AGM 2020

Apr 24, 2020

Good afternoon, everybody. I hope you can hear me. My name is Martin Lamb, chairman of Brotock. I confirmed that the dial in facility is now open, and therefore, shareholders dialing in should be able to listen to today's proceedings. It is now 12 pm, and I would like to thank you of participating in the 2020 Annual General Meeting of Rotor PLC. In what I think we would all agree are extraordinary times requiring exceptional measures. As such, and before we begin, I wanted to provide some background as to the unusual arrangements we have put in place for today's meeting. You will all be aware as referenced and set out in the notice of meeting, The UK government issued compulsory measures, restricting social gatherings in view of the ongoing COVID 19 pandemic. So called stay at home measures prohibiting among other things public gatherings of more than two people. Accordingly, attendance of the annual general meeting by a shareholder of the company, other than one specifically required to form the quorum for that meet is therefore prohibited under those stay at home measures. As a consequence, the board has put in place a listen only dial in facility so that shareholders can listen to the proceedings of the annual general meeting. Shareholders dialing in will not be counted as being present at that meeting and therefore will not form part of the quorum be able to speak or ask questions. Accordingly, in the unfortunate circumstances, As any shareholder experiences any technical issues with the Darling facility, this will not affect the business of the annual general meeting today. I apologize for the inconvenience caused by these changes and arrangements, but hope that the darling enables as many shareholders as possible to that the Darling facility does not allow shareholders to ask questions, but I confirmed that shareholders were given the opportunity to send questions to a designated email address, the details of which were published in the notice of meeting and 2 subsequent regulatory news announcements, but no questions were received. You will have noted from my letter in closing the notice of meeting that voting at today's meeting on the resolutions contained in the notice of meeting will be conducted by means of a poll in line with best corporate governance practice. Myself, as the chairman, may, in accordance with the company's articles of association, adjourn the meeting and or propose any procedural or amendment resolutions to be voted on by way of a show of hands. In accordance with the company's articles of association with myself and Jonathan Davis, the group finance director presence, I am advised that We will now move on to the business of the meeting, which was set out in the notice of meeting dated the 31st March 2020. Before we commence the voting, our chief executive officer, Kevin Hostettler, will buy our audio link present a summary of the business highlights for 2019 and provide an update on how the company is funding to the challenges presented by COVID 19. We will also publish Kevin's statement on the company's website. Immediately after the conclusion of the annual general meeting. Kevin, I will now hand over to you if I can. Thank you, Martin. Good day, everyone, and thank you for being like me, a shareholder in Rotor. My name is Kevin Hofdether, and I'm Rotorke's group chief executive. I'm very disappointed that it's not possible to present to you live at our annual general meeting this year. The COVID 19 situation is without precedent and has caused significant heartache and disruption across the world. Please be assured that our priority is the health and safety of our colleagues and their families and all other stakeholders. We have taken decisive actions to manage the situation, whilst following instructions from government and health authorities. Unfortunately, this includes the decision to ask the shareholders not attend the AGM in person. Off taking tough decisions such as this one, I should remind you that at rotor, we are absolutely committed to keeping the world flowing for future generations through providing our essential products and services. I would like to recognize the extraordinary fortitude and determination of all of our people in recent months, be they in our factories, in site services, in our offices, or currently working from home. I'm also really proud of the efforts our people are making to support our local communities. An example of this recognizing the shortage of protective equipment for doctors and nurses, our UK team designed a fantastic face shield. We are now manufacturing these shields in numbers of plants around the world and distributing to local hospitals. This is only one of many examples. Please be assured we are also doing all we can to engage with, support, and help the Rotor team worldwide. As well as implementing the strictest safety rules at all our sites, we have increased our group wide communications. Our weekly well-being tips have been well received, and we've had a good take up of Desk yoga. Let me begin with highlights from 2019. Then I'll briefly discuss the progress we are making on our growth acceleration program, provide an update on COVID 19, and I'll conclude with the few words I can regarding our outlook for 2020. My second year at Rotorque has been one of significant progress despite 2019 seeing a more challenging than expected external environment. Global economic growth lost momentum through the year and 2019 is now expected to have seen GDP growth of around 2.5% versus earlier forecast of above 3%. This is the slowest global growth rate since the financial crisis of 2008. The combination of this challenging macroeconomic environment a demanding comparison period, and absent orders and revenues from sanctioned countries meant revenue growth grew dilutive. We are pleased however to report