TIDMROR
RNS Number : 9872B
Rotork PLC
01 March 2011
Rotork p.l.c.
2010 Full Year Results
% change
(constant
2010 2009 % change currency)
Revenue GBP380.6m GBP353.5m +7.6% +6.5%
Operating profit GBP97.7m GBP91.5m +6.8% +2.6%
Profit before tax GBP97.9m GBP90.9m +7.6% +3.5%
Adjusted* profit before
tax GBP99.6m GBP91.5m +8.8% +4.7%
Basic earnings per share 80.5p 74.2p +8.4% +4.2%
Adjusted* basic earnings
per share 82.4p 74.9p +10.1% +6.0%
Final dividend 19.75p 17.25p +14.5%
Additional dividend 11.50p 11.50p
* Adjusted figures are before the amortisation of acquired
intangible assets and property disposal in 2009
Key Points
-- Record revenue and profit
-- Growth in all divisions and all market sectors
-- Record order intake, up 17.0%
-- Improving adjusted* margins, aided by currency
-- Cash generation strong, with period-end cash balances of
GBP97.9m
Peter France, Chief Executive, commenting on the results,
said:
"The long-term growth prospects continue to be positive for
Rotork as we benefit from infrastructure investment in both new and
existing plant. The need for automation is increasing as our
customers drive plant safety improvements through their
organisations and seek greater operating efficiencies.
Our wide geographic presence, especially in the countries
experiencing the greatest growth in demand, the breadth of our
product portfolio and strength of our customer relationships, puts
us in a strong position to benefit from a continued increase in
business activity.
Following several years of favourable movements in foreign
exchange, currency may provide a headwind in the current year.
However, the current order book and market activity support the
Board's expectation of making further progress in 2011."
For further information, please contact:
Rotork p.l.c. Tel: 01225 733200
Peter France, Chief Executive
Jonathan Davis, Finance Director
Financial Dynamics Tel: 020 7269 7291
Nick Hasell / Richard Mountain
Chairman's statement
I am pleased to report that 2010 was another year in which
Rotork delivered record revenue and profit, with progress being
made by all three divisions. Market conditions improved compared
with the previous year and this was reflected in the record order
intake. The broad base of our business and the level of emerging
market focus ensured that, whilst not all our geographic markets
grew in the year, each end-market, division, and the Group as a
whole, did. Through the year we have continued to invest in our
facilities, our people and our products to enable the Group to
capitalise on the long-term growth prospects in the markets we
currently serve. At the same time, investment in product
development and potential acquisitions will widen what we define as
our addressable market so that we continue to create value for our
shareholders.
Financial Highlights
Revenue of GBP380.6m was 7.6% higher than the previous year and
with profit before tax up 7.6% to GBP97.9m, Group return on sales
was in line with last year at 25.7%. Currency was a less
significant factor this year than it has been for several years but
remained a tailwind, with the majority of the impact arising in the
second half of the year. Cash balances of GBP97.9m at the end of
the year reflected strong cash generation throughout the year.
Divisional Highlights
Rotork Controls, the division which manufactures and sells our
range of market-leading electric actuators and includes the Rotork
Process Control products, reported revenue growth of 7.0% to
GBP243.4m. This division contributed 63.9% of Group revenue.
Operating profit rose to GBP78.8m, up 8.5% and the division
achieved a 32.4% operating margin compared with 31.9% in the prior
year. Some of the larger projects which were delayed through 2009
returned in 2010 and this was seen in a number of countries and
market sectors. Quotation levels remained positive as did the
number of active projects we are tracking globally, with the
medium-term prospects in each of the oil & gas, power and water
markets encouraging. In India, an important growth market for us,
we opened a new factory in Bangalore and also started work to
rebuild our existing factory in Chennai. This will increase our
manufacturing capacity and provide a platform to address the
increasing demand from India. Once completed in 2011, it will also
house our innovation, design and engineering centre ('RIDEC') that
was announced in August 2010 and which is currently operating from
temporary offices.
