Volution Group plc

really pleased to have a good audience. We're delighted to tell you a little bit more about what happened in our financial year 2023. What we're also looking forward to doing today is introducing you to some new materials, which we hope will try and bring the story to life a little bit more and certainly should be helpful for context. But as you can see from the agenda here, I'll take you through the overview. I'll hand over to Andy's now four years with Volusion, so four financial years completed. Of course, a couple of those were really difficult through the COVID period, but I'm not sure if we should talk about this being the new normal, but nevertheless, it's a more sort of normal environment that maybe we're trading in. I'll go through the business review and we'll talk a little bit about summary and outlook. The headline there, leading player. So we think of ourselves as a leading player in the international HVAC market. And I think this is a really important headline for the slide because one of the things that we often talk about in Volution is sort of peer set, peer group and so forth. And of course, in our daily life, the companies that we think of ourselves competing with are not necessarily the same as we get peered with. And so for those, I think, probably already aware, HVAC is sort of heating, ventilation and air conditioning. And of course, Volusion today has less than or sort of circa 40% of its revenue ending up with the UK customers. I think this is a really important takeaway for today because many of the names that we compete with on a daily basis are one not necessarily UK listed and certainly not what you would call building products. This is an important aspect for us and maybe we'll come back to it a little bit later on. But look, in the year, We delivered what we think was good organic growth, not without its challenges. And we'll take you through some of the individual markets as we go along. But just under 5% constant currency organic revenue growth. An adjusted operating margin of 21.3%, actually up 20 basis points. It's essential for us, and we'll talk a little bit more about how we underpin and protect those market-leading margins as we go forward. And an excellent cash conversion, and cash conversion is absolutely everything for us. We know what we're going to do with our cash, and delighted that we had such a strong year, and does provide significant headroom for further acquisitions. And of course, on that note, we completed two acquisitions in the year, one in France and another one in Slovenia. And in actual fact, we've already completed our first acquisition of FY24. It completed on the 4th of August, and that was DVS proven systems in New Zealand. ESG is really important for us. And in respect of recycled plastics, I thought this was an outstanding achievement to go from 67% of the plastics that we consume in our facilities comes now from a recycled source, so up to 76%. So look, overall, we think it was a strong performance and it was absolutely in line with our strategy in delivering against our ESG targets. A little bit more about our strategy and delivering on our strategy, and what is our strategy? I mean, it's the same strategy, in fact, that we had nine years ago when we listed, although we've got a little bit more experience and maybe a little bit more of a track record that we can claim. But look, what we expect to do is to grow organically each year. And we think we've got a really good track record in doing that. In the year, just under 5%. There were some changes across the different geographic areas. The UK, in actual fact, was the outstanding performance in the year. And continental Europe was... certainly much more difficult. But still in Australasia, a 3.6% constant currency revenue growth. And that's off the back of very strong revenue growth, particularly in Australia, since we acquired the business back in 2019. Value adding acquisitions, I've talked about them. I think now we're averaging about two and a half acquisitions each year since we listed. And indeed, we made other acquisitions prior to our listing in 2014. And just to stress, the pipeline is healthy, and we expect further transactions in the future. For us, and when Andy and I talk to prospective opportunities, we think of ourselves as a serial acquirer. This is what we do, this is what we expect to do, and you shouldn't be surprised to see us do further transactions in the period ahead. And then last but not least, operational excellence. 21.3% operating profit margin. I think I've had the question every year since we listed How sustainable are your margins? And I guess the best way to prove sustainability is to just try and inch them up each year. No new targets today. Certainly our long-term target is to stay above 20%. And of course, there's always a risk of dilution, particularly if we do bigger transactions in future, because rarely do we bring new companies to the group that operate at the same margin that the group operates at. All opportunity, of course. So sustainability, I've talked about recycled plastics, but 70.1% of our revenue was from low carbon products. And in actual fact, we surpassed our expectations there. The target was 66.1. And in actual fact, a 2025 target is at 70%. So we are now creating a new ambition today to get to 75% of our revenue from low carbon product sets by 2026. And inside that 70%, so it's 33.8% of our total group revenue is from heat recovery. And heat recovery is a very, very important product set for us and one that we expect to grow materially over time and not to give you too much of a lesson on the technology, but basically the most efficient way to ventilate a well insulated property is with heat recovery. You're not losing all that precious heat that you've paid increasingly more cost for heating in the first place. So just thinking about volution and what underpins our revenue growth, why do we believe that we can grow well organically and certainly above the sort of general market trends There's things that are going on in our space that are sort of obvious, but I thought we'd just try and summarise them for you here today. Decarbonisation. And I know there's been a lot of debate, for example, in the UK at the moment about whether or not we're stepping off in terms of decarbonisation. But for us, we see decarbonisation agenda every year become more helpful. It may not move as quickly as we would like, but it certainly every year improves. 40% of our energy use or 36% of emissions, carbon emissions are from buildings, buildings such as this one that we're in today. Healthy air, you know, healthy air is essential. You know, how long can you go without air? Don't try it, but it's not for very long. Healthy air is essential. And I think what we saw through COVID and certainly we've seen coming out the other side is a greater awareness and appreciation And so, for example, we see regulation increasingly focusing on indoor air quality or mould and condensation problems and so forth. And let's not forget comfort. The biggest objection to ventilation typically in a property, whether it be a refurbishment application or new build, is noise. Noisy ventilation gets switched off. Ventilation that gets switched off creates all sorts of degradation to the fabric of the building. So we work very hard on providing solutions that are quieter, that are less intrusive in the building but still provide good quality air. So I'm going to go over these slides quite quickly, but we talk about our three P's, product, planet and people. And under product here, we got to 70.1% of our revenue from low carbon sources. Now, there's no doubt that the acquisitions that we made more recently helped accelerate that trend, but they should do. If we're acquiring the right companies with the right technology, why wouldn't they help accelerate the trend? So some of the companies that we acquired more recently, for example, energy recovery industries in North Macedonia, is a producer of aluminium heat exchangers, the absolute integral part of any heat recovery system. And of course, the acquisitions that we made more recently haven't had a profound impact on that metric in the year. But nevertheless, VMI in France and iVent in Slovenia, iVent is a provider of of almost exclusively decentralised heat recovery retrofitted into Slovenian properties with a very significant market share. So as I say, new ambition for 2026 to get to 75% of our revenue from a low carbon source. Planet. We are absolutely serious about the impact or lessening the impact that we have on the planet. A lot of the products that we provide to our customers are made from plastic, and we decided some years ago that we could utilise more recycled material in our production. Some of the investments that we made last year helped accelerate that production, particularly in our Reading factory with respect to plastic ducting and so forth. But this is a fantastic performance. We still don't know how to get to 90% by 2025, but I think it's fair to say when we set the target back in 2020, we didn't know how to get to 76% for last year. This is an absolutely stretching target, but we're making really good progress. And when we stay with Planet, we have made a commitment to be net zero by 2040. And so reducing our carbon intensity by 9.8% in the year to 11.1 tonnes per million of revenue was a really compelling achievement there. So we're very pleased about the progress that we're making. But last but not least, around people, and I'm personally disappointed about our accident rate for last year. We had an increase and we're disappointed about that. However, I'm confident that the efforts that we're making to improve our health and safety, to keep our people safe at work, will take us in the right direction. And there were a couple of important new additions to the group last year. Andreas Berber joined us as the Operations Director in the UK in May. And we've also strengthened some of our health and safety representatives and management in the local areas. But staying with this people theme, management development programme four, what's management development programme four? Just before COVID, we were planning to have our fourth management development programme. But of course, no point having a management development programme if we're carrying that programme out virtually. The strength of our management development program is that we're bringing together an international management team that get to work together more closely. I'm particularly delighted about this. We'll kick it off in a couple of weeks' time. The chairman will join us at that launch. And it's one of the most exciting development programmes that we have across the group. And the reason I say that is that if I look back to the first three programmes, I could reel off to you today the people who are on programmes one, two and three and what they're doing in the group today. So this is really important for us and I'm very excited about what comes next. That was a very quick introduction to the year. I'm going to leave Andy with the exciting part to take you through the financials. But having said that, I think it is a very exciting update that Andy can provide.