full year order intake grew 1.5%. Despite our sales declining, We continued to execute as evidenced by a 160 basis point improvement in operating margins now up to 22.6%. A 260 basis point increase in return on capital employed to almost 32%. Cash conversion of 131 percent and a strong balance sheet at period end, including net cash of £106,000,000. Moving on to our growth acceleration program. I'm pleased to report that we have laid the foundation that drives our future growth and have successfully initiated our operational transformation. Our endeavors in becoming easier to do business with, reorienting our customer facing teams and accelerating our innovation and new product development are taking shape. We continue to make progress in lean manufacturing, globalizing our supply chain, and business simplification in terms of both facilities and product line rationalizations. These efforts, along with our keen focus on productivity, are yielding tangible benefits and increasing our cyclical resilience. We strengthened our leadership team and created our 1 road torque movement emphasizing bringing our company together under our revised purpose of keeping the world flowing for future generations. Our next generation IT platform, which yields additional future benefits, is well underway with elements having already been deployed this quarter ahead of the fuller implementation in 2021. Our investments in our Roadtorque Site Services business are bearing fruit and we were pleased to disclose recently that Rotor Site Services grew in 2019 to achieve 20% of group revenues. Moving to our outlook for 2020. When we reported our results on March 3rd, the impacts of COVID 19 were only just starting to be felt. At the time, we said that absent COVID 19, we were planning for modest sales growth and margin progress in 2020, albeit with margin progress more gradual us to the threat posed by COVID 19, which in a very short period of time had made the world considerably less certain. We reported that our ability to deliver products and services to our customers had remained good considering the demanding environments, However, we had started to experience some disruption. This was due to our actions to protect our people as well as supply chain and logistics challenges. We had to temporarily close certain facilities. And whilst we plan to remain open, we will not hesitate to close sites if required or if we believe there is risk to our colleagues. COVID 19 and the consequential drop in energy demand and global oil prices is of course impacting our customers. In several of our end markets, customers have announced high level plans to revisit their capital and operational expenditure commitments in light of COVID 19 uncertainty and the near term Given the uncertain outlook we currently face, we are taking steps to reduce the impact on our business. Options taken across the group include a recruitment freeze, postpone salary increases, restricting discretionary spending, and institution of greater flexibility in the workforce. Given these unprecedented times and our increasing awareness of the difficulties some of our global colleagues may face in light of the COVID 19 pandemic. Roadtorque has initiated the formation of an employee benevolent fund to provide short term supplemental emergency support to those past and present associates or eligible dependents. Facing serious financial hardship and who cannot afford housing, utilities, and other basic expenses as a result of certain unforeseen and unpredictable circumstances or personal tragedies. Our ambitious growth acceleration program continues to drive cost benefits from procurement, site improvement, continuous improvement, lean, and organizational change. We are reviewing whether there are cost benefits we could bring forward or investments we could delay. In order to ensure that Rochefort can continue to act from a position of strength and recognizing the exceptional set of circumstances and the mitigating actions the business is taking. The board has decided it is not it is appropriate to withdraw the recommendation to pay the final dividend. We will reassess this position later in the calendar year when the situation is clearer We understand the importance is that Roadtorque's financial position is strong. The group had circa £110,000,000 of net cash as of the 29th March 2020. We remain in advanced discussions with the group's banks to extend our funding arrangements beyond their current term. Additionally, our application to the UK government's CCFF scheme has been conditionally approved. I would like to thank our lending partners for their continued support. As regards to guidance given the unprecedented level of uncertainty, it is not possible for the group to provide an outlook I very much hope you and your family and friends stay well, and I sincerely hope we can meet in person next year. Thank you, Kevin. I shall now turn to the formal business of the meeting. I am pleased to report that we have received a substantial number of proxies representing approximately 82.5% of our shares. The results of each vote for against and votes withheld would normally be shown on a screen at the annual general meeting immediately after each resolution is voted on. And therefore, the result of the vote on each resolution is not typically read out of the meeting that is included in the final results announcement released to the London Stock Exchange through our regulatory information service as soon as possible following the meeting. These are, of course, anything but normal circumstances and shareholders only have a dial in listen only facility. For these reasons, shareholders were requested to appoint a proxy and provide voting instructions in advance of the annual general meeting. A substantial number of shareholders did this and appointed myself as chair of the