Strix Group Plc

Good morning everyone and thank you very much for joining us today. As Hannah says I'm Gary Lamb, I'm the chairman. What I'm going to do is just a very brief introduction ahead of starting to go through the slides. So you'll be aware that over the past few months I've had the opportunity to spend some time in the business to support the exec team and especially Clare following the announcement of Mark Bartlett's departure. I found this time very helpful and insightful enabling me to get a clearer understanding of the challenges and opportunities the business faces and importantly making sure we recruit the right person to lead the company. We will cover some of the challenges and opportunities as we run through the slides, but I would like to say that what has come very clear to me over the past few months is the need for a step change in leadership, market engagement and commercial focus. These are the areas we have to improve and I believe Andy's addition will make a significant difference. Over the past year we have focused on stabilising the business and of course the sale of Billy helped us improve our balance sheet and set the foundation for the future. So we're now in a position where we have some cash to invest, we have fewer distractions and an ability to focus on rebuilding this company under Andy's leadership. So that was a brief introduction, what I'm now going to do is I'm going to turn to the first slide. So this year has been a year of transition. You'll know from the changing of our year end that we're going to be covering a longer than normal trading period. The 15 month period ended the 31st of March this year. Changing the year end gives us a clearer and more consistent view of the seasonality across our end markets and importantly should help us improve forecasting accuracy going forward, something which is vitally important. In terms of financial performance, Group total revenue for the period increased by 6.2% to $153 million due to the longer trading period. Looking at the underlying 12-month period to the 31st of March 2026, compared with the 12 months to the 31st of March 2025, we saw revenue in our controls division decline by close to 24%. This reflects the challenging macroeconomic environment during the period, alongside increased competition within the sector, which we will talk about in more detail later. Against this consumer goods performed strongly with revenue increasing by 12% supported by higher volumes of bespoke filters and appliances. Billy also delivered a stronger performance during the period with a predisposal growth of just under 10%. Despite the challenging macro or market backdrop, profit before tax remained within our forecast range at 10.1 million. We also completed Disposal Billy for an enterprise value of 110 million. This represented around three times our original investment for when we acquired the business back in 2022. The Disposal has delivered a number of important benefits for the Group, including strengthening our balance sheet. The net cash of almost 40 million gives us greater flexibility and the ability to invest in the future of the business. and importantly, we were pleased to have returned 13.7 million to shareholders through a tender offer and a buyback as a result of this transaction. Again, more on that later. Alongside this, our cost optimisation programme remains on track and we now expect to secure savings in excess of our original target of 2 million. So overall, we are pleased with the progress we have made, both in the work we've completed and the initiatives we put in place for the future. We believe Strix is now a better position for the future with a clear focus on our core operations and a strong platform from which to deliver growth over the coming years. Finally, since the period then we announced the appointment of Andy Rainforth, our new Chief Executive Officer, following the departure of Mark Bartlett. So I'm delighted to introduce Andy, who joined us this morning. I'm going to hand over to Andy now to give a brief introduction.

Good morning everybody, thank you Gary. So I'm Andy Rainforth and I thought it'd be useful and pertinent to just give you a little bit of background as to who I am, some of the roles I've held before and really my approach and why I've joined Strix at this point and my approach going forward. I have a background as a mechanical engineer. I've worked in manufacturing my whole career, manufacturing physical products, so I understand the importance of operations globally, product development and product portfolio management. After becoming or moving into commercial roles, I've had a variety of sales and commercial roles and management roles that are focused on both commercial strategy, but leading commercial sales teams as well, primarily in complex international businesses. have typically been complex portfolios in complex geographies. So manufacturing at global footprint and selling at global footprint. So a lot of familiarity when I look at Strix and its current portfolio, its current footprint, there are a lot of things that are familiar to me. In terms of Why Strix and why now? I think the timing is crucial. I think that post Billy, the business is in an inflection point, a really exciting opportunity with dry powder and financial assets at our disposal to deploy as we look for the next growth engine and reposition our business. I think in terms of the technology is interesting to me and I look at this in two parts. One, our human capital and our know-how, our subject matter expertise in the markets we're playing today and also the ambition and entrepreneurial spirit to move forward into new white spaces. but also in terms of our manufacturing technology our world-class facilities that we have in in China and Italy and how we can leverage those and the capabilities that lie within them to attack new markets particularly but also get better at what we do and I think really in terms