Volution Group Stock

Good morning and welcome to our FY '26 results presentation. I was just working out with Andy. I think it's my 25th and Andy's 15th, and we haven't got wear out. Just be clear, that doesn't -- it's just longevity, not wear out. So look, we're really pleased to be here this morning, and we'll take you through the story in a very similar format that we've done previously. So overview. I've got a relatively easy bit where I'll talk about the overview and what's been happening, hand over to Andy for a little bit more detail on the financial review. I'll come back on the business review and then summary and outlook. And we've got something a little bit different just at the end of the presentation. So I'll keep you sort of guessing for that.

But look, it was another really good year for us, a strong earnings growth, margin expansion and strategic progress. We're absolutely delighted with the performance that we had in FY '26. revenue, operating profit, EPS and cash generation, all up greater than 15%. And from our perspective, if you look at our long-term targets, it doesn't really get much better than that in terms of our long-term target to be above 15% on those metrics and continuing our long-term compounding growth performance. Organic growth, 2.8%, just slightly below the bottom end of our 3% to 5% range, but demonstrating the benefits of our diverse geographic end market exposure, and we'll cover that in a little bit more detail.

Operating margin progression, 90 basis points, now 23.2%, good progress in the second half of the year, leveraging our scale, our expertise in procurement, engineering and product range. And our second largest acquisition to date, AC Industries in Australia, that was in February. So that was in the financial year '26. And then right at the beginning of the financial year, first working day, actually second working day of FY '27, getAir in Germany, a company that we've quoted for many years, delighted to now have that inside our group. But look, continuing to deliver strong returns and compounding growth. A little bit about our clear growth focus. And we talk about organic growth. We believe we've got an agile decentralized approach, very close intimate focus on local markets and organic growth of 2.8% on a constant currency basis in the year.

Value-adding acquisitions, I talked about AC Industries, very excited about that proposition and how it performed in the year, delivering 11% inorganic revenue growth. And that was only for half of the year. We only had that opportunity inside from the beginning of February, so at the second half of the year. And operational excellence, I think of this as about running the business well. So product cost leadership through sourcing, engineering and manufacturing, incremental efficiencies around process and operations and our people underpinning that significantly strong margin performance at 23.2% in the year. Investing in our compounding growth story. Why do we believe we're a compounding growth story? I'll come back to the chart at the bottom. But what's underpinning this? We're in growing markets supported by long-term structural tailwinds, and we could maybe cover that off in a little bit more detail.

But if you look at AC Industries acquired more recently, this is ventilation mining systems in copper and gold mining. I think the copper price very recently hit its all-time highest price ever. And we see with the energy transition, that's a very strong place to be. Increasing diversified geographic and end market exposure, that's really important for us. If I look at my early years in Volution joined in 2008, it was a U.K.-centric residential play. If you look at where we are today, we're providing ventilation systems in mines in Australia. We've had our first data center order for ventilation and cooling for Australian data centers. We've got a huge wide breadth of end markets, products and different applications.

We're pure play. We focus on ventilation and air. I've said this throughout, I've had it over the time. We're not looking at anything else. We want to be providing healthy air sustainably. It's about air quality. It's about leveraging scale, intimacy and expertise and scale benefits in a specific area that we believe we can be very good at. Continues to be a capital-light model, strong margins, highly cash generative. I've talked to you about the metrics, all being well over 15% in the year and disciplined capital allocation and M&A capability. We did 2 deals since the last time we sat in front of you. There's other deals that we haven't done, and that's really to do with discipline and not doing deals just for the sake of it.

So if you look at the adjusted earnings per share over time, 15.4% growth in the year. That's absolutely at the high end of our expectations. We have a long-term target to be over 10%, but we've compounded now over 10 years at 11.7%. And that goes back further. We have a debate about how far back do we go. But if you look at '14 when we listed through to now or indeed, if you go back prior as a private company, that compounding theme has been consistent throughout. We talk about our 3Ps, although there's 4 here, but we talk about 3Ps, product, planet and people. delivering our purpose around healthy air sustainably. And just a little bit about what's happening. So these are metrics that we put out.

So on revenue from low carbon products, it looks as if it's come down over the last couple of years, but that's partly to do with the composition of the group and Fantech, which is our largest acquisition that we made in December 2024. So on a like-for-like basis, actually, our low carbon revenue has been increasing, but we actually acquired some propositions that have a lower proportion of low carbon revenue. And that's why we're only at 72.1% of our revenue from low-carbon products. Particularly pleased about carbon intensity. This is in line with our long-term SBTi targets, and we had a reduction in the amount of CO2 per million of revenue down to GBP 10.5 million. So that's a very strong improvement in sustainability and carbon reduction in the year. we move to people, we've actually updated our internal values around customer excellence, collaboration, continuous improvement and ownership.

But a disappointing number here, I'm not particularly happy about the fact that our accident frequency rate increased in the year, and we've been redoubling our efforts internally with a view of improving that. We had a downward trend through to '25. And then regrettably, we stepped up to 0.29 frequency rate in 2026. So more that we can do there and absolutely on that journey. And then finally, recycled plastics in our products. And this is really important. You'll remember that recycled plastics for us are a huge hedge to the higher cost of virgin plastics. Quite a few organizations coming out more recently over the last 6 to 9 months talking about material cost inflation relative to virgin plastics, we try to insulate ourselves here by having a recycled content, although it dropped to 81.3% in absolute terms, the amount of recycled plastic that we were using has increased, but we are actually molding more in our facilities and the ratio dropped back to 81.3%.

It's still an outstanding achievement. 80% of what we process in our facilities is from a recycled source but can go higher. We're still committed to increasing that over time. And as you can see there, the 10-year increase is quite phenomenal. And of course, it's lower diminishing returns as we move forward, but still more that we can do in the future. So as I say, I had the easy bit. I think it's a really compelling set of results.

I'm going to hand over to Andy now to take you through the financial review in a little bit more detail, and then I'll come back afterwards and just go through the 3 geographic areas in a little bit more detail.

Good morning all. Thank you, Ronnie. I don't think this is the hard bit, though, if that was the easy bit. So really positive set of numbers, which I'm going to spend a few minutes walking you through. So starting with this slide, and look, 2 words that Ronnie has used a few times in the introductory section were compounding and growth. And look, ultimate -- I make no apologies for using them again now. That's what we're aiming to deliver. And this is showing track record over the last 5 years. So obviously, the 4 on the left there, revenue, operating profit, earnings per share and cash flow. And over the 5 years shown on this chart here, really, really strong double-digit growth in all 4 of those. And then if you like the 2 on the right-hand side, so the operating margin performance and the return on invested capital. So delivering that growth, but preserving or actually in the case of margin continuing to improve on those key sort of quality of earnings and quality of returns metrics. So I think a really powerful slide, which demonstrates in-year performance, which we'll talk more about now, but also, I'd say that sort of consistency and compounding of the growth performance.

So looking in a little bit more detail at year-over-year 2026 versus 2025. We'll go through the breakdown and the analysis of the revenue, the operating profit, the cash, et cetera, in later slides. So I won't dwell on that too much here. A couple of pieces to pick out. So leverage, this shows you where we were on the 31st of July, so 1.5x leverage. And I think probably important to context that in the last 2 years, we've done our 2 biggest acquisitions ever. We've invested over GBP 200 million in those 2 acquisitions. And yet we still closed the year with a leverage at 1.5x on an old money ex leases basis. Full transparency, of course, this is pre the getAir transaction. Immediately post that, we'd have been more like 1.8x. But as you know and as again, we'll sort of show later, that constant and consistent cash generation profile of the business means that we do still feel there's plenty of headroom and capacity on the M&A side of things.

Finance costs, point down there were higher in the year, and that is a function of that investment in acquisitions. And then dividend, we're not a dividend stock, but I think really important to show that we can continue to have this sort of slightly dividend increasing fractionally ahead of earnings year-by-year whilst continuing to, as I say, deploy our capital to acquisitions. So revenue breakdown. So clearly, on the left-hand side, how does our organic growth break down across the 3 regions. And look, if you were to glance back at the composition of that growth over the last 2 years, you'll see a very different picture. So you'd have seen perhaps U.K. and the lead and the other slightly behind. And this year, Ronnie will talk much more about the dynamics of the individual markets later, but you see a bit of a rotation. And look, would we love all of our regions to be growing phenomenally? Of course, we would. But I think what you really do see here, and I think the last few years really do demonstrate this is the benefit of that diverse portfolio, both geographically but also end market and application-wise.

In terms of the breakdown of that organic growth between price and volume, it's roughly equal. So 2.8% organic growth, pretty evenly distributed between, say, price contribution and then volume. But once actually, foreign exchange was helpful. It's -- I think that probably is the first in my 7 years, but it's been in our favor. And then the inorganic contribution there is the first 6 months of AC Industries, which will have again a further 6-month contribution in 2027, but also the 4 months of Fantech through to December 2025.

Operating profit. So again, we talked about this in the highlights earlier, the further nudging up. Well, I suppose 90 basis points is a bit more than a nudge, but the further improvement of the group operating margin to say that 23.2% level. So 2.8% constant currency revenue growth coming through at 6.3% constant currency profit growth, if you want to think about it that way. Bottom left section of the chart there is really just to try and give this a bit of complexion and detail on a region-by-region basis. First and really, really important message is all 3 regions expanded their margins on an organic basis. The U.K., I think that 230 basis points improvement on the back of a business where revenue was flat. So I think that is absolutely testament to the delivery that Ronnie talked about earlier in terms of product cost initiatives, efficiencies, whether that's in the factories or the back office. And it's also continuing to push up the premiumization, if you like, of the product range that we're selling.

Continental Europe, pretty consistent year-over-year. There's obviously quite a spread and diversity of activities that we have in Continental Europe, but good to see that, that margin nudging up slightly. And then in Australasia, we've given you this year and last year, but we've also in the slightly larger shaded blue there, given you 2026 on an organic basis. So effectively, that is essentially excluding the 6 months of AC Industries. AC Industries did come in at a premium to our group margin, which is unusual when we're at 23.2%, but this was a premium. But even if you take that out, so that moved us -- that benefited us by about 60 basis points in the year, but there's still about 100 basis points of underlying margin improvement there, which is great to see. And the biggest element of that, we've talked over the last couple of years about how when Fantech came into the group, it had a good margin, a strong margin, but it wasn't quite at our group levels. And I think this, amongst other things, is early evidence and proof points of us doing what we said we would, which is to sort of move that margin in an upward direction.

Moving on to cash. So really, really strong cash generation performance again this year. So our cash conversion target of 90%. We delivered 107% this year, good, good working capital control. CapEx, probably actually GBP 1 million or GBP 2 million lighter than we expected it to be. So we would normally think of spending somewhere in sort of GBP 9 million, GBP 10 million, GBP 11 million range. And that's probably just a function of the timing of our facility investment in ERI in North Macedonia. There's a bit more of that to come in 2027. But look, still, we're going to continue spending of that magnitude on the CapEx side of things. And then over on the right-hand side, of course, the big bar there is the GBP 105 million spend in the year on acquisitions. So that is GBP 75 million, roughly speaking, on AC Industries and then GBP 30 million being the deferred element of the Fantech consideration because when we bought that in 2024, there was an obligation to pay the remaining AUD 60 million 12 months later. But let say, the upshot of all of that is we've had one of our most exciting years on an M&A investment perspective, but we still end the year in a very, very healthy balance sheet position.

Returns on invested capital, super important metric for us. And I suppose the bullets on the right probably capture the key takeaways I give you on this slide here. So overall, the ROIC improved by 20 basis points. Now we've always said, if we've got a return up in the sort of 25% and above level, if we're buying businesses at 8, 9, 10x trailing earnings, they will or should be dilutive. Actually, I think the fact that AC Industries was only a 40 basis points impact in the year, partly because it's half year, but actually, part of it is testament to the very low multiple that we paid for buying what is a high-quality asset there. So 40 basis points dilution because of AC Industries. 20 basis points improvement on Fantech itself. And I think that is, again, coming back to that margin improvement during the course of the year and then 40 basis points of other organic improvement outside of that.

So look, really, really important metric to us, and I think we're very pleased to still be north of 25% after the busy couple of years that we've had M&A-wise. And I think there's probably not too much to say here because this really does just sort of wrap up what we've already covered. But this is where we were in FY '26 against those key financial metrics that we sort of pride so heavily. All of them at or above target with a slight exception of organic growth. But again, we'll talk more about that shortly, but 2.8%, very close to our sort of 3% to 5% target and all the others sort of looking very nicely ahead.

So with that, I'll hand over to Ronnie.

Thanks, Andy. Little bit more detail about the business. And I was listening to Andy taking you through the financial results. And they are quite frankly, pretty outstanding results. I've been doing this for a long time, not just in Volution, but in the industrial world. And when I look at the sort of repeatability and consistency of our results over time, I thought why do we have that level of confidence? And we'll talk about some of the market difficulties in a moment. It's not easy. And I was thinking to myself, how many of the last 10 years have been easy, market being really quite punchy and supporting us and providing that additional strength.

And I guess the point I'm trying to make there is that it's the way in which we run our business, the choices we make about the markets that we want to be in the decisions we make, and I was pleased to have some of the team along today. Martin, put your hand up there, but Martin is the Group Technical Director and Lee has put up with me for 19 years, now 18 years as the Business Development Director. But look, we're really confident about the outlook for our business, almost irrespective of the market. And even if the market is to be quite difficult in certain areas, it's about that agility and the choices that we make in the way in which we run our business.

And one of the things that was really important to us was increasing geographic diversity. When I joined Volution in 2008, it was 2 U.K. ventilation brands. I had the great opportunity to become the Chief Executive at the beginning of 2012, and it was very much a buy-and-build story, and we've done 31 acquisitions in the last 15 years. And we've chosen these markets. We've chosen to be in Continental Europe. We've chosen to be in Australasia. First acquisition in New Zealand in 2018, I remember the feedback was what have they done? Why are you going to New Zealand? The revenue pro forma in Australia now is actually bigger, in Australasian region, is bigger than the U.K. And these are great markets. We go to the Australasian region, and we talk to our team and they say, competition is really tough here. And I sort of smile about it. Lee spent a couple of years living in New Zealand. Competition is different in New Zealand than it is in the U.K. We have a market leadership position. We're very respectful and mindful of that position. But I think we've created a huge geographic and end market diversity that gives us a high degree of confidence that the results that we provided on a trading basis can be repeated into the future.

And so a little bit more detail on the performance in the year. U.K. revenue was flat. It was up in the first half. It was down in the second half of the year. If I was to stand up now and tell you the U.K. market is quite difficult, you'd be really surprised to hear me say that. But look, we're adjusting the way in which we run our U.K. business. The operating profit margin expansion in the year was huge. It was substantial. And we think -- we're not setting a new target, but we think that there's still more that we could do. I said to the team more recently, we had a perfect year. Everything went exactly as it should do. We didn't make any mistakes, and we had every initiative delivered. Of course, not. So there's still more that we could do. And what's happening in the market, residential RMI, public housing is still quite strong. But if I was to tell you that residential new build was more challenging, you wouldn't be surprised to hear that. Look at what the housebuilders are telling us.

But nevertheless, in the year, we delivered a really compelling result, notwithstanding the fact that the revenue didn't grow. And we're positioning our U.K. business for the long term. I actually believe in the U.K. market for the long term. I think we will eventually start to build more houses. The impact of building regulations is driving a more low-carbon product portfolio. And we absolutely, in the residential space, lead on residential ventilation products. And I think there's so much more that we could do there. So that's -- Andy talked about premiumization, but it's about products that are helping our customers deal with their low carbon challenges, and we're very good at that.

On the commercial side, disappointing. We talk about this internally. It's an opportunity. We should be doing a lot more. We think we can do more, and we're continuing to invest in that space, but a disappointing decline in our commercial revenue in the year, but we can do better. During the year, we took on a new facility. We've made some expansion changes at our Dudley facility. We have a very considerable capacity headroom. We're just not utilizing it yet, but we intend to over time. Strong growth in export. The Irish market is still from a new build perspective, probably the complete opposite to what we might talk about in the U.K. at the moment, but the Irish market is still very strong from a new build perspective and very much focused on low-carbon products, including what we call mechanical ventilation with heat recovery.