Rotork Fluid Systems, which manufactures and sells pneumatic and
hydraulic actuators, and is more focused on the oil & gas
market than the other parts of the Group, was the division most
affected by the slowdown in 2009 and, accordingly, saw the most
significant rebound in order input, up 35.1%. Revenue grew 7.1% to
GBP106.8m but operating profit fell 6.8% to GBP13.3m as operating
margins reduced from 14.3% last year to 12.4% in 2010. Margins
improved in the second half, as a result of higher volumes and the
return of competitive price pressures to more normal levels, but
over the year as a whole this did not offset lower first half
margins which were affected by the continuation of the difficult
trading environment in 2009, the slightly dilutive effect of an
acquisition and the higher amortisation charge. The division's
continued organic growth was augmented by Ralph A. Hiller
('Hiller'), purchased in May as part of our strategy of developing
our sales coverage and increasing our presence in the important
nuclear power market. The business has a distribution arm as well
as the nuclear actuator manufacturing arm and, whilst further
investment is needed to maximize the potential of the acquisition,
the addition of its nuclear-certified hydraulic actuators has
broadened Rotork's nuclear product offering. Integration of Hiller
is progressing well and its understanding of the nuclear industry
is already benefiting other parts of the Group.
Rotork Gears, which manufactures and sells manual and motorized
gearboxes, grew revenue by 6.5% to GBP39.2m. As a result of these
higher revenues and a continued focus on costs, operating margins
improved to 23.2%, reversing most of the reduction seen in 2009.
Operating profit was GBP9.1m, 13.4% higher than the prior year.
Rotork Gears remains the consolidator in what is a very fragmented
market and has built on its leading position in the year with the
launch of new products and by targeting new customers in countries
with the greatest potential for growth.
Cash generation
Cash balances have increased to GBP97.9m in the year as a result
of strong operating cash flows. The main outflows were tax and
dividends, as well as the GBP5.5m acquisition of Hiller. We remain
focused on working capital management but higher levels of revenue
towards the end of 2010 meant net working capital absorbed GBP14.0m
of cash during the year. Despite this, our cash generation key
performance indicator, which measures conversion of operating
profit into cash, was 96.5%. Going forward, we intend to use this
cash to generate incremental shareholder value, either through our
continued strategy to augment our business with acquisitions or via
special dividends.
Dividend
The Board recommends a final dividend of 19.75p per share which,
taken together with the interim dividend, gives a payment of 32.5p
per share (2009: 28.4p), representing a 14.4% increase. This
dividend will be payable on 6 May 2011 to shareholders on the
register on 8 April 2011. As a result of this increase, dividend
cover will reduce to 2.5 times (2009: 2.6). In addition, the
directors intend to pay a special dividend of 11.5p per share on 24
June 2011 to shareholders on the register on 27 May 2011. This
represents a further cash distribution of GBP10.0m.
Board Composition
I am pleased to welcome Gary Bullard to the Board as a
non-executive director. Gary previously held sales director and
managing director roles at IBM and BT Group and now provides
management consultancy services to large IT and telecommunications
companies. He is a member of the Audit and Nomination Committees
and Chairman of the Remuneration Committee.
Corporate Governance
High standards of corporate governance are rightly expected of
the Board and we remain committed to those principles which ensure
we run our business in a responsible way. Following publication of
the UK Corporate Governance Code June 2010 by the Financial
Reporting Council, we intend to introduce annual re-election for
the Chairman and all the other Directors. We have always believed
that good governance stems from a quality Board with a breadth of
experience and skills and non-executives who are able to provide
the necessary level of question and debate in the Boardroom. The
purpose of our annual appraisal of Board effectiveness is to ensure
that our Board is able to participate meaningfully in discussion
and make objective and informed decisions. Following the latest
review, I am satisfied the composition of the Board enables it to
fulfil its expected role.
