Volution Group plc

OK, brilliant. Thank you. So warm welcome to Volusion full year 2025 results. Nice full room. So look, we're really delighted and excited to be here this morning to take you through our last 12 months. Pretty much similar format for us a quick a quick overview I'll be quite brief with that hand over to Andy to talk about the financial review for the year I'll come back on business review and in summary and outlook and then Q&A and I think our sort of view here is that probably 20-25 minutes on the presentation and just from past experience And we know there's always a good appetite to sort of go through the Q&A. So we'd like to allow some really good time to go through the Q&A. But look, for us, I've been doing this for some time now. So this was a strong year for us, revenue up. 20.6% or just under 22% on a constant currency basis and delighted with organic revenue at 5.7% on a constant currency basis. And obviously the inorganic benefit in the year was exclusively from the Fantech acquisition. Our organic growth was largely sort of volume-led rather than price-led, and Andy can get into a little bit more detail on that later on. But highest revenue growth was in the UK, 9.5% revenue growth in the UK, so very strong growth. revenue growth in the UK, and come back on that in a moment and just take you through some of the detail, but certainly supported by regulations. Evolution is a regulatory underpinned story. I think this is a really good example of it, and also made share gains in the market, and we can talk about that as well. Adjusted operating profit margin, small reduction, 22.3% versus 22.5% in the prior year, solely attributable to the Fantech dilution. And in actual fact, the organic margin expanded 50 basis points in the year. Again, very pleased about that performance. Quite a bit of headwinds in the market, particularly in the UK, around inflation on payroll and national insurance and such. So very, very pleased. with the adjusted operating profit margin. And then the cash conversion, 109%. That's an absolute essential ingredient of the mix for us if we're going to continue to deploy capital to grow inorganically and leverage down to 1.2 times, in spite of the fact that during the year we made our largest acquisition to date. A robust return on invested capital, 25.2%. And we did, as I say, make our largest acquisition to date. And really good progress on ESG. And we've got some detail on that. And just one other one. This isn't new. We talked about it at the half year. But I've established a sort of more regional structure to run the group. And it's inevitable over time. If we're going to continue to grow at the rate that we have been, we need to have the management bandwidth and capability to underpin that as we go forwards. So this slide, we can't help but put this slide into the deck, but I think just to draw out a couple of important ingredients here. We listed in 2014, I became chief executive at the beginning of 2012, But it's really the sort of trajectory that we've been on. And I won't go into each of them individually, but roughly across revenue, profit, EPS, and cash flow, plus minus 12% compounding growth over that period. And it shows the change in the complexion of the group from four countries where we had a local presence. So that's a local presence, not where we make sales, but where we have a local operating company presence. But we've gone from 30% of our revenue from non-UK customers in 2014 to 63% today, five brands to 29 brands, and we have a presence in 17 countries. And that's sort of what's happened to us over the last 10 years. Strategic progress and priorities, three strategic pillars, organic growth, inorganic growth, and operational excellence. And just a little bit under each of these, and we will spend a bit more time later on, but 5.7% organic revenue growth and we're continuing to invest in products and facilities to underpin this organic growth revenue proposition. Value-add acquisition 16.2% in organic revenue growth coming from the Fantech acquisition and also as I've talked about sort of fully embedding that more regional leadership structure that I've talked about already and then operational excellence as I said there 22.3% operating profit margin but an organic operating profit margin improvement in the year. Sustainability, again, I don't want to go through each of these individually, but what I was pleased about is pretty much every metric on the page has improved. Should just explain on low carbon sales there. Low carbon sales, 71.2% of Volution's total revenue is in low carbon. I said that it improved. It has improved organically to 77.3. But Fantech, as a proposition, has less of its revenue today in what we would call the low-carbon product bucket. So that created some dilution in the year. And, of course, going forwards, we'll report the inclusive of Fantech number, which is the 71.3. And the same story with heat recovery. The dilution is, because of Phantech, actually organically we improved from 31.7% to 32.5%. And on the recycled plastics, I mean, some would say that we missed because we did set ourselves a 90% target. But we set that target when we were at 40%. And I remember shareholders saying to us, how are you going to get there? And we said, we don't know. But we're setting a stretching target. We've got close. It's 83.9%. And in actual fact, the sort of drag on that improvement was more around the Nordics, where in actual fact, more recently, we've made some really strong progress. And just one other one I'd like to just pick out on the slide there is the accident frequency rate that improved in the year and ultimately Volution is a place where we want everybody to come in in the morning and go home at night. So delighted to see that with the extra effort we're raking around health and safety and so forth that our frequency rate improved in the year. So that was a very quick overview from me. I'll hand over to Andy to take you in a little bit more detail now.

