Volution Group H2 2025 Earnings Report

Volution Group EPS Results

• Actual EPS: GBX 33.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Volution Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Volution Group Announcement Details

• Quarter: H2 2025
• Date: 10/9/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, October 9, 2025
• Conference Call Time: 4:30AM ET

Volution Group (LON:FAN) (LSE: FAN) is a leading supplier of ventilation products to the residential and commercial construction markets in the UK, the Nordics, Central Europe and Australasia.

Volution Group H2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Volution delivered 20.6% revenue growth (21.9% constant currency) with 5.7% organic expansion, led by a 9.5% surge in UK sales.
• Positive Sentiment: Adjusted operating profit margin held at 22.3% despite Fantech dilution, with organic margin up 50 bps amid inflationary and payroll pressures.
• Positive Sentiment: Cash conversion reached 109% and net leverage fell to 1.2×, supporting continued M&A after the largest acquisition to date.
• Positive Sentiment: The Fantech acquisition boosted inorganic revenue by 16.2% and is integrating smoothly, unlocking cross-sell and margin improvement opportunities in Australia and New Zealand.
• Negative Sentiment: Certain regions faced challenges: UK payroll and NI cost increases and a soft German market weighed on results, while Australian commercial saw a temporary dip pre-Fantech integration.

Presentation

[Ronnie George, CEO at Volution]

Warm welcome to Volution full year 2025 results. Nice full room. 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 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 then summary and outlook and then Q&A. I think our sort of view here is that probably 20 minutes, 25 minutes on the presentation. Just from past experience, we know there's always a good appetite to sort of go through the Q&A. We'd like to allow some really good time to go through the Q&A. For us, I've been doing this for some time now. This was, you know, a strong, a strong year for us.

[Ronnie George, CEO at Volution]

Revenue up 20.6% or just under 22% on a constant currency basis. Delighted with organic revenue at 5.7% on a constant currency basis. 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. Andy can get into a little bit more detail on that later on. Highest revenue growth was in the U.K., 9.5% revenue growth in the U.K. Very strong revenue growth in the U.K. I'll come back on that in a moment and just take you through some of the detail. Certainly supported by regulations. Volution is a regulatory underpinned story. I think this is a really good example of it. Also made share gains in the market. 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.

[Ronnie George, CEO at Volution]

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 U.K. around, sort of inflation on payroll and national insurance and such. Very, very pleased with the adjusted operating profit margin. 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 1.2x in spite of the fact that during the year we made our largest acquisition to date. Robust return on invested capital, 25.2%. We did, as I say, make our largest acquisition to date. Really good progress on ESG. We've got some detail on that. Just one other one. This isn't new.

[Ronnie George, CEO at Volution]

We talked about it at the half year, but we've established, I've established a sort of more regional structure to run the group. 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 forward. This slide, we can't help but put this slide into the deck. 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. It's really the sort of trajectory that we've been on. I won't go into each of them individually, but roughly across revenue, profit, EPS, and cash flow, ±12% compounding growth over that period. It shows the change in the complexion of the group from four countries where we had a local presence.

[Ronnie George, CEO at Volution]

That's a local presence, not where we make sales, but where we have a local operating company presence. We've gone from 30% of our revenue from non-U.K. customers in 2014 to 63% today, 5 brands to 29 brands. We have a presence in 17 countries. 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. Just a little bit under each of these. We will spend a bit more time later on. 5.7% organic revenue growth. We're continuing to invest in products and facilities to underpin this organic growth revenue proposition. Value-add acquisition, 16.2% inorganic revenue growth coming from the Fantech acquisition. Also, as I've talked about, sort of fully embedding that more regional leadership structure that I've talked about already.

[Ronnie George, CEO at Volution]

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%. Fantech, as a proposition, has less of its revenue today in what we would call the low carbon product bucket. That created some dilution in the year. Of course, going forwards, we'll report the inclusive of Fantech number, which is the 71.2%. The same story with heat recovery. The dilution is because of Fantech. Actually, organically, we improved from 31.7%-32.5%.

