TIDMROR
RNS Number : 1696O
Rotork PLC
03 March 2009
3 March 2009
Rotork p.l.c.
2008 Full Year Results
+----------------------------------------+-----------+-------------+----------
=-+----------------+
| | 2008 |
2007 | % change | % change |
|
| | | | (constant |
|
| | | |
currency) |
| | |
| |
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Revenue | GBP320.2m |
GBP235.7m | +35.9% | +22.1
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Operating profit | GBP74.9m |
GBP55.4m | +35.2% | +19.3
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Profit before tax | GBP75.8m |
GBP57.3m | +32.3% | +17.0
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Adjusted* profit before tax | GBP76.9m |
GBP57.3m | +34.1% | +18.8
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Basic earnings per share | 62.0p |
45.6p | +36.0% | +20.2
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Adjusted* basic earnings per share | 63.0p |
45.7p | +37.7% | +22.0
|
+----------------------------------------+-----------+-------------+-------
=----+----------------+
| Final dividend | 16.75p |
14.0p | +19.6% |
|
+----------------------------------------+-----------+-------------+-------
-----+----------------+
* = Adjusted figures add back the amortisation of acquired intangible assets
* Continued strong performance across all three divisions, aided by currency
benefits
* Rotork Controls revenue up 24.5% to GBP204.5m, operating profit up 32.0% to
GBP57.5m
* Impressive growth from Rotork Fluid Systems, with sales up 84.8% to GBP88.6m and
operating profit up 68.6% to GBP12.1m, boosted by acquisition of Remote Control
Sweden
* Rotork Gears maintained consistent growth - sales up 15.3% to GBP36.8m,
operating profit of GBP8.6m
* Strong balance sheet at year end with net cash of GBP41.4m
* New Control Valve Actuator launched during 2008 - good initial reception from
customers
* Order intake up 36.8% year on year
* Record order book of GBP162.0m, up 66% on the start of year
Peter France, Chief Executive, commenting on the results, said:
"Rotork started 2009 with an order book at record levels and a strong balance
sheet. We continue to invest in our future and have identified a number of
growth opportunities as part of our business development plans."
"Rotork is not immune to wider economic trends and we may see some slowing in
the growth of order intake. However quotation activity and project visibility
for medium and long term projects are up on levels seen one year ago."
"In addition, the Group's trading results would be expected to benefit from a
continued weakness of sterling against the US dollar and the euro."
"Taken together, these factors underpin our confidence in making progress during
2009."
For further information, please contact:
+------------------------------------+------------------------------------+
| Rotork p.l.c. | Tel: 01225 733200 |
+------------------------------------+------------------------------------+
| Peter France, Chief Executive | |
+------------------------------------+------------------------------------+
| Bob Slater, Finance Director | |
+------------------------------------+------------------------------------+
| | |
+------------------------------------+------------------------------------+
| Financial Dynamics | Tel: 020 7831 3113 |
+------------------------------------+------------------------------------+
| Jon Simmons/Sophie Kernon | |
+------------------------------------+------------------------------------+
Chairman's Statement
I am pleased to report another year of strong growth for the Group during a
period of significant volatility in markets generally. Although the progressive
strengthening of the US dollar and euro throughout the year has aided
performance, nonetheless both revenues and profits advanced substantially in
real terms across the Group. The year closed with a record order book and
measured optimism across all divisional businesses.
The appointment of Peter France as Chief Executive saw a review of all our
business activities resulting in changes to our operating structure and to the
way we target specific geographical regions to further increase our product and
market reach. Whilst important to our continued growth, these changes are not
intended to be fundamentally revolutionary and we therefore refer to this
approach as accelerated evolution. The benefits of these actions are already
beginning to be felt progressively throughout the whole Group.
Financial Highlights
Total sales increased by 35.9% on 2007 to GBP320.2m and profit before tax
(before amortisation of intangible assets arising on acquisitions) was up 34.1%
to GBP76.9m. At GBP162.0m the closing order book increased by 66% year on year.
Due to the nature of our business and the point in the demand cycle when
business is placed with Rotork, it is unusual for orders to be cancelled and we
have experienced virtually no instances of this during the year.
Notwithstanding its positive influence on the business in 2008, the impact of
currency extends beyond the conversion of reported figures in that it increases
our competitive edge in markets where previously sterling's strength has been a
constraining factor.
Divisional Highlights
Rotork Controls is the market leader in electric valve actuation and is our
largest divisional business accounting for 63.9% of Group turnover. In 2008,
sales revenue advanced by 24.5% to GBP204.5m and operating profit increased by
32.0% to GBP57.5m. Demand for our products remained strong and with growth
spread across all sectors and geographical areas we continue to reinforce our
position as market leader.
Rotork Fluid Systems ('RFS') continued its expansion delivering an impressive
84.8% increase in sales and 68.6% in operating profit to new highs of GBP88.6m
and GBP12.1m respectively. We have won a number of prestigious projects in the
year and are now well established in this market. We have grown our market share
substantially over the last few years and have brought innovation and technology
to a relatively conservative market and product line.
The acquisition of Remote Control Sweden ('RC') in January was an important step
for the division and has been well received by our customers. It provides access
to market areas that we can develop with these products as well as with the
wider RFS portfolio.
Rotork Gears maintained its consistent growth trend with year on year sales up
15.3% to GBP36.8m and with an operating profit of GBP8.6m being 18.8% ahead of
2007. We are the largest manufacturer in our field and the market leader in
terms of size and product range.
Cash
Cash generation in the year has been strong resulting in year end net cash
balances increasing to GBP41.4m. During the year we spent a total of GBP14.0m on
the RC acquisition and the intangible asset relating to the Drallim SVM product.
A further GBP10m was paid as an additional dividend to shareholders in July.
The strong order intake in 2008 has required working capital increases in some
areas to support the year end order book and the increase in inventory reflects
this. As a result the conversion of profit into cash has been partially
suppressed as the group prepares for what will be strong shipments in the first
quarter of 2009.
Dividend
The Board is recommending an increase of 19.6% for the 2008 final dividend. This
equates to a payment of 16.75p per share payable on 8 May to shareholders on the
register at 14 April 2009.
Board Performance
One of my principal responsibilities is to ensure Rotork is headed by an
effective Board accountable to shareholders for the Company's performance. To
this end the Board continues, annually, to evaluate its performance and that of
its Committees through a structured process the results of which are then
reviewed and, where appropriate, acted upon.
Performance and Risk
Our approach to performance measurement and the assessment and mitigation of
risk are dealt with in the CSR section of our annual reports. There we explain
how we ensure that we have correct health & safety and environmental policies, a
robust system for dealing with the assessment and management of risk through the
organisation, and appropriate KPIs to ensure focus on those performance issues
that are really relevant to the business. We take great care to ensure that we
deal with these matters responsibly and our reformatted disclosure is intended
to bring increased clarity to the underlying issues.
Outlook
Rotork started 2009 with an order book at record levels and a strong balance
sheet. We continue to invest in our future and have identified a number of
growth opportunities as part of our business development plans.
Rotork is not immune to wider economic trends and we may see some slowing in the
growth of order intake. However quotation activity and project visibility for
medium and long term projects are up on levels seen one year ago.
In addition, the Group's trading results would be expected to benefit from a
continued weakness of sterling against the US dollar and the euro.
Taken together, these factors underpin our confidence in making progress during
2009.
Roger Lockwood
Chairman
2 March 2009
Business review
Introduction
In 2008 Rotork saw a change in leadership for only the 4th time in its history
of over 50 years. From its beginnings in 1957, Rotork has been associated with
quality and innovative solutions to customer requirements, and from the very
early days has been a truly international business with products that are used
in a wide variety of industries and applications. Technological leadership has
also been instrumental in the growth of its products in the safety critical
emergency shut-down market with customers looking for Rotork to provide them
with high quality solutions. Rotork is often trusted solely in introducing
significant technology change into what are often quite conservative market
areas.
Rotork today is a truly global business with direct operations in 29 countries,
14 manufacturing plants and over 1700 staff. Add to these facilities over 300
sales outlets in a further 47 countries and Rotork's extensive international
coverage within the business becomes clear. As operations have grown so has the
range of products within the group's portfolio. With the addition of new
locations this has enabled Rotork to supply into increasingly diverse
applications and industries. Rotork supplies actuators, systems and associated
products wherever there is a need to control the flow of liquids or gases
through pipes or channels, as well as into other specialist applications. Rotork
actuators are used for example in a sugar factory to control the movement of
products in the process, and on the world's largest natural gas pipeline where
we control the flow of hydrocarbons in their system.