And then finally, OEM. I think the really important part about OEM is that we are now using a very material quantity of our own produced motors in our products. And that's, again, another initiative that helps expand our operating profit margin. So 28.3% operating profit margin, higher in the second half of the year than in the first half despite the fact that revenue declined in the second half. So good trajectory on margin. As Andy said, there's been years that we've stood up here and sort of apologized for more anemic organic growth in Continental Europe, 5.9% constant currency. We had some currency tailwinds there, both in Europe and in Australasia. But 5.9% is above our long-term 3% to 5% range. Operating profit margin, 24.3%, small expansion.

Nordics performed well. We've got a strong position in the Nordic market, particularly on the residential side. We're continuing to invest in our central systems and commercial proposition. And I think that's quite exciting about what we can do in the future. Our ClimaRad activities in the Netherlands around decentralized heat recovery. There's a really important theme here. Decentralized heat recovery from my perspective, I don't think I've got enough years left in Volution to see it fully vest. But decentralized heat recovery ventilation is the only way to deal with the existing stock of buildings in Europe. It's the only way to properly ventilate an existing building when you make it airtight. And we now own ClimaRad in the Netherlands, getAir in Germany, InVENTer in Germany, I-Vent in Slovenia and Croatia. We have a fantastic product portfolio, and we're very excited about this.

And we also own one of the largest producers of aluminum heat exchangers, energy recovery industries based in North Macedonia, where we've made quite a bit of investment over the last couple of years, really great support from the Board in terms of the investment for a new facility and the product range and the production capability and growing very nicely. So this heat recovery theme is very important to us. We talk about Belgium and France remaining challenging, and it was interesting because I had a comment back, I think, already this morning about well, we're a little bit worried about France. It's de minimis for us. Whether France performs well or not this year will not change our results. But over time, there's a market in France where we believe we can have a much bigger market share. So this is only upside opportunity over time. We're talking about a small delta on its financial performance in the year, but it's more about the opportunity cost. It's about what we hope to do in France in the future. And we believe we're a challenger there, and we can do much better.

So sometimes talking about these challenges, they get overemphasized. It really is insignificant from a group perspective today, but how do we make it significant in the future? And as I say, probably the only way is up from our perspective in France, as much as that might feel counterintuitive, our revenue is circa GBP 10 million out of a total revenue in Central Europe of GBP 150 million. You can get a sense of that. And we've improved the operating profit margin. We've improved the quality of the business, and we've made some really good investments. Martin and his team brought together a new mechanical extract ventilation product about 6, 7 months ago now, and that's starting to get really good traction. So we're excited about Europe, and we think that Europe may be on a slightly further ahead of the curve in terms of new build recovery than where we might be in the U.K. at the moment.

And finally, Australasia, 48.7% revenue growth. You understand why that was the -- obviously, the tailwind from the acquisitions, organic revenue growth of 3.3% and adjusted operating profit margin of 22.2%. So we are consistently making north of 20% operating profit margin in all 3 geographic areas. We have a strong market position in Australasia with the acquisition of Fantech. We're now busy with trying to bring this together and create a sort of scale benefit opportunity similar, I might add to what we've been doing in the U.K. over the last 10-plus years. So if you think about the trajectory for the U.K. business over the last 10 years from a margin perspective, that's the blueprint. We had the team together a few weeks ago in Germany, and we actually had the U.K. finance lead come and tell us about the back-office transformation that we've delivered in the U.K. over the last 7 or 8 years as a model, a playbook that we have at our disposal to drive our Australasian margin over time.

A couple of real big highlights in Australasia at the moment. AC Industries, I've gone on record saying I think it's probably going to be at this moment in time, one of our best returning acquisitions yet. It's done phenomenally well since we've acquired it. It's in copper and gold mining, not just in Australia, but more globally. We're looking at further international expansion there and how we can supply more into the other continents. And we've got a really good story. This is a product that performs, helps mines reduce their cost. Think about the cost of a mine. They're running ventilation, those ventilation products are often run off of generators. Those generators are running off of diesel and other fuels. I don't know if you've noticed what's happened to the price of diesel over the last 6 months, but energy reduction by having a superefficient ducting system in a mine is a very significant advantage for us. And this is going well, and we expect it to continue to go well. We're out in Sydney in about 3 weeks' time and look forward to being with the team again.

And we don't want to sort of set the hairs running here, but it is an opportunity, and it will underpin our organic growth this year. And we decided it'd be remiss not to talk about the fact that we've had quite a substantial order of about $12 million first order that we're supplying now for ventilation and cooling fans that go into data centers. And look, our Fantech proposition in Australia is the leader. It is the brand that you can trust. It is a company that can deliver. And when you're looking at large infrastructure projects like this, that's why we think we can do quite well in this space. So we're happy about that. And that's probably a good segue into the outlook and why we feel, despite the fact that the U.K. market is probably at best described as soggy, why we still feel that the prospects for the group are really quite strong for the rest of this financial year.

I won't repeat this. It was on the first slide, but I will just spend a little bit of time talking about the outlook. And what we're saying here is the year has started well. The group is delivering organic growth alongside a positive revenue contribution from AEC. It's not organic yet, but it is growing within itself. So if we look at the comps pre our ownership, it's growing strongly, and that's really helpful. We completed the acquisition of getAir in Germany. That integration is underway now. We had another review on the 200-day plan with the team last night. Very pleased about getAir and the proposition that we've got in Germany and the fact that we've got the widest product portfolio and some really good innovation. They were very smart -- have been very smart around innovation, and Martin will be leading that opportunity and how we can sort of cross-sell, cross- percolate those -- that technology into other areas of the group.

We've talked about the U.K. and no doubt there'll be some questions on it. The U.K. is challenging, but it's fully baked into our view, okay? We're baking in that the U.K. will be challenging, and we'll take whatever mitigating steps to deal with that. But there are still lots of opportunities for us to gain share, to innovate and bring new products to market and the way the building regulations are driving this is helpful. So we are still reasonably positive about what we can do in the U.K. despite a more benign, less positive outlook. And we see really good opportunities to build on this momentum, the recent orders for data centers, the strong ACI revenue stream, and we have a really strong product portfolio and platform. So the output there is that as the Board, we're confident of delivering another year of good progress and delivering sustainable growth for all of our stakeholders.

And what does that mean? I'd just ask you to have a look at the track record, look at what we've been delivering over the last 12 years, and we're standing up today saying, we don't think there's any material difference in our outlook to what we've delivered in the past. So before we go to Q&A, one of the challenges that we have just looking around the room, some of you have been to our Reading facility where we make about 3 million small plastic ventilation devices each year, 45 injection molding machines and then come away from it thinking they make small plastic fans, that's what Volution do. And you're right, we do. And then we'd like to take you through our facility in Dudley in the West Midlands over the next couple of months and show you where we make ventilation heat recovery systems. But 65% of what we do in our group isn't in the U.K. and you haven't seen all of the U.K. And that's a challenge for us. I guess if it was trip to visit our factory in Melbourne probably get, but we need to protect our margins. So we decided that the best route to maybe give you a better insight about our group is just show you a little corporate video that we prepared.

[Presentation]

No round of applause. So that's 35 minutes in and over to the floor now for any Q&A. I think we'll start in the room first, and then we can go on online virtually afterwards. So Rob, I'm going to stand up actually for now.

It's Rob Chantry at Berenberg. Three questions from me. So firstly, the product range is clearly key. Could you just comment on what percentage of the business you'd ideally like to have from specialist industrial in 5 years' time versus residential? Do you have something in mind? Secondly, cost inflation. I guess you've not really touched on it that much. You seem to have dealt with it very well. What was the pricing strategy in the year to cover any costs? And how did that differ from the approach taken by your competitors? And then thirdly, post the AC Industrial deal, I think you've spoken well about it. Has that given more optionality in the acquisition pipeline? Do more interesting things like that come into the pipeline post that deal and people see you're a relevant player in that area?

Andy, give you costs first. I'll do 1 and 3.

So I mean, cost -- we gave you the amount of price contribution to revenue growth this year, Rob, roughly 1.5%, more than 4%. And I think in the past, we've talked about it being there or thereabouts, 1% in most normal years with the exception of those couple of years where supply chains went a little bit bunkers. So actually, what does that tell you? It probably means that we've done largely the same approach that we've adopted before, which is to be forward-looking, to be proactive, to have good -- what we always try to do, of course, is to have good forward visibility of what's coming down the track so that we can then respond and react sensibly.

What do I mean by that, having the right amount of safety stocks and inventory in the facilities, having forward order placement with our key suppliers that gives us maybe as much as 9, 12 months of reasonably good certainty about where those costs are at. So that if things do change, they don't change on day 1, and we've got time to adjust and adapt in terms of our pricing. So I don't know how other people approach it, but we sort of -- we don't have a global mantra of saying x percent across the board because the circumstances and the requirements are different market to market. But I think the test case is being really close to our margin performance, looking at the data all the time and going, have we done the right thing? And if we need to adjust, we adjust. So I don't think there's been any change to it in terms of approach or strategy.

I do 1 and 3 together because I think they're quite nicely related. I think it's fair to say that a lot of our M&A is opportunistic and opportunistic, not in the sense of do we want to acquire these opportunities. It's just timing. It's a conversation we have with the Board on a regular basis. It would be so much easier if we could build a time line over the next 5 years and actually put in the dates at which we'd acquire these opportunities. And you've only got to look at the last couple of them that we did. getAir, I said at the beginning, was an opportunity that we actually got close in '23, and then it didn't happen. And then -- and of course, there is competition. There is competition for these assets, although I would say that I think we're not paying the highest price necessarily for the asset. There are other factors at play why I think that AEC, it was about continuing the growth trend in an environment where they felt they could be supported and have the opportunity to keep going.

So it's very difficult to say this is where we'll be, but we do like the diversity. We have entered some new markets with an air quality theme that we like, and we do think that, that opens up much more optionality in the future. So in actual fact, one of the questions that we often have is, can you -- of course, if you're going to continue to compound at 10% plus growth rates, M&A is an absolutely integral part of that story. I'm not concerned about whether or not we can continue to consummate deals at a similar rate proportionate to our size in the future. I think having a -- by definition, the residential ventilation markets globally are smaller than the commercial industrial market. So that opens up more opportunity. And indeed, with AC Industries, what we're seeing is if you think about sort of secular growth trends, we often talk about energy efficiency and carbon emissions, but there's also a really important issue about health and about filtration.

The reason why ventilation in mines is really important is it's a really onerous environment. We are still putting charges at the mine face and blowing them and having to have refresh and recharge rates to get back in the mine. We recently -- we had the Board visit in May, and we went to a fire station in Melbourne, where we are providing and rolling out now a ventilation system for the fire stations because of diesel particulate and so forth. So there's lots of different secular growth trends that we'd like to tap into. So there is a degree of opportunity, if you like, or opportunistic behavior. But I suspect over time, because there are more opportunities in the residential and industrial market, it's likely that we move in that direction just simply because there'll be more opportunities to deploy capital. You look at the residential ventilation space, it gets harder for us in the U.K. now. I think it would be hard to do a big deal in the U.K. I'm not necessarily saying that we couldn't do bolt-ons just because of our share. But there's still plenty of places in Europe where we're underweight, and we think that we can add value.

It's Jamie Murray from Bank of America. So you flagged -- I mean great results, firstly, but you did flag challenges in the U.K. new build residential market. It would just be good to hear your thoughts about what do you think could be done to get that market back up and running? And if you have any thoughts about the YFH, your first home initiative.

We need to extend the meeting to...

And if there's anything else in the budget that we should look out for that could benefit you guys.

Look, what are we seeing? If you look at the market dynamics, are we at the low point? Probably. Maybe that low point, we've gone past. There's so many different factors here. We had -- or was it -- I forgot the name, planning over Gateway 2. Thank you, Lee. Gateway 2. I know there was a reason for Lee being here. Gateway 2. So Gateway 2 was a big issue because of planning in high-rise. And that was a big issue for us because of central systems. You typically wouldn't build an apartment now without MEV or even MVHR. So we think that from our perspective, Gateway 2 is starting to release some opportunities, and that will be helpful. So we may have gone through the worst pain point with respect to high-rise.

Then from our perspective, if you look at the volumes and debate where they are, there are certain aspects of our market that aren't so acutely impacted by how many houses we build. Student accommodation is still very robust. We do well there. We lead. I think retirement homes is a little bit more difficult, and that's back to the equity release issue. Typically, back in time, it was if you've got a good, strong new build market, people are equity releasing, they're moving up. You move towards retirement, you release your equity and you go and buy a retirement home. And that's been more challenging. But I think, again, it's been challenging for the last 18 months to 2 years. Does it get any worse over the next 6 to 12 months? I'm not sure.

So I think our sort of working assumption on residential new build for us is it's not going to get any worse. I do think -- and I want to be mindful of not giving too much of an advantage to anyone else. But I do think there's some share gains that we can make and underway. I do think our technology and some of the innovation that we brought to market around low-carbon products will be really helpful and carving out share gains. And for us, of course, what we always say to people is, don't blame the market. The market will be what it will be. We can't make housebuilders build more houses. That's something we can't do, but we can help them choose more of our ventilation solutions. There's quite a lot around overheating in the summer. I think that would have firmly focused that in people's minds. We're not an air conditioning business, but we provide comfort cooling. We provide products that deal with part of the building regs. And I think you'll see an increasing focus on that for very obvious reasons. We've had 2 very hot summers now. Is this the new environment that we're living in, we're part of the solution.

So look, as part of the sort of wider what do we think on the U.K., we told you where the first couple of months are. We don't think the U.K. for us gets any worse, and we're growing organically as a group, and we're still in go-forward mode. But I think it will be challenging. And I don't see -- I'm not forecasting in the next 3 or 4 months, it gets materially better. I suspect post budget, there might be just the fact that we've had the budget and the uncertainty goes away in itself will probably be helpful. And the other one that we're not sure of at the moment is just how much of an impact there was on RMI demand over the last 3 or 4 months because of the heat. I don't know if you've been in your off space in the middle of summer, but it's pretty hot and pretty difficult to work in. And you hear from contractors that there's work that they would come back to later. And I came in this morning a little bit chillier. We're moving into autumn and winter. So I think that summer and so forth wouldn't have been helpful.

But look, just to finish on our U.K. business, big improvement in operating profit margin last year, good trajectory coming out of the year into this year, probably a little bit more benign around inflation impacts and risks. So we don't see an immediate risk around pricing or margin or a need to necessarily increase prices as we sit today. Pretty much where we are is baked into our thinking.

Clyde Lewis at Peel Hunt. I think I've got 4 apologies. Andy, probably the first one. The inflation, the 1.5%, 1.4% that you're talking about, is there much difference regionally in that number?

List for Clyde.

Okay. Following on, on the U.K. question, I'd be interesting to hear a little bit about where do you think the public sector is around the RMI drive and obviously, all of that humidity and damp issues. The U.K. commercial what are you going to do to actually sort of start growing that business again? Obviously, it's partly the market, but obviously sort of where are the opportunities for you, I suppose. And I've got to ask, obviously, on the data center stuff. You've dangled it out there. Are there products that you're making in us that you can actually start to ship into the U.K. or the European markets and maybe try and enter that this side of the globe?

I will take the first one and take...

So I think in terms of the number region to region, it is different. And why is it different? It's different because the cost impacts have been different because the margin profile of the products that they're selling are different and there's some competitive behaviors are different. So I'll give you an example. ERI selling aluminum heat cells, that is a competitive market. And of course, there's a sensitivity to the aluminum price and input cost that goes in there. We've suffered a little bit of margin deterioration over the last year or so, but that is -- we think that will come back. But there's only so much we think we can do because there's a very, very clear market price and there's competition. It's not that there's not competition elsewhere because, of course, there is.

