Strategy Statement
Rotork has a strategy for growth focused on products and services that are required to control the movement of fluids and gases. Our aim is to provide high quality, technically advanced, innovative products and services. We will continue to align our network of offices and manufacturing plants to support new and existing customers' activities around the world.
We operate an asset light business model which is highly cash generative. We seek to deliver quality margins, consistent year on year growth in revenues, profit and core dividends through organic growth and acquisitions.
We develop and train our people to deliver our strategy and satisfy our customers' requirements while maintaining high ethical and safety standards across the group and act as a responsible international corporate entity.
The following detail supports the overall Group Strategy Statement:
Financial
Rotork will continue to operate an asset light business model with an aim to maintain a high ROCE. The key measures of revenue growth and return on sales will continue to be a main driver for the business.
Strong cash generation and good working capital management are strategic financial objectives defined by clearly published KPIs embedded in management policy. Working capital will remain a focus with KPIs of cash conversion, inventory levels as a percentage of sales and debtor day targets.
Rotork is highly cash generative and prefers to re-invest these funds in the future growth of the Group. This re-investment may take the form of product development, investing in the infrastructure of the business or acquisitions. Any funds considered excess to these needs are returned to shareholders.
Dividends are considered to be either core dividends, which we expect to increase in line with earnings generally over the medium to long term, and additional (or special) which relate to the return of excess cash to shareholders. In a year where a special dividend is paid, the core dividend may increase at a rate lower than earnings generally in the knowledge that overall dividends are at or above the level of earnings growth.
Foreign exchange exposure will be hedged as required across the group to protect against downside risk on known currency flows and is controlled through a treasury committee. Group treasury activities will not be measured as a profit centre.
Sales and Marketing
We will continue to identify new customers, markets and products and further develop our organisation to support our growth targets.
We will continue to add sales and service centres worldwide where we believe our coverage could be enhanced. This may be in a new or existing country or market. Development of our people both technically and commercially remains a priority in providing superior customer service.
We will look to strengthen our product offering in each location and make sure that we are selling all of our current products where they are suitable for use. Our aim is to provide a complete service to new and existing customers and we will continue to develop innovative and flexible solutions.
Product Development
By leveraging Group technology and expertise we provide our customers with innovative and competitive solutions to their needs.
This is supported by a continuous search for new technology to maintain our market leadership.
Manufacturing
We will maintain our policy of outsourcing component manufacture wherever justifiable. Where business needs necessitate a local assembly plant we will establish one or acquire a company that provides the infrastructure required. We will always aim to benefit from our extensive supply chain.
Facilities management
We will continue to invest in our infrastructure to cope with the increased levels of demand and take advantage of the opportunities in the markets that we serve. Our facilities will provide a safe working environment for our staff.
We will continue to lease facilities as a preference in line with our asset light business model and only purchase a facility as part of an acquisition or if there are specific operational reasons to do so.
Procurement
We will continue to manage our cost base and mitigate labour and raw material cost increases by value engineering and sourcing initiatives. We will use Inter divisional support and procurement integration to benefit all areas of the business.
Acquisition of Companies and Businesses
The Group continually looks for opportunities to grow through acquisition as well as organically. Potential acquisition targets will be in the field of flow control and should satisfy at least one of the following three criteria.
- Provide a product that we currently do not have.
- Provide or enhance our position in a geographic market.
- Provide or enhance our position in an end user market.
Each acquisition will be assessed on its own merit and on the basis of maximising shareholder value. The overall effect of the acquisition on the Group, including the financial strategy will also be considered. Whilst all acquired businesses will have particular attractions to the Group and may not initially achieve the financial returns of existing Group companies, the overall Group return on sales target will aim to be maintained.
Our People
We recognise that to implement our business strategy we need highly trained and motivated staff. We will invest in our people and encourage internal development and operate a recruitment policy that supports our future growth plans.
Rotork aims to be a ‘great place to work' with strong core values in all of our business units and clear adherence to our published group ethics policies. Our entrepreneurial, open culture is an enabler to ‘getting the job done'.
Information Systems
Rotork will develop and implement global systems and processes to support the global growth of the organisation.
Legal, Governance and Compliance
Our Group will at all times be well governed and our subsidiary companies will comply with company law in all the countries in which we operate.
Corporate Social Responsibility
We will ensure high standards of CSR are embedded within our working practices and regularly report our progress to stakeholders.
Risk Management
Review by division main risks and provide suitable mitigation at division and group levels.
