Contents
Strategic report
Rotork is a market-leading global provider of mission-critical intelligent flow control solutions for oil & gas, water and wastewater, power, chemical process and industrial applications. Rotork helps customers around the world to improve efficiency, reduce emissions, minimise their environmental impact and assure safety. The Group employs about 3,300 people, has assembly facilities in 17 locations and serves 170 countries through a global service network.
Corporate governance
Financial statements
1 | Highlights of 2023 | 22 | Customer value | 98 | Chair's governance overview | 159 | Independent auditor's report |
2 | What we do | 24 | Innovative products & services | 100 | Governance highlights | 167 | Consolidated income statement |
3 | At a glance | 26 | Divisional review | 102 | Board of directors | Consolidated statement of | |
4 | Business model | 30 | Sustainability review | 104 | Corporate governance report | comprehensive income | |
6 | Our market dynamics | 64 | Financial review | 118 | ESG Committee report | 168 | Consolidated balance sheet |
8 | Chair's statement | 68 | Risk management | 121 | Audit Committee report | 169 | Consolidated statement of changes in equity |
10 | Key performance indicators | 73 | Principal risks and uncertainties | 126 | Nomination Committee report | 171 | Consolidated statement of cash flows |
12 | Chief Executive Officer's statement | 80 | Viability statement | 129 | Directors' Remuneration report | 173 | Notes to the Group financial statements |
16 | Investment case | 82 | Task Force on Climate-related | 154 | Directors' report | 200 | Company balance sheet |
17 | Strategy introduction | Financial Disclosures | 157 | Statement of directors' responsibilities | Company statement of changes in equity | ||
18 | Target segments | 93 | Non-financial and sustainability | 201 | Notes to the Company financial statements | ||
information statement | 206 | Ten year trading history | |||||
207 | Share register information | ||||||
208 | Corporate directory |
Highlights of 2023
Strong delivery of Growth+ strategy
Non-financial highlights
ESG scores
• Order intake was 7.8% higher year-on-year on an OCC basis with orders ahead at all divisions
• Revenue increased 12.0% year-on-year despite a significant foreign exchange headwind which strengthened through the second half. On an OCC basis sales grew 13.6% year-on-year
• Adjusted operating margins were 60bps higher year-on-year at 22.9%
Financial highlights
Orders (£m)
23 724
22 682
21 614
Revenues (£m)
23
22 642
21 569
+7.8%
Orders were 7.8% higher year-on-year on an organic constant currency (OCC) basis
+13.6%
Revenues were 13.6% ahead year-on-year (OCC)
Adjusted EPS (p)
719
• We incorporated an emissions reduction target linked to our SBTi targets into our long term incentive plan
• Our total scope 1 and market based scope 2 greenhouse gas emissions reduced by 11%
• The Rotork IQTF electric actuator was established as the leading actuator for upstream oil & gas choke valve applications
• Eco-transition portfolio sales grew faster than the Group overall
Adjusted operating profit (£m) and margin (%)
23 22 21
12.7
10.8
14.6p
Basic EPS was 13.2p
14.6
23 22 21
164 (22.9%)
143 (22.3%)
128 (22.5%)
£164m
Reported operating profit was £149m
Adjusted figures and organic constant currency ('OCC') figures are alternative performance measures and are used consistently throughout these results. They are defined in full and reconciled to the statutory measures in note 2 of the Financial Statements.
Profit before tax (£m)
23 22 21
106
£151m
• MSCI ESG: AAA
• Sustainalytics: ESG Industry Top Rated
• S&P CSA: Ranked in the top 10% globally in the Machinery and Electrical Equipment industry
124
Profit before tax was 21% higher year-on-year
Dividend per share (p)
151
23 7.2
22 6.7
21 6.4
7.2p
Annual dividend increased by 7.5% year-on-year
Rotork Annual Report 2023
What we do
Global presence
Offices
Rotork is a market-leading global provider of mission-critical intelligent flow control solutions
Assembly facilities
Americas
Employees 534 Offices 11 Assembly facilities 4 Revenue
£201m
Divisional split
EMEA
Employees 1,773 Offices 24 Assembly facilities 9 Revenue
£280m
Oil & Gas
The leading supplier of electric critical duty actuators and related services to the global Oil & Gas sector with the largest installed base and site services team. Our products and services are used by customers across their upstream, midstream and downstream segments to automate and electrify processes, assure safety and eliminate fugitive emissions.
Read more P.28
Revenue £328m +16%
Adjusted operating margin
25.5%
Chemical, Process & Industrial
A supplier of specialist actuators and instruments for niche applications in the broad chemical, process industry and industrial sectors. The division identifies and solves critical challenges for customers across
Adjusted operating margin reliability, efficiency and safety 24.0%
a broad range of end markets including speciality and other chemicals, metals and mining, critical HVAC, pharmaceutical, steel and cement.
Read more P.26
Revenue £214m +8%
Water & Power
Supplier of premium actuators, predominantly electric, and gearboxes for applications in the water and power generation sectors. Our products and services are used to solve water challenges and in climate change
Adjusted operating margin management, quality and scarcity 26.2%
adaptation and alternative energy, as well as to automate, electrify and digitalise our customers' processes.