Business Strategy
Rotork aims to increase shareholder value each year by focussing on valve
actuation and associated activities, principally wherever there is a need to
control the movement of fluids or gases. As world market leader our aim is to
provide high quality, advanced, innovative products and services that constitute
superior solutions to customers' requirements in these focussed technical areas.
We support these operations around the world through our extensive and
continually expanding network of offices and manufacturing plants.
We operate an asset light business model which is highly cash generative. We
will also seek to deliver quality margins, consistent year on year growth in
revenues, profit and core dividends through organic growth and acquisitions.
The group provides products and a working environment where health & safety is
paramount for the benefit and protection of our employees and customers. We
develop and train our people to deliver our strategy and satisfy our customers'
requirements while maintaining high ethical and safety standards across the
Group and acting as a responsible international corporate entity.
Year under review
The year has seen Rotork achieve strong improvement in performance, setting new
records across the business. We experienced growth in each of our three
divisions, and all of our markets and territories. A number of our facilities
have received infrastructure investment in the year, and this process of
development and improvement is continuing into 2009. This investment is
impacting each of our operating divisions across our global reach. In addition
we have extended our initiatives on cross divisional co-operation and joint
development in specific market areas.
Overall, order intake was GBP344.2m up 36.8% and revenue increased to GBP320.2m,
up 35.9%. The order book increased to an impressive GBP162.0m which is 66.0% up
on the start of 2008. However this included the impact of currency movements
during the year, and the inclusion of the opening order book of Remote Control
('RC') - the acquisition we made in the early part of the year. If these are
excluded then the order book at the end of 2008 would have been up 30.7% on the
prior year position.
Sales revenue growth was strong across all three divisions, with Controls up
24.5%, RFS up 84.8% and Gears up 15.3%. Profit before tax and before
amortisation of acquired intangibles, was GBP76.9m, an increase of 34.1% over
the prior year. Each of the divisions performed well with operating profits in
Controls up 32.0%, RFS up 68.6% and Gears up 18.8%. Currency had some impact on
this as sterling weakened through the latter part of the year, but the
underlying performance of the businesses at constant currency was strong.
Overall 60% of our companies achieved sales revenue growth of more than 20% in
the year and two thirds achieved profit growth of over 20%.
Return on sales continues to be a key driver of the business and this has
slightly reduced from 24.3% to 23.7%. This was partly as a result of currency
affecting sales more than profit and the increased proportion of operating
profits produced by the RFS division. At constant currency the rate for 2008
would have been 23.3%. Overall if the impact of currency was removed by
restating the 2008 figures at 2007 rates, then sales would have shown an
increase of 22.1%, and profit before tax an increase of 17.0%.
Rotork Controls is still our largest division, supplying electric actuator
products across a number of sectors. Here we saw investment across the business
and we believe that we continued to take market share even when currency rates
were not in our favour. The current market makes our products more competitive
and this combined with a strong underlying demand for Rotork quality and
technology is an important fundamental as we go into 2009.
Rotork Fluid Systems is our fastest growing division supplying pneumatic,
hydraulic and electrohydraulic actuators and systems. We are undoubtedly now
seen as a major force in this field and we have the widest range of products in
the market. We also provide a tailored response to customer application issues
and a real focus on delivery of a sound commissioned solution with support at
all levels of the process.
Rotork Gears, a supplier of gearboxes, adaptors and ancillaries for the valve
industry, has been a consolidator of businesses in this area and is now the
world leader in terms of product portfolio and geographic reach. This is a
slower growing business than the other divisions, but is involved in closer
partnering with its customers and provides high quality outsourcing, giving the
customer base real product improvements and cost savings in a long term
relationship.
Rotork Site Services operates through each of the three divisions with dedicated
teams providing on site and workshop support to our customers for the complete
range of products. This is an important feature in our business strategy going
forward as we become the only actuator business to be able to genuinely support
our customers across this range of products and the applications that they
cover. We are making improvements and structural changes in this business to
better enable it to respond to our customers' increasing demands for an
outsourcing business model in the fields of site service and plant repair and
maintenance.
The growth and success of the business in recent times has required that the
management structure be strengthened to support the ongoing opportunities of the
markets that we serve. The Rotork Management Board was created at the start of
the year to improve our level of co-ordination and control of the three
divisions and this, supported by the Executive management teams of the
divisions, gives us a more responsive and dynamic management structure able to
take advantage of the substantial opportunities that we believe are still
available to us.
Quality
Commitment to product excellence and customer satisfaction is fundamental to
Rotork and we ensure that it is embedded into our systems and procedures for
both vendor assurance and production.
Rotork manufacturing sites are required to be registered to the international
Quality Management System Standard ISO9001 and also adopt Rotork systems and
working practices that are proven and used across the group. This process is
planned and managed from the main production site and Group headquarters in
Bath.
Our research and development function has a robust design review process for all
new products which ensures that our quality ethos is built in. For example the
recently launched Control Valve Actuator ('CVA') has been subject to rigorous
review at every stage in its development and can now rely on the robust quality
assurance systems in place at our own and our supplier's facilities.
Our business model requires exact control of component procurement processes and
through our global supply chains we have created a mutually supportive network
of Rotork supplier quality assurance ('SQA') and procurement teams to ensure
that our requirements are achieved.
R&D
Investment in our product portfolio is an important part of Rotork's success,
and a major differentiating factor in our competitive landscape. Each of the
three divisions has an active programme of research and development aimed at
refining the product offering, widening its market appeal across sectors, and
bringing technical developments into the product range where they would provide
value for our customers.
The main event of the year was the release of the initial size of the control
valve actuator. This had been showcased prior to launch at a number of trade
exhibitions, and had generated considerable enthusiasm amongst both our sales
force and end-users. This product extends the range of Rotork's electric
actuators to cover the demanding process control market. The product range will
be augmented with additional sizes and further options during 2009.
2008 also saw the introduction of a new controller family for the ROM series of
actuators. This development enables users of small quarter turn valves to
benefit from Rotork's experience in networking and valve diagnostics with the
actuator sharing the Bluetooth capability of the CVA. First shipments of this
product were despatched to a Turkish customer for shipboard use.
The first field trial of our wireless network was successfully commissioned in
the last quarter of the year and this is now providing useful feedback. Further
site trials are to be installed during 2009. It is expected that take-up of this
technology will occur in 2010 and beyond as standardisation activities are
completed and user confidence in wireless technology increases.
The Smart Valve Monitor partial stroking product acquired from Drallim
Industries Ltd has now been fully integrated into Rotork's manufacturing system
in a joint development between engineers within the Controls and Fluid Power
Divisions. In addition to ensuring that the product meets Rotork's stringent
quality requirements the opportunity was taken to include additional features
such as the ability to gain credit from unscheduled plant shut-downs.
Maintaining technological leadership within the valve actuation industry
continues to be our goal and we have further increased our resources in Bath to
assist in focussing on the many opportunities available to us. In addition to
major developments we continue to focus on reducing material costs through
design optimisation and the use of alternate materials such as engineering
plastics. We also work with external partners to bring both specialised skills
and cost savings to the design process.
During 2008, the Process Control Division has undertaken some important projects
aimed at widening their products' market appeal in terms of ruggedness and
style, bringing some commonality with the IQ actuator and further developing a
common image.
Last year we reported on our work with high integrity pressure protection
systems ('HIPPS'). This specialist solution with can assist customers in
applications where safety integrity is an important issue, and in certain
applications the enhanced design can be used to prolong the design life of the
valve. The challenging demands of these systems also provide an opportunity for
the unique benefits of the SVM technology.
Subsea actuator development has been an important feature of our product
development across the divisional businesses. In a joint development between the
Fluid Systems and Gears divisions, we have brought some innovative products to
the market.
Value engineering and development has continued across the RFS high pressure gas
pipeline actuator range with the high pressure gas block being optimised for
size and assembly, reducing cost and providing a more competitive product whilst
maintaining the features differentiating it in the market place.
In the Gears division, the focus for 2009 is to launch a new range of
quarter-turn gearboxes focussed on water industry specifications in the USA.
Following the international growth of this business a number of smaller projects
will look at the strengths of each manufacturing site to create a more
comprehensive and effective complete gearbox range.