But no, I mean, I think the overall -- I suppose for us, the asset test is deliver margin. Each region has noted its margin up. And of course, we haven't given you inside each of the European countries. But generally speaking, that's been the dynamic as well there that people have done the right things to largely hold or maintain margins. So as long as that's the case, Clyde, we're comfortable and we're happy even if it means that percent -- the right percent in country A is different from the correct percent in country B.

Just trying to get some numbers for you, Clyde, Okay. So public housing on public RMI. I think public housing is still 5 million homes, quality is still very low. I think we've said this is a multiyear issue. We did very well. I would say we've got some outstanding products, a product called Revive. I think iteratively, we developed it again over the last 18 months, made the footprint a little bit smaller. We've got some smarter connections now. We coupled that with a company called Switchy to provide data capture for the housing association. So I'm still really positive about social housing outlook. Funding is there. This is a social issue, and it absolutely needs to be dealt with. So one of our maybe stronger revenue streams and the outlook is still really, I think, quite positive.

If you look at U.K. commercial, I was just trying to look at Construction Products Association, I was just trying to get my head around what happened there. So it sort of had new build down 8%, RMI down -- sorry, 10% and 8%. So I'm not arguing that 9.6% down is the market, but the market was very weak. And there's almost some humility here. We stand up and we're really positive about our business, but it would be remiss not to say this is an area where we think we should be doing better, and we've discussed it internally, and we've positioned ourselves to do it. And I think it's one of those that once we build momentum in the space, it will run. So when we get the model right, and look, we've got some formidable competitors. I mean, Genuit bought Monograft last year and they've owned it for about 12 months. And quite frankly, that's an area of the market that we should do better. So let's see how they integrate that opportunity over time, and let's see how we can do better against opportunities like that.

So this is one that should become a growth engine for us. And just imagine we could get that growing well at a time when maybe residential new build and the U.K. market at large is doing a little bit better. So yes, so full disclosure there. This is one that we talk about a lot internally, and we'd certainly like to do better. If you talk about data centers more generally, the solution we have in Australia, I think I'm not a data center expert, but there's lots of different solutions, liquid cooling, air cooling. We have a very relatively simple solution in terms of -- it's like a big fan coil. So it's a chilling device where you blow air over the chilling device, big cassettes, very repetitive, but big volume. We've had our first order and we're in sort of a confidential discussion around future projects. And I'm not going to give you the numbers that they talk about for the next 5 years because I think we could get carried away with ourselves. But we're focusing on it. I mean it's slightly lower margin in terms of how we bring it to market.

Can we transfer that technology to other areas of Europe? We did a little bit of data center business to a third party in the Nordics last year. It's just helpful. It is just really helpful. And you always worry about this because if we have a couple of 3 or 4 good years around data centers, it's what comes beyond it. And we're absolutely not trying to pivot pollution towards being exclusively focused on that area of the market. It's additive. It's helpful. But we're not hanging our hat on this is where we go in the future and some have. There are some names out there at the moment. You'll know who they are. We'd like that wider proposition. How do we -- if we're still here in 5 or 10 years' time standing up presenting to the results, say, we've just continued our 12% compounding CAGR of earnings. And so we need lots of things that are growing well rather than necessarily betting the ranch on one opportunity. I hope that helps. And you were here at the first results presentation. So you've listened to all 25 of them probably. But anyway.

Richard Farrell from Jefferies. I've got 2, if I can. The first one, just looking at AC Industries, could you give us a bit more on how you're going to internationalize that opportunity and what you put in place so far? And then just a second part to that one. Strong first 6 months. How does that look when you consider the contingent consideration in the back value?

The current the contingent consideration is in 2 tranches. There's the first smaller piece, which is measured in 2027 and then the larger, that's about AUD 9 million. And then the larger piece, $20 million is 2029. Just to context it, to earn 100% of both of them, they would have to get to AUD 30 million of EBITDA in 2029. When we bought the business, it was 17 million. So that's the growth that we sort of target into it. So our current -- when you sort of noodle through the notes to the accounts, we've effectively assumed that we're going to hit the 2027 one because that's reasonably foreseeable. And at the moment, we've got a reasonably high proportion of the 2029 one that we're assuming is going to be hit as well. So we think that it's -- we'd love it to be max because that's the best check to be write because it tells you what the business has done. But yes, we're assuming it's going to do well, and that shows the growth.

If it gets there, it would be 6x trailing is the purchase price. So cracking deal and back to sort of capital discipline, that's where we want to deploy our capital. So the international growth piece is really interesting because when we were acquiring it, it was already underway. And we did a considerable piece of due diligence commercial that we don't normally do with M&A. So when we bought getAir in Germany, we did no commercial due diligence. We're now the leading proposition for decentralized heat recovery in Germany. Why do we need to do due diligence on a market we know. But we didn't know the mining customer base. We didn't understand the lifetime of mines and everything else. And we put quite a bit of color in previous presentations on AC, but it's already growing in those different areas.

I think the bigger issue for us that we need to address is the sort of key man or key team risk. The earn-out is great because we think that gives us a degree of security. But what we have to do is to build the resource and the team behind them. And that's frankly why Andy and Lee and I are going out and supporting Anthony, the local Regional Managing Director. It was us that sat in front of the ex-owners and convince them that it should come inside Volution. But now we want to encourage them to actually put a bit more resource in and build a stronger, wider team. That, I think, is the bigger challenge for us, less so do I think that they're going to grow internationally? They already are. And we haven't given you any color here in terms of exactly how it's growing on the prior year, but it's above our range. And of course, we look forward to showing you that in the second half of the year as it starts to become organic.

And just the kind of second one, you kind of mentioned it there, decentralized heat recovery, Continental Europe. You called out that you had a strong fourth quarter. Could you just kind of break that down into how much was internal actions in your half market? And then obviously, with getAir as well, where do you see that going?

Yes. Interesting question, how to sort of split what we brought to it and what -- look, in ClimaRad, we had a really strong revenue growth in the Netherlands, and I think it's absolutely about the proposition and the sales process. And we often talk about sales process in our group. And we're big on sharing best practice around innovation and around procurement and so forth. But I think there's probably more to do around selling best practice. ClimaRad have got a really well-executed machine. It's a project business. I think the way that they use CRM and they track these things is really good. So I'm confident that we're growing significantly ahead of market in the Netherlands.

In Germany, InVENTer, we've alluded to, we actually changed the leadership about 6 or 7 months ago. We've moved -- I haven't really talked about it at length today. But if you do get a chance in the prelims, quite a lot around our regional focus and how we've got 4 regional leaders now. And I think we've just got a stronger team in Germany in InVENTer and getAir coming in will be part of that team. Martin is already working on a more consolidated approach to innovation. You see for us, and I'm not this isn't been critical of others on M&A and how they integrate, but we have a really fundamental view on acquisitions and how they come into the group. And that is -- what I don't want is 31 deals and 31 managing directors, all doing their own thing because for me, that is just a portfolio of operating companies.

What we actually want is some scale benefits and some joined-up thinking. So getAir is an OEM proposition in Germany. There's lots of heating companies in Germany that are decarbonizing moving to heat pumps. And as part of their proposition, they go and see customers and say, "Hi, you want a heat pump and you also need some decentralized heat recovery." So we've chosen to be in that market through getAir. What that means is that there's a leg of the market that we can't be in with our own brands, but we can be with the OEMs.

Now you might say, but what if the OEM does it themselves? You look at these large heating groups in Germany. they're not interested in developing a few million euros of revenue of heat recovery with the widest product and best portfolio in the market. So it's a really good honest partnership. We can go to them and say, we want to be your partner in that space. It's complementary to the project business that we have elsewhere under our other brands. And we're really excited about it. So it's a great acquisition. The integration is underway. It's only a couple of months in. And I think it will be really exciting for us, notwithstanding the fact InVENTer actually started to perform, and we alluded to it very well over the last 4 or 5 months.

Ben Varrow, RBC. Two, please. First, on the targets, so margin and returns, both comfortably ahead, I suppose, how do you think about those shaping out over the next few years? It sounds like you've got a bit more to do on margin. Next one on leverage. Where do you see that shaking out to at the end of the year? And how should we think about headroom for M&A from here?

I'll take both of those. So we've had the targets question quite a few times and even change them. I think the returns on invested capital, as you saw there, it was 27%, 28% 3 or 4 years ago. It's now sort of 25.5%. But in those last 3 years, we've been very, very acquisitive, and we want to carry on being so. So actually, if we can keep up same or very close to pace of M&A and retain those margins there or thereabouts in the low 20s, we're delighted with that. So our target of 20% and above, I think, is absolutely valid there. It wouldn't be valid if we stopped acquiring, but then the whole business model changes. So on the premise of acquisition, we think that target is right.

The margin target is something that we do keep getting asked about because our stated target remains 20% and above. And as we showed, all 3 regions are above that, and we're continuing to sort of eke out the organic opportunity. So again, boring answer, but one I've given before. This is not us saying it's going to come down to 20%. It's also not any lack of ambition or saying we've run out of ideas. But I think we just believe that there would be no benefit from restating a new target fine. I mean you guys might model something slightly differently, but you can do that anyway based on what you think is going to happen. But internally is, I guess, what I'm really talking about I think we've got it in the right spot right now in terms of margin awareness, margin attention that people know to focus on all the small things, but they also know that it's about a long-term play and doing the right things for the long term. And the danger -- if you said, I don't know, 23%, 24%, 25% target, you might drive in some sort of short-term cost saving behavior, which isn't right for the long term. So that's still our judgment. But it's not -- but absolutely, it's not about feeling it's going to drop down or taking foot off the gas in terms of the opportunities.

Leverage. I'm sorry, yes, yes. So -- so we showed you where we were right now. And of course, the movement in this -- in the year just gone was in the context of spending GBP 105 million on M&A. So what we say is crudely, if we had a year with 0 M&A, and we don't want to have one, but if we did, we would delever about 0.5 turn per year. So the cash generation is very, very consistent, very reliable, and that is what fuels the opportunity. So we've always said we -- if we did deals that took us up to 2x, 2.1x on acquisition for good cash-generative businesses that bring it down the other side, we're happy to do that. So getAir, took us to 1.8. If we did nothing else this year, we probably end the year at 1.3, 1.4. So that gives you more than half a turn to play with still.

And then Toby had a question...

A couple of supplementaries on the U.K., please, for a slightly longer-term perspective, but apologies if there's any repetition here. So a 5-year perspective, all the growth in the U.K. has come from residential, which I think is interesting in itself. exports up a bit, commercial and Torin-Sifan are down. Just interested to know on that basis, where you think the market position is in the U.K. now compared to 5 years ago because that's an unusually big residential increase over that time period? That's the first question.

Yes. Okay. Do you want to ask all of them just in case?

Yes, sure. I guess the supplementary to that bit is what do you think the mix looks like in 5 years' time? You've sort of spoken about the commercial a little bit. Also in the U.K., gross margin increase, but that was amplified by what looks to be a reduction in OpEx over the year. Just wondering if there's anything structural in there that we should be aware of? And final question in Continental Europe. Just wondering, there's a small gross margin increase there as well. Just wondering if there's any sort of reinvestment further down the P&L in the OpEx line that stopped that dropping all the way through.

Okay. I've got it. I'm glad I asked them all at once so I can bring them together. So U.K., there's a couple of things that happened in the U.K. that have meant the residential has grown significantly. And I think regulation is a huge part in that. So Lee chairs the BEAMA Ventilation Committee. I won't ask him to come up and talk to you about it, but we could tell you we know what's happening in this space. We've innovated in advance of where the regulations move to. There's a sort of an expectation about where we're going to go in future. And it's our job through Lee and the wider team to make sure we understand it and then to innovate ahead of it.

So one of our fastest-growing products in the U.K. in the new build space, we developed in 2022. And we were talking about the other day, and we were talking about the volumes that we sold in the first couple of months, and we went, is that it? And now it's very significant. And the reason is we got there first. We had that first-mover advantage, but it was actually a very, very good solution, specific fanpower, noise and cost. We're absolutely paranoid about cost. I say it with Martin in the room, and he knows it anyway, but we're absolutely paranoid about cost because this is a competitive market. There are other people out there. There are very good competitors in this residential space. So if we're going to have a bigger share as we grow, we've got to be able to bring not only a compelling solution to our customers, but one that they're prepared to pay for. And there's others that I think do elements of that, but you've got to do both of it.

So I think we're predominantly from an organic perspective, going to be this sort of split. I do think there's some commercial add-ons that we could do, and we started to think about them a little bit more, but we won't rush. And all I would say is although we're talking about the complexion of the business, OEM and commercial being maybe broadly similar, the level of profitability that we deliver from those revenue streams is significantly higher. The operating profit in the year was circa GBP 50 million. And if you go back, when we listed the group was circa GBP 20 million, including some overseas activities, but it was mainly in U.K. It's been a very, very exciting journey.

Gross margin, I think it's operational excellence and efficiency. We had a good year in the U.K. in '25. My sense was that we weren't as efficient as we should have been. And we doubled down on those efficiencies in '26, although we also took on an additional building that we paid for and expanded the operating profit margins. The new facility at Dudley that we had a full year of lease costs in '26 that we didn't have in '25. And then just more generally about investment, our biggest investment that we make is primarily in products, in tooling and in R&D and in products. It is a relatively CapEx-light model. We don't have an ambition to necessarily own our facilities. So quite a few of our facilities are leased, and that's fine. That gives us some flexibility for the long term.

So the business is actually investing quite a bit. I alluded to some of the things that are underway at the moment. We bought the facility in North Macedonia because we couldn't lease it. We're spending a lot of money on expanding it at the moment. And quite frankly, our ambition for ERI, Energy Recovery Industries over the next 5 years is to double the revenue. Now that's not a new target that we're necessarily going to guide to, but that's the ambition that we're working to internally and is driving the sort of investment decision. And it's back to Andy's point on margin. We don't set margin targets for the sake of margin targets. What we do is we look at what's the art of the possible.

And it's also when it comes to pricing, and I talk about our pricing being value-based, what is the value of the proposition that we bring to the customer and how much are they prepared to pay for it? That's really important. And that's probably slightly different for our industry because it quite often ends up being cost plus and so forth. And for me, it's about -- if we do a really good job innovating, we have great service and the customer is prepared to pay x, that's what they'll pay. And if you look in the U.K., as I say, lots of formidable competitors, but we're able to eke out share gains. And that's not because we charge necessarily more than anyone else, but we create more value when we do it. We're just coming -- yes, okay. Do we have any online at all? Just...

A couple.

A couple. Okay. We're okay to carry on, please.

It's Rajesh Patki from Barclays. I've got just one remaining. You've talked about diversification away from the U.K. into Europe and Australia over a number of years. Can you talk about incremental thoughts on potentially expanding into the U.S.? Or are you content with the opportunities in the existing regions for now? Also, if you've taken a look at any targets, what do you see as the key constraints in the U.S. from an M&A perspective?

I mean I'll answer it more sort of holistically, I think, Rajesh. So look, we think diversification is really important, and it's about expanding access to the market. It's not just doing it for the sake of it. It's because if we just stay as a U.K.-only business, there was a limit to obviously where we could sell into and how far we could grow. So it's all about the market access, the growth opportunities. Our judgment still is that at the moment, the 3 markets, Ronnie talked about making choices earlier. The markets we've chosen were deliberate and are deliberate because we think there's a product overlap and product sharing opportunity. There's an organizational sort of efficiency opportunities. So we think that these are still good choices, and we think there's a lot more we can do in all 3, but particularly probably in Continental Europe from a market share perspective, but selective in the other 2.

And when it comes to the U.S. or other markets, we also have quite openly said we are opportunistic. So we're not going to say no, never, and we must do X or we're not going to do Y. Our judgment, though, is that almost certainly at the moment, we'd have to pay more, we'd have to buy bigger, the sharing of the synergies and benefits are less certain. And so back to that importance of returns. At the moment, our judgment is it probably wouldn't offer the same return outcome as the existing markets would. But we'll keep learning, keep observing and be opportunistic in case something ever did pop up. But it's not a -- we must be there or we must be there. It's all about that returns piece.