[Ronnie George, CEO at Volution]

On the recycled plastics, some would say that we missed because we did set ourselves a 90% target. We set that target when we were at 40%. 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%. In actual fact, the sort of drag on that improvement was more around the Nordics, where more recently, we've made some really strong progress. Just one other one I'd like to pick out on the slide there is the accident frequency rate that improved in the year. Ultimately, Volution is a place where we want everybody to come in in the morning and go home at night. Delighted to see that with the extra effort that we're making around health and safety and so forth, our frequency rate improved in the year.

[Ronnie George, CEO at Volution]

That was a very quick overview from me. I'll hand over to Andy to take you in a little bit more detail now.

[Andy O'Brien, Group CFO at Volution]

Thanks, Ronnie. Morning, everybody. 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 comps. The lines all make sense. 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. 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 onto when he starts to unpick the individual markets.

[Andy O'Brien, Group CFO at Volution]

5.7% organic growth. Our target range, you'll remember, is sort of 3%-5% that we've stated at. Supplementing that, obviously, with Fantech, our largest acquisition to date, which has gone really, really well. I will then, in the subsequent slides, and then I say in the market, go into a little bit more around some of these key pieces. I guess, you know, 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. That's always at the heart of the business model because that is how we fuel M&A. Obviously, that is how we deliver our returns. To do that this year was even more important than normal years. To end the year at 1.2x leverage, having spent AUD 220 million, GBP 110 million on the Fantech acquisition.

[Andy O'Brien, Group CFO at Volution]

Plus, of course, we did also complete the buyout of the balance, 25% of ClimaRad in the year. A meaningful amount of expenditure on M&A, but still ending with the balance sheet in very good shape there at 1.2x leverage. This next slide, 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. Just to sort of help the analysts out, and again, they will probably have read this in going through the more detailed statement, a couple of the pieces that then sort of go below operating profit. 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 ClimaRad purchase. Our finance costs were up about 40% year-over-year to just over GBP 9 million.

[Andy O'Brien, Group CFO at Volution]

Tax rate was basically unchanged. In fact, it was exactly unchanged year-on-year. It was 21.8%. What should have happened is Australasia being higher tax rates than the rest of our group. Australia's 30%. We should have actually seen that bump up slightly. Offsetting that, our growth in the U.K., particularly U.K. residential, is very much in patented products. We talk a lot about the fact that 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. We then have leveraged that U.K. patent box opportunity. 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. Really, really pleased that that still came out at just above 25%.

[Andy O'Brien, Group CFO at Volution]

That's got 2/3 of the Fantech balance sheet in it because of our three-point methodology on the balance sheet. Dividends up 20%. Slightly ahead of the rate of growth of the earnings per share. Dividends up 20% to GBP 0.108. Revenue. I won't go through the individual regions too much because Ronnie will do that in more depth in the next section. Really pleasing that within that 5.7% constant currency organic growth, all three regions grew. Yes, the U.K. grew strongest. Europe grew nicely. Australasia, very, very small bit of growth, but it was growth. 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 a thunder, but hopefully starting to show some signs of recovery. Still, we were able to show organic growth in all three. FX was against us.

[Andy O'Brien, Group CFO at Volution]

I think I've said that pretty much every year for the last few years. One of these years, FX will sort of flip in our favor. That was, again, mainly in Australia and New Zealand that that GBP 4.5 million of adverse revenue impact and about GBP 1 million of profit impact comes through from translation. Fantech obviously then coming in with the inorganic growth piece. On the strap at the bottom there, we always try to unpick how much of the constant currency growth is volume stroke mix. Those two things effectively come together. 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? The like-for-like price is now back to very much a normalized level of just over 1%.

[Andy O'Brien, Group CFO at Volution]

Four and a half percent 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 we're bottom left there, group margins nudged down ever so slightly by 20 basis points. 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 the margin that we trade at as a group. 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. In that bottom middle graph, you see how that organic margin improvement comes through region by region. U.K. and Europe, there's no inorganic effect. Those comps are exactly as they would be.