of team I think is the important thing we were very deliberate and very and so on and so forth. Incrementally in the recruitment, the way that I joined this business, I had opportunity to speak to everybody in the executive management, the senior leadership team and our divisional leaders in our controls business and in our consumer goods business and spend a lot of time with Gary and with Clare. And I think the important thing in that is that because Gary has been Sailing the Ship for the past few months. He is able to offer insights that a normal chair may not be able to to an incoming CEO. So that is incredibly useful as I hit the ground and predominantly the conversations I had with Clare and that seems somewhat endless at times about our conjoined desire to move this business forward. So this will not be a relationship where I sell things, Clare counts things. This is a relationship where we are literally shoulder to shoulder and conjoined almost with our approach to the market. I think in terms of where we go from here as an organisation, Thank you very much. Thank you very much. but I also think that there is opportunity to sell new things to new clients in terms of white spaces in both of our current divisions. I think there are some relatively obvious things that we should investigate that again are a little bit different to what we do today but leveraging the technical capabilities that we have in our organisation. Three weeks and three days in, I have a lot more questions than answers at this point. My next few weeks are going to be spent continuing to interview everybody who works on the Isle of Man and the UK with plans to visit our Italian facility in September and our Chinese facility in October, which will coincide with the Canton Fair. and so we are very much working on strategy as well at the same time as making immediate incremental improvements to the business and the executive management team has done an awful lot of work on a strategy document that says this is the areas that we should be investigating and I'm currently validating that hopefully adding some value to that and being a little provocative about some of the areas we may be able to move into as well to test the validity of that. That work is ongoing, working towards Capital Markets Day later in the current fiscal year, where we'll be able to share a lot more news about the future direction at that point. So I'm going to hand over to Clare to run through some of the results.

Thank you, Andy, and thanks, Gary. Before we get into any of the detail of divisional results and balance sheet movements, as normal, I wanted to take us through the high level financial highlights for the period that's gone. Now it is a little different this year because of the change in financial year end to 31st of March. In line with accounting guidance, the numbers in the financial statements are very much focused on the 15-month period ended 31st of March 2026, which we're calling PE26, versus the year ended 31st of December 2024. However, comparing a 15-month period to a 12-month period makes it much more difficult to understand shifts in underlying trading. And of course, the other circumstance we've had this year is the disposal of Billy, which brings its own complexity to the group's results. To counter those challenges, I will be presenting some PE26 numbers, but I will also be presenting some numbers for the 12-month period ended 31st March 2026 versus 12-month period ended 31st March 2025. In addition, I will make it clear when I am speaking about only our continuing operations, i.e. controls and consumer goods, and when I am speaking about the total group trading results, i.e. still including Billy. You will see if you look at the CFO review in the annual report that we have also presented far greater analysis this year in terms of tables and narrative to make this period more comprehensible. But enough build up, let's run through this slide. As previously reported and as mentioned by Gary, we have undoubtedly seen some macro and market challenges in this 15 months in the controls market, which have impacted on our results. However, we are still reporting a revenue increase of 6.2% at constant exchange rate for PE26, albeit that is really due to the longer trading period. However, if we instead look to continuing revenues for the shorter 12 month period to 31st of March 2026, we see that these have reduced by 12.8%. We will talk about divisional trading a bit later, but in summary, this reduction is all coming out of the controls division due to the unsettled macro environment and increasing competitive pressure. In contrast, consumer goods have reported double digit growth, particularly in the bespoke water filtration and appliance manufacturing part of the business. As expected, when you look at continuing gross margin, we are also seeing a decrease in the period. Again, this is predominantly to do with the trading challenges and the controls division. As usual, more detailed divisional slide is coming next on this. Continuing adjusted EBITDA for the 12 months ended 31st March 2026 has also decreased at both margin and pound note level. This largely reflects the reduced gross margin, however it has also been impacted by negative operational gearing. The business has worked hard in the period to keep overheads level, despite investments being made in certain key commercial areas, especially in the consumer goods division. However, maintaining level overheads against lower revenues does have a naturally negative effect on EBITDA margins. Looking ahead, the business is not standing idle on costs. As Gary has mentioned, we have been working hard on cost optimisation and we are already on track to secure gross annualised savings, i.e. before investment, in excess of our previously announced £2 million target. Looking at the last two boxes, the change in our balance sheet position has obviously been marked as a result of the disposal of