Thanks, Ronnie. And echoing Ronnie's earlier comment, great to see. Thank you for coming today, guys. Great to see so many people in the room. We're obviously going to need some more chairs next time. But good to see both familiar and new faces. I'm just going to briefly talk through some of the financial highlights of the year 2023. As this slide says here, a strong financial performance. I think it's not usual, and it certainly makes your life quite straightforward as a CFO to see plus percentages on all of the metrics on the right-hand side there. We'll unpick all of these in a bit more detail as we go through the materials, but you know, a good, strong revenue performance. Really, really delighted that, again, managed to gently uptick our margins, so the margin growth slightly above the revenue growth. Earnings per share, despite the challenges of interest rates and what that brought to our finance costs in the year, again, you know, managing to deliver a very similar rate of earnings growth as we had with operating profit growth. And then, you know, I guess perhaps the number that Again, for a CFO, probably the most pleasing one of the lot is the 50% improvement in operating cash flow. Last year, we made a very deliberate investment, which we talked about in inventory, which absolutely stood us in good stead for delivery last year, stood us in good stead for delivery this year. But what we did promise you a year ago was we would return back to our normal levels of cash conversion and cash generation in the year 2020. And indeed, that's what happened. And then a proposed dividend, which will result in a total dividend for the year of eight pence, which is just under 10% up on prior year. as the strapline says at the bottom there, strong growth in organic revenue margin and cash flow and earnings per share ahead of consensus. So normally I show you these charts on a five-year basis, but I think there's 10 data points here now, because as Ronnie said, it's just over nine years since the business listed. And we thought it was really, really important just to just to draw out and show the consistency of delivery of this business ever since it IPO'd in 2014. You know, invariably you've got the little blip in 2020 for COVID, but you draw a line straight through those graphs on all the measures. So revenue, operating profit, earnings, and cash flow, and 13%, 14% compounding through that 10-year period, notwithstanding the 2020 piece. I think it's the numbers themselves, but it's also the consistency of that performance. It's not spikes and troughs and spikes again. It's a really, really consistent compounding performance through the 10 years, which we think is a great achievement. Revenue, so when we move into the regional pieces, Ronnie will unpick this a little bit more, there were different dynamics, different moving parts within the group, some markets having tougher conditions than others. But overall, a result of 6.6% revenue growth, organic revenue up 4.6%. The price volume question is something that we'll always get asked here. And we, roughly speaking, analyse that 4.6% to be about 75%, 80% of it coming through price and about 20-25% of it through volume. But I guess the way you should think about that, and again, you know, more apparent as we get into the regional slides, if you take the bits of the business that really did perform very, very strongly, so whether that be UK residential, whether it be Climorad or ERI in continental Europe, the growth rates there were very, very much volume with a small price assist. But of course, we did have a couple of markets, particularly in continental Europe, which were a little bit tougher, where volumes definitely did contract. So Nordics and Germany in particular, but we'll talk more about those as we move into the regional slides. Relatively small contribution from inorganic growth this year, not because we weren't active on acquisitions, because as Ronnie's already mentioned, to really exciting additions to the portfolio and then a third post year end but simply the timing of those transactions so the two in the year were respectively April and June so very very minimal impact in 2023 but you know definitely something that we're really excited about in terms of what it brings for 2024 and beyond moving then on to margins so you know I guess if you look at the bottom left there three full financial years now of delivering post-COVID, of delivering margins at or fractionally above 21%. So our target, as Ronnie said, is and remains greater than or equal to 20%. We're not going to be moving that target. But I think, again, back to that consistency of delivery point, these last three years have been very unpredictable, very challenging, whether it be market conditions, whether it be supply chain disruptions, whether it be inflation, we've had to navigate that period and to come out with that consistency of delivery, again, is something that we're very, very, very proud of. If you look at the bottom right there, we just tried to unpick what that looks like on a on a three regional basis. So you'll see the bars for 2022 and 2023. And I guess the important takeaway for 2023 is that really strong performance in both the UK and Australasia. So over 2% of margin improvement in both of those territories. A little bit of softening in continental Europe, which is predominantly mixed. So as I've mentioned, you know, Germany, Nordics, more challenging areas, they are traditionally and still towards the upper end of our margin profile in the group. So that mix effect hasn't been helpful. But what you then end up with is, you know, three regions all delivering margins, you know, very, very similar to each other and all very strong margins. ahead of the group target. You know, inflation has still been with us this year. I think it was, you know, in terms of materials, components and things like freight, it's definitely, definitely got much, much easier in the second half of the year. But that's now moved into whether it's labour, staff costs, property costs, some of the other overhead areas. So it's not to say inflation is gone, but I think it definitely is definitely moved in where it's gone. Then moving, probably the highlight for me was the cash generation performance in the year. So cash conversion, we set a target of greater than or equal to 90%. As I mentioned earlier, last year we were, by our standards, relatively lower than that at 76%, but that was a very targeted and specific investment that we made, which definitely did contribute to our service performance and therefore our revenue performance over the last two years. And to get back to now comfortably above 100% is really, really pleasing. A small inflow of working capital this year. That wasn't from inventory. Inventory basically flat. If you exclude the new acquisitions, inventory basically flat year on year. And that's what we said. We said, having done the build, we don't intend to unwind it. We still think supply chains have the potential to be disruptive and the relatively small cost that has versus the ability to keep on servicing the market really excellently is, we think, worth a lot more than a million or two of inventory. But what has contributed to that inflow has mainly been receivables, so a really good performance on receivables. And those of you who look at the notes, when you look at the ageing profile of the business, you'll see that actually the ageing profile of the receivables, it's always been good, but this year it was particularly good. particularly strong. If you were to draw a box around everything here, apart from the right hand one being the acquisition spend, what you'll see is an overall cash inflow of about £30 million. So what we would say is we de-lever, and we've always said this, in a year where we didn't do acquisitions, we would de-lever approximately half a turn per year. So it's a really, really strong cash generating business. But what we want to do with that cash generation is to invest it in really exciting acquisitions that add to the portfolio. So the right-hand bar there, 30.7 million, that includes a little bit of fees, but £30 million basically spent on the two acquisitions in the year. But still with that, we end the year with net debt fractionally lower than we went into it and leverage at 0.8 times on an ex-leases basis, again, means that we not only are in a good position at the end of the year, but we're definitely in a place where we can carry on pursuing these attractive acquisition targets. Ronnie mentioned earlier that we've tried to introduce some sort of new materials this year. And one of the things that we've been doing a lot of work on and consulted with a number of the analysts in the room as part of developing that, and thank you all for your help and insight, return on capital, ROCI or ROIC or whatever you want to call it. There are obviously multiple ways of looking at this. So we've always had a metric where we look at specifically the performance of our acquisitions. So we've had a target that we've had there for the last few years, where we say for each individual acquisition, we target it to deliver a return of 18% or more once it's been in the group for over three years. And that's still a really helpful measure. And it's the measure by which we test out how well we've delivered on both buying assets well, but then improving those assets well. But we felt it was really important to also move into developing an overall return on investor capital. It's all encompassing for the business, not just the acquisitions, but the whole business. On that old measure, you may recall that we would have said over the last couple of years, and the number is still the same this year, that the acquisition return is about 24% cumulatively. But what we've got here is a full return on invested capital for the group, and that's coming out at 27%. So we've taken a three-point average for the balance sheet. We've added back acquisition-related liabilities, net debt, and we've added back any historic amortization charges. So it is a true sort of grossed up invested capital. We have made an adjustment and we think this is the right thing to do for the original transaction that created the group back in 2012. So that's what you'll see there, the goodwill intangibles of the 2012 leveraged buyout. And all together, that comes out then with a return of just over 27% for the business. Now, That is a very, very strong return, as it says on the right there. Clearly, it's significantly ahead of whatever people would estimate your weighted average cost of capital to be. It's clearly far, far in excess of that. I guess going forward, and this is going to be interesting from a target and measurement perspective, if we carry on executing on the acquisition strategy, which absolutely is at the heart of what we do, acquisitions will be dilutive at the point of entry to the group. No question about that. And so actually, if we can carry on maintaining this sort of return in the mid-20s with the execution of a good, strong acquisition strategy, we think that's going to be a recipe for really good growth and good returns for the business. And so the final slide from me, and I think there's nothing new here, but just really summarising it back again in terms of how this year has looked relative to the targets, the core target that we have in our financial model. We've added, I say, that new return on invested capital target at the bottom there as well. But, you know, really, really good, strong performance, delivery against all of the targets. I mean, the only one that, if you like, is slightly below our model, for want of a better word, is the total revenue growth. But that is purely the function of the timing of the inorganic activity and when that starts to play through as revenue. But look, overall, I'd say a really, really pleasing set of numbers. And with that, Pass back to Ronnie.

