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Targets and strategy

On 26 January 2011, we gave an extensive Capital Markets presentation setting out our targets for performance improvement over the coming three years and our strategy for achieving those targets. The full presentation is available here. The targets are:

average annual revenue growth to exceed 1.5 times global GDP growth;
return on sales margin of 12% by year 2013;
double digit average annual headline earnings growth;
dividend growth at least in line with earnings growth;
return on investment increasingly ahead of the Group’s weighted average cost of capital; and
maintaining a strong financial position with a leverage ratio (year-end net debt to EBITDA ratio) of not more than 1.5 times.

In setting these targets we are not assuming any significant acquisitions, but some bolt-on acquisitions are possible. Also, no major disposals are anticipated but any opportunities to create value will be considered objectively.

We see the achievement of these targets being underpinned by:

leading global market positions, supplying consumables to essential industries — steel, foundry and electronics;
track record of market share gains with new, enhanced technology, higher margin products — increased R&D capability and spending;
significant emerging market exposure (50% of revenue; >60% of trading profit);
considerable further recovery potential in mature markets where cost base significantly reduced; and
opportunities to leverage further organic growth through bolt-on acquisitions.

Group Performance 2010

REVENUE by division
^{including Prcious Metals at NSV}

Ceramics - 63%; Electronics - 31%; Precious Metals - 6%