Thanks, Ronnie. Morning, everybody. So just to kick off, you saw the sort of 10-year progression on some of the key metrics earlier. This is adding a couple more and doing it over five years. Actually, it's quite nice because for the first time now, we can drop the COVID year off the five-year comp. So the lines all make sense. And look again, at risk of repeating the earlier slide, I think... What stands out the most for this for us and hopefully for you as well is that sort of consistency of performance year over year, the continued improvement on all the key metrics. And actually you see the sort of the steepness on those top two, their revenue and operating profit growing faster this year than any prior year as a result of both some really strong organic growth, which Ronnie is going to come on to when he starts to unpick the individual markets. So 5.7% organic growth. Our target range, you'll remember, is sort of three to five that we stated at. And then supplementing that, obviously, with Fantech, our largest acquisition to date, which has gone really, really well. So I will then, in the subsequent slides, and then, let's say, in the market, we'll go into a little bit more around some of these key pieces. But I guess the other one that I'd sort of draw out, having done the top left, if you go to the bottom right, really, really strong cash performance in the year. And that's always at the heart of the business model, because that is how we fuel M&A, and obviously that is how we deliver our returns, but actually to do that this year was even more important than normal years and then to end the year at 1.2 times leverage having spent 220 million Aussie dollars, 110 million pounds on the Fantech acquisition. Plus of course we did also complete the buyout of the balance 25% of KlimaRad in the year, so a meaningful amount of expenditure on on on on m a but still ending with the balance sheet in very good shape there at 1.2 times leverage um so this next slide um just showing a little bit more detail year over year comparatives there revenue operating profit i'll unpick a bit more on the next couple of slides i guess just to sort of help the analysts out and again they will probably have read this in in in going through the more detailed statement but a couple of the pieces that then to go below operating profit. So we obviously had a higher financing cost charge in the year as a result of the borrowings that we took on to do the Fantech acquisition and the Klimrad purchase. So our finance costs were up about 40% year over year to just over £9 million. Tax rate was basically unchanged. In fact, it was exactly unchanged year on year. It was 21.8%. Now, what should have happened is Australasia being higher tax rates than the rest of our group. So Australia is 30%. So we should have actually seen that bump up slightly. But offsetting that, our growth in the UK, particularly UK residential, is very much in patented products. We talk a lot about the fact that Actually, it's regulations that have moved forward, and we've developed some really compelling propositions to service those regulations, some of which then benefit from being patented. So we then have leveraged that UK patent box opportunity, and that's meant that effectively the tax rate has stayed exactly unchanged. Return on invested capital, again, I'll come back to later with a more detailed slide, but actually really, really pleased that that still came out at just above 25%. And that's got two thirds of the Fantech balance sheet in it because of our three point methodology on the balance sheet. And then dividends up 20%. So slightly ahead of the rate of growth of the earnings per share. So dividends up 20% to 10.8 pence. Revenue, so I won't go through the individual regions too much because obviously Ronnie will do that in more depth in the next section. But really pleasing that actually within that 5.7% constant currency organic growth, all three regions grew. Yes, the UK grew strongest. Europe grew nicely. Australasia, very, very small bit of growth, but it was growth. And that's despite the fact that, as we have talked about for the last couple of years, the New Zealand market has been a really, really tough market. Won't steal the thunder, but hopefully starting to show some signs of of recovery. But still, we were able to show organic growth in all three. FX was against us. I think I've said that pretty much every year for the last few years. So one of these years, FX will sort of flip in our favor. That was, again, mainly in Australia and New Zealand, that 4 and 1 half million of adverse revenue impact and about one million of profit impact sort of comes through from translation. Fantech obviously then, you know, coming in with the inorganic growth piece and then just in the sort of the strap at the bottom there, just again, we always sort of try to unpick how much of the constant currency growth is volume stroke mix, so those two things effectively come together, so that's volume and it's also upselling of the proposition, how much is from that and how much is from pure like-for-like price, and the like-for-like price is now back to very much a normalised level of just over 1%, so 4.5% is what we estimate to be the volume stroke mix component of that revenue growth. Operating margin, as Ronnie mentioned in the intro slide, the fact that, bottom left there, group margins nudged down ever so slightly by 20 basis points, but we'd already long trailed that Fantech was coming into the group at a good margin relative to the wider market, but at a margin that nonetheless is lower than Fantech. the margin that we trade at as a group. So to get to that 22.3, you've got effectively a 50 basis points improvement in the organic margins of the business, offset then by a slight dilution from Fantech. And then you see, I guess, in that sort of bottom middle graph, you see how that organic margin improvement comes through region by region. So UK and Europe, there's no inorganic effect. So those comps are exactly as they would be. So really nice 100 basis points improvement in the UK, 20 in Europe. And interestingly, for those that have sort of followed us for many, many years, I remember my first couple of sets of results being asked, well, why is the UK margin the laggard relative to the rest of your group. And actually, look, I think this is testament to some really, really strong results from the UK over many, many years now. I guess we always said, look, we've got a really good infrastructure in the UK. We've got a very broad proposition. There is no reason why it won't be at or above. And indeed, that's what you now see. And then on the Australasia graph, we've given you three data points there. So as reported, 24 and 25, but then also showing what the 25 organic was. So actually, if you compare that 22.7 to the 23.8, a nice organic margin improvement in Australasia as well. Jumping onto the balance sheet and the cash flow. So a very, very strong cash conversion, 109%. We talk about a target of above at or above 90%. And as you see on that sort of top right graph there, we've hit that pretty much every year bar. 2022 was when we made a sort of material increase in our inventory levels. to bolster customer service. But aside from that, essentially, the 90% and above. 109 is particularly strong. I'm not going to promise that's going to keep repeating, but it does just show how robust the model actually is. And inside that, investing nicely in facilities and infrastructure. So you'll see when you get the annual report in a couple of weeks' time, we showed a little bit about where we've been investing, whether that's further capacity and automation in Reading in the UK, for example, whether it be the early bits of our expansion in North Macedonia that we've talked about for a number of years, and in the Nordics where we've been adding additional metal production capability. So we spent about £8.4 million on capex in the year, which was up £1.3 million from the year before. So still continuing to invest nicely in the organic business where it's compelling as well. then you know i've already mentioned this return on invested capital so this is this is you know really really important metric for us um we've said that you know we are confident that we can carry on delivering returns of 20 and above um whilst continuing to invest materially in acquisitions well and as i said the fact that we're 25.2 um with having brought fantech into the group is is fantastic so there was a very nice organic ROIC improvement coming about through that working capital and balance sheet management coming about through that organic margin improvement. And again, that means that we're able to bring these nice acquisitions in and still deliver very, very strong returns to investors. I don't think I need to, this is a risk of repetition a little bit. This is basically showing in the dark blue, our key financial metrics for FY25. In the light blue, the average over the last five years. So actually what you see with all of them, the organic one there does still include the 21 versus 2020 comp, which is COVID impacted. But really, you know, relative to our green metrics, numbers there which are the the long-term financial targets if you like of the business you know continuing to deliver on all of those metrics which obviously is you know really really pleasing and important for us so with that i'll pass back to ronnie to go through the business