[Andy O'Brien, Group CFO at Volution]

A really nice 100 basis points improvement in the U.K., 20 basis points in Europe. Interestingly, for those that have followed us for many, many years, I remember my first couple of sets of results being asked, why is the U.K. margin the laggard relative to the rest of your group? Actually, I think this is testament to some really, really strong results from the U.K. over many, many years now. We always said, we've got a really good infrastructure in the U.K. We've got a very broad proposition. There is no reason why it won't be at or above. Indeed, that's what you now see. On the Australasia graph, we've given you three data points there. As reported, 2024 and 2025, but also showing what the 2025 organic was. If you compare that 22.7% to the 23.8%, a nice organic margin improvement in Australasia as well.

[Andy O'Brien, Group CFO at Volution]

Jumping onto the balance sheet and the cash flow, a very, very strong cash conversion, 109%. We talk about a target of at or above 90%. As you see on that top right graph there, we've hit that pretty much every year. 2022 was when we made a sort of material increase in our inventory levels to bolster customer service. Aside from that, essentially the 90% and above, you know, 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. Inside that, you know, investing nicely in facilities and infrastructure.

[Andy O'Brien, Group CFO at Volution]

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, you know, further capacity and automation in Reading in the U.K., for example, whether it be the early bits of our expansion in North Macedonia that we've talked about for a number of years. In the Nordics, where we've been adding additional metal production capability. We spent about GBP 8.4 million on CapEx in the year, which was up GBP 1.3 million from the year before. Still continuing to invest nicely in the organic business where it's compelling as well. I've already mentioned this sort of return on invested capital. This is, you know, really, really important metric for us. We've said that, you know, we are confident that we can carry on delivering returns of 20% and above, whilst continuing to invest materially in acquisitions.

[Andy O'Brien, Group CFO at Volution]

The fact that we're 25.2%, with having brought Fantech into the group is fantastic. 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. That means that we're able to bring these nice acquisitions in and still deliver, you know, very, very strong returns to investors. I don't think I need to, this is sort of a risk of repetition a little bit. This is basically showing in the dark blue, our key financial metrics for FY 2025. In the light blue, the average over the last five years. What you see with, and you know, with all of them, the organic one there does still include the 2021 versus 2020 comp, which is COVID impacted.

[Andy O'Brien, Group CFO at Volution]

Relative to our green numbers there, which are 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. With that, I'll pass back to Ronnie to go through the business.

[Ronnie George, CEO at Volution]

Great. Thanks very much, Andy. We talked about this already, Volution in 2014 and today. Of course, the Australasia only includes eight months of Fantech. The way to sort of think about the group now in terms of its geographic disposition is 40%, 30%, 30%. Quite a nice split. What we've said throughout is that over time we expect the percentage of group revenue in the U.K. to get smaller as we continue to bulk up with more, obviously more opportunities in continental Europe and in Australasia. This again is our increasing geographic diversity. You see from, as I say, my tenure started in 2012. We started to acquire in Europe and then the first acquisition in New Zealand in FY2018. Of course, this year we'd expect again that light blue box to get much bigger as we see 12 months participation from Fantech.

[Ronnie George, CEO at Volution]

A little bit of detail about the local geographic areas. Specifically in the U.K., very pleased with the 9.5% revenue growth. I mean, that's, that's, 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 U.K., but the U.K. residential ventilation increased by 9.7%. 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. 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. We made some account gains along the way there. That was a particularly pleasing step up in residential.

[Ronnie George, CEO at Volution]

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. As you work down commercial, we're still very small in commercial. We've only got GBP 30 million of revenue in a much bigger U.K. commercial ventilation market. In the year, the 6.9% revenue growth was particularly buoyed by the second half of the year. We had good strength in the second half of the year. 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, 29.4% revenue growth. Very strong, mainly in Ireland. We've got a good partnership in Ireland again around residential heat recovery systems.

[Ronnie George, CEO at Volution]

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. Our technology lends itself really well to the regulations and we've benefited hugely. We still think there's a runway of opportunity to continue there. As Andy's already talked about, you know, 100 basis points operating profit margin improvement. 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. I'm delighted that we were able to, in spite of that, improve adjusted operating profit margins. It's about future proofing. We're not just about delivering in this year.