Thank you. Thank you, Andy. So just a reminder here. So I mentioned earlier on, Volution is a much more international business today. And so about 40% of our revenue comes from UK customers. And the balance, as you can see, comes internationally. comes elsewhere. And of course, if you think about the acquisition pipeline and where we're likely to cement future transactions, that sort of reducing UK proportion will continue, although the UK market is very important to us. But that will continue to change over time. And look, we think that sort of geographic and end market diversification or diversity is really helpful. And it does create quite a bit of resilience. And I think that comes out really well in a moment when I take you through some of the individual markets and how they performed. Although we delivered just under 5% organic growth, constant currency organic growth, not all of our markets were performing strongly. And I always say this to the teams, as CEO, it's very rare that every market points up strongly every year, no matter how hard we try. This is just showing how things have moved. So 10 years ago, two countries, in actual fact, when I became CEO, we had one country, and we were based in the UK. So 17 countries, that will change over time. Lots of white spaces on the map still, other geographies that we'd like to enter, and indeed existing geographies that we'd also like to add to. There's a lot of detail coming up on the next few slides, and I'm not going to go through every individual bullet, but they're There's sort of some core sort of highlights and maybe some lowlights that we should just discuss while we're here. So in the UK, I mean, look, it was an outstanding performance. I don't remember us growing 19.5% in the residential market before, notwithstanding the COVID recovery year was obviously a very strong performance, but it wasn't against a sensible comp. But we grew 19% in residential. In actual fact, we grew in all three elements of our residential business, public RMI, private RMI, and indeed in residential new build, which I know does feel counterintuitive when we understand what's happening in the house building market at the moment. Look, I'm convinced that in the UK we have a number of brands, leading brands. We have a strong, if not the strongest, product portfolio. We have the largest ventilation sales force. We have excellent customer service and excellent relationships. And I don't think the market grew 19% last year, so clearly we've been gaining share. That was a particularly strong performance. If we look at residential new build, even in residential new build, we talked about some account wins that we made early in the financial year and also this move towards lower carbon continuous system or heat recovery ventilation, which has a very profound impact on the unit revenue that we see per dwelling. And so that is the highlight for us. In commercial... We're underweight. We're not the leader in UK commercial ventilation, but we have some strong niches. For example, we're the leading provider of what we call fan coil ventilation in the London market. And in actual fact, our commercial revenue performed better in the second half of the year. If you look back in the first half, actually our decline was greater than that. So actually half two was stronger. In export, we grew 1.7%. That's mainly in Ireland. Most of our growth is in Ireland. We're the leader for heat recovery ventilation in the Irish market. under our Ventaxia brand with heat recovery systems. And in actual fact, that's a market that continues to sort of struggle with how they build more houses. I mean, it's completely different to, I remember, in 2008 when we were building the houses in the wrong place. But there is good sort of structural underpinning and faster regulatory underpinning in Ireland. It's a good example of where maybe the UK market could go more quickly because most properties in Ireland are built with some form of system or heat recovery ventilation. OEM was a disappointment. OEM is our motorised impeller business. And what we saw there, particularly in the second half of the year, was a situation where I think supply chains generally had normalised. One particular competitor that had struggled, had sort of caught up, a German competitor. And we also saw a lot of the business from our OEM, about 50% of the business is in export. And what we saw is quite a bit of weakness around Europe because these motorized impellers predominantly go into products that are new build focused. And in actual fact, we expect to see continued weakness in our OEM area, partly as customers are potentially overstocked and we see some destocking and also fundamentally we're seeing obviously a greater weakness in new build construction than we are maybe in terms of RMI. Sorry, how could I miss that? Margin. Yes, I mean, Andy, operating profit margin improvement in the UK from 20.4, 22.6%. And that's a function of a whole raft of things. Obviously the volume helps. I would say the pricing discipline, and our sort of relentless focus on operational excellence, factory efficiency and value engineering and so forth. So in actual fact, we exit the UK, if you like, in FY23 with, if you like, an improving margin trend throughout the year. So if you think about what the operating profit margin was in half one and then look at where we ended up for the year, that we believe is a good trajectory to exit the year on. Continental Europe, really quite a mixed bag. I think the two low lights were in the Nordics and in Germany, and particularly low in the second half of the year. In the Nordics, I'm convinced, because I can see what's happening more recently, is that we had a period of destocking. We had strong demand in a prior period. We had distributor and wholesaler customers with high levels of stock. We had weaker demand and then we had the inevitable destocking. And I think a lot of that destocking is largely complete. So we had quite a bit of weakness there. And in Germany, our exposure is greater to new build than it is across the wider group. We typically talk about the group being 65, 70 percent RMI to new build. But in Germany, actually, you could probably reverse that. And we have a greater predominance of new build there. And there was some subsidy changes and so forth. So the German market, which had performed really well for us for three or four years, in actual fact, if you remember back to COVID, we actually grew our revenue in Germany in the COVID year. And we continue to have a strong performance in 21 and 22, but it's come off. And what we had, as Andy's already talked about, is we had strong performance in other areas, in Klima Rad, in the Netherlands, where we have decentralised heat recovery, in energy recovery industries with our heat exchangers. and in one or two other areas we had a strong performance. So the operating profit margin decline of 2.2% isn't because we necessarily had a lesser quality delivery in the local areas. It's the participation or the lower participation of the Nordics and Germany bringing down the average and the greater growth in areas that are at a lower operating profit margin. So I guess what I'm saying there is that if and when we see a recovery in the Nordics and German areas. we would naturally expect to reflect that in an improving margin mix. And the inorganic additions, really very small. Ventel Air Sec or VMI in France. Look, we've acquired Ventel Air Sec in France as a small proposition that deals through electrical wholesale trades, has access to distribution, but it's a relatively small player in the French market. And we believe that has a huge runway of opportunity in the coming years. The issue for us is to introduce new products and open up new customer relationships. Some of those customers are international groups that we have strong relationships with elsewhere. And we believe will see us as the horse to back, if you like, in the local market because they know what we're able to deliver for them in other markets where we partner. So look, the opportunity in France is a long-run way of opportunity. We're working very hard with that right now. Whereas iVent in Slovenia is slightly different. It's got a market-leading position. It's a country of just 2 million people, although we are now opening up in Croatia. And we have a slightly different model in iVent. But it's very