Great. Thanks very much, Andy. So we talked about this already, Volution, in 2014 and today. And of course, the Australasia only includes eight months of Fantech. So the way to sort of think about the group now in terms of its geographic disposition is 40%, 30%, 30%. So quite a nice... split and look what we've said throughout is that over time we expect the percentage of group revenue in the UK to get smaller as we continue to bulk up with more obviously more opportunities in continental Europe and in Australasia. And this, again, is our increasing geographic diversity. So you see from, as I say, my tenure started in 12. We started to acquire in Europe and then the first acquisition in New Zealand in FY18. And, of course, this year we'd expect, again, that light blue box to get much bigger as we see 12 months participation from Fantech. So a little bit of detail about the local geographic areas. So look, specifically in the UK, very pleased with the 9.5% revenue growth. And if you look at the residential, we've had a consistent period of growth now. We talk about strong comps and they were strong comps in 2024. for the UK but the UK residential ventilation increased by 9.7% and that was the growth was most significant in residential new build which I know is counterintuitive when we think about house builders and the volume of activity but we saw a big change in the impact from regulations and we're moving towards what we call more continuous ventilation and continuous ventilation with heat recovery And we made some account gains along the way there. So that was a particularly pleasing step up in residential. I think it's fair to say that public housing RMI is still attractive for us and private residential RMI has been probably a little bit more challenging. Then as you work down commercial, look, we're still very small in commercial. We've only got £30 million of revenue. in a much bigger uk commercial ventilation market so in the year the 6.9 revenue growth was particularly um buoyed by the second half of the year and we had good strength in the second half of the year and i'll come on to some of the investments and focus that we're making in that area because we still see that as a runway of opportunity for us into the future export you 29.4 percent revenue growth so very strong mainly in Ireland we've got a good partnership in Ireland again around residential heat recovery systems the Irish market is probably one of the best examples about where regulations have really quite seriously driven that sort of home of the future that very energy efficient home of the future and our technology lends itself really well to the regulations and we've benefited hugely and we still think there's a runway of opportunity to continue there and as Andy's already talked about you know 100 basis points operating profit margin improvement and we did suffer quite a substantial national insurance increase and wage related increase from April and also some facilities cost increase around leasing and so forth but delighted that we were able to in spite of that improve adjusted operating profit margins. And then it's about future proofing. We're not just about delivering in this year. We've made investments in most of our facilities in the UK, but in particular in Reading with new injection moulding, some additional machine monitoring, some robot control. Quite a big investment in Dudley in the West Midlands. In actual fact, we took on an additional 50,000 square feet facility that we're equipping right now as we speak. But it's about future-proofing our facilities to be able to have capacity headroom to grow into the future. In continental Europe... The European story's been a little bit more challenging for us over time, but in actual fact, 3.1% constant currency growth, adjusted operating profit, increase of 2.5%. But what it would draw out there is that we had in in our central european activities we had strong performance from our klima rad brand in the netherlands which is mainly focused on structural refurbishment and that's a heat recovery proposition a business that we bought in 2020 in actual fact during the year we completed the balance 25 acquisition that that took place in december and we talked about that in march if you remember, but very pleased about the proposition in the Netherlands. We're seeing good organic revenue growth from our heat recovery counterflow cell manufacturing in North Macedonia, in Bitola, where again we've made some investments. As Andy said, a lot of content in the annual report coming up, but substantial investment. We've effectively doubled the size of our factory footprint in North Macedonia, We're refurbishing a building at the moment and putting in additional investment, but with strong sort of organic growth plans in that facility in the years ahead. The disappointments for us were probably in Germany. The market continues to be quite weak. I think we mitigated some of that weakness so as to have a less profound impact on profitability. It's still a very profitable business and we still believe in the long term prospects of heat recovery ventilation, particularly in refurbishment in Germany. And the Nordics again have been quite challenging but actually showing some signs of recovery and I think this is largely to do with the fact that we've had interest rates roll over more quickly in Europe and I think our outlook for Europe is certainly a little bit more positive as we go forwards. Finally, Australasia, these numbers that you look at here, they struggle a little bit with a big inorganic growth addition. So when you look at, for example, the commercial revenue decline of 11.3%, I really do need to pick this out, this is an 11.3% decline on the only 3.1 million of organic commercial revenue that we had in the region prior to acquiring Fantech. So just to remind you, prior to acquiring Fantech, Volusion's proposition in Australia and New Zealand was almost exclusively residential. So if we look back at the prior year, 52 million of revenue, 3.1 million of it. So let's say circa 5 or 6% of our total revenue in the region was in commercial. That materially changes as we've acquired Fantech. So Fantech is in actual fact the reverse. That's why the complementarity of these two propositions is really quite attractive. We've taken a strong residential presence, complemented it with an additional residential presence, and then overlaid a market-leading commercial proposition. So overall, when you look at the adjusted operating profit increase of 83.5%, Andy's already talked about the organic component, But Fantech's going really well. I'm very proud of the fact that we brought the company into the group. The chairman had the opportunity to visit the team locally a couple of months ago. This is an amazing proposition for us, integrating very well and plenty of opportunities now for us to cross-sell more, to cross-reduce products and to improve the organic margin, if you like, as we go forwards in Fantech to and beyond our 20% operating profit target. So very pleased about Fantech, delighted that we were able to get this over the line in December last year and going really well. In actual fact, I've told you all of that. I've jumped ahead. So, there we are. So, yeah, I don't think there's anything new there. New regional leadership established. Anthony Lamaro was in Fantech for 18 years before we promoted him to be the regional leader. Very well respected, experienced leader. And I think it's fair to say that Not surprisingly, when we buy a company that's much larger than us with our original presence, we've actually acquired a very strong management team. And so there's quite a lot of extra coverage now and strength in that team to help us improve the business as we go forward. We could spend an age on... Fantech and the proposition. Maybe there'll be some questions later on, but going really well and in itself growing on its prior year. I know we don't talk about that as organic, but what we should consider is that Fantech has improved over its prior year, both from a revenue and profit perspective and expanding margins. So as I said, we wouldn't be too long on basically half the presentation time allocated to this. I'm not going to go over these again. It's just repeating what we said earlier on. But just on the outlook, look, for us, it's only a couple of months in. We've had August and September and six trading days of October. But look, the new year has started well. We do have the benefit of the inorganic drag from Fantech for the next four months. And we are growing organically. And maybe just a caveat, that the end markets are not as helpful as we would like. They could be more helpful. But notwithstanding those challenges, we're still very optimistic about another year of good progress for the group. So that's sort of the formal presentation. We'd love to have your questions. OK. Tanya, hi.

