets - goodwill
|
Goodwill |
Total |
|
Cost and net book value |
|
|
At 31 July 2023 |
168,988 |
|
On the business combination of DVS |
5,037 |
|
Net foreign currency exchange differences |
(2,685) |
|
At 31 July 2024 |
171,340 |
|
On the business combination of Fantech (provisional) |
69,870 |
|
Net foreign currency exchange differences |
(2,410) |
|
At 31 January 2025 |
238,800 |
8. Intangible assets - other
|
2025 |
Total |
|
Cost |
|
|
At 1 August 2024 |
247,146 |
|
Additions |
753 |
|
On business combination (provisional) |
59,020 |
|
Disposals |
(99) |
|
Net foreign currency exchange differences |
(2,359) |
|
At 31 January 2025 |
304,461 |
|
Amortisation |
|
|
At 1 August 2024 |
170,244 |
|
Charge for the period |
5,989 |
|
Disposals |
(99) |
|
Net foreign currency exchange differences |
(340) |
|
At 31 January 2025 |
175,794 |
|
Net book value |
|
|
At 31 January 2025 |
128,667 |
Intangible assets - other, is made up of development costs, software costs, customer base, trademarks and patents.
9. Business combinations
Business combination in the half year ended 31 January 2025
Fantech
On 29 November 2024, Volution Group acquired Fantech, a market leading position in commercial and residential ventilation in Australasia. The acquisition of Fantech is in line with the Group's strategy to grow by selectively acquired value-adding businesses in new and existing markets and geographies.
Total consideration for the purchase of Fantech is AUD$280 million (
Transaction costs relating to professional fees associated with the business combination in the period ending 31 January 2025 were
The fair values of the acquired assets and liabilities recognized in our financial statements are provisional, as they are based on the information available at the acquisition date; adjustments may be required if additional relevant information becomes available within the measurement period, which extends up to 12 months from the acquisition date. The provisional fair value of the net assets acquired is set out below:
|
|
Provisional book value |
Provisional fair value adjustments |
Provisional Fair value |
|
Intangible assets |
1,127 |
57,893 |
59,020 |
|
Property, plant and equipment |
1,760 |
- |
1,760 |
|
Right of use assets |
11,315 |
- |
11,315 |
|
Inventory |
19,648 |
6,282 |
25,930 |
|
Trade and other receivables |
15,462 |
- |
15,462 |
|
Trade and other payables |
(15,106) |
- |
(15,106) |
|
Lease Liabilities |
(14,362) |
- |
(14,362) |
|
Income Tax |
(684) |
- |
(684) |
|
Provisions |
(186) |
- |
(186) |
|
Deferred Tax |
896 |
(17,682) |
(16,786) |
|
Cash and cash equivalents |
5,370 |
- |
5,370 |
|
Total identifiable net assets |
25,240 |
46,493 |
71,733 |
|
Goodwill on the business combination |
|
|
69,870 |
|
Discharged by: |
|
|
|
|
Cash consideration |
|
|
111,999 |
|
Deferred consideration |
|
|
29,604 |
Goodwill of
The gross amount of trade and other receivables is
Inventories recorded on the business combination were recognised at fair value. The fair value uplift is charged to gross profit over a period of 4 months from the date of acquisition.
Fantech generated revenue of
If the combination had taken place at 1 August 2024, the Group's revenue would have been
Business combination in the half year ended 31 January 2024
DVS
On 4 August 2023, Volution Group acquired the trade and assets of Proven Systems Limited ("DVS"), a market leading supplier and installer of home ventilation solutions in New Zealand. The acquisition of DVS is in line with the Group's strategy to grow by selectively acquired value-adding businesses in new and existing markets and geographies.
Total consideration for the purchase of the trade and assets of DVS was
The fair value of contingent consideration is calculated by estimating the future cash flows for the company based on management's knowledge of the business and how the current economic environment is likely to impact performance. If EBITDA for each period for which contingent consideration is measured is 10% higher than expected, contingent consideration would be £nil.
