Volution Group PLC — Annual Report 2024

Oct 23, 2024

Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

Strategic report

02 Financial highlights

03 Sustainability highlights

04 A decade of sustained progress

06 Our business at a glance

08 Investment case

10 Chair’s Statement

12 Chief Executive Officer’s Review

16 Regional Review

24 Our Business Model

26 Our Solutions

28 Healthier spaces

30 Cleaner air

32 Comfort redefined

34 Our strategy

36 Strategy in action

38 Key Performance Indicators

46 Financial Review

49 Stakeholder Engagement

59 Risk Management and Principal Risks

60 Non-Financial and Sustainability Information Statement

60 Sustainability at a Glance

Governance report

89 Chair’s Introduction to Governance

92 Compliance with the Code

93 Board Diversity Dashboard

94 Board of Directors

96 Governance Framework

99 2024 Board Activities

108 Nomination Committee Report

110 Audit Committee Report

117 Directors’ Remuneration Report

130 Directors’ Report

133 Directors’ Responsibility Statement

Financial statements

134 Independent auditors’ report

141 Consolidated Statement of Comprehensive Income

142 Consolidated Statement of Financial Position

143 Consolidated Statement of Changes in Equity

144 Consolidated Statement of Cash Flows

145 Notes to the Consolidated Financial Statements

182 Parent Company Statement of Financial Position

183 Parent Company Statement of Changes in Equity

184 Parent Company Statement of Cash Flows

185 Notes to the Parent Company Financial Statements

Additional information

190 ESG Data

203 Glossary of Technical Terms

203 Shareholder Information

Contents
Healthier spaces page 28
Comfort redefined page 32
Cleaner air page 30

01

Volution Group plc Annual Report 2024

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Strategic report
Governance report
Financial statements
Additional information

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Revenue £m
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Revenue | £347.6m | | |
| | (+8.0% at cc) | | |

Adjusted basic EPS pence
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Adjusted basic EPS | 28.0p | | |
| | (+8.5%) | | |

Adjusted operating cash flow £m
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Adjusted operating cash flow | £85.8m | | |
| | (+13.4%) | | |

Adjusted operating profit £m
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Adjusted operating profit | £78.0m | | |
| | (+11.7%) | | |

Adjusted operating profit margin %
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Adjusted operating profit margin | 22.5% | | |
| | (+120bps) | | |

Reported basic EPS pence
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Reported basic EPS | 21.6p | | |
| | (+13.7%) | | |

Dividend pence
| | 2024 | 2023 | 2022 |
| :--------------------- | :------- | :------- | :------- |
| Dividend | 9.0p | | |
| | (+12.5%) | | |

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• Group revenue up 6.0%; +1.5% organic (cc), +6.5% inorganic, offset by a 2.0% adverse foreign exchange impact.
• Adjusted operating profit margin up 120bps to 22.5% (2023: 21.3%) driven by strong UK performance, with enhanced mix and benefits from wider group value engineering, procurement initiatives and operational excellence.
• Excellent cash conversion of 107% (2023: 106%), above our target of 90%, assisted by further inventory optimisation.
• Adjusted basic EPS up 8.5% at 28.0 pence (2023: 25.8 pence), with reported basic EPS at 21.6 pence (2023: 19.0 pence).
• High return on invested capital maintained: ROIC (pre-tax) of 27.8% (2023: 27.4%).
• Proposed final dividend of 6.2p, bringing total dividend for the year to 9.0p, up 12.5% (2023: 8.0p).

02

Volution Group plc Annual Report 2024

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Strategic report
Governance report
Financial statements
Additional information

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• First Group-wide Employee Engagement Survey completed in the year, strong overall engagement.
• Our fourth Management Development Programme with 17 internal participants completes in October 2024.
• Significant improvement in reportable accident frequency, down from 0.30 (2023) to 0.20 (2024) per 100,000 hours worked.
• Continued progress on “product” and “planet” targets with low-carbon revenue at 70.9% (2023: 70.1%) and recycled plastics 78.1% (2023: 76.2%), albeit with a small increase in carbon intensity to 12.8tCO2/£m revenue (2023: 12.3tCO2/£m revenue).
• Our SBTi aligned carbon emissions targets, have been technically validated and final evaluation is in progress.

Employee engagement score	Accident frequency rate	Sales revenue from low-carbon products	Scope 1 & 2 carbon intensity (location based)	Recycled plastic used in our products
74	0.20	70.9%	12.8tCO2/£m revenue	78.1%

Sustainability highlights

1. The Group uses some alternative performance measures (APMs) to track and assess the underlying performance of the business. These measures include adjusted operating profit, adjusted operating profit margin, adjusted profit before tax, adjusted basic EPS, adjusted operating cash flow, return on invested capital, net debt, net debt (excluding lease liabilities) and adjusted operating cash conversion. The reconciliation of the Group’s reported profit before tax to adjusted profit measures of performance is summarised in the table on page 43 and in detail in note 2 to the consolidated financial statements. For a definition of all the adjusted and non-GAAP measures, see the glossary of terms in note 33 to the consolidated financial statements.
2. Definitions, basis of preparation, calculation methodology and historical data related to sustainability KPIs and other measures of sustainability performance can be found on pages 200 to 202.

03# Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

A decade of sustained progress

The group in 2014
* Revenue: £120.7m
* Revenue from Non-UK customers: c30%
* Number of countries: 4
* Number of key brands: 5
* Number of employees: 1,008
* Use of recycled plastics in our own products: +63.1pp
* Low-carbon products: +27.9pp
* Revenue growth: 11.2% (Ten year CAGR)
* Adjusted earnings per share: 12.3% (Ten year CAGR)

A decade of sustained progress continued

The group in 2024
* Revenue: £347.6m
* Revenue from Non-UK customers: c60%
* Number of countries: 17
* Number of key brands: 22
* Number of employees: 1,869
* Carbon intensity: 65.2% (10-year reduction)
* Adjusted cash flow: 14.2% (Ten year CAGR)
* Adjusted operating profit: 11.4% (Ten year CAGR)

Revenue split

Our business at a glance

What we do & why we do it

Volution is a leading supplier of ventilation products, catering to primary markets in the UK, Continental Europe, and Australasia. We aim to enhance our customers’ experience of ventilation by reducing energy consumption and improving indoor air quality and comfort. Our purpose is to provide healthy air, sustainably.

Our solutions

Key brands

Residential ventilation

The Volution Group’s residential products encompass a broad range of solutions designed to suit a variety of budgets and applications, ranging from unitary extractor fans for use in bathrooms and kitchens to significantly higher value, low-carbon, energy efficient whole building ventilation systems with heat recovery.

Commercial ventilation

The Volution Group’s commercial products encompass a variety of extractor fans, as well as mechanical heat recovery units (including both “fixed volume” and “demand” systems, some of which also incorporate high efficiency counter-flow heat recovery cells for energy efficiency), air handling units, fan coils and hybrid ventilation solutions.

Revenue Split	New build	Commercial	RMI	Residential
Percentage	31%	23%	69%	77%

Our business at a glance continued

Colleague numbers	UK	Continental Europe	Australasia	Total
Number	1,026	692	151	1,869

Locations	UK	Continental Europe	Australasia	Total
Number	6	15	6	27

Region	Revenue	Adjusted operating profit	Adjusted operating profit margin
UK	£160.8 million	£40.2 million	25.0% (Read more on page 16)
Continental Europe	£134.4 million	£32.1 million	23.9% (Read more on page 20)
Australasia	£52.4 million	£11.9 million	22.7% (Read more on page 22)

Investment case

• Leading product and technology offering
• Strong brands and customer relationships
• Successful track record of value adding acquisitions
• Highly efficient operating model
• Long-term sustainable growth model

Our differentiated business case

Our clear compounding growth model

Market overview – Structural growth drivers underpin long term growth

Structural undersupply of new homes

Increased urbanisation, stringent planning regulations, slow construction rates and increases in single person households, have all contributed to widespread housing shortages. As Governments react with initiatives to boost housing supply, we will see increases in demand for our products.

Regulation drives adoption of energy efficient, higher unit value solutions

The drive to reduce carbon emissions in buildings is increasing the adoption of heat recovery systems and other energy-efficient ventilation solutions. These systems are higher in value than traditional methods of ventilation, increasing the average revenue from each application.

Energy efficiency improvements driven by fuel costs and customer choice

Fuel cost increases drive energy efficiency improvements to existing homes. In addition, actions such as turning down thermostats to save energy increases condensation and mould risk and thus the need for improved ventilation.

Indoor Air Quality awareness and mould prevention clear link to health

Since Covid, there is far greater awareness of the impact that poor air quality has on health. This, along will acute focus on reducing mould in housing will continue to drive demand for ventilation solutions.

Demand for premium solutions and upsell to premium ventilation solutions (silence, aesthetics and controls)

Public housing focus on automation and strong differentiation in private refurbishment through quieter, more discrete designs is leading to increasing sales of our value added ventilation solutions. Heat recovery also represents an increasing premium demand.

Investment case continued

Strategic Pillars	Financial Returns
Organic growth	Revenue growth: +10% p.a.
Value added acquisitions	Organic revenue growth: +3 to 5% p.a.
Operational excellence	Adjusted operating profit margin (% of revenue): >20%
Sustainability at our core	Adjusted earnings per share: +10% p.a.
	Adjusted operating cash conversion: >90%
	Return on Invested Capital (ROIC): >20%

Delivering attractive financial returns

Dear shareholder,

I am pleased to report another year of strong performance, demonstrating the strength and resilience of Volution’s business model and strategy. In June this year, the Group celebrated its 10-year anniversary since IPO. We are proud of the excellent progress made over that period, which is testament to our strong corporate culture, differentiated business model, compounding growth strategy and consistent delivery. Over that 10-year period, Volution’s Total Shareholder Return (TSR) was 272%, compared with the FTSE 250 Index’s TSR of 71%.

Performance and results

• Group revenue increased to £347.6 million (2023: £328.0 million).
• Adjusted operating profit was up 11.7% at £78.0 million (2023: £69.9 million), giving an adjusted operating margin of 22.5% (2023: 21.3%).
• Reported profit before tax increased to £56.6 million (2023: £48.8 million).
• The Group’s adjusted earnings per share was 28.0 pence, representing an increase over the prior year of 2.2 pence, up 8.5%.
• Since our IPO in 2014, the compound annual growth rate of adjusted basic earnings per share is 12.3%, demonstrating strong earnings growth over that period.
• Reported basic earnings per share for the year was 21.6 pence (2023: 19.0 pence).
• Adjusted operating cash flow was £85.8 million (2023: £75.7 million).
• We spent £8.5 million, net of debt acquired, on the acquisition of DVS during the year.
• Net debt excluding lease liabilities at the year-end was £31.6 million (2023: £58.1 million).

Agreement to acquire Fantech, Australasia

Shortly after the year-end, on 20 September 2024, we were pleased to announce the agreement to acquire the Fantech Group in Australasia (‘Fantech’) for a consideration of AUD$280 million (£143.7 million) 1 on a debt/cash free basis, financed through newly arranged bank facilities.

1 Based on an AUD$:£ exchange rate of 1.948:1 being the closing rate as at 19 September 2024.

Innovation in action

We are closely aligned with environmental, health, regulatory and consumer developments that are reshaping the world’s expectation of how we live life indoors. Read more about our product innovation on pages 28 to 33.

Living our values

Delivering on our strategic goals and purpose

Chair’s Statement

Nigel Lingwood
Chair

The Board anticipates being able to complete on the transaction, which is subject to antitrust approvals, by the end of the calendar year 2024. Once completed Fantech will be our largest acquisition to date, provides Volution with a great platform to continue our growth ambitions in Australasia and demonstrates the Board’s commitment to the strategy of building a broader market position and set of businesses to enhance returns to shareholders.

Dividends

Recognising our strong performance in the year and our continued confidence in the business, the Board has recommended a final dividend of 6.2 pence per share, giving a total dividend for the financial year of 9.0 pence per share (2023: 8.0 pence per share), an increase of 12.5% on the previous year. This is in line with our ambition to progressively grow dividends each year. The resulting adjusted earnings dividend cover for the year was 3.1x (2023: 3.2x).Subject to approval by shareholders at the Annual General Meeting on 11 December 2024, the final dividend will be paid on 17 December 2024 to shareholders on the register at 22 November 2024.

Strategy

Volution’s purpose is central to our strategic ambition, driving value for all our shareholders and stakeholders. Continued development of industry regulation designed to make indoor air cleaner, and to decarbonise buildings, remains a central driver of growth, demonstrated again by the strong set of results. Underpinning the successful delivery of the Group’s purpose – to provide ‘Healthy air, sustainably’ are our strategic pillars of organic growth, value-adding acquisitions and operational excellence. Good progress was made during the year, with positive organic growth in spite of some challenging end markets, whilst the announcement in September 2024 of the intention to acquire Fantech demonstrates our ambition to further strengthen the Group’s market reach and product diversification. We continued our relentless focus on operational excellence, delivering excellent customer service, optimising supply chains and improving our sustainability.

Environmental, social and governance (ESG) objectives

Our commitment to high standards of sustainability, corporate responsibility, and engagement with our people provides the platform from which the Group can contribute to a more sustainable world. Our ventilation systems and products provide clean air solutions that protect people’s health and increase their comfort in an ethical and responsible way. Wherever feasible, our products and services are sustainably sourced. The Sustainability section starting on page 60 of this Report explains our commitments in more detail, including our work to reduce the carbon footprint of our products.

Our people and culture

A key focus for the Board is building on our workplace engagement and ensuring good corporate culture, and we regularly monitor indicators of the Company’s culture and seek opportunities throughout the year to engage with colleagues across the Group. Claire Tiney, our designated Non-Executive Director for workforce engagement, continues to participate in the Group-wide Employee Forum events, reporting insights to the Board. We were delighted by the results of the first Group-wide employee engagement survey, which signalled engagement levels of over 74%, although we do recognise that the bulk of the work will come with delivering on the action plans that have been developed in response to the feedback. The Group remains focused on a zero-harm ambition, and I am pleased to report good progress in the area of health and safety in the year, with a notable reduction in our reportable accident frequency rate to 0.20 reportable accidents per 100,000 hours worked (2023: 0.30). Our work on health and safety initiatives is ongoing and will continue to be a key focus for the Board in the year ahead. I am grateful to all our Volution colleagues for their commitment, talent and contribution, which is essential for the continued successful delivery of our strategy.

Board changes

Following the changes in the last financial year, when I became Chair of the Board and Jonathan Davis was appointed as the new Audit Committee Chair, we have had a quieter period, with no changes to the Board composition since that time. Margaret Amos has decided not to stand for re-election at the 2024 AGM and Claire Tiney’s tenure on the Board reaches the nine-year mark next year. The Board intends to begin a search for their replacements in the coming year.

Governance

The Group is fully committed to high levels of corporate governance. We are fully compliant with the 2018 edition of the UK Corporate Governance Code. It is our responsibility as a Board to retain a sharp focus and to deliver sustainable shareholder value over the long term, through effective management and good governance. Open, thorough, and robust discussion around key strategic matters, risks and opportunities faced by the Group at Board level is central to reaching our goals, whilst taking account of the impact on all our stakeholders. As a Board we ensure that good governance is central to all we do.

Nigel Lingwood
Non-Executive Chair
9 October 2024

Integrity in action

We aim to contribute positively to the communities and environment in which we operate. We focus on supporting communities and groups local to our operations. Read more about our work in local communities on page 73

Growth in action

The elements of our sustainable growth model work together to deliver our unique value proposition. Combined, they deliver high returns and long-term value for stakeholders whilst ensuring we continue to deliver on our environmental and social objectives. Read about the factors that drive growth on pages 8 and 9

Commitment in action

Volution has set its ambition to become net zero and has followed through on our commitment to submit science-based targets for approval by SBTi. Read more about our decarbonisation plans and initiatives on pages 80 and 87

Chair’s Statement continued
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Continuing to deliver sustainable compounding growth

Ronnie George
Chief Executive Officer

Summary

• Reported revenue growth of 6.0% (8.0% at cc), with organic decline of 0.3% (growth of 1.5% at cc), supplemented by inorganic growth of 6.3% (6.5% at cc).
• Strong revenue and profit development in the UK and good progress strategically and against our environment, social and governance (ESG) targets in our tenth full year since listing in 2014.
• Adjusted operating profit of £78.0 million, an increase of 11.7% over the prior year (2023: £69.9 million). Reported operating profit of £70.4 million, an increase of 23.2% over the prior year (2023: £57.1 million).
• Adjusted operating margin expansion of 120 bps to 22.5% (2023: 21.3%), as we successfully managed inflationary headwinds.
• Excellent cash conversion in the year of 107%, above our target of 90% supported by our inventory optimisation initiatives and continuing a 10-year trend of strong annual cash generation.
• Adjusted earnings per share at 28.0 pence, an increase of 8.5% over prior year (2023: 25.8 pence). Reported earnings per share at 21.6 pence, an increase of 13.7% over prior year (2023: 19.0 pence).
• M&A momentum continues with the acquisition of DVS completed 4 August 2023.
• Signed an agreement post year-end to acquire Fantech for AUD$280 million (£143.7 million).

Chief Executive Officer’s Review
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Volution Group plc Annual Report 2024
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Overview

We are delighted with our progress this year, our tenth full year as a listed company. Against a backdrop of challenging end markets, most notably in the area of new build construction, we made good steps forward across all aspects of our strategy. We achieved organic growth of 1.5% at constant currency (cc), lower than our long-term expected range of between 3% and 5%, however our performance was ahead of the wider market. This was supplemented by inorganic growth from the latest three acquisitions which have been successfully integrated in the year, delivering an overall revenue growth of 8.0% at cc and enhanced by further adjusted operating profit margin expansion of 120 bps, resulting in an 11.7% increase in adjusted operating profit, up to £78.0 million. Adjusted operating margins increased to 22.5%, supported by the significant progress made in the UK. In recent years, we have navigated the higher inflationary environment well. The year just ended was characterised by moderating material cost inflation, but with ongoing labour, overhead and facility cost inflation. An important and ongoing focus within the Group is the enhancement of product gross margins through technical assisted value engineering and our increasing procurement scale and more sophisticated and wider supplier partnerships. We made significant progress in the year with these initiatives, both with existing Group brands and the new additions to the Group. Organic growth was slightly higher in the second half of the year, with a full year growth of 1.5% at cc over the prior year. This growth was delivered against a headwind of significant revenue decline in our OEM activities in the UK, where revenue reduced by 36%. Adjusting for this significant decline in revenues, the Group delivered a stronger organic growth in line with our long-term range of expectations. The revenue decline in OEM led us to bring forward the implementation of a two-into-one site consolidation in Swindon, which was completed early in the new financial year 2025. Cash generation is an essential enabler of our M&A-led compounding growth strategy. An excellent adjusted operating cash conversion of 107% enabled us to bring net debt leverage levels down to the lowest ratio since listing in 2014. Early in the year, we completed the acquisition of DVS in New Zealand and successfully integrated both this business and the two acquisitions completed towards the end of the previous financial year. Volution operates in three key geographic areas: UK, Continental Europe and Australasia, with acquisitions focused primarily in the latter two areas. Our ambition over time is to become one of the leading ventilation providers for residential and commercial buildings in these chosen three geographical areas – we made further good progress on this ambition in the year. Our pipeline of opportunities remains interesting, and we will continue to exhibit pricing discipline and agility in pursuit of further deals. On 20 September 2024, the Group announced an agreement to acquire Fantech, subject to anti-trust approvals.# Fantech is a leading provider of commercial ventilation solutions in Australia and New Zealand, and complements our existing local market positions in Ventair, Simx and DVS very well.
Post the anticipated completion of the Fantech transaction and on a proforma basis, Australasia will represent over 30% of the Volution’s revenue. Ever mindful of the significant year-on-year expansion ambitions of the Group, we continue to invest in our people. Management Development Programme number four completes in October 2024, with plans for the fifth programme already underway and earmarked to kick off in spring 2025. New hires were made to the Senior Management Team and our bench was further strengthened by these new joiners. Our first Group-wide employee engagement survey was a huge success with nearly 80% of employees taking part, and we will soon embark on our annual follow-up with positive expectations of progress made in the year.

Our markets

Volution’s revenue continues to be weighted towards the refurbishment market and towards residential applications. We operate in an environment that is increasingly aware of the importance of indoor air quality and with local market agenda’s firmly focusing on decarbonising buildings. There is a more material influence of regulations on our new build activities, as very clearly demonstrated by our UK new build residential activities in 2024, and these trends are becoming more impactful everywhere in all local jurisdictions. This has been an underpinning factor in the performance and resilience of Volution’s ventilation activities in the last year. Our lesser exposure to new build activities has been a decisive factor in our outperformance of the wider market as we believe that ventilation refurbishment activities are more resilient and far less discretionary than other product categories. With many examples in recent years of the inextricable link between poor indoor air quality, insufficiently ventilated properties and the ill-health of tenants, ventilation demand today is more structurally underpinned than at any time in our history. We continue to repeat an important statistic whereby over 40% of energy use and 36% of carbon emissions in Europe is from buildings. Every year we see examples of where local regulations are changing to support the decarbonising of buildings. Mostly starting with the reduced air leakage and increased insulation of a building, ventilation strategies become essential in avoiding ‘sick building syndrome’ or the build-of up harmful humidity causing propagation of mould and condensation problems. Volution is present in most local trade associations and actively participates in consultation processes formulating the regulations that will exist for new and existing buildings for the future. Although the pace of these regulatory changes is increasing, sometimes the immediate impact can be quite limited, instead building up over the medium term. For example, the changes to Part F and Part L of UK building regulations in 2022 only had a material impact on the type of ventilation solutions fitted in new homes in the UK in 2024, Volution’s Vent-Axia brand benefiting hugely as a result of a new range of ultra low-carbon efficient ventilation solutions launched over two years ago.