meeting as their proxy. I will table the resolutions to the meeting and then pause for poll cards to be completed. I will, of course, complete the poll card for all those shareholders who appointed me as their proxy in accordance with the voting instructions received. Please bear with me during these pauses in our proceedings for voting. We will endeavor to keep these to a minimum and I will provide some feedback Again, as referenced earlier, the full details of the votes will be released to the London Stock Exchange following the conclusion of this meeting. Finally, I will close the meeting immediately following the vote on the last resolution. The meeting has been called to deal with 19 resolutions set out in the notice of meeting. Resolution 15 to 19 are special resolutions and must be passed by a majority of not less than 75% of votes cast. All other resolutions are ordinary resolutions requiring a simple majority in order to be passed. Moving to the resolution set out in the notice of meeting, I will, where I think it is appropriate to do so, group the resolutions together for the purposes of voting. I will now propose Resolution 1 relating to the annual report and accounts to the meeting. Please complete your poll cards now. Thank you. Voting is now closed and I declare the resolution carried by the necessary majority with a vote in favor of well over 90%. I will now propose Resolution 2 relating to the approval of the directed remuneration report to the meeting. Please complete your poll cards now. Thank you. Voting is now closed and I declare the resolution carried by the necessary majority with a vote in favor of well over 90%. I will now propose Resolution III relating to the approval of the director's remuneration to the meeting. Please complete your poll cards now. Thank you. Voting is now closed and I declare the resolution carried by the necessary majority with a vote in favor of well over 90%. I now put resolutions 4 to 10 to the meeting, being Resolution 4 relating to the re election of Anne Christian Anderson. Resolution 5 relating to the reelection of Lucinda Bell, Resolution 6 relating to the reelection of Tim Cobble, Resolution 7 relating to the re election of Jonathan Davis, Resolution 8 relating to the re election of Peter Dillon, Resolution 9 relating to the re election of Kevin Hostigler and Resolution 10 relating to the recollection of Sally James. Please complete your poll card for each of the above resolutions now. Thank you. Voting is now closed and I declare each of the resolutions carried by the necessary majority. With a vote in favor of each resolution of over 90%. As Resolution 11 concerns my own reelection, I will ask Jonathan Davis to propose this resolution. I will now propose Resolution 11 relating to the re election of Martin Lamb into the meeting. Please complete your poll cards now. Thank you. Voting is now closed, and I declare the resolution carried by the necessary majority with a vote in favor of well over 90%. I will now pass back to Martin. Thank you, Jonathan. I will now put resolutions 12 to 14 to the meeting, being Resolution 12 relating to the reappointment of Deloitte LLP as audited. Resolution 13 relating to the auditors remuneration and Resolution 14, confirming the director's general authority to allot shares. Please complete your poll cards for each of the above resolutions now. Thank you. Voting is now closed and I declare each of the resolutions carried by the necessary majority with a vote in favor of each resolution of over 87%. With apologies, I have been informed that there are some clerical numbering errors in resolutions 1516. Which we need to resolve of the company's articles of association, which authorizes clerical amendments to a resolution to be made I now propose to the meeting the following clerical amendments to Resolution 15 to replace references in the text of Resolution 15 which cross refer to resolutions 1516 to be read as references to resolutions 1415 respectively. Further, I proposed clerical amendments to Resolution 16 to replace references in the text of Resolution 16 which cross refer to resolutions 'fifteen, 'sixteen, 'seventeen to be read as references to resolutions 'fourteen, 'fifteen, 'sixteen, I now propose to put this proposal to the votes on a show of hands. Voting is open. Please raise your hand to vote as in favor as against. Thank you. Voting is now closed, and I declare the resolution carried by the necessary majority. I will now put resolutions 15 to 'nineteen to the meeting. Being Resolution 15, as amended by the Above Amendment resolution concerning the directors general authority, to disupply preemption rights. And Resolution 16, again, as amended by the Above Amendment Resolution, concerning the director's specific authority to discipline freeemption rights in connection with share allotments for acquisitions and other specified capital investments. Resolution 17, concerning the company's authority to purchase ordinary shares, Resolution 18 concerning the company's authority to purchase preference shares and Resolution 19 concerning fixing the notice period 4 general meetings. Please complete your poll cards for each of the above resolutions now. Thank you. Voting is now closed and I declare each of the resolutions carried by the necessary majority with a vote in favor of each resolution of over 87%. Ladies and gentlemen, that concludes this year's annual general meeting. The voting results will be audited by our registrar. And the final results will be announced at the London Stock Exchange through our regulatory information service as soon as possible following this meeting. I very much hope and expect to see many of you in person next year as we return to more normal circumstances. Thank you for your patience, understanding and participation in this year's meeting. I now declare the meeting closed.