It's a great question because I don't want to be controversial, but ratings, if you look at some of the U.S. CVAC plays that may or may not be delivering a similar trajectory of performance as us and ratings versus where we are. That's probably a debate in itself. As Andy says, for us, it's the synergies and the route to delivering. If you take AC Industries, it's a step out from buildings into mining ventilation. I don't think we'd have done that deal in Australia if we weren't in Australia because we want to bring some competence around it, some governance, some management, some security.

And the thing is, although the U.S. is a big market, it's not driving energy efficiency in the same way as maybe we see in Europe. But look, as I say, Volution has got a huge runway of opportunity many years into the future. And at some stage, we might be standing up here saying we've done deal #53, not 31, and we're running out of opportunities in our chosen markets, and there's a step out. But I think it's about returns. And if you look at AC and the returns that we'll make there, I'm confident we'll get there as well. The stellar and there's a risk of dilution, I think. No more in the room. I just see if we've got any.

Just a couple online from David Farrell, Jefferies. You've touched on the growth -- international growth on AC Industries, but can you expand on what international infrastructure you might need to drive the growth? And second question from David. How do you see the interplay between ventilation and cooling solutions?

Okay. I can do both of those quickly. So I if you look at AC Industries and the proposition, the nice thing about the solution is because it's a HDPE, high-density polyethylene textile solution, it's actually flat pack. It expands in the mine when it's under pressure, it charges at 4,000 pass, but we can actually manufacture and ship anywhere, and we're already doing that. So I think the sort of infrastructure would be if we grew significantly ahead of our expectations, there'd be a factory capacity challenge there. And then it might be appropriate to manufacture these products closer to the market. But our logistics costs are probably only about 5% to 6% of revenue and the advantage of scaling up our existing Sydney factory, which is what exactly what we're doing right now works. The rest of the infrastructure is more about selling expertise closer to the customer. So I think we'd like some more selling expertise in those local markets rather than having to fly all over the world. So I think a relatively light touch. If we did need a new factory, it would be a fantastic outcome because of the growth. And then the other question was on -- and I've forgotten, I think.

Just on interfere between ventilation and cooling.

Yes, and cooling. Yes, okay. It's a really good -- it's a good question because we -- air conditioning is the only way to properly cool a hot property in the middle of summer when it's 35 degrees outside. You'll never get to the sort of cooling that we can provide, but it's expensive. I was talking to somebody the other day, said, I run my air conditioning all night." I said, have you calculated how much it costs. So it's GBP 12 a night, GBP 360 a month, and they fell off the chair. It's expensive. These are products that consume a lot of energy. They're expensive to install.

And so what we're seeing is sort of ambient type cooling or free cooling, and we see that. And it already happens in schools in the U.K., there's something called natural hybrid ventilation. And what happens in the summer, we have some quite sophisticated control strategies that bring in all the cool air from outside overnight. You bring the temperature of the classroom down to 17, 18 degrees in the morning and then you're less likely to overheat through the day. So ventilation and cooling are absolutely intwined. And I think that's a greater opportunity for us. And maybe we don't talk about it enough, but we have a lot of solutions at the moment that provide ambient cooling, some are bypass in mechanical ventilation heat recovery units. Part O, we have cool box products in the U.K. that we sell to developers. So yes, so the overheating risk is a tailwind opportunity for us in ventilation.

Okay. So sorry, we went over, but great questions. And just to finish, we're really excited about our results and equally optimistic as ever about the outlook. And thanks to all of you for giving up your time this morning to come and see us. Really appreciate it. Thank you.

So I'm Ronnie George, Chief Executive of Volution. You know me really well by now. Andy O'Brien, Chief Financial Officer, been with the group for nearly 7 years now. So we've been doing this for some time. I thought about this, this morning as I came in on the train, another set of half year results, and we'll take you through it. But look, I think in no uncertain terms, this is a really great set of results. I'm really proud along with Andy, to be standing up here this morning taking you through it in what is no doubt an ongoing sort of challenging backdrop.

So we'd like to take you through our results. I'll just sort of kick off with some headlines, but it is a strong first half performance, and not surprising really. We had revenue growth of just over 20% on a constant currency basis, obviously benefiting from the acquisition that we made previously. But we've had strong volume-led organic growth of 4.2% on a constant currency basis. All 3 of our regions have grown organically. Very, very pleased about that.

Adjusted operating profit margin is 22.6%, and that's an organic margin improvement of 40 basis points on the prior year. We had some small dilution because of Fantech. But in actual fact, the dilution from Fantech is today far less than you would have expected when we first made that acquisition. So really delighted with our operating profit margin, and we'll spend a bit more time taking you through that in a little bit of detail. And good cash conversion, 98%, and this is at the half year. So typically, we would expect cash conversion to be stronger throughout the year. Second half is stronger. So 98% at the first half of the year, debt leverage 1.3x.

And look, one of our metrics around revenue is to talk about low carbon revenue, and that increased to 72.1% of the total, and that's because of good growth throughout our heat recovery ranges. And this is a sort of post half year result outcome, but we completed the acquisition of AC Industries in Australia at the beginning of February. We'll spend a little bit of time on this one as we move to the back of the presentation, but this is a super exciting new addition to the group that we completed at the beginning of February, strengthens our position in Australasia. Very, very pleased about bringing that company into the group.

So look, good organic growth and further organic margin expansion. And this slide here, I said to Andy, I won't do too much of it. In actual fact, I think it speaks for itself. These are our long-term sort of key financial targets. And in actual fact, if you look at each of them individually, I won't read them out, but we are either ahead or in line with each and every one of those targets. Very pleased about this. So as we go through in a little bit more detail, we'll elaborate. But look, it's a really good set of results. I'm going to try and elegantly move away now and hand over to Andy, who's going to take you through the financial review. I'll come back then afterwards and just go through each of our 3 geographic areas and just spend a little bit of time there. We think this presentation probably takes 25, 30 minutes, and then we'll leave the balance of the half an hour, if you like, the hour for Q&A, okay?

Good morning, everybody. As Ronnie said, it feels a bit strange standing up rather than sitting down. And of course, the downside when you're 5 foot 7 is people realize that when you sit down, it's not so obvious. So look, Ronnie has already -- the highlights for the period in large part was the financial performance. So obviously, Ronnie has talked about a number of these pieces already. But this -- we like to look at this, obviously, as I'm sure you do over not just a 1-year basis, but over a long-term consistency basis. And I think if you follow all of those charts over the last 5 years, I think it's a really strong and consistent trajectory on all of the key things that we want to deliver.

So it's not just about delivering well in this period. It's about delivering well consistently. I think I'll go into more depth on each of these key ones sort of as we go. We've -- on the margin one, we've shown you what the margin would have looked like organically as well as in totality. So this is where you can see that actually there was a nice organic margin improvement. And then as Ronnie said, the Fantech margin is already moving in the right direction through some really good initiatives that we're driving, but there is a little bit of inevitable dilution from that. But look, overall, still a really, really strong margin outturn from the business.

On the bottom right there, and I will do more detail, obviously, around cash flow as we move deeper into the slides, but the leverage there of 1.3x, full clarity. Of course, this is before the completion of AC Industries. So we completed that transaction on the 2nd of February. If you had put that pro forma into our numbers at 31st of January, then that 1.3x would have become 1.8x, which is exactly what we'd sort of signposted when we completed the transaction -- sorry, when we announced the transaction pre-Christmas. And I think what it does also still show is that 1.8x is still in a very comfortable position in terms of future M&A optionality, particularly given how strong and consistent and reliable the cash generation of the business is.

So this slide actually basically covers what we've already talked about. So maybe I'll just draw on a couple of the things that actually aren't there, but just to sort of, I guess, help the analysts with their modeling and with their numbers. So yes, revenue, operating profit, we'll talk about some more as we go into the subsequent slides. Finance costs were, of course, slightly elevated in this period because of the borrowings for Fantech. The actual interest rate on our debt was slightly down compared to the prior period. But in total terms, finance costs increased from GBP 3.6 million in prior year first half to GBP 5.1 million in this first half, I say due to the Fantech borrowing.

Our tax rate was up ever so slightly. And again, we'd indicated that this would happen. Australia and New Zealand have tax rates up at 30% versus the low 20s for the group average before that. So our effective tax rate nudged up from 21.8% in full year 2025 to 22.5% this period. You'll also see reference there to the dividend. So dividend -- interim dividend of 4p per share. So that's up almost 18%.

So then breaking the revenue a little bit further. As usual, Ronnie will go through the regional color and the regional details in subsequent slides. But I think what's really pleasing about that block in green is 4.2% constant currency. So above the midpoint of our 3% to 5% stated range despite, I'd say, generally speaking, still unhelpful markets, which Ronnie said I've been doing this for 7 years. He's been doing it for 18. I think for the 7 years, I think I've been saying unhelpful markets for most of those 7 years, but I think that's definitely the case this time around.

But actually, what's really pleasing, and we did talk a little bit about this at the year-end. We said that the last couple of years, we've had really strong organic growth, but there's been pockets of super strength and some pockets that have been tougher. And I think what we've signposted was that we expected a bit more of a normalization around that sort of 3% to 5% range. And indeed, what you see there is all 3 of the regions, really pleasingly delivering within or in the case of Europe, slightly above that range.

Bottom in the green strap line there, you'll see the sort of how we've analyzed the 4.2% between volume and price. So it is very, very much a volume-driven growth, price 0.6% overall blended for the period. And of course, looking back to the margin or indeed looking forward to the margin, that 0.6% price is still clearly, I think as this would demonstrate correctly pitched because we've been able to continue to expand the organic margins actually of all 3 regions.

So if you look at the bottom middle bit there, where you've got the regional breakdown of margins for this period compared to half 1 of 2025, U.K. now up north of 26%, which means a fantastic margin. But Europe, again, 120 basis points growth. And then in Australasia, of course, this is where the Fantech mix effect comes in. But if you looked at the organic margin, that was up again in the period. So look, a really, really pleasing set of numbers on all of the businesses there.

I move to the next slide. A little bit more detail maybe on this one. So cash conversion, as Ronnie said at the outset, we set ourselves a target of being 90% or above cash conversion on a full year basis. We generate cash reliably through the year. But generally speaking, our conversion might be slightly higher in the second half of a normal year than the first half. So actually, 98%, I think, in that context is a really, really pleasing outcome.

If you just look at the waterfall there on the left in terms of how and where we've used that cash over the period. So working capital, there was a small increase or a small outflow of GBP 4 million, but that's very much in line with activity growth. So I think actually, our working capital is well managed. Our inventory over the previous couple of years, we've seen a little bit of optimization. So this was where perhaps 2, 3 years ago when supply chains were particularly difficult, we had, as you'll remember, deliberately increased our inventory, which we think is absolutely the right thing to do for a customer service perspective.

But we then said that perhaps that had opened up a few opportunities to slightly optimize. And I think over the previous couple of years, we've done that. And I think now we've got working capital very much at the right level for the business. So I would expect that typically now to flow in line with activity, which I think is what you see there. We spent GBP 4.3 million on CapEx in the period. And we've always talked of a sort of GBP 8 million, GBP 9 million, GBP 10 million full year spend. So it's very much in that range. It's slightly higher than we spent in the equivalent first half of last year, which was GBP 2.8 million. But I think, again, our CapEx is not a big number, but that's not because we hold it back. We're always keen to invest in things which support and grow the organic business.

And so in the period, some continuing exciting investment around new products. So we spent just under GBP 1 million on new product development projects and initiatives across the business, a similar number, so just under GBP 1 million in Reading. So a number of you have been around our Reading facility. Those who have been around more recently will have seen some of the big investment that we've done there in terms of injection molding capacity, and that's all about efficiency, future-proofing capacity for further growth.

And then we've also continued with programs such as the capacity expansion in ERI in North Macedonia, which will take place over the next couple of years. The acquisition number there, so the GBP 30.1 million, that is the deferred consideration for the Fantech acquisition. So you'll probably remember that when we completed that in 2024, there was a $60 million, GBP 30 million deferred element of the consideration. So that went out in this period. And as I mentioned earlier, the leverage of 1.3x there is pre-DAC Industries transaction. So with that, it would have been 1.8x.

Return on invested capital, again, really -- what we sort of said here is our target is 20% and above whilst continuing to invest in really attractive and value-accretive acquisitions into the business. The methodology we use here is to have last 12 months of earnings and measure that against a 3-point average on the balance sheet. So this is the -- so that's 12 months ago, 6 months ago and now. So this is the first period where actually you see the complete effect of Fantech in that return on invested capital number there. So the fact that it only nudged down slightly from 25% to 24.6%, I think is having done by far the biggest acquisition we've ever done. I think that's sort of really supportive of the strength of this metric. And there, as we said on the third bullet point, if we hadn't had that Fantech effect this time around, again, the organic returns for the business would have improved.

I don't normally take this one. But in terms of sustainability, as Ronnie mentioned earlier, low carbon revenue percentage continuing to expand, in fact, quite meaningfully there from just under 68% to just over 72%. And we think this is the direction of travel. So whether this is, as we've said in the bullet point there, continued growth in heat recovery. And actually, in the U.K., it's also been the sort of continuous running solutions, which the regulations have supported over recent years.

Recycled plastics, we're now up at a very, very strong level, north of 80%. We do -- we're continuing to work on opportunities and new materials and new ways of nudging that number up, but it does get difficult in this period, although we did increase -- so we increased the tonnage of recycled plastics that we use across our facilities. But in terms of percentages, it's come off ever so slightly. There have been a few availability challenges, and this is where we continue to sort of trial and look to develop new sources.

But north of 80% is a really strong number. And I think I'm sure when we come to the Q&A, we might talk a little bit about what's going on in the world right now. But I think with oil price volatility, I think the benefit of recycled plastics, which are somewhat insulated from that effect, I think, is definitely something that we think is important.

Health and safety, slight worsening in the metric here, which is a disappointment. And so we -- this is something which we continue to focus on very, very strongly as a group. So how can we share best practice, how can we support the smaller businesses and the bigger businesses and continue to improve that culture and that methodology here. We've had a new U.K. Operations Director who's joined us in this period, and she's made a great start in terms of supporting the U.K. operations, but she's also very, very steeped in health and safety. So I think she's going to be a really powerful advocate for continuing that and supporting some of our smaller businesses in how they move forward there as well.

So with that, I'll pass back across to Ronnie.

Thanks, Andy, for that. So as I said, it's a cracking set of numbers to go through. We're really very pleased about the performance in the first half, but a little bit about what's sort of been happening. So Volution at a glance. And not surprisingly, our proportion of total group revenue in Australasia has been growing.

The important takeaway from this slide is geographic diversity. I think what we've talked about for some time when we stood up in the past is we've had some really strong revenue growth in the U.K., which I know has been sort of counterintuitive to some of you in terms of the overall performance of the market, and that was very much sort of regulatory, is regulatory led and benefiting from some share gains and some innovation that we brought to the market. And we're still -- look, we're still super excited about the U.K. market medium term, but we know that it's a little bit more challenging at the moment in terms of new build housing activity, for example.

But what we've got is this geographic diversity. And as much as Andy and I would love to be standing up here and saying every individual element across all 3 of our geographies is pointing up at the same time, the reality in life is that, that's not always the case. But clearly, what we've got at the moment is some stronger performance in some of the other areas. And look, we're absolutely nailed to these 3 geographic areas. I'll talk a little bit about AC Industries towards the end of the presentation. But of course, our proportion of total revenue in Australasia will grow further with that addition.

And you can see it nicely here. We've been listed since 2014. I became Chief Executive in 2012, and this was all about a classic buy-and-build international expansion strategy, and we've delivered that really well. So we're culminating now with 1/3 of our revenue still in Europe. And not to spend too much time on the sort of M&A and the outlook and so forth. But by definition, we're underweight here and to a lesser extent here. And of course, that's where we continue to focus all of our time and attention in terms of future M&A opportunities.