Results

The Group delivered revenue of £347.6 million (2023: £328.0 million), an increase of 6.0% (8.0% at cc), with organic decline of 0.3% (growth of 1.5% at cc) and inorganic growth from the acquisition of DVS in the year, as well as from the full-year effect of the acquisition in the prior year, of 6.3% (6.5% at cc). Adjusted operating margins increased from 21.3% in the prior year to 22.5%, a strong performance and an impressive margin expansion despite the immediately margin-dilutive impact of the three most recent acquisitions (i-Vent, VMI and DVS). Reported profit before tax was £56.6 million (2023: £48.8 million), an increase of 15.9%.

• 8.0% revenue growth at cc
• 22.5% adjusted operating profit margin
• 70.9% revenue from our low-carbon products
• 1 acquisition during the year

Chief Executive Officer’s Review continued
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Volution Group plc
Annual Report 2024
Strategic report
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Financial statements
Additional information
Chief Executive Officer’s Review continued

Sustainability

This year we have continued to make good progress on our key Sustainability KPI’s. Recycled plastics content in our own production increased in the year to 78.1% of total consumption. With such a high proportion of the Group’s injection moulding and PVC extrusion production taking place at our Reading facility in the UK, the team there has done a great job of finding, trialling and ultimately using a range of new materials from different sources. The learnings from our Reading site have enabled us to develop robust processes and testing regimes helping us to understand the properties and suitability at a batch level. We have been able to leverage these learnings and to help increase the adoption in the Nordics, where our run rate exiting the year sets us up well for improvement in FY25. Revenue from our low-carbon products has increased to 70.9%. We continue to see strong regulatory tailwinds helping to drive the adoption of more energy efficient solutions across our geographies. This year’s acquisition of DVS in New Zealand has helped contribute to our low-carbon sales in addition to a full year’s contribution from VMI in France and i-Vent in Slovenia. More detail is provided within the regional reviews. Our Sustainability Committee, comprising our Senior Management Team and our non-executive director, Amanda Mellor, met twice in the year, where we reviewed progress against our published targets and key initiatives for the years ahead. In addition, we have now submitted our targets under the Science Based Target Initiative and have passed the Eligibility Verification and Technical Screening stages. We are now awaiting the Target Evaluation stage to begin. This year both the UK and Nordic teams have started to provide customers with embodied carbon data and expect to issue our first Environmental Product Declarations during FY25.

Strategy

Organic growth

We delivered Group organic growth of 1.5% at cc, though the underlying picture behind this was mixed. UK organic growth was 3.1% with strong residential outperformance offset by weaker commercial market demand and significant weakness in our OEM activities. Volution has a long-term target to consistently deliver organic growth in the range of 3 – 5% and whilst we were below that level at 1.5% in 2024, our performance was ahead of the wider market, which remained very challenging. As interest rates fall and new home affordability improves, coupled with ever tightening regulation, we expect new build activity to improve. In the UK we are seeing what we believe is a multi-year refurbishment and standards improvement agenda underway in public housing, as well as a target to hit Energy Performance Certificate (EPC) level ‘C’ by 2030. All of this is driving increased demand for low-carbon and continuous running ventilation solutions.

Acquisitions

We completed one acquisition in the year. In August 2023, we announced the completion of the acquisition of DVS in New Zealand for an initial consideration of £8.5 million (NZ$17.7 million), net of cash acquired, with further contingent cash consideration of up to NZ$9.0 million. DVS supplies directly to consumers and installs a range of energy-efficient centralised ventilation systems, incorporating positive input, heat recovery, heat transfer, and heating and cooling solutions, supplying into both new build and refurbishment applications. A combination of difficult market conditions in New Zealand coupled with slower than originally planned implementation of key product cost initiatives meant that performance in the first year was short of our forecast. Progress is now being made with the initiatives and we are confident that DVS will be a key contributor to our Australasian business and provide an additional sales channel to supply low-carbon solutions

Operational excellence

Maintaining our long-term adjusted operating margin at, or above, 20% is an important objective for Volution. In the year we delivered a 120bps margin improvement to 22.5% despite the dilutionary impact of the three most recent acquisitions and the continuing inflationary pressures across mainly labour and infrastructure costs. Our technically led value engineering initiatives and Group procurement-led sourcing programmes have again delivered good support for our gross margin improvement. During the period we announced two UK site closures. Due to lower demand in our OEM activities in Swindon, we have consolidated our two production facilities into one on the original ‘Greenbridge’ site. Investment has been made in improving the facility, reducing our carbon emissions and improving the working environment. Our Soham facility is also closing, with the production of natural and hybrid ventilation moving to our existing facility in Dudley, West Midlands. These changes, whilst regrettable due to the redundancy of valued colleagues, was necessary to maintain our competitiveness for both product ranges. These projects will be completed early in financial year 2025.

People

I am hugely proud that we completed our first Group-wide employee engagement survey in the year with c1,500 employees participating and a participation rate of 80%. Volution is absolutely committed to involving and inspiring our colleagues to deliver ‘Healthy air, sustainably’ and without this engagement we will not fulfil our true potential. Since joining us in early 2022, our Group Head of HR, Michelle Dettman, has made significant progress with our employee engagement agenda, and we are delighted to have signed up to the Construction Inclusion Coalition in 2024.We believe that a diverse and rich culture across our workforce is a source of strong competitive advantage, and I am honoured to lead such an incredible group of people. Our fourth Management Development Programme completes at the end of October 2024 and our 17 participants from across all areas of the Group have been working hard to assist us on our carbon emissions reduction journey. The feedback from the programme is that it has been rewarding and stimulating, and we are pleased to feature some of the programme participants in this year’s annual report. Such is the importance of developing our employees, we have already earmarked our fifth programme cohort who will embark on their programme in spring 2025. As Group Chief Executive I believe it is important to be visible in the business. During the year I was able to attend many of our locations and to take part in employee briefing and Q&A sessions. These are a rich source of information and an important part of the fully inclusive culture we want to perpetuate. As in previous years we held two Group-wide employee and engagement communication meetings attended by Claire Tiney, Non-Executive Director, and chair of the Remuneration Committee, as well as multiple senior managers’ briefing meetings virtually attended by approximately one hundred senior and middle management colleagues. Our strengthening of the team continued with several new key hires in the year. Martin Goodfellow, with significant experience in the nuclear industry and with a long career of technical leadership, joined us in the spring of 2024 as Group Technical Director. Martin has made great progress in further harnessing the talented group of technical experts and focusing the team on our exciting pipeline of new product development. Koen Groenewold started on 1 January 2024 as Managing Director of ClimaRad, succeeding the previous owner, as we prepare to acquire the balance of the 25% of shares of the company on a predetermined and previously announced basis, completing by 31 December 2024. And finally, in Australasia, Jeff Nicol joined us in June 2024, as Regional Managing Director elect, taking over from Ian Borley, our previous local leader who has been with us since Simx joined the Group in 2018 and who is retiring this year. I would like to thank Ian for his significant contribution to the group since 2018, developing a sizeable market position in Australasia.

Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

I continue to believe we have a strong culture of success at Volution, but also a culture where our teams work closely together and have a lot of fun in providing ‘Healthy air, sustainably’.

Outlook

Volution has delivered another strong set of results and made further good progress against our strategic and financial priorities in the year that we celebrated our tenth year as a listed company. I am incredibly proud of how, during this time, we have moved from being a largely UK centric ventilation leader to having a broad- based presence across the UK, Continental European and Australasian ventilation markets. The further enhanced operating profit margin delivered in the year, against continuing challenging markets, is a testament to our scale, diversification, and strong cohesion between the local operating areas, as well as our group-wide technical, procurement and product management functions. We continue to be equally focused on converting profitability into cash, and I was delighted to see another year of excellent cash conversion, well above our 90% target. The new financial year has started as anticipated, with both revenue and adjusted operating profit ahead of the same period last year. Also, in an exciting post year-end development, we have announced an agreement to acquire Fantech’s ventilation activities in Australia and New Zealand, which would represent our largest acquisition to date by some considerable distance. This, along with the momentum we have across many parts of the business, provides the Board with confidence of another year of good progress across the Group.

Ronnie George
Chief Executive Officer
9 October 2024

Chief Executive Officer’s Review continued

In conversation with our Chief Executive Officer

Q. How is the overall market for Volution’s products evolving?

The market for our products is continually evolving. With a wider imperative to reduce carbon emissions from buildings and the heightened awareness of the impact of poor indoor air quality on health we are seeing ongoing and supportive trends across our markets. Consumers are demanding quieter, more silent, better performing and easier to control products. Building architects and specifiers are tuned in to the positive impact correctly specified ventilation can have on the building’s performance. As a result we have seen a counter intuitive impact in some of our markets where the impact of these trends has enabled us to deliver revenue growth at a time when new build construction volumes have been declining.

Q. How will the evolving regulatory landscape impact Volution?

The global energy transition, moving away from the use of fossil-based fuels to renewable and more sustainable solutions is having a significant impact on the regulatory landscape. Two good examples in the last year include UK residential new house construction and our Australian new and refurbishment supply of more energy efficient ceiling fans. In both instances we are seeing the positive impact of more stringent regulations drive increased demand for more energy efficient ventilation and cooling solutions with a higher unit value. These changes are set to continue and when we overlay the greater awareness of the importance of indoor air quality on health and wellbeing, we are also experiencing positive demand drivers for more energy efficient and more silent refurbishment solutions.

Q. What are the biggest challenges Volution will face in the short to medium term?

Our business model is well established and has enabled us to deliver successfully for many years. We are focussed on continuing to grow the business both organically and by acquisition, and so I am acutely aware that having high levels of organisational bandwidth and talent across the Group is essential to our future success. In the last few years, we have successfully added to our already strong management team with new hires in Group HR, UK Operations Director, Group Technical Director and orderly succession planning for retirement in ClimaRad NL and Australasia. I am also very proud of the success of our most recent management development program (MDP4) and we will kick off our fifth cohort of managers in MDP5 during spring 2025. I believe that Volution is an inspiring and exciting place to work as we provide our customers with leading ventilation solutions underpinned by a sustainability focussed business model. It is this compelling purpose that helps us attract and retain the most talented and committed employees.

Regional Review – UK

Regional Review – UK

	2024 £m	2023 £m	Growth %	Growth (cc) %
Residential	105.0	89.7	17.1	17.1
Commercial	28.2	30.2	(6.6)	(6.6)
Export	12.1	12.1	–	1.2
OEM	15.5	24.1	(36.0)	(35.6)
Total revenue	160.8	156.1	3.0	3.1
Adjusted operating profit	40.2	35.3	13.9
Adjusted operating profit margin (%)	25.0	22.6	2.4pp
Reported operating profit	34.6	28.1	22.9

The UK delivered good organic revenue growth over the prior year. UK revenues increased from £156.1 million to £160.8 million, a 3.0% increase (3.1% at cc). The standout performance was residential ventilation activity which was a huge underpinning factor in the good results delivered by the Group. Given our end markets were generally challenging, with commercial and OEM activities quite weak, overall organic revenue growth of 3.1% was a good achievement. Adjusted operating profit increased from £35.3 million to £40.2 million with a significant increase in the adjusted operating profit margin at 25.0% up 240 bps from 22.6% in the prior year. Our gross margins expanded through a combination of favourable product mix, initiatives to reduce product cost and increased utilisation of our Reading, Crawley and Dudley factories. Indirect costs were tightly controlled although there were higher than usual bonus payments made to the teams that helped deliver the 17.1% revenue growth in the residential market.

Residential

Sales in our residential market sector were £105.0 million (2023: £89.7 million), representing impressive organic revenue growth of 17.1%, and building on last year’s strong organic growth. The structural growth drivers in the residential segment were reassuringly similar to the prior year. The importance of indoor air quality in homes and the need to properly ventilate to deal with the risks of mould and condensation are better understood than ever before. We have now seen further examples in the last twelve months where both private and public landlords have been taken to court and prosecuted for failing to prevent mould and condensation inside rental properties. Our sales teams are set up to help and assist with these issues and our offering extends beyond product supply to include expert analysis of problems via site surveys and remediation strategies. During the year we further enhanced our product ranges, and specifically in the refurbishment, maintenance and improvement market we upgraded many of our already successful product lines. Revive, already one of the most successful continuous ventilation solutions for the public refurbishment market, benefited from a significant upgrade directed at reducing the size and improving the aesthetics of the solution whilst still maintaining its’ market leading performance.# Volution Group plc Annual Report 2024

Strategic report

Regional Review – UK

Public housing landlords are undertaking a significant and what we expect to be, a multi-year improvement programme, to ensure mould and condensation problems are reduced. Alongside this, there is a stated Government target to improve the energy efficiency of the public housing stock to achieve Energy Performance Certificate (EPC) level “C” by 2030. The new Government has also recently indicated a commitment to introduce the same requirement for private sector rented housing. Improving the quality of a dwelling to EPC C requires in some cases much more structural refurbishment, often increasing levels of insulation and air tightness therefore requiring a more sophisticated higher added value ventilation solution. Quite often these solutions include decentralised heat recovery, an area where Volution is one of the European leaders with probably the widest range of solutions available to customers. Volution is the leading provider of ventilation solutions in the UK residential market with a preferred route to market through distribution. We actively work with our distributors to maintain good levels of key products in inventory to support the many thousands of contractors who install our products on a daily basis. During the year our engagement with distributor partners reached new heights. Through supporting buying conferences, hosting sales meetings at our facilities, providing training on our products and ventilations standards, we further intensified our efforts to remain the first-choice supplier for our key customers. I also had the benefit of attending some key distributor annual conferences where I was able to witness first-hand the strength of our relationships with our distribution partners. Our successful business model is the result of us focusing on some key basics. Firstly, we continue to innovate and improve our product solutions staying in close contact with all stakeholders to understand what is important to consultants, specifiers, contractors and all parts of the supply chain. Equally critical is our focus on continuing to deliver outstanding customer service levels, making the widest range of product solutions available for customers and ensuring that we can respond in a way where we continually exceed customer expectations.

£160.8m Revenue ↑3.1% Revenue growth at cc
£40.2 million Adjusted operating profit

New Build 36%
RMI 64%
Residential 76%
Commercial 24%

16 Volution Group plc Annual Report 2024

Strategic report
Governance report
Financial statements
Additional information

Regional Review – UK continued

Our key residential ventilation brands in the UK; Vent-Axia, Manrose, National Ventilation and Airtech again delivered excellent levels of customer service whilst delivering an impressive 17.1% organic revenue growth in the year. Residential new build revenue performed strongly in the year and ahead of our expectations at the start of the year. With housing completions down markedly on the previous year the significant revenue growth achieved is even more pleasing. The previously advised changes to Part F and Part L of the building regulations are now beginning to have an impact and there was a material shift to continuous ventilation solutions in the year. These solely low carbon, more energy efficient and more comprehensive solutions are now the default minimum standard of ventilation in new homes. Volution benefited from these changes as well as achieving considerable market share gains with many new accounts coming on board. In addition, new product innovation supported our new build activity levels. The range was further augmented in the year with new decentralised continuous solutions added and a new range of mechanical heat recovery units incorporating an element of refrigerant cooling to assist with the delivery of regulation Part O where overheating is a concern in the design and building of new homes. Investment in both our Dudley factory, to further scale up assembly capacity as well as increasing our injection moulding and extrusion capacity in our Reading factory, leaves us well placed to support further growth in residential new build in the UK. There has been much discussion around the potential recovery of housebuilding in the UK. The new Government’s ambitious target to build 1.5 million homes in the next five years would benefit Volution hugely and we are continuing to invest in all aspects of our product range and service capability.

Commercial Sales in our commercial sector were £28.2 million (2023: £30.2 million), an organic revenue decline of 6.6%. Whilst the commercial ventilation market in the UK has been challenging, we were nonetheless disappointed by our performance. Historic product range gaps as well as sales team leadership and resourcing have played a part in this relative underperformance, and we have taken decisive action to address these issues. In the commercial ventilation market, Volution is not currently a leading player, and we see this as a significant opportunity to grow revenue for the long term. During the year we further strengthened the sales team, new commercial leadership joined towards the end of the year, and we are fully focused on growing this area. In 2024 we brought several new commercial product ranges to the market. A new and improved range of mechanical ventilation with heat recovery (Apex) was launched at the beginning of the year. Mid-year we launched a new range of hybrid ventilation solutions, and during the year, we started the process of upgrading our range of fan coils to be more modular and easier for the contractor to flex during the install. At our manufacturing facility in Dudley, we are consolidating the previous production capability from our Soham site that closed in August 2024. With the new ambitious sales leadership, the additional specification selling roles we added during the year coupled with the newly enhanced product ranges we are confident of delivering improved results in the commercial ventilation market in the future. Whilst currently subdued the outlook for new high rise commercial construction in London is positive and we are well placed to capitalise on this opportunity with our leading and improved range of fan coil ventilation.

Export Sales in our UK Export sector were £12.1 million (2023: £12.1 million), an organic revenue growth rate of 1.2% at cc. The mix of export sales changed markedly in the year. Whilst exports excluding Ireland declined, our revenue in Ireland grew well via our strong relationship with our exclusive Vent-Axia partner. The outlook for the Irish market in 2025 is positive and the introduction of our new Passivhaus approved Mechanical Ventilation with Heat Recovery (MVHR) has already secured some exciting projects for the new financial year.

OEM Third party Sales in our OEM sector were again disappointing at £15.5 million (2023: £24.1 million), an organic decline of 35.6% at cc. The significant decline in revenue, due to a combination of much lower customer demand, customer overstocking and the need to de-stock was a significant headwind for the group. Early in 2024 we took decisive action to stabilise the business and to consolidate production into one of our two production facilities. This site consolidation project was completed in early FY25, and we now operate from one site with significantly lower overhead costs than in the prior year. Further investment has been made to enhance our range of EC3 motorised impellers. Whilst third party demand declined during the year there was a further material step up in the use of our motorised impeller solution inside our own group products.

17 Volution Group plc Annual Report 2024

Strategic report
Governance report
Financial statements
Additional information

New build

The Future Homes Standard (FHS), planned for England in 2025, follows a public consultation that ran from November 2023 to March 2024. The standard aims to make new homes and non-residential buildings energy-efficient and ‘zero carbon ready’. That means that no further work will be required for them to become zero carbon as our electricity grid decarbonises. Metrics The standard retains existing metrics of operational carbon, as used in the current national calculation method, as this already supports decarbonisation of buildings. However, a new calculation tool is proposed called the Home Energy Model (HEM) which is an alternative to the Standard Assessment Procedure (SAP). Fabric and fixed building services The standard proposes improvements to the guidance and to minimum standards for heat losses from building services, which directly supports the installation of ‘zero carbon ready’ technologies, including heat recovery ventilation.

Regional Review – UK continued

What does this mean for Volution

Q. How will the FHS positively impact Volution?
Continued tightening of the building fabric with better insulation levels will mean a greater opportunity for heat recovery technologies to help reduce carbon further. In addition, the increasing requirements for passive and active cooling offers Volution new opportunities. Indeed, this important new income stream is already being seen in new build housing.

Q. What are the potential threats rapidly changing regulation pose to Volution?
With any changes to a calculation method, there is always a risk that the new calculations may treat our products differently. However, the product characteristic database that carries the energy efficiency data for our products will be retained in HEM. We are also engaged with the Department for Energy Security and Net Zero (DESNZ) through our trade association as they develop the new tools.

Legislation update – UK

Volution products support legislative transition as we decarbonise. In the UK the built environment is responsible for c30% of total CO 2 emissions.# Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

Provision of ventilation

With greater focus on healthy, energy-efficient homes, we have continued to see wide-reaching programmes to upgrade ventilation provision in social housing. There are approximately 4.4 million social housing homes in the UK, including council housing and housing association properties. The number has declined over time through policies such as Right to Buy which has led to more social housing homes being sold than replaced. Awaab’s Law and the Decent Homes Standard from 2022 are both playing a significant role in ensuring that social housing meet minimum quality criteria including being free from serious hazards such as mould. In December 2023, the English Housing Survey identified that around 15% of the total housing stock in England (around 3.7 million homes) failed to meet the Decent Homes Standard.

Energy Efficiency

For both social and private rental properties in the UK, the Government has set a long-term target to achieve an energy performance certificate (EPC) band ‘C’ or above from 2030. The Social Housing Decarbonisation Fund (SHDF) will upgrade a significant quantity of the social housing stock currently below EPC band C up to that standard. It will support the installation of energy performance measures in social housing homes in England and facilitate the subsequent widespread adoption of decarbonised heating systems and energy-efficient ventilation to help:

• deliver warm, energy-efficient homes
• reduce carbon emissions
• tackle fuel poverty
• support green jobs
• develop the retrofit sector
• improve the comfort, health and wellbeing of social housing tenants.

During the year, we have seen Waves 2.1 and 2.2 of the SHDF close, which allocated £858 million to improve approximately 90,000 homes, and Wave 3 open with £1.25 billion dedicated to supporting 140,000 social housing homes between 2025 and 2028. In total £3.8 billion has been allocated over a ten-year period.

Regional Review – UK continued

Improving the health of social housing in the UK

Following the tragic death of 2-year-old Awaab Ishak, the Social Housing (Regulation) Act, which received royal assent in July 2023, has been introduced. In addition, the Renters’ Rights Bill means it will be extended to cover the private rental sector. This law aims to ensure that landlords address health hazards including damp and mould within specified timeframes. Under Awaab’s Law, landlords are required to investigate reported hazards within 14 days and provide a written report. For significant health risks, repair work must begin within seven days, and emergency repairs must be completed within 24 hours. If landlords fail to comply, tenants can take legal action to enforce the necessary repairs.