Outlook
The long-term growth prospects continue to be positive for
Rotork as we benefit from infrastructure investment in both new and
existing plant. The need for automation is increasing as our
customers drive plant safety improvements through their
organisations and seek greater operating efficiencies.
Our wide geographic presence, especially in the countries
experiencing the greatest growth in demand, the breadth of our
product portfolio and strength of our customer relationships, puts
us in a strong position to benefit from a continued increase in
business activity.
Following several years of favourable movements in foreign
exchange, currency may provide a headwind in the current year.
However, the current order book and market activity support the
Board's expectation of making further progress in 2011.
Roger Lockwood
Chairman
28 February 2011
Business Review
Rotork actuators are used to control the flow of liquids and
gases in many different applications across many different end-user
markets. Rotork's markets are often described as oil & gas,
power and water as these are the sectors with the greatest
requirement for actuators. However, our products can also be found
in many other industrial applications - including food and beverage
manufacturing, chemicals, mining and shipboard systems.
Our customers are located throughout the world and in order to
provide the local support our customers require, so are we. Rotork
has 105 offices across 30 countries, which are supplemented by a
further 254 sales outlets, bringing the total number of countries
with a Rotork presence to 87. From its foundation, Rotork has
brought new technology to actuators and continues to set new
standards in developing innovative, functionally-advanced, high
quality products within each of its divisions.
The final component of Rotork's business model is the method of
manufacture. We outsource component manufacture, so most of our
manufacturing plants buy components in a relatively finished form.
These are then assembled to meet the requirements of a particular
customer order. This provides the necessary flexibility in the
sourcing of components that supports our 17 worldwide manufacturing
operations and ensures we maintain a high return on capital
employed.
Year under review
In the same way that some parts of the world were more severely
affected than others by the economic disruption of 2009, the start
of the year saw a wide variation in the rate at which they
rebounded. In the first quarter, Rotork saw order intake return to
near the previous peak. However, the pattern of demand was uneven
and customers kept their budgets under tight control, this
particularly affected Rotork Fluid Systems where our competitors
were pricing most aggressively in order to rebuild their order
books. The fact that we continued to make progress is testament to
the tremendous hard work of our employees, and customers
appreciating the benefits of Rotork's products and services.
Although the cost of an actuator can be insignificant in the total
cost of a project, our customers understand the importance of
actuators to the overall running of their operations, and recognise
the need to use products that perform reliably, and most of all
safely.
Overall, order intake was GBP381.9m, up 17.0% compared with
2009. Particularly strong improvements were reported by our
businesses in the Netherlands (+123%), Italy (+32%) and China
(+27%), with all regions showing growth. Removing the positive
impacts of currency and the Hiller acquisition, order intake was
12.9% ahead of the prior year.
The revenue split between half years returned to a more
customary weighting in favour of the second half as the improvement
in orders took effect. In total, revenue advanced 7.6% to GBP380.6m
which, excluding the effects of currency and Hiller represented a
4.6% increase. The closing order book was GBP138.9m, up GBP9.9m
from the start of the year, including the GBP5.1m order book
acquired with Hiller. Operating margins reduced by 0.2 percentage
points to 25.7%, mainly as a result of higher amortisation costs.
Return on sales, as defined in our key performance indicators, was
maintained at 25.7% and profit before taxation rose 7.6% to
GBP97.9m.
The establishment of the Rotork Innovation Design and
Engineering Centre ('RIDEC'), based in India, supplements our
already-growing divisional engineering teams and provides the
opportunity to improve the capacity and speed of our product
development. India has also benefited from one new factory during
2010, in Bangalore, and we are now in the process of building
another in Chennai. The Bangalore plant has provided space for the
Gears division to start assembly in India. The factory in Chennai
will replace an ageing facility which has been making electric
actuators for over 30 years. Through these two world-class
facilities, our Indian operations will be even better placed to
tackle this large and still-growing market. Elsewhere, in China, we
have enlarged our factory in Shanghai and, in the US, will shortly
relocate to larger premises in Houston. Both businesses have
outgrown their existing sites. We have also expanded our operations
in the Middle East, moving to a new facility in Saudi Arabia and
increasing Rotork's presence in the region. We will look to develop
this further in 2011.
