Really pleased to have a good audience. We're delighted to tell you a little bit more about what happened in our financial year, 2023. And what we're also looking forward to doing today is introducing you to some new materials, which we hope will try and bring the story to life a little bit more, and certainly should be helpful for context. But as you can see from the agenda here, I'll take you through the overview. I'll hand over to Andy. Andy's now at four years with Volution, so four financial years completed. Of course, a couple of those were really difficult through the COVID period, but I'm not sure if we should talk about this being the new normal. But nevertheless, it's a more sort of normal environment that maybe we're trading in.
I'll go through the business review, and we'll talk a little bit about summary and outlook. The headline there, leading player, so we think of ourselves as a leading player in the international HVAC market. And I think this is a really important headline for the slide because, and one of the things that we often talk about in Volution is sort of peer set, peer group, and so forth. And of course, in our daily life, the companies that we think of ourselves competing with are not necessarily the same as we get peered with. And so for those, I think probably are already aware, HVAC is sort of heating, ventilation, and air conditioning. And of course, Volution today has less than, or sort of circa 40% of its revenue ending up with U.K. customers.
I think this is a really important takeaway for today because many of the names that we compete with on a daily basis are, one, not necessarily U.K. listed and certainly not what you would call building products. So this is an important aspect for us, and maybe we'll come back to it a little bit later on. But look, in the year, we delivered, you know, what we think was, was good organic growth, not without its challenges, and we'll take you through some of the individual markets as we go along. But at just under 5% constant currency organic revenue growth, an adjusted operating margin of 21.3%, actually up 20 basis points. You know, it's essential for us, and we'll talk a little bit more about how we underpin and protect those market-leading margins as we go forward.
An excellent cash conversion, and cash conversion is absolutely everything for us. You know, we know what we're going to do with our, with our cash, and delighted that we had such a strong year and does provide significant headroom for further acquisitions. Of course, on that note, we completed two acquisitions in the year, one in France and another one in Slovenia. And in actual fact, we've already completed our first acquisition of FY 2024. It completed on the fourth of August, and that was DVS Proven Systems in New Zealand. ESG is really important for us, and in respect of recycled plastics, I thought this was an outstanding achievement to go from 67% of the plastics that we consume in our facilities comes now from a recycled source, so up to 76%.
So look, overall, we think it was a strong performance, and it was absolutely in line with our strategy in delivering against our ESG targets. A little bit more about our strategy and delivering on our strategy, and what is our strategy? I mean, it's the same strategy, in fact, that we had nine years ago when we listed, although we've got a little bit more experience and maybe a, a little bit more of a track record that we can claim. But look, what we expect to do is to grow organically each year, and, and we think we've got a really good track record in doing that. In the year, just under 5%, there were some changes across the different geographic areas. The U.K., in actual fact, was the outstanding performance in the year, and Continental Europe was, was certainly much more difficult.
Still in Australasia, a 3.6% constant currency revenue growth, and that's off the back of very strong revenue growth, particularly in Australia, since we acquired the business back in 2019. Value-adding acquisitions, I've talked about them. I think now we're averaging about 2.5% acquisitions each year since we listed, and indeed, we made other acquisitions prior, prior to our listing in 2014. Just to stress, the pipeline is healthy, and we expect further transactions in the future. For us, and when Andy and I talk to prospective opportunities, we think of ourselves as a serial acquirer. This is what we do, this is what we expect to do, and you shouldn't be surprised to see us do further transactions in the period ahead. Last but not least, operational excellence.
21.3% operating profit margin. I think I've had the question every year since we listed, "How sustainable are your margins?" And I guess the best way to prove sustainability is to just try and inch them up each year. No new targets today. Certainly, our long-term target is to stay above 20%. And of course, there's always a risk of dilution, particularly if we do bigger transactions in future, because rarely do we bring new companies to the group that operate at the same margin that the group operates at. All opportunity, of course. So sustainability, I've talked about recycled plastics, but 70.1% of our revenue was from low-carbon products. And in actual fact, we surpassed our expectations, and the target was 66.1%, and in actual fact, our 2025 target is at 70%.
We are now creating a new ambition today to get to 75% of our revenue from low-carbon product sets by 2026. Inside that 70%, it's 33.8% of our total group revenue is from heat recovery. Heat recovery is a very important product set for us and one that we expect to grow materially over time. Not to give you too much of a lesson on the technology, but basically, the most efficient way to ventilate a well-insulated property is with heat recovery. You're not losing all that precious heat that you've paid increasingly more cost for heating in the first place. Just thinking about Volution and what underpins our revenue growth, why do we believe that we can grow well organically and certainly above the sort of general market trends?
There's things that are going on in our space that are sort of obvious, but I thought we'd just try and summarize them for you here today. Decarbonization. And I know there's been a lot of debate, for example, in the U.K. at the moment, about whether or not we're stepping off in terms of decarbonization. But for us, we see decarbonization agenda every year become more helpful. It may not move as quickly as we would like, but it certainly every year improves. 40% of our energy use, or 36% of emissions, carbon emissions, are from buildings, buildings such as this one that we're in today. Healthy air. You know, healthy air is essential. You know, how long can you go without air? Don't try it, but it's not for very long.
Healthy air is essential, and I think what we saw through COVID, and certainly we've seen coming out the other side, is a greater awareness and appreciation. So, for example, we see regulation increasingly focusing on indoor air quality or mold and condensation problems and so forth. Let's not forget comfort. The biggest objection to ventilation, typically in a property, whether it be a refurbishment application or new build, is noise. Noisy ventilation gets switched off. Ventilation that gets switched off creates all sorts of degradation to the fabric of the building. So we work very hard on providing solutions that are quieter, that are less intrusive in the building, but still provide good quality air. So I'm gonna go over these slides quite quickly, but we talk about our three Ps: Product, Planet, and People.
Under product here, we got to 70.1% of our revenue from low carbon sources. Now, there's no doubt that the acquisitions that we made more recently helped accelerate that trend, but they should do. If we're acquiring the right companies with the right technology, why wouldn't they help accelerate the trend? So some of the companies that we acquired more recently, for example, Energy Recovery Industries in North Macedonia, is a producer of aluminum heat exchangers, the absolute integral part of any heat recovery system. And of course, the acquisitions that we made more recently haven't had a profound impact on that metric in the year. But nevertheless, VMI in France and i-Vent in Slovenia. i-Vent is a provider of almost exclusively decentralized heat recovery, retrofitted into Slovenian properties with a very significant market share.
So as I say, new ambition for 2026 to get to 75% of our revenue from a low carbon source. Planet. We are absolutely serious about the impact or lessening the impact that we have on the planet. A lot of the products that we provide to our customers are made from plastic, and we decided some years ago that we could utilize more recycled material in our production. Some of the investments that we made last year helped accelerate that production, particularly in our Reading factory, in with respect of plastic ducting and so forth. But this is a fantastic performance.
We still don't know how to get to 90% by 2025, but I think it's fair to say when we set the target back in 2020, we didn't know how to get to 76% for last year. This is an absolutely stretching target, but we're making really good progress. When we say we're planet, we have made a commitment to be net zero by 2040, and so reducing our carbon intensity by 9.8% in the year to 11.1 tons per GBP 1 million of revenue was a really, you know, compelling achievement there. We're very pleased about the progress that we're making. Last but not least, around people, I'm personally disappointed about our accident rate for last year. We had an increase, and we're disappointed about that.