But just going through each of the sort of regional areas in a bit of detail. I remember probably, I think Andy joined in 2019, we had a U.K. operating profit margin that have been a little bit subdued through quite a big investment that we've made in Reading, and we were talking about 18%, 19% operating profit margin. We've just landed at 26.3%. And it's a very established, mature U.K. operating structure here where we're getting huge economies of scale and running our brands really well into the market.

And the way to think about this is our residential ventilation grew 4.2% in the year, which we're actually really pleased about. We had a very strong residential performance throughout all of FY '25. And if we look at the moment, we're still underpinned by regulatory changes. We still see opportunity for share gains. Tactically, we think there's an opportunity there, but we are clearly against the backdrop of a little bit less certainty around housebuilding. And I think by now, we probably hope that housebuilding was recovering at a faster rate.

But nevertheless, we're delighted about the performance in the first half of the year, and regulations will continue to be a theme. And of course, sticking with that, [indiscernible] isn't so much a regulation, but an awareness issue in U.K. social housing. And we've seen ongoing strong social housing demand. We think that's set to continue, but there is also the balance of affordability versus the demand. The demand for ventilation solutions in social housing refurbishment is strong. We see that sort of tailwind being there for many years into the future, but then you come back to the affordability for these housing associations and so forth.

But look, these are areas where we consider ourselves to have a leadership position across residential new build, social housing refurbishment and private RMI by some considerable distance. And I think that's a good segue into commercial, down 7.3%. Tough market. We don't think the market has been particularly easy. We're not particularly happy about our performance in U.K. commercial, and it remains an opportunity. It remains an opportunity because we are subscale, we are smaller. And we made some investments in the year. We've taken on an additional facility in Dudley in the West Midlands. We've effectively grown our footprint 2x. That's incorporated in the numbers.

So our 26.3% operating profit margin includes the facility that we now have and that we're scaling up. And we remain ambitious in this U.K. commercial market, but I think it will take us some time tactically to actually start eking out share gains and so forth into the future. But it's absolutely an important priority for us.

Export, it's a small number, grew really well, 20% revenue growth. A lot of that in Ireland. Ireland housebuilding trajectory is what we would probably like to see from a U.K. perspective, but we're not there yet. Strong regulatory drivers, strong market position, quite a bit of innovation, perform really well. And I think the outlook is equally quite strong. I saw a statistic the other day about whether or not necessarily we believe it, but Irish housebuilding getting up to 60,000 units in the year into the future, and we're probably only running at about 40,000 units at the moment. We still think there's a strong market outlook.

And just finally, on the U.K. piece, OEM, this OEM revenue is third-party customers. A lot of our motorized impellers are increasingly used internally. We struggled with our OEM proposition a couple of years ago, done some tremendous work, closing two facilities into one, improving the quality of the business, and we're really delighted about the contribution in terms of organic and profit growth that the OEM part of the U.K. business has delivered in the year. So look, overall, 3.8% organic growth, good margin expansion, adjusted operating profit up 6.2%.

And moving to Europe. I think in particular, I'm pleased about the Nordics. For many years, we'd sort of come to these presentations talking about the strength of our Nordic business, and it's undoubtedly been really quite tough over the last few years. But we've seen really good recovery in our Nordic business. And I think it's fair to say that, that recovery was more pronounced in Q2 rather than Q1. So the trajectory is definitely very encouraging. And as we come into the more recent months, we're seeing that in the start of the second half of the year continue to go very well.

In Central Europe, I think it's a little bit more of a mixed bag with some outstanding performance from ClimaRad with our decentralized heat recovery ventilation. That's continued to perform very well. The outlook is positive. The order book has been growing. In Germany, we've probably seen some stabilization. And in Energy Recovery Industries, Andy has already alluded to some of the investments that we have made and are making and our ambitions for that particular revenue stream as we grow into the future.

And actually much smaller from a revenue perspective inside our Continental European business is Belgium and France. But as we always say, it doesn't matter how small or immaterial it might be. We drive each of these individual areas equally well. And we think that the outlook there in the second half of the year is probably slightly better for us in many respects, some of the self-help and the things that we're doing. Very significant margin expansion and 16% operating profit growth in the first half of the year. Operating margin is up to 25.3%. So very pleased about our Continental European activities. And as I say, Volution is still relatively underweight in this market. There's still white spaces on the map that we would look to tackle into the future.

And then finally, Australasia. Organic growth of 3.3%, but we split this now into residential and commercial across both Australia and New Zealand. New Zealand has been difficult. We've talked about that for some years, but it's certainly better. And I think clearly, having a leadership position across multiple brands in both Australia and New Zealand. Tactically, we're able to apply that to try and take share. This is what it's about for us. Clearly, the Fantech acquisition was super exciting in terms of the size and the scale that it brings, but it's also about having different routes to markets and brands that we can leverage to capture more of the opportunity.

So residential, very good. Commercial, a little bit more difficult. But overall, we've talked about an organic margin expansion. And I'd like to think of our Australasian model as being the sort of the steps on the path to follow into what we've established with that mature U.K. platform. And certainly, working with the local leadership team, I'm actually due to be out in about 3 weeks, but traveling through a slightly different route. But it's about encouraging that team to follow what we've clearly done very well at in the U.K. And there's a lot of sharing of knowledge and experience there.

So look, operationally across the 3 areas, very pleased about the first half of the year. And sometimes I do feel when we turn up and talk about more challenging backdrops and markets, but they are challenging. And I think that the performance that we've had in the first half of the year is a credit to our local teams, dexterity and just picking out share gain opportunities and just being absolutely obsessive around customer service, a conversation I had with somebody in the U.K. more recently and also that discipline around initiatives and how we track those initiatives that effectively underpin our margin expansion.

Just quickly on AC Industries. We didn't have the opportunity to talk to you about this. We announced it in December. We completed at the beginning of February. This is an adjacency for us. It's ventilation systems in the mining sector. It's very exciting. We've had the first month of review in February, and that's performed really well. We're looking at an EBITDA margin here of 35%. So clearly, it's above our 20% target, and we're in very good shape here and excited about what we can do. And we're spending a little bit of time now just helping the team think about the international growth.

We're going through what we call a 200-day plan integration, and that's really important just to bring it inside of the group, and then we'll start working with the local team about how we can grow this proposition internationally outside of Australia, where we have a very big market share.

So summary and outlook, we had to get this slide in just quickly. We won't spend too much time on it. That's what we've talked about for the first half of the year. And as I say, sometimes you have to sort of pinch yourself when you turn up talking about 20% revenue growth and 19% improvement in earnings per share. These are sort of numbers that over the medium term, we couldn't necessarily look to repeat in every half, but really outstanding first half performance.

And just on to the outlook. And of course, we started drafting these papers and materials a few weeks back. And we've certainly had a sort of self-reflection on the current state of the world as it were and how that fits for us. And I think just not to read it all individually, but there are a couple of important points to pick out of here. And I think it's this one about being mindful of the heightened geopolitical risks. And of course, they are quite fluid, but remaining agile and proactive to these potentially changing conditions. And I hate to mention it, but through COVID, we had what we consider to be a good COVID where from a supply chain and sort of operational customer service performance, it was very strong. And I think that experience that we had is hugely underpinning for whatever might happen next.

And look, we think we're in really good shape. And as a result of that, the Board now expects adjusted earnings per share for the year to be at the top end of the range of market expectations. And we think we're in good shape, notwithstanding the wider geopolitical risks. So I think we did manage to do the 30 minutes as usual. That is the sort of formal part of our presentation. I think Andy and I will come and sit down now, but we'd just love to have your questions. I know we get some really interesting questions from the floor.

Aynsley and I am from Investec. I think you've got 3 actually.

First of all, kind of obvious one. I'm interested where you see the kind of direct and indirect risk around the geopolitical situation, so energy cost, supply chain, as you mentioned. Second question, just on the kind of -- obviously, great performance on the margin. I think pricing was only up 0.6%. Just interested how kind of cost inflation, was it running higher? Did you take out costs, kind of how that all fits with the low increase in the pricing? And then maybe, Andy, I don't know if you could give some guidance around the absolute level of net debt you expect for the end of the year pre any more acquisitions also?

On the first one, I mean, the geopolitical risk, we had our Board meeting on Tuesday, and we put a risk paper together and sort of articulate -- gone through it in some detail. But if you sort of break it down into the constituent parts, of course, you've got demand. And I'm not going to sit here and predict in any detail what's going to happen to demand other than I did say that if you think about energy security, what I think this does to from a sort of low-carbon energy transition perspective is it further focuses the mind.

Now that's medium term. That's not going to help us in the second half of our financial year, but there is definitely an increasing awareness around energy security, and this is a start reminder right now. So look, I think the long-term dynamics underpinning regulations and so forth, this is, dare I say, a good thing. In terms of demand and so forth, I don't think it has a material impact on us directly. But of course, there could potentially be a widening consumer confidence issue over time. But I think that's the sort of macro.

Coming back to individually, what does it mean for us? Look, specifically, we're not energy intensive as a business. We're not CapEx intensive. The 2 probably go hand in hand. So -- and if you think about issues such as our biggest energy cost is heating and lighting our facilities. We've always taken a long-term view in terms of protecting ourselves on costs. I think Andy reminded me that we're hedged on gas prices to the end of 2027 for all of our U.K. activities.

So -- but actually, it's not that material anyway as a cost relative to other risks. Andy has talked about input cost materials. We are long term in terms of hedging and fixing our material input prices, and I think that's completely covered off almost 0 risk in half 2. And then beyond that, if there is a wider market implication, then we talked about price agility and so forth and pricing power, then we would act. But we don't see a need to do that right now. I don't think things are materially different.

So the other issue is around logistics and supply chain and so forth. We've got quite a large sort of Southeast Asia supply chain. But in actual fact, this crisis doesn't really have a huge impact on that. We've already been sailing ships from China and so forth around the Cape for the last 12 months because of the houthi type dispute or threat. And so this for us is may be some impact on sea freight costs, but probably -- and nowhere near as pronounced as what we had in COVID. If you look at what happened to 40-foot container rates in COVID relative to where they might potentially go now, I don't see it as a big risk.

So I think we're in really good shape. Andy talked about the working capital investment in the year. Our customer service generally across the group is at exceptionally good levels. We've hired a new U.K. Operations Director, been with us for about 3 months. We talked about that individual in one of the earlier slides. So I think from a customer service perspective and operational sort of cadence, we're very, very happy about where we are.

And just moving into the second question, Aynsley, was around how we delivered the margin expansion. A little bit of price. I think there has been a little bit of price there. I think price increases have moderated more recently. I think they were bigger earlier going back over the last couple of years. We are very, very focused around initiatives, whether it be product value engineering initiatives, whether it be supply chain, whether it be operational excellence, whether it be indirect cost efficiencies. We haven't really talked about technology and AI, but we're starting to apply more technology in the business to drive efficiency.

And my sense is what you saw there in the operating margin expansion in the first half of the year were the efforts that we've been making over the last couple of years. And what I'm absolutely confident of is the pipeline of issues that we are driving going forward to continue to underpin that. This isn't sort of campaign-driven initiatives. This is part of our DNA. I do genuinely believe this is how people operate each and every day when they come to work.

Yes. And then just quickly on the net debt, Aynsley, if you don't mind, I will talk excluding leases because I think that's the best way to do it. So we were GBP 143 million just under at the half year point. Obviously, that was before the ACI spend, which is, give or take, is GBP 75 million. So if you add that on and then you have our sort of normal amount of cash generation in the second half of the year, I think you're ending up sort of close to GBP 200 million, maybe a little bit less than GBP 200 million in terms of net debt.

One thing I would say, and so I'm not going to predict it, but just a little watch out for is the -- how that impacts from currency translation. So effectively, all of our debt is denominated in non-sterling currencies. Most of it now is in Aussie dollars because we match it with the acquisitions. And so when you look through the cash flow detail in the statement here, you'll see that actually in the first half, the Aussie dollar did swing quite a bit towards the end of the period. So we actually had a GBP 6 million increase in reported net debt simply because of translation. And it's probably gone a little bit more in the period since then. Who knows what happens over the next few months. So that may skew it slightly, but that's roughly where you are.

Rob Chantry at Berenberg. So yes, 3 questions from me. So firstly, on AC industries, clearly, mining, specialist industrial. I suppose just interested in your experience in the market post acquisition and completion with regards to do you want to do more in Specialist industrial? How has the industry responded to kind of a nonmining kind of ventilation business getting involved? How do you see the scope for more specialist industrial going forward?

Secondly, Nordics, I think commentary was around an improvement through the period. Clearly, many geographies, but just the dynamics there would be helpful and the kind of the run rate. Then thirdly, U.K. residential. Can you just put that 4.2% organic performance into a market context, i.e., how has market share evolved? Where are you winning, where you're missing out?

Okay. The M&A and why AC, when we first started to look at M&A back in 2012, the available capital to deploy was quite small, and we had a very focused residential-only strategy. What I'd love to tell you with M&A is that we could define what we do and when. But of course, the reality is that it takes two to sort of tango in this regard. So we can't be certain when opportunities will manifest, whether or not we'll be successful.

So through a sort of a development agenda over the last years, we've widened the scope, but there are some really important factors to consider. It's going to be air quality. It's got to be air quality because we believe that we're quite good at providing solutions around air quality. And we don't have any interest or desire to move outside of that. So that's absolutely sacrosanct.

And when we met the owners of AC Industries and started to talk about, we turn up and we use our public presentation and we talk to them about what we do. The owner said to me, this feels like us. Why? They provide healthy, good quality air in mining. You can't ignore the fact that people work in mining. It's not an AI threat. We're still going to send people down into mines. And they got it. And it was just -- it was just really exciting. And I think that's why we got the deal away. We know we won't disclose it here, but we know that there were 2 very big industrial trade suitors. And we don't believe we paid the highest price, but we were the best partner.

So that's where we create a lot of value. We acquire a business at a multiple of earnings that is super exciting with an EBITDA margin that's above the group average that we think has organic growth capabilities beyond -- potentially beyond our 3% to 5% in a sector that is exciting. So there's everything to like, and we bring -- we do bring some synergies. We'll bring some synergies in terms of, I think, how we can help them grow internationally, part of our wider infrastructure in Australasia. We've already got aboveground mining activities. So it's not that far away really.

But does it mean that now the next acquisition will be mining related? It could be but it might not be. And what I'm saying is that the scope, and this is what's attractive for us is we don't see -- Andy and I don't see any reason why in the coming years, our cash conversion is any lower than it has been. And in actual fact, there was quite a nice article written about us recently, and they've looked at it from just a purely cash generation perspective and the bar is growing materially over time.

And so the risk for us over time is not being able to deploy that capital into M&A and creating that compounding performance that we believe -- we believe now after delivering sort of 13% compounding nearly for 12 years, it should start to shine through. So long answer to the question, but it is really important. We've got wider scope of opportunities. We've got areas that obviously we were underweight in terms of Continental Europe that we'd like to address. We think the Australasian market is very attractive. And you get that economies of scale and back-office synergy effect because when we buy brands or our assets in geographies where we've got scale, then we're able to incorporate them really well.

So I think that hopefully covers off where it will be, but it will absolutely always be around air quality.

Just on the Nordics then, Rob. So we -- just a reminder, we are very much residentially oriented in the Nordics, but more RMI, but a bit of new build as well. And I guess over the last few periods where we've talked about it being a difficult market, the refurbishment had been reasonably resilient through that period, but it was probably the new build that was absolutely the toughest. And I think what we've seen in this most recent period is actually the refurbishment has not just stabilized, but hopefully is starting to sort of nudge upwards, but also the new build is getting better.

I think the whether that's a function of interest rates there because, of course, a lot of -- of course, a lot of consumers in the Nordics are on purely variable rates. So typically, when rates are going up, they feel it first. And then when rates are moving in, hopefully, a more favorable direction, again, they feel that first. So I think the new build conditions, the new build order book has got better. Refurbishment has continued to perform well. So the residential is coming through nicely. And over the years to come, a bit like the U.K. really, commercial is another opportunity for us where we're currently relatively minor to perhaps try and eke out a bit more gain there as well.