Billy, taking us from a net debt position to a net cash position of just shy of 40 million. However, I don't want us to lose sight of the rest of the good cash generation work that has been achieved in the period, as the business has continued to drive balance sheet efficiency, even given the now net cash position. Over the last three years, the Strix business has consistently secured extremely high levels of cash conversion. I remember telling you guys when we hit 106% cash conversion in financial year 23 that there were limits to how sustainable this could be. However, the truth is that as a result of the accelerated debt reduction plans we put into place following the half-year announcement in September, continuing operating cash conversion has climbed even higher, achieving just shy of 120% in PE26. We told you the around 50% operating cash conversions reported at half-year was a temporary blip, and my goodness, we have held to our word. So that is the highlights. If we move on to the next slide, we can speak about gross margin in a bit more detail. And here we are looking at PE26 versus financial year 2024. Now before we go any further, in the spirit of full disclosure, consistent with the half year, we have adjusted the way that we calculate divisional gross margins here. We have reclassified certain costs, including those relating to Group Departments, as central costs, rather than allocating them out into the divisions. This change allows for better analysis of underlying trading performance, effectively with fewer distractions. Overall gross margin obviously continues to take all costs into account and so there is no change there and equally obviously we've restated to comparative so that we are comparing like we'd like. But going back to the PE26 results as mentioned and in part as expected we've seen a decrease in our overall gross margins of 590 basis points. As you would expect the main reason for that decrease relates to our controls division as you can see here. For controls, gross margins have decreased by 610 basis points. As we've discussed, PE26 has been a challenging trading period for the controls division and the gross margin has seen the negative impact of two main factors. The first and the most important is simply lower regulated, less regulated sales over a semi-fixed cost base. On top of that, the ongoing weakness in the US dollar has had an impact as we sell around about 50% of our export controls revenue in US dollars. Looking ahead we do expect to see pressure on controls gross margins continue due to the ongoing volatility in commodity prices, the US dollar and the continued rollout of new lower priced products which are affecting our average selling price. That's not the same as saying we expect to see gross profit as a pound note level decline and we'll talk more about expected market share growth opportunities in a few slides time. On the other hand, our consumer goods division has seen a good uptick in margins, increasing nearly 300 basis points on 24th. Approximately half of this is the opposite effect of higher sales over a semi-fixed cost base due to the accelerated 12% growth in the period. The other half reflects an ongoing shift towards higher margin business, especially due to higher volumes in the bespoke water filtration market. Looking ahead, we expect to see gross margins remain broadly consistent in our consumer goods division at around about 30%. Finally, and it is worth touching on this as Billy remained part of the group for 13 months of the 15 month period, as expected, we saw margins remain around the 45% in the Billy division prior to disposal. So if that is the income statement, if we turn on to the next slide, we can see what has happened on the balance sheet side. and to understand this we have included our usual net debt bridge which I'm very pleased to report has of course become a net debt for the net cash bridge this year. As we said at the beginning of the presentation the disposal of Billy has brought a marked change to the group's balance sheet with 102.5 million pounds of net cash proceeds coming in in the period we have moved very resoundingly from a net debt position of 63.7 million to a net cash one of 38.7. But this isn't the only thing that has happened. We spoke about exceptionally high continuing operating cash conversion earlier. But the biggest part of that, as it says there, was the £8 million reduction in the manufactured stock at our China side. This was against an end of September 2025 peak, but it still represents a £4 million decrease on the opening position. We don't see the benefit of all of that in here in the 2.8 million on that bridge as this reflects the total group position and before we disposed to Billy we did see a planned increase in stock to get them ready for the head office and manufacturing site move in Australia. One metric that we like to keep an eye on is working capital as a percentage of sales. And as you can see here, due to the concerted efforts made for the continuing group and due to in the 12 months ending 31st of March revenues as the basis, we've seen this reduce significantly from around 15% in March 25 to just under 10% in March 26. This is a fantastic achievement, especially for a business that derives around a third of its revenues in the Italian market, well known for its heavily extended credit terms. Capital investment in the period has remained highly targeted and relatively low against prior years at 8 million for the 15 months versus to 8.2 million in the last calendar year. This has been focused predominantly on key investments into the low cost and next generation production platforms and the Billy Sight move that we did at the end of the year. Whilst lower than 2024, interest in the period was still 7.4 million. It is worth noting that given the now net cash position, we would consider only about half a million of this to be recurring in future years. Removing this significant drain on cash retention