Our people
Rotork has a good relationship with its employees, with a number of initiatives
in place across the world to ensure regular and effective communication of
objectives and targets, and to enable feedback from people on issues that really
matter to them. During the year we undertook an employee satisfaction survey for
the first time, across the worldwide operations of the business. This was aimed
at obtaining input from our people on a wide range of issues including
conditions, the reward system, and the sense of fulfilment that people get from
their involvement with Rotork. We were pleased with the level of response that
we received from our staff and the level of involvement and reward that people
generally felt from being a part of the business. We have a number of residual
tasks emanating from the results of the survey and we intend to repeat the
process again in the next year.
We believe that our reward system is appropriate and fair, and employees in the
UK and many overseas subsidiary companies enjoy participation in long-standing
Rotork profit sharing and share schemes. At the Bath plant, an Employee
Committee sits regularly to discuss staff issues and suggests improvements in
working conditions and practices with all issues being reviewed by directors and
acted on as appropriate.
An Equal Opportunities policy is applied throughout the Group and in almost all
cases, it is nationals from countries in which the Company operates who manage
those companies locally. Financial support for training and learning programmes
directly related to employees' working roles are provided. We have permanent
full time training officers in many of our facilities who co-ordinate product
training for employees and customers. Our commitment to staff development over
the long term is evidenced by initiatives on four year apprenticeship
programmes, our extended graduate recruitment programme and other training
initiatives across the group.
Peter France
Chief Executive
2 March 2009
Consolidated Income Statement
for the year ended 31 December 2008
+--------------------------------------------------+--------+------------+------------+
| | Notes | 2008 | 2007 |
+--------------------------------------------------+--------+------------+------------+
| | | GBP'000 | GBP'000 |
+--------------------------------------------------+--------+------------+------------+
| | | | |
+--------------------------------------------------+--------+------------+------------+
| Revenue | 2 | 320,207 | 235,688 |
+--------------------------------------------------+--------+------------+------------+
| Cost of sales | | (176,046) | (127,748) |
+--------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+--------------------------------------------------+--------+------------+------------+
| Gross profit | | 144,161 | 107,940 |
+--------------------------------------------------+--------+------------+------------+
| Other income | | 42 | 227 |
+--------------------------------------------------+--------+------------+------------+
| Distribution costs | | (3,535) | (2,954) |
+--------------------------------------------------+--------+------------+------------+
| Administrative expenses | | (65,697) | (49,811) |
+--------------------------------------------------+--------+------------+------------+
| Other expenses | | (82) | (15) |
+--------------------------------------------------+--------+------------+------------+
| | | | |
+--------------------------------------------------+--------+------------+------------+
| Operating profit before the amortisation of | | 76,014 | 55,461 |
| acquired intangible assets | | | |
+--------------------------------------------------+--------+------------+------------+
| Amortisation of acquired intangible assets | | (1,125) | (74) |
+--------------------------------------------------+--------+------------+------------+
| Operating profit | 2 | 74,889 | 55,387 |
+--------------------------------------------------+--------+------------+------------+
| | | | |
+--------------------------------------------------+--------+------------+------------+
| Financial income | 4 | 7,073 | 6,607 |
+--------------------------------------------------+--------+------------+------------+
| Financial expenses | 4 | (6,211) | (4,741) |
+--------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+--------------------------------------------------+--------+------------+------------+
| Profit before tax | | 75,751 | 57,253 |
+--------------------------------------------------+--------+------------+------------+
| Income tax expense | 5 | (22,331) | (17,957) |
+--------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+--------------------------------------------------+--------+------------+------------+
| Profit for the year | | 53,420 | 39,296 |
| | | ===== | ===== |
+--------------------------------------------------+--------+------------+------------+
| | | | |
+--------------------------------------------------+--------+------------+------------+
| | | | |
+--------------------------------------------------+--------+------------+------------+
| | | Pence | Pence |
+--------------------------------------------------+--------+------------+------------+
| Basic earnings per share | 13 | 62.0 | 45.6 |
+--------------------------------------------------+--------+------------+------------+
| Diluted earnings per share | 13 | 61.6 | 45.2 |
+--------------------------------------------------+--------+------------+------------+
Consolidated Balance Sheet
at 31 December 2008
+-------------------------------------------------+--------+------------+------------+
| | Notes | 2008 | 2007 |
+-------------------------------------------------+--------+------------+------------+
| | | GBP'000 | GBP'000 |
+-------------------------------------------------+--------+------------+------------+
| Assets | | | |
+-------------------------------------------------+--------+------------+------------+
| Property, plant and equipment | | 23,868 | 17,549 |
+-------------------------------------------------+--------+------------+------------+
| Intangible assets | 6 | 39,696 | 23,141 |
+-------------------------------------------------+--------+------------+------------+
| Deferred tax assets | | 10,925 | 6,614 |
+-------------------------------------------------+--------+------------+------------+
| Other receivables | | 1,137 | 850 |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total non-current assets | | 75,626 | 48,154 |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Inventories | 7 | 59,410 | 35,993 |
+-------------------------------------------------+--------+------------+------------+
| Trade receivables | 8 | 63,694 | 44,262 |
+-------------------------------------------------+--------+------------+------------+
| Current tax | | 1,752 | 1,330 |
+-------------------------------------------------+--------+------------+------------+
| Other receivables | | 5,578 | 4,745 |
+-------------------------------------------------+--------+------------+------------+
| Cash and cash equivalents | 9 | 41,390 | 38,253 |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total current assets | | 171,824 | 124,583 |
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total assets | | 247,450 | 172,737 |
| | | ===== | ===== |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Equity | | | |
+-------------------------------------------------+--------+------------+------------+
| Issued equity capital | | 4,325 | 4,323 |
+-------------------------------------------------+--------+------------+------------+
| Share premium | | 6,666 | 6,519 |
+-------------------------------------------------+--------+------------+------------+
| Reserves | | 21,288 | 2,180 |
+-------------------------------------------------+--------+------------+------------+
| Retained earnings | | 112,117 | 89,430 |
+-------------------------------------------------+--------+------------+------------+
| | | _____ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total equity | 12 | 144,396 | 102,452 |
| | | ===== | ===== |
+-------------------------------------------------+--------+------------+------------+
| Liabilities | | | |
+-------------------------------------------------+--------+------------+------------+
| Interest bearing loans and borrowings | | 190 | 209 |
+-------------------------------------------------+--------+------------+------------+
| Employee benefits | | 8,637 | 11,047 |
+-------------------------------------------------+--------+------------+------------+
| Deferred tax liabilities | | 2,806 | 906 |
+-------------------------------------------------+--------+------------+------------+
| Derivative financial instruments | | 1,686 | - |
+-------------------------------------------------+--------+------------+------------+
| Provisions | 10 | 1,660 | 1,157 |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total non-current liabilities | | 14,979 | 13,319 |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Interest bearing loans and borrowings | | 157 | 118 |
+-------------------------------------------------+--------+------------+------------+
| Trade payables | 11 | 32,803 | 21,567 |
+-------------------------------------------------+--------+------------+------------+
| Employee benefits | | 7,001 | 4,890 |
+-------------------------------------------------+--------+------------+------------+
| Current tax | | 12,197 | 8,791 |
+-------------------------------------------------+--------+------------+------------+
| Derivative financial instruments | | 5,624 | 544 |
+-------------------------------------------------+--------+------------+------------+
| Other payables | 11 | 26,781 | 18,594 |
+-------------------------------------------------+--------+------------+------------+
| Provisions | 10 | 3,512 | 2,462 |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total current liabilities | | 88,075 | 56,966 |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Total liabilities | | 103,054 | 70,285 |
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total equity and liabilities | | 247,450 | 172,737 |
| | | ===== | ===== |
+-------------------------------------------------+--------+------------+------------+
Consolidated Statement of Cash Flows
for the year ended 31 December 2008
+------------------------------------+--------+----------+----------+----------+----------+
| | Notes | 2008 | 2008 | 2007 | 2007 |
+------------------------------------+--------+----------+----------+----------+----------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Profit for the year | | 53,420 | | 39,296 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Adjustments for: | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Amortisation of intangibles | | 1,125 | | 74 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Amortisation of development costs | | 352 | | 309 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Depreciation | | 3,281 | | 2,630 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Equity settled share based payment | | 718 | | 680 | |