Looking at our main markets, and the underlying factors
supporting investment in oil & gas, power and water
infrastructure, there is reason to be confident in the prospects of
each - both in the medium and long-term. Through our broad
geographic coverage and product portfolio we remain focused on
meeting our customers' growing needs. However, we still see
opportunities to expand our direct presence in new territories -
whether through acquisition, as we recently have in Mexico, or
organically as in Brazil. Similarly, we continue to seek suitable
opportunities to expand our product offering, both organically and
through acquisition.
Rotork Controls
Rotork Controls, which manufactures and sells the electric
actuators on which Rotork originally built its name, still accounts
for 63.9% of the Group's sales and remains the highest margin
division. In the year, order intake increased by 9.1% and revenue
grew by 7.0% to GBP243.4m. The closing order book was GBP85.8m, up
1.2%.
Controls has the widest end-market exposure and improved
activity levels were seen across all sectors. Within oil & gas,
electric actuators are found in greater numbers on downstream and
transmission applications, and tank storage was particularly strong
in the year. We also saw an improving trend in the water market,
reversing the position at the half year.
Operating profit increased by 8.5% to GBP78.8m with margins
fractionally higher at 32.4%. This division was less affected by
the pricing pressure felt earlier in the year and has been able to
use the benefit of operational gearing to offset the costs of
investing in new facilities and people. These investments position
the division for further growth. At the same time, our outsourced
manufacturing model has meant that modest cost increases from
commodity price rises have been mostly offset by sourcing
initiatives.
Rotork Fluid Systems
Since its formation as a stand-alone division in 2001, revenue
in Rotork Fluid Systems ('RFS') has risen to GBP106.8m, up 7.1% in
the year. Although this growth has been assisted by acquisitions,
the more significant benefits have been derived from the
integration of each acquired business into the Group, and their use
of our existing sales channels. RFS supplies pneumatic and
hydraulic powered actuators and control systems from its seven
factories and through a further seven Centres of Excellence, where
added value services can be provided to the local customer.
RFS is the division most focused on the oil & gas market,
and having felt the biggest decline in orders in 2009, it has now
seen the biggest rebound, with order intake up 35.1% in 2010 and
the order book increasing to GBP45.9m. We have continued to
strengthen our engineering and R&D infrastructure and at the
same time invest in improving our facilities. When the cost of
these initiatives are combined with the pricing pressure
experienced earlier in the year, they outweighed the benefits
gained through operational gearing and material cost control,
resulting in a reduction in operating margins to 12.4%, down 1.9
percentage points. RFS is now better placed to capitalise on
project opportunities and operational gearing remains a key
determinant of the division's margins.
Rotork Gears
Rotork Gears supplies manual and motorized gearboxes and
ancillaries to the valve industry. Unlike the Controls and RFS
divisions, where sales are project-focused, this division sells
direct to valvemakers through long-term supply agreements, and with
deliveries at regular intervals. These customers buy from Rotork
due to the guarantee of quality and reliability of supply, as the
alternative is often their own small-scale gearbox production or
local independent vendors. We can also typically provide cost
savings due to the scale of our operations and worldwide delivery
from the six Gears factories.
Revenue from third party sales rose 14.8% in the year to
GBP30.4m as a result of an increased sales effort in a number of
developing markets and the successful launch of new products. Total
revenue for this division increased at a lesser rate, up 6.5% to
GBP39.2m, reflecting lower sales to other Rotork divisions.
Operating margins had been under pressure in 2009 but the
combination of higher revenue and the drive to reduce material
costs, even against a commodity cost headwind, saw margins improve
to 23.2%.