Hi. Good morning, Tanya from RBC. Just a couple questions on the UK market and your market share there, particularly given the strong performance in the second half, and how should we look about growth going into next year with some of the new regulations coming into play? And then just about your capex spend for next year across the regions to expand capacity. Is that being driven by order book demand that you're seeing now, or is that more in terms of what you're expecting to come?

Yeah, so taking our UK in order there, residential share is pretty substantial across new build, social housing refurbishment and private housing refurbishment. Not necessarily with one single brand, but collectively with a number of different brands that we have in the stable. I think we would argue that we've got a leadership position in all three, residential new build, commercial, sorry, social housing refurbishment and private housing refurbishment. And I think the drivers are different but converging. So on residential new build, A lot of this is going to come down to whether or not we start to see more houses starting and being completed. And my crystal ball is as good as anyone else's there and I think it's probably fair to say that it's been disappointing so far. Although in spite of that we've managed to grow strongly. Now regulations will continue to help. We haven't had a full lap of the year yet where those regulatory benefits catch up with themselves. So if nothing else, there's a regulatory gain. I'd like to think that there might be sort of more structural increase in houses, but let's see. And then from a share perspective, I think what we would argue is that as the proposition becomes more complex, it's become easier for us to gain share. In other words, I think my argument is that our innovation and product range capability lends itself strongest to the higher end, even though we're eminently quite strong at the lower end, but it's probably a little bit more commoditized. So it's easier for us to stand out. and you'll talk about some of the capacity investments that we've made. Social housing refurbishment, OAB's law in October will be interesting to see how social housing responds to that. So there is one school of thought at the moment that social housing has probably been a little bit slower in terms of planned refurbishment because are concerned about the onslaught that might happen once OAB's law goes live. OAB's law is basically around where ventilation or mould related problems in a dwelling have to be dealt with in a much shorter time period. And I know social housing landlords are sort of gearing up for that and we've set ourselves up to support it. But we're not quite sure quite how much of a bounce, if any, that that will deliver. And then I think private housing refurbishment is very much down to sort of the whole consumer confidence piece as well. But look, we're very well positioned in all three. We're continuing to innovate and customer service is essential here. In UK commercial, our share is quite small. Quite frankly, we're not the market leader. We understand who the leaders are in the different propositions, but we believe that we can grow our heat recovery ventilation and our natural and hybrid ventilation range under breathing buildings. And in fact, as I say, some of the investments we've made are to support that. So we think the runway of opportunity in commercial organically is strong and the opportunity there for us is quite clearly to take share. I didn't mention OEM earlier. It is quite small, but OEM had been quite a drag on our performance over the last few years, but we've brought our OEM proposition into one facility. We did that about 12 months ago, and we've steadily improved the contribution that OEM makes towards the group. And a significant proportion of our internal consumption of larger motors now is actually manufactured in our OEM activities, although you don't see it here. And there's been a big focus on improving that proposition and trying to make some share gains. So we're reasonably optimistic about the outlook for OEM, having had a couple of challenging years.