| expense | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Loss / (profit) on sale of property, plant | 25 | | (159) | |
| and equipment | | | | |
+---------------------------------------------+----------+----------+----------+----------+
| Financial income | | (7,073) | | (6,607) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Financial expenses | | 6,216 | | 4,741 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Income tax expense | | 22,331 | | 17,957 | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | ______ | | ______ | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | 80,395 | | 58,921 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Increase in inventories | | (8,621) | | (5,580) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Increase in trade and other | | (4,293) | | (4,873) | |
| receivables | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Increase in trade and other | | 5,955 | | 7,001 | |
| payables | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Difference between pension charge | | (823) | | (2,938) | |
| and cash contribution | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Increase in provisions | | 1,554 | | 713 | |
+------------------------------------+--------+----------+----------+----------+----------+
| (Decrease) / increase in other employee | (299) | | 2,875 | |
| benefits | | | | |
+---------------------------------------------+----------+----------+----------+----------+
| | | ______ | | ______ | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | 73,868 | | 56,119 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Income taxes paid | | (22,547) | | (15,071) | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | ______ | | ______ | |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash flows from operating | | | 51,321 | | 41,048 |
| activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Investing activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Purchase of property, plant and | | (4,353) | | (2,762) | |
| equipment | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Purchase of intangible assets | | (666) | | - | |
+------------------------------------+--------+----------+----------+----------+----------+
| Development costs capitalised | | (817) | | (687) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Sale of property, plant and | | 90 | | 228 | |
| equipment | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Acquisition of subsidiary net of | | (12,714) | | (8) | |
| cash acquired | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Interest received | | 564 | | 932 | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | ______ | | ______ | |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash flows from investing | | | (17,896) | | (2,297) |
| activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Financing activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Issue of ordinary share capital | | 149 | | 671 | |
+------------------------------------+--------+----------+----------+----------+----------+
| Purchase of ordinary share capital | | (3,517) | | (4,249) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Purchase of preference shares | | (5) | | - | |
| treated as debt | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Interest paid | | (300) | | (112) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Repayment of amounts borrowed | | (82) | | (456) | |
+------------------------------------+--------+----------+----------+----------+----------+
| Repayment of finance lease | | (87) | | (95) | |
| liabilities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Dividends paid on ordinary shares | | (29,970) | | (24,732) | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | ______ | | ______ | |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash flows from financing | | | (33,812) | | (28,973) |
| activities | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| | | | ______ | | ______ |
+------------------------------------+--------+----------+----------+----------+----------+
| Net (decrease) / increase in cash | | | (387) | | 9,778 |
| and cash equivalents | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash and cash equivalents at 1 | | | 38,253 | | 28,398 |
| January | | | | | |
+------------------------------------+--------+----------+----------+----------+----------+
| Effect of exchange rate | | | 3,524 | | 77 |
| fluctuations on cash held | | | _____ | | ______ |
+------------------------------------+--------+----------+----------+----------+----------+
| Cash and cash equivalents at 31 | 9 | | 41,390 | | 38,253 |
| December | | | ===== | | ===== |
+------------------------------------+--------+----------+----------+----------+----------+
Consolidated Statement of Recognised Income and Expense
for the year ended 31 December 2008
+-------------------------------------------------+--------+------------+------------+
| | | 2008 | 2007 |
+-------------------------------------------------+--------+------------+------------+
| | | GBP'000 | GBP'000 |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Foreign exchange translation differences | | 23,824 | 3,855 |
+-------------------------------------------------+--------+------------+------------+
| Actuarial gain / (loss) in pension scheme | | 1,290 | (4,883) |
+-------------------------------------------------+--------+------------+------------+
| Movement on deferred tax relating to actuarial | | (161) | 1,241 |
| (gain) / loss | | | |
+-------------------------------------------------+--------+------------+------------+
| Effective portion of changes in fair value of | | (4,719) | (254) |
| cash flow hedges | | | |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Income and expenses recognised directly in | | 20,234 | (41) |
| equity | | | |
+-------------------------------------------------+--------+------------+------------+
| | | | |
+-------------------------------------------------+--------+------------+------------+
| Profit for the year | | 53,420 | 39,296 |
+-------------------------------------------------+--------+------------+------------+
| | | ______ | ______ |
+-------------------------------------------------+--------+------------+------------+
| Total recognised income for the year | | 73,654 | 39,255 |
| | | ===== | ===== |
| | | | |
+-------------------------------------------------+--------+------------+------------+
Notes to the Financial Statements
for the year ended 31 December 2008
Except where indicated, values in these notes are in GBP'000.
Rotork p.l.c. is a Company domiciled in England. The consolidated financial
statements of the Company for the year ended 31 December 2008 comprise the
Company and its subsidiaries (together referred to as the 'Group').
1. Accounting policies
Basis of preparation
The consolidated financial statements of Rotork plc have been prepared and
approved by the directors in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs' as adopted by the EU), IFRIC
Interpretations and the Companies Act 1985 applicable to companies reporting
under IFRS.
The consolidated financial statements have been prepared under the historical
cost convention subject to the items referred to in the derivative financial
instruments accounting policy.
Interpretations effective in 2008
IFRIC 14 - Recognition of a Defined Benefit Pension Scheme Surplus and IFRIC 11,
IFRS 2: Group and Treasury Share Transactions have been applied in the year and
they have not had a material effect on the reported results or financial
position of the Group for 2007 or 2008.
Standards, amendments and interpretations to existing standards that are not yet
effective and have not been early adopted by the group
IFRS 8 - Operating Segments, IFRIC 13 - Customer loyalty programmes and IAS1
(revised) - Presentation of Financial Statements, together with the amendments
to IAS 23, IAS 27, IAS32 and IFRS 3 which are adopted by the European Union but
not effective as at 31 December 2008 will be applied in 2009, 2010 or 2011 as
applicable. They are not expected to have a material effect on the reported
results or financial position of the Group.
After making enquiries, the directors have a reasonable expectation that the
company and the group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiaries for the year to 31 December 2008. The financial
statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date control ceases. Intragroup
balances and any unrealised gains or losses or income and expenses arising from
intragroup transactions are eliminated in preparing the consolidated financial
statements.
Status of this preliminary announcement
The financial information contained in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 31 December 2008
or 2007. Statutory accounts for 2007, which were prepared under International
Financial Reporting Standards as adopted by the EU, have been delivered to the
registrar of companies, and those for 2008 will be delivered in due course. The
auditors have reported on these accounts, their reports were unqualified and did
not contain statements under section 237 (2) or (3) of the Companies Act 1985.
Full financial statements for the year ended 31 December 2008, will shortly be
posted to shareholders, and after adoption at the Annual General Meeting on 24
April 2009 will be delivered to the registrar.
Notes to the Financial Statements
2. Analysis of revenue, profit and net assets
The primary format used for segmental reporting is by business segment as this
reflects the internal management structure and reporting of the Group. Segment
results, assets and liabilities include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis. Unallocated
expenses comprise corporate expenses and unallocated assets and liabilities
comprise cash, borrowings, tax assets and liabilities respectively. Intra group
trading is determined on an arm's length basis.
Business segments
The Group comprises the following business segments:
Controls - the design, manufacture and sale of electric valve actuators
Fluid Systems - the design, manufacture and sale of heavy duty pneumatic and
hydraulic valve actuators
Gears - the design, manufacture and sale of gearboxes, adaption and ancillaries
for the valve industry
Geographic segments
Rotork has a worldwide presence in all three business segments through its
subsidiary selling offices and through an agency network. A full list of
locations can be found at www.rotork.com.