Regional Review – Europe

	2024 £m	2023 £m	Charge %	Change (cc) %
Central Europe	87.0	75.4	15.4	17.1
Nordics	47.4	49.1	(3.6)	0.4
Total revenue	134.4	124.5	7.9	10.5
Adjusted operating profit	32.1	28.4	13.9
Adjusted operating profit margin (%)	23.9	22.8	1.1pp
Reported operating profit	29.1	25.1	16.0

Our Continental Europe revenues increased from £124.5 million to £134.4 million, growth of 10.5% at cc, within which organic revenue was flat. The sector benefited from the full-year effect of the acquisitions of VMI in April 2023, and i-Vent in June 2023 with inorganic growth of 10.5% at cc. Adjusted operating profit was up 13.9% at £32.1 million versus a prior year of £28.4 million. The adjusted operating profit margin increased in the year by 110bps to 23.9% (2023: 22.8%).

Central Europe

Sales in the Central Europe region grew 17.1% at cc to £87.0 million compared to the prior year of £75.4 million. Organic revenue declined by 0.3% on a cc basis, with inorganic growth (17.4%) coming from the full-year effects of the acquisition of VMI and i-Vent. Revenue in Central Europe was a mixed picture, with significant revenue growth in ClimaRad in the Netherlands and revenue declines in Germany and Ventilair Belgium and Netherlands.

ClimaRad in the Netherlands delivered stronger organic revenue growth. Our decentralised heat recovery product range, within which some of the products include a heat emitter that can be connected to a heat pump, made excellent progress in the year. Our revenue is mainly for significant refurbishment projects, where we support housing association landlords with investment opportunities with a tangible payback in reduced energy costs. This provides a unique and unrivalled solution in the marketplace. The project order pipeline and confirmed order book also grew significantly in the year and the outlook is very positive. The Netherlands market was one of the first in Europe to ban the adoption of gas boilers in new residential builds and has a hugely proactive approach to low-carbon refurbishment of existing housing stock. During the year we hired a new Managing Director, Koen Groenewold, part of our succession planning to replace the ClimaRad founder, and in readiness for the final purchase of the 25% of the ClimaRad shares, scheduled for the end of calendar year 2024.

In Germany our revenues declined in the year as our greater exposure to new house construction compared with the rest of the Group, struggled to recover. In the last two years we have increased our proportion of revenue in the German refurbishment market, however this was insufficient to offset the difficulties in the new build market. We continue to introduce new products to the market and our new ‘Taris’ exhaust fan, launched later than anticipated, has started to gain early traction in the market. Further new product developments are planned early in 2025, including a low-cost sound insulation cover for new project sales and retrofittable as an upgrade to past installations. Good cost control by the local team and continued value engineering initiatives, supported by the wider Group technical and procurement functions, enabled us to maintain a similar operating profit margin albeit at lower revenue.

In Belgium, like Germany, our exposure is more weighted towards new residential construction. It was another difficult year, and our revenues declined on the previous year. Our new range of MVHR, branded Econiq, successfully launched in the year and we have plans to further extend the range in early 2025. Ventilair Belgium, with the new enhanced product range, is well placed to capture the anticipated recovery in new build residential activity.

Energy Recovery Industries (ERI), our leading proposition of aluminium cross counterflow and thermal wheel heat exchangers, reported a small revenue decline in the year. Significant new innovation, initiatives to improve the product cost and further factory efficiency gains delivered an improvement in operating profit. ERI is significantly exposed to new construction activity, and we are actively investing to increase our installed capacity to underpin the expected revenue growth as new construction demand recovers and the proportion of ventilation in buildings utilising heat recovery further develops.

Within the two businesses we acquired in FY23, VMI, in France, and i-Vent, in Slovenia, we have progressed well with planned initiatives. In VMI we have substantially increased the product range available to our distribution customers in France. Our investment thesis is to utilise the brand to grow our coverage in the French market, and we made good progress with the execution of this strategy in the year. Further new product introductions are planned for 2025. In Slovenia we introduced several new products from across the Group, including a proprietary exhaust fan solution to replace a previously third party sourced solution. The model is direct to consume,r and we have increased our marketing effort to greater establish the i-Vent brand in the market place in the face of increased competitor activity.

Regional Review – Europe

• ↑10.5% revenue growth at cc
• £32.1 million adjusted operating profit
• £134.4m Revenue
• New Build 36%
• RMI 64%
• Residential 70%
• Commercial 30%

Regional Review – Europe continued

Revised Energy Performance of Buildings Directive

In May 2024, the European Commission finally adopted the strengthened Energy Performance of Buildings Directive (EPBD). This represents another milestone of the European Green Deal. This legislation sets the framework for Member States to reduce emissions and energy use in buildings across the EU, from homes and workplaces to schools, hospitals and other public buildings. This will help improve people’s health and quality of life. Each Member State will adopt its own national trajectory to reduce the average primary energy use of residential buildings, by 16% by 2030 and 20 – 22% by 2035. For non-residential buildings, they will need to renovate the 16% worst-performing buildings by 2030 and the 26% worst-performing buildings by 2033.

Legislation update – Europe

Buildings are responsible for around 40% of the EU’s energy consumption, more than half of EU gas consumption (mainly through heating, cooling and domestic hot water), and 35% of the energy-related greenhouse gas emissions. At present, about 35% of the EU’s buildings are over 50 years old and almost 75% of the building stock is energy inefficient. At the same time, the average annual energy renovation rate is only about 1%.# Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

Regional Review – Australasia

	2024 £m	2023 £m	Change %	Change (cc) %
Total revenue	52.4	47.4	10.6	17.5
Adjusted operating profit	11.9	11.3	5.3
Adjusted operating profit margin (%)	22.7	23.9	(1.2)pp
Reported operating profit	11.1	10.7	3.6

Sales in our Australasia region were £52.4 million, with organic growth of 0.1% at cc. The sector benefited from the acquisition of DVS in August 2023 with inorganic growth of 17.4%. Adjusted operating profit increased by 5.3% to £11.9 million from £11.3 million in the prior year in spite of a significant earnings translation headwind resulting from the weaker local currencies versus GBP. Adjusted operating profit margins were down by 120bps to 22.7% versus 23.9% in the prior year, the dilution being related to the lower margin contribution from the newly acquired DVS.

The market in New Zealand was more challenging in the year following a good period of growth in the prior year which impacted revenue in both Simx and DVS. Revenues in Simx declined in the period, however operating margins were maintained through gross margin improvement initiatives and initiatives to control our indirect cost base. In the year we added the direct-to-consumer sales opportunity through the acquisition of DVS. Having these two different routes to market in the residential space gives us greater flexibility and opportunity to introduce new products to the New Zealand market. Whilst we are delighted to have acquired DVS, the business traditionally operates with a much lower operating margin than our core activities. We have identified and are now implementing significant product cost reduction initiatives, most notably in the area of pcb electronics, and these benefits provide the potential for a meaningful margin expansion in DVS. There is greater seasonality in DVS than the rest of our New Zealand activities, with almost 50% of our annual revenue being generated in the Southern Hemisphere winter months of May, June and July.

In Australia, our Ventair business had another very successful year. Our updated ranges of DC low-carbon ceiling fans have gained significant traction in the market, as revenues of these new product lines replace older, lower price point AC driven technology faster than we had anticipated. Regulations in the market favouring low-carbon technology and the use of ceiling fans as a more energy-efficient and effective way to provide cooling in a warmer climate have driven overall market volumes in the last few years.

• ↑17.5% revenue growth at cc
• £11.9 million adjusted operating profit
• £52.4m Revenue

	New Build	4%
RMI	96%
Residential	94%
Commercial	6%

Legislation update – Australasia

Public consultation on the Commercial Building Disclosure (CBD) Programme expansion

The Commercial Building Disclosure (CBD) Programme requires energy-efficiency information to be provided, in most cases, when commercial office space of 1000 square metres or more is offered for sale or lease. The aim of the CBD Programme is to improve the energy efficiency of Australia’s large office buildings and to ensure prospective buyers and tenants are informed. The CBD Program is established by the Building Energy Efficiency Disclosure Act 2010 (the BEED Act) and is managed by the Australian Government Department of Climate Change, Energy, the Environment and Water (the ‘Department’).

The CBD Programme has driven considerable energy savings for large commercial office buildings by empowering building owners and operators to make informed decisions to enhance energy efficiency and reduce consumption. Since 2010, there has been a 35% reduction in base building energy usage per square meter for disclosure-affected office buildings. In Australia, non-residential buildings contribute around 10% of total emissions in the economy, most of this outside the office sub-sector. Expanding the scope to the other building types represents a significant opportunity to decarbonise. The feasibility study includes a suggested roadmap for introducing mandatory disclosure to most major commercial building sectors by 2035.

What does this mean for Volution

Q. How will wider disclosure positively impact Volution?

NABERS provides a rating across four areas including indoor environment (IE). A NABERS IE rating measures the indoor environment quality of a building, based on factors that impact people’s cognitive performance, satisfaction and productivity, including air quality, lighting quality, temperature and thermal comfort, and acoustics.

Q. What is included in a NABERS IE rating?

Indoor air quality is a specific measure. This includes ventilation effectiveness and levels of pollutants as well as maintenance of air systems and cleaning practices for the building in general. This will help continue to drive demand for higher specification ventilation systems for commercial buildings.

The following key principles support the proposed roadmap for change:

• Emphasising the early expansion of scope to include larger building types where National Australian Built Environment Rating System (NABERS) rating tools are accessible.
• Gradually extending coverage to all major sectors of commercial buildings, ultimately addressing a significant portion of their emissions and energy consumption through effective regulations.
• Introducing minimum energy performance standards (MEPS) for building types that have initially been subjected to disclosure requirements.
• Providing specific information regarding timing, size thresholds, trigger points, and disclosure/consideration requirements after conducting a more thorough cost-benefit analysis, regulatory impact statement (RIS), and consultations with the industry.

The Department is inviting feedback on this roadmap, recognising that the implementation of CBD expansion will necessitate additional analysis of the costs and benefits specific to the sector being considered.

Regional Review – Australasia continued

Our Business Model

What drives us

People

We rely on our dedicated workforce to deliver on our purpose.

• 1,869 employees

Brands

Our trusted brands across the UK, Continental Europe and Australasia provide us with a strong customer base and unique market selling opportunities.

• 22 brands operating across three main markets

Relationships

We rely on the strong partnerships that we build with our customers, regulators and suppliers.# Volution Group plc Annual Report 2024

Strategic report

Our value chain

Our Business Model continued

Our value chain

Distribute

Our 22 brands operate across three key geographies. Our scale allows us to maximise cross-selling opportunities, maximising our market reach, setting us apart from our peers. We aim to collaborate with distribution partners who prioritise sustainable practices.

Manufacture

With continued product innovation we manufacture products with sustainability at their heart. We aim to use high-quality, sustainable products, eliminating waste in our value chain. We aspire to close the loop on our circular economy by recycling end-of-life products.

Innovate

We design and create innovative products across our business utilising the wealth of expertise from our employees , feedback from partners and our years of experience to deliver bespoke air quality solutions for our customers.

Grow

Our acquisition strategy allows us to continually integrate value-adding businesses that provide new expertise, additional routes to market, and product development opportunities.

Underpinned by our strategic pillars and commitment to sustainability

Strategic pillars	Sustainability commitments
Organic growth	Product
Value-adding acquisitions	Planet
Operational excellence	People

Read more on pages 34 to 37
Read more on pages 60 to 87

Shareholders
Delivering attractive returns
+11.8% adjusted basic EPS 5-year CAGR

Suppliers
Develop long-term relationships with suppliers to grow together while meeting social commitments
c2,000 suppliers

Customers
Provide innovative air quality solutions to support their needs

20,000 SKUs

Environment
Continue to reduce our environmental impact within our value chain
2021 Green Economy Mark since 2021

Employees
Create a working environment within which our employees can develop their skills
74 overall employee engagement score

Government
Support regulatory change through the continued development of clean air ventilation systems

Read more on pages 16 to 23

Our Solutions

Leading range of products and solutions

Residential:

New build houses
Ventilation systems in homes are not only fitted to bathrooms, utility rooms and kitchens, but can be supplied to the whole house.

Apartments
Apartments, and other multi-occupancy properties such as care homes, are also often more complex than houses so need more bespoke solutions.

Housing refurbishment
Existing buildings are harder to retrofit complex duct routes to. Refurbishment solutions for individual properties are therefore generally simpler to nature.

Our Solutions continued

Non-residential

Schools

In classrooms specialist solutions are needed to maximise the energy efficiency throughout the seasons, minimising energy loss in winter and keeping them cool in summer.

Hospitality

Restaurants, bars, hotels and the like all have a high density of people where air quality and comfort are key. We offer a wide range of energy-efficient solutions.

Workplaces

Offices, factories, warehouses, retail spaces and government buildings, plus many more workplaces, can all be served by our non-residential solutions.

Making buildings healthier

In modern well-insulated and airtight buildings, good ventilation is required to ensure that we maintain a healthy indoor atmosphere. Requirements are driven by regulations.

Build tight, ventilate right
As we decarbonise, our buildings will become more airtight with much better insulation, all added to make our buildings more energy efficient. However, the air inside these buildings runs the risk of becoming full of indoor pollutants and condensation leading to mould growth and poor health.

• Healthier spaces
• Cleaner air
• Comfort redefined

“Our windows used to be completely covered in water, but after installing the Vent-Axia PureAir Home PIV the condensation has gone. After a while I wondered whether the condensation had disappeared just because the weather was warmer so I turned the unit off for a week and guess what? – the condensation came back.” Rob Ford, UK customer

84%
We spend over 84% of our time indoors.

The Vent-Axia PureAir Home is a positive pressure unit designed for easy retrofit into an existing house. It’s deigned to help reduce the condensation by helping prevent the migration of humidity around the home.

Making buildings cleaner

Volution’s focus on low-carbon products helps reduce the energy used in buildings.

Heat recovery avoids carbon emissions
Recovering energy from the air when ventilating reduces the amount of heating or cooling needed in a building, which in turn reduces carbon emissions from the energy network.

• Healthier spaces
• Cleaner air
• Comfort redefined

“Energy efficiency is at the heart of everything we do for our customers, so for our own new workplace, we wanted to demonstrate the capability of today’s products in delivering carbon neutral buildings in operation and hopefully inspire others”. Paul Hooker, owner and Managing Director of ECO MEP after installation of CIBSE award-winning Sentinel Apex to provide ventilation for ECO MEP’s highly efficient commercial office environment in Ashford, Kent.

93%
Volution supplies products with up to 93% heat recovery.

The CIBSE award-winning Sentinel Apex achieves the ‘holy grail’ of delivering the highest level of indoor air quality (IAQ) and thermal comfort with the lowest energy use and ultra-low sound levels.

Making buildings more comfortable

Our products reduce the risk of overheating and create comfortable living environments.

Insulation and global warming will lead to overheating
Modern, well-insulated buildings, along with increasing temperatures driven by climate change, increase the risk of overheating buildings. Regulators are starting to increase legislation to mitigation of the risk, and specifiers are responding by including cooling solutions into their designs. It is key, however, that cooling is provided in the most efficient way so that emission reduction targets can still be met. Volution has a range of products designed to do just that.

• Healthier spaces
• Cleaner air
• Comfort redefined

Remodelling of the Stationsstraat office building was needed as, during the summer, temperatures above 30°C were recorded in the workplace: “We had previously equipped a number of rooms with ClimaRad units as a pilot and the experiences of the users were very positive. The indoor climate was considerably improved by ventilation via heat recovery in combination with low temperature output.” Tiwos Tilbug housing association

90% of UK homes will overheat under a 2°C Global Warming Scenario

The ClimaRad H1C unit has a built-in heat exchanger and various sensors that measure air quality. A convector with additional ventilators is placed above the unit. This convector can be used to heat or cool. The unit provides ventilation, heating and cooling for each room, mounted on the external wall.

Our strategy

Providing healthy air sustainably through our four strategic pillars

2 Value-adding acquisitions

What this means & how we do it
We will continue to acquire and integrate complementary businesses in the residential market and, where appropriate, in the commercial ventilation market. Our focus will be in businesses with clear synergistic benefits available.

Progress
• Inorganic growth at 6.5% on a constant currency basis.
• Completed the acquisition of DVS in New Zealand, a provider of low-carbon whole-home ventilation systems.

Priorities for FY25
• Continue to focus on delivery of targeted synergistic benefits including cost reduction and intercompany trade.# Volution Group plc Annual Report 2024

Strategic report

Governance report

Financial statements

Additional information

Our strategy continued

“This year we further demonstrated our strategy for compounding growth. Against a backdrop of challenging markets, we delivered strong organic growth in our UK residential activities, integrated three new acquisitions and firmly cemented our market position in our three complementary geographical areas. Good progress was made with simplifying our UK operations as well as further improvement with our key ESG KPIs.”
Ronnie George
Chief Executive Officer

Acquisition of DVS

Founded in 1996, DVS is a market-leading ventilation supplier based in New Zealand. For more than two decades, they have been dedicated to making New Zealand homes healthier and more comfortable to live in. DVS supplies and installs a range of energy-efficient centralised ventilation systems, incorporating positive input, heat recovery, heat transfer, and heating and cooling solutions. Their products can be installed in both new and existing properties and are sold under the DVS Home Ventilation brand.

Our strategy in action

2 Value-adding acquisitions

Expanding our product offer in France
The acquisition of VMI in France provided us with a new platform through which to launch new and existing Group products. In March 2024 we launched a new product VMI branded offer including extract fans, single room heat recovery products and additional positive pressure units. These products are now available in the distribution channels in France and are just the start of widening the categories sold through VMI.

1 Organic growth

Expanding our market opportunity in Australia
In the second half of the year, we launched a range of new products into the Australian market. The range of DC motor-powered ceiling fans, exhaust fans and 3 in 1 heat, fan and light bathroom heaters all provide a new low-carbon product offer – all designed for quiet, continuous operation.

Expanding our market opportunity in UK non-residential
Expanding on our multi-award-winning NVHR range, we have designed a market leading, natural ventilation system that delivers heat recycling and heat recovery with hybrid technology, delivering maximum efficiency. Sustainability benefits were key at every stage of the product design to ensure the heat recovery system helps our customers on the road to reducing their carbon footprint and net zero carbon emissions.

3 Operational excellence

Operational efficiencies in the UK
In the first half of the year, we consolidated our Torin facilities in Swindon into a single location at Greenbridge helping to optimise our footprint. In addition, we integrated our facility in Soham, where we were assembling the Breathing Buildings Product range, into our facility in Dudley. To facilitate the move, we invested circa £1 million upgrading the employee facilities, equipment and the addition of new flowlines.

4 Sustainability at our core

Expanding our market opportunity in centralised heat recovery
Lo-Carbon Sentinel Econiq Cool-Flow is Vent-Axia’s latest flagship MVHR system combined with our Intelligent Econiq Cool-Flow Module offering up to 3.78KWh of cooling. In the cooler months the Lo-Carbon Sentinel Econiq Cool-Flow provides up to 93% heat recovery ensuring heating bills are kept to a minimum. In the warmer months our Intelligent controller automatically switches between heat recovery, summer bypass and active cooling via the Econiq Cool-Flow Module, continuously measuring internal and external temperatures to maintain comfort thresholds efficiently.

New integrated heat pump
With the increasing demand for low-carbon heating and increasing cooling demand, Pamon have developed an integrated heat pump and centralised energy recovery air handling unit for commercial applications.

This year we identified new sources of polymers helping us to increase the range of products incorporating recycled plastic. We have invested in new test facilities enabling us to test on site at Reading. This has enabled us to speed up approval of new sources ad helps drive the adoption of alternative materials.

Insourcing metal fabrication in Bosnia
With the introduction of our new Vita unit in ClimaRad, we made the decision to internalise the metal fabrication of the unit rather than outsource. This not only provided a cost reduction after the investment of €0.3 million in metal cutting and bending, but provides greater flexibility in production, helping to manage the quick adoption of new products into projects.

Our strategy in action continued

3 Operational excellence

4 Sustainability at our core

Link to strategic pillars key

• LTI: Long Term Incentive Plan
• ABP: Annual Bonus Plan

Financial performance

Key Performance Indicators (KPIs)

Strong and sustainable performance

Note 1. The Group uses some alternative performance measures (APMs) to track and assess the underlying performance of the business. These measures include adjusted operating profit, adjusted operating profit margin, adjusted profit before tax, adjusted basic EPS, adjusted operating cash flow, return on invested capital, net debt, net debt (excluding lease liabilities) and adjusted operating cash conversion. The reconciliation of the Group’s reported profit before tax to adjusted profit measures of performance is summarised in the table on page 43 and in detail in note 2 to the consolidated financial statements. For a definition of all the adjusted and non-GAAP measures, see the glossary of terms in note 33 to the consolidated financial statements.

2. Definitions, basis of preparation, calculation methodology and historical data related to sustainability KPIs and other measures of sustainability performance can be found on pages 200 to 202.

We have identified a number of key performance indicators (KPIs) that monitor performance against our strategy and priorities, and enable investors and other stakeholders to measure our progress consistently.

KPI	Revenue growth £m	Five-year average	2024	2023	2022	2021	2020
Strategic pillars measured by this KPI	This KPI tracks our performance against our strategic aim to grow the business. We expect to grow via a combination of both organic growth and via acquisitions of attractive businesses with strong brands that expand our access to markets and are aligned with our purpose.
Comments	• Revenue grew 6.0%, or 8.0% constant currency (cc) • 1.5%cc growth was organic, 6.5%cc growth through acquisitions

KPI	Organic revenue growth %	Five-year average	2024	2023	2022	2021	2020
Strategic pillars measured by this KPI	This KPI tracks our revenue performance from existing businesses excluding the impact of acquisitions. We expect to deliver growth ahead of GDP, leveraging our strong brand positions and market leading product portfolios, supported by regulatory trends and increasing customer awareness of air quality and the importance of ventilation.
Comments	• Organic revenue growth of 1.5%cc • Full-year organic growth delivered in the UK (3.1% at cc) and Australasia (0.1% at cc), with Continental Europe being flat on prior year.