obviously provides a huge positive to the Group's overall liquidity. I'll talk about shareholder returns today in a couple of slides time. So if that's a high level financial results, over the course of the next couple of slides, I want to take you through a few other topics, starting with a little more detail around Billy and the disposal. One of the first things I wanted to do was remind you all that this wasn't a simple acquisition and disposal. Strix created a huge amount of value in the Billy division whilst it was under group ownership. Following acquisition, we strengthened the Billy leadership team and operational teams globally. We put in over 100 new heads into the business. We invested a lot of time in enhancing customer service infrastructure. You may well remember the Trustpilot scores here in the UK increasing to 4.9 as a result. We built the Billy UK team and business from the ground up, recruiting new people, finding new premises, putting in a new IT system, and building out the commercial customer base and Billy brand in the market. We also opened the flagship London showroom in Farringdon in May 2023, which proved instrumental in establishing Billy's place in the high-end commercial water filtration market in the UK. We accelerated international expansion with a focus on the UK and mainland Europe, but also with an eye on the rest of the world, most specifically in Southeast Asia. And finally, at the end of 2025 calendar year, we supported the Billy headquarters and manufacturing site to relocate into brand new premises in Melbourne, Australia. Having said all that, disposing of something for approximately three times original investment value after only three years of ownership remains a very good rate of return. And just as importantly, that successful disposal has been transformational for the Group. It allows us to repay 80 million of RCF debt back in full and exit the year with just under 40 million of net cash, giving us a very strong financial foundation and the resources and financial flexibility to invest in tomorrow's growth. It's not just cash resources that were restricted over the last three years, it is also management time and capacity. Post the Billy disposal, Strix has left a simpler group and one that allows for a more enhanced strategic focus. We have two great divisions still within this group in controls and consumer goods. and the first time in a fair while we have the opportunity to give those two businesses the management focus, the time and the energy that they deserve to drive profitable growth and value creation. I'll leave Gary to take you through that in a bit more detail later on. Turning on to the next slide, I only want to touch on this one reasonably briefly as we are currently in a period of transition in regard to capital allocation. But I do want to make it clear that for Strix capital allocation is something that is hugely important and putting in place the right fit for purpose comprehensive capital allocation framework is going to be instrumental to the medium term success of the Group and our value creation plans. However, this is not something that we can conclude on in isolation, as it needs to naturally evolve over the course of the coming months as we further review, align and focus the strategic direction of the Group, taking into account investment in growth opportunities, but also balancing capital discipline and shareholder returns. Ahead of that comprehensive process and due to the scale of disposal proceeds, the Board felt confident to take some short-term actions, which have already led to the return of £13.7 million to shareholders to date by both a tender offer and the Share Buy Back programme. As you know, following the successful tender offer, we have currently paused that buyback programme simply to allow the wider commercial reassessment and strategic planning process to complete. Once that happens, as it says there, and as Andy mentioned earlier, we very much look forward to coming back to speak to you all about strategy and capital allocation as part of the capital market stay later in the financial year. And if we move on to the next slide, what I want to do now is just take us through the trading in our two trading revisions. Starting with controls, I will cover the next couple of slides which take us through the year just gone and a bit of history and then I'll hand over to Gary who will give a bit more of a flavour about what tomorrow looks like and how we are looking to build for the future. Let's focus on the year just gone first and here to aid understanding I am talking about the 12 months ended 31st of March 2026 versus March 25 where we reported revenues of just under 53 million and around 24% down on the comparative 12 month period. As previously reported, there can be no doubt that this has been a challenging 12-month period, most especially across both regulated and less regulated markets. The introduction of US tariffs at the beginning of April 2025 significantly disrupted customer ordering patterns and reduced volumes in the market. And at the same time, it provided the perfect breeding ground for competition to increase, bringing with it higher pricing pressures in some of the more price-sensitive parts of the market. and this is pressure from top tier Chinese control manufacturers, I'm not going to call them copyists, who have begun to operate more aggressively in what has been a multi-year period of sustained marketplace uncertainty. As previously reported, we saw the impacts of this over the course of the year in a reduced regulated market share. The majority of this has been felt in the fast growing, more price sensitive US regulated market. However, it was not exclusively there, and we have seen some market share erosion in other Western markets outside of the UK. We've also seen a degree of erosion in the more price sensitive, less regulated market. The final headwind in the year came in the form of the