[indiscernible] was resi, yes. I think I covered it off probably quite well in the presentation. I mean U.K. residential new build, regulations changed in 2022. Part F, L and O all very supportive in terms of regulatory growth. And we've seen that benefit. We've certainly seen a huge benefit through '23, '24 and '25. And our sense is that there is still a further regulatory benefit to be had, but we probably had hoped by now that we would have seen a volume growth. And I think it's probably fair to say in the period that we've just talked about, volumes you could probably argue at best flat and probably slightly down.

And there's been quite a lot of consternation around things like apartment builds and some of the approvals under what we -- the so-called Gateway 2. So our sense is that residential new build, notwithstanding the wider backdrop, but mortgage rates have been becoming more competitive, had been. How long that's offset by, we don't know. We've certainly seen others talk about the recovery being delayed, but we're still optimistic about our own position.

I mean we always talk about this internally. It's -- the market will be what it will be. But if we just wait for the market to recover, that's not acceptable, and that's not the way we work anywhere. We've got some really good innovation. We think we can take further share gains in terms of what we're doing. We've made quite a bit of investment in our Reading facility and a further investment that goes live in about 6 weeks to increase our capability and our responsiveness with an ambition to grow share. And we've got a couple of segments in the U.K. market that we think we're underweight in that we can go after.

So I think what I'm saying is it's going to come largely down to self-help rather than the market necessarily being strong. But I don't think the RMI market is necessarily weaker. I think it's reasonably okay, but I'm not arguing that the consumers are ultra confident and spending more in the next 6 months, but we can certainly do more.

Christen Hjorth from Deutsche Bank. Just 2 questions for me. First of all, maybe just some slightly technical on ACI. Just what is the contribution to EPS in your guidance for FY '26? So just to understand that piece. And then secondly, sticking maybe with U.K. housebuilding. Are your products there at the same margins as the U.K. overall? And I suppose do you get any sort of housebuilders struggling with affordability? Do you get pushback on the level of margins that you make? Or actually, is the solution you're providing, is that the sales point, not necessarily the price per se?

I'll take the first one, and then I'm sure Ronnie will take the second one, Christen. So in -- so when we started talking about this back in December when we announced it, we said that, look, if you put in the sort of the revenue of ACI, it's very strong margin. It's north of 30%, as Ronnie mentioned. But of course, then you put in the GBP 75 million debt that we're taking -- we're drawing down to use it. You basically end up at around 1p of additional EPS in FY '26. Of course, then you go into FY '27, you're paying the debt down and hopefully, the business is continuing to grow. As a quick reminder, we did say at the time of acquiring that it had been consistently growing low double digits over the preceding years. So this is a business we're very excited about.

U.K. residential new build or product margins more generally, they're plus/minus very, very similar. I mean, we could pick out outliers and so forth. But the story in residential new build for us was started a couple of years before we really started to see the revenue. We looked at the regulations and we could understand that the market would go -- a little bit technical, continuous decentralized with certain performance requirements in the product around specific fan power and controls.

And quite frankly, we nailed it from a development perspective, not just in terms of the performance, but also the cost because you know that sector really well. It wasn't for us to go to turn up and say we've delivered this solution that ticks all of your boxes from an install reliability, from a noise objection, from a specific fan power and approval perspective in [ SAP ], but it's going to cost you X and X is too much. So we had a cost price target to deliver against that from an engineering and operational perspective, we got there.

So we were able to go to the customer and say, here's a solution. They went, that's great. And it's actually a little bit cheaper than some of the other ones I'm taking and it ticks all the boxes. And we make what we believe is an appropriate and fair margin for all of the effort that we've made. And it's just a really good example of being totally joined up across the business. And that's where we are. It's just -- I'm just thinking about one specific product. I'm not going to mention it by name, but that was the example, and we did it really well.

And it's -- for me, it's about value-based pricing. If we solve customers' problems efficiently and competitively, then if we make a better margin than somebody else, they're not really interested in that. It's about what we do for them. And it's about customer centricity. And that, I think, is what we do phenomenally well all over. I mean, I could take you to the Netherlands, and we've got operating profit margins generated in our decentralized heat recovery solution that's growing phenomenally well that are above where we're at here because we solve the problem really efficiently. And there is a total cost of ownership payback that the customer buys into.

So that's really important. Every product development that we talk about, we had a really good session at the Board on Tuesday with the Technical Director talking about this. I just think we're really good at it, and we coordinate those resources group-wide. So every time we make an acquisition, we learn something new because every company we acquire has something about them that we don't know.

Charlie was just first.

Charlie Campbell at Stifel here. So a couple of questions really around margin. You, I think, alluded in the presentation that Fantech's margin has gone up because you said it's less dilutive than it would have been. So I guess what you mean there. Just wonder what you've done to improve the margin there, that would be really interesting to see in the context of M&A. And if we think about Australasia, and really, this is a question kind of before adding in AC, margin obviously is lower than the rest of the group because I'm guessing that commercial is a higher share of the revenues than anywhere else. Is that the right way to think about that structurally that Australasian business ex AC stays at that 20% and can't really get to 25%? Or would you challenge yourself to hit it even with more commercial?

Yes, and then little feedback to Ronnie taking the first one, which is more detail around Fantech. So I mean, if you actually looked at the previous presentations prior to the Fantech acquisition, Charlie, I think you'd have seen that actually the businesses that we've had there since 2017, 2018 were very, very much on a par or, in fact, in some periods, slightly above the U.K. European margin. So there was no -- we were starting from a very, very strong position.

Fantech, which Ronnie will just elaborate a little bit more on some of the initiatives. We've said consistently throughout, it's about -- it started life about 6 percentage points lower at both the gross and an operating margin level. I don't think that's intrinsically because it was commercial. I think 16 -- well, first of all, again, we said 16% is not a bad margin and most -- a lot of other competitors would love to have that. But we could already see that there was an opportunity to move it up, which I guess Ronnie will sort of touch on. AC will then come in and b, mix -- will move the mix in another direction again.

So look, I mean, I guess, in a nutshell, as long as we can do what we think we can and are already starting with Fantech to nudge it towards and hopefully ahead of 20%. What we won't do in periods to come is talk explicitly about Fantech margin or this margin, that margin because as Ronnie mentioned earlier, where we really want to get to here is having a really well-run integrated region like the U.K., where we've got multiple different brands and multiple channels that the customer sees and recognizes. But behind the scenes, how can we pull that all together into a really coherent and well efficient and integrated sort of back office setup. So [ we're not able to say ] this cost belongs to here and this cost belongs to here. But long story short, it's not resi commercial. It's -- ACI is commercial...

Slightly because my answer to your question one was just explain how we would run a very integrated -- and Andy has already done that, so I won't repeat it, but that is the approach. But look, we've got -- I think this is a confidence in our ability. If we make an acquisition somewhere, it has to be on the basis that we can create some additional value. And those value levers that we pull are not the same in every acquisition.

With AC, it will be different. We won't make material differences to the cost price of the product. We think they're very good at it, high-density polyethylene textile material. We think that we might increase the robustness around the supply chain and some protection because it's a key material, but we won't -- but in the case of Fantech and what we're doing in that local region at the moment is it's on that treadmill of initiatives as with everything else. And so we -- our sense is that we've got really good, strong technical and procurement capabilities group-wide that we're able to leverage into the local region.

Our product knowledge -- our product management knowledge is really strong. I can see the sorts of things. I was sitting there last night and the local regional leader, Anthony Lamaro, who might be listening now sent me a picture of a new product that we're introducing and said, it's just -- it's really good attention to initiatives, and I applaud that. And so we're not setting a margin target for Australasia. We are being conservative about more than 20%, but we're already in a good place and think we can enhance things over time. And I think Andy's answer was the sort of backbone, the structure that helps deliver that.

Okay, David?

Those were my questions. Just a question in terms of kind of the shape of the first half organic revenue. Obviously, first 4 months was 5% kind of implies that the last 2 months were kind of below 3%. So kind of what's going on there? What's kind of working against you? Obviously, some of your peers have called out weather in the U.K. And then I guess, as you kind of look into the second half of the year, what could kind of lift that exit run rate up higher? And then my second question was just a little bit more detail in terms of kind of the -- what's going in commercial in Australia, obviously, down during the period, kind of how you're seeing that end market. Obviously, I think we're all quite aware of what's happening in U.K. commercial, but Australia outlook would be helpful?

So if I take the first one. So you're quite right. So 4.2% for the 6 months, we were circa 5% at the 4 months. So yes, by definition, December and in particular, January were tougher. And loath to call out the weather, but certainly, everything I read and see suggests that January was a pretty difficult month for a number of people in a number of different industries, and I think we sort of saw and felt that.

We have talked -- and again, back to what I was saying earlier about the -- perhaps the normalization of the growth levels across the 3 regions. So we said back at the year-end and before that the regulatory kicker and the share gains and all the good stuff that very much underpinned our U.K. residential, that was in. The share -- we're still continuing to look for share gain opportunities. Don't worry about that. But in terms of the mix effect, we said that, that was largely going to have played its way into the numbers during the course of the first half of this year.

So that's no longer a year-over-year impact in the way that it was. What, of course, we now all, I think, hope for in U.K. new build is the volume piece. So that's definitely leveled off somewhat. But then as again, as we moved through the period, we talked about the Nordics being better in Q2 than Q1. So that's going in the alternative direction. Look, I mean, I think I wouldn't want to overpredict what the second half looks like. But I think you've seen where we've sort of guided it to. I think we're still confident that, that portfolio effect is going to come through really, really nicely and that we can continue to deliver good organic growth relative to market for sure.

Commercial Australia and New Zealand, I think that if you look at the New Zealand market more generally, I think that's been tougher. And certainly, if we look at, it's only a couple of months, but we're seeing some signs of recovery. Yes, I mean, our commercial share in Australia is very significant. So there is always a risk around market is tough, how do you mitigate that? Some new product introductions at the moment that I think will be helpful.

Certainly, we've -- as a result of our wider group experience, there's a couple of things that we're launching that we think we can help us. And the last couple of months have probably been a little bit better. I mean the December, January issue is always slightly musing for us in terms of Australasia because, of course, we talk about how good the summer is and how much longer it takes after Christmas for people to come back to work and so forth. So there is an element of that. But yes, but overall, I think we're pleased about the direction of travel in the last couple of months.

Okay. I think we have any other questions in the room? Very happy to take any? If no, we have a couple of questions online, I believe.

So the first question is from Roland French from Penman Securities. Can you talk about your comment that recycled plastics is more insulated from higher oil prices and how you're thinking about cost of goods inflation and procurement given the macro backdrop?

Yes. Okay. So the issue around recycled plastics is that because, of course, it's a recycled source is it's not reliant on oil going into that material. It's effectively recycling a material that's there. We have a couple of really good, one in particular, long-term strategic partnerships that we've tied into. The use of that material is in itself quite difficult.

So we think we are in the sense of a partnership, we're tied to the supplier, and I think the supply is tied to us in terms of being able to utilize that material, and we've committed that long term. So one of the things that was disappointing for us in the first half of the year, we had a slight reduction in the proportion, the percentage of overall plastics recycling we used, but it was an absolute increase in volume, okay, because our volume had grown, but we had used slightly less percentage.

We've actually had a few breakthroughs, more recently, one last week. Group Procurement Director has found an additional source to supplement that. And the good news for us is that the use of recycled plastics versus virgin is a significant saving. So we think we're very well sort of hedged and supported around plastics. Wider material input costs. In actual fact, before this crisis more recently, I was citing metals commodity prices as being the bigger risk to input costs over time and expected that to probably manifest towards the second half of this calendar year.

So look, we remain agile, both in terms of the sourcing and the commitments and of course, any offset through value engineering and initiatives and then, of course, the ability or the requirement to maybe nudge prices up if necessary during the course of the year, but don't have a concern about gross and operating profit margins as we go forward.

And I mean just in terms of sort of direct cost to ourselves from energy, we are a very, very low user of gas and electricity. But to the extent that we are a user still gas in the U.K., where fixed pricing through to September 2027. Electricity were fixed through to the end of this year. But as I say, we're -- because of the nature of our process, we're a very, very low direct user anyway.

So the next question is from Florence O'Donoghue from Davy. Can you update on operating costs, labor, raw materials? And there appears to be a number of senior management appointments recently, U.K. Operations Director, Germany and so on. Can you discuss this investment?

Yes. Actually, I'm sort of pleased in a way that we hadn't called out wage inflation and so forth, but Volution isn't immune to that. So we've certainly had wage inflation very similar to other companies in our space. But I guess one of the reasons why we didn't call it out in so much detail is that clearly, the operating profit margins haven't been impacted because of it. So we didn't need to sort of cite the fact that, that had been a drag on our results.

And of course, we would expect labor inflation to continue. It may have moderated more recently, but nevertheless, it's something -- we always try to target operationally to mitigate any labor inflation through efficiency. That's got to be the annual improvement target. Quite a lot of initiatives going in at the moment that we think probably haven't fully manifested the benefits yet. So I think from a material perspective, that's in good shape.

I mean, Flor, it's a really good acknowledgment around people, probably an opportunity now for me to just credit the wider senior management team and the wider employee base for the great results in the first half of the year. But we're investing for the future. We're building stronger teams to underpin our ambition. So the appointment in the U.K. around operations was that I think we performed really well operationally and customer service-wise, but we know we can do better. And I'm delighted that we have a new leader in that role who in the first few months is having quite a profound impact, not just in terms of the operations, but also the leadership and developing the team. So I think that's really exciting.

The appointment in Germany, I think, was -- quite honestly, we've had a situation in Germany where the market has been really tough for some time. We had a local leader who've been with us since we acquired the business in 2014. And I think it just came to a natural point where maybe freshening up and changing for both was a good place to be. And that's part of our regional structure under 1 of our 2 regional managing directors for Europe. And we're really excited about the new individual joining us at the beginning of April. So that's underway, and we think that can just help reinvigorate the opportunity in Germany. The German market is tough, but we again believe that there are share gain opportunities, and we think that new leadership will be really helpful.

Okay. We've just gone slightly over. But thank you very much for your attention. Thank you for your questions. I look forward to seeing you next time. Thank you. Thanks very much.

Hello, and good morning, and thanks very much for taking the time out to be with us. I'm Ronnie George, Chief Executive of Volution Group, and I'm delighted to be accompanied by Andy O'Brien, our Chief Financial Officer today.

Just a very quick introduction to our AGM trading update. So we'd just like to talk about trading has started well in the first 4 months of the year. So Volution is growing organically at around 5%, and we've delivered growth in each of our 3 regional areas. I'm very pleased with the inorganic revenue delivery from Fantech, so 25% inorganic revenue growth in the first 4 months of the year, benefiting from the Fantech acquisition. So an overall 30% revenue growth for the group and the Fantech acquisition is now at its 12 month anniversary.

And just to add to that on trading, our organic margins are consistent with the prior year and overall, our margins are continuing to be very strong. So look, the main purpose of today's presentation was actually to talk about something else other than trading, but I wanted to just stress that we've had a good start to the year and very pleased with how things are going.

But look, on to something else. We're delighted to tell you about the acquisition of AC Industries. So that acquisition was signed, and we're expecting completion of the transaction at the beginning of February. But look, this is an acquisition of a leading manufacturing supplier of underground ducting ventilation systems, primarily in Australia and also in overseas markets. And the market focus is predominantly around copper and gold mining.

The consideration upfront is AUD 150 million, so around GBP 75 million. And there's a contingent element of consideration that is based on some strong EBITDA growth targets over the next 18 and 36 months.

The revenue -- so 2025 revenue for AC Industries, this is to June this year, was just under AUD 48 million and a strong EBITDA delivery of 17.1%. So look, we're delighted about the margins in the newly acquired company, over 30% EBITDA margins.

And the exposure, as I've already said, is 80% -- over 80% of the revenue is based on gold and copper mining. And certainly, when we talk about gold and in particular, copper mining, this is for us an opportunity to benefit from the energy transition agenda.