[Ronnie George, CEO at Volution]

We've made investments in most of our facilities in the U.K., but in particular in Reading with new injection molding, 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 sq ft facility that we're equipping right now as we speak. 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 has been a little bit more challenging for us over time. In actual fact, 3.1% constant currency growth, adjusted operating profit increase of 2.5%. What I would draw out there is that we had in our Central European activities, we had strong performance from our CleanerAd brand in the Netherlands, which is mainly focused on structural refurbishment. That's a heat recovery proposition, a business that we bought in 2020.

[Ronnie George, CEO at Volution]

In actual fact, during the year, we completed the balanced 25% acquisition that took place in December. We talked about that in March, if you remember. Very pleased about the proposition in the Netherlands. We're seeing good organic revenue growth from our heat recovery, 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, 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.

[Ronnie George, CEO at Volution]

It's still a very profitable business. We still believe in the long-term prospects of heat recovery ventilation, particularly in refurbishment in Germany. The Nordics again have been quite challenging, actually showing some signs of recovery. I think this is largely to do with the fact that we've had interest rates roll over more quickly in Europe. I think our outlook for Europe is certainly a little bit more positive as we go forward. Finally, Australasia. These numbers that you look at here, they struggle a little bit with a big inorganic growth addition. 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 GBP 3.1 million of organic commercial revenue that we had in the region prior to acquiring Fantech.

[Ronnie George, CEO at Volution]

Just to remind you, prior to acquiring Fantech, Volution's proposition in Australia and New Zealand was almost exclusively residential. If we look back at the prior year, GBP 52 million of revenue, GBP 3.1 million of it, 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. 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. Overall, when you look at the adjusted operating profit increase of 83.5%, Andy's already talked about the organic component. Fantech's going really well. I'm very proud of the fact that we brought the company into the group.

[Ronnie George, CEO at Volution]

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 cost-reduce products, and to improve the organic margin, if you like, as we go forward in Fantech, to and beyond our 20% operating profit target. 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. There we are. Yeah, I don't think there's anything new there. New regional leadership established. [Andy Alleman] was in Fantech for 18 years before we promoted him to be the regional leader, very well-respected, experienced leader.

[Ronnie George, CEO at Volution]

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. 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. 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.

[Ronnie George, CEO at Volution]

Just on the outlook, for us, it's only a couple of months in. We've had August and September and six trading days of October. The new year has started well. We do have the benefit of the inorganic drag from Fantech for the next four months. We are growing organically. Maybe just a caveat that the end markets are not as helpful as we would like. They could be more helpful. Notwithstanding those challenges, we're still very optimistic about another year of good progress for the group. That's sort of the formal presentation. We'd love to have your questions. Okay. I'll let [Tanya], hi.

[Ronnie George, CEO at Volution]

Good morning. [Tanya] from RBC. Just a couple of questions on the U.K. market and your market share there, particularly given the strong performance in the second half. How should we look about growth going into next year with some of the new regulations coming into play? 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?

[Ronnie George, CEO at Volution]

Yeah. Taking our U.K. in order there, residential share is pretty substantial, you know, 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, social housing refurbishment, and private housing refurbishment. I think the drivers are different but converging. 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. My crystal ball is as good as anyone else's there. 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. Our regulations will continue to help.

[Ronnie George, CEO at Volution]

We haven't had a full lap of the year yet where those regulatory benefits catch up with themselves. 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. 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. It's easier for us to stand out. You'll talk about some of the capacity investments that we've made. Social Housing refurbishment, Awaab’s Law in October will be interesting to see how social housing responds to that.

[Ronnie George, CEO at Volution]

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 we're concerned about the onslaught that might happen once Awaab’s Law goes live. Awaab’s Law is basically around where ventilation or mold-related problems in a dwelling have to be dealt within a much shorter time period. I know social housing landlords are sort of gearing up for that. 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. I think private housing refurbishment is very much down to sort of the whole consumer confidence piece as well. Look, we're very well positioned in all three. We're continuing to innovate, and customer service is essential here. In U.K. commercial, our share is quite small. Quite frankly, we're not the market leader.

[Ronnie George, CEO at Volution]

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. In fact, as I say, some of the investments we've made are to support that. 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. 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. 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.