Rotork Site Services
Our after sales and service business, Rotork Site Services
('RSS') operates through each of the three divisions and is
reported within their results. Growing this business forms a key
part of the Group's strategy and during the year we have opened
service centres in six new locations, from New Zealand to Southern
France, although many of the activities RSS performs are carried
out on customers' sites. Our continued investment in RSS will
ensure that we are able to respond to customer's requirements
promptly, and underlines our commitment to supporting our products
in the field from a local base.
RSS activities are divided into a number of revenue streams and,
whilst we do not report the financial results of these, we are able
to monitor other metrics to assess growth. During the year we have
increased the number of service engineers by 8% - perhaps the best
indication of overall activity levels. These service engineers have
responded to 33% more service calls, fitted 18% more actuators to
valves at customers' plants and 17% more actuators to new valves in
our workshops. We also have 4% more actuators on preventative
maintenance contracts, where customers have outsourced their
maintenance requirements to Rotork.
Strategy
Rotork's vision is to be the recognised global leader in
electric, fluid power, manual valve actuation and associated
products and services. We focus on valve actuation and associated
products and services, 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, technically advanced,
innovative products and services that support our customers'
activities 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 seek to deliver quality margins, consistent year on
year growth in revenues, profit and core dividends through organic
growth and acquisitions.
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.
To provide short-term focus, we agree a set of key objectives,
the broad areas of which are the same for 2011 as they were for
2010 although all parts relating to corporate and social
responsibility have now been grouped together under one objective.
In addition, the initiatives within each area have progressed.
The key objectives are:
1. Sales growth - The drive for organic growth requires
subsidiaries to sell all the products available to them and target
all end-markets within their geographies.
-- 2010 - New Middle East sales subsidiary, new Bangalore
factory, establishment of RFS China, growth of sales force
worldwide.
-- 2011 - Move to larger premises in Houston, restructuring of
US sales offices, new Chennai factory, expansion of China
factory.
2. Product development - This investment will continue in 2011
and will result in enhancements to existing products and new
products entering the market.
-- 2010 - Expansion of wireless capabilities, new gearbox
ranges, start up of Rotork Innovation Design and Engineering Centre
('RIDEC'), nuclear qualification of products.
-- 2011 - Growth of RIDEC, expansion of RPC ranges, investment
in nuclear products and other projects that will benefit Rotork in
2012 and beyond.
3. Acquisitions - These are a core part of our growth strategy
and we continue to seek suitable opportunities. We require an
acquisition to bring Rotork either a new product, a new
geographical market or a new market sector. Often the target will
satisfy two or even three of these criteria. The size of the
acquisitions we are prepared to undertake is limited by
opportunity, rather than by our financial capacity but we retain a
rigorous and disciplined approach to acquisition pricing.
-- 2010 - Acquisition of Hiller.
-- 2011 - Acquisition of Rotork Mexico.
4. Manufacturing and facilities - Rotork has invested in a
number of factories and sales offices to develop world class
facilities from which to work. The investment programme will
continue into 2011.
-- 2010 - New factory in Bangalore, investment in Bath
factory
-- 2011 - New factory in Chennai, expansion of Shanghai factory,
new Houston sales and service facility, new offices in Saudi
Arabia
5. Material cost management - Rotork's outsourced manufacturing
model means that material costs are the most significant component
of direct costs. We have always sought to control these costs and
wherever possible leverage our global presence to source
materials.
-- 2010 - Gross margin increased in the year as rising commodity
costs were mitigated through a combination of sourcing initiatives
and passing through the increases.
-- 2011 - Continue to look for opportunities to take costs out
of our products through sourcing or product development. This will
include expanding our sourcing network through teams based in each
of our factories.
6. Development of Rotork Site Services ('RSS') - RSS has grown
over the last few years to become a revenue generator as well as a
key differentiator for Rotork.
-- 2010 - Increased the number of service engineers by 8%,
invested in the service workshops in six locations, three of which
are new facilities.
