Slide 1: Healthy air, sustainably
Healthy air, sustainably Volution Group plc Full year results to 31 July 2023
Slide 2: Agenda
Agenda 01. Overview 02. Financial Review 03. Business Review Ronnie George Chief Executive Officer 04. Summary and Outlook 05. Q&A Andy O’Brien Chief Financial Officer Cover: Image taken by Natalie Humphrey, Marketing, UK Volution Group plc Full year results to 31 July 2023 1
Slide 3: Overview
Overview Full year results to 31 July 2023 Image: Nisha Desai, Simx, New Zealand
Slide 4: A leading player in the international HVAC market
A leading player in the international HVAC market Revenue +6.6%, Organic revenue +5.1% (4.6% cc) Adjusted operating margin 21.3% (up 0.2 pp) Excellent cash conversion 106%, significant headroom for further acquisitions Two acquisitions, extending our geographic and end market diversity (further acqu
Slide 5: Delivering on our strategy
Delivering on our strategy Organic growth Value-adding acquisitions Operational Excellence • Organic revenue growth 5.1% • Inorganic revenue growth 1.5%. • Adjusted operating margin (4.6% cc). expansion of 20 bps to 21.3% • Two acquisitions completed (2022: 21.1%). • Organic growth in all in the yea
Slide 6: Regulation supports the adoption of Volution Products
Regulation supports the adoption of Volution Products Decarbonisation Healthy Air Comfort 40% of our energy use and 36% of Increasing focus on good indoor air Increasing risk of over heating as well our emissions are from buildings. quality (IAQ) and the importance of as nuisance noise as we move Vo
Slide 7: Driving sustainable solutions: Product
Driving sustainable solutions Product • 70.1% of revenue from low-carbon, energy saving products (2022: 66.1%). 70% Met our target of 70% of sales revenue from • Continuing regulatory and legislative tailwinds. low‑carbon products two years early. • 33.8% of revenue from Heat recovery sales (2022: 3
Slide 8: Driving sustainable solutions: Planet
Driving sustainable solutions Planet • 76.2% of plastic used in own manufacturing facilities from recycled sources (2022: 67.2%). 90% Targeting 90% of the plastic that we process in our factories to • Continued positive development in adoption of recycled be from recycled resourced by the end of 202
Slide 9: Driving sustainable solutions: People
Driving sustainable solutions People • Reportable accident frequency rate of 0.30 per 100,000 hours worked (2022: 0.25). ZERO Target zero reportable accidents • Andreas Boeber joined as Operations Director in May 2023. Actions Performance • Equity, Diversity & Inclusion steering group launched. • Re
Slide 10: Financial Review
Financial Review Full year results to 31 July 2023 Image: John Adah, Dudley, UK
Slide 11: A strong financial performance
A strong financial performance 2023 2022 £m £m Movement • Revenue +6.6% with organic (cc) growth of 4.6%. Revenue (£m) 328.0 307.7 +6.6% • Organic growth attributable approximately Adjusted operating profit (£m)1 69.9 64.9 +7.7% 80% price/20% volume. • Adjusted operating margin +20bps to 21.3% throu
Slide 12: Strong and sustainable compounding growth
Strong and sustainable compounding growth Revenue £m Adjusted operating profit £m £328.0m £69.9m 350 80 300 13.3% CAGR* 70 12.9% CAGR* 60 250 50 200 40 150 30 100 20 50 10 0 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Adjusted EPS pence per s
Slide 13: Revenue
Revenue Revenue up 6.6% with organic revenue up 5.1% (+4.6% at cc) £1.6m £4.5m +0.5% £328.0m +1.5% £1.6m £11.9m £0.7m +0.5% +3.9% +0.2% £307.7m Organic growth £14.2m, (+4.6% cc) FY22 UK Continental Australasia Inorganic FX FY23 Europe Volution Group plc Full year results to 31 July 2023 12
Slide 14: Group adjusted operating profit up 7.7% to £69.9 million
Group adjusted operating profit up 7.7% to £69.9 million, with margin up 0.2pp to 21.3% £4.3m £0.5m £0.2m £69.9m £64.9m FY22 Organic Inorganic FX FY23 Target 20% 25.0% 23.9% FY23 21.3% 22.8% 22.6% 21.8% 20.4% FY22 21.1% Group FY21 20.9% FY20 15.6% FY23 FY23 FY22 FY22 FY23 FY22 FY19 17.8% UK Continen
Slide 15: Net debt and cash flow
Net debt and cash flow Cash conversionCash 97%,conversion 106% leverage 0.9x, (2022: liquidity available 76%) £96.2 million Leverage 0.8x (2022: 0.9x) Available liquidity £91.9m (2022: £89.2m) Net debt (excluding lease liabilities) £2.8m £79.3m £(7.8)m £(4.5)m £(4.0)m 0 £(14.0)m £(14.8)m £(3.6)m £(3
Slide 16: Compelling returns on invested capital (ROIC)
Compelling returns on invested capital (ROIC) 2023 2022 • Very strong ROIC 27.4%, significantly ahead AVERAGE NET ASSETS 1 216.3 195.3 of Group WACC (estimated to be c 10%). Add/(deduct) • Acquisitions will be dilutive at point of entry. + Acquisition related liabilities 15.6 13.0 • Improving return
Slide 17: Continuing to deliver against financial KPIs
Continuing to deliver against financial KPIs Revenue growth Organic revenue growth (cc) Adjusted operating margin % +6.6% p.a. +4.6% p.a. 21.3% Target: 10% p.a. Target: +3 to 5% p.a. Target: >20% Adjusted operating Return on invested capital (ROIC) Adjusted EPS cash flow conversion 106% 27.4% 7.5% T
Slide 18: Business Review