However, I'm confident that the efforts that we're making to improve our health and safety, to keep our people safe at work, will take us in the right direction. There were a couple of important new additions to the group last year. Andreas Boeber joined us as the Operations Director in the U.K. in May, and we've also strengthened some of our health and safety representatives and management in the local areas. Staying with this people theme, management development program four. What's management development program four? Just before COVID, we were planning to have our fourth management development program, but of course, no point having a management development program if we're carrying that program out virtually. The strength of our management development program is that we're bringing together an international management team that get to work together more closely.
I'm particularly delighted about this. We'll kick it off in a couple of weeks' time. The chairman will join us at that launch, and it's one of the most exciting development programs that we have across the group. And the reason I say that is that if I look back to the first three programs, I could reel off to you today the people who are on programs one, two, and three, and what they're doing in the group today. So this is really important for us, and I'm very excited about what comes next. That was a very quick introduction to the year. I'm gonna leave Andy with the exciting part to take you through the financials. But having said that, I think it is a very exciting update that Andy can provide.
Thanks, Ronnie. And look, echoing Ronnie's earlier comment, great to see. Thank you for coming today, guys. Great to see so many people in the room. We're gonna obviously going to need some more chairs next time, but good to see both, you know, familiar and new faces. So look, I'm just gonna briefly talk through some of the financial highlights of the year 2023. So you know, as this slide says here, a strong financial performance, I think it's, you know, it's not usual, and it certainly makes your life quite straightforward as a CFO to see plus percentages on all of the metrics on the right-hand side there. So whether we're talking, you know, we'll unpick all of these in a bit more detail as we go through the materials, but, you know, a good, strong revenue performance.
Really, really delighted that, again, managed to gently uptick our margins, so the margin growth slightly above the revenue growth. Earnings per share, despite the challenges of interest rates and what that brought to our finance costs in the year, again, you know, managing to deliver a very similar rate of earnings growth as we had with operating profit growth. And then, you know, I guess perhaps the number that, again, for a CFO, probably the most pleasing one of the lot is the 50% improvement in operating cash flow. You know, last year, we made a very deliberate investment, which we talked about in inventory, which absolutely stood us in good stead for delivery last year, stood us in good stead for delivery this year.
But what we did promise you a year ago was, you know, we would return back to our normal levels of cash conversion and cash generation in the year, and indeed, that's what happened. And then, you know, a proposed dividend, which will result in a total dividend for the year of GBP 0.08, which is just under 10% up on prior years. So look, as the strap line says at the bottom there, you know, strong growth in organic revenue margin and cash flow and earnings per share, ahead of consensus. So normally, I show you these charts on a five-year basis, but I think there's 10 data points here now, 'cause as Ronnie said, it's just over 9 years since the business listed.
And we thought it was really, really important just to, just to draw out and show the consistency of delivery of this business ever since it IPO'd in 2014. You know, invariably, you've got the little blip in 2020 for COVID, but you draw a line straight through those graphs on all the measures, so revenue, operating profit, earnings, and cash flow, and, you know, 13% to 14% compounding through that ten-year period, notwithstanding the 2020 piece. Look, I think it's the numbers themselves, but it's also the consistency of that performance. It's not spikes and troughs and spikes again, it's a really, really consistent compounding performance through the ten years, which we think is, you know, is, is, is a great achievement.
Revenue, you know, over when we move into the regional pieces, Ronnie will unpick this a little bit more. There were different dynamics, different moving parts within the group, some markets having tougher conditions than others. Overall, a result of, you know, 6.6% revenue growth, organic revenue up 4.6%. The sort of price volume question is something that we'll always get asked here, and we, roughly speaking, analyze that 4.6% to be about 75%-80% of it coming through price and about 20% to 25% of it through volume.
But I guess the way you should think about that, and again, you know, more apparent as we get into the regional slides, if you take the bits of the business that really did perform very, very strongly, so whether that be U.K. residential, whether it be ClimaRad or ERI in continental Europe, the growth rates there were very much volume with a small price assist. But of course, we did have a couple of markets, particularly in continental Europe, which were a little bit tougher, where volumes definitely did contract. So Nordics and Germany in particular, but we'll talk more about those as we move into the regional slides.
Relatively small contribution from inorganic growth this year, not because we weren't active on acquisitions, because as Ronnie's already mentioned, two really exciting additions to the portfolio, and then a third post-year end, but simply the timing of those transactions. The two in the year were respectively April and June, so very minimal impact in 2023, but, you know, definitely something that we're really excited about in terms of what it brings for 2024 and beyond. Moving then on to margins. You know, I guess if you look at the bottom left there, three full financial years now of delivering post-COVID, of delivering margins at or fractionally above 21%. Our target, as Ronnie said, is and remains greater than or equal to 20%.
We're not gonna be moving that target, but I think, again, you know, back to that consistency of delivery point, you know, these last three years have been very unpredictable, very challenging, whether it be market conditions, whether it be supply chain disruptions, whether it be inflation. We've had to navigate that period, and to come out with that consistency of delivery, again, is something that we're very, very, very proud of. If you look at the bottom right there, we just tried to unpick what that looks like on a, on a three regional basis. So you'll see the bars for 2022 and 2023. And I guess, you know, the important takeaway for 2023 is that really strong performance in both the U.K. and Australasia. So over 2% of margin improvement in both of those territories.
A little bit of softening in continental Europe, which is predominantly mixed. So as I've mentioned, you know, Germany, Nordics, more challenging areas, they are traditionally and still towards the upper end of our margin profile in the group, so that mix effect hasn't been helpful. But what you then end up with is, you know, three regions all delivering margins, you know, very, very similar to each other and all very strong margins ahead of, ahead of the group target. You know, inflation has still been with us this year. I think it was, you know, in terms of materials, components, and things like freight, it's definitely, definitely got much, much easier in the second half of the year. But that's now moved into whether it's labor, staff costs, property costs, some of the other overhead areas.
So it's not to say inflation's gone, but I think it definitely, it has definitely moved in where it's, in where it's gone. Then moving us on to, you know, probably the highlight for me was, was the cash generation performance in the year. So cash conversion, we set a target of greater than or equal to 90%. You know, as I mentioned earlier, last year, we were, by our standards, relatively lower than that, at 76%, but that was a very targeted and specific investment that we made, which definitely did contribute to our service performance and therefore our revenue performance over the last two years. And to get back to now, you know, comfortably above 100% is, is really, really pleasing a small inflow of working capital this year. That wasn't from inventory. Inventory, basically flat.
If you exclude the new acquisitions, inventory basically flat year on year, and that's what we said. We said, having done the build, we don't intend to unwind it. We still think supply chains have the potential to be disruptive, and the relatively small cost that has versus the ability to keep on servicing the market really excellently is, we think, worth a lot more than, you know, GBP 1 million or 2 million of inventory. But what has contributed to that inflow has mainly been receivables, so a really good performance on receivables. And those of you who look at the notes, when you look at the aging profile of the business, you'll see that actually the, you know, the aging profile of the receivables, it's always been good, but this year it was particularly strong.
If you were to draw a box around everything here, apart from the right-hand one being the acquisition spend, you know, what you'll see is an overall cash inflow of about GBP 30 million. So what we would say is we de-lever, and we've always said this, we would de-lever in a year where we didn't do acquisitions, we would de-lever approximately half a turn per year. So it's a really, really strong cash-generating business. But what we want to do with that cash generation is to invest it in, you know, really exciting acquisitions that add to the portfolio. So the right-hand, well, the right-hand bar there, GBP 30.7 million, that includes a little bit of fees, but GBP 30 million basically spent on the two acquisitions in the year.
