Financial Highlights

For the year ended 30 September 2020

Resilient performance despite challenging conditions

Revenue
£538.4m
2019: £544.7m -1%
Acquisition spend3
£14.9m
2019: £78.3m
Adjusted operating profit1
£87.1m
2019: £97.2m -10%
Statutory operating profit
£69.8m
2019: £84.1m -17%
Free cash flow2
£72.5m
2019: £56.5m +28%
Adjusted operating margin1
16.2%
2019: 17.8% -160bps
ROATCE
19.1%
2019: 22.9%
Total dividend per share
30.0p
2019: 29.0p +3%
  1. Before acquisition related charges and fair value remeasurements.
  2. Before cash payments on acquisitions and dividends.
  3. In addition, Windy City Wire was acquired on 16 October 2020 for initial consideration of $450m.

Chairman's Statement

2020 demonstrated the power of our value-add distribution model John NicholasChairman
  1. Ten-year compound.
Chairman's Statement (PDF, 0.73MB)

Chief Executive's Review

Strong execution against strategic priorities Johnny Thomson Chief Executive Officer

Sector review

Complementing our existing product range

Group Revenue

45%

Employees

1,019

The Seals Sector businesses supply a range of seals, gaskets, filters, cylinders, components and kits used in heavy mobile machinery and specialised industrial equipment.

We have opened a new facility in Louisville, Kentucky, that will serve our North American Aftermarket businesses. This facility puts us at the cutting edge of distribution and will use advanced automation and robots to pick and manage orders. This system will increase the speed and accuracy of our order fulfilment and offer greater storage density and flexibility, as a result we will be more effective, efficient and scalable.

The facility’s location is also strategic. It is next to a major UPS hub, which gives us access to more of industrial America and allows us to offer later order times and guaranteed next-day delivery to more of the US. As a result, we are more accessible and cost-effective to customers on the West Coast, the mid-West and the North East, which gives us excellent scope for market share gains.

Sector Performance

Our North American Aftermarket businesses reported flat underlying revenues despite Covid-19 – a strong performance thanks to scale, low transaction values, a diverse customer base, and business concentration in the South Eastern States, which remained open through the pandemic.

After a few years of challenging conditions in our US Industrial OEM businesses, the new management team has started to reap the rewards of their efforts and performance has been improving steadily through Q4 and into the new year.

In MRO, VSP had a fantastic first full year with the Group, with double-digit growth and +400bps of margin improvement in the 9 months before Covid-19. Although growth was impacted by Covid-19, their contribution has been significant and we remain excited about VSP’s future in the Group.

International Seals performed very well, supported by the diversity of its end segments. Business into medical, pharma, and renewable energies offset the influence of Covid-19 in more industrial end segments.

Complementing our existing product range

Group Revenue

29%

Employees

536

The Controls Sector businesses supply specialised wiring, cable, connectors, fasteners and control devices used in a range of technically demanding applications.

Focus our growth

We completed the acquisition of Windy City Wire on 16 October 2020. Windy City Wire is a value-add distributor of premium, low-voltage wire and cable based near Chicago.

Windy City Wire has built a truly scalable platform through 19 distribution warehouses across the country, excellent technology, and some supply chain control. This has allowed the business to deliver double-digit revenue growth over the last 10 years and uninterrupted profit growth over the last 25 years.

This acquisition is a significant, strategic step for the Group and allows us to build a US position for our Controls Sector and will be accretive to both our growth and our margins in the future.

Sector Performance

The Interconnect businesses performed very well in the first half of the year but were impacted by Covid-19 in the second half. We restructured some businesses to position them for future growth and integrated two of our cabling and wiring businesses to form the Shoal Group – a bigger business with scope to invest in growth across Europe.

The Specialty Fasteners businesses focused on diversifying revenue streams to ensure growth beyond end segment exposures. Civil Aerospace performed reasonably in the circumstances and we continue to trade well in the US and Asia, and take market share in the challenging European environment.

The Fluid Controls business was impacted by Covid-19 lockdowns in the hospitality industry but was able to leverage its exposure to the refrigeration market, particularly OEMs producing refrigeration elements for food delivery vehicles.

Controls is exposed to a diverse range of end segments. As a result, underlying revenues in the Sector have been recovering well and we expect this to continue during 2021.

Complementing our existing product range

Group Revenue

26%

Employees

425

The Life Sciences Sector businesses supply a range of clinical diagnostics, instrumentation, consumables and related services to the Healthcare and Environmental industries.

Product Pipeline

We have historically built successful businesses in key growth areas of healthcare spend, such as specialty surgery and diagnostics, which offer a good growth base rate.

Product pipeline management is essential to sustaining that growth and we must continually bring new suppliers and products to market. Our Life Sciences business have worked very hard to develop a broad range of suppliers and products in the small to medium size category, diversifying our revenues and securing future revenue streams.

In Healthcare, we have expanded our horizons into new categories in urology, bariatrics, and gynaecology. Product pipeline management is an area of management focus that will sustain strong levels of growth in the future.

Sector Performance

The Healthcare businesses experienced a sharp fall in activity during the early months of the pandemic. However, revenues recovered quickly once lockdown restrictions eased and our Healthcare businesses saw a return to pre-Covid-19 levels of surgery and diagnostics in their main markets of Australia and Canada.

The recovery, which was due to a back-log of elective surgeries and non-critical and outpatient diagnostic procedures, is expected to continue into FY2021. In diagnostics, we are well positioned to take advantage of structural increases in research and demand for testing as a result of Covid-19.

Our Environmental Environmental businesses saw a slight decrease of 2% in underlying and reported revenues, due to the repercussions of Covid-19 travel restrictions on international business.

Sector Review (PDF, 1.33MB)

Corporate Responsibility

Our approach is to deliver value responsibly through our strong business model and execution of strategy by considering what “Makes a Difference.”
Delivering Value Responsibly
Corporate Responsibility (PDF, 0.14MB)