[Ronnie George, CEO at Volution]

There's been a big focus on improving that proposition and trying to make some share gains. We're reasonably optimistic about the outlook for OEM, having had a couple of challenging years.

[Andy O'Brien, Group CFO at Volution]

Yeah, and on the CapEx front, Tanya, I guess just to start with, first of all, to put it in context, spend in 2025 was GBP 8.4 million. Spend the year before was GBP 7.1 million. Normally we've talked about [GBP 7 million] as a sort of par spend. It's sort of [GBP 1.5 million] or so more than that's been. Of course, the group is growing quite materially, and that GBP 8.4 million spreads across the breadth of the business. If we think about the sort of capacity and growth side of things, this isn't about us stretching at the seams and being unable to deliver revenue. This really is about future proofing. It's also about areas like commercial in the U.K. where we've got aspiration to be bigger than we are right now.

[Andy O'Brien, Group CFO at Volution]

If I just pick out a couple of them, Dudley in the U.K. we've talked about, that is where we manufacture both our heat recovery products that go into U.K. new build, which of course has been growing very, very strongly. If you go around that facility, it is full, and therefore taking on the additional space just allows us to carry on with that growth because the regulations aren't going backwards. Hopefully, volumes are improving. It also serves new build, so heat recovery propositions that go into our European markets as well. We serve Denmark, we serve Belgium, we serve other countries out of that Dudley facility. That growth there is very much supporting that piece and supporting our U.K. commercial broader aspirations.

[Andy O'Brien, Group CFO at Volution]

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. 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 residential refurbishment where we've always been very, very strong. Then North Macedonia, ERI, we've talked about for a little while now. 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.

[Andy O'Brien, Group CFO at Volution]

We're in the process of refurbishing and then kitting those buildings out. This is about, you know, the growth that comes next. Dudley is probably the one where, if you go around, you go, gosh, they're quite full right now. What we try to do always is, you know, clearly not invest too early, but invest at the right time so that we can continue that growth going into the future.

[Ronnie George, CEO at Volution]

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-incision, 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. It's capacity headroom and unit efficiency. To your 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. 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. That's where we get the scale benefits by putting a chassis tool in, having four parts instead of one larger machine.

[Ronnie George, CEO at Volution]

The robot investment is about reducing the people cost included in the product. 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. That's an example of what we think we can do in the future. Okay. Should we go to Rob next?

[Rob Chantry, Head of UK Company Research at Berenberg]

Morning, Rob Chantry from Berenberg. Thanks for the presentation, guys. Three questions from me. Firstly, just on addressable markets, obviously very impressive slides on the 12% CAGR over the last 10 years. 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 else and a lot of other things going on. Do you have any desire to do more in data controls, etc., which seem to be prominent? Would you like more of that in the business? Thirdly, on Germany and Central Europe, quite the improvement in the year with kind of good constant currency or organic growth.

[Rob Chantry, Head of UK Company Research at Berenberg]

I guess how much of that is market versus focus versus internal management decisions? Is there any benefit from the German fiscal spend plans?

[Ronnie George, CEO at Volution]

Okay. First, M&A, yeah, absolutely. Not concerned about the runway of opportunity on M&A. Yeah, you're quite right. You know, if we compound it 12% per annum, I sort of double the size of the business every six years. 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. 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. I would say that if you look at the three geographic areas that we're in, U.K., continental Europe, and Australasia, I think it's fair to say that could be in any one of those.

[Ronnie George, CEO at Volution]

We've talked about having a low market share in commercial in the U.K., although I do think that 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. We'd love to do more there. Of course, now we've got a strong presence in Australasia. I think there might be adjacencies that would make sense for us in the future. I just want to remind you that Fantech 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? As an adjacency to having a strong residential position in the region already, it wasn't really a surprise.

[Ronnie George, CEO at Volution]

I think what Fantech and acquisitions like it do for us is they create additional adjacencies that we may or may not be able to consummate over time. That was the, yes, that was one and two, wasn't it?

[Andy O'Brien, Group CFO at Volution]

Yeah, there was a specific question around sort of data control.