On the CapEx front, Tanya, I guess just to start with, first of all, to put it in context. So spend in 25 was 8.4 million. Spend the year before was 7.1 million. And normally we've talked about seven as a sort of par spend. So it's sort of one and a half or so more than that's been. But of course, the group is growing quite materially. And that 8.4 spreads across the breadth of the business. But I guess if we think about the sort of capacity and growth side of things, this isn't about us sort of stretching at the seams and being unable to deliver revenue. This really is about sort of future proofing. And it's also about areas like commercial in the uk where we've got aspiration to be bigger than we are right now so if i just pick out a couple of them you know dudley in the uk we've talked about that is where we manufacture both our heat recovery products that go into uk new build which of course has been growing very very strongly so like actually if you go around that facility it is full um and therefore taking on the additional space just allows us to to carry on with that growth because you know the regulations aren't going backwards hopefully the volumes are improving It also serves new build, sort of heat recovery propositions that go into our European markets as well. So we serve Denmark, we serve Belgium, we serve other countries out of that Dudley facility. So that growth there is very much supporting that piece and supporting our sort of UK commercial projects. broader aspirations some of the other ones we're doing in places like in reading which is about being more automation having bigger capacity molding machines which means that we can get more output from the machines for the same amount of factory floor space that's taken up this is about both efficiency and catering for future growth We've got some interesting metal work investment in the Nordics where we're quite peripheral and minor on commercial again there. And this is about helping us get the cost base right so that we can really compete in new parts of that market beyond perhaps the traditional sort of residential refurbishment where we've always been very, very strong. And then Macedonia ERI we've talked about for a little while now. So that business has grown very, very well over the years pre our ownership and the four years since we acquired it in 2021. We've taken on additional buildings. We're in the process of refurbishing and then kitting those buildings out. And this is about the growth that comes next. So that and Dudley are probably the two where if you go around you go, gosh, they're quite full right now. But what we try to do always is clearly not invest too early, but invest at the right time so that we can continue that growth going into the future.

And just to add to that, that investment isn't just capacity, it's also focusing on efficiency and improving unit cost. We could spend a lot of time on this, but at Reading we've moved to what we call multi-injection, multi-cavity injection tools so that we can increase the output unit rate. That means bigger machines and so forth, that investment's gone in. So it's capacity headroom and unit efficiency. And great insight from the technical team. I remember we did this about seven or eight years ago, but we built this platform of plastics that could scale and so what happens is that although we have a market leading range of final SKUs we pair it back to a more limited number of chassis and so forth and that's where we get the scale benefits by putting a chassis tool in having four parts instead of one larger machines the robot investment is about reducing the people cost included in the product And in actual fact, we started that first in the Nordics, and that was the sort of trailblazer for us, the art of the possible. We've got three shifts in the Nordics, and one of them has got no people on it. And that's an example of what we think we can do in the future. OK. Shall we go to Rob next?

Morning, Rob from Berenberg. Thanks for the presentation, guys. So three questions for me. So firstly, just on addressable markets, we obviously see very impressive slides on the 12% CAGR over the last 10 years. So if you were to do that again, is there enough in the current addressable markets that you have to achieve that or do you have to look more widely? Secondly, in terms of transactions in the space, clearly Fantech was the last big one you've done, but there's been a lot of other things going on. Do you have any desire to do more in data controls, et cetera, which seem to be prominent? Would you like more of that in the business? And then thirdly, on Germany and Central Europe, quite the improvement in the year with kind of good constant currency organic growth. I guess how much of that is market versus focus versus internal management decisions? And is there any benefit from the German fiscal spend plans?

OK, first to M&A. Yeah, absolutely. Not concerned about the runway of opportunity on M&A. Yeah, so, yeah, you're quite right. You know, if we compound at 12% per annum, I'm sort of doubling the size of the business every six years and... That's why we're proud of the slides that we put up, because that's the sort of track record. We're generating the cash to do it, so there's no doubt about continuing along those lines. Want to be a little bit circumspect and sort of private around what we're doing, but there's plenty of stuff that we're looking at and optimistic about continuing on that trajectory, Rob. And I would say that if you look at the three geographic areas that we're in, UK, continental Europe, and Australasia, I think it's fair to say that it could be in any one of those. We've talked about having a low market share in commercial in the UK, although I do think there's a super opportunity to go fast organically. But notwithstanding that, we could also add things on. In Europe, we're still very small. We're underweight in quite a few geographies in Europe, so we'd love to do more there. And of course, now we've got a strong presence in Australasia, I think there might be adjacencies that would make sense for us in future. I just want to remind you that Phantech is something that if we'd have turned up 10 years ago, I think you'd have been surprised and said, why have you acquired a more commercially focused ventilation business the other side of the world but as an adjacency to having a strong residential position in the region already it wasn't really a surprise and I think what Phantech and acquisitions like it do for us is they create additional adjacencies that we may or may not be able to consummate over time. So that was the Yes, that was one and two, wasn't it? Yeah, I mean, there was a specific question around sort of data control. Oh, sorry, yes, yes. Been some really big deals in the data market. Samsung made a big acquisition of Flatwoods. It's an interesting one in terms of long-term growth prospects i mean it's it's certainly a bit of a bubble at the moment and there's some very attractive growth but i'm also hearing that maybe some of those projects are being delayed aren't happening and so forth um we've had some insights around some of those deals and some of those numbers we do have some niche data centre applications as being in certain markets and providing air movement. But I wouldn't say necessarily that we would see that making a beeline towards that. I mean, look, if you're doing it inorganically, the competition is going to be stiff and people are going to pay very high multiples. And I think we'd struggle to make the return on invested capital returns that we expect to make. And that sort of M&A discipline is essential for us. We're only delivering this 12% return on invested capital because of that discipline, and we mustn't give up on what's got us here so far.

