Volution (FAN) 189.2p

Gain to date: 4.8%

Original entry point: Buy at 180.5p, 9 July 2020

After an up-and-down start our faith in ventilation products firm Volution (FAN) is beginning to be rewarded – helped by a fairly robust set of results for the year to 31 July.

Alongside the numbers the company announced strong recent trading and a plan to resume dividends for the current financial year. Long-term we think the company can be a beneficiary of increased focused on air quality in the wake of coronavirus.

For the 12 months to 31 July 2020, pre-tax profit fell 37.1% to £14.6 million year-on-year as revenue slipped 8.1% to £216.6 million. However, strong cash generation meant that on a like-for-like basis net debt fell by £23.5 million to £51.1 million.

Canaccord Genuity analyst Aynsley Lammin says: ‘The group delivered a relatively good set of results given the timing and impact of the pandemic. Cash generation was very good with leverage reducing significantly in the absence of substantial acquisitions.’

Volution chief executive Ronnie George tells Shares that although the company has seen organic revenue growth of 7% in the first two months of its new financial year and margins ahead of pre-Covid levels the company is sticking with its conservative guidance for now. This suggests scope for earnings upgrades if current trends continue.

SHARES SAYS: Keep buying.

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