[Ronnie George, CEO at Volution]

Oh, sorry, yes, yes. There have been some really big deals in the data market. Samsung made a big acquisition of FläktGroup. It's an interesting one in terms of long-term growth prospects. I mean, it's certainly a bit of a bubble at the moment, and there's some very attractive growth. I'm also hearing that maybe some of those projects are being delayed, aren't happening, and so forth. We've had some insights around some of those deals and some of those numbers. We do have some niche data center applications as being in certain markets and providing air movement. I wouldn't say necessarily that we would see that making a beeline towards that. If you're doing it inorganically, the competition is going to be stiff and people are going to pay very high multiples. I think we'd struggle to make the return on invested capital returns that we expect to make.

[Ronnie George, CEO at Volution]

That sort of M&A discipline is essential for us. We are 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.

[Andy O'Brien, Group CFO at Volution]

I mean, just quickly again to add one more thing on that sort of transactions and what might be there. I think, you know, 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. Why is that? It's because our profile is so much bigger, our range is so much wider. People are coming to us with, first of all, they're aware of us in the way they weren't before. I think we've got a reputation as good acquirers.

[Andy O'Brien, Group CFO at Volution]

I think, you know, more ideas will therefore come through that channel as well as the sort of organically generated ones, if that's the right phrase. Your other question, [Tanya], on sort of Central Europe. Look, 6% organic growth, constant currency in Central Europe, but a very mixed, you know, if we, we're not going to, but if I was to give you each individual country within that, it's quite a disparity of outcomes. I think where we've done particularly well, ClimaRad, ERI, absolutely specialist in their area, hitting the sweet spots. Also in both of those cases, very much underpinned by sort of heat recovery and heat recovery being the driver of the future in key markets. 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.

[Andy O'Brien, Group CFO at Volution]

We think we're well positioned and we think we can do more as the market picks back up. Other places, France, we had a nice result this year, growing well organically, but it's small. Our aspirations there are definitely bigger than the business that we acquired because we acquired a very small position in a relatively large market. 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 Lewis, Deputy Head of Research at Peel Hunt]

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 FY 2026? 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'd be really interesting to understand probably the U.K. dynamics, particularly in the U.K. number is obviously higher because, obviously, you know, if you're swapping out a couple of fans within the U.K. new homes for a heat recovery ventilation unit, there's obviously a huge mix issue there.

[Clyde Lewis, Deputy Head of Research at Peel Hunt]

It'd be really useful to get an update on what's happening in Australia and New Zealand in terms of regulation as to whether there are any sort of new drivers coming through on that side of things. 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?

[Andy O'Brien, Group CFO at Volution]

I'll take the first two, and I think they sort of flow into each other and hopefully relatively quick, Clyde. 1.2% price and then the 4.5% volume/mix. In fact, I'll do the second one first. The 1.2% price is a very similar number in all three regions. Effectively, therefore, the balance to get you to your organic growth is the volume mix. Of course, the U.K. being 9.5% means that there's a higher volume mix there than there is elsewhere. We've always said sort of 1% there. How do we get to our 3%-5% long-term target? Roughly 1% of like-for-like prices is what we think of as a norm inside that number. I think you think about all the markets being sort of relatively normalized in that context.

[Andy O'Brien, Group CFO at Volution]

Cost pressures, Ronnie sort of alluded to earlier, I think the two places where there probably are still things that we have to keep constantly watching on, people costs and particularly in the U.K., it's been the national minimum wage, national insurance. Let's find out in a month's time, but hopefully there's not new delights coming our way. That's obviously not been helpful. Facilities and sort of back infrastructure type costs, we lease essentially all of our buildings and premises across the globe. When they come for periodic rent reviews, they never seem to go down. Those are probably the two bits where you get the most. 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. I think we feel well positioned with that.

[Andy O'Brien, Group CFO at Volution]

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. Maybe it comes out at somewhere between 1%, 1.5%, 2% overall, depending on inflationary pressures year to year. I think we're in a relatively normal state.

[Ronnie George, CEO at Volution]

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. We've got opportunities in Fantech and elsewhere. I think the inflationary environment is probably less inflationary in the next 12 months than the last 12 months. I would say that the opportunity for us to self-help and improve is as strong as ever. I think we're reasonably confident. The issue for us is around how do we grow top line. 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.