But still, with that, you know, we end the year with net debt fractionally lower than we went into it. And leverage at 0.8 times on an ex-leases basis, again, means that we not only are in a good position at the end of the year, but we're definitely in a place where we can carry on pursuing these attractive acquisition targets. Right, one of Ronnie's mentioned earlier that we've tried to introduce some sort of new materials this year, and one of the things that we've been doing a lot of work on, and, you know, consulted with a number of the analysts in the room as part of sort of developing that, you know, thank you all for your help and insight.
Return on capital, or ROCE or ROIC or whatever you want to call it, there are obviously multiple ways of looking at this. But what we've always had a metric where we look at specifically the performance of our acquisitions. So we've had a target that we've had there for the last few years, where we say for each individual acquisition, we target it to deliver a return of 18% or more once it's been in the group for over three years. And look, that's still a really helpful measure, and it's the measure by which we test out how well we've delivered on both buying assets well, but then improving those assets well. But we felt it was really important to also move into developing an overall return on invested capital.
It's all-encompassing for the business, not just the acquisitions, but the whole business. Now, you know, on that old measure, you may recall that, you know, we've, we would have said over the last couple of years, the number is still the same this year, that the acquisition return is about 24%, cumulatively. But, but what we've got here is a full return on invested capital for the group, and that's coming out at 27%. So we've taken a 3-point average for the balance sheet. We've added back acquisition-related liabilities, net debt, and we've added back any historic amortization charges, so it is a true sort of grossed up invested capital.
We have made an adjustment, and we won't, you know, we think this is the right thing to do for the original transaction that created the group back in 2012. So that's what you'll see there, the goodwill intangibles of the 2012 leveraged buy-out. And all, altogether, that comes out then with a return of just over 27% for the business. Now, yeah, that is a very, very strong return, as it says on the right there, you know, clearly, significantly ahead of whatever people would estimate your weighted average cost of capital to be. It's clearly far, far in excess of that.
I guess, going forward, and this is gonna be interesting from a target and measurement perspective, if we carry on executing on the acquisition strategy, which absolutely is at the heart of what we do, acquisitions will be dilutive at the point of entry to the group. No question about that. And so actually, if we can carry on maintaining this sort of return in the mid-twenties with the execution of a good, strong acquisition strategy, we think that's gonna be a recipe for really, you know, good growth and good returns for the business. And so, look, the final slide from me, and, you know, I think there's nothing new here, but just really summarizing it back again in terms of how this year has looked, relative to the targets, the core target that we have in our financial model.
We've added, I say, that new return on invested capital target at the bottom there as well, but, you know, really, really good, strong performance, delivery against all of the targets. I mean, the only one that, if you like, is slightly below our, our model, for want of a better word, is the total revenue growth, but that is purely the function of the timing of the inorganic activity and when that starts to play through as revenue. But look, overall, I'd say a really, really, pleasing set of, of numbers. And with that, I'll pass back to Ronnie.
Brilliant . Thank you, Andy. So just a reminder here, so I mentioned earlier on, Volution is a much more international business today, and so about 40% of our revenue comes from U.K. customers, and the balance, as you can see, comes elsewhere. And of course, if you think about the acquisition pipeline and where we're likely to cement future transactions, that sort of reducing U.K. proportion will continue, although the U.K. market is very important to us. But that will continue to change over time. And look, we think that sort of geographic and end market diversification or diversity is really helpful, and it does create quite a bit of resilience.
I think that comes out really well in a moment when I take you through some of the individual markets and how they performed. Although we delivered just under 5% organic growth, constant currency organic growth, not all of our markets were performing strongly. You know, I always say this to the teams, you know, as CEO, it's very rare that every market points up, you know, strongly every year, no matter how hard we try. This is just showing how things have moved. You know, 10 years ago, two countries, in actual fact, when I became CEO, we had one country, and we were based in the U.K. You know, 17 countries, that will change over time.
Lots of white spaces on the map, still, other geographies that we'd like to enter, and in, and indeed, existing geographies that we'd also like to add to. There's a lot of detail coming up on the next few slides, and I'm not, I'm not gonna go through every individual bullet, but there, there's sort of some core sort of highlights and maybe some lowlights that we should just discuss, while we're here. So in, in the U.K., I mean, look, it was an outstanding performance. I don't remember us growing 19.5% in the residential market before. Notwithstanding, the COVID recovery year was obviously a very strong performance, but it wasn't against a sensible comp. But, you know, we grew 19% in residential.
In actual fact, we grew in all three elements of our residential business, public RMI, private RMI, and indeed, in residential new build, which I know does feel counterintuitive when we understand what's happening in the house building market at the moment. Look, I'm convinced that in the U.K. we have a number of brands, leading brands. We have a strong, if not the strongest, product portfolio. We have the largest ventilation sales force. We have excellent customer service and excellent, excellent relationships, and I don't think the market grew 19% last year, so clearly we've been gaining share. That was a, you know, particularly strong performance.
If we look at residential new build, even in residential new build, we talked about some account wins that we made early in the financial year, and also this move towards lower carbon, continuous system or heat recovery ventilation, which has a very profound impact on the unit revenue that we see per dwelling. And so that is the highlight for us. In commercial, we're underweight. You know, we're not the leader in U.K. commercial ventilation, but we have some strong niches. For example, we're the leading provider of what we call Fan Coil Ventilation in the London market. And in actual fact, our commercial revenue performed better in the second half of the year. If you look back in the first half, actually, our decline was greater than that, so actually, half two was stronger.
In export, we grew 1.7%. That's mainly in Ireland. Most of our growth is in Ireland. We're the leader for heat recovery ventilation in the Irish market under our Vent-Axia brand with heat recovery systems. And in actual fact, that's a market that continues to sort of struggle with how they build more houses. I mean, it's completely different too. I remember in 2008, when we were building the houses in the wrong place. But there is good sort of structural underpinning and faster regulatory underpinning in Ireland. It's a good example of where maybe the U.K. market could go more quickly, because most properties in Ireland are built with some form of system or heat recovery ventilation. OEM was a disappointment.
OEM is our motorized impeller business, and what we saw there, particularly in the second half of the year, was a situation where I think supply chains generally had normalized. One particular competitor that had struggled had sort of caught up, a German competitor. We also saw a lot, a lot of the business from our OEM, about 50% of the business is in export. What we saw is quite a bit of weakness around Europe because these motorized impellers predominantly go into products that are new build focused. In actual fact, we expect to see continued weakness in our OEM area, partly as customers are potentially overstocked, and we see some destocking, and also fundamentally, we're seeing obviously a greater weakness in new build construction than we are maybe in terms of RMI.
How could I miss that? Margin. Yes, I mean, Andy, operating profit margin improvement in the UK from 20.4%-22.6%. And that's a function of a whole raft of things. So obviously, the volume helps. I would say the pricing discipline and our sort of relentless focus on operational excellence, factory efficiency, and value engineering, and so forth. So in actual fact, we exit the UK, if you like, in FY 2023 with an improving margin trend throughout the year. So if you think about what the operating profit margin was in half one, and then look at where we ended up for the year, that, we believe, is a good trajectory to exit the year on. Continental Europe, you know, really quite a mixed bag.
