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.
Enabling a sustainable future
Our businesses are well positioned to enable the low-carbon global economy with products and services used to electrify flow control processes in hydrogen, carbon capture and storage and battery production. We have a major part to play in the energy transition too. Our ‘footprint’ might be small, but we recognise our opportunity to reduce value chain emissions, including in our ‘handprint’. We have set emissions targets to deliver net-zero by 2045. 8.2% 20-year basic EPS growth (CAGR).
Rotork is a highly cash generative group
Rotork’s businesses are highly cash generative - cash conversion averaged 108% 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 2021 we had a net cash balance of £114.1m. 8.3% 20-year dividend growth (CAGR).
Market leading returns with room for upside
Our adjusted operating profit margin was 22.5% in 2021, amongst the highest in the industrial goods & services sector. We target a return to the mid-20s over time through continuous improvement, sourcing and supply chain initiatives and footprint optimisation. Rotork’s is an asset light business and our return on capital employed (ROCE), at 30.1% in 2021, is ahead of peers.
We have a clear capital allocation framework
Our capital allocation priorities are: i) organic development (new markets, innovation and new product development, IT upgrades); ii) our progressive dividend policy; and iii) strategic investments followed by, in the event in the future we determine we have excess cash, iv) return of cash. Any return of cash would currently be executed through a share buyback. Net cash balance of £114m.
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.
* 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.