Strategic report

Governance report

Financial statements

Additional information

Link to strategic pillars key
Link to Directors’ remuneration key

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Organic growth

Value-adding acquisitions

Operational excellence

Sustainability at our core

LTI P Long Term Incentive Plan
ABP Annual Bonus Plan

Adjusted operating profit margin

% of revenue	Five-year average	2024	2023	2022	2021	2020
+20.3%		22.5	21.3	21.1	20.9	15.6

Strategic pillars measured by this KPI
This adjusted measure tracks the underlying financial performance and quality of the Group’s earnings. We aim to achieve and sustain attractive operating margins by leveraging the benefits of product innovation, and through economies of scale in sourcing and operational efficiencies in our production and indirect costs.

Comments
* Full-year adjusted operating margin up 120bps to 22.5% (2023: 21.3%)
* Strongest margin growth was in the UK, supported by enhanced mix and by cost initiatives

Link to Directors’ remuneration
LTI P
ABP

Adjusted operating cash conversion

%	Five-year average	2024	2023	2022	2021	2020
+102%		107	106	76	97	124

Strategic pillars measured by this KPI
This KPI tracks the efficiency of cash generation at the operational level (important for our acquisition strategy), after movements in working capital and capital expenditure.

Comments
* Working capital inflow of £2.6 million in the year.
* Capital expenditure of £7.2 million (2023: £7.8 million).

Working capital % of LTM revenue

	Five-year average	2024	2023	2022	2021	2020
+14.9%		14.7	16.1	18.1	12.7	12.8

Strategic pillars measured by this KPI
This KPI tracks our working capital efficiency; optimisation of our working capital, especially inventories across the Group, is an important stream of our operational excellence focus.

Comments
* Working capital inflow of £2.6 million in the year primarily due to improvement in inventory offset by slightly higher receivables and lower payables.
* Inventory (excluding new acquisitions) was down £6.8 million in the year.

Link to Directors’ remuneration
LTI P
ABP

Key Performance Indicators (KPIs) continued

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Return on invested capital (ROIC)

%	Three-year average	2024	2023	2022
28.0%		27.8	27.4	28.8

Strategic pillars measured by this KPI
This KPI measures the returns for the Group as a whole and helps demonstrate the underlying quality of the business and its ability to generate shareholder value. It is measured as adjusted operating profit for the year divided by average net assets excluding net debt, acquisition related liabilities, and historic goodwill and acquisition related amortisation charges. The measure also excludes the goodwill and intangible assets arising from the original transaction that created the Group as a result of the leveraged buy-out transaction by private equity house Towerbrook Capital Partners in 2012.

Comments
* 2024 ROIC of 27.8% (2023: 27.4%) is significantly ahead of the Group’s estimated Weighted Average Cost of Capital
* Growth in ROIC in the year was due to adjusted operating margin expansion part offset by the impact of acquisitions on our invested capital.

Reported basic earnings per share

Pence	Five-year average	2024	2023	2022	2021	2020
+31.7%		21.6	19.0	18.1	10.5	4.9

Strategic pillars measured by this KPI
This KPI measures how successful we have been in growing the business relative to capital allocation and tax considerations.

Comments
* Reported basic EPS grew 18.6%.

Adjusted basic earnings per share

Pence	Five-year average	2024	2023	2022	2021	2020
+15.9%		28.0	25.8	24.0	21.0	12.1

Strategic pillars measured by this KPI
This KPI measures how successful we have been in growing the business relative to capital allocation and tax considerations. We target double digit adjusted EPS growth.

Comments
* Adjusted basic EPS grew 8.5%
* Our adjusted operating profit grew strongly at 11.7% growth, however this reduced to 8.5% EPS growth due to higher finance costs as a result of significantly increased bank interest rates.

Link to Directors’ remuneration
LTI P
ABP

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Link to strategic pillars key
Link to Directors’ remuneration key

Organic growth

Value-adding acquisitions

Operational excellence

Sustainability at our core

LTI P
ABP

Scope 1 & 2 Carbon intensity

tCO₂ / £m revenue	Group	2024	2023	2022	2021	2020
	12.8	12.8	12.3	12.3	15.1	19.4

Strategic pillars measured by this KPI
LTI P
* This KPI measures progress on our commitment net zero.
* In FY24 we saw an increase in carbon intensity, impacted by the addition of our recent acquisitions, changes to carbon conversion factors, and some increases in vehicle and gas use.

Recycled plastic used in our own manufactured products

%	Group	2024	2023	2022	2021	2020
78.1%		78.1	76.2	67.2	59.7	56.0

Strategic pillars measured by this KPI
LTI P
* This KPI measures our aim to reduce our environmental impact
* We made progress in FY24. Although we fell short of our stretching target for the year of 83.4%, our Q4 FY24 exit rate was over 83.0%

Revenue from Low-carbon products

% of revenue	Group	2024	2023	2022	2021	2020
70.9%		70.9	70.1	66.1	62.1	59.0

Strategic pillars measured by this KPI
LTI P
* This KPI measures our aim to champion the energy saving potential of our products to support the drive to net zero.
* We made further progress in FY24, already surpassing our FY25 target of 70.0%

Reportable accident frequency rate

Reportable accident rate per 100,000 hours worked	Group	2024	2023	2022	2021	2020
0.20		0.20	0.30	0.25	0.20	0.03

Strategic pillars measured by this KPI
* This KPI measures our first priority to keep everyone safe.
* In FY24, our focus and investment lead to a significant improvement in our reportable accident frequency rate compared to last year.

Key Performance Indicators (KPIs) continued

Sustainability performance

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Results Review

I am pleased to report that despite a year of varied, and in many countries quite challenging, market conditions, the Group was able to grow organically and delivered a strong performance in terms of both adjusted operating profit (+11.7%) and adjusted operating cash flow (+13.4%).

Group revenue grew 6.0% to £347.6 million (2023: £328.0 million), with organic growth at constant currency (cc) of 1.5% and a 6.5% (cc) contribution from acquisitions, part offset by an adverse 2.0% impact from movements in foreign exchange. All three regions grew revenue, with the UK up 3.0% (all organic) whilst in Europe and Australasia organic revenue (cc) was flat with growth coming from the acquisitions completed in late FY23 and early FY24. Further information on the performance and market drivers per region is given in the regional reviews on pages 16 to 23 of this report.

Gross margins increased by 290bps to 51.3%, benefiting from effective supply chain management and procurement savings, as well as good levels of factory efficiency and performance. Price benefit of c2% was primarily the result of the annualised impact from prior year increases. An increase of £11.3 million in administration and distribution costs was primarily due to the new acquisitions (£8.1 million) with the ‘direct to consumer’ business models of both i-Vent and DVS bringing a higher level of marketing and advertising costs. The remaining increase in administration and distribution costs was primarily attributable to staff costs, with average salary increases of approximately 4.8%.

Adjusted operating profit grew by 11.7% to £78.0 million (2023: £69.9 million) with adjusted operating margins expanding to 22.5%, up from 21.3% in the prior year. Reported operating profit grew by 23.2% to £70.4 million (2023: £57.1 million). Adjusted earnings per share increased by 8.5% to 28.0 pence (2023: 25.8 pence).

Financial Review

Excellent cash generation continues to underpin our growth model

Andy O’Brien
Chief Financial Officer

Our capital allocation for long-term sustainable growth
* Value added acquisitions
* Investment for organic growth
* Reliable return to shareholders

	Year ended 31 July 2024			Year ended 31 July 2023
	Reported £m	Adjustments £m	Adjusted results £m	Reported £m	Adjustments £m	Adjusted results £m
Revenue	347.6	–	347.6	328.0	–	328.0
Gross profit	178.3	–	178.3	158.9	–	158.9
Administration and distribution costs excluding the costs below	(100.3)	–	(100.3)	(89.0)	–	(89.0)
Amortisation of intangible assets acquired through bus. comb.	(9.3)	9.3	–	(11.1)	11.1	–
Contingent consideration	1.9	(1.9)	–	(0.6)	0.6	–
Costs of business combinations	(0.2)	0.2	–	(1.1)	1.1	–
Operating profit	70.4	7.6	78.0	57.1	12.8	69.9
Re-measurement of financial liabilities	(0.9)	–	(0.9)	0.1	–	0.1
Re-measurement of contingent consideration	(6.6)	6.6	–	(1.9)	1.9	–
Net gain on financial instruments at fair value	0.1	(0.1)	–	(1.6)	1.6	–
Other net finance costs	(6.4)	–	(6.4)	(4.9)	–	(4.9)
Profit before tax	56.6	14.1	70.7	48.8	16.3	65.1
Income tax	(13.8)	(1.6)	(15.4)	(11.3)	(3.0)	(14.3)
Profit after tax	42.8	12.5	55.3	37.5	13.3	50.8

Adjusted net finance costs of £6.4 million were up 31.6% compared to prior year (2023: £4.9 million) despite the relatively low levels of gross debt but reflecting the higher interest rates prevailing for the year. The adverse variance to prior year did moderate in the second half both as a result of reduced debt levels (closing net debt excluding lease liabilities at 31 July 2024 was 45.7% lower than prior year closing) coupled with the stabilisation of interest rates.The weighted average interest rates on gross debt in the year was 6.8% (2023: 4.4%). Reported profit before tax was £56.6 million, an increase of 15.9% from £48.8 million in 2023. Adjusted profit before tax was £70.7 million, up 8.7% versus the prior year (2023: £65.1 million). Adjusted basic earnings per share increased by 8.5% to 28.0p (2023: 25.8p). Basic earnings per share was 21.6p (2023: 19.0p), an increase of 13.7%.

Reported and adjusted results

The Group uses some Adjusted Performance Measures to track and assess the underlying performance of the business, as we believe they provide stakeholders with helpful information on the performance of the business, and a useful comparison of underlying business trends and performance from one period to the next.

Amortisation of intangible assets acquired through business combinations was £9.3 million (2023: £11.1 million), down £1.8 million in the year as a number of our older intangible assets reached the end of their amortisation life. Contingent consideration of £1.9 million consists of £1.6 million in respect of i-Vent in Slovenia, where a strong finish to calendar year 2023 was followed by a more difficult trading period in spring/ summer 2024 which led to a reduction in our expectation of contingent consideration payable. A small adjustment of £0.3 million was also made in respect of estimated contingent consideration for ERI. Costs associated with business combinations were £0.2 million (2023: £1.1 million), down £0.9 million due to the lower level of acquisitions completed in the year compared to the prior year. Re-measurement of contingent consideration was £6.6 million for the increase in expected consideration for the purchase of the remaining 25% of the shares of ClimaRad due to the strong earnings performance of the ClimaRad business through FY24.

Financial Review continued

Currency impacts

Aside from Sterling, the Group’s key trading currencies for our non-UK businesses are the Euro, representing approximately 23% of Group revenues, Swedish Krona (approximately 9%), New Zealand Dollar (approximately 6%) and Australian Dollar (approximately 8%). We do not hedge the translational exchange risk arising from the conversion of the results of overseas subsidiaries, although we do denominate some of our borrowings in our non-Sterling trading currencies, which offsets some of the translation risk relating to net assets. In 2024 we experienced a significant currency headwind of £6.7 million at a revenue level with a £1.7 million impact to adjusted operating profit. All of our principal non-Sterling currencies weakened relative to Sterling in the year, as shown in the below table.

Average rate	2024	2023	Movement
Euro	1.17	1.15	1.5%
Swedish Krona	13.40	12.80	4.7%
New Zealand Dollar	2.08	1.97	5.9%
Australian Dollar	1.92	1.80	6.6%

The Group had Euro denominated borrowings as at 31 July 2024 of £49.8 million (2023: £79.4 million). The Sterling value of these foreign currency denominated loans, decreased by £1.1 million because of exchange rate movements (2023: increased by £1.3 million). Transactional foreign exchange exposures arise principally from our US Dollar denominated purchases of materials from our suppliers in the Far East. We aim to purchase a substantial proportion of our expected requirements approximately 12 months forward, and as such, we have forward currency contracts in place for approximately 80% to 85% of our forecast average forward requirements for the 2025 financial year (approximately $20 million).

Taxation

Our adjusted effective tax rate of 21.8% (2023: 21.9%) is broadly in line with last year, with the increase in the UK Corporation Tax rate from 19% to 25% partially offset by favourable business mix effect and an increase in UK Patent Box relief. We expect our medium-term adjusted effective tax rate to be in the range of 21% to 25% of the Group’s adjusted profit before tax, depending on the business mix and the profile of acquisitions. With a current tax rate of 30% in Australia, the anticipated addition of Fantech would be expected to increase the current rate. Our reported effective tax rate for the year was 24.4% (2023: 23.4%); the increase of 1.0pp driven by higher non-deductible expenses, primarily movements in contingent consideration.

Excellent cash generation

Volution’s high operating margins and asset light business model and operations drives a profile of strong cash generation. Underpinned by a working capital inflow of £2.7 million in the year (2023: inflow of £2.8 million), principally due to inventory optimisation, the Group delivered a strong adjusted operating cash flow of £85.8 million (2023: £75.7 million). Group cash conversion, defined as adjusted operating cash flow as a percentage of adjusted earnings before interest, tax and amortisation (see the glossary of terms in note 33 to the consolidated financial statements) was 107% (2023: 106%). Performance against this KPI has now beaten our target of 90% in all bar one of the Group’s ten years as a listed business. A summary of the year’s cash flow is shown in the tables below, with the principal outflows being in relation to dividends (£16.4 million) and tax paid (£16.8 million), acquisitions (£13.2 million including acquisitions, contingent consideration, earn-outs and associated fees), and capital expenditure (£7.1 million). Net debt at 31 July 2024 was £57.9 million (2023: £89.3 million), and is set out in the table below. With lower leverage of net debt (excluding lease liabilities) to adjusted EBITDA of 0.4x at 31 July 2024 (2023: 0.8x), our strong balance sheet and reliable high levels of cash conversion give us significant capability for future growth investment.

Movements in net debt position for the year ended 31 July 2024	£m	2023 £m
Opening net debt 1 August		(89.3)
Movements from normal business operations:
Adjusted EBITDA	89.0	79.3
Movement in working capital	2.7	2.8
Share-based payments	1.2	1.4
Capital expenditure	(7.1)	(7.8)
Adjusted operating cash flow:	85.8	75.7
• Interest paid net of interest received	(5.0)	(3.7)
• Income tax paid	(16.8)	(14.0)
• Cash flow relating to business combination costs	(0.2)	(1.0)
• Dividend paid	(16.4)	(14.8)
• Purchase of own shares	(2.7)	(1.8)
• FX on foreign currency loans/cash	0.8	(3.1)
• Issue costs of new borrowings	–	(0.3)
• IFRS 16 payment of lease liabilities	(5.7)	(4.5)
• IFRS 16 decrease/(increase) in lease liabilities	4.8	(6.2)
Movements from business combinations:
• Business combination of subsidiaries, net of cash acquired	(8.5)	(29.7)
• Contingent consideration relating to I-Vent	(2.6)	–
• Contingent consideration relating to ERI	(1.9)	–
• Business combination of subsidiaries, debt repaid	(0.2)	(0.1)
Closing net debt 31 July	(57.9)	(89.3)

Reconciliation of Bank debt to Net debt	2024 £m	2023 £m
Bank debt	(49.8)	(79.4)
Cash	18.2	21.3
Net debt (excluding lease liabilities)	(31.6)	(58.1)
Lease liabilities	(26.3)	(31.2)
Net debt	(57.9)	(89.3)

Reconciliation of reported to adjusted operating cash flow	2024 £m	2023 £m
Net cash flow generated from operating activities	75.7	68.5
Net capital expenditure	(6.9)	(7.8)
UK and overseas tax paid	16.8	14.0
Cash flow relating to business combination costs	0.2	1.0
Adjusted operating cash flow	85.8	75.7

Funding facilities and liquidity

As at 31 July 2024, the Group had in place a £150 million multi-currency ‘Sustainability Linked Revolving Credit Facility’, together with an accordion of up to £30 million. As at 31 July 2024, the Group had £100.2 million of undrawn, committed bank facilities (2023: £70.6 million) and £18.2 million of cash and cash equivalents on the consolidated statement of financial position (2023: £21.3 million). On 10 September 2024, the Group refinanced its bank debt. The Group now has in place a £230 million multi-currency ‘Sustainability Linked Revolving Credit Facility’, together with an accordion of up to £70 million. The facility matures in September 2027, with the option to extend for up to two additional years. The previous facility was repaid in full.

Value-adding acquisitions

Acquisition spend in the year net of cash acquired was £13.0 million (2023: £29.7 million). We completed the acquisition of DVS (New Zealand), for an initial consideration of £8.5million, (NZ$17.7 million), net of cash acquired, with further contingent cash consideration of up to NZ$9.0 million based on stretching targets for the financial results for the 12 months ended 3 August 2024 and the 12 months ended 31 March 2026. DVS supplies directly to consumers and installs a range of energy-efficient centralised ventilation systems, incorporating positive input, heat recovery, heat transfer, and heating and cooling solutions. Their products can be installed in both new and existing properties and are sold under the DVS Home Ventilation brand. DVS is being integrated into our Australasian business and provides an additional sales channel to supply low-carbon solutions. Contingent consideration of £2.6 million for the first year measurement period of the FY23 acquisition of i-Vent was paid during the year, as was a deferred payment of £1.9 million related to the FY22 acquisition of ERI. On 20 September 2024, the Group signed an agreement to acquire Fantech for an initial consideration of AUD$220 million (£113.4 million) on a debt free cash free basis, with further non- contingent consideration of AUD$60 million (£30.9 million) payable 12 months after the completion date. The transaction will be financed using proceeds of the new facility, plus cash on the balance sheet.# High Returns on Invested Capital (ROIC)

Strong profit and cash generation is a key focus of Volution’s financial model, and allied to our asset light business model means the Group generates a high Return on Invested Capital (ROIC). The Group’s ROIC (pre-tax) for the financial year was 27.8% (2023: 27.4%), measured as adjusted operating profit for the year divided by average net assets adding back net debt, acquisition- related liabilities, and historic goodwill and acquisition-related amortisation charges (net of the associated deferred tax). The measure excludes the goodwill and intangible assets arising from the original transaction that created the Group when it was bought via a leveraged buy-out transaction by private equity house Towerbrook Capital Partners in 2012. The increase of 40bps versus prior year reflects the improvement in operating profit in the year from revenue growth allied to the Group’s continued operating margin expansion in the period, offset by the effect of acquisitions with the full-year invested capital impact from our 2023 acquisitions (VMI and i-Vent) and two-thirds impact of DVS. Volution continues to have ambitious plans for growth, both through organic and inorganic investment, with the post year-end agreement to acquire Fantech being a clear demonstration of our ambition in what (subject to completion) will be by some considerable distance the Group’s largest acquisition to date. Although, at the time of entry to the Group, acquisitions will be dilutive to ROIC, our track record of improving returns post-acquisition, coupled with continued organic growth, provides confidence in maintaining Group ROIC above 20% over the medium term while continuing to invest to grow the business.

Recommended dividend

The Board is recommending a final dividend of 6.2 pence which, together with an interim dividend paid of 2.8 pence per share, gives a total dividend per share of 9.0 pence (2023: 8.0 pence), up 12.5% in total. The final dividend is subject to approval by shareholders at the Annual General Meeting on 11 December 2024 and, if approved, will be paid on 17 December 2024.

Employee Benefit Trust

During the year £2.7 million of non-recourse loans (2023: £1.8 million) were made to the Volution Employee Benefit Trust for the purpose of purchasing shares in Volution Group plc to meet the Company’s obligations under its share incentive plans. The Volution Employee Benefit Trust acquired 770,000 shares at an average price of £3.903 per share in the period (2023: £3.334) and 1,019,886 shares (2023: 920,250 shares) were released by the trustees with a value of £3,942,724 (2023: £3,018,420). The Volution Employee Benefit Trust has been consolidated into our results and the shares purchased have been treated as treasury shares deducted from shareholders’ funds.

Andy O’Brien
Chief Financial Officer
9 October 2024

45 Volution Group plc Annual Report 2024

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Strategic report

Governance report

Financial statements

Additional information

Stakeholder Engagement

Employees	Customers	Suppliers	Shareholders	Communities and the environment	Government/industry bodies
Why engagement matters
Employee engagement is critical to our long-term success. Interaction between our employees and customers is also one of the main ways of experiencing our brands. We work to create a diverse and inclusive workplace where every employee can reach their full potential. This ensures we can retain and develop the best talent.	Understanding our customers’ needs and behaviours allows us to deliver relevant products and services, retain customers and attract new ones and improve product performance. It also highlights opportunities for innovation of sustainable products and growth and challenges to be met.	Our suppliers make a vital contribution to our performance. Engaging with our supply chain means that we can ensure security of supply and speed to market. Carefully selected high-quality suppliers ensure our brands deliver market leading innovative products meeting our customer expectations and requirements.	Continued access to capital is vital to the long-term success of our business. We work to ensure that our investors and investment analysts have a strong understanding of our strategy, performance and ambition. As a Company with shares listed on the Main Market of the London Stock Exchange, we must provide fair, balanced and understandable information about the business to enable informed investment decisions to be made.	We do business responsibly. We value our brands and have a reputation built on transparency and proven sustainability expertise. We have strong environmental objectives and targets, driven by our strategic pillars. We are committed to human rights. We aim to contribute positively to the communities and environment in which we operate. We focus on supporting communities and groups local to our operations. ESG principles and responsible business provide the foundations for sustainable growth. Volution has a sustainability strategy and has been awarded the Green Economy Mark by the London Stock Exchange. In addition we have a Sustainability Linked Revolving Credit Facility.	National governments set the regulatory framework within which we operate. We engage to ensure we can help in shaping new policies, regulations and standards, which assist in improving indoor air quality, and ensure compliance with existing legislation. We continually innovate to ensure our products become more energy efficient in line with the sustainability policies set out by most national governments. We conduct business in accordance with the principles set out in the Bribery Act 2010.