profitable, very exciting, and we're delighted to bring it on board. But those companies only participated for a couple of months in the year. Moving on to Australasia. Again, it was a really good year in Australasia. Slightly mixed, I would say, I think, in New Zealand. In New Zealand, the market has been tougher. In Australia, we still continue to grow very well, operating profit margin of 23.9%. So that's a great performance. If you look back at the sort of Vente margin when we acquired the business back in 2019, it was sort of circa 10%, 11%, 12%. So we've been able to steadily... improve the margin. And then, of course, more recently, it was a post-balance sheet event. It was the 4th of August. We did have to go through competition clearance. We had to work with New Zealand competition clearance authorities to get the approval, but delighted that we have. And what's important about DBS is that we have two routes to market in New Zealand. It's generally a smaller country, probably about 5 million people but we have a distribution market leading position in Symex. And we've also acquired DVS, which is an installer of ventilation and has a different proposition. And we believe the attraction of having the installation element in New Zealand is that we can upsell and upscale products more quickly. We're having a direct-to-consumer conversation about what's the right solution and so forth. And the attraction there is that we've got a very wide scope of products across the group, and we know that we can deploy those products into New Zealand through DVS. Which of course is exciting for Cymix over time as well, because Cymix is providing the products that are replaced over time, and so we're able to sort of double dip in the market. So really excited about that. Excited about the profit improvement in the year. You know, 22% growth in the profit in the year, partly because of the organic growth, but of course hugely assisted by the margin expansion. What I'd like to talk you through now is how our markets benefit from long-term structural growth drivers. And I think it's particularly relevant at the moment because, of course, we're all nervous about outlook and quite what's going to happen next. I'd remind you, of course, that in that context, we have just delivered a circa 5% organic growth. But there's no doubt that with inflation, higher interest rates and mortgage rates that new build construction globally is under some pressure in the UK, in continental Europe and indeed in Australasia. And we're just trying to show on this slide how this impacts us. So for example, if we look at new build residential, clearly our revenue in new build applications is hugely linked to the construction volume. Are we building more homes, less homes, or the same? However, there are also, as you can see on the second line there, huge regulatory drivers that can assist us. And I would argue in FY23, our residential new build strength was clearly not as a result of building more homes, but was as a result of regulations having a greater impact. And just to understand the runway of opportunity here, we estimate pretty accurately that less than 40% of all UK house building consists of heat recovery. The future home standard, which is the standard that's basically setting the outline for how we build homes that are net zero carbon ready, would argue that heat recovery is probably the only sensible way to go. Now, I'm not arguing that by 2025 We'll see that 40% penetration go to 100%, but it is moving every year. And we have daily engagements with house builders and with projects around utilising more heat recovery and system ventilation. It's moving. It will continue to move. And of course, the last change in part F and L of the building race was really supportive. But this is a trend that's happening all over Europe, but not just in new build and What we're showing here is that in RMI the impact is less, but there are other impacts in RMI that are of greater importance. Energy efficiency, indoor air quality. We've only got to look at what's happening in the public housing market in the UK at the moment. Indoor air quality awareness is paramount. Mould and condensation is something, if you Google mould and condensation in UK social housing, It's every day. This is underpinning substantial increase in demand for proper refurbishment of social housing properties. So we're not arguing we're acyclical, if only that were true. What we are arguing is that there are other drivers that can assist us in a market when maybe overall volumes are a little bit weaker. And, of course, all of this is complemented by a broad geographic and end market exposure. So that's us really, that's what we wanted to talk to you about today. I'll come on to summary and outlook and what we think of as our clear compounding growth model. There's a debate for Andy and I which one of us would use the slide showing the nine, 10 year track record. Andy won that one, but look, I get the opportunity to summarise what should come next. We have structural growth drivers underpinning our long-term growth. We could not have delivered what we have to date and have the confidence in our future expectation without the structural undersupply of homes in the UK, or for that matter, pretty much all over Europe, and indeed in New Zealand, where if you've ever tried to rent a property in New Zealand, it's nigh on impossible, as one of our colleagues found a couple of years ago. We've got increased regulation. There's no debate about that. I know there's a lot of debate about the recent Conservative government announcements, but fundamentally I don't think they'll make a huge change to the progress that we see in the coming years in this space. A drive for energy efficiency. It's key. It's not just about carbon emissions. It's also about cost. Indoor air quality and health awareness and upselling. Upselling is something that we're very good at, particularly in areas such as private refurbishment. We have a differentiated business model aligned to our chosen markets. I won't take you through each of the individual bullets there, but our strong brands, you know, we have leading brands. And sometimes it might sound counterintuitive, but those brands might not lead an entire market, but they'll lead their niche. In the Netherlands, we have Klimarat. It leads the niche in decentralised heat recovery. We have Inventor in Germany. It does exactly the same. And just to remind you, you know, delivering... an attractive through-cycle financial framework, organic growth between 3% and 5%, we've actually been closer to 5%, overall revenue including the acquisitions at 10%, the margin consistently over 20%, an EPS growth that should be over 10%, a cash conversion over 90%, and a group return on invested capital of mid-20s. All of this augmented with an attractive bolt-on M&A strategy, and in that particular aspect our pipeline is It's full, it's busy, and we're excited about what we can do next. So it just gives me the opportunity now to summarise, it was a good year, you can see on the slide there, and maybe just come on to outlook, and I know it sounds like the long disclaimer here, but look, I think the important issue is that we don't know for certain what's going to happen next, but we do know where our business is at and the levers that we have to pull. We have the M&A that we've recently consummated that we're excited about improving in the year. We have certain elements of our markets that are running quite hot at the moment, for example, in terms of UK social housing that I believe is a multi-year trend. The amount of work that needs to be completed cannot be completed in one or two years. This is going to run for some considerable time. Also, I think from Andy and I perspective, credit to the wider management team. We are able to comfortably be here today on the roadshow for the next week in the comfort that we have a very, very strong management team, not just functionally in terms of leading innovation and procurement and product management, but also the local managing directors. And because of that, and of course our wider geographic and market diversity, it gives us really good confidence of making further progress in the year ahead. OK, well, that's the sort of formal part of proceedings. We've got a little bit of time now to open up to questions. OK. Right, quick. Rob, we'll go. Sorry.