weaker US dollar that I mentioned earlier. We transact about 50% of our controls revenues in US dollars and therefore weaker dollar does impact negatively on the relative values of those revenues. However, whilst it is important to recognise what has happened over the course of the period, it is not all doom and gloom. We have already taken action to navigate these challenges and to position ourselves for the future. The successful launch of low cost range and next gen controls gives us the ability to approach the market in a different and more relevant way. These lower cost products enhance our competitiveness, expand our addressable market and are already showing some signs of supporting a recapture of market share. We have continued to be disciplined in how we approach the China market. There is no point in selling volume at a loss. However, it is fair to say that with the new low-cost controls, again, we do have more avenues opened up to us in this market than before. The targeted price surcharge program that we successfully implemented around period end has gone a long way to offsetting elevated copper and silver costs. and the fact that we and the competition went through similar processes in this regard shows that while sales price does matter, customers are willing to understand and respect that inflationary costs cannot simply be met at the supplier level and similarly it is clear that our competitors are also not prepared to swallow cost inflation in order to gain share. As a final piece of positive, the other thing to note is that whilst volumes did remain lower than in prior years, we did also start to see an improved trading momentum towards the end of the period, just carried on into quarter one of 2027. So if that is the year just gone, if we turn over to the next slide for the first time, I wanted to take us through a little bit more detail in terms of a longer term market view. The first thing I want to do before we get into any detail on this slide is to draw your attention to the comment at the bottom of this slide as it is important context. There is no perfect information out there on the Kettle Controls market. You can Google Kettle Controls rates and you will get an answer. I think it's around 5% at the moment. And whilst that answer is not entirely incorrect, it is also not entirely useful in order to understand our results as we do not play evenly in all markets. As market leader, we have perhaps the best combination of internal and external data sets at our disposal, and we have combined those to come up with the high level view you see on this page. However, this is a high level view across multiple years, global markets, customers and friends. It is unlikely to fully align with other information that is publicly available, but it is our best high level estimate. Since Strix reported peak pandemic controls revenues in 2021 due to extremely high consumer demands, the kettle control market has seen a consistently unsettled macro for all sorts of reasons. In fact, in line with many other ultimately consumer facing industries, the only consistency we have seen is a sustained uncertainty due to conflicts, cost of living crises, supply chain issues, commodity costs, tariffs, you name it, we've seen it. and what that means is that it has been increasingly difficult to understand the controls market and Strix's position in it by looking just at a year-on-year movements. Therefore, to assist understanding and to help better inform future direction, we are presenting a graph on this page that shows the main revenue movements over the last five years. And there are four main elements of this, all of which we have talked about before, but not perhaps with the degree of clarity that this bridge provides. The first one, average selling price, we've spoken about ASP reduction for a number of years and the fact that this is part of the controls market dynamic. This is not due to product price deflation, it is to do with product mix shifts. To remain relevant and protect market position, Strix has continued the introduction and rollout of innovative, lower priced and costed products into the market over recent years. The original gen became second gen, second gen becomes next gen or low cost and so on. The impact of this over the last five years has been to Elastrix to maintain its market-leading position, but it has also led to ASP reductions of 2-3% per annum. The second point is market contraction, which again we have spoken to you about before. Now this is not across the board, but our best estimates do show that excluding the US, the regulated markets, i.e. including UK and Germany, contracted after the 2021 peak and they have never recovered, remaining around about 10% below that peak volume level. As previously discussed, we've also seen a reduction in market share. In reality, the biggest part of this reduction was in the 15-month period that we're talking about this week, as what started as a macro tariff event shifted into market share loss as volume started to recover. As previously reported, in the regulated market, the majority of this was in the US market, but we did also see some impacts in the less regulated space. In a large part, this reflects relative price sensitivity. Wherever this is naturally higher, either in the US or in the less-reg market, we have seen increased competitive pressure. The final element, again, we have spoken to you about before, is Strix's reduced focus on the China domestic market. Over the course of those five years, we have seen a marked revenue impact due to the disciplined, profit-led approach to what is a highly price-sensitive market. As I said at the beginning, this is not a perfect science, but hopefully despite that caveat, the information on this slide provides useful clarity, context and understanding. I will now hand you over to Gary, who's going to focus on what we're doing about those market challenges and how we plan to build for the future.