---

Why engagement matters

Employee engagement is critical to our long-term success. Interaction between our employees and customers is also one of the main ways of experiencing our brands. We work to create a diverse and inclusive workplace where every employee can reach their full potential. This ensures we can retain and develop the best talent.

---

How does Volution engage

• Employee Representative Forum.
• Employee Engagement Survey.
• Training and development.
• Individual performance reviews.
• Recognition and reward.
• Apprenticeships.
• Regular communications such as newsletters.
• Management of ongoing customer relationships.
• Customer events and product launches.
• Participation in industry forums and events.
• Brand websites and social media.
• Annual Report and Accounts.
• Supplier audits and inspections.
• Ongoing supplier relationship meetings.
• Responsible, sustainable and ethical procurement.
• Engagement on our Code of Conduct and policies on the prevention of anti-bribery and corruption and modern slavery.
• Through our China–Britain Business Council sourcing office in Hangzhou.
• Annual Report and Accounts.
• Annual General Meeting.
• Corporate website including dedicated investor section.
• Results presentations and post-results engagement with major shareholders.
• Investor roadshows, site visits, face-to-face meetings and addressing regular investor and analyst enquiries.
• Regulatory announcements.
• Signatories to the UN Global Compact and the CEO Water Mandate.
• Community investment initiatives.
• Sponsorship and employee volunteering.
• Contributing to national initiatives in society such as International Women’s Day and Global Recycling Day.
• A number of employee-led charitable initiatives during the year.
• Participation in industry bodies and working groups, in particular BEAMA, the UK trade association for manufacturers and providers of energy infrastructure technologies and systems.
• Engagement with tax authorities.
• Responding to industry and government consultations.
• Conferences and speaking opportunities.
• Effective and clear policies against bribery and supporting the elimination of modern slavery with training for staff and business partners.

---

Board engagement

• Employee Representative Forum attended by Claire Tiney, designated Non-Executive Director for workforce engagement.
• Review of Employee Engagement Survey results and Group- wide Action Plans.
• Oversight of employee remuneration and gender pay gap data.
• Monthly health and safety reports.
• Annual Report and Accounts.
• New product development reports.
• CEO Board report updates the Board on material customer matters.
• CEO Board report updates the Board on material supplier matters and progress on ethical and sustainable supply.
• Supplier audit reviews are presented to and discussed by the Audit Committee as part of its work in connection with the Group modern slavery policy and statement.
• Through regular shareholder feedback to the Board by the CEO and CFO.
• The CEO and CFO (and Chairman if appropriate) hold meetings with shareholders as part of the investor roadshows and ad-hoc meetings as appropriate.
• The Chair of the Remuneration Committee engages with shareholders on Remuneration Policy and practice.
• The Board reviews the voting of shareholders.
• Active engagement with the Group’s ESG matters and sustainability strategy.
• Amanda Mellor, Non-Executive Director, has been appointed as the Board’s representative to attend and report back on the Management Sustainability Committee’s decisions and actions.
• The Board receives regular updates on sustainability including in relation to the development of sustainable new products and progress against sustainability targets.
• The Board provides direction in support of the UN Global Compact’s principles, and policies relating to modern slavery and anti-bribery.

---

Board engagement

Delivering value for all

46 Volution Group plc Annual Report 2024

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Strategic report

Governance report

Financial statements

Additional information

Stakeholder Engagement continued

Employees	Customers	Suppliers	Shareholders	Communities and the environment	Government/industry bodies
Why engagement matters
Employee engagement is critical to our long-term success. Interaction between our employees and customers is also one of the main ways of experiencing our brands. We work to create a diverse and inclusive workplace where every employee can reach their full potential. This ensures we can retain and develop the best talent.

Why engagement matters

How does Volution engage

• Employee Representative Forum.
• Employee Engagement Survey.
• Training and development.
• Individual performance reviews.
• Recognition and reward.
• Apprenticeships.
• Regular communications such as newsletters.
• Management of ongoing customer relationships.
• Customer events and product launches.
• Participation in industry forums and events.
• Brand websites and social media.
• Annual Report and Accounts.
• Supplier audits and inspections.
• Ongoing supplier relationship meetings.
• Responsible, sustainable and ethical procurement.
• Engagement on our Code of Conduct and policies on the prevention of anti-bribery and corruption and modern slavery.
• Through our China–Britain Business Council sourcing office in Hangzhou.
• Annual Report and Accounts.
• Annual General Meeting.
• Corporate website including dedicated investor section.
• Results presentations and post-results engagement with major shareholders.
• Investor roadshows, site visits, face-to-face meetings and addressing regular investor and analyst enquiries.
• Regulatory announcements.
• Signatories to the UN Global Compact and the CEO Water Mandate.
• Community investment initiatives.
• Sponsorship and employee volunteering.
• Contributing to national initiatives in society such as International Women’s Day and Global Recycling Day.
• A number of employee-led charitable initiatives during the year.
• Participation in industry bodies and working groups, in particular BEAMA, the UK trade association for manufacturers and providers of energy infrastructure technologies and systems.
• Engagement with tax authorities.
• Responding to industry and government consultations.
• Conferences and speaking opportunities.
• Effective and clear policies against bribery and supporting the elimination of modern slavery with training for staff and business partners.

How does Volution engage

Board engagement

• Employee Representative Forum attended by Claire Tiney, designated Non-Executive Director for workforce engagement.
• Review of Employee Engagement Survey results and Group- wide Action Plans.
• Oversight of employee remuneration and gender pay gap data.
• Monthly health and safety reports.
• Annual Report and Accounts.
• New product development reports.
• CEO Board report updates the Board on material customer matters.
• CEO Board report updates the Board on material supplier matters and progress on ethical and sustainable supply.
• Supplier audit reviews are presented to and discussed by the Audit Committee as part of its work in connection with the Group modern slavery policy and statement.
• Through regular shareholder feedback to the Board by the CEO and CFO.
• The CEO and CFO (and Chairman if appropriate) hold meetings with shareholders as part of the investor roadshows and ad-hoc meetings as appropriate.
• The Chair of the Remuneration Committee engages with shareholders on Remuneration Policy and practice.
• The Board reviews the voting of shareholders.
• Active engagement with the Group’s ESG matters and sustainability strategy.
• Amanda Mellor, Non-Executive Director, has been appointed as the Board’s representative to attend and report back on the Management Sustainability Committee’s decisions and actions.
• The Board receives regular updates on sustainability including in relation to the development of sustainable new products and progress against sustainability targets.
• The Board provides direction in support of the UN Global Compact’s principles, and policies relating to modern slavery and anti-bribery.

Board engagement

47 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information

Stakeholder Engagement continued

Businesses do not operate in isolation. Without a good understanding of who the key stakeholders are and their needs, a business will fail to deliver sustainable value to shareholders and other stakeholders. Under s172 of the UK Companies Act, a director of a company must act in the way they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In doing this, the director must have regard, amongst other matters, to the:

• likely consequences of any decisions in the long term;
• interests of the company’s employees;
• need to foster the company’s business relationships with suppliers, customers and others;
• impact of the company’s operations on the community and environment;
• company’s reputation for high standards of business conduct; and
• need to act fairly as between members of the company.

The Directors are focused on their duties under s172 (1) of the Companies Act 2006 and consider that they have acted in the way they consider, in good faith, would promote the success of the Company for the benefit of its members as a whole, having regard to the stakeholders and matters set out in s172 (1) (a–f) in the decisions taken during the year ended 31 July 2024. For examples of some of the key strategic decisions reached by the Board in the year end and how s172 factors have been considered, see pages 99 and 100.

The Strategic Report was approved by the Board and signed on its behalf by Ronnie George, Chief Executive Officer, on 9 October 2024.

Ronnie George
Chief Executive Officer
9 October 2024

Section 172 Statement

48 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information

Risk Management and Principal Risks

Effective risk management is integral to our objective of delivering sustainable long-term value. The Board is committed to protecting and enhancing the Group’s reputation and assets in the interests of shareholders as a whole, while having due regard to the interests of all stakeholders. It has overall responsibility for the Group’s system of risk management and internal control. The Group’s businesses are affected by a number of risks and uncertainties. These may be impacted by internal and external factors, some of which we cannot control. Many of the risks are similar to those found by other companies of similar scale and operations. The risks and uncertainties facing the Group have been considered in the context of the political and macroeconomic uncertainties that have arisen since the invasion of Ukraine in early 2022 and from the changes in the trading relationship between the UK andtheEUfrom1January2021.Aspecificassessmentofthepotential risks and our approach to management of these risks can be found on pages 53 to 58.

Emerging risk	Description of risk	Time horizon
Geo-political tension	Global political and economic instability could disrupt markets or limit access to certain regionshinderingdealflow.	Short/ Medium term
AI driven innovation	AI presents many opportunities but also considerable risks around cyber security. AI must be developed in an ethical way.	Medium term

Our approach

Risk management and maintenance of appropriate systems of control to manage risk are the responsibilities of the Board and are integral to the ability of the Group to deliver on its strategic priorities. The Board has developed a framework of risk management which is used to establish the culture of effective risk management throughout the business by identifying and monitoring the material risks, setting risk appetite and determining the overall risk tolerance of the Group. To enhance risk awareness, embed risk management and gain greater participation in managing risk across the Group, a programme of employee communication continues with all new employees receiving a brochure on joining Volution. The Group’s framework of risk management is monitored by the Audit Committee, under delegation from the Board.# Governance Report

The Audit Committee is responsible for overseeing the effectiveness of the internal control environment of the Group. Our In-house Internal Audit function provides independent assurance that the Group’s risk management, governance and internal control processes are operating effectively.

Risk appetite

During the year, the Board reviewed its risk appetite in depth and improved the framework used for assessing appetite, including adjusting from the previous five risk appetite categories to three (Averse, Cautious, Open) which it felt more appropriately represents the Board’s approach to risk appetite. The Board also approved a risk appetite statement: “The Board recognises that continuing to deliver returns for shareholders and other stakeholders is dependent upon accepting a level of risk. We balance risk and opportunity in pursuit of our strategic objectives and the acceptable level of risk is assessed on an annual basis by the Board, which defines its risk appetite against certain key indicators, including potential impact of risk, likelihood of risk and ability to reduce risk through mitigation. This ensures alignment between acceptable risk exposure and the strategic priorities of the Group.”

Board
* Overall responsibility for risk management
* Reviews principal risks and uncertainties, along with actions taken, where possible, to mitigate them

Audit Committee
* Assurance oversight of the internal controls and risk management process

Executive management
* Day-to-day management of risk
* Design and implementation of the necessary systems of internal control