Transaction costs relating to professional fees associated with the business combination in the period ending 31 January 2024 were
The fair value of the net assets acquired is set out below:
|
|
Book value |
Fair value adjustments |
Fair value |
|
Intangible assets |
35 |
3,976 |
4,011 |
|
Property, plant and equipment |
185 |
- |
185 |
|
Inventory |
875 |
- |
875 |
|
Trade and other receivables |
130 |
- |
130 |
|
Trade and other payables |
(627) |
- |
(627) |
|
Deferred tax liabilities |
- |
(1,113) |
(1,113) |
|
Total identifiable net assets |
598 |
2,863 |
3,461 |
|
Goodwill on the business combination |
|
|
5,037 |
|
Discharged by: |
|
|
|
|
Cash consideration |
|
|
8,498 |
Goodwill of
The gross amount of trade and other receivables is
DVS generated revenue of
If the combination had taken place at 1 August 2023, the Group's revenue and profit before tax would have been the same as reported, as the acquisition took place on the 4 August 2023.
Cash outflows arising from business combinations are as follows:
|
|
6 months to 31 January 2025 |
6 months to 31 January 2024 |
|
Fantech |
|
|
|
Cash consideration |
111,999 |
- |
|
Less: cash acquired with the business |
(5,370) |
- |
|
DVS |
|
|
|
Cash consideration |
- |
8,498 |
|
Total revenue from contracts with customers |
106,629 |
8,498 |
10. Property, plant and equipment excluding right-of-use assets
|
2025 |
|
|
|
Total |
|
Cost |
|
|
|
|
|
At 1 August 2024 |
|
|
|
55,101 |
|
On business combination |
|
|
|
1,760 |
|
Additions |
|
|
|
2,142 |
|
Disposals |
|
|
|
(1,249) |
|
Net foreign currency exchange differences |
|
|
|
(185) |
|
At 31 January 2025 |
|
|
|
57,569 |
|
Depreciation |
|
|
|
|
|
At 1 August 2024 |
|
|
|
24,908 |
|
Charge for the period |
|
|
|
2,319 |
|
Disposals |
|
|
|
(1,205) |
|
Net foreign currency exchange differences |
|
|
|
(52) |
|
At 31 January 2025 |
|
|
|
25,970 |
|
Net book value |
|
|
|
|
|
At 31 January 2025 |
|
|
|
31,599 |
Commitments for the acquisition of property, plant and equipment as of 31 January 2025 are
11. Other financial liabilities
|
2025 |
Foreign exchange forward contracts |
Contingent consideration ClimaRad BV |
Contingent consideration ERI |
Deferred consideration Fantech |
Total |
|
At 1 August 2024 |
192 |
16,346 |
5,530 |
- |
22,068 |
|
Deferred consideration |
- |
- |
- |
29,604 |
29,604 |
|
Re-measurement of financial liability |
- |
455 |
- |
- |
455 |
|
Re-measurement of contingent consideration |
- |
4,021 |
(964) |
- |
3,057 |
|
Consideration paid |
- |
(20,046) |
- |
- |
(20,046) |
|
Foreign exchange |
(192) |
31 |
- |
(612) |
(773) |
|
At 31 January 2025 |
- |
807 |
4,566 |
28,992 |
34,365 |
|
Analysis |
|
|
|
|
|
|
Current |
- |
807 |
4,566 |
28,992 |
34,365 |
|
Non-current |
- |
- |
- |
- |
- |
|
Total |
- |
807 |
4,566 |
28,992 |
34,365 |
The fair value of contingent consideration is calculated by estimating the future cash flows for the acquired company. These estimates are based on management's knowledge of the business and how the current economic environment is likely to impact performance. The relevant future cash flows are dependent on the specific terms of the sale and purchase agreement. For non-current liabilities due more than one year from the balance sheet date, the assessed contingent liability is discounted using the discount rates for the relevant CGU. The contingent consideration was assessed based on the current estimate of future performance of the business, discounted to present value.