-- 2011 - Continue to expand the service team and establish new
workshops where there is customer demand.
7. IT - Develop a global system for the sales and service
offices.
-- 2010 - Commenced the design of the solution.
-- 2011 - Finalise the design and begin roll-out.
8. Nuclear - Expand our nuclear-certified product offering and
ensure we are positioned to take advantage of increased activity in
this market.
-- 2010 - The purchase of Ralph A. Hiller was central to
achieving this objective. Re-qualification of our nuclear electric
actuators was also achieved during the year.
-- 2011 - We will continue to develop our traditional products
for use in nuclear applications as well as working with Hiller to
enhance their products.
9. Corporate and Social Responsibility - Our consideration of
Corporate and Social responsibility ('CSR') and objectives cover
three distinct areas. The Rotork approach to health and safety is
to disseminate best practice around the Group, training those
responsible and then verify adoption through auditing each
subsidiary.
-- 2010 - The improvement in audit scores and reduction in the
Accident Frequency Rate KPI show we are making progress.
-- 2011 - Continue the initiatives which have already delivered
improvements.
People development - Throughout the Group we look to develop
internal talent and promote from within where possible. Encouraging
people to build their career within Rotork and helping them
identify their training needs allows each individual to reach their
full potential. Feedback on our success in this is obtained through
our Employee Satisfaction Survey.
Processes and ethics - We continue to embed a high-performance
culture and the delivery of our Corporate Social Responsibility
agenda. Communication of Rotork's Ethics and Values is now part of
the induction process for new employees and new agents and takes
due account of the Bribery Act 2010 and the associated draft
guidelines. These core ethical values will ensure each individual
employee acts at all times with integrity, honesty and fairness
towards those whom they engage. 2010 saw greater employee
participation in supporting local charities, as well as WaterAid,
the nominated Group charity.
Research & Development
A major initiative during 2010 has been the setting up of the
Rotork Innovation and Design Engineering Centre ('RIDEC') in
Chennai, India. This facility became operational in the last
quarter and is intended to provide a multi-disciplinary technical
resource to all business units within the Group. RIDEC will help
with both the engineering integration of acquired businesses that
may employ different CAD systems and processes, and the development
of new and enhanced products across the Group. It will continue to
recruit through the year, aiming to be at full strength by the end
of 2011.
The key differentiating features of an electric actuator are
motor control, robust communications links, and sensor technology,
and our Bath-based engineers remain active in all of these areas.
At the end of the year we commenced production of a variant of our
IQ series using a novel valve position sensor. This represents the
conclusion of several years' research into position measurement
techniques and the search for a cost-effective alternative to our
existing technology. In addition, we have continued the development
of our wireless network and are now ready to move from pilot
installations to deployment within an operational environment.
There are still challenges ahead but this represents an exciting
step forward.
As in previous years we have continued our efforts to gain
leverage by applying our IQ technology to other products within the
Group. Products scheduled for release by the RFS division during
2011 mark the culmination of this activity. Work has continued on
the control valve actuator ('CVA') to increase the range of options
available and to extend the torque and thrust capability of the
family. A larger size is now planned for introduction in 2011.
Throughout 2010, the Process Controls division ('RPC') has been
working on the development of a new family of linear, rotary and
quarter-turn actuators that will complement the CVA range and
replace some of its older products. The first sizes of this new
family are due for release during 2011.
In tandem with the acquisition of Hiller, we have substantially
increased our resources committed to the development of our nuclear
product portfolio. We have completed re-qualification of the
existing nuclear electric actuator range to IEEE382 1996, together
with seismic qualification of the 90NA/ISN19 actuator/gearbox
combination; the 90NA/ISN19 being the largest combination that we
produce. We are also actively engaged in the design and
qualification of electric and fluid power actuators suitable for
use within Westinghouse-designed AP1000 and Areva EPR nuclear power
stations.