49 Volution Group plc Annual Report 2024

Strategic report
Governance report
Financial statements
Additional information

91 days | Total | |---|---|---|---|---|---| | **31 July 2024** | | | | | | | Expected credit loss rate | <0.2% | <0.1% | 1.1% | 8.6% | 35.0% | | Estimated total gross carrying amount at default | 42,089 | 2,125 | 470 | 81 | 1,241 | 46,006 | | Expected credit loss | 66 | 2 | 5 | 7 | 434 | 514 | | | <30 days | 30–60 days | 61–90 days | >91 days | Total | |---|---|---|---|---|---| | **31 July 2023** | | | | | | | Expected credit loss rate | <0.1% | <0.1% | 1.5% | 5.1% | 50.4% | | Estimated total gross carrying amount at default | 40,577 | 2,502 | 607 | 368 | 914 | 44,968 | | Expected credit loss | 30 | 2 | 9 | 19 | 461 | 521 | 177 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ## 27. Risk management continued ### Financial instruments and cash deposits Credit risk from balances with banks and financial institutions is managed in accordance with the Group’s policy. The Group deposits cash with reputable financial institutions, from which management believes the possibilities of loss to be remote. The Group’s maximum exposure to credit risk for the components of the statement of financial position at 31 July 2024 and 2023 is the carrying amount. The Group’s maximum exposure to derivative financial instruments is noted in either note 21 or in the liquidity tables on pages 175 and 176. ### Capital risk management The primary objective of the Group’s capital management policy is to ensure that it has the capital required to operate and grow the business at a reasonable cost of capital without incurring undue financial risks. The Board periodically reviews its capital structure to ensure it meets changing business needs. The Group defines its capital as its share capital (excluding treasury shares), share premium account, foreign currency translation reserves and retained earnings. In addition, the Directors consider the management of debt to be an important element in controlling the capital structure of the Group. The Group may carry significant levels of long-term structural and subordinated debt to fund acquisitions and has arranged debt facilities to allow for fluctuations in working capital requirements. There have been no changes to the capital management policy in the current period. Management manages capital on an ongoing basis to ensure that covenant requirements on third party debt are met. ### Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: * **Level 1** – quoted (unadjusted) prices in active markets for identical assets or liabilities; * **Level 2** – other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly; and * **Level 3** – techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. Financial instruments carried at fair value comprise the derivative financial instruments in note 21 and the contingent consideration in notes 15 and 21. For hierarchy purposes derivative financial instruments are deemed to be Level 2 as external valuers are involved in the valuation of these contracts. Their fair value is measured using valuation techniques including the DCF model. Inputs to this calculation include the expected cash flows in relation to these derivative contracts and relevant discount rates. Contingent consideration is deemed to be Level 3; see note 21 for details on the valuation techniques used to measure the fair value. ## 28. Related party transactions Transactions between Volution Group plc and its subsidiaries, and transactions between subsidiaries, are eliminated on consolidation and are not disclosed in this note. A breakdown of transactions between the Group and its related parties is disclosed below. No related party loan note balances exist at 31 July 2024 or 31 July 2023. There were no material transactions or balances between the Company and its key management personnel or members of their close family other than the compensation shown below. At the end of the period, key management personnel did not owe the Company any amounts. The Companies Act 2006 and the Directors’ Remuneration Report Regulations 2013 require certain disclosures of Directors’ remuneration. The details of the Directors’ total remuneration are provided in the Directors’ Remuneration Report (see pages 117 to 129). ### Compensation of key management personnel | | 2024 | 2023 | |---|---|---| | | £000 | £000 | | Short-term employee benefits | 4,888 | 3,886 | | Share-based payment charge (see note 31) | 904 | 1,003 | | **Total** | **5,792** | **4,889** | Key management personnel is defined as the CEO, the CFO and the 15 (2023: 14) individuals who report directly to the CEO. The Group also incurred fees and expenses of £414,000 (2023: £400,000) in respect of Claire Tiney, Amanda Mellor, Nigel Lingwood, Margaret Amos and Jonathan Davis for their services as Non- Executive Directors. Notes to the Consolidated Financial Statements continued For the year ended 31 July 2024 178 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information Notes to the Consolidated Financial Statements continued For the year ended 31 July 2024 ## 29. Group structure details At 31 July 2024, Volution Group plc held 100% of the voting shares of the following subsidiaries: | Country of incorporation | Group company | Principal activity | |---|---|---| | England | Windmill Topco Limited 1 | Intermediate holding company | | England | Volution Holdings Limited 1 | Intermediate holding company | | England | Energy Technique Limited 1 | Intermediate holding company | | England | Indirect Windmill Midco Limited 1 | Intermediate holding company | | England | Windmill Cleanco Limited 1 | Intermediate holding company | | England | Windmill Bidco Limited 1 | Intermediate holding company | | England | Manrose Manufacturing Limited 1 | Non-trading | | England | Volution Ventilation Group Limited 1 | Intermediate holding company | | England | Torin-Sifan Limited 1 | Original equipment manufacturer | | England | Anda Products Limited 1 | Non-trading | | England | Axia Fans Limited 1 | Non-trading | | England | Roof Units Limited 1 | Non-trading | | England | Torin Limited 1 | Non-trading | | England | Vent-Axia Limited 1 | Non-trading | | England | Vent-Axia Clean Air Systems Limited 1 | Non-trading | | England | Vent-Axia Group Limited 1 | HR services to Group | | England | ET Environmental Limited 1 | Non-trading | | England | Diffusion Environmental Systems Limited 1 | Non-trading | | England | NVA Services Limited 1 | Non-trading | | England | SW National Ventilation Limited 1 | Non-trading | | England | Airtech Humidity Controls Limited 1 | Non-trading | | England | Sens-Air Limited 1 | Non-trading | | England | Breathing Buildings Limited 1 | Non-trading | | England | Volution Ventilation UK Limited 1 | Ventilation products | | Sweden | Volution Holdings Sweden AB 2 | Intermediate holding company | | Sweden | Volution Sweden AB 2 | Ventilation products | | Sweden | VoltAir System AB 3 | Ventilation products | | Norway | Volution Norge AS 4 | Ventilation products | | Germany | inVENTer GmbH 5 | Ventilation products | | Germany | Volution Management Holdings GmbH 5 | Intermediate holding company | | Germany | Volution Deutschland Real Estate GmbH 5 | Property holding company | | Belgium | Ventilair Group International 6 | Intermediate holding company | | Belgium | Ventilair Group Belgium BVBA 6 | Ventilation products | | Netherlands | Ventilair Group Netherlands B.V. 7 | Ventilation products | | Netherlands | Vent-Axia B.V. 7 | Ventilation products | | New Zealand | Simx Limited 8 | Ventilation products | | New Zealand | Volution Ventilation New Zealand Limited 8 | Intermediate holding company | | Finland | Oy Pamon Ab 9 | Ventilation products | | Denmark | Air Connection ApS 10 | Ventilation products | | Australia | Ventair Pty Limited 11 | Ventilation products | | North Macedonia | ERI Corporation DOO Bitola 12 | Ventilation products | | Italy | ERI Corporation SRL 13 | Ventilation products | | Spain | Energy Recovery Industries Trading SLU 14 | Ventilation products | | UK | Energy Recovery Industries Corporation Limited 1 | Ventilation products | | France | Ventilairsec 15 | Ventilation products | | France | Neosfair 15 | Ventilation products | | Slovenia | I-VENT doo 16 | Ventilation products | | Croatia | Lunos Hrvatska d.o.o 17 | Ventilation products | | New Zealand | DVS 8 | Ventilation products | **Registered offices** 1. Fleming Way, Crawley, West Sussex RH10 9YX. 2. Gransholmsvägen 136, 35599 Gemla, Sweden. 3. Box 7033, 12107 Stockholm-Globen, Sweden. 4. Professor Birkelands vei 24B, 1081 Oslo, Norway. 5. Ortsstraße 4a 07751 Löberschütz, Germany. 6. Pieter Verhaeghestraat 8, 8520 Kuurne, Belgium. 7. Kerver 16, 5521 DB Eersel, the Netherlands. 8. 1 Haliday Place, East Tamaki, Auckland, 2013, New Zealand. 9. Keskikankaantie 17, 15680 Hollola, Finland. 10. Rude Havvej 17B, DK-8300 Odder, Denmark. 11. 4 Capital Pl, Carrum Downs VIC 3201, Australia. 12. BURSA 124 7000, Bitola, North Macedonia. 13. Via Modigliani 90 81031 Aversa, Italy. 14. Calle Pere Dezcallar I Net 11 Planta 2, 07003 Palma De Mallorca Illes Balears, Spain. 15. 16 Rue des Imprimeurs, 44220 Couëron, France. 16. Robbova ulica 2, 1000 Ljubljana, Slovenia. 17. Zagreb (Grad Zagreb), Samoborska cesta 153A, Croatia. 179 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ### 29. Group structure details continued At 31 July 2024, Volution Group plc held 75.65% of the voting shares of the following subsidiaries: | Country of incorporation | Group company | Principal activity | |---|---|---| | Netherlands | Volution Ventilation Holdings B.V. 1 | Intermediate holding company | | Netherlands | ClimaRad Holding B.V .1 | Intermediate holding company | | Netherlands | ClimaRad BV 1 | Ventilation products | | Bosnia | ClimaRad d.o.o 2 | Ventilation products | **Registered offices** 1. Lübeckstraat 25, 7575 EE Oldenzaal, the Netherlands. 2. Kamenolom 10, 71215 Blazuj, Sarajevo, Bosnia and Herzegovina.Torin-Sifan Limited, Volution Holdings Limited, Volution Ventilation Group Limited, Vent-Axia Group Limited and Energy Recovery Industries Corporation Limited are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of Section 479A of that Act. 30. Commitments and contingencies Commitments for the acquisition of property, plant and equipment as of 31 July 2024 are £626,000 (2023: £582,000). 31. Share-based payments The Company operates a share-based incentive scheme for Directors and key employees, known as the Volution Long Term Incentive Plan (LTIP). Share options were granted in March 2018, October 2018 and October 2019; these nil-cost options normally vest after three years assuming continuing employment with the Company. The extent to which the options will vest is dependent upon the Company’s performance over a three-year period set at the date of grant. The vesting of the awards will be determined by the Company’s relative total shareholder return (TSR) performance and EPS growth. The TSR element of the options granted has been valued using the Group’s share price volatility, the correlation between the share price movements of TSR comparators and the relevant vesting schedule. | | 2024 | 2023 | |---|---|---| | Outstanding at 1 August | 3,639,160 | 2,954,091 | | Granted during the year | 696,754 | 920,834 | | Dividend equivalent added on vesting | 30,409 | 28,355 | | Exercised during the year | (1,050,589) | (187,697) | | Lapsed during the year | (82,757) | (76,423) | | Outstanding at 31 July | 3,232,977 | 3,639,160 | The weighted average exercise price for all options is £nil. The total number of options granted in the year were 696,754 (2023: 920,834), of the total number of options outstanding at 31 July 2024, 1,552,724 had vested and were exercisable. The weighted average fair value of each option granted during the year was £3.75 (2023: £3.02). The weighted average remaining contractual life for the share options outstanding as at 31 July 2024 was 7.0 years (2023: 7.5 years). The following information is relevant in the determination of the fair value of options granted during the year under the LTIP: | | 2024 | |---|---| | Option pricing model used | Monte Carlo | | Weighted average share price at grant date (£) | 3.75 | | Exercise price (£) | nil | | Expected dividend yield (£) | nil | | Expected life (years) | 3 | | Expected volatility | 38.4% | | Risk-free interest rate | 4.5% | The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of share prices over a period commensurate with the expected life of the option. The share-based remuneration expense comprises: | | 2024 | 2023 | |---|---|---| | | £000 | £000 | | Equity-settled schemes | 1,200 | 1,357 | | | 1,200 | 1,357 | The Group did not enter into any share-based payment transactions with parties other than employees during the current or previous periods. 32. Events after the reporting period After the year end, on 10 September 2024, the Group refinanced its bank debt. The Group now has in place a £230 million multi-currency “Sustainability Linked Revolving Credit Facility”, together with an accordion of up to £70 million. The facility matures in September 2027, with the option to extend for up to two additional years. The old facility was repaid in full early, on 11 September 2024, and a new multi-currency “Sustainability Linked Revolving Credit Facility” was entered into. After the year-end, on 20 September 2024, the Group signed an agreement to acquire Fantech for an initial consideration of AUD$220 million (£113.4 million) on a debt free cash free basis, with further non contingent consideration of AUD$60 million (£30.9 million) payable twelve months after the completion date. Conditions to completion of the transaction include anti-trust approvals which we are optimistic will be satisfied within approximately two to three months of signing. Notes to the Consolidated Financial Statements continued For the year ended 31 July 2024 180 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information 33. Glossary of terms * **Adjusted basic and diluted EPS:** calculated by dividing the adjusted profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the adjusted net profit/(loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of any dilutive potential ordinary shares into ordinary shares. There are 2,143,783 dilutive potential ordinary shares at 31 July 2024 (2023: 3,365,875). * **Adjusted EBITA:** adjusted operating profit before amortisation. * **Adjusted EBITDA:** adjusted operating profit before depreciation and amortisation. * **Adjusted finance costs:** finance costs before net gains or losses on financial instruments at fair value and the exceptional write-off of unamortised loan issue costs upon refinancing. * **Adjusted operating cash flow:** adjusted EBITDA plus or minus movements in operating working capital, less net investments in property, plant and equipment and intangible assets. * **Adjusted operating profit:** operating profit before exceptional operating costs, release of contingent consideration and amortisation of assets acquired through business combinations. * **Adjusted profit after tax:** profit after tax before exceptional operating costs, release of contingent consideration, exceptional write-off of unamortised loan issue costs upon refinancing, net gains, or losses on financial instruments at fair value, amortisation of assets acquired through business combinations and the tax effect on these items. * **Adjusted profit before tax:** profit before tax before exceptional operating costs, release of contingent consideration, exceptional write-off of unamortised loan issue costs upon refinancing, net gains, or losses on financial instruments at fair value and amortisation of assets acquired through business combinations. * **Adjusted tax charge:** the reported tax charge less the tax effect on the adjusted items. * **CAGR:** compound annual growth rate. * **Cash conversion:** calculated by dividing adjusted operating cash flow by adjusted EBITA. * **Constant currency:** to determine values expressed as being at constant currency we have converted the income statement of our foreign operating companies for the year ended 31 July 2024 at the average exchange rate for the year ended 31 July 2023. In addition, we have converted the UK operating companies’ sale and purchase transactions in the year ended 31 July 2024, which were denominated in foreign currencies, at the average exchange rates for the year ended 31 July 2023. * **EBITA:** profit before net finance costs, tax, and amortisation. * **EBITDA:** profit before net finance costs, tax, depreciation, and amortisation. * **Net debt:** bank borrowings and lease liabilities less cash and cash equivalents. * **Operating cash flow:** EBITDA plus or minus movements in operating working capital, less share-based payment expense, less net investments in property, plant and equipment and intangible assets. * **ROIC:** measured as adjusted operating profit for the year divided by average net assets adding back net debt, acquisition-related liabilities, and historic goodwill and acquisition-related amortisation charges (net of the associated deferred tax). Notes to the Consolidated Financial Statements continued For the year ended 31 July 2024 181 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **Parent Company Statement of Financial Position** At 31 July 2024 | Notes | 2024 £000 | 2023 £000 | |---|---|---| | **ASSETS** | | | | **Non-current assets** | | | | Property, plant and equipment | 4 | 110 | 140 | | Investments | 5 | 199,322 | 199,322 | | Deferred tax asset | 6 | 3,423 | 3,417 | | Total non-current assets | | 202,855 | 202,879 | | **Current assets** | | | | Other receivables and prepayments | 7 | 121,937 | 135,160 | | Cash and short-term deposits | | 469 | 1,118 | | Total current assets | | 122,406 | 136,278 | | **Total assets** | | **325,261** | **339,157** | | **LIABILITIES** | | | | **Current liabilities** | | | | Trade and other payables | 9 | (24,291) | (24,461) | | Other current financial liabilities | 8 | (313) | (433) | | Total current liabilities | | (24,604) | (24,894) | | **Non-current liabilities** | | | | Interest-bearing loans and borrowings | 10 | (49,794) | (78,677) | | Total non-current liabilities | | (49,794) | (78,677) | | **Total liabilities** | | **(74,398)** | **(103,571)** | | **Net assets** | | **250,863** | **235,586** | | Notes | 2024 £000 | 2023 £000 | |---|---|---| | **Capital and reserves** | | | | Share capital | 11 | 2,000 | 2,000 | | Share premium | | 11,527 | 11,527 | | Treasury shares | | (2,250) | (2,390) | | Share-based payment reserve | | 5,200 | 5,357 | | Capital reserve | | (273) | (273) | | Retained earnings | | 234,659 | 219,365 | | **Total equity** | | **250,863** | **235,586** | As permitted by Section 408 of the Companies Act 2006, the Company’s income statement has not been included in these financial statements. The Company’s profit for the year ended 31 July 2024 was £33.4 million (2023: £27.5 million). The financial statements on pages 182 to 189 of Volution Group plc (registered number: 09041571) were approved by the Board of Directors and authorised for issue on 9 October 2024.On behalf of the Board Ronnie George Chief Executive Officer 9 October 2024 Andy O’Brien Chief Financial Officer 9 October 2024 182 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **Parent Company Statement of Changes in Equity** For the year ended 31 July 2024 | Share capital £000 | Share premium £000 | Treasury shares £000 | Share-based payment reserve £000 | Capital reserve £000 | Retained earnings £000 | Total £000 | |---|---|---|---|---|---|---| | **At 1 August 2022** | 2,000 | 11,527 | (3,574) | 4,910 | (273) | 208,312 | 222,902 | | Profit for the year | – | – | – | – | – | 27,515 | 27,515 | | Total comprehensive income | – | – | – | – | – | 27,515 | 27,515 | | Share-based payment | – | – | – | 1,826 | – | – | 1,826 | | Purchase of own shares | – | – | (1,834) | – | – | – | (1,834) | | Vesting of shares | – | – | 3,018 | (1,379) | – | (1,639) | – | | Dividends paid | – | – | – | – | – | (14,823) | (14,823) | | **At 1 August 2023** | 2,000 | 11,527 | (2,390) | 5,357 | (273) | 219,365 | 235,586 | | Profit for the year | – | – | – | – | – | 33,370 | 33,370 | | Total comprehensive income | – | – | – | – | – | 33,370 | 33,370 | | Share-based payment | – | – | – | 1,056 | – | – | 1,056 | | Purchase of own shares | – | – | (2,732) | – | – | – | (2,732) | | Vesting of shares | – | – | 2,872 | (1,213) | – | (1,659) | – | | Dividends paid | – | – | – | – | – | (16,417) | (16,417) | | **At 31 July 2024** | 2,000 | 11,527 | (2,250) | 5,200 | (273) | 234,659 | 250,863 | 183 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **Parent Company Statement of Cash Flows** For the year ended 31 July 2024 | | Notes | 2024 £000 | 2023 £000 | |---|---|---|---| | **Operating activities** | | | | | Profit for the year after tax | | 33,369 | 27,515 | | Adjustments to reconcile profit for the year to net cash flow from operating activities: | | | | | Income tax for the year | | (3,258) | (2,474) | | Business combination-related costs | | 193 | 1,032 | | Cash flows relating to business combination costs | | (193) | (1,032) | | Finance revenue | | (639) | (45) | | Finance costs | | 5,126 | 5,051 | | Effect of exchange on foreign denominated loans | | (1,124) | 1,308 | | Share-based payment expense | | 1,200 | 1,357 | | Depreciation of property, plant and equipment | 4 | 33 | 35 | | Working capital adjustments: | | | | | Decrease/(Increase) in other receivables and prepayments | | 16,842 | (16,995) | | Increase in trade and other payables | | 2 | 1,438 | | **Net cash flow generated from operating activities** | | **51,551** | **17,190** | | | Notes | 2024 £000 | 2023 £000 | | **Investing activities** | | | | | Purchase of property, plant and equipment | 4 | (5) | (13) | | Proceeds from disposal of property, plant and equipment | 3 | – | – | | Interest received | – | 45 | | **Net cash flow generated from investing activities** | | **(2)** | **32** | | **Financing activities** | | | | | Interest paid | | (4,598) | (3,008) | | Repayment of interest-bearing loans and borrowings | | (56,734) | (62,240) | | Proceeds from new borrowings | | 28,283 | 65,950 | | Issue costs of new borrowings | | – | (300) | | Dividend paid to equity holders | | (16,417) | (14,823) | | Purchase of own shares | | (2,732) | (1,834) | | **Net cash flow (used in) financing activities** | | **(52,198)** | **(16,255)** | | Net (decrease)/increase in cash and cash equivalents | | (649) | 967 | | Cash and cash equivalents at the start of the year | | 1,118 | 151 | | **Cash and cash equivalents at the end of the year** | | **469** | **1,118** | 184 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **Notes to the Parent Company Financial Statements** For the year ended 31 July 2024 **1. General information** These financial statements were approved and authorised for issue by the Board of Directors of Volution Group plc (the Company) on 9 October 2024. The Company is a public limited company and is incorporated and domiciled in the UK (registered number: 09041571). The share capital of the Company is listed on the London Stock Exchange. The address of its registered office is Fleming Way, Crawley, West Sussex RH10 9YX. **2. Accounting policies** **Basis of preparation** The financial statements are prepared in accordance with UK-adopted international accounting standards (IFRS). The financial statements are presented in GBP (£), rounded to the nearest thousand (£000) unless otherwise stated. They have been prepared under the historical cost convention. The policies applied by the Company are consistent with those set out in the notes to the consolidated financial statements. The following additional policies are also relevant to the Company financial statements. **Investments (note 5)** Investments in subsidiary undertakings are valued at cost, being the fair value of the consideration given and including directly attributable transaction costs. The carrying value is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. **Dividends received** Revenue is recognised when the Company’s right to receive the payment is established, which is generally when the shareholders approve the dividend. **Financial instruments** For detailed disclosures of financial instruments refer to note 27 of the Group financial statements. **New standards and interpretations** The standards or interpretations listed below have become effective since 1 August 2023 for annual periods beginning on or after 1 January 2023. The following amendments became effective as at 1 January 2023: • Amendments to IAS 12 ‘Deferred tax related to assets and liabilities arising from a single transaction’; • Amendments to IAS 8 ‘Definition of accounting estimates’; and • Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of accounting policies’. At the date of authorisation of these financial statements, the Company has not applied the following new and revised IFRS Standards that have been issued but are not yet effective. The following amendments became effective as at 1 January 2024: • Amendments to IAS 1 ‘Classification of liabilities as current or non-current’; • Amendments to IFRS 16 ‘Lease liability in a sale and leaseback’; • Amendments to IAS 1 ‘Non-current liabilities with covenants’; and • Amendments to IAS 7 ‘Supplier finance arrangements’. The following amendments will became effective after 1 January 2025: • Amendments to IFRS 18 ‘Presentation and disclosure in financial statements’. The Directors do not expect that the adoption of the Standards listed above will have a material impact on the consolidated financial statements of the Company in future periods. **Accounting judgements and key sources of estimation uncertainty** In the application of the Company accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The Directors have concluded that there are no key judgements or major sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. **3. Staff costs** | | 2024 £000 | 2023 £000 | |---|---|---| | Wages and salaries | 5,047 | 4,127 | | Social security costs | 379 | 338 | | Share-based payment charge | 1,200 | 1,357 | | Other pension costs | 92 | 76 | | | **6,718** | **5,898** | Other pension costs relate to the Company’s contribution to defined contribution pension plans. Total contributions payable in the next financial year are expected to be at rates broadly similar to those in 2023/24 but based on actual salary levels in 2024/25. **Average monthly number of employees in the year** | | 2024 Number | 2023 Number | |---|---|---| | Administration | 19 | 17 | 185 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **Notes to the Parent Company Financial Statements continued** For the year ended 31 July 2024 **3. Staff costs continued** **Directors’ remuneration** | Amounts paid in respect of qualifying services | 2024 £000 | 2023 £000 | |---|---|---| | Aggregate Directors’ remuneration | 3,265 | 3,748 | | Aggregate Non-Executive Directors’ remuneration | 414 | 400 | | Aggregate Directors’ cash payment in lieu of employer’s pension contribution | 43 | 59 | | Aggregate Directors’ pension scheme contributions | – | – | The number of Directors accruing benefits under Company money purchase pension arrangements was £nil (2023: £nil). The Company also incurred fees and expenses of £414,000 (2023: £400,000) in respect of Claire Tiney, Amanda Mellor, Nigel Lingwood, Margaret Amos and Jonathan Davis for their services as Non-Executive Directors. **4. Property, plant and equipment** **2024** | Fixtures, fittings, tools, equipment and vehicles £000 | Total £000 | |---|---| | **Cost** | | | At 1 August 2023 | 302 | 302 | | Additions | 5 | 5 | | Disposals | (21) | (21) | | **At 31 July 2024** | **286** | **286** | | **Accumulated depreciation** | | | At 1 August 2023 | 162 | 162 | | Disposals | (19) | (19) | | Charge for the year | 33 | 33 | | **At 31 July 2024** | **176** | **176** | | **Net book value** | | | **At 31 July 2024** | **110** | **110** | **2023** | Fixtures, fittings, tools, equipment and vehicles £000 | Total £000 | |---|---| | **Cost** | | | At 1 August 2022 | 289 | 289 | | Additions | 13 | 13 | | **At 31 July 2023** | **302** | **302** | | **Accumulated depreciation** | | | At 1 August 2022 | 127 | 127 | | Charge for the year | 35 | 35 | | **At 31 July 2023** | **162** | **162** | | **Net book value** | | | **At 31 July 2023** | **140** | **140** | **5. Investments** | | £000 | |---|---| | Cost and net book value | | | At 31 July 2023 and 31 July 2024 | 199,322 | For a list of the subsidiaries in which Volution Group plc held 100% of the voting shares as at 31 July 2024, see note 29 of the Group financial statements. The Company has considered whether there is objective evidence that the investment in subsidiaries is impaired. Considering models and assumptions consistent with those used for the Group goodwill impairment testing (see note 13 of the Group financial statements), no indicator of impairment has been identified. 