Ah, yes. Hi, thank you. It's Rob from Berenberg. Thanks for the presentation. Just three questions for me. Firstly, just on the German market in particular, you mentioned 70% new build. Could you share some of your thoughts around the structure of that market in terms of its cyclicality compared to the UK and the broader structure of how that is impacting the business and specifically in German new build? Secondly, how do you see yourself moving further around the kind of broader HVAC landscape? You clearly put that line up, the tagline at the start of the presentation. On a multi-year view, do you see there's significant opportunities beyond your current end markets that you'd like to play a role in? And then thirdly, you talked about increasing the proportion of the feedstock from recycled material with a 90% target by 2025. Could you just talk about some of the main, I guess, supply chain technological barriers, challenges around feedstock availability and pricing to getting there? Because clearly, it's all not immediately available today at the price you want it to at a stable price. Thanks.

Okay, so Germany first. Our exposure in Germany is about 70% new build, 30% RMI. Like a lot of markets, I think new build construction have been reasonably strong up until about 12 months ago. We saw the impact in our in our half two, quite profound. A couple of things that we're doing at the moment. One is that we think decentralized heat recovery lends itself really well to refurbishment. And we have been sort of doubling down and focusing hard on the refurbishment opportunity. So that acts as a little bit of a mitigation there. In terms of new build construction, I don't know this for certain, but I suspect that we are probably at or close to the bottom. And so there's almost an inference there that as we come round into the second half of this year, that the situation in Germany, if we're able to be successful, and indeed I think we will be in telling more into refurbishment and we come off the bottom in new build, actually it probably gets a little bit easier for us. And also, this is a technology that fundamentally has been growing well anyway. So you'd almost argue in a static volume market, you would expect heat recovery to grow. And indeed, the reason I talked about 2021 and 22 is we were delivering consistent double digit revenue growth in Germany because of that. Just the second question on HVAC and how we think of ourselves. I didn't know you were going to ask the question, but if I was to answer it, I would look at this slide and say if we deploy the same strategy with the same success for the next three to five years, one would hope, and this isn't a forecast, but one would hope that we could deliver a similar performance to the one that we've delivered in the last nine years. And we don't see any major departure from strategy. What I would say is that there isn't going to be a ventilation company of any size in Europe that's sold in the next 12 months that won't have us as a potential acquirer on the list. And in actual fact, there's also quite a few other things that we won't be a potential acquirer of that we're on the list for as well. So what I'm saying is we're getting many more inbounds than ever. But the core markets are UK, continental Europe and Australasia. We're not looking at North America. We believe that there's so much value to be created in those existing markets. And the third point about recycled materials, it's really quite detailed here. But if you imagine a ventilation device, there's certain parts that are passive and there are certain parts that move. The passive parts have less structural integrity in them because they're not moving than, for example, an impeller that may spin at many thousands of RPM. So we have to be very careful about applying recycled materials to parts that are active in the device. And what that means is that we have to do extensive testing to satisfy ourselves that we're not taking undue risk with the structural integrity of the material. What is happening, of course, is more recycled material is being made available, but there's also more demand for recycled material because we're not alone here. But I have confidence in the team to get to this 90% measure because, as I say, when we set the measure at 90% previously in those individual steps across the years, We've got some great people who came together and they're really challenging. Even some simple things where we've moved products that are not visible from white to black because it's easier to find black materials than white. And we've had to go to customers and say, it's going to be black now, not white, but it's not visible. And actually, when you go to customers and say, we're trying to be more sustainable in our processes, and what we do, there's very little pushback. In actual fact, we would argue there's a new account acquisition shortly that I think will get over the line. And it's because they can claim to their customers that this particular product line will be from a 100% recycled source. There's all sorts of regulation now about having a certain minimum recycled content in a new build commercial project. And we help customers with that metric. Okay, Charlie, sorry.

Thanks very much. It's Charlie Campbell at Liberum. I've got a couple and maybe do them in turn. Market share in the UK clearly has gone up. I just wonder kind of what more levers you have to increase that further. And in particular, you talked about new account wins in the financial year just gone. Any prospects for any more of those sorts of accounts in 24, 25?

Yes, I think there are. I'm probably not going to answer that question in full, Charlie, because I think we've got a strategy that's working and an approach that's that I think is slightly different, and I'm confident that will continue to help us gain share, but I probably don't want to be too intimate about how that works because, yeah, but we are confident. I think in certain aspects, we are confident about being able to further leverage our position. I mean, one area that stands out for us is this sort of, I think I use the word, relentless pursuit of customer service. And I know we had a board visit to our Reading factory recently and I just let the team get on with it and they live and breathe this relentless pursuit of delivering customer service. And it's quite incredible in this day and age that it's actually a point of competitive advantage. So I think that's really clear. And we've stood out, you know, where house builders, for example, over the last few years have really been fraught with supply chain difficulties. I think we're one name they can put on the pad and not have to worry about. And I think that lasts. But look, credit to the UK team. You know, we have a very significant, long-serving team who know what to do. So there's a couple of new account wins that I think will get over the line. And obviously that's helpful if there are more headwinds, particularly in the new build sector.

Thanks very much. And the second question was about order books. I mean, I know that there aren't order books across the group, but there are, I suppose, a few companies where there are order books. And maybe thinking about ERI, Clemerad, and maybe New Build UK. Just if you give us some colour on the order books, how those are looking for the year.