Business Review Full year results to 31 July 2023 Image: ERI Team, North Macedonia
Slide 19: Volution at a glance
Volution at a glance £156.1m £124.5m £47.4m United Kingdom Continental Europe Australasia 47.5% of Group revenue 38.0% of Group revenue 14.5% of Group revenue 39.6% UK customers 7.9% Export customers UK Residential 27.2% Central Europe 23.0% Australasia 14.5% UK Commercial 9.2% Nordics 15.0% UK Expo
Slide 20: Our increasing geographical diversity
Our increasing geographical diversity 10 years ago (2013) Today (2023) 2 countries 17 countries 14.5% 10.6% Total revenue Total revenue £102.3m £328.0m 47.5% 38.0% 89.4% UK Continental Europe Australasia Volution Group plc Full year results to 31 July 2023 19
Slide 21: UK
47.5% % of Volution Group plc revenue Rizzy Cook, Crawley, UK UK • Revenue of £156.1 million, up 8.6% (8.3% cc). Growth 2023 2022 (cc) • Outstanding performance in Residential with revenue up 19.5% and all £m £m % categories (Private RMI, Public RMI, New Build Systems) growing. • Excellent customer
Slide 22: Continental Europe
38.0% % of Volution Group plc revenue I-Vent Team, Slovenia Continental Europe Growth 2023 2022 (cc) • Revenue grew by 5.2% (4.4% cc) with organic revenue growth of 1.3% £m £m % (0.6% cc). Continental Europe revenue 124.5 118.4 4.4 • Inorganic growth of 3.8% (3.8% cc), due to acquisition of VMI in A
Slide 23: Australasia
14.5% % of Volution Group plc revenue Ventair Team, Australia Australasia Growth 2023 2022 (cc) • Revenue of £47.4 million, up 3.9% (3.6% cc). £m £m % • Adjusted operating profit of £11.3 million (2022: £9.9 million). Australasia revenue 47.4 45.6 3.6 • Pricing discipline and excellent cost control
Slide 24: Our markets benefit from long-term structural growth drivers
Our markets benefit from long-term structural growth drivers Impact on End markets New Build Private RMI Public RMI Growth Drivers Residential Residential Residential Commercial Structural under-supply of new homes Regulation drives adoption of energy efficient, higher unit value solutions Energy ef
Slide 25: Summary and Outlook
Summary and Outlook Full year results to 31 July 2023 Image: Simx team, New Zealand
Slide 26: Our clear compounding growth model
Our clear compounding growth model Structural growth drivers underpinning long term growth Structural Increased Drive for energy IAQ health Upsell undersupply regulation efficiency awareness of homes Differentiated business model aligned to lead in chosen markets Leading product Strong brands Divers
Slide 27: Summary
Summary Revenue +6.6%, Organic revenue +5.1% (4.6% cc) Adjusted operating margin 21.3% (up 0.2 pp) Excellent cash conversion 106%, significant headroom for further acquisitions Two acquisitions, extending our geographic and end market diversity (further acquisition completed post year end) Recycled
Slide 28: Outlook
Outlook Whilst we are mindful of the impact of higher interest rates on consumer confidence and new build construction, the regulatory changes in our local markets continue to drive demand for our innovative and well-positioned low carbon product technologies. In addition, our three new acquisitions
Slide 29: Thank You Q&A
Thank You Q&A Full year results to 31 July 2023 Image: VMI NPD team, France
Slide 30: Appendix
Appendix Full year results to 31 July 2023 Image: Harpal Purewal, Reading, UK
Slide 31: Operating segments
Operating segments % of Volution Group % of Volution Group plc revenue (by sector) plc revenue OEM Export OEM UK 4.2% 3.2% UK Export 3.7% UK Nordics Commercial 15.0% 9.2% Central Europe Continental Europe: 38.0% 23.0% Australasia: 14.5% UK: 47.5% UK Residential 27.2% Australasia 14.5% Volution Group
Slide 32: Financial summary
Financial summary 2023 2022 Movement Revenue (£m) 328.0 307.7 6.6% Revenue (cc) (£m) 326.5 307.7 6.1% Gross margin (%) 48.4 47.8 0.6pp Adjusted operating profit (£m)1 69.9 64.9 7.7% Adjusted operating margin (%)1 21.3 21.1 0.2pp Adjusted profit before tax (£m)1 65.1 60.9 6.8% Adjusted EPS (pence)1 2
Slide 33: Reconciliation of adjusted to reported profit
Reconciliation of adjusted to reported profit 2023 2022 Movement • Acquisition related costs: £m £m £m • £1.0 million (2022: £0.2 million) of Adjusted profit before tax 65.1 60.9 4.2 professional fees in respect of the acquisitions during the year. Items excluded from adjusted measures: • Loss of £1
Slide 34: Consolidated statement of financial position summary
Consolidated statement of financial position summary 31 July 2023 31 July 2022 £m £m Non-current assets Property, plant and equipment 29.4 28.2 Right-of-use assets 29.9 23.6 Intangible assets – goodwill 164.9 142.7 Intangible assets – others 83.9 87.6 308.1 282.1 Current assets Inventories 59.0 57.2
Slide 35: Cash flow/net debt
Cash flow/net debt 31 July 2023 31 July 2022 Movement Movement £m £m £m % Adjusted EBITA (A) 71.3 66.5 4.8 7.2% Depreciation 8.0 7.4 Adjusted EBITDA 79.3 73.9 5.4 7.4% Change in net working capital 2.8 (17.7) Share-based payments 1.4 1.1 Net investment in fixed assets (7.8) (6.9) Adjusted operating
Slide 36: Cautionary statement
Cautionary statement This document may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such