The remeasurement of contingent consideration of
Contingent consideration related to the acquisition of ERI has been extended to include a potential payment of
|
2023 |
|
|
|
Foreign exchange forward contracts |
Contingent consideration ClimaRad BV |
Contingent consideration I-Vent |
Contingent consideration ERI |
Total |
|
At 1 August 2023 |
|
|
|
330 |
8,877 |
4,115 |
7,720 |
21,042 |
|
Re-measurement of financial liability |
|
|
|
─ |
870 |
─ |
─ |
870 |
|
Re-measurement of contingent consideration |
|
|
|
─ |
6,599 |
(1,529) |
(316) |
4,754 |
|
Consideration paid |
|
|
|
─ |
─ |
(2,566) |
(1,874) |
(4,440) |
|
Foreign exchange |
|
|
|
(138) |
─ |
(20) |
─ |
(158) |
|
At 31 July 2024 |
|
|
|
192 |
16,346 |
─ |
5,530 |
22,068 |
|
Analysis |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
192 |
16,346 |
─ |
5,530 |
22,068 |
|
Non-current |
|
|
|
─ |
─ |
─ |
─ |
─ |
|
Total |
|
|
|
192 |
16,346 |
─ |
5,530 |
22,068 |
12. Interest-bearing loans and borrowings
|
|
31 January 2025 |
31 July 2024 |
||
|
|
Current |
Non-current |
Current |
Non-current |
|
Unsecured - at amortised cost |
|
|
|
|
|
Borrowings under the revolving credit facility (maturing December 2025) |
─ |
─ |
─ |
49,794 |
|
Borrowings under the revolving credit facility (maturing September 2027) |
─ |
158,877 |
─ |
─ |
|
Cost of arranging bank loan |
─ |
(1,578) |
─ |
─ |
|
|
─ |
157,299 |
─ |
49,794 |
|
ClimaRad vendor loan (maturing March 2025) |
─ |
─ |
9,605 |
─ |
|
Other loans (maturing September 2026) |
─ |
435 |
─ |
565 |
|
Lease liabilities |
5,894 |
32,776 |
4,758 |
21,271 |
|
Total |
5,894 |
190,510 |
14,363 |
71,630 |
Revolving credit facility - at 31 January 2025
|
Currency |
Amount outstanding |
Termination date |
Repayment frequency |
Rate % |
|
GBP |
─ |
9 September 2027 |
One payment |
Sonia + margin% |
|
Euro |
41,416 |
9 September 2027 |
One payment |
Euribor + margin% |
|
AUD |
102,906 |
9 September 2027 |
One payment |
AUD - BBSY+ margin% |
|
Swedish Krona |
14,555 |
9 September 2027 |
One payment |
Stibor + margin% |
|
Total |
158,877 |
|
|
|
Revolving credit facility - at 31 July 2024
|
Currency |
Amount outstanding |
Termination date |
Repayment frequency |
Rate % |
|
GBP |
─ |
2 December 2025 |
One payment |
Sonia + margin% |
|
Euro |
49,794 |
2 December 2025 |
One payment |
Euribor + margin% |
|
Swedish Krona |
─ |
2 December 2025 |
One payment |
Stibor + margin% |
|
Total |
49,794 |
|
|
|
The interest rate on borrowings includes a margin that is dependent on the consolidated leverage level of the Group in respect of the most recently completed reporting period. For the period ended 31 January 2025, Group leverage was equal or below 1.5:1 and therefore the margin remains at 1.50% in H2 2025.
The Group remained comfortably within its banking covenants, which are tested semi-annually. As at 31 January 2025, the multiple of EBITDA to net finance charges was 16.7 (31 July 2024: 14.8; 31 January 2024: 14.5), against a covenant minimum ratio of 4.0, and the multiple of net borrowings to EBITDA (leverage) was 1.5 (31 July 2024: 0.4; 31 January 2024: 0.7), against a covenant maximum ratio of 3.0.
On 10 September 2024, the Group refinanced its bank debt. The Group now has in place a new
At 31 January 2025, the Group had
13. Fair values of financial assets and financial liabilities
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
· Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities;
· Level 2 - other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly; and
· Level 3 - techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
Financial instruments carried at fair value comprise the derivative financial instruments and the contingent consideration in note 11. For hierarchy purposes, derivative financial instruments are deemed to be Level 2 as external valuers are involved in the valuation of these contracts. Their fair value is measured using valuation techniques, including a DCF model. Inputs to this calculation include the expected cash flows in relation to these derivative contracts and relevant discount rates.