Analysis by operation:
+----------------------------+------------+------------+------------+--------------+--------------+
| | Controls | Fluid | Gears | Eliminations | Consolidated |
| | | Systems | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| | 2008 | 2008 | 2008 | 2008 | 2008 |
+----------------------------+------------+------------+------------+--------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Revenue from external | 204,510 | 88,570 | 27,127 | - | 320,207 |
| customers | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Inter segment revenue | - | - | 9,654 | (9,654) | - |
+----------------------------+------------+------------+------------+--------------+--------------+
| | ______ | ______ | ______ | ______ | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Total revenue | 204,510 | 88,570 | 36,781 | (9,654) | 320,207 |
| | ===== | ===== | ===== | ===== | ===== |
+----------------------------+------------+------------+------------+--------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Segment result | 57,466 | 12,075 | 8,621 | - | 78,162 |
| | ===== | ===== | ===== | ===== | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Unallocated expenses | | | | | (3,273) |
| | | | | | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Operating profit | | | | | 74,889 |
+----------------------------+------------+------------+------------+--------------+--------------+
| Net financing income | | | | | 862 |
+----------------------------+------------+------------+------------+--------------+--------------+
| Income tax expense | | | | | (22,331) |
| | | | | | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Profit for the year | | | | | 53,420 |
| | | | | | ===== |
+----------------------------+------------+------------+------------+--------------+--------------+
+----------------------------+------------+------------+------------+--------------+--------------+
| | Controls | Fluid | Gears | Eliminations | Consolidated |
| | | Systems | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| | 2007 | 2007 | 2007 | 2007 | 2007 |
+----------------------------+------------+------------+------------+--------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Revenue from external | 164,226 | 47,919 | 23,543 | - | 235,688 |
| customers | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Inter segment revenue | - | - | 8,347 | (8,347) | - |
+----------------------------+------------+------------+------------+--------------+--------------+
| | ______ | ______ | ______ | ______ | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Total revenue | 164,226 | 47,919 | 31,890 | (8,347) | 235,688 |
| | ===== | ===== | ===== | ===== | ===== |
+----------------------------+------------+------------+------------+--------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Segment result | 43,536 | 7,164 | 7,259 | - | 57,959 |
| | ===== | ===== | ===== | ===== | |
+----------------------------+------------+------------+------------+--------------+--------------+
| Unallocated expenses | | | | | (2,572) |
| | | | | | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Operating profit | | | | | 55,387 |
+----------------------------+------------+------------+------------+--------------+--------------+
| Net financing income | | | | | 1,866 |
+----------------------------+------------+------------+------------+--------------+--------------+
| Income tax expense | | | | | (17,957) |
| | | | | | ______ |
+----------------------------+------------+------------+------------+--------------+--------------+
| Profit for the year | | | | | 39,296 |
| | | | | | ===== |
+----------------------------+------------+------------+------------+--------------+--------------+
+-----------------------------------+------------+------------+------------+-------------+--------------+
| | Controls | Fluid | Gears | Unallocated | Consolidated |
| | | Systems | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| | 2008 | 2008 | 2008 | 2008 | 2008 |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Segment assets | 101,160 | 74,564 | 19,707 | 52,019 | 247,450 |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Segment liabilities | 58,049 | 23,734 | 6,998 | 14,273 | 103,054 |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Depreciation | 2,167 | 867 | 247 | - | 3,281 |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Amortisation | - | 1,070 | 55 | - | 1,125 |
| Other | 352 | - | - | - | 352 |
| intangibles | | | | | |
| Development | | | | | |
| costs | | | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Non-cash items : equity | 365 | 37 | 51 | 265 | 718 |
| settled share based | | | | | |
| payments | | | | | |
+-----------------------------------+------------+------------+------------+-------------+--------------+
| Capital expenditure | 2,585 | 2,077 | 232 | - | 4,894 |
+-----------------------------------+------------+------------+------------+-------------+--------------+
+------------------------------------+------------+------------+------------+-------------+--------------+
| | Controls | Fluid | Gears | Unallocated | Consolidated |
| | | Systems | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| | 2007 | 2007 | 2007 | 2007 | 2007 |
+------------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Segment assets | 72,937 | 37,420 | 16,183 | 46,197 | 172,737 |
+------------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Segment liabilities | 40,728 | 14,002 | 5,322 | 10,233 | 70,285 |
+------------------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Depreciation | 1,839 | 553 | 238 | - | 2,630 |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Amortisation | - | 27 | 47 | - | 74 |
| Other | 309 | - | - | - | 309 |
| intangibles | | | | | |
| Development | | | | | |
| costs | | | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Non-cash items : equity | 378 | 45 | 25 | 232 | 680 |
| settled share based | | | | | |
| payments | | | | | |
+------------------------------------+------------+------------+------------+-------------+--------------+
| Capital expenditure | 2,052 | 689 | 253 | - | 2,994 |
+------------------------------------+------------+------------+------------+-------------+--------------+
+----------------------------+------------+------------+------------+-------------+--------------+
| Analysis by Geographical | Europe | Americas | Rest of | Unallocated | Consolidated |
| segment: | | | the World | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | 2008 | 2008 | 2008 | 2008 | 2008 |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Revenue from external | 145,996 | 84,049 | 90,162 | - | 320,207 |
| customers by location of | | | | | |
| customer | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Segment assets by location | 131,330 | 37,658 | 26,443 | 52,019 | 247,450 |
| of assets | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Capital expenditure by | 3,634 | 381 | 879 | - | 4,894 |
| location of assets | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
+----------------------------+------------+------------+------------+-------------+--------------+
| | Europe | Americas | Rest of | Unallocated | Consolidated |
| | | | the World | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | 2007 | 2007 | 2007 | 2007 | 2007 |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Revenue from external | 110,679 | 56,298 | 68,711 | - | 235,688 |
| customers by location of | | | | | |
| customer | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Segment assets by location | 86,538 | 22,307 | 17,695 | 46,197 | 172,737 |
| of assets | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
| Capital expenditure by | 2,197 | 275 | 522 | - | 2,994 |
| location of assets | | | | | |
+----------------------------+------------+------------+------------+-------------+--------------+
All of the activities of the Group in the year arise from continuing
operations.
3. Acquisition of subsidiaries
On 30 January 2008 the Group acquired 100% of the share capital of Remote
Controls Sweden AB a designer and manufacturer of valve actuators based in
Falun, Sweden. The acquisition was accounted for using the purchase method of
consolidation.
In the 12 months to 31 December 2008 the subsidiary contributed GBP18,261,000 to
Group revenue and GBP2,208,000 to consolidated operating profit before the
GBP985,000 amortisation charge from the acquired intangible assets. It is not
practicable to disclose profit before tax as the Group manages its Treasury
function on a group basis. Similarly it is not practicable to disclose profit
attributable to equity shareholders, as acquired businesses have been merged
with existing group companies in the period since the acquisition. If the
acquisition had occurred on 1 January 2008 the results would not have been
materially different.
Goodwill has arisen on this acquisition as a result of the value attributed to
staff expertise and the assembled workforce, which did not meet the recognition
criteria for an intangible asset, and post acquisition synergies within the
Fluid Systems division.
The acquisition had the following effect on the Group's assets and liabilities.
+-------------------------------------------------+-------------+-------------+-----------+
| | Pre | Fair | Carrying |
| | acquisition | value | amounts |
| | carrying | adjustments | |
| | amounts | | |
+-------------------------------------------------+-------------+-------------+-----------+
| | | | |
+-------------------------------------------------+-------------+-------------+-----------+
| Property, plant and equipment | 1,115 | - | 1,115 |
+-------------------------------------------------+-------------+-------------+-----------+
| Intangible assets | - | 4,755 | 4,755 |
+-------------------------------------------------+-------------+-------------+-----------+
| Inventories | 2,905 | - | 2,905 |
+-------------------------------------------------+-------------+-------------+-----------+
| Trade and other receivables | 2,335 | - | 2,335 |
+-------------------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents | 587 | | 587 |
+-------------------------------------------------+-------------+-------------+-----------+
| Trade and other payables | (2,616) | - | (2,616) |
+-------------------------------------------------+-------------+-------------+-----------+
| Deferred tax liabilities | (105) | (1,331) | (1,436) |
+-------------------------------------------------+-------------+-------------+-----------+
| Borrowings | (55) | - | (55) |
| | ______ | ______ | ______ |
+-------------------------------------------------+-------------+-------------+-----------+
| | 4,166 | 3,424 | 7,590 |
+-------------------------------------------------+-------------+-------------+-----------+
| Goodwill on acquisition | | | 5,711 |
| | | | ______ |
+-------------------------------------------------+-------------+-------------+-----------+
| Consideration paid, satisfied in cash (including GBP162,000 | | 13,301 |
| expenses) | | ===== |
+---------------------------------------------------------------+-------------+-----------+
| | | | |
+-------------------------------------------------+-------------+-------------+-----------+
| Purchase consideration settled in cash | | | 13,301 |
+-------------------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents in subsidiary | | | (587) |
| acquired | | | ______ |
+-------------------------------------------------+-------------+-------------+-----------+
| Cash outflow on acquisition | | | 12,714 |
| | | | ===== |
+-------------------------------------------------+-------------+-------------+-----------+
The intangible assets identified comprise customer relationships, brand and
acquired order book.