[Ronnie George, CEO at Volution]

We alluded to that in the detail of the statement. 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. It's some way off. I know this isn't regulatory, but we've got the Brisbane Olympics coming up. Look, from an infrastructure perspective, Fantech is better placed than anyone else to capitalize on this. It's a bit early yet for this financial year, but that runway of opportunity into the future will be really helpful. 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. Pleased about where we are.

[Ronnie George, CEO at Volution]

Just a couple of cost reduction margin points and New Zealand. We've owned DVS 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. That's seen quite a substantial gross margin improvement, albeit the proposition itself in the region is quite small. 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 U.K. commercial, U.K., 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 Volution.

[Ronnie George, CEO at Volution]

That just gives you a sign, 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. We go Charlie there, and then we'll come to Christian next.

[Charlie Campbell, Managing Director of Equity Research at Stifel]

Thanks very much. Charlie Campbell at Stifel. Just got two, please. On the U.K. Future Home Standard, we might hear something soon. Is that a further step change in ventilation in the U.K.? Secondly, ClimaRad, 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? Is that an opportunity for you?

[Andy O'Brien, Group CFO at Volution]

Yeah, I mean, I can do the second one because it's so easier then. I think when we acquire businesses and whether they're running under burnouts, whether they're running under, in that case, the sort of [75%-25%], you know, 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. We are decentralized. 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 sort of share the ideas, we encourage the ideas, and they then move at the pace that they move at. Look, we've got a little bit of traction over the last couple of years on getting the ClimaRad proposition into Germany. Can that go faster? Hopefully, yes.

[Andy O'Brien, Group CFO at Volution]

I think the structure change that Ronnie mentioned with the regional MDs. Effectively, our ClimaRad MD is also now responsible for the German business. That, rather than the change in 75 to 100% ownership, should help it, of course, because, you know, if you've got the same person looking over both businesses, it's easier to knit all the bits of pieces of it together. That's something we're focusing on. It's not just Germany. Hopefully, it's other markets. I think, you know, ClimaRad 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. It doesn't change as a result of the acquisition, I guess, is the message.

[Ronnie George, CEO at Volution]

Future Home Standard. Absolutely, but it will take time. We've talked about how regulations have a sort of offset time and gestation. Future Home Standard 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. SAP, the Standard Assessment Procedure, is moving to HEM, which is the Home Energy Model. We're firmly involved with the consultation on all of that. [Lee Nurse] chairs the U.K. Trade Association for Ventilation in BEAMA and also represents BEAMA at the Future Home Standard consultation. We see the direction of travel as really quite exciting, but it will take time. The reason I mention Ireland there is that I think U.K. bodies are looking at Ireland as a really good example on two fronts around heat recovery.

[Ronnie George, CEO at Volution]

One is that the proposition is going in really well and the benefits to the home and the decarbonization, but also the install governance because heat recovery is more complex. What we have to make sure of is that these products are installed properly and they perform as intended. We've got some really good insights there from Ireland and we're able to help with that. Yes, absolutely. Heat recovery and continuous ventilation in new homes are the predominant solution, but heat recovery is still secondary to continuous. One day it should be pretty much exclusively heat recovery in a new home. Why wouldn't you? Christian, yes. David, we'll come to you.

[Ronnie George, CEO at Volution]

Thank you very much. Christian, you're from Deutsche Bank. Two questions from me. First of all, it's interesting to understand the difference in average sale price between U.K. social, U.K. house building, U.K. private RMI. I know that won't be a like-for-like product, but it's more around the difference mix going into those end markets. The second one, just on that 26% EBIT margin in the U.K., how sustainable is that going forward? Is there a mix 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. We should think about 26% being the right number going forward.

[Ronnie George, CEO at Volution]

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 GBP 20, GBP 25 to, you know, GBP 100 at the top end, but there's not so much at the top end. If you look at the distribution across that range, it's probably more GBP 30, GBP 40, GBP 50, but there is a distribution. 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. Of course, with the largest sales force in the U.K. across multiple brands, that's the proposition that we push. Quite frankly, if you're not pushing that, what are you pushing?