And the revenue stream is repeatable, and we can talk a little bit more about what happens here. But we've got existing customers with repeatable revenue. This is very much seen as a consumable in the mine. And it's -- we're primarily dealing with the miners directly.

So loyal, blue chip, strong customer relationships that have been enduring over many years. And we're funding this transaction through cash and debt. It means at the point of completion, our pro forma leverage will be at about 1.8x and usual characteristics with Volution, we delever very fast, and we expect that at the end of the financial year, July 2026, leverage will be down to 1.5x.

So a little bit of the strategic rationale. This is clearly a slight change from where we've been in the past. But look, if we just go through how we see the alignment aligned with our values, this is a proposition that provides healthy air inside the mine, critical to mine safety, critical to the efficient running of the mine. And because of the efficiency of the proposition, it helps our customers reduce their energy usage through a very efficient product.

And this is important here because the running of ventilation fans in the mining sector is a hugely significant cost. And our product proposition here helps drive energy efficiency in delivering healthy air to the mining arrangements. It's aligned with the global energy transition, as we've already talked about. We know what's happened to gold as a sort of risk-averse asset over the recent years.

And the copper demand is projected to grow significantly in the coming years as part of the energy transition as we decarbonize across the planet. This is a specialist provider. And what we particularly liked when we met the management team over the last couple of months is their passion for customer service. And we just felt that this perfectly aligned with Volution's sort of intimate feeling around customers and how customer service is absolutely at the center of what we do.

In many respects, I think this acquisition, which we believe was hotly pursued by other strategics and indeed private equity, we think which -- one of the things that won us over with the sellers was our alignment on purpose, on customer intimacy and providing healthy air. So look, it's aligned with our financial characteristics. It's been delivering low double-digit revenue growth consistently over the last 5 years.

It's high margins, it's typically mid-30% EBITDA margin, it's highly cash generative, it's asset-light and we've got this strong repeating revenue with long-term customer base. So these are characteristics and hallmarks of what we believe is consistent with Volution overall. And it fits really well with our Australasian organization. So over the last few years and certainly with the Fantech acquisition that was actually about 12 months earlier, so it was December 2024, but it further increases our breadth in that local market, so our industrial applications.

Fantech already provides above ground for mining applications. So this is not a huge departure in terms of the mining sector, but of course, it's below ground. I'm very excited about what we're offering here. We have unparalleled nationwide logistics, and maybe we can talk a little bit more later on about how AC Industries is servicing its customers.

And it's an extremely experienced leadership team. Tony Wigg, the Managing Director, has been with the company for 30 years. The earn-out focus is very much on tying in the key people, that's Tony Wigg and his Operations Director, Brad, who we believe will be with us for the long term, and we're really excited about helping partner with them to grow the business over time.

And it will leverage our extensive functional and management resources and capability, not just locally, but extensively locally, but of course, across the wider group.

A lot of detail on this slide. I don't propose to go through each of the individual elements. But the key takeaway here is that this is a market-leading proposition. It supports over 150 mines currently, 120 of those are in Australia. And we think there's a huge runway of opportunity to continue to grow organically in Australia.

But we are excited about growing this business internationally, that would be in Asia Pac, into the African region and into North America. And that's where we've got hugely excited. The business has been growing very well more recently. But as you can see, 80% of the revenue is domestic, if you like, in Australia and only 20% international, and we think both of those elements offer a huge opportunity to grow in the future.

The technology is patented, it's innovative, it's a very durable solution and it really does stand out with a wide product portfolio, over 2,000 SKUs in the product portfolio and an ability to provide this sort of selection of specific ventilation solutions in the mine. It's not dissimilar to how we talked about Fantech in the past.

So this further expands our position in Australasia. So our position now is just under 60% of our total revenue in the region is in the commercial and what we are calling specialist industrial sector. We'll report this revenue and profit stream as part of our Australasian region under our commercial and industrial sector, and that complements our 42% share of residential.

And look, what we've done with this acquisition, with Fantech and the other acquisitions in the region is build up a compelling market leadership position in a region that we very much like.

So just finally, because I do want to make sure that Andy and I have an opportunity to answer your questions, a quick recap. Exciting strategic and value-creating acquisition, extends our comprehensive range of solutions in the region. It's underpinned by structural growth drivers of healthy air and energy efficiency in mines.

This is a sector that is increasingly aware of its duty of care towards the people who work in the mines. And we talk about refresh rate. One of the things that this ventilation solution can do is reduce the refresh rate for the mine so that when they're actually mining at the face and there's -- they're letting off the explosives, the refresh rate, because of our solution, is dramatically reduced.

What happens at the moment is that people exit the mine, there's an explosion, there's a ventilation solution and that refresh rate, that ability to get people safely back into the front coal phase -- sorry, front face of the mine is essential, and we help reduce refresh rate.

It's got a strong record of revenue growth. We've talked about that consistent increasing of revenue growth. And we believe that we can take the business further with the international element over time. Excellent financial characteristics, over 30% EBITDA margin and strong cash generation, consistent with the wider group.

So look, that's a very quick introduction. We know there'll be lots of interesting questions to follow, but this is immediately earnings accretive. It's expected to be at the early part of February 2026. There are no competition clearance or antitrust measures that we have to go through. We've simply given ourselves a little bit of breathing space because of the speed at which we executed the transaction.

As I say, this was hotly pursued by other strategic and financial sponsors. And we've just given ourselves a little bit of time, so at the beginning of our half 2 at the early part of February will complete, and we're excited to get going.

So look, that's, as I say, just a 10-minute overview. We'd like to finish this session at 8:30, but we're reserving the sort of remaining 15 to 20 minutes for Q&A.

[Operator Instructions] We're going to go through our first question, which is from David Farrell from Jefferies.

Well, congrats on another great deal. A couple of questions for me. Just can we break down the revenue into 3 buckets, please, that amount of revenue coming from new mines, that amount of revenue coming from kind of expansion in existing mines and then the amount of revenue which you kind of call repeatable, i.e., replacing kind of the ventilation ducting that's already in place?

Yes. Look, really good question. So Andy is going to take you through a little bit of detail in a moment. But just to explain on this proposition. When the ducting is installed in an existing mine that isn't the end of the revenue if that mine doesn't extend over time. So what happens is I talked about it being a consumable that this solution is seen as the most robust and one of the longest lasting in the mine.

But because of the arduous conditions, because of the traffic, because of the air flows through this particular ducting system, there is attrition. So even if we're in an existing mine and there is no further expansion, there is an ongoing further revenue stream. It's not just static as the mines are equipped. There's this ongoing attrition and replacement. Andy will give you some statistics on how that breaks...

Yes. And David, precisely saying how much dollars of revenue is expansion of the mine versus, to Ronnie's point, replacement of previously installed product, that's not possible because it's the same product. But I guess the way we would think about it is, so if you take 2025 revenues, for example, 70% of the revenue earned in 2025 was from mines that were already being serviced by AC Industries prior to 2021.

So effectively, this is, if you like, your sort of installed base that's been there for sort of 4, 5 years. And then each year, you layer on a little bit of new work, which then sort of further drives that growth. So I think basically, the message being once you're in, as long as you're servicing that customer well, and that's all about the logistics and the product performance, then you do have this opportunity to enjoy quite a healthy repetition of revenue because we normally talk about our products elsewhere in the group, typically 8- to 10-year replacement cycle; well here, we're talking about perhaps a 2-year replacement cycle. So hopefully, that gives a bit of complexion.

Also to add, there's a significant upsell opportunity here because there's a product called Rhino Duct. It's a stronger, more robust solution with a premium. So the company has been very focused on already the margins are very strong, but how can they further enhance margins and provide a more robust innovative solution over time, and they've been very successful in delivering these new propositions to customers.

Okay. And then my second question was just around the international opportunity. Could you kind of tell us what percentage of revenue was international outside of Australia maybe 5 years ago? And given mining CapEx, areas of focus would be South America, North America, Indonesia, APAC, outside of Australia. How do you think about utilizing Volution's footprint to get into those areas because clearly, you're not present in most of them?

Yes. So look, we -- our sense is that it's not going to be our existing sales network that will help with that. So at the moment, company's revenue outside of Australia is about 20%, and that's grown materially over the last 5 years. So if we go back 5 years ago, it had an immaterial international revenue development.

What's happened to date, and I think this is what's particularly exciting about the proposition, is the revenue growth internationally is existing, if you like, indigenous customers wanting to take this solution into other areas. So if you can imagine in the mining industry, you've got an engineer who has a great experience with working with the AC Industries proposition in Australia, goes to work in a mining area somewhere else internationally and has been effectively dragging those products into other areas.

One of the key discussion points that we had with the sellers was how we could accelerate this international growth? So at the moment, 20% of the revenue is international, and that is without actually having boots on the ground as it were, that's without having sales personnel in those other 3 regions that we see as very exciting.

So look, we think the business can continue to grow well organically in the Australian market, big runway of opportunity, but accelerating this international piece by investing in additional personnel looks to be very exciting for us.

Our next question is from Robert Chantry from Berenberg.

Yes, 2 questions. I'll do one at a time. So firstly, this is clearly quite a move away from, I guess, the historic core markets. Is it kind of fair to assume it's a broader signaling of the kind of broadening of the envelope for the acquisitions that Volution sees as relevant, i.e., could we expect to see more build and deals to come in, I guess, the specialist industrial area on a more global basis?

I don't know -- sorry, I think we're both very excited about this. Come back to the investment case. We want to continue to grow this business on a sort of 12% compounding basis. And we've been successful at doing that for 11 years, and there's no reason why FY '26 of July next year won't be the same again.

So over time, we've always said that having a wider picking from the market is attractive. There are adjacencies now that are much more relevant that wouldn't have been when we first listed back in 2014. Clearly, the Fantech acquisition in Australia last year, very much sort of commercial industrial was a departure from being more residentially focused. This is a natural next step.

I think you should see it as a sign of our wider ambition. But look, there is a central theme here. It's healthy air and it's strong aligned financial characteristics with Volution. And we don't believe that this is a huge departure from what's important from us, health air, sustainably and strong financial characteristics, asset-light proposition with strong cash generation and customer intimacy and customer service has helped these guys differentiate. So that's consistent with everything that we would say about Volution to date.

And then the second question, I guess, further to the one earlier around how you perceive the cyclical exposure of the business? Clearly, it's mining, it's a different cycle, it has ups and downs. I guess, can you just put into context how that's performed over the past 5, 10 years through different periods and how you kind of see that fitting into the broader group in terms of managing that cyclical exposure?

Yes. Probably too much information for the audience, but I spent my first 20 years in the wire and cable industry. And when I first started work, the copper price was GBP 800 a tonne. And today, it's about GBP 10,000 a tonne. So what we know from a cyclical nature is copper is unlikely to be anywhere other than on an upward trend into the future.

Think about the energy transition; think about how solar, wind, nuclear, these are -- this is electricity generation and transmission. And the last time we looked, there wasn't another way of transmitting electricity efficiently other than through copper. And we look at the outlook there over time. So we don't perceive there is a huge or significant cyclical risk here.

And in actual fact, we've heard people refer to this more recently as a super cycle and so forth. We're not necessarily positioning it that way. But nevertheless, that's the language that we've had around the space. We see -- we did a very significant piece of commercial due diligence using Hatch who are hugely helpful for us in the mining sector.

And we looked at the outlook for copper and gold mines in Australia and globally over the next 5, 10 and 20 years. And if you just think about the economics here, if you look at the gold price, and let's not look at the gold price today. Let's look at the gold price 18 months earlier. There was still a huge economic attractiveness for mining gold. And in actual fact, the gold price has more than doubled over the last couple of years, which makes that even more attractive.

Copper is running in the same direction. And we evaluated this hugely. We don't see a cyclical risk. In actual fact, we think there's a huge tailwind from the wider energy transition that could be supportive for demand for many years into the future.

Our next question is going to be from Clyde Lewis from Peel Hunt.

I think I've got 3 questions, if I may. One, I suppose, is around investment in the business, whether you need to do anything, what it sounds this is asset-light, as I think you just mentioned, Ronnie, but interested to know whether you think you do need to put any new CapEx or investment into the business?

Second one was, I suppose, around technology and what ACI has versus what the rest of the group has? What sort of technological sharing do you think there will be going forward, if any? And the third one was around competitors. And I suppose, particularly in Australia, who are they up against or who are you up against in that market [indiscernible].

So first one, Clyde, was investments. So look, I think from a -- we said it's asset-light. It's very cash generative. In fact, in the presentation slide, you'll see a couple of sort of zoom down shots of the facility. And you see actually, there's not huge bits of plant and machinery there. So it's very, very similar, clearly a different product, but very similar in nature to a lot of our plants.

So CapEx requirements are modest. Where there is going to be investment, I guess, is back to what Ronnie sort of mentioned earlier, and this is sort of backing the growth story through resources. So this will be a case of judiciously working out how many additional sales teams, marketing, investment, et cetera, to put in, in support of that growth.

But I think that's going to be more relevant as a sort of key discussion than CapEx. I think the CapEx need is going to be modest. Cash generation of the business is there or thereabouts to our 90% target that we run with across the group.

The technology proposition, so just to go back, AC Industries started 30 years ago as a textiles company. And what the company developed was a high-density polyethylene mix of high-density polyethylene textile product that is hugely durable and very light and very efficient. And this is, if you like, the sort of secret sauce around AC Industries in terms of the material technology.

We spent quite a bit of time diligencing the supply chain and so forth. And that's how it's been able to stand out. And yes, there is competition. There's some Chinese competition that cannot match us in terms of product technology and in terms of the intimacy and the customer service.

I said that these long-term relationships with key people are absolutely essential for us. And that's why unashamedly having this earn-out proposition to align Tony and Brad with us into the future was essential. So competition is varied. There are some more rigid solutions, but those rigid solutions are in themselves very expensive to transport.

If you imagine that a ducting solution is delivered to a mine almost in a flat pack and then under 4,000 pascals of pressure -- 4,000 pascals of pressure what does that mean? A typical ventilation solution in a building is operating at 200 or 300 pascals of pressure. So these solutions effectively blow themselves up under the pressure of the airflow.

So it's an extremely neat proposition. We were thinking to ourselves, how do we grow this business internationally, manufacturing in Australia. But if you can effectively palletize these in flat pack, the logistics cost of transporting those products to other regions is relatively low. The product is hugely durable.

And I think it's a huge testament to the success of the brand and the proposition that it's got a very significant market share in Australia. And we think of it as a consumable, not CapEx. I've heard people talk about CapEx in mind. It's not seen as a mine as a CapEx, it's relatively low expenditure consumable.

Our next question is going to be from Christen Hjorth from Deutsche Bank.

Brilliant. Just a couple of, hopefully, reasonably quick ones from me. First of all, I mean, this may be tying in a few of the other questions, but clearly, that EBITDA margin is highly impressive, ahead of the group's highly impressive EBITDA margin already. So what -- when you did your DD, I suppose, what did you conclude as the key drivers of that and how sustainable it will be going forward? Because obviously, it's not the capital intensity, and you've touched on a few of these, but just be interested to get in more detail.

And second of all, obviously, the M&A focus with Fantech and ACI has been very much outside of Europe over recent deals. Should we expect this to remain the case going forward or is there nothing really to read into that?

So look, in terms of the EBITDA margins, Christen, I mean, I guess, we would always encourage value pricing and businesses to know what their value is to their customer and to charge accordingly. And I think what we learned, and sort of Ronnie has touched on this earlier, is as a share of the cost of the mine, the ducting itself is relatively small. The impact it can have on the energy consumption by its performance is far, far larger than the cost of the item itself.

The importance of having stock and really, really good customer service because if you're repeating this -- sorry, if you're replacing this relatively regularly and you're expanding, what you can't have is interruption and stop of production because the product isn't there and available to you. So that sort of excellence of customer service, that quality of the product performance allows you to charge appropriately for the value you bring to your customers.