Contingent consideration is deemed to be Level 3; see note 11 for details on the valuation techniques used to measure the fair value.
14. Dividends paid and proposed
|
|
6 months ended 31 January 2025 |
6 months ended 31 January 2024 |
|
Cash dividends on ordinary shares declared and paid |
|
|
|
Final dividend for 2024: |
12,278 |
10,879 |
|
Proposed dividends on ordinary shares |
|
|
|
Proposed interim dividend for 2025: |
6,733 |
5,538 |
A final dividend payment of
The Board has declared an interim dividend of
15. Related party transactions
Transactions between Volution Group plc and its subsidiaries, and transactions between subsidiaries, are eliminated on consolidation and are not disclosed in this note.
No material related party balances, other than those transactions that have been eliminated on consolidation, exist at 31 January 2025 or 31 January 2024.
There were no material transactions or balances between the Company and its key management personnel or members of their close family. At the end of the period, key management personnel did not owe the Company any amounts (H1 2024: Nil).
16. Glossary of terms
Adjusted basic and diluted EPS: calculated by dividing the adjusted profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the adjusted net profit/(loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares. There are 2,077,163 dilutive potential ordinary shares at 31 January 2025 (H1 2024: 3,128,124).
Adjusted EBITDA: adjusted operating profit before depreciation and amortisation.
Adjusted finance costs: finance costs before net gains or losses on financial instruments at fair value and the exceptional write-off of unamortised loan issue costs upon refinancing.
Adjusted operating cash flow: adjusted EBITDA plus or minus movements in operating working capital, less net investments in property, plant and equipment and intangible assets less the operating activities part of the contingent consideration.
Adjusted operating profit: operating profit before adjustments for re-measurement of contingent consideration, costs of business combinations, amortisation of acquired inventory fair value adjustments and amortisation of assets acquired through business combinations.
Adjusted profit after tax: profit after tax before adjustments to re-measurement of contingent consideration, net gains, or losses on financial instruments at fair value, costs of business combinations, amortisation of acquired inventory fair value adjustments, amortisation of intangible assets acquired through business combinations and the tax effect on these items.
Adjusted profit before tax: profit before tax before adjustments for re-measurement of contingent consideration, net gains, or losses on financial instruments at fair value, costs of business combinations, amortisation of acquired inventory fair value adjustments and amortisation of assets acquired through business combinations.
Adjusted tax charge: the statutory tax charge less the tax effect on the adjusted items.
CAGR: compound annual growth rate.
Cash conversion: is calculated by dividing adjusted operating cash flow by adjusted EBITA.
Constant currency: to determine values expressed as being at constant currency we have converted the income statement of our foreign operating companies for the 6 months ended 31 January 2025 at the average exchange rate for the period ended 31 January 2024. In addition, we have converted the UK operating companies' sale and purchase transactions in the period ended 31 January 2025, which were denominated in foreign currencies, at the average exchange rates for the period ended 31 January 2024.
EBITDA: profit before net finance costs, tax, depreciation, and amortisation.
Net debt: bank borrowings and lease liabilities less cash and cash equivalents.
Operating cash flow: EBITDA plus or minus movements in operating working capital, less share-based payment expense, less net investments in property, plant and equipment and intangible assets.
ROIC: measured as adjusted operating profit for the year divided by average net assets adding back net debt, acquisition related liabilities, and historic goodwill and acquisition related amortisation charges (net of the associated deferred tax).
[1] The Group uses some alternative performance measures to track and assess the underlying performance of the business. These measures include adjusted operating profit, adjusted operating profit margin, adjusted profit before tax, adjusted basic EPS, adjusted operating cash flow, return on invested capital and adjusted operating cash flow conversion. The reconciliation of the Group's statutory profit before tax to adjusted measures of performance is summarised in note 2 to the interim condensed consolidated financial statements. For a definition of all the adjusted and non-GAAP measures, please see the glossary of terms in note 16 to the interim condensed consolidated financial statements.
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