Read more P.29
Revenue £177m +11%
At a glance
What makes Rotork a market leader?
Rotork's market position is driven by our technical capabilities, the quality and reliability of our products and services and our reputation in the market. Our products must satisfy challenging and complex certification requirements which differ from industry to industry and geography to geography, meaning barriers to entry are relatively high
Safety, productivity and efficiency
Extraction
Our products are used in the extraction of high value materials such as oil & gas, metals and minerals
Processing
They are used to automate material processing plants, such as refineries and chemical facilities
Transportation
Rotork products provide critical safety functions during the transportation of fluids e.g. via pipelines
Storage
Controlling the flow of fluids in and out of storage tanks and shutting them down in an emergency
Offshore wind connections
IQ3 Pro electric actuators are used for critical control duties on high-voltage direct current transformer platforms in the UK's North Sea.
Utilisation
Our products are regularly used in the utilisation of fluids - for example producing hydrogen from water
Heating and cooling
They are used in severe service HVAC applications such as in semiconductor fabrication plants and data centres
Recovery
Rotork products have an important role to play in the circular economy, e.g. carbon capture and storage
Recycling
They often play a key role in recycling processes, for example of reclaimed and effluent water
Business model
Rotork is a market-leading global provider of mission-critical intelligent flow control solutions
The customer is at the centre of everything we do, from first enquiry to installation to aftersales care
1
Identify our customers' automation challenges Our customers rely upon Rotork for innovative solutions to safely control the flow of their liquids, gases and powders. We proactively seek out their product and service needs and develop solutions that offer improved efficiency, assured safety and environmental protection and are tailored to their precise requirements.
2
Innovation and development of products and services
The innovative research and development activities across Rotork ensure cutting-edge products are available for every application across the markets we serve. Our new product development is particularly focused on products that help improve our customers' efficiency and environmental performance.
5
Lifecycle services & support
We offer dedicated, expert service and support from initial inquiry, to product installation, and through Rotork Site Services, long-term aftersales care including planned and predictive maintenance and end-of-life decommissioning.
We are a global business with product manufacturing sites located around the world.
We have been widely acknowledged as the market leader in flow control for over 60 years, recognised for our comprehensive, high-quality range of products and solutions.
Our products are available with extensive certifications, including for use in hazardous areas and safety applications, and as explosion proof.
World class product manufacturingIndustry leading application engineering
Our factories operate to the highest international standards and supply our quality products to our customers on time and at short notice if required.
3
Business model continued
The value we created in 2023
Our offering
We launched 5 new products and services in 2023. Sustainability is a high priority for our teams working in innovation and product development.
5
no. of product launches
Our routes to market
Employees
We offer our employees a safe working environment, fair pay, terms and conditions, equality and fairness in the workplace and engagement on important issues.
£187m
wages, salaries etc. paid
Strategic report | |
Suppliers | Communities |
We have a sizeable supply | We endeavour to make a |
chain. Social, environmental | positive social impact by |
and ethical considerations | being a good corporate |
are embedded into | citizen. We are pleased |
our Global Supplier | to pay taxes and contribute |
Excellence programme. | to society in the countries |
in which we operate. | |
£364m | £33m |
spend with | corporation tax |
external suppliers | cash paid |
Specification approval | |
Key to direct or indirect sales |
The environment
We delivered a good set of results across our key environmental metrics in 2023, including a 11% reduction in total scope 1 and market-based scope 2 tCO2e emissions.
-11%
CO2 emissions, YoY
Shareholders
We have a strong track record of creating shareholder value and have increased our ordinary dividend each year for more than 20 years.