4. Net financing income
+------------------------------------------------------------+-----------+-----------+
| Recognised in the income statement | 2008 | 2007 |
+------------------------------------------------------------+-----------+-----------+
| | | |
+------------------------------------------------------------+-----------+-----------+
| Interest income | 562 | 958 |
+------------------------------------------------------------+-----------+-----------+
| Expected return on assets in the pension schemes | 5,896 | 5,574 |
+------------------------------------------------------------+-----------+-----------+
| Foreign exchange gains | 615 | 75 |
| | ______ | ______ |
+------------------------------------------------------------+-----------+-----------+
| | 7,073 | 6,607 |
| | ===== | ===== |
+------------------------------------------------------------+-----------+-----------+
| | | |
+------------------------------------------------------------+-----------+-----------+
| Interest expense | 296 | 112 |
+------------------------------------------------------------+-----------+-----------+
| Interest charge on pension scheme liabilities | 5,538 | 4,541 |
+------------------------------------------------------------+-----------+-----------+
| Foreign exchange losses | 377 | 88 |
| | ______ | ______ |
+------------------------------------------------------------+-----------+-----------+
| | 6,211 | 4,741 |
| | ===== | ===== |
+------------------------------------------------------------+-----------+-----------+
| | | |
+------------------------------------------------------------+-----------+-----------+
| Recognised in equity | | |
+------------------------------------------------------------+-----------+-----------+
| | | |
+------------------------------------------------------------+-----------+-----------+
| Effective portion of changes in fair value of cash flow | (5,263) | (544) |
| hedges | | |
+------------------------------------------------------------+-----------+-----------+
| Fair value of cash flow hedges transferred to profit or | 544 | 290 |
| loss | | |
+------------------------------------------------------------+-----------+-----------+
| Foreign currency translation differences for foreign | 23,824 | 3,855 |
| operations | ______ | ______ |
+------------------------------------------------------------+-----------+-----------+
| | 19,105 | 3,601 |
| | ===== | ===== |
+------------------------------------------------------------+-----------+-----------+
| Recognised in: | | |
+------------------------------------------------------------+-----------+-----------+
| Hedging reserve | (4,719) | (254) |
+------------------------------------------------------------+-----------+-----------+
| Translation reserve | 23,824 | 3,855 |
| | ______ | ______ |
+------------------------------------------------------------+-----------+-----------+
| | 19,105 | 3,601 |
| | ===== | ===== |
+------------------------------------------------------------+-----------+-----------+
5. Income tax expense
+----------------------------------------+-----------+-----------+-----------+-----------+
| | 2008 | 2008 | 2007 | 2007 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Current tax: | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| UK Corporation tax on profits for the | 17,570 | | 12,670 | |
| year | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Double tax relief | (8,789) | | (5,122) | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Adjustment in respect of prior years | (152) | | (187) | |
| | ______ | | ______ | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | 8,629 | | 7,361 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Overseas tax on profits for the year | 15,921 | | 10,487 | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Adjustment in respect of prior years | (15) | | (24) | |
| | ______ | | ______ | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | 15,906 | | 10,463 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | ______ | | ______ |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Total current tax | | 24,535 | | 17,824 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Deferred tax: | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Origination and reversal of other | (2,354) | | 115 | |
| temporary differences | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Adjustment in respect of prior years | 150 | | 18 | |
| | ______ | | ______ | |
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Total deferred tax | | (2,204) | | 133 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | _____ | | _____ |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Total tax charge for year | | 22,331 | | 17,957 |
| | | ===== | | ===== |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Effective tax rate (based on profit | | 29.5% | | 31.4% |
| before tax) | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Profit before tax | | 75,751 | | 57,253 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Profit before tax multiplied by | | 21,589 | | 17,176 |
| standard rate of corporation tax | | | | |
| in the UK of 28.5% (2007: 30.0%) | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Effects of: | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Non deductible items | | 1,640 | | 349 |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Utilisation of overseas tax | | (1,154) | | - |
| holidays and losses | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Different tax rates on overseas | | 273 | | 625 |
| earnings | | | | |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Adjustments to tax charge in | | (17) | | (193) |
| respect of prior years | | ______ | | ______ |
+----------------------------------------+-----------+-----------+-----------+-----------+
| Total tax charge for year | | 22,331 | | 17,957 |
| | | ===== | | ===== |
+----------------------------------------+-----------+-----------+-----------+-----------+
A tax expense of GBP471,000 (2007: credit GBP577,000) in respect of share based
payments has been recognised directly in equity in the year.
The Group continues to expect its effective rate of corporation tax to be
slightly higher than the standard UK rate due to higher rates of tax in the US,
Canada, France, Germany, Italy, Japan and India.
There is an unrecognised deferred tax liability for temporary differences
associated with investments in subsidiaries. Rotork p.l.c. controls the dividend
policies of its subsidiaries and subsequently the timing of the reversal of the
temporary differences. It is not practical to quantify the unprovided temporary
differences as acknowledged within paragraph 40 of IAS 12.
6. Intangible assets
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| | Goodwill | Development | Other | Total | Goodwill | Development | Other | Total |
| | 2008 | costs | intangibles | 2008 | 2007 | costs | intangibles | 2007 |
| | | 2008 | 2008 | | | 2007 | 2007 | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Cost | 21,527 | 3,062 | 805 | 25,394 | 20,947 | 2,375 | 737 | 24,059 |
| Balance at 1 | | | | | | | | |
| January | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Exchange | 5,554 | - | 715 | 6,269 | 901 | - | 68 | 969 |
| differences | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Internally | - | 817 | - | 817 | - | 687 | - | 687 |
| developed during | | | | | | | | |
| the year | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Reduction in | - | - | - | - | (321) | - | - | (321) |
| deferred | | | | | | | | |
| consideration | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Additions | - | - | 666 | 666 | - | - | - | - |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Acquisition | 5,711 | - | 4,755 | 10,466 | - | - | - | - |
| through business | _____ | ______ | ______ | _____ | _____ | ______ | ______ | _____ |
| combinations | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Balance at 31 | 32,792 | 3,879 | 6,941 | 43,612 | 21,527 | 3,062 | 805 | 25,394 |
| December | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Amortisation | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Balance at 1 | - | 1,801 | 452 | 2,253 | - | 1,492 | 342 | 1,834 |
| January | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Exchange | - | - | 186 | 186 | - | - | 36 | 36 |
| differences | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Amortisation for | - | 352 | 1,125 | 1,477 | - | 309 | 74 | 383 |
| the year | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| | _____ | ______ | ______ | ______ | _____ | ______ | ______ | _____ |
| | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Balance at 31 | - | 2,153 | 1,763 | 3,916 | - | 1,801 | 452 | 2,253 |
| December | _____ | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
| Net book value | 32,792 | 1,726 | 5,178 | 39,696 | 21,527 | 1,261 | 353 | 23,141 |
| at 31 December | ===== | ===== | ===== | ===== | ===== | ===== | ===== | ===== |
| Net book value | | | | | 20,947 | 883 | 395 | 22,225 |
| at 31 December | | | | | ===== | ===== | ===== | ===== |
| 2006 | | | | | | | | |
+------------------+-----------------------------------+-------------+-------------+--------+-----------------------------------+-------------+-------------+--------+
The amortisation charge in both years is recognised within administrative
expenses in the income statement. Other intangibles include customer
relationships, order books, intellectual property, agency agreements and trading
names of acquired companies.
Impairment tests for goodwill
Goodwill is allocated to the Group's cash generating units ('CGUs') identified
according to business segment. A segment level summary of goodwill allocation is
presented below.
+-----------------------------------------------------------+------------+----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+----------+
| | | |
+-----------------------------------------------------------+------------+----------+
| Controls | 7,240 | 5,839 |
+-----------------------------------------------------------+------------+----------+
| Fluid Systems | 17,490 | 8,513 |
+-----------------------------------------------------------+------------+----------+
| Gears | 8,062 | 7,175 |
+-----------------------------------------------------------+------------+----------+
| | _____ | _____ |
+-----------------------------------------------------------+------------+----------+
| | 32,792 | 21,527 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+----------+
The recoverable amounts of all CGUs are based on value in use calculations.
These calculations use cash flow projections and are based on actual operating
results and the latest Group three year plan. The three year plan is based on
management's view of the future and experience of past performance. Cash flows
for the remainder of the next twenty years are extrapolated using a 2% growth
rate which reflects the long-term nature of many of the markets the Group
serves. This rate has been consistently bettered in the past so is believed to
represent a prudent estimate. A discount rate of 11.0%, being the Group's
current weighted average cost of capital ('WACC'), has been used in discounting
the projected cash flows. The WACC has been used as management believe this to
be the most appropriate and prudent rate for a market participant at the current
date. The discount rate of each business segment is not materially different to
11.0%. On this basis each business segment has sufficient headroom and therefore
no impairment write downs are required.