I think the two lowlights were in the Nordics and in Germany, and particularly low in the second half of the year. In the Nordics, you know, I'm convinced, because I can see what's happening more recently, is that we had a period of destocking. We had strong demand in a prior period. We had our distributor and wholesaler customers with high levels of stock. We had weaker demand, and then we had the inevitable destocking, and I think a lot of that destocking is largely complete. So we had quite a bit of weakness there. And in Germany, our exposure is greater to new build than it is across the wider group. We typically talk about the group being 65%-70% RMI to new build, but in Germany, actually, you could probably reverse that, and we have a greater predominance of new build.
And there were some subsidy changes and so forth. So the German market, which had performed really well for us for three or four years... In actual fact, if you remember back to COVID, we actually grew our revenue in Germany in the COVID year.... And we continue to have a strong performance in 2021 and 2022, but it's come off. And what we had, and Andy's already talked about it, is we had strong performance in other areas, in ClimaRad, in the Netherlands, where we have decentralized heat recovery, in energy recovery industries with our heat exchangers, and in one or two other areas, we had a strong performance. So the operating profit margin decline of 2.2% isn't because we necessarily had a lesser quality delivery in the local areas.
It's the participation or the lower participation of the Nordics and Germany bringing down the average, and the greater growth in areas that are at a lower operating profit margin. So I guess what I'm saying there is that if and when we see a recovery in the Nordics and German areas, we would naturally expect to reflect that in an improving margin mix. And the inorganic additions, really very small. Yeah, Ventilairsec or VMI in France, look, we've acquired Ventilairsec in France as a small proposition that deals through electrical wholesale trade, has access to distribution, but it's a relatively small player in the French market, and we believe that has a huge runway of opportunity in the coming years. The issue for us is to introduce new products and open up new customer relationships.
Some of those customers are international groups that we have strong relationships with elsewhere, and we believe will see us as the horse to back, if you like, in the local market, because they know what we're able to deliver for them in other markets where we partner. So look, the opportunity in France is a long runway of opportunity. We're working very hard with that right now. Whereas i-Vent in Slovenia is slightly different. It's got a market-leading position. It's a country of just 2 million people, although we are now opening up in Croatia, and we have a slightly different model in i-Vent, but it's very profitable, very exciting, and we're delighted to bring it on board. But those companies only participated for a couple of months in the year. Moving on to Australasia.
You know, again, it was a really good year in Australasia. Slightly mixed, I would say, I think in New Zealand. In New Zealand, the market has been tougher. In Australia, we still continue to grow very well, operating profit margin of 23.9%. So that's a great performance. If you look back at the sort of Ventair margin when we acquired the business back in 2019, it was sort of circa 10%, 11%, 12%. So we've been able to steadily improve the margin. And then, of course, more recently, it was a post-balance sheet event. It was the fourth of August, and we did have to go through competition clearance.
We had to work with New Zealand, New Zealand competition clearance authorities, to, to get the approval, but delighted that we have. And what's important about DVS is that we have two routes to market in New Zealand. It's a, you know, generally a smaller country, probably about 5, you know, 5 million people, but we have a distribution market leading position in Simx, and we've also acquired DVS, which is an installer of ventilation and has a different proposition. And we believe the attraction of having the installation element in New Zealand is that we can upsell and, and, and upscale products more quickly. We're having a direct-to-consumer conversation about what's the right solution and so forth.
The attraction there is that we've got a very wide scope of products across the group, and we know that we can deploy those products into New Zealand through DVS, which of course is exciting for Simx over time as well, because Simx is providing the products that are replaced over time, and so we're able to sort of double dip in the market. So really excited about that. Excited about the profit improvement in the year. You know, 22% growth in the profit in the year, partly because of the organic growth, but of course, hugely assisted by the margin expansion. What I'd like to talk you through now is sort of how our markets benefit from long-term structural growth drivers.
It's particularly relevant at the moment because, of course, we're all nervous about outlook and quite what's going to happen next. I'd remind you, of course, that in that context, we have just delivered a circa 5% organic growth. There's no doubt that with inflation, higher interest rates, and mortgage rates, new build construction globally is under some pressure in the U.K., in continental Europe, and indeed in Australasia. We're just trying to show on this slide how this impacts us. For example, if we look at new build residential, clearly, our revenue in new build applications is hugely linked to the construction volume. You know, are we building more homes, less homes or the same?
However, there are also, as you can see on the second line there, huge regulatory drivers that can assist us. And I would argue in FY 23, our residential new build strength was clearly not as a result of building more homes, but was as a result of regulations having a greater impact. And just to understand the runway of opportunity here, we estimate pretty accurately that less than 40% of all UK house building consists of heat recovery. The Future Homes Standard, which is the standard that's basically setting the outline for how we build homes that are net zero carbon ready, would argue that heat recovery is probably the only sensible way to go.
Now, I'm not arguing that by 2025, we'll see that 40% penetration go to 100%, but it is moving every year, and we have daily engagements with house builders and with, and with projects around utilizing more heat recovery and system ventilation. It's moving. It will continue to move, and of course, the last change in Part F and L of the Building Regulations was really supportive. But this is a trend that's happening all over Europe, but not just in new build. And what we're showing here is that in RMI, the impact is less, but there are other impacts in RMI that are of greater importance. Energy efficiency, indoor air quality. We've only got to look at what's happening in the public housing market in the U.K. at the moment. Indoor air quality awareness is paramount.
Mold and condensation is something if you, you know, if you Google mold and condensation in U.K. social housing, it's, it's every day. This is underpinning, you know, substantial increase in demand for proper refurbishment of social housing properties. We're not arguing we're a cyclical. If only that were true, what we are arguing is that there are other drivers that can assist us in a market when maybe overall volume's a little bit weaker. Of course, all of this is complemented by a broad geographic and end market exposure. That's us, really. That's what we wanted to talk to you about today. I'll come on to summary and outlook, and what we think of as our clear compounding growth model. There was a debate for Andy and I, which one of us would use the slide showing the nine, 10-year track record.
Andy won that one. But look, I get the opportunity to summarize what should come next. You know, we have structural growth drivers underpinning our long-term growth. We could not have delivered what we have to date and have the confidence in our future expectation without the structural undersupply of homes in the UK, or for that matter, pretty much all over Europe, and indeed in New Zealand, where if you've ever tried to rent a property in New Zealand, it's nigh on impossible, as one of our colleagues found a couple of years ago. We've got increased regulation. There's no debate about that. I know there's a lot of debate about the recent conservative government announcements, but fundamentally, I don't think they'll make a huge change to the progress that we see in the coming years in this space.
A drive for energy efficiency, it's key. It's not just about carbon emissions, it's also about cost. Indoor air quality and health awareness and upselling. Upselling is something that we're very good at, particularly in areas such as private refurbishment. We have a differentiated business model aligned to our chosen markets. I won't take you through each of the individual bullets there, but our strong brands, you know, we have leading brands, and sometimes it might sound counterintuitive, but those brands might not lead an entire market, but they'll lead their niche. In the Netherlands, we have ClimaRad. It leads the niche in decentralized heat recovery. We have inVENTer in Germany, it does exactly the same. And just to remind you, you know, delivering an attractive through-cycle financial framework, organic growth between 3% and 5%, we've actually been closer to 5%.