[Ronnie George, CEO at Volution]

Because it's not so regulatory driven. Social housing, the range of price point is probably GBP 70 to GBP 250 a unit. I would say the sweet spot is probably GBP 90 to GBP 110, GBP 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, Switchee, and we coupled with them to provide ventilation equipment that can provide the housing association with live statistics around humidity, temperature, and so forth. That's a premium. That's an upsell for us. We integrated that technology and we partnered with Switchee. The sales are quite small at the moment, but it's an opportunity to upsell. On residential new build, the range has moved up because it used to be GBP 20 or GBP 30 a unit, or maybe GBP 100 a home. It's probably moved to GBP 200.

[Ronnie George, CEO at Volution]

When you move to heat recovery, you're up at GBP 1,000. There are also all sorts of other products that we're putting into new homes now. Part O is looking at cooling and overheating risks. 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. They're eminently more sensible because they cost less to run, easier to install, and the price is lower, but nevertheless attractive for us. That comes back to the sort of gross margin. Our gross margins across the business are broadly similar. If you look at the group, then you would say that, you know, ±5% is the sort of range. Margin sustainability, I certainly wouldn't predict that things come off over time. I think we're in a nice position at the moment. Yes, absolutely sustainable.

[Ronnie George, CEO at Volution]

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. Sustainable, and hopefully that gives you a bit of an insight on the price point ranges. Okay, David.

[David Farrell, SVP UK Industrials Equity Research at Jefferies]

Hi, thanks. David from Jefferies. Three, hopefully quick questions. The 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? Is that order book up year-on-year if there is one? 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, you know, interest rates feeding through to high levels of activity?

[Andy O'Brien, Group CFO at Volution]

I don't mind taking the last one if you like, and then I think Ronnie. There is definitely some key product activity that we've seen that's now coming into the order book. What gives us a bit of confidence, David, is the most challenging bit of the Nordics over the last couple of years has definitely been residential new build. I think the residential refurbishment has not been growing phenomenally strongly, but it's been very resilient. I think it is definitely in growth territory. 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.

[Andy O'Brien, Group CFO at Volution]

We were out in Denmark a few weeks ago with our sort of 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 the 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. We've not suddenly seen a takeoff of activity, but it's back into a balance at which we would expect to see activity picking up. 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 your 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.

[Andy O'Brien, Group CFO at Volution]

I guess that's our grounds for a bit more confidence hopefully in the outlook.

[Ronnie George, CEO at Volution]

Regional Managing Directors. We started to sort of socialize this internally over a year ago. All three regional leaders are promoted from within, which is really helpful. Incentivization, if you think about the variable element of pay, there's a big focus on the annual on their regional areas and what they influence. 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, you know, 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.

[Ronnie George, CEO at Volution]

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 they do so because they deserve it. I think that works really well. You had the question on Fantech visibility. A bit more visibility in Fantech 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. Don't worry, orders come in every day, and that pipeline gets populated throughout the month. On commercial, there's a little bit more visibility around projects. Of course, we've got this sort of more medium-term indicator around the quotes.

[Ronnie George, CEO at Volution]

We have something called the Fan Selector Program in the Fantech business, which is quite an integrated selection tool that consultants use to select our products. We can see what they're selecting and what's being quoted and so forth. I think the outlook in that region is positive. The question you asked specifically about is the order book bigger now than it was, by the fact that the order book tends to follow roughly the revenue pace. I've said that the revenue is growing. The order book is growing in line with that. Yes. I think that's perfect time. I don't know if there was any other questions. No questions online. One minute to go. Thank you very much. Full run, lots of interest. We're delighted and we're positive about what comes next. Thank you very much. Thank you.

Participants

Analysts

• Clyde Lewis, Deputy Head of Research at Peel Hunt
• Ronnie George, CEO at Volution
• Analyst at RBC
• Andy O'Brien, Group CFO at Volution
• David Farrell, SVP UK Industrials Equity Research at Jefferies
• Charlie Campbell, Managing Director of Equity Research at Stifel
• Analyst at Deutsche Bank
• Rob Chantry, Head of UK Company Research at Berenberg