186 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **6. Deferred tax assets** Deferred tax assets and liabilities arise from the following: | | 1 August 2023 £000 | Charged to income £000 | Credit to equity £000 | 31 July 2024 £000 | |---|---|---|---|---| | Deferred tax asset | | | | | | Temporary differences | 3,417 | 386 | (380) | 3,423 | | | 1 August 2022 £000 | Credit to income £000 | Credit to equity £000 | 31 July 2023 £000 | |---|---|---|---|---| | Deferred tax asset | | | | | | Temporary differences | 2,719 | 434 | 264 | 3,417 | **7. Other receivables and prepayments** | | 2024 £000 | 2023 £000 | |---|---|---| | Amounts owed by Group undertakings | 121,141 | 134,451 | | Prepayments | 796 | 709 | | | **121,937** | **135,160** | The Group has considered the recoverability of the amounts owed by Group undertakings.## Notes to the Parent Company Financial Statements ### 8. Other financial liabilities | | 2024 Current £000 | 2023 Current £000 | | :--------------------------------- | :---------------- | :---------------- | | **Financial liabilities** | | | | Foreign exchange forward contracts | 313 | 433 | | | 313 | 433 | The foreign exchange forward contracts are carried at their fair value with the gain or loss being recognised in the Company’s statement of comprehensive income. Refer to note 27 within the Group’s financial statements for the fair value hierarchy the Company uses to determine the fair value of financial instruments. ### 9. Trade and other payables | | 2024 £000 | 2023 £000 | | :------------------ | :-------- | :-------- | | Trade payables | 390 | 552 | | Other payables | 251 | 411 | | Accruals | 3,019 | 2,773 | | Amounts owed to Group undertakings | 20,631 | 20,725 | | | 24,291 | 24,461 | ### 10. Interest-bearing loans and borrowings | | 2024 Current £000 | 2024 Non-current £000 | 2023 Current £000 | 2023 Non-current £000 | | :-------------------------------------------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | | Unsecured – at amortised cost | | | | | | Borrowings under the revolving credit facility (maturing 2025) | – | 49,794 | – | 79,369 | | Cost of arranging bank loan | – | – | – | (692) | | | – | 49,794 | – | 78,677 | **Revolving credit facility – at 31 July 2024** | Currency | Amount outstanding £000 | Termination date | Repayment frequency | Rate % | | :-------------- | :---------------------- | :--------------- | :------------------ | :------------------- | | GBP | – | 2 December 2025 | One payment | SONIA + margin% | | Euro | 49,794 | 2 December 2025 | One payment | EURIBOR + margin% | | Swedish Krona | – | 2 December 2025 | One payment | STIBOR + margin% | | **Total** | **49,794** | | | | **Revolving credit facility – at 31 July 2023** | Currency | Amount outstanding £000 | Termination date | Repayment frequency | Rate % | | :-------------- | :---------------------- | :--------------- | :------------------ | :------------------- | | GBP | – | 2 December 2025 | One payment | SONIA + margin% | | Euro | 79,369 | 2 December 2025 | One payment | EURIBOR + margin% | | Swedish Krona | – | 2 December 2025 | One payment | STIBOR + margin% | | **Total** | **79,369** | | | | Notes to the Parent Company Financial Statements continued For the year ended 31 July 2024 187 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information **10. Interest-bearing loans and borrowings continued** On 9 September 2024, the Group refinanced its bank debt. The Group now has in place a £230 million multi-currency ‘Sustainability Linked Revolving Credit Facility’, together with an accordion of up to £70 million. The facility matures in September 2027, with the option to extend for up to two additional years. The old facility was repaid in full early, on 11 September 2024, and a new multi-currency ‘Sustainability Linked Revolving Credit Facility’ was entered into. The interest rate on borrowings includes a margin that is dependent on the consolidated leverage level of the Group in respect of the most recently completed reporting period. For the year ended 31 July 2024, Group leverage was below 1.0:1 and therefore the margin will remain at 1.25%. At 31 July 2024, the Group had £100,206,000 (2023: £70,631,000) of its multi-currency revolving credit facility unutilised, plus an unutilised accordion of up to £30,000,000. **Reconciliation of movement in financial liabilities** | | 2024 £000 | 2023 £000 | | :----------------------- | :-------- | :-------- | | At 1 August | 79,369 | 74,351 | | Additional loans | 28,283 | 65,950 | | Repayment of loans | (56,734) | (62,240) | | Interest charge | 4,427 | 3,008 | | Interest paid | (4,427) | (3,008) | | Foreign exchange | (1,124) | 1,308 | | At 31 July | 49,794 | 79,369 | **Changes in liabilities arising from financing activities** | | 1 August 2023 £000 | Cash flows £000 | Foreign exchange movement £000 | New leases £000 | 31 July 2024 £000 | | :-------------------------------------- | :----------------- | :-------------- | :----------------------------- | :-------------- | :---------------- | | Non-current interest-bearing loans and borrowings | 79,369 | (28,451) | (1,124) | – | 49,794 | | | 1 August 2022 £000 | Cash flows £000 | Foreign exchange movement £000 | New leases £000 | 31 July 2023 £000 | | :-------------------------------------- | :----------------- | :-------------- | :----------------------------- | :-------------- | :---------------- | | Non-current interest-bearing loans and borrowings | 74,351 | 3,710 | 1,308 | – | 79,369 | ### 11. Share capital and share premium The movement in called-up share capital and share premium accounts is set out below: | | Number of ordinary shares issued and fully paid | Share capital £000 | Share premium £000 | | :------------------------------ | :---------------------------------------------- | :----------------- | :----------------- | | At 31 July 2023 and 31 July 2024 | 200,000,000 | 2,000 | 11,527 | ### 12. Dividends paid and proposed | | 2024 £000 | 2023 £000 | | :--------------------------------------------------------------- | :-------- | :-------- | | **Cash dividends on ordinary shares declared and paid** | | | | Interim dividend for 2024: 2.80 pence per share (2023: 2.50 pence) | 5,538 | 4,942 | | **Proposed dividends on ordinary shares** | | | | Final dividend for 2024: 6.20 pence per share (2023: 5.50 pence) | 12,267 | 10,879 | The interim dividend payment of £5,538,000 is included in the consolidated statement of cash flows (2023: £4,942,000). A final dividend payment of £10,879,000 paid in 2024 is included in the consolidated statement of cash flows relating to 2023 final dividend (2023: £9,891,000). The proposed dividend on ordinary shares is subject to approval at the Annual General Meeting and is not recognised as a liability at 31 July 2024. Notes to the Parent Company Financial Statements continued For the year ended 31 July 2024 188 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information Notes to the Parent Company Financial Statements continued For the year ended 31 July 2024 ### 13. Related party transactions The following table provides the total amount of transactions that have been entered into with subsidiary undertakings for the relevant financial period. | Related parties | 2024 Amounts owed by related parties £000 | 2024 Amounts owed to related parties £000 | 2023 Amounts owed by related parties £000 | 2023 Amounts owed to related parties £000 | | :--- | :--- | :--- | :--- | :--- | | Volution Ventilation Group Limited | 75,673 | 19,966 | 95,066 | 19,966 | | Volution Holdings Limited | 39,511 | – | 39,385 | – | | DVS | 5,957 | – | – | – | | VMI | – | 665 | – | 759 | | | 121,141 | 20,631 | 134,451 | 20,725 | Sales made to Volution Holdings Limited of £4,340,000 (2023: £4,113,000) relate to management fees. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. No sales were made to Volution Ventilation Group Limited; the outstanding balance is an intercompany loan which has been repaid in part during the year. **Compensation of key management personnel** The Executive and Non-Executive Directors are deemed to be key management personnel of Volution Group plc. It is the Board that has responsibility for planning, directing and controlling the activities of the Group. Please refer to note 3 for details of the Executive and Non-Executive Directors’ remuneration. There were no material transactions or balances between the Company and its key management personnel or members of their close family. At the end of the year, key management personnel did not owe the Company any amounts. ### 14. Share-based payments For detailed disclosures of share-based payments granted to employees, refer to note 31 of the Group financial statements. 189 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ## ESG Data ### TCFD / Companies Act reference – where to find disclosures | Recommended disclosures | Reference | | :---------------------- | :------------------------------------------ | | Governance | • Board oversight (pages 64 and 190) CA s414CB(a)
• Management’s role (pages 64 and 190) CA s414CB(a) | | | • Our governance structure provides clear oversight and ownership of the Group’s sustainability strategy and management of climate risk and opportunity.
• In 2021, we established the Group Management Sustainability Committee and Senior Independent Non-Executive Board member Amanda Mellor assumed Board oversight responsibility for Volution’s sustainability strategy and targets. | | Strategy | • Climate-related risks and opportunities (pages 86-87, 191-192) CA s414CB(d)
• Impact on strategy (page 72) CA s414CB(e)
• Resilience (page 193) CA s414CB(f) | | | • Our purpose is to provide healthy indoor air, sustainably and this commitment to sustainability is integral to everything we do. Our business model is underpinned by our sustainability pillars of Product, Planet and People.
• Our sustainability ambition is to champion the energy-saving potential of our products and solutions and we are well positioned to seize the opportunities that regulatory tailwinds bring us.
• We have identified transition risks related to reputation, policy and regulation, and technology but have not assessed any of these risks as high under either scenario under the short, medium or long term.
• We have undertaken a review of our major production and warehouse locations, and have concluded we are not exposed to significant risk.
• In preparing the Group’s financial statements, we have considered the impact of climate-related risks on our financial position and performance, and have not identified any material adverse impact on the financial statements or judgements within. | | Metrics and targets | • Metrics (pages 84 and 194-201) CA s414CB(h)
• Scope 1, 2, 3 emissions (pages 194-201) CAs414CB(h)
• Targets (page 82, 194-201) CA s414CB(g) | | | • We developed two key metrics in 2020 to measure our progress against our net zero ambitions: the percentage of revenue derived from low-carbon products, and the percentage of recycled plastic used in our manufactured products,
• In 2021 we set out our ambition to be a carbon net zero business and have submitted targets to SBTi.
• We have set detailed forecasts and targets for the short, medium and long term, aligned to our net zero ambitions for Scope 1,3 and 3
• We have provided details of our Scope 1, 2 and 3 emissions on both a location and market basis | | Risk | • Risk processes (pages 86-87, 191-193) CA s414CB(b)
• Integration into overall risk management (pages 86-87, 49-58) CAs414CB(c) | | | • We have continued to embed climate risk into our broader risk management framework and have integrated climate change into our principal risks.
• Our risk review consider the risks and opportunities under the short, medium and long term, as well as over our chosen climate scenarios. | **TCFD pillar – Governance** Climate change is embedded in the governance structure of the Group through a decentralised local ownership, overseen by Group leadership and under the ultimate oversight of the Board.# Strategic report ## Governance report ### ESG Data continued The Board is collectively responsible for promoting the long-term sustainable success of the Company, generating value for shareholders and contributing to wider society. The principal way that climate change is embedded into this governance structure is shown in the diagram on page 64 and described in more detail in section a) and b) below. **a. Board oversight of climate-related risks and opportunities** The Board has ultimate oversight and responsibility for climate change. The Board receives a review of the Group’s risks and opportunities twice per year, including an assessment of climate-related risks and opportunities. The Board assessed those risks and approved the principal risks presented on pages 49 to 58. The Board considered whether climate change should be disclosed as an individual standalone principal risk, but concluded it was more appropriate to embed the specific impacts of climate change risks within existing principal risks – a ‘cross cutting’ approach. The Group does not believe the any individual or collection of climate change risks are themselves material to the financial prospects of the Group. See pages 49 to 58 for description of the Group’s Risk management process). The Board received updates each month on key sustainability KPIs, and during the year (twice in FY24) received a more detailed review of performance against the sustainability targets and the Group’s disclosures relating to TCFD. Once per year, the complete set of emissions data, performance against targets, and setting of new targets where relevant is received by the Audit Committee and Board for review and approval to be published externally. The performance of the Executives against their sustainability-related incentives is reviewed by the Remuneration Committee (pages 117 to 129). The Board and certain individual Board members kept up to date on climate-related issues through attending external seminars and discussing with Group advisers. Board Members’ relevant experience is described on pages 94 and 95. 190 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ESG Data continued **b. Management’s role in assessing and managing climate-related risks and opportunities** The Group Management Sustainability Committee is responsible for assessing and managing climate-related risks and opportunities and co-ordinating with the Group Risk Management Committee to ensure that climate-related risks are fully integrated into the risk management process. The Board representative on the committee communicates the activities of the Group Management Sustainability Committee to the Board. The Group Management Sustainability Committee met twice during FY24. The members of the Committee include Amanda Mellor (Senior Independent Non-Executive Director providing Board oversight), Ronnie George (CEO) and Andy O’Brien (CFO), the Managing Directors of each Business and Group ESG subject-matter experts. * **Environment** Group Business Development Director * **Group Financial Controller** * **Social** Group HR Director * **Governance** Group Company Secretary * **Overall ESG** Group ESG Analyst The Managing Director of each business unit is responsible for assessing the specific climate risks and opportunities within their business and submitting to the Group Management Risk Committee. The Group Management Sustainability Committee enables relevant issues to be discussed and to exchange information and best practice. The Committee this year focused on our carbon-reduction plan and the risks and opportunities of climate change and delivering our climate-reduction targets. The ESG subject-matter experts are responsible for ensuring they keep up to date with changes in reporting and relevant standards to provide assistance to local business management. **The Remuneration Committee** The LTIPs of the Executives have, since FY20, included ESG measures that focus on two targets that are linked to our 2025 goals for optimising recycled plastics used in our manufactured products and increasing the low-carbon credentials in the product portfolio measured as a percentage of revenue. This year, the LTIPs for the first time included a measure directly linked to our SBTi aligned carbon intensity targets to 2029. The measures have a 20% weighting in the LTIPs with a maximum pay-out that is aligned to the targets shown on pages 122 and 123. **TCFD pillars – Strategy and Risk** Our strategy sets out our response to the transition to a net zero economy and limiting the effects of climate change (see pages 34 to 37). Our sustainability ambition is to champion the energy-saving potential of our products and solutions and support the net zero ambitions of the countries in which we operate. The regulatory tailwinds should significantly increase demand for our sustainable and innovative ventilation solutions, while our leading position in the UK, Continental Europe and Australasia ventilation markets means that we are well positioned to seize this opportunity. **a. Climate-related risks and opportunities the organisation has identified in the short, medium and long term** **Methodology and risk ratings** We carry out a full risk management process each year (see pages 49 to 58) including a separate but integrated bottom-up climate-related risk review. The climate-related risk process followed the same process as the wider risk management process considering both the likelihood and the potential impact of each risk. The Climate related risks are reviewed each year and submitted to the Volution Group Risk Committee each year. A full bottom up assessment of Climate risk is carried out every three years with the next assessment to be carried out in FY25. This year, we have again concluded that climate change represents a net opportunity to Volution through our ability to continue to drive growth from the regulatory and market tailwinds. **Scenarios** We assessed our risks and opportunities under a 1.5°C Paris-aligned scenario and a 4°C ‘hot house’ scenario to provide a broad view of outcomes. Under a 1.5°C orderly scenario, risks relate primarily to the transition to a net zero world, the regulatory response, and the changing political, consumer and investor expectations. Under a 4°C scenario, the physical impacts of a changing climate will become more apparent. These scenarios are aligned to the Network for Greening the Financial System’s (NGFS) climate scenarios. The timeframes used when identifying risks are short term (less than five years) which is the period over which we prepare detailed bottom-up plans, medium term (5 – 15 years) which is the period over which our continued strategy to provide healthy air sustainability under our strategic pillars will be delivered including specific targets to reduce carbon, and long term (beyond 15 years) which is the period aligned to the useful economic life of some of our property assets and where the potential impacts under different scenarios are less certain. These different periods have allowed us to assess risks and opportunities that are immediate and well defined and those which may arise over time but which are much less certain. We have given clear emphasis to both our transition and physical risks and opportunities. We have adopted the same approach to the materiality of these risks and opportunities as for our principal risks and uncertainties. 191 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ESG Data continued Volution products support legislative transition as we decarbonise Buildings are responsible for around 36% of total CO 2 emissions and 40% of total energy demand. If we are to hit global net zero targets, we must deal with the existing building stock, as well as building new compliant buildings. With 90% of the buildings we have today expected to be still standing by 2050, and a current refurbishment rate of just 1% per year, we need new initiatives. To deliver net-zero-ready buildings, we must make them air-tight, insulate them well and decarbonise the heating source. These actions will impact the indoor environment, and ventilation will be even more important for both health and comfort. Doing that without losing heat, and therefore energy, will require energy-efficient ventilation solutions including Heat recovery. If we are successful and reduce the energy demand in buildings by 80% by 2050, we will save more than 30% of our total energy needs. To achieve this, we need to at least triple the rate of existing building stock renovation, to 3% a year. As a structural growth driver, in March 2023, the European Parliament passed a comprehensive revision of the 2010 Energy Performance of Buildings Directive (EPBD IV) to cover existing buildings for the first time. These regulations will stimulate the renovation market in the EU, as they will trigger a wave of renovations and create a greater demand for energy-efficient upgrades. Similar regulatory drivers exist in all our markets and are fully described on pages 18 to 23. These responses to climate change will increase demand for our low-emission products and services. **b. The impact of climate-related risks and opportunities on the organisation’s business, strategy and financial planning** As described on page 192, we have identified physical risks to some of our locations and supply chains and transitional risks related to reputation, policy and regulation. However, our sustainability ambition is to champion the energy savings potential of our products and solutions, and we are well positioned to seize the opportunities that regulatory tailwinds bring us. The opportunities that are available to us are a key driver to our Sustainable Growth Model. Our organic growth is driven by our local businesses taking the opportunities available to them in each market, driven in part by the local regulatory tailwinds (see pages 18 to 23).# Volution Group plc Annual Report 2024 ## Strategic report Our drive to innovate and develop new products ensures that we are able to maintain a leadership position in low-carbon and heat-recovery products (see pages 76 to 79). Our growth from acquisition targets successful businesses that specialise in low-carbon and heat-recovery products, evidenced by our three most recent acquisitions (I-Vent, VMI and DVS). We have concluded that we do not expect the risks of climate change to have a material impact on our financial prospects over the short, medium or long term, and hence those risks have not materially impacted our strategy nor financial planning. However, we have made a commitment to net zero and published targets that we intend to meet. We have assessed the impact of these commitments and concluded that they do not have a material adverse financial impact as shown in the table below. | Climate related commitment/target/action | Financial impact assessment # ESG Data continued ## Energy use, emissions and targets – Scope 1 and 2 | Performance Targets | 2023 | 2024 | 2024 | 2034 | 2050 | | :------------------ | :--- | :--- | :--- | :--- | :--- | | **Scope 1** | **tCO₂e** | **KwH** | **tCO₂e** | **KwH** | **tCO₂e** | **tCO₂e** | **tCO₂e** | | Gas | 544 | 2,975,988 | 641 | 3,473,786 | | | | | Other fuel⁴ | 306 | 1,632,255 | 237 | 885,263 | | | | | Vehicle fuels⁴⁵ | 1,183 | 5,066,416 | 1,189 | 5,006,952 | | | | | Refrigerants⁶ | – | – | 53 | – | | | | | Total scope 1 | 2,034 | 9,674,659 | 2,120 | 9,366,373 | | | | | **Scope 2** | | | | | | | | | Scope 2 (location based)⁷ | 1,996 | 9,327,115⁸ | 2,317 | 10,109,068⁹ | 3,600 | 1,178 | 386 | | Scope 1 and 2 total (location based) | 4,029 | 19,001,775 | 4,437 | 19,475,440 | | | | | Scope 2 (market based) | 743 | 9,327,115 | 642 | 10,109,068 | | | | | Total Scope 1 and 2 (market based) | 2,777 | 19,001,775 | 2,762 | 19,475,440 | | | | | Carbon intensity per £m of revenue, location based | 12.3 | 12.8 | 11.6 | 10.2 | 4.7 | | | | Carbon intensity per £m of revenue, market based | 8.47 | 7.95 | 8.8 | 8.0 | 3.3 | | | | Energy intensity per £m of revenue, market based | 57,932 | 56,028 | | | | | | 1. GHG emissions have been assessed against the GHG Protocol Methodologies using DEFRA emission factors for the UK and local specific electricity emission factors. 2. Scope 1 and 2 emissions are calculated from 11 months of actual consumption, extrapolated to 12 months based on average usage. 3. Our Scope 1, 2 and 3 targets are aligned to the SBTi principles 4. Not including Carbon for biofuels, which is reported separately in ‘Out of Scope’ emissions 5. EV fleet emissions have been transferred from Scope 1 to Scope 2 for consistency with 2024 methodology 6. Emissions from refrigerant use are updated and calculated based on top-up value as opposed to system capacity 7. FY23 emissions have been recalculated with updated emission factors to improve accuracy, where more accurate 2023 conversion factors are now available. 8. Restatement of 2023 electricity consumption to include self-generated electricity (2023: 53.8 KWh generated from solar panels) 9. Gross KWh energy usage reported, of which 111.6k KWh was self-generated – energy emissions are based off the net KWh, energy retrieved from the grid (2023 53.89k KWh self generated) ## Scope 3 | Performance Targets | 2023 | 2024 | 2024 | 2034 | 2050 | | :------------------ | :--- | :--- | :--- | :--- | :--- | | | tCO₂e | tCO₂e | tCO₂e | tCO₂e | tCO₂e | | **Upstream scope 3** | | | | | | | Category 1 – Purchased goods and services¹² | 77,948 | 67,530 | | | | | Category 2 – Capital goods | 4,691 | 4,552 | | | | | Category 3 – Energy-related activities¹³ | 1,219 | 1,955 | | | | | Category 4 – Upstream transportation and distribution¹⁴,¹⁵ | 15,763 | 12,185 | | | | | Category 5 – Waste generated in operations¹⁶ | 546 | 39 | | | | | Category 6 – Business travel | 386 | 279 | | | | | Category 7 – Employee commuting¹⁷ | 695 | 555 | | | | | Category 8 – Upstream leased assets¹⁸ | – | – | | | | | **Downstream scope 3** | | | | | | | Category 9 – Downstream transportation and distribution | – | – | | | | | Category 10 – Processing of sold products¹⁹ | – | – | | | | | Category 11 – Use of sold products²⁰ | 632,429 | 570,398 | | | | | Category 12 – End-of-life treatment of sold products²¹ | 192 | 113 | | | | | Category 13 – Downstream leased assets¹⁸ | – | – | | | | | Category 14 – Franchises¹⁸ | – | – | | | | | Category 15 – Investments¹⁸ | – | – | | | | | Total scope 3 emissions | 733,868 | 657,605 | 763,867 | 260,035 | 72,974 | | Total scope 1, 2 and 3 emissions | 737,898 | 662,043 | 767,468 | 261,214 | 73,360 | 10. DEFRA Government spend and activity emission factors used for consistency across the group 11. Calculated from 11 months of actual consumption, extrapolated to 12 months based on average usage. 12. Hybrid methodology using activity data for plastics and spend data for all other calculations” 13. Transport and distribution losses not included in Scope 2, including fleet and business travel 14. Emissions for category 4 and 9 have been aggregated into category 4. It is not currently possible to accurately separate upstream & downstream emissions. 15. Spend-based methodology used for consistency 16. Calculated from total weight of waste generated in operations, and the relevant DEFRA conversion factor. 17. Includes assumptions for Group extrapolated from UK average data 18. Not relevant to group operations 19. Emissions are minimal and are not material to operations 20. 2023 emissions have been recalculated with updated emission factors to improve accuracy. 