ERI, the order book's quite... it's quite short in actual fact because it's more of an OEM. And so what happens is customers are placing orders probably one or two months in advance. And there's probably a little bit less demand in that area, not surprisingly, because these heat exchangers are going into new build. On the other side, if I look at Clemerad, these are projects that tend to get placed quite early on. And I would say there that there's quite a bit of strength in the order book. And definitely that was what was underpinning the second half strength of last year. So we've got really good visibility in Clean Morad. And in residential new build, I think our project order intake is remarkably consistent at the moment. But we are stronger in apartments versus houses at the moment because of the way the regulations work. And we've also got the tailwind still of a couple of new accounts and indeed another account that we won more recently. So I always say to the teams, you might have account A that's talking about a 20% reduction, but actually it's 100% more than we had in the prior year. So that's helpful. OK. Clyde, sorry, I've gone a little bit out of turn, but I will get to everyone.

Thank you, Clive Lewis at Peel Hunt. I think I've got three, if I may. You put up HVAC. Yes. But obviously the V is massively bigger than the H and the AC. Is that an indication, albeit a very subtle one, that you are starting to think a bit harder about the H and the AC part?

Oh, no. No, no, it's not. Sorry. Absolutely not, no. So... The classic sort of heating, ventilation and air conditioning, we're absolutely the V for ventilation. But no, it was just more the fact that if I looked at a... If I looked at... a piece of research from anywhere in the marketplace. It would not talk about companies like Zendair or Lindab or Systemair or Belimo and so forth that we think of as very credible ventilation peers. It would talk about more UK-centric building products companies that are great companies, but they're in a different area of the market. And so what we're trying to say is that Volusion is, I think, the only UK listed ventilation group. So there is a danger that we get paired with other UK listed companies that don't actually do what we do, have a minimal overlap. There's only one company that's listed in the UK that has a minimal overlap with us in the UK, and that's obviously genuine. So we look at what's happening with Belimo, or Zender or Systemair or Ariston or Lindad. Names that might be new to some of you, but ones that we compete with in their local markets. So for example, if we go to Germany, we're competing with Zender. Or if we go to the Netherlands, we're competing with an Ariston-owned company. That was the point, but no, we're not looking to be a heating or air conditioning company. Just checking.

No. Second one was on new housing. It'd be really useful if you could give us a little bit of an example as to how the UK versus the German market, you know, the average spend on the product, the ventilation products in the German house... compared to the 40%. I must admit, I was surprised as many as 40% of new houses are using those heat recovery systems. But it'd be useful to sort of maybe comp if you have got any numbers, just so that we can sort of understand the opportunity in that sort of market.

Yeah, so first of all, the 40% is all UK construction, so apartments, some student accommodation, but also houses. So it's probably 80,000, 90,000 pieces out of maybe 240 total. We've had some slides in the past that talk about the revenue per dwelling. It's quite crude here, but I would say that a new three or four bedroom house that includes heat recovery as a system would probably have about 1,000 to 1,400 pounds of materials installed, plus also the installation cost, but it's relatively low cost to install in a new build. Clearly not the case in a retrofit. If I looked at that in Germany, it's higher, but not massive, a couple of thousand to two and a half thousand euros. The standard is probably more elevated and there's a little bit more, but it's not hugely different. And of course, we should compare that to a house that maybe five years ago was built with just unitary fans, and that's probably one to 200 pounds. What happened with the last change of the building regulations in June 2022 is that it's almost impossible now to meet the regulations building with unitary ventilation. Now, The problem is that it takes time for the existing construction, if you like, to work through. So we don't see an immediate impact from the change in regs. It tends to come a couple of years later. And there's some intermediary stages as well in terms of the technology. But the sort of holy grail for us is that one day, whether it's in my lifetime with Volution or not, one day you'd be expecting 90%, 95% of all UK construction to potentially be with heat recovery.

And the 40% in the UK would look like what? Oh, sorry.

In actual fact, in Germany, it's not as high as you might think because it's not as well regulated. in terms of the way the UK is, and I can be quite prescriptive about that route that we're going through, but they generally build more energy-efficient properties. So even though it's not regulated, they'll use decentralised heat recovery, so they've been using us and other brands. They use central systems and so forth. So I would say if you looked at decentral and central heat recovery, it's probably 60%, 70%.

Last one then was on UK RMI, but private side rather than public sector, because obviously public sector is pushing quite hard.

Yes.

What trends are you seeing there in terms of, is there an upscaling, improving quality of what people are putting in? Are they doing it themselves? In private RMI?

Yes, I think there is. There were two things that happened in the year that were really quite profound. One of them was that, I think we talked about it the half year, the positive input ventilation, the problem solver, and the Google search for that. We've seen that positive input ventilation has It went viral on TikTok with people showing, I put one of these products into my property and look what happened. So PIV in private refurbishment grew really well. And what we argued is that because of our strong links to distribution versus the brands that we compete with that are more direct sellers, we were able to leverage that opportunity really well. And we're confident we do the same again this year. And of course, our strategy is to upsell. What we're saying to consumers, to contractors, to whomever, is ventilation doesn't have to be noisy. And actually, the premium you're paying over a more traditional to a quiet device is 10 or 20 or 30 or 40 pounds. You're paying three or four times that to have it installed. And that's an education. It's a forever education because there's 30,000 plus small electrical contractors, probably more than that, that fit these products. How do we get to them? How do we influence them? But we're very good at it. And our customers understand it. I won't use any specifics, but there are a number of retail and trade customers who get it because they're selling a higher value proposition. So it helps them grow as well as us, of course. Okay. Sorry, at the back there. I know you've had your hand up a couple of times. Thank you.

Hi, Vanessa Jeffries from Jeffries. Just to follow up on installation of heat recovery a bit, aside from the cost, could you talk a bit about the practicalities? Because my understanding is that some house builders find them quite complex to install. And then after that, if you could just talk about if there's any theme in the last three acquisitions you did and how you plan to exploit that French opportunity more and what kind of opportunities there are.

It's a really good question about the complexities, and in actual fact it's always been the argument. So when we first looked at heat recovery ventilation in the UK, I remember 15 years ago, it was about there's an underdeveloped installer base, and it was problematic. In actual fact, going back 15 years ago, we would install. And the reason we would install was the only way we could be confident that the product installation experience would be a good one. But we do not want to be an installer. That's not our job. I'd be very, very clear on that. And our route to market is through distribution. just in case any of our distributors are listening. But the point is that we have been developing the installer base. We run a training program along with the rest of the trade association to effectively approve installers. And I don't think the installation barrier is a risk now. And actually, if you look on LinkedIn and other social media type platforms, there's some fantastic installers out there that showcase their work. And I think the standard is very good. and it's too much detail for now, but we used to have an argument about what we call in-use factors with the products. What would happen is, the regulator would say the products never get installed properly, so we're going to downgrade the in-use experience so you won't get the full value of heat recovery. We lobbied very hard to say if these are installed properly, you shouldn't downgrade, have what we call an in-use factor. I don't think that's a barrier now, and we can see some fantastic installations. So I think it's more to do with the adoption. But what we are seeing, of course, is house builders talk about their own net zero, their own experience, There's different propositions, but let's not forget the running costs. Now, there was a survey last year, I've forgotten, it was in one of the publications, that said a new house probably costs £2,000 to £3,000 a year less, a new three-, four-bedroom house, £2,000 to £3,000 a year less to heat and light than an older one. And I just think that's a really compelling proposition if you're trying to sell new houses. The question about improving.