7. Inventories
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Raw materials and consumables | 31,937 | 20,419 |
+-----------------------------------------------------------+------------+------------+
| Work in progress | 18,411 | 10,521 |
+-----------------------------------------------------------+------------+------------+
| Finished goods | 9,062 | 5,053 |
| | ______ | ______ |
+-----------------------------------------------------------+------------+------------+
| | 59,410 | 35,993 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+------------+
Included in cost of sales was GBP134,769,000 (2007: GBP97,055,000) in respect of
inventories consumed in the year.
8. Trade and other receivables
+-----------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+------------+
| Non-current assets: | | |
+-----------------------------------------------------------+------------+------------+
| Insurance policy | 976 | 754 |
+-----------------------------------------------------------+------------+------------+
| Other | 161 | 96 |
| | _____ | _____ |
+-----------------------------------------------------------+------------+------------+
| Other receivables | 1,137 | 850 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Current assets: | | |
+-----------------------------------------------------------+------------+------------+
| Trade receivables | 65,062 | 44,870 |
+-----------------------------------------------------------+------------+------------+
| Less provision for impairment of receivables | (1,368) | (608) |
| | ______ | ______ |
+-----------------------------------------------------------+------------+------------+
| Trade receivables - net | 63,694 | 44,262 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Corporation tax | 1,752 | 1,330 |
| | ______ | ______ |
+-----------------------------------------------------------+------------+------------+
| Current tax | 1,752 | 1,330 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------------------+------------+------------+
| Other non-trade receivables | 3,714 | 3,306 |
+-----------------------------------------------------------+------------+------------+
| Prepayments and accrued income | 1,864 | 1,439 |
| | ______ | ______ |
+-----------------------------------------------------------+------------+------------+
| Other receivables | 5,578 | 4,745 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+------------+
9. Cash and cash equivalents
+-----------------------------------+------------+------------+------------+------------+
| | | | 2008 | 2007 |
+-----------------------------------+------------+------------+------------+------------+
| | | | | |
+-----------------------------------+------------+------------+------------+------------+
| Bank balances | | | 23,654 | 14,125 |
+-----------------------------------+------------+------------+------------+------------+
| Cash in hand | | | 92 | 70 |
+-----------------------------------+------------+------------+------------+------------+
| Short-term deposits | | | 17,644 | 24,058 |
| | | | ______ | ______ |
+-----------------------------------+------------+------------+------------+------------+
| Cash and cash equivalents | | | 41,390 | 38,253 |
+-----------------------------------+------------+------------+------------+------------+
| Bank overdrafts | | | - | - |
| | | | ______ | ______ |
+-----------------------------------+------------+------------+------------+------------+
| Cash and cash equivalents in the | | | 41,390 | 38,253 |
| consolidated statement of cash | | | ===== | ===== |
| flows | | | | |
+-----------------------------------+------------+------------+------------+------------+
10. Provisions
+----------------------------------------------+------------+---------------+-----------+
| | Warranty | Deferred | Total |
| | 2008 | consideration | 2008 |
| | | 2008 | |
+----------------------------------------------+------------+---------------+-----------+
| Balance at 1 January 2008 | 3,472 | 147 | 3,619 |
+----------------------------------------------+------------+---------------+-----------+
| Exchange differences | 1,058 | 46 | 1,104 |
+----------------------------------------------+------------+---------------+-----------+
| Provisions used during the year | (1,227) | - | (1,227) |
+----------------------------------------------+------------+---------------+-----------+
| Charged / (credited) in the year | 1,676 | - | 1,676 |
| | ______ | _____ | _____ |
+----------------------------------------------+------------+---------------+-----------+
| Balance at 31 December 2008 | 4,979 | 193 | 5,172 |
+----------------------------------------------+------------+---------------+-----------+
| | ===== | ===== | ===== |
+----------------------------------------------+------------+---------------+-----------+
| Maturity at 31 December 2008 | | | |
+----------------------------------------------+------------+---------------+-----------+
| | | | |
+----------------------------------------------+------------+---------------+-----------+
| Non-current | 1,660 | - | 1,660 |
+----------------------------------------------+------------+---------------+-----------+
| Current | 3,319 | 193 | 3,512 |
| | ______ | _____ | _____ |
| | 4,979 | 193 | 5,172 |
| | ===== | ===== | ===== |
+----------------------------------------------+------------+---------------+-----------+
| | | | |
+----------------------------------------------+------------+---------------+-----------+
| Maturity at 31 December 2007 | | | |
+----------------------------------------------+------------+---------------+-----------+
| | | | |
+----------------------------------------------+------------+---------------+-----------+
| Non-current | 1,157 | - | 1,157 |
+----------------------------------------------+------------+---------------+-----------+
| Current | 2,315 | 147 | 2,462 |
| | ______ | _____ | _____ |
| | 3,472 | 147 | 3,619 |
| | ===== | ===== | ===== |
+----------------------------------------------+------------+---------------+-----------+
The warranty provision is based on estimates made from historical warranty data
associated with similar products and services. The provision relates mainly to
products sold during the last twelve months, the typical warranty period is now
eighteen months.
The deferred consideration arose on the acquisition of PC Intertechnik during
2005. Payment or release of the final tranche of this provision is still subject
to negotiation and is expected to be settled in 2009.
11. Trade and other payables
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Trade payables | 32,096 | 21,448 |
+-----------------------------------------------------------+------------+-----------+
| Bills of exchange | 707 | 119 |
| | ______ | ______ |
+-----------------------------------------------------------+------------+-----------+
| Trade payables | 32,803 | 21,567 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Corporation tax | 12,197 | 8,791 |
| | ______ | ______ |
+-----------------------------------------------------------+------------+-----------+
| Current tax | 12,197 | 8,791 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Other taxes and social security | 3,636 | 2,767 |
+-----------------------------------------------------------+------------+-----------+
| Non-trade payables and accrued expenses | 23,145 | 15,827 |
+-----------------------------------------------------------+------------+-----------+
| | ______ | ______ |
+-----------------------------------------------------------+------------+-----------+
| Other payables | 26,781 | 18,594 |
+-----------------------------------------------------------+------------+-----------+
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
12. Capital and reserves
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| | Issued | Share | Translation | Capital | Hedging | Retained | Total |
| | equity | premium | reserve | redemption | reserve | earnings | |
| | capital | | | reserve | | | |
| | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Balance at 31 | 4,314 | 5,857 | (2,770) | 1,639 | (290) | 80,386 | 89,136 |
| December 2006 | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Profit for the | - | - | - | - | - | 39,296 | 39,296 |
| year | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Other items in | - | - | 3,855 | - | (254) | (3,642) | (41) |
| the statement of | | | | | | | |
| recognised income | | | | | | | |
| and expense | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Equity settled | - | - | - | - | - | 364 | 364 |
| share based | | | | | | | |
| payment | | | | | | | |
| transactions net | | | | | | | |
| of tax | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Share options | 9 | 662 | - | - | - | - | 671 |
| exercised by | | | | | | | |
| employees | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Own ordinary | - | - | - | - | - | (4,249) | (4,249) |
| shares acquired | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Own ordinary | - | - | - | - | - | 2,007 | 2,007 |
| shares awarded | | | | | | | |
| under share | | | | | | | |
| schemes | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Dividends | - | - | - | - | - | (24,732) | (24,732) |
| | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Balance at 31 | 4,323 | 6,519 | 1,085 | 1,639 | (544) | 89,430 | 102,452 |
| December 2007 | ===== | ===== | ===== | ===== | ===== | ===== | ===== |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Profit for the | - | - | - | - | - | 53,420 | 53,420 |
| year | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Other items in | - | - | 23,824 | - | (4,719) | 1,129 | 20,234 |
| the statement of | | | | | | | |
| recognised income | | | | | | | |
| and expense | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Equity settled | - | - | - | - | - | (2,419) | (2,419) |
| share based | | | | | | | |
| payment | | | | | | | |
| transactions net | | | | | | | |
| of tax | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Share options | 2 | 147 | - | - | - | - | 149 |
| exercised by | | | | | | | |
| employees | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Own ordinary | - | - | - | - | - | (3,518) | (3,518) |
| shares acquired | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Own ordinary | - | - | - | - | - | 4,050 | 4,050 |
| shares awarded | | | | | | | |
| under share | | | | | | | |
| schemes | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Preference shares | - | - | - | 3 | - | (5) | (2) |
| redeemed | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Dividends | - | - | - | - | - | (29,970) | (29,970) |
| | _____ | _____ | _____ | _____ | _____ | _____ | _____ |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| Balance at 31 | 4,325 | 6,666 | 24,909 | 1,642 | (5,263) | 112,117 | 144,396 |
| December 2008 | ===== | ===== | ===== | ===== | ===== | ===== | ===== |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
| | | | | | | | |
+-------------------+---------+---------+-------------+------------+---------+----------+----------+
Share capital and share premium
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| | 5p | 5p | GBP1 | 5p | 5p | GBP1 |
| | Ordinary | Ordinary |Non-redeemable | Ordinary | Ordinary |Non-redeemable |
| | shares | shares | preference | shares | shares | preference |
| |Authorised | Issued | shares |Authorised | Issued | shares |
| | |and fully | | |and fully | |
| | | paid up | | | paid up | |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| | 2008 | 2008 | 2008 | 2007 | 2007 | 2007 |
| | | | | | | |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| At 1 January | 5,449 | 4,323 | 45 | 5,449 | 4,314 | 45 |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| Issued under | - | 2 | (3) | - | 9 | - |
| employee share | _____ | _____ | _____ | _____ | _____ | _____ |
| schemes | | | | | | |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| At 31 December | 5,449 | 4,325 | 42 | 5,449 | 4,323 | 45 |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| | ===== | ===== | ===== | ===== | ===== | ===== |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| | | | | | | |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
| Number of shares | 108,990 | 86,510 | | 108,990 | 86,469 | |
| (000) | ===== | ===== | | ===== | ===== | |
+------------------+------------+-----------+----------------+------------+-----------+----------------+
The ordinary shareholders are entitled to receive dividends as declared and are
entitled to vote at meetings of the Company.