Just quickly, again, to add one more thing on that, sort of transactions and what might be there. We've said in the past that if roughly half of what we do are things that we've developed internally, we've known for many, many years, and the other half are really good ideas that come to us, we do get some bad ideas as well, but they're inbound ideas that we then have a really good look at. I think it's fair to say that the volume of inbound ideas has grown exponentially over the last few years. And why is that? It's because our profile is so much bigger, our range is so much wider. And so people are coming to us with, well, first of all, they're aware of us in a way they weren't before. I think we've got a reputation as good acquirers. And I think more ideas will therefore come through that channel as well as the... sort of organically generated ones, if that's the right phrase. And then your other question, Tanya, on sort of Central Europe. So look, 6% organic growth, constant currency in Central Europe, but a very mixed, you know, we're not going to, but if I was to give you each individual country within that, it's quite a disparity of outcomes. And I think where we've done particularly well, Klimerad, ERI, you know, absolutely specialist in their area, hitting the sweet spots and also in both of those cases, you know, very much underpinned by sort of heat recovery and heat recovery being the driver of the future in key markets. So those two have gone exceptionally well. Some of the other, Germany's been difficult. Germany's still difficult. We think that's, you know, that it is just a tough market at the moment. We think we're well positioned and we think we can do more as the market picks back up. And then other places. France, we had a nice result this year, growing well organically, but it's small. And our aspirations there are definitely bigger than the business that we acquired, because we acquired a very small position in a relatively large market. So a mixed picture. But I think overall, the European market per se hasn't been super supportive and super helpful over the last few years. Let's hope it starts to pick up a little bit more moving forward. Clyde.

Thank you. Clyde Lewis at Peel Hunt. I think I've got four. Apologies. Cost pressures and pricing. Can you just give us an update as to what you think you've got ahead of you for FY26? I mean, obviously, it varies a lot across different markets, so obviously fairly broad on that front. In terms of the volume mix split, that 4.5% that you put up, it would be really interesting to understand probably the UK dynamics of particularly in the UK number is obviously higher because obviously you know if you're swapping out a couple of fans within the UK new house for a heat recovery unit there's obviously a huge mix issue there be really useful to get an update on what's happening in Australia New Zealand in terms of regulation as to whether there are any sort of new drivers coming through on that side of things. And the last one was probably on the competitor environment. There has been consolidation in a number of markets. Have you seen any areas where there's been a noticeable change in the competitive pressures at all?

So look, I'll take the first two and I think they sort of flow into each other and hopefully relatively quick, Clyde. So 1.2% price and then the 4.5% volume stroke mix. In fact, I'll do the second one first. So the 1.2% price, it's a very similar number in all three regions. So effectively, therefore, the balance to get you to your organic growth is the volume mix. So of course, the UK being 9.5% means that there's a higher volume mix there than there is elsewhere. And we've always said 1% there. How do we get to our 3% to 5% long-term target? Roughly 1% for like prices is what we think of as a norm inside that number. So I think you think about all the markets being relatively normalised in that context. you know, cost pressures. Ronnie sort of alluded to it earlier, I think the two places where there probably are still things that we have to keep constantly watching on, you know, people costs, and particularly in the UK, it's been the national minimum wage, national insurance, you know, let's find out in a month's time, but hopefully there's not new delights coming our way. But that's obviously not been helpful. Facilities and sort of infrastructure type costs. We lease essentially all of our buildings and premises across the globe, and when they come for periodic rent reviews, they never seem to go down. So those are probably the two bits where you get the most. But then we're always looking at the product cost level. I think we're carrying on doing what we always do, and hence our organic gross margins have carried on nudging up. So I think we feel well positioned with that. And I think in terms of future price, where we sit now, we'd probably expect to carry on... We're now back into a rhythm, I think, of announcing pretty much annual increases of different levels in different places. And maybe it comes out at somewhere between 1%, 1.5%, 2% overall, depending on inflationary pressures year to year. But I think we're in a relatively normal state now.