So if I take them one by one very quickly. So France, very much as Ronnie said, it's about a footprint in the market, an established position with wholesalers distribution channel. It's currently got a very narrow product range. And look, it's not going to happen overnight, but we see no reason why a large proportion of products that we sell in UK, in Belgium, in Germany, in Netherlands, why they can't get traction in the French market. And so I think making that product set available over time is really the route to growing that business. There's a couple of interesting cost-out opportunities there as well. Gross margin-wise, it's a good margin business, but we've already got our eye on a couple of cost-out opportunities. But it is very, very much about using the platform to scale products and grow. There might be a bit of product sell opportunity the other way, so taking the French product into other markets, but it is quite a high price-pointed solution, so it will be niche by definition. Slovenia, I mean, it's grown really well over the last few years. As Ronnie mentioned, it's trying to expand into new markets as well there, so it's about backing that business in those markets. But I think when you put, from a sales perspective, when you now put Slovenia sorry, Ivent, Inventor in Germany, Klimerad in the Netherlands, we've undoubtedly got the broadest range of, we think decentralised heat recovery as a solution is hugely flexible, very much so into refurbishment, but also into new build. And with those three propositions with effectively all the same end game, but with different product sets to get there, we've got a range that nobody else has got. So that undoubtedly across the group gives us a real opportunity And again, there's some cost out that we can do there, so we can supply some products which they are currently having to buy on a third party basis. So that's the route in Slovenia. New Zealand, again, as Ronnie mentioned, I think it's about adding a direct-to-consumer channel to our existing strength in the wholesale channel. So we've got, if you like, pretty much all approaches to that New Zealand market sort of covered. And, again, we think we can offer some products into that proposition, which they currently haven't got, which, again, should expand the sales opportunity.

Ainsley? Yeah, sorry, Ainsley.

Yes, Ainsley.

Thanks very much. I think I've got three as well. Just on the UK, you talked about the multi-year kind of opportunity for public RM&I work. Is that kind of a higher, structurally higher margin business? If you were to look at New Res, private RM&I and public, just interested in the margin spread there. And then secondly on M&A, just interested in the kind of headroom you have. Should we expect more smaller bolt-on acquisitions or could larger ones be something we might see? And then just interested in the first two months of trading, kind of any surprises, whether it's on pricing volume that you've seen in August, September. Okay, good.

Public housing. Margin's generally very similar across the group. If we oversimplify and say it's a 50% gross margin business, then maybe some products are at 55 or 60 and some are at 40 or 40. But that's the sort of range I would look at. What's more important in social housing is to think about... what we're trying to do here. So you're a local authority, you're a housing association, you've got mould and condensation problems and you want to put something into the property that will take care of it. And so what happens is there's quite a bit more sophistication controls that will sense humidity, adjust, will ventilate at an appropriate airflow, will not be noisy because tenants turn off ventilation if it's noisy. So if you've got a mould and condensation problem in a property, you've got a ventilation device that's doing its job, but it's noisy, it gets switched off, and then the housing association has a problem because the tenant's saying, I've got mould and condensation everywhere, so we get into this circuitous loop. such that we even provide data collection in products to talk about humidity rates and air flows and so forth. So we've developed into a discrete solution a very, very comprehensive solution to their problem, if you like. It's quiet, it's energy efficient because running costs are important. We have to demonstrate the running costs of the particular product It adjusts really well. You don't have nuisance tripping. So all of that means that there's more value. And if, in simple terms, we're seeing two or three times the unit value for one of those devices over maybe what would be installed in the private sector, but at the same gross margin, the cash margin's higher, the gross margin percent will be similar. And we've been very, very good. I've been with this journey for 15 years. I know explicitly what we're doing and what's coming next. The next step on the path now is how do we make the same solution smaller and less intrusive? It's obvious, isn't it? But it's not easy because then you're coming up against physics. And that's what we do really well, and I think that's why we've been successful. We estimate roughly how many units are supplied each year. The way to look at this the other way, 4.9 million properties socially managed, three ventilation devices in a property, it's 15 million. It's a lot of fans that are going in. What's our market share? Let's be conservative and say 30%. So that's 5 million for us. That's why I say multi-year. If I think about the actual volume that we're supplying, and I correlate that to 5 million and maybe more, that's a long run way of opportunity. And the other thing, of course, is that as much as we make great products, they don't last forever. They need replacing. So it's a little bit like the Fourth Road Bridge type quote, is that actually by the time you come round on yourself, you've got to replace again. Also, I could talk for a lot longer than we've got available to us, but we are starting to put in decentralised heat recovery solutions into UK social housing. And we're the only ones who can do that because we have a German, Netherlands, Slovenian, Nordic experience that we package into a solution that we bring to the market competitively with experience that our competition just don't have. And that's where we're really leveraging the group R&D technical capability to our advantage.

Your other two quickly, so M&A headroom, we ended the year 0.8 times leverage, which I think is the lowest we've been as a year end leverage position in the last 10 years. So if we were to go up to 1.5 or slightly north of 1.5 to do the right acquisitions, we're absolutely happy to do it. So that's got headroom. Plus, obviously, the cash generation itself, because I guess, as I mentioned earlier, this year, the 30 million we spent was the 30 million that we'd created in the year. So we didn't increase leverage at all in making this year's acquisition. So plenty of headroom. Will it be smaller? Will it be continuation, the small bolt-ons or larger ones? It'll be more of the former, not because we're nervous about doing big ones, but I think just the nature of the market itself. It is very fragmented. I think we've got this really good track record and toolkit now of buying smaller businesses, deploying a load of things in to improve them, which perhaps a bigger opportunity doesn't have that improvement runway ahead of it. But if there are bigger ones, as long as they are, I guess back to Clyde's point, as long as they are absolutely down the fairway ventilation and air quality business, if they're bigger because they've got a massive heating exposure, we're not interested. If they're bigger because they've got other things that we don't think we can add value to, we're not interested. But if they are bigger, good ventilation businesses, we will look at them. But I think the nature of the market is it'll be more smaller ones. Your last question was the first two months of the year. I think probably in simpler terms to say, what we've seen in the first two months is not dissimilar from the second half of last year, and particularly the sort of the fourth, we don't give you quarter by quarter, but the fourth quarter of last year is very much what we've seen in the first two months of this year. The markets that were good at the end of last year are still good. The markets that were more challenging, you know, actually Germany's made a reasonably decent start to the year, but still we look at it and go, there are challenging conditions out there.

Christian, I know you were there. Yeah.

Kristen, you're from Numis. Two from me, and actually just to follow up on both of Ainslie's, really. Could you put some numbers around the increase in revenue in UK social housing in the year? And I suppose just to sort of summarise what you were saying, Ronnie, is you don't feel there's a big risk of a normalisation following increased spend from the issues around mould and obviously that awful death of a boy. And the second one, just on M&A, If the focus is on smaller deals, are you confident that there's enough deals out there to drive the 5% to 7% organic revenue per annum? Because obviously, as you grow, you need more smaller deals to drive that level of growth of the group. Thank you.