Overall revenue, including the acquisitions, at 10. The margin consistently over 20%. An EPS growth that should be over 10%. A cash conversion over 90, and a group return on invested capital of mid-20s. All of this augmented with an attractive bolt-on M&A strategy, and in that particular aspect, our pipeline is full, it's busy, and we're excited about what we can do next. So it just gives me the opportunity now to summarize. It was a good year, you can see on the slide there, and maybe just come on to outlook. I know it sounds like the long disclaimer here, but look, I think the important issue is that we don't know for certain what's gonna happen next, but we do know where our business is at and the levers that we have to pull.
You know, we have the M&A that we've recently consummated, that we're excited about improving in the year. We have certain elements of our markets that are running quite hot at the moment, for example, in terms of U.K. social housing, that I believe is a multi-year trend. The amount of work that needs to be completed cannot be completed in one or two years. This is gonna run for some considerable time. And also, I think from Andy and I perspective, you know, credit to the wider management team. You know, we are able to comfortably be here today on the roadshow for the next week in the comfort that we have a very, very strong management team, not just functionally in terms of leading innovation and procurement and product management, but also the local managing directors.
And because of that, and of course, our wider geographic and market diversity, it gives us really good confidence of making further progress in the year ahead. Okay, well, that's the sort of formal part of proceedings. We've got a little bit of time now to open up to questions.
All right. Hi, thank you. It's Rob Kenny from Berenberg, and thanks for the presentation. Just three questions from me. Firstly, just on the German market in particular, you mentioned 70% new build. Could you share some of your thoughts around the structure of that market in terms of its cyclicality compared to the UK and the broader structure of how that is impacting the business and specifically in German new build? Secondly, how do you see yourself moving further around the kind of broader HVAC landscape? You clearly put that line up, the tagline at the start of the presentation. On a multi-year view, do you see there's significant opportunities beyond your current end markets that you'd like to play a role in?
And then thirdly, you talked about increasing the proportion of the kind of feedstock from recycled material, a 90% target by 2025. Could you just talk about some of the main, I guess, supply chain, technological barriers, challenges around feedstock availability and pricing to getting there? Because clearly, it's all not immediately available today at the price you want it to, at a stable price. Thanks.
Okay. Germany first. Our exposure in Germany is about 70% new build, 30% RMI. It, like a lot of markets, I think new build construction have been reasonably strong up until about 12 months ago. We saw the impact in our half two, quite profound. Couple of things that we're doing at the moment. One is that we think decentralized heat recovery lends itself really well to refurbishment, and we have been sort of doubling down and focusing hard on the refurbishment opportunity. So that acts as a little bit of a mitigation there.
In terms of new build construction, I don't know this for certain, but I suspect that we are probably at or close to the bottom, and so there's almost an inference there that as we come round into the second half of this year, that the situation in Germany, if we're able to be successful, and indeed, I think we will be, in turning more into refurbishment and we come off the bottom in new build, actually, it probably gets a little bit easier for us. And also, this is a technology that fundamentally has been growing well anyway. So you'd almost argue in a static volume market, you would expect heat recovery to grow. And indeed, the reason I talked about 2020, 2021, and 2022, is we were delivering consistent double-digit revenue growth in Germany because of that.
Just a second question on HVAC and how we think of ourselves. I didn't know you were gonna ask the question, but if I was to answer it, I would look at this slide and say, if we deploy the same strategy with the same success for the next three to five years, one would hope, and this isn't a forecast, but one would hope that we could deliver a similar performance to the one that we've delivered in the last nine years. And we don't see any major departure from strategy. What I would say is that there isn't going to be a ventilation company of any size in Europe that's sold in the next 12 months that won't have us as a potential acquirer on the list.
And in actual fact, there's also quite a few other things that we won't be a potential acquirer of that we're on the list for as well. So what I'm saying is we're getting many more inbounds than ever, but the core markets are U.K., Continental Europe, and Australasia. We're not looking at North America. We believe that there's so much value to be created in those existing markets. And the third point about recycled materials, it's really quite detailed here, but if you imagine a ventilation device, there's certain parts that are passive and there are certain parts that move. The passive parts have less structural integrity in them, because they're not moving, than, for example, an impeller that may spin at many thousands of RPM. So we have to be very careful about applying recycled materials to parts that are active that, in the device.
What that means is that we have to do extensive testing to satisfy ourselves that we're not taking undue risk with the structural integrity of the material. What is happening, of course, is more recycled material is being made available, but there's also more demand for recycled material because we're not alone here. I have confidence in the team to get to this 90% measure, because as I say, when we set the measure at 90% previously, and that those individual steps across the years, you know, we've got some great people who came together, and they're really challenging. Even some simple things where we've moved, we've moved products that are not visible from white to black because it's easier to find black materials than white.
And we've had to go to customers and say, "It's gonna be black now, not white, but it's not visible." And actually, when you go to customers and say, "We're trying to be more sustainable in our processes and what we do," there's very little pushback. In actual fact, we would argue there's a new account acquisition shortly that I think will get over the line, and it's because they can claim to their customers that this particular product line will be from a 100% recycled source. There's all sorts of regulation now about having a certain minimum recycled content in a new build commercial project, and we help customers with that metric. Okay, Charlie. Sorry.
Thanks very much. It's Charlie Campbell at Liberum. I've got a couple, and maybe do them in turn. Market share in the UK clearly has gone up. I just wondered kind of whether what more levers you have to increase that further. And in particular, you talked about new account wins in the financial year just gone. Any prospects for any more of those sorts of accounts in 2024, 2025?
Yes, I think, I think there are. I'm probably not gonna answer that question in full, Charlie, because I, I, I think we've got a, we've got a strategy that's working and an approach that I think is slightly different, and I, and I'm confident that will continue to help us gain share. I probably don't want to be too intimate about how that works because we are confident. I, I think in certain aspects, we, we are confident about being able to further leverage our position. I mean , one area that, that stands out for us is this sort of, I think I use the word relentless pursuit of customer service.
I know we had a board visit to our Reading factory recently, and I just let the team get on with it, and they live and breathe this relentless pursuit of delivering customer service. And it's quite incredible in this day and age that it's actually a point of competitive advantage. So I think that's really clear, and we've stood out. You know, where house builders, for example, over the last few years have really been fraught with supply chain difficulties, I think we're one name they can put on the pad and not have to worry about, and I think at last. But look, credit to the U.K. team. You know, we have a very significant long-serving team who know what to do.
So there's a couple of new account wins that I think will get over the line, and obviously, that's helpful if there are more headwinds, particularly in the new build sector.
Thanks very much. And the second book question was about order books. I mean, I know that there aren't order books across the group, but there are, I suppose, a few companies where there are order books, and maybe thinking about ERI, ClimaRad, and maybe New Build UK. Just if you give us some color- on the order books, how those are looking for the year?
ERI, the order book's quite, it's quite short in actual fact, because it's more of an OEM, and so what happens is, customers are placing orders probably one or two months in advance, and there's probably a little bit less demand in that area, not surprisingly, because these are heat exchangers are going into new build. On the other side, if I look at ClimaRad, these are projects that tend to get placed quite early on, and I would say there that there's quite a bit of strength in the order book, and definitely that was what was underpinning the second half strength of last year. So we've got really good visibility in ClimaRad.
In residential new build, I think our project order intake is remarkably consistent at the moment, but, you know, we are stronger in apartments versus houses at the moment because of the way the regulations work. We've also got the tailwind still of a couple of new accounts, and indeed, another account that we won more recently. I always say to the team, sort of, "You might have account A that's talking about a 20% reduction, but actually it's 100% more than we had in the prior year." That's helpful.