21. Weight of sold products determined using weight data or estimates based on sales data. Data gaps were filled using extrapolations from existing data. Further definitions, basis of preparation, calculation methodology and historical data can be found on pages 200 to 202. ## Emissions recalculation policy and process In alignment with the principals of the SBTi under which we have set our short, medium and Long term targets, we have reviewed the targets we set in FY23 to ensure they are still relevant and appropriate. We do not believe that there have been any material changes in climate science and there are no changes in our business context, and so they continue to be relevant in FY24. Our policy on recalculations and restatements of emissions data is to review our GHG inventory on an annual basis and we will restate our data and/or recalculate our targets when required: to reflect significant changes to our company structure, methodology changes or errors. Where a restatement or recalculation is performed, it will be clearly described. During FY24 we have reassessed FY23 emissions for all scopes and made adjustments where necessary to provide greater accuracy. This reassessed FY23 base year has then been aligned to our existing short, medium and Long term targets. ## Review of our Energy use and emissions data It is currently not mandatory for energy use and emissions data to be assured and this year our data has not been assured. However, but we chose to engage with independent consultants Carbon Footprint to assist in recalculating the FY23 base year for use in developing targets for our SBTi submission, and to provide information such as carbon conversion factors and modelling assistance in calculating FY24 actual emissions. Our energy use and carbon emissions data collection and modelling was internally reviewed by a Volution business process and control specialist. ## Carbon emissions by country | Country | Scope 1 (tCO₂e) | Scope 1 and 2 Location Based (tCO₂e) | Scope 1 and 2 Market Based (tCO₂e) | Total Scope 3 (tCO₂e) | | :------------------ | :-------------- | :----------------------------------- | :--------------------------------- | :-------------------- | | United Kingdom | 1,204 | 1,342 | 1,212 | 296,980 | | Sweden | 355 | 17 | 359 | 10,551 | | Norway | 64 | 0 | 65 | 2,794 | | Finland | 66 | 31 | 186 | 6,617 | | Denmark | 29 | 24 | 73 | 1,682 | | Germany | 19 | 92 | 55 | 17,675 | | Netherlands | 36 | 24 | 44 | 8,458 | | Belgium | 131 | 33 | 194 | 10,780 | | Bosnia and Herzegovina | 4 | 249 | 144 | 2,880 | | North Macedonia | 5 | 438 | 164 | 149,751 | | France | 92 | 6 | 101 | 5,335 | | Slovenia | 61 | 6 | 71 | 1,953 | | New Zealand | 51 | 19 | 51 | 36,835 | | Australia | 8 | 36 | 44 | 105,315 | | **TOTAL** | **2,126** | **2,317** | **2,762** | **657,605** | ## Carbon avoidance methodology ### Methodology The methodology considers both domestic and non-domestic buildings, following the design standards and guidance in SAP 2012 and CIBSE Guide B2. The total heat load is a function of the fabric heat losses, heat losses due to infiltration and heat losses due to ventilation. The calculated energy savings and greenhouse gas (GHG) emissions reductions relate to the reduced heating load due to the selected MVHR product.The calculation methodology and assumptions include: • number of devices sold; • device airflow rate (24 hours/day for domestic, 14 hours/day for non-domestic); • assumed heat recovery efficiencies; • external temperature per country; • relevant emissions factors for gas and electricity; • internal setpoint temperature of 21ºC (with 12ºC setback for non-domestic); • the energy used in using the devices; • product performance as tested for the Ecodesign Directive; and • average lifetime of use has been assumed as 10 years, and the electricity grid is assumed to decarbonise at a 5% per year. Assumptions and uncertainties of avoided emissions We recognise that there is not yet a universally accepted method of measuring or reporting ‘avoided emissions’ (sometimes referred to as ‘Scope 4’ emissions), and that any measure can only ever be an estimate. The TCFD framework does not include avoided emissions with the reporting recommendations, and together with the assumptions and uncertainties involved in the calculations means that avoided emissions reported for FY2024 should not be considered to be at the same level of accuracy as our Group emissions reported within the TCFD section. However, we understand from our stakeholders that the energy saving potential of our products is useful information and is provided for that purpose. The emissions calculated using our model should be assumed to be the upper limit of energy savings. The calculation is sensitive to the variables noted under ‘methodology’ and other limitations. Limitations include: The domestic application baseline assumes mains gas boiler heating, heat loss due to infiltration is not adjusted for wind speed, the thermal capacity and inertia has not been considered, domestic applications are modelled on detached houses and Commercial applications are modelled on open plan offices. Adjusting the model for these limitations may either raise or lower avoided emissions calculations. Sensitivities to key assumptions include: a 1% increase in the rate of electricity decarbonisation year on year reduces avoided emissions by 4.3%, lowering the internal setpoint temperature from 21ºC to 20ºC reduces avoided emissions by 8.3%, and decreasing unit lifetime use from 10 to 9 years reduces avoided emissions by 8.2%. ESG Data continued 197 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ## SFDR Principal Adverse Indicators (PAI) We are reporting on PA indicators to help investors with their reporting for the EU Sustainable Finance Disclosure Regulation (SFDR). | Adverse sustainability indicator | Indicator/Metric | Volution response | | :--- | :--- | :--- | | GHG emissions | 1 Scope 1, 2 and 3 emissions | Scope 1: 2,120 tCO 2 , Scope 2: 2,317 tCO 2 , Scope 3: 657,605 tCO 2 (pages 195 and 196) | | | 2 Carbon footprint | Total emissions: 662,043 tCO 2 (page 196) | | | 3 Carbon intensity | Scope 1 & 2 intensity 12.8 tCO 2 /£1m revenue (page 195) | | | 4 Exposure to companies in the fossil fuel sector | Volution does not operate in fossil fuel sector | | | 5 Share of non renewable energy consumption | 86.7% of energy used was from renewable sources or tariffs, 13.3% non-renewable | | | 6 Energy consumption in GwH per €1 revenue | Scope 1 & 2 energy consumption: 19.48 Gwh = 0.049 Gwh/€1m Revenue (page 200) | | Biodiversity | 7 Activities negatively affecting biodiversity | Our operations do not have a significant impact on biodiversity. | | | 8 Emissions to water | We do not discharge solid, liquid or contaminants into bodies of water. | | | 9 Hazardous waste | We use a non-material amount of hazardous waste, which is properly recycled or disposed. 1,400kg. | | Social and employee | 10 Violations of UK Global Compact principles and OECD GME | We are not aware of any violations of the UNGC principles or OECD GME | | | 11 Lack of processes and compliance mechanisms | We joined the UN Global Compact in FY 22 and have since signed the CEO water mandate and continue to engage. We have comprehensive policies in place aligned with principles of the UNGC and OECD Guidelines including Anti corruption, Anti modern slavery, Ethical tax etc | | | 12 Unadjusted gender pay gap | We publish gender pay gap data for the UK only | | | 13 Board gender diversity | At 31 July 2024 c40% of the Board was female (page 93) | | | 14 Exposure to controversial weapons | Volution is not involved in the manufacture or sales of weapons | ESG Data continued 198 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional information ## The Sustainability Accounting Standards Board (SASB) The SASB Foundation was founded in 2011 as a not-for-profit, independent standards-setting organisation. Volution provides information in alignment with SASB reporting guidelines for its sector (electrical and electronic equipment). The below table shows the reported topics and metrics and where further detail can be found within this report. | Accounting metric and SASB code | Response/data/reference | | :--- | :--- | | Energy management | | | Total energy consumed (RT-EE-130a.1) | Our total energy consumption across the Group during the year was 70,112 GJ representing all electricity and heat and direct fuel use across all of our facilities, of which 52% was electricity sourced from the grid. A small but increasing proportion is “off grid”, exemplified by the solar array on the Reading facility. Of the electricity consumed, 87.6% was from renewable sources, including renewable tariffs and on-site generation. | | Percentage of grid electricity (RT-EE-130a.1) | | | Percentage renewable (RT-EE-130a.1) | | | Hazardous waste management | | | Amount of hazardous waste generated, percentage recycled (RT-EE-150a.1) | We use a non-material amount of hazardous waste, which is properly recycled or disposed. 1,400 kg. | | Number and aggregate quantity of reportable spills and quantity recovered (RT-EE-150a.2) | Zero reportable spills. | | Product safety | | | Number of product recalls issued, total units recalled (RT-EE-250a.1) | Zero product recalls related to product safety. | | Monetary losses from legal proceedings associated with product safety (RT-EE-250a.2) | No monetary losses as a result of product safety issues. | | Product lifecycle management | | | Percentage of products, by revenue, that contain IEC 62474 declarable substances (RT-EE-410a.1) | We manufacture a large proportion of our products ourselves and use no IEC 62474 declarable substances in the production process. We are continuing to review supply chain products for relevant substances and will report in future if necessary. | | Percentage of eligible products, certified to an energy efficiency certification (RT-EE-410a.2) | This metric is not relevant at a global level as it is only applicable in the US and Canada. | | Revenue from renewable energy-related and energy efficiency-related products (RT-EE-410a.3) | Revenues derived from products that are low carbon account for 70.9% (2023: 70.1%) of total revenue (see page 86). | | Materials sourcing | | | Description of the management of risks associated with the use of critical materials (RT-EE-440a.1) | Our suppliers make a vital contribution to our performance and engaging with our carefully selected, high quality supply chain ensures we can maintain security of supply. Reviews and supplier audits are carried out to ensure compliance with our Code of Conduct and our policies on the prevention of bribery, corruption and modern slavery. The Group is exposed to fluctuations in the price of raw materials and has implemented procedures to limit exposure to rising prices, including hedging of foreign currencies | | Business ethics | | | Description of policies and practices for prevention of bribery, corruption and anti-competitive behaviour (RT-EE-510a.1) | Volution is committed to complying with all applicable laws and regulations in the countries in which we operate. Our policies are available on our website. | | Monetary losses from legal proceedings associated with bribery or corruption (RT-EE-510a.2) | No legal proceedings and no monetary losses. | | Monetary losses from legal proceedings associated with anti-competitive behaviour (RT-EE-510a.3) | No legal proceedings and no monetary losses. | | Activity measures | | | Number of units produced by product category (RT-EE-000.A) | A breakdown of revenues by activity and product type is shown on page 155. | | Number of employees (RT-EE-000.B) | Workforce statistics are shown on page 157. The average number of employees was 1,869 (2023: 1,871). | | Reportable accident frequency rate | Accident frequency rates are shown on page 74. We report frequency rates per 100,000 hours worked, representing an approximation of the hours worked during a person’s lifetime, and allowing comparability across our business units and with other companies. Reportable accidents per 100,000 hours worked in 2024 was 0.20 (2023: 0.30). | | Minor accident frequency rate | Minor accidents per 100,000 hours worked in 2024 was 0.10. (2023: 0.50). | | Fatalities | Zero fatalities occurred during the year. | | % Recycled plastic | FY20 | FY21 | FY22 | FY23 | FY24 | | :----------------- | :---- | :---- | :---- | :---- | :---- | | | 56.0% | 59.7% | 67.2% | 76.2% | 78.1% | The % recycled plastic used in our facilities’ is the proportion of recycled plastic used in production in our main plastic manufacturing locations in the UK, Nordics and Bosnia Herzegovina, shown as a % of total used. The weight of the recycled plastic is shown as a proportion of the total plastic used (including virgin plastic) in manufacturing our own products. The perimeter and calculation methodology is unchanged in each of the reported years shown. The target for FY24 was 83.4%. | % Low carbon sales | FY20 | FY21 | FY22 | FY23 | FY24 | | :----------------- | :---- | :---- | :---- | :---- | :---- | | | 59.0% | 62.1% | 66.1% | 70.1% | 70.9% | The % of Low carbon sales is the proportion of total Group revenue that is from the sale of products that are categorised as ‘low-carbon products’, shown as a % of total Group revenue. ESG Data continued 199 Volution Group plc Annual Report 2024 Strategic report Governance report Financial statements Additional informationWe define our low carbon products as products that use less energy than the products they replace, or as products that are used within the local calculation methods to reduce emissions from buildings. A full definition is given on page 202. The perimeter and calculation methodology is unchanged in each of the reported years shown. The target for FY24 was 67.8%. ## % Heat recovery sales | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :----- | :----- | :---- | :---- | :---- | | | na | na | 30.1% | 31.4% | 31.7% | The "% of Heat recovery sales" is the proportion of total Group revenue that is from the sale of products that are categorised as ‘Heat recovery products’, shown as a % of total Group revenue. We define our Heat recovery products as systems, and products and accessories that may be used within a system, of ventilation that collects heat from exhaust air that would otherwise be lost and reuses such heat by transferring it to the incoming fresh air. The perimeter and calculation methodology is unchanged in each of the reported years shown. There is no target set for % Heat recovery sales. The % reported for FY23 has been restated from 33.8% due to improved data collection. ## Energy consumption | Scope | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :----- | :--------- | :--------- | :--------- | :--------- | | 1 | na | 11,133,933 | 9,169,000 | 9,674,659 | 9,366,373 | | 2 | na | 9,109,225 | 9,578,815 | 9,327,115 | 10,109,068 | | Total | na | 20,243,158 | 18,747,815 | 19,001,774 | 19,475,440 | Scope 1 energy use covers all direct energy use from the business, including all vehicle fuels, gas and heating fuels. Scope 2 energy use covers all purchased energy with data obtained from energy supply bills, using 12 months of data where possible and extrapolated out using average usage for 11 months where data gaps exist to cover the full 12 months of usage. From 2023, energy consumption is reported gross including all self-generated electricity. The GHG inventory perimeter for each year includes 100% of the businesses within the Group that have been within the Group for at least one complete year, including all businesses that are within financial or operation control. Acquisitions made during the year are not included in that years figures. ## Carbon emissions | Scope | FY20 | FY21 | FY22 | FY23 | FY24 | | :------------------------- | :---- | :---- | :----- | :------ | :------ | | 1 | 4,196 | 2,368 | 1,920 | 2,034 | 2,120 | | 2 | na | 1,769 | 1,855 | 1,996 | 2,317 | | Location Based Scope 2 | na | na | 904 | 743 | 642 | | Market Based Scope 2 | na | na | 51,832 | 733,868 | 657,605 | | Scope 3 | | | | | | | Total location based | 4,196 | 4,137 | 52,345 | 737,898 | 662,043 | Scope 1 emissions include all direct emissions from the business, including all vehicle fuels, gas and heating fuels. All emissions are calculated using DEFRA emission factors published in the appropriate year. Scope 2 emissions include all purchased electricity. The data is gathered primarily from energy bills, using 12 months of data where possible and extrapolated out using average usage where data gaps exist to cover 12 months of usage. All emissions are calculated using DEFRA emission factors published in the appropriate year. Scope 2 location based emissions are calculated with emission factors specific to the energy grid of each operating country. Scope 2 Market Based emission are calculated using an emission factor that accounts the residual emissions in the energy grid. Scope 3 emissions include all indirect emissions across the Group for FY24. The number of scope 3 categories included has expanded over the reported periods shown, and as such, the year-on-year reported emissions are not directly comparable. Carbon is reported in tonnes of carbon equivalent (tCO2e) and encompass all greenhouse gasses. The GHG inventory perimeter for each year includes 100% of the businesses within the Group that have been within the Group for at least one complete year, including all businesses that are within financial or operation control. Acquisitions made during the year are not included in that years figures. ## % of our scope 2 electricity from renewables | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :--- | :--- | :---- | :---- | :---- | | | na | na | 73.7% | 86.5% | 86.7% | The percentage of total scope 2 energy purchase within the business from renewable sources including self generated and renewable tariffs/products as a proportion of overall scope 2 energy purchased. ## Carbon intensity | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :--- | :--- | :---- | :---- | :---- | | | 19.4 | 15.1 | 12.3 | 12.3 | 12.8 | Carbon intensity is calculated as Scope 1 and 2 location based carbon emissions in tonnes per £million revenue. The perimeter and calculation methodology is unchanged in each of the reported years shown. The GHG inventory perimeter for each year includes 100% of the businesses within the Group that have been within the Group for at least one complete year, including all businesses that are within financial or operation control. Acquisitions made during the year are not included in that years figures. The target for FY24 was 11.6. The intensity reported for FY23 has been restated from 11.1 due to improved data collection, the addition of some car journeys not included at the time, and updated emission factors to improve accuracy, where more accurate 2023 conversion factors are now available. ## ESG Data continued **200 Volution Group plc Annual Report 2024** Strategic report Governance report Financial statements Additional information ## Reportable accident frequency rate | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :---- | :---- | :---- | :---- | :---- | | | 0.03 | 0.20 | 0.25 | 0.30 | 0.20 | Reportable accident frequency rates per 100,000 hours worked are calculated by dividing the number of reportable accidents recorded in the year by the total number of hours worked and multiplied by 100,000. A reportable accident is defined as an accident where the injured colleague is unable to work for more than 7 days, and is aligned to the UK HSE RIDDOR category of injury. 100,000 hours is chosen as it represents an approximation of the hours worked during a person’s lifetime, and allowing comparability across our business units and with other companies. ## Minor incidents frequency rate | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :--- | :--- | :---- | :---- | :---- | | | na | 0.61 | 0.43 | 0.50 | 0.18 | Minor accident frequency rates per 100,000 hours worked are calculated by dividing the number of minor accidents recorded in the year by the total number of hours worked and multiplied by 100,000. A minor accident is defined as an accident where the injured colleague is unable to work for more than 1 day but less than 7. ## Safety walks | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :--- | :--- | :---- | :---- | :---- | | | na | na | 187 | 391 | 476 | A safety walk is defined as a formal assessment performed by senior management to assess and address health and safety risks within an operational facilities, with the number shown for the financial year. ## Number of colleagues | | FY20 | FY21 | FY22 | FY23 | FY24 | | :---- | :---- | :---- | :---- | :---- | :---- | | | 1,445 | 1,538 | 1,898 | 1,871 | 1,869 | Average number of FTE over the financial year. This number includes all companies within the group. ## Gender diversity – total employees | Gender | FY20 | FY21 | FY22 | FY23 | FY24 | | :----- | :---- | :---- | :---- | :---- | :---- | | Male | 980 | 1,034 | 1,321 | 1,310 | 1,308 | | Female | 465 | 504 | 577 | 561 | 561 | | Other | 0 | 0 | 0 | 0 | 1 | | Total | 1,445 | 1,538 | 1,898 | 1,871 | 1,869 | ## Gender diversity – Board | Gender | FY20 | FY21 | FY22 | FY23 | FY24 | | :----- | :--- | :--- | :--- | :--- | :--- | | Male | 5 | 5 | 4 | 4 | 4 | | Female | 2 | 2 | 3 | 3 | 3 | | Other | 0 | 0 | 0 | 0 | 0 | | Total | 7 | 7 | 7 | 7 | 7 | Based on average number of FTE for the financial year, from data held in company records. This number includes all companies within the group. ## Carbon reduction metrics | | FY23 | FY24 | | :------------------- | :----- | :----- | | 1 – Emissions from purchased plastic | 11,589 | 11,611 | | 2 – Emissions from Air freight | 1,701 | 762 | | 3 – Scope 2 Market-based emissions | 743 | 642 | | 4 – Emissions from gas used at our facilities | 544 | 641 | | 5 – Emissions from owned vehicles and fuel use | 1,183 | 1,189 | | Total | 15,760 | 14,845 | When setting our carbon reduction targets in FY23 we disclosed a selection of active reduction initiatives that would be a driver for carbon reductions and that we would track each year. 1 – Virgin plastic has a higher carbon footprint than recycled. Despite the year-on-year increase in the percentage of our products manufactured from recycled plastic, the total plastic used has increased as have conversion factors. 2 – The reduction in reported Air freight emissions represents a deliberate reduction in air-freighting year-on-year. FY23 has been restated, aligned to DEFRA factors, to ensure that emissions are not overstated. 3 – We aim to move any remaining purchased electricity to contracted renewable tariffs. 4 – Our aim to reduce natural gas use in UK by switching facilities to electricity is a longer term metric. The increase year-on-year is natural variability primarily due to cooler weather. 5 – Emissions remain high as vehicle use has increased, and the transition to a fully hybrid/electric fleet continues as vehicles need replacing. Transition to full EVs is progressing more slowly as we respond to an unstable EV market. ## Employee Engagement – methodology We partnered with WeSoar, a London-based HR Technology and advisory firm to ensure a transparent and unbiased survey process. All colleagues across Volution Group (except new acquisitions in the year – DVS and iVent) were invited to participate. The survey was translated into multiple languages and was sent by email to each employee. We have a significant proportion of our colleagues who do not have a company email address and they were sent the survey link to their personal email address. Designated computer terminals were provided on site to ensure these colleagues had easy access to the survey. Participation rate is calculated as the total number of completed surveys divided by the total number of employees. All individual responses were confidential and reported in the aggregate subject to a minimum of four responses to protect data confidentiality. A validated and consistent Likert Scale was used for all questions. The engagement score was calculated using five key items* identified from a pool of 20 survey items categorized under the following factors – Purpose, Commitment, Leadership, Role, Work Environment, Innovation, Retention, Diversity & Inclusion, Advocacy, Communication, Wellbeing, Collaboration, Growth, Belonging. These five items form the Engagement Index, which represents the overall engagement score, giving equal weightage to each question. The selected items measure critical engagement factors: Advocacy, Belonging, Commitment, and Retention.# Glossary of Technical Terms ## Alternating current or AC The flow of electric current which reverses direction periodically, typically at 50Hz in the UK and Europe. This is the standard type of electricity supply to domestic and commercial properties. ## AC blowers A low-pressure fan with an AC motor. ## AC motor An alternating current motor. ## AHU Air handling unit: a ventilation device which usually integrates air, heating and filtration into one combined unit. May also include cooling and heat recovery. ## Decentralised heat recovery A system of ventilation that collects heat from exhaust air that would otherwise be lost and reuses such heat by transferring it to the incoming fresh air. Decentralised heat recovery consists of multiple units supplying and extracting from around the home. ## EC/DC electronically commutated direct current Electronically commutated or EC a type of motor which historically used a mechanical means of reversing the current flow but which now uses an electronic device to do the same, which is more reliable and more efficient. ## Fan coil A device used to heat or cool a space which includes a water coil and fan for connection to the wider HVAC package within a building. ## HVAC Heating, ventilation and air conditioning. ## Hybrid ventilation A method that combines both passive and mechanical means to form a mixed mode ventilation system. ## IAQ Indoor air quality. ## Motorised impellers A motor that is supplied complete with an impeller attached to it. ## MVHR Mechanical ventilation with heat recovery: a centralised system of ventilation that collects heat from exhaust air that would otherwise be lost and reuses such heat by transferring it to the incoming fresh air. ## NVHR Natural ventilation with heat recycling. ## OEM Original equipment manufacturer. ## PIV Positive input ventilation: this is an energy efficient method of pushing out and replacing stale, unhealthy air by gently pressurising the home with fresh, filtered air to increase the overall circulation of air in the dwelling. ## RMI Repair, maintenance and improvement. ## Rotary heat exchanger A type of heat exchanger consisting of a circular honeycomb matrix which rotates in the airstream of a heat recovery device. ## Plate heat exchanger A type of heat exchanger consisting of a series of plates which transfer the heat from one airstream to another. ## Specifiers Persons who may specify certain characteristics of products. # Low-carbon products – definition We define our low-carbon revenue as a) revenue from products that are designed to be more energy efficient than the product, or method of ventilation or air movement that they replace, and/or b) revenue from products which reduce carbon emissions as verified through national calculation methodologies or recognised schemes for improving the energy efficiency of buildings. In our European businesses, this is driven by the Energy Performance of Buildings Directive (EPBD) with every local jurisdiction having their own national calculation method. In the UK, products that reduce carbon emissions are included in the Standard Assessment Procedure (SAP) and are listed on the Product Characteristics Database (PCDB) or applied in commercial buildings through the Simplified Building Energy Model (SBEM). In Germany, products that reduce carbon use calculations through DIN V 4701-10:2003-08 combined with DIN V 4108-6:2004-03 or DIN V 18599- 6:2018-09. We also include products that are listed through other schemes which recognise energy saving measures such as the Energy Technology List (ETL) in the UK, or in Australia, products that help improve the ‘star rating’ of a home in the Nationwide House Energy Rating Scheme (NatHERS). In addition, we include products that save energy over traditional methods such as our products with automation and our DC/EC motorised extract fans. Our low-carbon products are aligned to our accreditation with the FTSE Russell Green Economy mark where our low-carbon revenue is defined as deriving from ‘green’ products and services as defined by FTSE Russell’s Classification System (2023), within the category of Buildings and Property EM.01.0 ‘revenue generating activities related to the design, development, manufacture or installation of energy efficient products or services for use in buildings’. # Shareholder Information ## Shareholder services For any enquiries concerning your shareholding please contact our registrar: Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA United Kingdom Equiniti has a shareholder portal offering access to services and information to help manage your shareholdings and inform your important investment decisions. Please visit www.shareview.co.uk. Shareholder helpline: 0371 384 2030 1 from the UK or +44 (0) 121 415 7047 from overseas. Note 1. Lines are open 8.30 am to 5.30 pm, Monday to Friday (excluding public holidays in England and Wales). You can access our Annual Report and Accounts and other shareholder communications through our website, www.volutiongroupplc.com. ## Company advisers **External independent auditor** PricewaterhouseCoopers LLP **Corporate brokers** Berenberg Jefferies International Limited **Legal adviser** Norton Rose Fulbright **Financial PR adviser** FTI Consulting **Company Secretary and registered office** Fiona Smith Volution Group plc Fleming Way Crawley West Sussex RH10 9YX United Kingdom Registered in England and Wales Company number: 09041571 LSE ticker code: FAN Legal Entity Identifier: 213800EPT84EQCDHO768 Tel: +44 (0) 1293 441 662 Shareholder enquiries: investors@volutiongroupplc.com General enquiries: info@volutiongroupplc.com Website: www.volutiongroupplc.com # Forward-looking statements The Annual Report and Accounts contains certain statements, statistics and projections that are or may be forward looking. The accuracy and completeness of all such statements including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Volution Group plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as “intends”, “expects”, “anticipates” and “estimates” and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Volution Group plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Volution Group plc and could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Other than as required by applicable law or the applicable rules of any exchange on which our securities may be listed, Volution Group plc has no intention or obligation to update forward-looking statements contained herein. Consultancy, design and production www.luminous.co.uk CBP027409 This report is printed on paper which is carbon balanced certified by World Land Trust Ltd. Blackdog Digital is a carbon neutral company and is committed to all-round excellence, and improved environmental performance is an important part of our ‘Go Green’ strategy. Luminous is certified in using carbon balanced paper for the Volution Group plc Annual Report 2024. This project has balanced through World Land Trust the equivalent of 79kg of carbon dioxide. This support will enable World Land Trust to protect 15m² of critically threatened tropical forest. Volution Group plc Fleming Way Crawley West Sussex RH10 9YX United Kingdom volutiongroupplc.com