It's interesting, because Andy said smaller deals, but of course... they're not really smaller. They're just smaller than maybe you'd be thinking. But they're actually bigger for us. If you look at, you know, we spent, how much last year? 30 million on acquisitions. There were two. So our average ticket size on acquisitions is actually growing. I think the question is whether... can it grow quick enough or can it keep pace with the growth in the group? You know, if we are delivering what was the compounding 13, we've got to keep going at the same rate, haven't we? 13%, isn't it? And, of course, if only four or five of that is organic, it's got to be 10. I'm absolutely convinced that we can. And Andy and I were talking, obviously we know what we know, we know what's coming in. We're very disciplined. We're very disciplined. There are some things out there that have happened that we've stayed away from because we're disciplined. And having a heroic measure of mid-20s keeps you disciplined. That's really important. But I have no concerns whatsoever. In actual fact, I suspect what will happen over the next couple of years is that we'll get to a situation where we've never had to do it and we've never really looked to do it, but we may... our leverage moves up because we've done a couple of deals and then something else comes up that we want to do, we may have to think differently about that. But nice problem to have. Your first question was about UK social housing. No, I don't think, you know, Andy said the trends that we're seeing in the first couple of months of the year, we're moving into condensation season now. We haven't really, the weather's still quite mild. You're not getting much condensation on the windows in the morning, but I'm In actual fact, I even sent one of the guys a note this morning saying, let's just make sure we're ready for this because there's absolutely no way if the demand is strong that we want to miss any opportunities by not having availability. About 90 million of revenue last year in residential. We don't give the explicit detail, but when we did, we used to have about two-thirds RMI, one-third new build, of which it was about 40, 60 social versus private. So if you use that proxy back then, it's not far out today. You can get a sense of the... And look... Public RMI grew really well, but private wasn't disappointing last year. It just didn't grow necessarily at the same rate as public, but it's still encouraging. We've got a couple more. Please.

Hi, it's Andrea Collins from Davey. So just two questions for me. Just in terms of the last three acquisitions, how are they betting into the business? I guess specifically maybe DVS that's only been in for a few weeks. What are the initial impressions? Anything you're positively surprised with? Any negatives? And then the second question is in terms of new product development, in terms of the pipeline. I know you flagged a few new products in the slide deck. Is there anything you're particularly excited for for 2024? Okay.

So on the acquisitions, to just try to avoid maybe repeating some of the stuff that we've said, but if you look at the three very quickly, France is a huge market and we're very, very small. And it's going to take us some time, but we're being quite considered about how we attack that because it's a long-term play. And so in actual fact, I said internally, I remember at one of our board meetings, I said that France was probably financially the least additive in the short term, but potentially the most exciting medium term because of the size of the market. And if we get the proposition right, then we can hugely scale up. And we're talking about, you know, 10 million euros of residential ventilation revenue in France with a market that's probably 50 times what we're... So that's the size... of the opportunity for us. And I think that will take longer, but intentionally. Our event in Slovenia is quite exciting. Andy talked about some new product introductions. And we really like the management team there. But of course, it's a bit of a shock coming from a private entrepreneurial founder-led business to us. But Andy was there again recently. I was there about a month ago. excited about what we can do and getting that team to work closely with our German team because it's the same proposition, good experiences to share. And DVS, interestingly, DVS in New Zealand, what's particularly helpful about DVS in New Zealand is we have an exceptionally strong team in the market. We have an Australasian headquarters in Auckland. The team know the business really well. We've already seen the results for the first couple of months of the year and the integration's going really well. And What we're excited about is how we upsell there, really do start to upsell. We're moving into off-season in New Zealand, of course, southern hemisphere, so we're moving into their summer. And so, therefore, it's really about getting things in place for when we go into winter, because you'd probably say 60%, 70% of the revenue takes place in one half of the year, the colder months. OK. There's a question on NPD. Oh, sorry, my apologies. Thank you. I talked earlier on about hiring a UK operations director, Andreas Berber, who's been with us since May. And that was a decision to provide the technical director in the group more opportunity to develop more quickly. And it's a really interesting opportunity for us because every time we acquire a new company in France, we're getting more experience and knowledge. We talked about it specifically in here, but I think the exciting new product range for this year is what we call the iconic range of central heat recovery systems, which is the next iteration of the very successful product family that we have. And we've been launching it in Belgium, it's now in the Netherlands, Denmark, and there'll be some niche play in the UK. That's very exciting. And the other area that we've talked about is commercial heat recovery in the UK, where we're significantly underweight. There's a very successful competitor that provides those solutions, and we see an opportunity there to do more in commercial heat recovery over the next couple of years. And that product range has been launched successfully in August, and we're already starting to see some early sales. But I mean, typically, These are more the headlines, but typically we're launching new products probably every week. But some are obviously more significant than others. Lots of questions. I wanted to make sure that everybody was covered. I think that's everyone. Were there any questions?

Yes, we have a couple from the webcast. Two from Graham Kyle at Shore Capital. One, I think, has mostly been covered. The other, in the German market, are there any indications that new state subsidies for green building projects are under consideration? How will this benefit Volution?

It's a good question. What happened over the last couple of years is they were withdrawn. And if you talk to the team locally... This sounds familiar, doesn't it? That they're saying that there is mixed messages coming from government about subsidies and they tend to be turned on and off and there's a lack of consistency there. But we believe that, yes. But we believe that there'll be more supportive subsidies and indeed there are some now that cover both new build and refurbishment. And of course the big issue for us in Germany and indeed I should have probably mentioned it earlier, in a lot of markets is the move towards heat pumps. And heat pumps are really complementary for volution because heat pumps typically work best in a well-insulated property. And that's where most consultants would recommend thinking more sympathetically about the ventilation solution as well.

Thank you. And a couple from Peter Tester at One Investments. Can you please talk about how you manage operating costs in the different units to balance against the uneven demand pattern between countries and protect operating margins? And does inflation moving from COGS to other areas provide challenges on this?

Very quick answer to both of those. We have strong managing directors locally who will flex their costs accordingly. And I think that's probably borne out by the sort of consistent delivery in terms of margin, both terms in gross margin and so forth. I don't think that's a big concern for us, and certainly Andy and I are very close to it. So I think it's well managed. The issue about inflation is that It's not a greater challenge, it's just moved. So the emphasis maybe 12 or 18 months ago would have been very definitely around materials and there was labour inflation. Now what we're saying is there's an absence of material inflation risks, but there's still a prevailing but maybe weakening labour inflation risk. But we don't see it as a challenge to margins and we think it is definitely rolling over. quite how quickly that happens. It'll be interesting for all of us to see. But not concerned about protecting margins and inflation is less of a worry for us today than it would have been when we were in the room maybe six or 12 months ago. Just mindful of everyone's time because we've gone sort of 20 minutes over usual. Look, thanks very much. I hope the level of sort of scrutiny and questions is commensurate with your interest and the appreciation for our We're delighted about what we achieved, but notwithstanding the difficult markets, we are confident about the direction of travel. Thank you very much. Thank you.