So on that basis, we are not worried at all about the sustainability of the margins because I think, again, they've established a really, really strong position there and the proposition and the customers clearly value it. We did a piece of customer referencing work. And yes, I mean, pricing was one of the factors, but it was by no means in the top couple of factors. It was all about product performance, reliability of supply, quality of engagement with the sales and the sort of customer service operation was more important.

In terms of M&A focus, I mean, I think if you think about us in Australasia, it's been a series of building blocks over the years and almost each one that happened first enabled what happened next. So I guess if I go from last to first, would we have done this now if we haven't done Fantech a year ago?

Probably not because that established our nationwide presence in Australia, it established our sort of commercial and industrial capability as well as residential. Would we have done Fantech if we hadn't done what preceded it with Simx and Ventair, again, probably no. So it's been that sort of sequential journey.

In Europe, we will look at market by market. And as long as it meets our financial characteristics, as long as it meets our sort of strategic intent, which we tried to lay out here, we are open for different types of acquisitions. And I think this does show that we do have a breadth that we can operate too.

Absolutely. I mean just to add, I mean, we've got 3 geographic regions. We think we've got a very substantial sort of pool to fish in as it were. And this is hugely attractive. And look, if we're going to continue to deliver 12% compounding of earnings, then M&A pricing discipline is key. And that doesn't mean that we won't pay higher multiples for attractive opportunities if we can see value.

But we've talked previously about a couple of deals that we participated in that we were unsuccessful due to our pricing discipline. And I think that's really important. It sounds a little bit corny, but absolutely shareholder value creation through disciplined M&A is something that we won't disregard.

And look, it's an attractive region. We've carved out -- I mean, we've been -- it's been indicated to us who the trade competition was and I have to say we heard a bit of a little bit of feedback last night. I was very proud of the fact that our team has been able to convince a seller to maybe not max out on the pricing opportunity because of Volution credentials and that we really do take care of assets, and we'll look after this company.

We'll look after the people who are involved. And I think we'd be very disappointed if we're not paying them the earn-out in 3.5 years' time. And I think that's a great reputation. And this is a wonderful market with probably higher barriers to entry logistically than many others.

Next question is from Aynsley Lammin from Investec. [Operator Instructions] Okay, unfortunately, we're not hearing you at the moment. Maybe if we go to Tania Maciver.

Great. Congrats on the acquisition. Just a couple of small questions. Out of the 150 mines, how many customers is that? Are there many customers with multiple mines? And is there an average remaining life of the 70% of mines that are operating?

And then just one more question, I'll add. Just in terms of the product itself, are there any unique materials that are difficult to source or that could sort of restrict growth if there was a shortage of supply? And are there controls associated with the product for quality control deep in the mines for...

Okay. Let me do the -- Andy is going to look up some of the data on the first question. But the second one first is there is a clever sort of polymer textile technology, but there are multiple suppliers. So we don't see -- they've already thought about this in terms of the growth trajectory and mitigating that risk.

So we think we're in a good place. And I certainly believe our procurement capabilities internationally will help and also with the accessories. We've talked a lot about the ducting solution, but there's also the accessories and so forth that go with this. So we don't see any constraints to providing the raw material to grow.

When it comes to the mines, and Andy can help me with this a little bit, but 120 mines will not be 120 discrete customers because clearly, there are miners in Australia that operate more than one mine. Although I think because of the intimacy and the engineering relationship, although it could be the same umbrella customer, they do actually treat each individual mine like a discrete customer because it does have its own individual decision-making process. When we look at the life of mines, we're talking about many tens of years into the future. I mean, I think we've talked about Olympic Dam with another...

Yes, if I look at the top 20 quickly, Tania, so the top 20 -- the top 20 actual mines they're serving into, there's about 15 different customers, if you like. So there's a couple of repeats, but it's mainly sort of individuals.

On the future life of the mines, again, for that sort of top 20, there's 4 that have got an assessed life of less than 5 years ahead of them from now. The other 16 have all got more than 5 and look a lot of them are north of 15, 20, one even up to sort of north of 50 years sort of assessed life of mine. So on average, it's probably sort of 15 to 20 years. But again, there's only the 4 that are in sort of the very near-term expiry.

What was reassuring in the DD process for us is that the company projected the life to go for existing customers, and we overlaid that independently. And I think the delta was a year or 2. So it was the business plan that we've effectively bought into was independently verified by what we consider to be one of the experts in the space.

Should we just try Aynsley and then see it -- Aynsley, are you able to unmute and we can get your question?

Can you hear me now?

We can. Go.

Just 2 for me. You may have actually covered this actually. Depreciation for the full year, obviously, EBITDA margin is very high with the kind of post depreciation margin be around 20%. And then secondly, just on the interest charge on that GBP 75 million of consideration, what would be a full year kind of interest on that?

Yes. I mean, the depreciation is, as I mentioned, the CapEx is light, fixed assets are light. So look, there's a difference between EBITDA and EBIT, it's not going to be massively different from what we have elsewhere across the group from a modeling perspective. So it doesn't bring the margins down substantially.

Interest charge, you can see that -- so we've drawn the GBP 75 million upfront from our revolving credit facility. So you can see in the annual report the sort of the margin rate that we typically sort of pay on that. It's in Aussie dollars. So effectively, I think it's Aussie base rate plus about 1.25% is the current margin that we pay on top of that.

And rates in the region have actually been coming down recently. So that's helpful. And of course, as Andy says, we effectively hedge the balance sheet by denominating the debt in dollars. So we're just hedging the risk on the asset. So that's something we've always done.

Any other last questions?

No. I think back to yourself for any closing remarks.

Okay. Brilliant. Well, look, thank you very much. I know, obviously, it was at short notice that we called this update. But look, we're super excited. It's been a good start to the year. The markets aren't particularly helpful, but to deliver 5% organic growth across our business is pleasing. Fantech is going well. And of course, that gave us the additional confidence to make this acquisition of AC Industries.

We're super excited to be working with these new partners and helping them continue to grow well. So look, it's a very exciting time for us. Pleased to have your interest today. And certainly, if after the meeting, there are any further questions, reach out to either Andy or I, we'd be delighted to help. But that's it from us. Thank you very much for your attention. Thank you.

Okay. Brilliant. Thank you. So warm welcome to Volution 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 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. And I think our sort of view here is that probably 20, 25 minutes on the presentation. And just from past experience, 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 U.K., 9.5% revenue growth in the U.K. So 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 but certainly supported by regulations.

Volution 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 U.K. around sort of 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 1.2x in spite of the fact that during the year, we made our largest acquisition to date. 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 we established -- 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 forward. 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 4 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-U.K. customers in 2014 to 63% today, 5 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, 3 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% inorganic 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.

I 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 forward, we'll report the inclusive of Fantech number, which is the 71.2%. And the same story with heat recovery. The dilution is because of Fantech 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 making 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. Good 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 5 years. Actually, it's quite nice because for the first time now, we can drop the COVID year off the 5-year comps. 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 2, the 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 3% to 5% 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 have in the subsequent slides and then I 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 to 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 1.2x leverage, having spent AUD 220 million, GBP 110 million on the Fantech acquisition. Plus, of course, we did also complete the buyout of the balance 25% of ClimaRad in the year.

So a meaningful amount of expenditure on M&A but still ending with the balance sheet in very good shape there at 1.2x leverage. So this next slide, just showing a little bit more detailed year-over-year comparative 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 going through the more detailed statement, but a couple of the pieces that then sort of 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 ClimaRad purchase.

So our finance costs were up about 40% year-over-year to just over GBP 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 U.K., particularly U.K. 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 U.K. 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 2/3 of the Fantech balance sheet in it because of our 3-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 10.8p. 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 U.K. 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 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 GBP 4.5 million of adverse revenue impact and about GBP 1 million of profit impact sort of comes through from translation. Fantech obviously then coming in with the inorganic growth piece. And then just in the sort of the strap at the bottom there, just again, where we 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 normalized 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 trail 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. 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 U.K. and Europe, there's no inorganic effect. So those comps are exactly as they would be. So a really nice 100 basis points improvement in the U.K., 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, why is the U.K. 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 U.K. over many, many years now.

I guess we always said, look, 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. 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 on to 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 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 and in the Nordics, where we've been adding additional metal production capability. So we spent about GBP 8.4 million on CapEx in the year, which was up GBP 1.3 million from the year before. So still continuing to invest nicely in the organic business where it's compelling as well.

Then I've already mentioned this, the return on invested capital. So this is a really, really important metric for us. We've said that we are confident that we can carry on delivering returns of 20% and above whilst continuing to invest materially in acquisitions. And as I said, the fact that we're 25.2% with having brought Fantech into the group 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 at the risk of repetition a little bit. This is basically showing in the dark blue, our key financial metrics for FY '25. In the light blue, the average over the last 5 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, relative to our green numbers there, which are the long-term financial targets, if you like, of the business, continuing to deliver on all of those metrics, which obviously is 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 8 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 U.K. 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 FY '18. 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 U.K., very pleased with the 9.5% revenue growth. I mean 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%.

And that was -- the growth was most significant in residential new build, which I know is counterintuitive and 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 have 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 GBP 30 million of revenue in a much bigger U.K. commercial ventilation market. So 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. 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 29.4% 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 has already talked about, 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 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 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 has 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 I would draw out there is that we had -- in our Central European activities, we had strong performance from our ClimaRad 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 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 counter flow 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, where 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 are 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 forward. 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 GBP 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, Volution's proposition in Australia and New Zealand was almost exclusively residential. So if we look back at the prior year, GBP 52 million of revenue, GBP 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 -- sorry, the adjusted operating profit increase of 83.5%. Andy has already talked about the organic component. But Fantech is 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 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. 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 yes, I don't think there's anything new there. The 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 strengthening 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 6 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 4 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.

Tania 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? 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.

Yes. So taking U.K. 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, it's -- 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 is 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 lend 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. Andy will 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. 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 they are 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 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 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 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.

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 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 -- we 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.

Yes. And on the CapEx front, Tania, I guess just to start with, first of all, to put it in context. So spend in '25 was GBP 8.4 million, spend the year before was GBP 7.1 million. And normally, we've talked about GBP 7 million as a sort of par spend. So it's sort of GBP 1.5 million or so more than that's been. But of course, the group is growing quite materially. And that GBP 8.4 million 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 U.K., where we've got aspirations to be bigger than we are right now. So 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. So actually, 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 the volumes are improving. It also serves new build -- sorry, heat recovery propositions that go into 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 U.K. commercial broader aspirations. Some of the other ones we're doing in places like 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 4 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 and 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.

Just to add to that, that investment isn't just capacity. It's also focusing on efficiency and improving unit cost. We 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 has gone in. So it's capacity headroom and unit efficiency. And great insight from the technical team. I remember we did this about 7 or 8 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 machine. 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 3 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. Okay. Should we go to Rob next.

Rob Chantry from Berenberg. So 3 questions from me. So firstly, just on addressable markets. I mean, obviously, 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 else -- 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?

Okay. First 2, so M&A, yes, absolutely, not concerned about the runway of opportunity on M&A. Yes. So yes, you're quite right. If we compound at 12% per annum by sort of doubling the size of the business every 6 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. I 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, U.K., 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 U.K., although I do think there's a super opportunity to go faster 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 the future. I just want to remind you that Fantech is something that if we 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 on 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 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. The -- sorry, that was the -- yes, that was 1 and 2, wasn't it?

Yes. I mean there was a specific question around sort of data control.

Sorry, yes, yes. There have been some really big deals in the data market. Samsung made a big acquisition of [ Flatwoods ] (sic) [ 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. But 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.

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 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.

And then so -- I mean just quickly again to add one more thing on that sort of transactions and what might be there. I think we 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 the way they weren't before. I think we've got a reputation as good acquirers. And I think ideas therefore, will -- 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, Tania, on sort of Central Europe. So look, 6% organic growth constant currency in Central Europe, but a very mixed, 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, ClimaRad, ERI, absolutely specialist in their area, hitting the sweet spots and 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. So those 2 have gone exceptionally well. Some of the other -- Germany has been difficult. Germany is still difficult. We think that's -- 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, yes, 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 Lewis at Peel Hunt. I think I've got 4, 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 '26? I mean, obviously, 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, would be really interesting to understand probably the U.K. dynamics, particularly the U.K. number is obviously higher because obviously, if you're swapping out a couple of fans within the U.K., new house for a heat recovery unit, there's obviously a huge mix issue there.

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. 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 as well.

So look, I'll take the first 2, 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 is to get you to your organic growth is the volume mix. So of course, the U.K. being 9.5% means that there's a higher volume mix there than there is elsewhere. And we've always said sort of 1%. How do we get to our 3% to 5% long-term target, roughly 1% of like-for-like price is what we think of as a norm inside that number.

So I think you think about all the markets being sort of relatively normalized in that context. Cost pressures, Ronnie sort of alluded to earlier, I think the 2 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 a national minimum wage, national insurance. 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 up for periodic rent reviews, they never seem to go down.

So those are probably the 2 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 that 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.

Just to add to that, the relentless focus on what I call value engineering and cost down 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 Fantech and elsewhere. So I think the inflationary environment is probably less inflationary next 12 months or 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. 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 capitalize 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 DVS now for 2.5 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 competitive environment. This is a real -- 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 2 or 3 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. 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 to Charlie there, and then we'll come to Christen next.

Charlie Campbell at Stifel. Just got 2, please. On the U.K., Future Homes Standard, we might hear something soon. Is that a further step change in ventilation in the U.K.? And then 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? And is that an opportunity for you?

I mean I can do the second one because it's so easier then -- so I think when we acquire businesses and 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 1, Charlie, make available everything in the group on day 1 and encourage them with the opportunities on day 1. But we are decentralized. So we don't go into a new acquisition and say, they 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. And I think the structure change that Ronnie mentioned with the regional MDs. So effectively, our ClimaRad 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 bits and 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 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. But it doesn't change as a result of the acquisition, I guess, is the message.

Future Homes 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 Homes 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. 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 U.K. Trade Association for Ventilation and BEAMA, also represents BEAMA at the Future Homes Standard consultation, and we see the direction of travel is really quite exciting but will take time. And the reason I mentioned Ireland there is that I think U.K. bodies are looking at Ireland as a really good example on 2 fronts around heat recovery. One is that the proposition going in really well and the benefits to the home and the decarbonization, but also 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 heat recovery in a new home. Why wouldn't you? Christen? Yes. And then -- sorry, David, we'll come to you.

Christen Hjorth from Deutsche Bank. Two questions from me. First of all, just be interesting to understand the difference in average sale price between U.K. social, U.K. housebuilding, U.K. private RMI. I know that won't be a like-for-like product, but it's more around the different mix going into those end markets. And then 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 on costs, that's there, and we should think about 26% being the right number going forward?

Okay. I can sort of do them together. Private -- so price point, 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 GBP 100 at the top end, but there's not so much at the top end. So you look at the sort of -- if you look at the distribution across that range, it's probably more GBP 30, GBP 40, GBP 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 U.K. 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 GBP 70 to GBP 250, GBP 250 a unit. But I would say the sweet spot is probably GBP 90 to GBP 110, GBP 120. But the 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.

And that's a premium. That's an upsell for us. And we integrated that technology, and we partnered with Switchee. 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 GBP 20 or GBP 30 a unit or maybe GBP 100 a home, it's probably moved to GBP 200. And when you move to heat recovery, you're up at GBP 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 for 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 plus/minus 5% 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 use price as a vehicle to try and attract more volume, I don't think it would make any difference. So yes, so sustainable, and hopefully, that gives you a bit of an insight on the price point ranges. Okay, David?

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 higher levels of activity?

I don't mind taking the last one, if you like, and then I think Ronnie do that. So there is definitely some key product 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 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.

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've been -- we talked a little bit about the metal investments that we've done, and you've seen in the annual 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 a bit more confidence, hopefully, in the outlook.

Regional Managing Director, so started to sort of socialize this internally over a year ago. All 3 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. 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. I 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. So 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 they do so because they deserve it. So I think that works really well. And then 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. 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 Fantech 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 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 were any other questions. No questions online, 1 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.