£59m
dividends paid
Own sales Our highly experienced sales and application engineering teams
Channel partners
Industrial distributors and manufacturer's agents
Rotork Site Services
Our market leading global aftersales and service team
End users
Specification approval
Understanding customer needs and confirming our products meet them
Rotork Site Services
OEMs Customers who incorporate Rotork components into their products and systems
20%
EPCs, contractors and integrators Third-party infrastructure construction and speciality automation partners
Rotork Annual Report 2023
Our market dynamics
Global megatrends driving our top line growth
Our growth is driven by significant long-term megatrends, from automation to new energies, as well as our own self-help initiatives
Automation
Automation is the introduction of automatic equipment into processes to improve reliability, safety and efficiency. We benefit from this powerful trend as our end users upgrade from manual to actuated valves
Electrification
Electrification is the conversion of a machine or system to the use of electrical power. Electrification is occurring across many areas of industry, including flow control, driven by emissions reduction and improved control
Digitalisation
Digitalisation is the use of digital technologies to change a business model and provide new value to customers. Digitalisation is a major theme in the markets we serve - examples include condition monitoring and remote diagnostics
Challenge | Opportunity | Challenge | Opportunity | Challenge | Opportunity | Challenge | Opportunity |
>10% | >90% | +7% | >50% | >23% | iAM | >50% | £100m |
The global industrial | Over 90% of Rotork | In the IEA's Net Zero | Electric powered valve | The global Industrial | Rotork's Intelligent | Global LNG demand is | LNG is a Rotork |
automation and control | sales are into the | emissions by 2050 | actuators represented | Internet of Things | Asset Management | estimated to rise by | target segment and |
systems market is | industrial automation | scenario the electricity | over 50% of Rotork | ("IIoT") market is | ("iAM") system | >50% by 2040, | we estimate the |
forecast to grow at | and control | share of total global | sales in 2023 | forecast to grow at | analyses actuator | driven by industrial | addressable market |
10.5% p.a. from 2023 | systems market | final energy | 23.2% p.a. from 2023 | performance data and | coal-to-gas switching | could grow to £100m | |
to 2030 (CAGR) | consumption rises to | to 2030 (CAGR) | uses this to provide | and economic growth | in 3-4 years time | ||
27% in 2030 from 20% | users with value | ||||||
(Source: Grand | (Source: Grand | (Source: Shell LNG | |||||
in 2021 | added services | ||||||
View Research) | View Research) | outlook 2024) | |||||
Rotork Annual Report 2023 |
Energy security
Energy security has risen up the global priority list following Russia's invasion of Ukraine and has triggered an acceleration in infrastructure spend including LNG capacity expansions, storage investment and life extensions
Our market dynamics continued
Global megatrends driving our top line growth continued
Water scarcity
Water scarcity is resulting in greater investment in leak detection and monitoring as well as water re-use and recycling. Rotork is well placed to benefit, for example through the recently launched CK range of waterproof actuators
Water quality
Water quality challenges are creating opportunities globally, for example in network infrastructure modernisation, water treatment and desalination.
The USA's Inflation Reduction Act included significant funding for water quality
New energies
New energies have a major part to play in the energy transition and we see exciting opportunities in LNG as a bridging fuel as well as in biofuels, carbon capture utilisation and storage, green and blue hydrogen and concentrated solar
Challenge | Opportunity | Challenge | Opportunity | Challenge | Opportunity | Challenge | Opportunity |
50l | IQ3 | >8% | £150m | >23% | CPI | 6% | CH4 |
Water leakage across | Intelligent actuators | The desalination | Desalination is a | Global energy | Mining, chemical and | Fugitive methane | To eliminate or |
England and Wales in | with remote operation | equipment market | Rotork targets segment | storage additions are | HVAC markets within | emissions from | reduce emissions the |
2020-21 was greater | can be used to manage | is forecast to grow | and we estimate | forecast to grow at | the battery value chain | energy production | oil and gas sector is |
than 50l of water per | network pressure | at 8.6% CAGR | the serviceable | 23% p.a from 2022 | are target segments of | are estimated to | transitioning to electric |
person per day | thereby reducing | over 2023-33 | addressable market at | to 2030 (CAGR) | the Rotork CPI division | contribute ~6% of | powered from |
any leak rate | approximately £150m | global GHG emissions | pneumatic powered | ||||
valve actuators | |||||||
(Source: Ofwat) | (Source: Future | (Source: BloombergNEF) | (Source: Our World in Data) | ||||
Market Insights) | |||||||
rotork.com | Rotork Annual Report 2023 |
Sustainability
Sustainability is the societal goal of our time - people safely co-existing over the long term. Sustainability is a major opportunity for us, including through methane emissions and flaring elimination and low- and no-carbon fuels
Chair's statement
2023 was the first full year of our Growth+ strategy and I'm pleased to report we have made significant progress. The market response to our Target Segment strategic pillar has been very encouraging
Dorothy Thompson, CBE Chair
Chair's statement 2023 was the first full year of our Growth+ strategy and my first year as Rotork's Chair. We launched the strategy in 2022, designed to deliver profitable growth by targeting the right market segments, providing value to our customers, innovating our products and services, and enabling a sustainable future.
Solid progress has been made in delivering the strategy. From 2021 to 2023, we delivered revenue growth of 26% and EBITA growth of 29%. The market response to our Target Segment strategic pillar has been very encouraging. We have made significant progress on Customer Value, increasing our customer focus through investing in people and rolling out new systems and processes.
In 2023, our Chief Technology Officer implemented a full review of our process for innovation of products and services, resulting in a more agile approach focused on customer needs and delivering sustainable products. During the year, we delivered important product and service launches, including the latest release electric actuator, the IQ3 Pro, and enhanced our Intelligent Asset Management digital offerings. Under our Innovation pillar, the acquisition of Hanbay has expanded our technology capabilities and strengthened our decarbonisation product suite.
Energy transition & sustainability Enabling the energy transition and delivering sustainable products and operations is at the heart of our Growth+ strategy.
During 2023, we made significant progress in the North American upstream electrification segment, with the IQTF range being established as the leading electric actuator for choke valve wellhead automation. Replacing a process gas-powered pneumatic actuator with an electric IQTF actuator eliminates any methane emissions from operating the valve.
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Rotork plc published this content on 26 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 14:12:36 UTC.