Ordinary shares issued during the year were 18,835 (2007: 142,173) under the
Share option scheme, at prices between 285p and 387p (2007: 285p and
387p) and 21,951 (2007: 44,905) under the Sharesave plan at 462p (2007: 320p).
The Group received proceeds of GBP149,000 (2007: GBP671,000) in respect of the
40,786 (2007: 187,078) Ordinary shares issued during the year: GBP2,000 (2007:
GBP9,000) was credited to share capital and GBP147,000 (2007: GBP662,000) to
share premium.
The preference shareholders take priority over the ordinary shareholders when
there is a distribution upon winding up the Company or on a reduction of equity
involving a return of capital. The holders of preference shares are entitled to
vote at a general meeting of the Company if a preference dividend is in arrears
for six months or the business of the meeting includes the consideration of a
resolution for winding up the Company or the alteration of the preference
shareholders' rights
Within the retained earnings reserve are own shares held. The investment in own
shares represents 413,302 (2007: 445,396) ordinary shares of the Company held in
trust for the benefit of directors and employees for future payments under the
Share Incentive Plan and Long-term incentive plan. The dividends on these shares
have been waived.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of foreign operations.
Capital redemption reserve
The capital redemption reserve arises when the Company redeems shares wholly out
of distributable profits.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change
in the fair value of cash flow hedging instruments that are determined to be an
effective hedge.
Dividends
The following dividends were paid in the year per qualifying ordinary share:
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| 14.0p final dividend (2007: 11.65p) | 12,075 | 10,051 |
+-----------------------------------------------------------+------------+-----------+
| 9.25p interim dividend (2007: 7.7p) | 7,979 | 6,645 |
+-----------------------------------------------------------+------------+-----------+
| 2008 additional interim dividend 11.5p | 9,916 | - |
+-----------------------------------------------------------+------------+-----------+
| 2007 additional interim dividend 9.3p | - | 8,036 |
| | _____ | _____ |
+-----------------------------------------------------------+------------+-----------+
| | 29,970 | 24,732 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
After the balance sheet date the following dividends per qualifying ordinary
share were proposed by the directors. The dividends have not been provided for
and there are no corporation tax consequences.
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| Final proposed dividend per qualifying ordinary share | | |
+-----------------------------------------------------------+------------+-----------+
| 16.75p | 14,490 | |
| | ===== | |
+-----------------------------------------------------------+------------+-----------+
| 14.00p | | 12,116 |
| | | ===== |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Additional interim dividends per qualifying ordinary | | |
| share proposed for 2009 | | |
+-----------------------------------------------------------+------------+-----------+
| - | - | |
| | ===== | |
+-----------------------------------------------------------+------------+-----------+
| 11.5p | | 10,000 |
| | | ===== |
+-----------------------------------------------------------+------------+-----------+
13. Earnings per share
Basic earnings per share
Earnings per share is calculated for both the current and previous years using
the profit attributable to the ordinary shareholders for the year. The earnings
per share calculation is based on 86.1m shares (2007: 86.1m shares) being the
weighted average number of ordinary shares in issue (net of own ordinary shares
held) for the year.
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Net profit attributable to ordinary shareholders | 53,420 | 39,296 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
| Weighted average number of ordinary shares | | |
| | | |
+-----------------------------------------------------------+------------+-----------+
| Issued ordinary shares at 1 January | 86,024 | 85,999 |
+-----------------------------------------------------------+------------+-----------+
| Effect of own shares held | 21 | 54 |
+-----------------------------------------------------------+------------+-----------+
| Effect of shares issued under Share option schemes / | 99 | 93 |
| Sharesave plans | _____ | _____ |
+-----------------------------------------------------------+------------+-----------+
| Weighted average number of ordinary shares for the year | 86,144 | 86,146 |
| ended 31 December | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
Diluted earnings per share
Diluted earnings per share is based on the profit for the year attributable to
the ordinary shareholders and 86.7m shares (2007: 86.9m shares). The number of
shares is equal to the weighted average number of ordinary shares in issue (net
of own ordinary shares held) adjusted to assume conversion of all potentially
dilutive ordinary shares. The Company has three categories of potentially
dilutive ordinary shares: those share options granted to employees under the
Share option scheme and Sharesave plan where the exercise price is less than the
average market price of the Company's ordinary shares during the year and
contingently issuable shares awarded under the Long-term incentive plan.
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Net profit attributable to ordinary shareholders | 53,420 | 39,296 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
| Weighted average number of ordinary shares (diluted) | | |
| | | |
+-----------------------------------------------------------+------------+-----------+
| Weighted average number of ordinary shares for the year | 86,144 | 86,146 |
| ended 31 December | | |
+-----------------------------------------------------------+------------+-----------+
| Effect of share options in issue | 17 | 30 |
+-----------------------------------------------------------+------------+-----------+
| Effect of Sharesave options in issue | 116 | 113 |
+-----------------------------------------------------------+------------+-----------+
| Effect of LTIP shares in issue | 416 | 604 |
| | _____ | _____ |
+-----------------------------------------------------------+------------+-----------+
| Weighted average number of ordinary shares (diluted) for | 86,693 | 86,893 |
| the year ended 31 December | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
14. Related parties
The Group has a related party relationship with its subsidiaries and with its
directors and key management. A list of subsidiaries is shown on pages 80 to 81
of the 2007 annual report and account. Transactions between two subsidiaries for
the sale and purchase of products or the subsidiary and parent for management
charges are priced on an arms length basis.
Sales to subsidiaries and associates of BAE Systems plc, a related party by
virtue of non-executive director IG King's directorship of that company,
totalled GBP32,000 during the year (2007: GBP20,000) and there are no amounts
outstanding at 31 December 2008 (2007: GBPnil).
Key management emoluments
The emoluments of those members of the management team, including directors, who
are responsible for planning, directing and controlling the activities of the
Group are:
+-----------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+-----------------------------------------------------------+------------+-----------+
| | | |
+-----------------------------------------------------------+------------+-----------+
| Emoluments including social security costs | 2,535 | 2,331 |
+-----------------------------------------------------------+------------+-----------+
| Post employment benefits | 388 | 316 |
+-----------------------------------------------------------+------------+-----------+
| Share based payments | 760 | 898 |
| | _____ | _____ |
+-----------------------------------------------------------+------------+-----------+
| | 3,683 | 3,545 |
| | ===== | ===== |
+-----------------------------------------------------------+------------+-----------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSUFMESUSEID
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