Thanks very much.
Okay. Clyde. Sorry, I've gone a little bit out of turn, but I will get to everyone.
Thank you, Clyde Lewis at Peel Hunt. I think I might have got three, if I may. You put up HVAC.
Yes.
But obviously the V is massively bigger than the H and the AC. Is that an indication, albeit a very subtle one, that you are starting to think a bit harder about the H and the AC part?
No, it's not. Sorry. Absolutely not. No. So the classic sort of heating, ventilation, and air conditioning, we're absolutely the V for ventilation. But no, it was just more the fact that if I looked at a piece of research from anywhere in the marketplace, it would not talk about companies like Zehnder or Lindab or Systemair or Belimo and so forth, that we think of as very credible ventilation peers. It would talk about more U.K.-centric building products companies, that are great companies, but they're in a different area of the market. And so what we're trying to say is that, you know, Volution is, I think, the only U.K.-listed ventilation group.
There is a danger that we get paired with other U.K.-listed companies that don't actually do what we do, have a minimal, minimal overlap. There's only one company that's listed in the U.K. that has a minimal overlap with us in the U.K., and that's obviously Zehnder. You know, we look at what's happening with Belimo or Zehnder or Systemair or Ariston or Lindab, names that might be new to some of you, but ones that we compete with in their local markets. You know, for example, if we go to Germany, we're competing with Zehnder, or if we go to the Netherlands, we're competing with an Ariston-owned company. That was the point, but no, we're not looking to be a heating or air conditioning company.
Just checking.
No.
Second one was on- new housing. It'd be really useful if you'd give us a little bit of an example as to how the UK versus the German market, you know, the average spend on the product, the ventilation products in a German house, compared to the 40%. I must admit, I was surprised as many as 40% new houses are using those heat recovery systems. But it'd be useful to sort of maybe compare, if you have got any numbers, just so that we can sort of understand the opportunity in that sort of market.
Yeah, and so first of all, the 40% is all UK construction, so apartments, some student accommodation, but also houses. So it's probably 80-90 thousand pieces out of maybe 240 total. And the... We've had some slides in the past that talk about the revenue per dwelling. It's quite crude here, but I would say that a new 3- or 4-bedroom house that includes heat recovery as a system would probably have about GBP 1,000-GBP 1,400 of materials installed, plus also the installation cost, but it's relatively low cost to install in a new build. Clearly not the case in a retrofit. If I looked at that in Germany, it's higher, but not mass- you know, EUR 2,000 to EUR 2,500.
The standard is probably more elevated, and there's a little bit more of that, but it's not, it's not hugely different. And of course, we should compare that to, you know, a house that maybe five years ago was built with just unitary fans, and that's probably GBP 100 to GBP 200. What happened with the last change of the building regulations in June 2022 is that it's almost impossible now to meet the regulations building with unitary ventilation. Now, the problem is that it takes time for the existing construction, if you like, to work through. So we don't see an immediate impact from the change in rates. It tends to come a couple of years later.
There's some intermediary stages as well in terms of the technology, but the sort of holy grail for us is that one day, you know, whether it's in my lifetime with Volution or not, but one day you'd be expecting, you know, 90% to 95% of all U.K. construction to potentially be with heat recovery.
And the 40% in the U..K would look like what?
Oh, sorry. Well, in actual fact, in Germany, it's not as high as you might think, because it's not as well regulated in terms of the way the U.K. is, and I can be quite prescriptive about that route that we're going through, but they generally build more energy-efficient properties. So even though it's not regulated, they'll use decentralized heat recovery, so they've been using us and other brands. They'll use central systems and so forth. So I would say if you looked at decentral and central heat recovery, it's probably 60% to 70%. Yeah.
Thank you. Last one then was on U.K. RMI, but private side- rather than public sector, because obviously public sector is pushing quite hard.
Yes.
What trends are you seeing there in terms of, is there an upscaling, you know, improving quality of what people are putting in? Are they doing it themselves?
In private RMI?
In private RMI.
Yes, I think there is. There were two things that happened in the year that were really quite profound. One of them was that, I think we talked about at the half year, the Positive Input Ventilation, the problem solver, and the Google search for that. We've seen that Positive Input Ventilation, you know, there was some viral, you know, it went viral on TikTok with people showing: I put one of these products into my property and look what happened. So PIV in private refurbishment grew really well. And what we argued is that because of our strong links to distribution, versus the brands that we compete with that are more direct sellers, we were able to leverage that opportunity really well, and we're confident we'll do the same again this year.
Of course, our strategy is to upsell. You know, what we're saying to consumers, to contractors, to whomever, is ventilation doesn't have to be noisy. And actually, the premium you're paying over a, a more traditional to a quiet device is GBP 10 or GBP 20 or GBP 30 or GBP 40. You're paying three or four times that to have it installed. And that's an education. It's a forever education because there's 30,000 plus small electrical contractors, probably more than that, that fit these products. How do we get to them? How do we influence them? But we're very good at it, and our customers understand it. I won't use any specifics, but there are a number of retail and trade customers who get it because they're selling a higher value proposition, so it helps them grow as well as us, of course. Okay.
Sorry, at the back there, I know you've had your hand up a couple of times. Thank you.
Hi, Vanessa Jeffriess from Jefferies. Just to follow up on installation of heat recovery a bit, aside from the cost, could you talk a bit about the practicalities? 'Cause my understanding is that some house builders find them to be quite complex to install. And then after that, if you could just talk about if there's any theme in the last three acquisitions you did, and how you plan to exploit that French opportunity more, and what kind of opportunity is there?
It's a really good question about the complexities, and actual fact, it's always been the argument. So when we first looked at sort of heat recovery ventilation in the UK, I remember 15 years ago, it was about there's an underdeveloped installer base, and it was problematic. In actual fact, going back 15 years ago, we would install. And the reason we would install is that it was the only way we could be confident that the product installation experience would be a good one, but we do not want to be an installer. That's not our job. I'd be very, very clear on that, and our route to market is through distribution, just in case any of our distributors are listening. But the point is that we have been developing the installer base.
We run a training program, along with the rest of the trade association, and to effectively approve installers, and I don't think the installation barrier is a risk now. Actually, if you look on LinkedIn and other social media type platforms, there's some fantastic installers out there that showcase their work, and I think the standard is very good. It's too much detail for now, but we used to have an argument about what we call in-use factors with the products. What would happen is the regulator would say, "The products never get installed properly, so we're going to downgrade the in-use experience, so you won't get the full value of heat recovery." We lobbied very hard to say, "If these are installed properly, you shouldn't downgrade," have what we call an in-use factor.
I don't think that's a barrier now, and we, and we can see some, you know, fantastic installations. So I think it's more to do with the adoption. But what we are seeing, of course, is house builders talk about their own net zero, their own experience. There, there's different propositions, but let's not forget the, the running costs. Now, there was a survey last year, it was one of the publications that said a new house probably costs GBP 2,000 to GBP 3,000 a year less, a new three to four bedroom house, GBP 2,000 to GBP 3,000 a year less to heat and light than an older one. I just think that's a really compelling proposition if you're trying to sell new houses. The question about-
M&A
-improving.
I can take that one, Ronnie, yeah. The lack of national questions is simple. Look-
Quite right.