Quality
Commitment to product excellence and exceeding customer
expectations is a fundamental part of Rotork's strategy. A
quality-driven focus is embedded in all our business processes,
from procurement and vendor approval, through to manufacture and
delivery, and extends into our site service activities. All Rotork
manufacturing sites are required to be registered with a Quality
Management Approval System to ISO9000 standards, and are required
to adopt Rotork systems and working practices.
Our divisional structure and decentralised procurement &
manufacturing hubs allow us to disseminate best practice between
our businesses, and foster a culture of continuous improvement at
all levels, which is reviewed in quality audits. KPIs allow us to
target, monitor and improve our performance and instil an approach
that is focused on the customer. Techniques such as six sigma and
lean manufacturing principles are used extensively and allow us to
leverage world-class standards and place ourselves at the leading
edge of product quality and performance.
Peter France
Chief Executive
28 February 2011
Consolidated Income Statement
for the year ended 31 December 2010
Notes 2010 2009
GBP'000 GBP'000
Revenue 2 380,560 353,521
Cost of sales (199,742) (187,600)
______ ______
Gross profit 180,818 165,921
Other income 83 688
Distribution costs (3,604) (3,428)
Administrative expenses (79,513) (71,585)
Other expenses (60) (59)
Operating profit before the amortisation
of acquired intangible assets and the
disposal of property 99,442 92,103
Amortisation of acquired intangible assets (1,718) (1,153)
Disposal of property - 587
Operating profit 97,724 91,537
Financial income 3 6,931 5,784
Financial expenses 3 (6,800) (6,405)
______ ______
Profit before tax 97,855 90,916
Income tax expense 4 (28,334) (26,884)
______ ______
69,521 64,032
Profit for the year ===== =====
Pence Pence
Basic earnings per share 10 80.5 74.2
Diluted earnings per share 10 80.2 73.9
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
2010 2009
GBP'000 GBP'000
Profit for the year 69,521 64,032
Other comprehensive income
Foreign exchange translation differences 1,119 (11,928)
Actuarial gain / (loss) in pension scheme 1,095 (11,290)
Effective portion of changes in fair value
of cash flow hedges 674 5,046
______ ______
Income and expenses recognised directly
in equity 2,888 (18,172)
Total comprehensive income for the year 72,409 45,860
===== =====
Consolidated Balance Sheet
at 31 December 2010
Notes 2010 2009
GBP'000 GBP'000
Assets
Property, plant and equipment 25,780 23,521
Intangible assets 5 43,990 40,780
Deferred tax assets 11,480 11,631
Other receivables 7 1,290 1,119
______ ______
Total non-current assets 82,540 77,051
Inventories 6 48,241 46,712
Trade receivables 7 70,362 53,791
Current tax 7 2,398 1,818
Derivative financial instruments 918 942
Other receivables 7 6,684 6,197
Cash and cash equivalents 8 97,881 78,676
______ ______
226,484 188,136
Total current assets ______ ______
309,024 265,187
Total assets ===== =====
Equity
Issued equity capital 9 4,334 4,330
Share premium 7,389 7,033
Reserves 16,201 14,406
Retained earnings 175,927 140,402
______ ______
203,851 166,171
Total equity ===== =====
Liabilities
Interest bearing loans and borrowings 127 162
Employee benefits 19,752 22,549
Deferred tax liabilities 3,165 1,970
Derivative financial instruments - 127
Provisions 11 1,968 1,664
______ ______
Total non-current liabilities 25,012 26,472
Interest bearing loans and borrowings 49 104
Trade payables 12 30,447 26,350
Employee benefits 8,220 7,252
Current tax 12 10,821 9,768
Derivative financial instruments 294 1,130
Other payables 12 26,334 24,690
Provisions 11 3,996 3,250
______ ______
Total current liabilities 80,161 72,544
Total liabilities 105,173 99,016