Just to add to that, the relentless focus on what I call value engineering and cost out initiatives in the business is a delight. We put 50 basis points organically on in spite of all those headwinds and the runway of opportunity there is as strong as ever and we've got opportunities in Fante and elsewhere. I think the inflationary environment is probably less inflationary in the next 12 months than the last 12 months. But I would say that the opportunity for us to self-help and improve is as strong as ever. So I think we're reasonably confident. I think the issue for us is around how do we grow top line. I'm not saying we're not concerned about protecting margins, but I think it's a well-oiled machine. Regulations in Australia and New Zealand. I think it's fair to say in New Zealand that the economy has been better recently. We alluded to that in the detail of the statement. So I think we're getting a bit of help in New Zealand. We're moving towards more continuous ventilation in New Zealand and we're seeing some regulations around air purity in the workplace or air purity in commercial industrial applications that will help us. And it's some way off, and I know this isn't regulatory, but we've got the Brisbane Olympics coming up, and look, from an infrastructure perspective, Fantech is better placed than anyone else to capitalise on this. So a bit early yet for this financial year, but that runway of opportunity into the future will be really helpful. And look, I just think the way that we're coordinated on regulations now between Australia and New Zealand, the different brands and the competence that we have is really helpful in terms of leveraging that. So pleased about where we are and just a couple, a cost reduction margin point and New Zealand. We've owned EVS now for two and a half years and we've made huge strides in improving the cost price of the product whilst improving the proposition and that's seen quite a substantial gross margin improvement, albeit the proposition itself in the region is quite small. And then the fourth question was around competitor environment. This is quite fragmented still, Clyde, I would say. Our competition tends to come more locally. We could sit here and reel off the top two or three competitors in UK commercial, UK retail, and then if you went to Germany. They're not necessarily the same. I would say as a sort of more consolidated international group, we're probably... up there now in terms of volutions. So that just gives you an indication of the sort of fragmentation of the market, which comes back to Rob's earlier point about can you continue to acquire? Absolutely, because it is still very fragmented as a market. Right, so we'll go Charlie there and then we'll come to Christian next.

Thanks very much. Charlie Campbell at Steve. I've just got two, please. On the UK future home standard, we might hear something soon. Is that a further step change in ventilation in the UK? And then secondly, KlimaRad, you now own 100% of that. Does that make it easier to extend that proposition out into other markets than maybe it's been in the past? And is that an opportunity for you?

I could do the second one because it's so easier then. So I think when we acquire businesses, whether they're running under earnouts, whether they're running under, in that case, the sort of 75-25, we try to be transparent from day one, Charlie, make available everything in the group on day one and encourage them with the opportunities on day one. But we are decentralised, so we don't go into a new acquisition and say, thou must sell this product over here or you must get that product into your market. We share the ideas, we encourage the ideas, and they then move at the pace that they move at. We've got a little bit of traction over the last couple of years on getting the Klimerad proposition into Germany. Can that go faster? Hopefully yes. And I think the structure change that Ronnie mentioned with the regional MDs, so effectively our Klimerad MD is also now responsible for the German business. So that, rather than the change in 75% to 100% ownership, That should help it, of course, because if you've got the same person looking over both businesses, it's easier to knit all the pieces of it together. So that's something we're focusing on. And it's not just Germany. Hopefully, it's other markets. But I think Klimerad is very, very strong in the Netherlands. It's always that balance between... adding the new bits but not losing your focus on where you're particularly strong as well. But it doesn't change as a result of the acquisition, I guess, is the message.

Future home standard? I mean, absolutely, but it will take time. We've talked about how regulations have a sort of offset time and gestation, but look, future home standards will be very helpful. We're seeing now some communication around HEM, home energy model. I don't know if that's come across your radar more recently, but moving from SAP. So SAP, the standard assessment procedure is moving to HEM, which is the home energy model. And we're firmly involved with the consultation on all of that. So Lee Nurse chairs the UK Trade Association for Ventilation in BEMA, also represents BEMA at the future home standard consultation, and we see the direction of travel as really quite exciting, but we'll take time. And the reason I mention Ireland there is that I think UK bodies are looking at Ireland as a really good example on two fronts around heat recovery. One is that the proposition going in really well and the benefits to the home and the decarbonisation, but also the install the install governance because heat recovery is more complex and what we have to make sure of is that these products are installed properly and they perform as intended. So we've got some really good insights there from Ireland and we're able to help with that. But yes, absolutely, heat recovery and continuous ventilation in new homes are the predominant solution but heat recovery is still secondary to continuous and that one day it should be pretty much exclusively recovery in a new home. Why wouldn't you? Christian, yes, and then we'll, sorry, David, and we'll come to you.

Thank you very much. Christian York from Deutsche Bank. Just two questions from me. First of all, just be interesting to understand the difference in average sale price between UK social, UK house building, UK private RMI. I know that wouldn't be a like-for-like product, but it's more around the difference mix going into those end markets. And then the second one, just on that 26% EBIT margin in the UK, how sustainable is that going forward? Is there a mixed dynamic, which means it sort of falls back a bit, or actually is it that the mix is all moving in the right direction and that's not going to come back and all the structural stuff you're doing and costs, you know, that's there. And we should think about 26 being the right number going forward.