If I take them one by one very quickly. France, very much as Ronnie said, it's about a footprint in the market, you know, an established position with wholesalers' distribution channel. It's currently got a very narrow product range. It's not gonna happen overnight, but we see no reason why a large proportion of products that we sell in the U.K., in Belgium, in Germany, in Netherlands, why they can't get traction in the French market. I think making that product set available over time is really the route to growing that business. There's a couple of interesting cost out opportunities there as well. You know, it's already, you know, gross margin-wise, it's a good margin business, but we've already got a couple of little...
Our eye on a couple of cost out opportunities, but it is very, very much about, you know, using the platform to scale the products and grow. There might be a bit of product sell opportunity the other way, so taking the French product into other markets, but it is quite a high price pointed solution, so it will be niche by definition. Slovenia, I mean, it's grown really well over the last few years. As Ronnie mentioned, it's trying to expand into new markets as well there, so it's about backing that business in those markets.
But I think when you put Slovenia from a sales perspective, when you now put Slovenia, sorry, i-Vent, inVENTer in Germany, ClimaRad in the Netherlands, we've undoubtedly got the broadest range of we, we think decentralized heat recovery as a solution is hugely flexible, very much so into refurbishment, but also into new build. And with those three propositions, with effectively all the same end game, but with different product sets to get there, we've got a range that nobody else has got. So that, that undoubtedly, across the group, gives us a real opportunity. And again, there, there's some cost out, there's some cost out that we can do there, so we can supply some products which they are currently having to buy from a, on a third-party basis. So that, there's, you know, that, that's the route in Slovenia.
New Zealand, again, as Ronnie mentioned, I think it's about adding a direct-to-consumer channel to our existing strength in the wholesale channel. So we've got, if you like, all, all, pretty much all approaches to that New Zealand market sort of covered. And again, you know, we think we can offer some product into that proposition, which they currently haven't got, which again, should expand the sales opportunity. Aynsley?
Yes, sorry, Aynsley.
Thanks very much. Aynsley Lammin from Investec. I think I've got three as well. Just on the UK, looking at the, you talked about the multi-year kind of opportunity for public RM&I work. Is that kind of a higher, structurally higher margin business if you were to look at new res, private RM&I and public, just interested in the, the margin spread there? And then secondly, on M&A, just interested in the kind of headroom you have. Should we expect, you know, more smaller bolt-on acquisitions, or could larger ones be something we might see? And then just interested in the first two months of trade in, kind of, you know, any surprises, whether it's on pricing, volume, that you've seen in, August, September? Thanks.
Okay, good. Public housing margins generally very similar across the group, and if we oversimplify and say it's a 50% gross margin business, then, you know, maybe some products are at 55% or 60%, and some are at 40% or 40 basis points. But that's the range I would look at. What's more important in social housing is to think about what we're trying to do here. So you're a local authority, you're a housing association. You've got mold and condensation problems, and you want to put something into the property that will take care of it.
What happens is there's quite a bit more sophistication, controls that will sense humidity, adjust, will ventilate at an appropriate airflow, will not be noisy, because tenants turn off ventilation if it's noisy. So if you've got a mold and condensation problem in a property, you've got a ventilation device that's doing its job, but it's noisy, it gets switched off, and then the housing association has a problem because the tenant's saying, "I've got mold and condensation everywhere," so we get into this circuitous loop such that we even provide data collection in products to talk about humidity rates and airflows and so forth. So we've developed into a discrete solution, a very, very comprehensive solution to their problem, if you like.
It's quiet, it's energy efficient, because running costs are important, and we have to demonstrate the running costs of the particular product. It adjusts really well. You don't have nuisance tripping, you don't want. A ll of that means that there's more value. And if in simple terms, we're seeing two or three times the unit value for one of those devices over maybe what would be installed in the private sector, but at the same gross margin, the cash margin's higher, the gross margin percent will be similar. And we've been very good , I've been with this journey for 15 years. I know explicitly what we're doing and what's coming next. You know, the next step on the path now is how do we make the same solution smaller and less intrusive? It's obvious, isn't it?
But it's not easy, because then you're coming up against physics. You know, and, and, and that's what we do really well, and I think that's why we've been successful. We estimate roughly how many units are supplied each year. The way to look at this the other way, 4.9 million properties socially managed, three ventilation devices in a property, it's 15 million. It's a lot of fans that are going in. What's our market share? Let's be conservative and say 30%. So, you know, that's 5 million for us. You know, that's why I say multi-year. If I think about the actual volume that we're supplying, and I correlate that to 5 million, and maybe more, that's a long runway of opportunity. And the other thing, of course, is that as much as we make great products, they don't last forever. They need replacing.
So it's a little bit like the Forth Road Bridge type quote, is that actually, by the time you come round on yourself, you've got to replace again. Also, I could talk for a lot longer than we've got available to us, but we are starting to put in decentralized heat recovery solutions into U.K. social housing. And we're the only ones who can do that, because we have a German, Netherlands, Slovenian, Nordic experience that we package into a solution that we bring to the market competitively with experience that our competitors just don't have. And that's where we're really leveraging the group R&D technical capability to our advantage. Your other two, quickly, Ainsley.
So M&A headroom, we ended the year at 0.8x leverage, which I think is the lowest we've been as a year-end leverage position in the last 10 years. So, you know, to, if we were to have to, if we were to go up to 1.5 or slightly north of 1.5 to do the right acquisitions, we're absolutely happy to do it. So that, that's got headroom, plus obviously the cash generation itself, 'cause I guess, as I mentioned earlier, you know, this year, the GBP 30 million we spent was the GBP 30 million that we'd created in the year, so we didn't increase leverage at all in making this year's acquisition. So plenty of headroom. Will it be smaller? Will it be continuation of the small bolt-ons or, or larger ones?
It'll be more of the former, not because we're nervous about doing big ones, but I think just the nature of the market itself, it is very fragmented. I think we've got this really good track record and toolkit now of buying smaller businesses, deploying a load of things in to improve them, which perhaps, perhaps a bigger opportunity doesn't have that improvement runway ahead of it. But, you know, if there are, if there are bigger ones, as long as they are, I guess back to Clyde's point, as long as they are absolutely down the fairway, ventilation and air quality business. If they're bigger 'cause they've got a massive heating exposure, we're not interested. If they're bigger 'cause they've got other things that we, we don't think we can add value to, we're not interested.
If they are bigger, good ventilation businesses, we will look at them, but I think the nature of the market is it'll be more, more smaller ones. Your last question was the first two months of the year. I think probably in simpler terms to say, what we've seen in the first two months is not dissimilar from the second half of last year, and particularly, the sort of the fourth- we don't give you quarter by quarter, but the fourth quarter of last year is very much what we've seen in the first two months of this year. The markets that were good at the end of last year are still good. The markets that were more challenging, you know, actually, Germany's made a reasonably decent start to the year. Still, we look at it and go, it- there are challenging conditions out there.
Christian, I know you were there.
Christen Hjorth from Numis. Two from me, and actually just to follow up on both of Ainsley's, really. Could you put some numbers around the increase in revenue in UK social housing in the year? And I suppose, just to sort of summarize what you were saying, Ronnie, is you don't sort of feel there's a big risk of a normalization following increased spend from the issues around mold and obviously that awful death of a boy. And the second one, just on M&A. If the focus is on smaller deals, are you confident that there's enough deals out there to drive sort of the 5% to 7% organic revenue per annum?
