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.
Ambitious growth targets
Targeting mid to high single-digit revenue growth over time
We are the global leader in highly attractive growth markets that have high barriers to entry and are relatively concentrated. Our served markets are benefiting from the mega trends of automation, electrification and digitalisation that are transforming industry. We aim to outgrow them through the implementation of our Growth+ strategy – focusing on Target Segments and delivering Customer Value and Innovative Products & Services.
Sales growth in 2022 (OCC)
+8.4%
Strong operating leverage
Higher sales boost profits significantly
Our business has a high gross margin and relatively low variable costs meaning high operating leverage – higher sales boost profits significantly and quickly. As well as having high margins and relatively low fixed assets, the business has a comparatively low level of net working capital, meaning that revenue growth need not absorb significant cash.
Gross margin
45.5%
Net Working Capital/sales
28.7%
Return on Capital Employed
31.3%
20-year basic EPS growth CAGR
+8.8%
Leading returns
Market leading returns with room for upside
Our adjusted operating profit margin was 22.3% in 2022, amongst the highest in the industrial goods & services sector. We target a return to the mid-20s over time through operational gearing, continuous improvement and sourcing and supply chain initiatives. We have an asset-light business model and our return on capital employed (ROCE), at 31.3% in 2022, is ahead of our peers.
Adjusted operating profit margin
22.3%
Highly cash generative
Balance sheet strength
Our group is highly cash generative – cash conversion averaged 111% over the last five years. This cash flow enables us to fund organic investments, pay a progressive annual dividend and gives us the flexibility to make strategic acquisitions. The lower cash conversion of 76% in 2022 was in part a timing issue, reflecting a high level of sales in the final weeks of the year, and tactical inventory build.
20-year dividend growth CAGR
+8.2%
Disciplined capital allocation
A clear capital allocation framework
Our capital allocation priorities are: i) organic investment (new product development, innovation, new markets, internal systems); ii) our progressive dividend policy; iii) strategic investments; followed by, in the event in the future we determine we have excess cash, iv) return of cash.
Net cash balance
£106m
Committed to sustainability
Enabling a sustainable future
Our sustainability framework is core to everything we do and embedded in the Growth+ strategy through our ‘Enabling a Sustainable Future’ initiative. Every day we work to help customers better their own environmental performance, including through our ‘eco-transition’ portfolio of products and services, whilst at the same time working to improve our own. Our sustainability initiatives are aligned with our management incentives.
S&P Global CSA
Top 5%
Ranked in the top 5% in our industry globally