Okay, I can sort of do them together. Private refurbishment is lower. In the past, I think we've used a slide where we talk about ranges, but private housing refurbishment ventilation equipment ranges from a sort of entry at maybe 20, 25 pounds to 100 pounds at the top end, but there's not so much at the top end. So if you look at the distribution across that range, it's probably more 30, 40, 50, but there is a distribution. And our approach to private refurbishment forever has always been, you don't have to have a noisy extract fan at home. There are silent ones and quiet ones and aesthetically more attractive ones, and that's the upsell. And of course, with the largest sales force in the UK across multiple brands, that's the proposition that we push. And quite frankly, if you're not pushing that, what are you pushing? Because it's not so regulatory driven. Social housing, the range of price point is probably 70 to 250, 250 pounds a unit. But I would say the sweet spot is probably 90 to 110, 120. A new development that we put into the market more recently was to piggyback some infrastructure that's supplied into the home from another brand, Switchy. And we coupled with them to provide ventilation equipment that can provide the housing association with life statistics around humidity, temperature, and so forth. And that's a premium. That's an upsell for us. And we integrated that technology and we partnered with Switchy. And the sales are quite small at the moment, but it's an opportunity to upsell. And then on residential new build, the range has moved up because it used to be 20 or 30 pounds a unit or maybe 100 pounds a home. It's probably moved to 200. And when you move to heat recovery, you're up at 1,000. And there's also all sorts of other products that we're putting into new homes now. Part O is looking at cooling and overheating risks and we've got some quite innovative solutions that are not air conditioning based but provide purge ventilation in the summer when you want to cool your home and they're eminently more sensible because they cost less to run, easier to install and the price is lower but nevertheless attractive. us and that comes back to the sort of gross margin our gross margins across the business are broadly similar so if you look at the group then you would say that you know plus minus five percent is the sort of range so margin sustainability I certainly wouldn't predict that things come off over time I think we're in a nice position at the moment So yes, absolutely sustainable. Believe it or not, this is a market that I think tends to compete more on the proposition, on the innovation, on the service, rather than necessarily the price. Not that we would do this, but if we used price as a vehicle, and we could do, of course. We think we've got a cost leadership position. But if we used price as a vehicle to try and attract more volume, I don't think it would make any difference. So yeah, so sustainable, and hopefully that gives you a bit of an insight on the price point ranges. Okay, David.

Hi, thanks. David Farrell from Jefferies. Three hopefully quick questions. First one around the new regional MDs. Can you talk to how they're incentivized? Is it the same as the executive management team? Second question on Fantech. Does that have an order book and therefore what kind of visibility do you have in the year ahead? And is that order book up year on year if there is one? And then my final question around Nordics, obviously sounding a bit more positive about that. Is that because of orders you've seen come into the group already, or is that just an expectation around interest rates feeding through to high levels of activity?

I don't mind taking the last one, if you like. So there is definitely some key project activity that we've seen that's now coming into the order book. But I think what gives us a bit of confidence, David, is the most challenging bit of the Nordics for the last couple of years has definitely been residential new build. So I think the residential refurbishment has not been growing phenomenally strongly, but it's been very resilient. And I think it is definitely in growth territory. And the bit that's been holding it back has been new build, which for us is particularly places like Denmark and Finland. I think a combination of the succession of interest rate reductions that have happened in the region will definitely help. We were out in Denmark a few weeks ago with our country manager there, and the view was that whereas a couple of years ago there was a huge glut of unoccupied, already built speculative apartments in particular in Copenhagen area, and therefore effectively the market just didn't need much by way of new build, that's largely worked its way through the system now. So we've not suddenly seen a take-off of activity, but it's back into a balance at which we would expect to see activity picking up. So I think for us it's new build hopefully getting better. We talked a little bit about the metal investments that we've done in the report. That's about us being more competitive with some of these slightly larger projects, aside from then the residential refurbishment, which we think remains pretty resilient. So I guess that's our grounds for...

bit more confidence hopefully in the outlook regional managing directors so started to sort of socialize this internally over over a year ago all three regional leaders are promotion from within which is really helpful incentivization if you think about their variable element of pay there's a big focus on the annual on their regional areas and what they influence but then when it comes to long-term incentives and that's not just for our regional leaders of course from a sort of PDMR and external communication perspective you see Andy and I but we've got a long tail of senior managers and mid-managers now that are linked to the LTIP on an identical basis to us. Absolutely identical. No change. Strongly believe in that. We want alignment. We want our managers to feel as if they're shareholders in the business and be aligned with the initiatives that we're trying to drive. like i think it's an exciting place if we can continue to grow the group at the rate that we have been they benefit from our success and i'm delighted if if they do so because they deserve it so i think that works um really well and then you had the question on fan tech visibility a bit more visibility in fan tech on the commercial side our residential visibility particularly in distribution is days It's quite scary. If I look at October, we don't have enough of an order book across the group to meet our October revenue. But don't worry, orders come in every day and that pipeline gets populated throughout the month. But on commercial, there's a little bit more visibility around projects. And of course, we've got this sort of more medium term indicator around the quotes. We have something called the fan selector program in the fan tech business, which is quite an integrated selection tool that consultants use to select our products and we can see what they're selecting and what's being quoted and so forth. So I think the outlook in that region is positive. And the question you asked specifically about is the order book bigger now than it was, But I didn't know the fact that the order book tends to follow roughly the revenue piece. And I've said that the revenue is growing. The order book is growing in line with that. So, yes. Okay. I think that's perfect time. I don't know if there was any other questions. No questions online. One minute to go. Well, look, brilliant. Thank you very much. Full room. Lots of interest. We're delighted and we're positive about what comes next. So, thank you very much.