Investment Proposition

Rotork Investment Proposition

We believe that the combination of our Purpose, our strategy, our culture and our Values, our business model and our Growth Acceleration Programme differentiates us and will drive superior value for our shareholders.

Exciting growth prospects

Rotork has a long history of growth. External drivers include global GDP growth, automation, electrification, digitalisation, energy efficiency and emissions reduction. Our ambitious Growth Acceleration Programme targets additional growth through being easier to work with, realigning our salesforce, accelerated new product development and investment in Asia Pacific and in Site Services. Additionally, we see significant opportunity for value-enhancing bolt-on acquisitions. 10.1% 20-year basic EPS growth (CAGR).

Over 50-year dividend track record

We have a strong dividend track record, increasing our annual ordinary dividend payment to shareholders every year for 20 years, and paying extra or special dividends on six occasions. The Board proposes a 1.6% increase in the dividend for the full year 2020. 8.6% 20-year dividend growth (CAGR).

Strong cash generation and balance sheet

Rotork’s businesses are extremely cash generative. Cash conversion averaged 122% over the last five years. This cashflow enables us to fund organic investments and pay a progressive annual dividend. Our policy is to maintain a strong balance sheet, giving us the flexibility to invest and to make acquisitions. At the end of 2020 we had a net cash balance of £178.1m.

High returns with room for upside

Our adjusted operating profit margin was 23.6% in 2020, up from 22.6% in 2019, amongst the highest in the industrial goods sector. We target a further increase in margin to the mid-20s over time. Our Return on Capital Employed (ROCE), at 31.9% in 2020, is also well above the average amongst our peers.

Strong values, performance culture

We are respected and admired for our products, people and performance. Rotork has long had a widely-admired culture with particular strength in sales, operations, Site Services and safety. Our Purpose, Values and behaviours are driving a shift towards an even higher performance culture that will enable all employees to achieve their maximum potential. Our success flows from our commitment to engineering excellence, and that’s what we will always pursue, safely and sustainably. We are committed to improving our customers’, and our own, environmental performance.

As per Report & Accounts 2020

* We define cash conversion as cash flow from operating activities before tax outflows, restructuring costs and the pension charge to cash adjustment as a percentage of adjusted operating profits.