Because obviously, you know, as you grow, you need more smaller deals to drive that level of growth of the group. Thank you.
It's interesting, because Andy said smaller deals, but of course, they're not really smaller, they're just smaller than maybe you'd be thinking, but they're actually bigger for us. If you look at, you know, we spent how much last year? GBP 30 million on acquisitions. There were two. Our average ticket size on acquisitions is actually growing. I think the question is whether, can it grow quick enough, or can it keep pace with the growth in the group? You know, if we are delivering, what was the compounding? Thirteen. We've got to keep going at the same rate, haven't we? 13%, isn't it? Of course, if only four or five of that is organic, it's got to be ten. I, I'm absolutely convinced that we can.
Andy and I were talking. Obviously, we know what we know. We know what's coming in. We're very disciplined. We're very disciplined. There are some things out there that have happened that we've stayed away from because we're disciplined. You know, having a ROIC measure of, you know, mid-20s keeps you disciplined. You know, that's really important. But I have no concerns whatsoever.
In actual fact, I suspect what will happen over the next couple of years is that, you know, we'll get to a situation where, you know, we've never had to do it, we've never really looked to do it, but we may, you know, our leverage moves up because we've done a couple of deals, and then something else comes up that we want to do, we may have to think differently about that. But nice, nice problem to have. Your first question was about U.K. social housing. No, I don't think, Andy said the trends that we're seeing in the first couple of months of the year, you know, we're moving into condensation season now, and t he weather's still quite mild.
We're not getting much condensation on the windows in the morning, but in actual fact, I even sent one of the guys a note this morning saying, "Let's just make sure we're ready for this," because there's absolutely no way, if the demand is strong, that we want to miss any opportunities by not having availability. Of our GBP 90 million of revenue last year in residential, we don't give the explicit detail, but when we did, we used to have about 2/3 RMI, 1/3 new build, of which it was about 40 to 60 social versus private. So if you use that proxy back then, it's not far out today. You can get a sense of the public RMI grew really well, but private, private wasn't disappointing last year. It just didn't grow necessarily at the same rate as public, but it's still encouraging.
We've got a couple more, please.
Hi, it's Andrea Collins from Davy. So just two questions from me. Just in terms of the last three acquisitions, how are they buying into the business? I guess specifically, maybe DVS, that's only been in for a few weeks. What are the initial impressions? Anything you're positively surprised with? Any negatives? And then the second question is in terms of new product development, in terms of the pipeline. I know you flagged a few new products in the slide deck. Is there any you're particularly excited for 2024?
Okay. So on the acquisitions, so to just try to avoid maybe repeating some of the stuff that we've said, but if you look at the three, you know, very quickly, France is a huge market, and we're very, very small. And it's going to take us some time, but we're being quite considered about how we attack that, because it's a long-term play. And so in actual fact, you know, I said internally, I remember, I remember at one of our board meetings, I said that France was probably financially the least additive in the short term, but potentially the most exciting medium term because of the size of the market. And if we get the proposition right, then we can hugely scale up.
I mean, we're talking about, you know, EUR 10 million of residential ventilation revenue in France with a market that's probably 50 times what we're doing. So that's the size of the opportunity for us, and I think that will take longer, but intentionally. I -Vent in Slovenia is quite exciting. Andy talked about some new product introductions, and we really like the management team there. But of course, it's a bit of a shock coming from a private, entrepreneurial, founder-led business to us. But, you know, and Andy was there again recently. I was there about a month ago, excited about what we can do, and getting that team to work closely with our German team, because it's the same proposition, good experiences to share.
DVS, interestingly, DVS in New Zealand, what's particularly helpful about DVS in New Zealand is we have an exceptionally strong team in the market. You know, we have an Australasian headquarters in Auckland. The team know the business really well. We've already seen the results for the first couple of months of the year, and the integration's going really well. You know, what we're excited about is how we upsell there, really do start to upsell. We're moving into off-season in New Zealand, of course, southern hemisphere, so we're moving into their summer. Therefore, it's really about getting things in place for when we go into winter, because you'd probably say 60% to 70% of the revenue takes place in one half of the year, the colder months. Okay.
There's a question on NPD as well.
My apologies. Yeah, thank you. I talked earlier on about hiring a UK operations director, Andreas Boeber, who's been with us since May, and that was a decision to provide the technical director in the group more opportunity to develop more quickly. And it's a really interesting opportunity for us because every time we acquire a new company in France and we're getting more experience and knowledge. We talked about it specifically in here, but I think the exciting new product range for this year is what we call the Iconic range of central heat recovery systems, which is the next iteration of the very successful product family that we have, and we've been launching it in Belgium.
It's now in the Netherlands, Denmark, and there'll be some niche play in the U.K. That's very exciting. And the other area that we talked about is commercial heat recovery in the U.K., where we're significantly underweight. There's a very successful competitor that provides those solutions, and we see an opportunity there to do more in commercial heat recovery over the next couple of years. And that product range has been launched successfully in August, and we're already starting to see some early sales. But these are the more the headlines, but typically, we're launching new products probably every week, but some are obviously more significant than others. Lots of questions. I wanted to make sure that everybody was covered. I think that's everyone. Were there any questions?
Yes, we have a couple from the webcast. Two from Graeme Kyle at Shore Capital. One, I think, has mostly been covered. The other, in the German market, are there any indications that new state subsidies for green building projects are under consideration? How will this benefit Volution?
It's a good, good question. What happened over the last couple of years is they were withdrawn, and if you talk to the team locally, this sounds familiar, doesn't it? That they're saying that there is, mixed messages coming from government about subsidies, and they tend to be turned on and off, and there's a lack of consistency there. We believe that, yes, we believe that there'll be more supportive subsidies, and indeed, there are some now that cover both new build and refurbishment. Of course, the big issue for us in Germany, and indeed, I should have probably mentioned it earlier, in a lot of markets, is the move towards heat pumps.
Heat pumps are really complementary for Volution, because heat pumps typically work best in a well-insulated property, and that's where most consultants would recommend thinking more sympathetically about the ventilation solution as well.
Thank you. And a couple from Peter Tester at One Investments. Can you please talk about how you manage operating costs in the different units to balance against the uneven demand pattern between countries and protect operating margins? And does inflation moving from COGS to other areas provide challenges on this?
A very quick answer to both of those. I mean, I, we, we have strong sort of managing directors locally who will flex their costs accordingly, and I think that's probably borne out by the sort of consistent delivery in terms of margin, both terms in gross margin and so forth. We, I don't think that's a big concern for us, and certainly Andy and I are very close to it, so I think it's well managed. The issue about inflation is that it's not a greater challenge, it's just moved. So the emphasis maybe 12 or 18 months ago would have been very definitely around materials, and there was labor inflation.
Now, what we're saying is there's an absence of material inflation risks, but there's still a prevailing, but maybe weakening, labor inflation risk. But we don't see it as a challenge to margins, and we think it is definitely rolling over. Quite how quickly that happens, it'll be interesting for all of us to see. But not concerned about protecting margins, and inflation is less of a worry for us today than it would have been when we were in the room maybe six, six or 12 months ago. Just mindful of everyone's time, 'cause we've gone sort of 20 minutes over usual. Look, thanks very much. I hope that the level of sort of scrutiny and questions is commensurate with your interest and the appreciation for our results.
We're delighted about what we achieved, but notwithstanding the difficult markets, we are confident about the direction of travel. Thank you very much. Thank you.