______ ______
Total equity and liabilities 309,024 265,187
===== =====
Consolidated Statement of Changes in Equity
Issued Capital
equity Share Translation redemption Hedging Retained
capital premium reserve reserve reserve earnings Total
Balance at 31
December
2008 4,325 6,666 24,909 1,642 (5,263) 112,117 144,396
Profit for the
year - - - - - 64,032 64,032
Other
comprehensive
income
-------- -------- ------------ ----------- -------- --------- ---------
Foreign
exchange
translation
differences - - (11,928) - - - (11,928)
Effective
portion of
changes in
fair value of
cash flow
hedges - - - - 5,046 - 5,046
Actuarial
gains and
losses on
defined
benefit
pension plans
net of tax - - - - - (11,290) (11,290)
-------- -------- ------------ ----------- -------- --------- ---------
Total other
comprehensive
income - - (11,928) - 5,046 (11,290) (18,172)
-------- -------- ------------ ----------- -------- --------- ---------
Total
comprehensive
income - - (11,928) - 5,046 52,742 45,860
Transactions
with owners,
recorded
directly in
equity
Equity settled
share-based
payment
transactions
net of tax - - - - - 48 48
Share options
exercised by
employees 5 367 - - - - 372
Own ordinary
shares
acquired - - - - - (3,700) (3,700)
Own ordinary
shares
awarded under
share
schemes - - - - - 3,297 3,297
Dividends - - - - - (24,102) (24,102)
-------- -------- ------------ ----------- -------- --------- ---------
Balance at 31
December
2009 4,330 7,033 12,981 1,642 (217) 140,402 166,171
Profit for the
year - - - - - 69,521 69,521
Other
comprehensive
income
-------- -------- ------------ ----------- -------- --------- ---------
Foreign
exchange
translation
differences - - 1,119 - - - 1,119
Effective
portion of
changes in
fair value of
cash flow
hedges - - - - 674 - 674
Actuarial
gains and
losses on
defined
benefit
pension plans
net of tax - - - - - 1,095 1,095
-------- -------- ------------ ----------- -------- --------- ---------
Total other
comprehensive
income - - 1,119 - 674 1,095 2,888
-------- -------- ------------ ----------- -------- --------- ---------
Total
comprehensive
income - - 1,119 - 674 70,616 72,409
Transactions
with owners,
recorded
directly in
equity
Equity settled
share-based
payment
transactions
net of tax - - - - - 195 195
Share options
exercised by
employees 4 356 - - - - 360
Own ordinary
shares
acquired - - - - - (2,876) (2,876)
Own ordinary
shares
awarded under
share
schemes - - - - - 3,506 3,506
Preference
shares
redeemed - - - 2 - (4) (2)
Dividends - - - - - (35,912) (35,912)
-------- -------- ------------ ----------- -------- --------- ---------
Balance at 31
December
2010 4,334 7,389 14,100 1,644 457 175,927 203,851
-------- -------- ------------ ----------- -------- --------- ---------
Detailed explanations for equity capital, translation reserve,
capital redemption reserve and hedging reserve can be seen in note
9. Consolidated Statement of Cash Flows
for the year ended 31 December 2010
Notes 2010 2010 2009 2009
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the year 69,521 64,032
Adjustments for:
Amortisation of intangibles 1,718 1,153
Amortisation of development costs 639 402
Depreciation 3,972 3,549
Equity settled share-based
payment expense 1,086 872
Profit on sale of property, plant
and equipment (12) (598)
Financial income (6,931) (5,784)
Financial expenses 6,800 6,405
Income tax expense 28,334 26,884
______ ______
105,127 96,915
Decrease in inventories 489 9,680
(Increase) / decrease in trade
and other receivables (14,503) 5,967
Increase / (decrease) in trade
and other payables 3,189 (4,032)
Difference between pension charge
and cash contribution (844) (1,350)
Increase / (decrease) in
provisions 385 (257)
Increase in other employee
benefits 507 272
______ ______
94,350 107,195
Income taxes paid (26,186) (27,548)
______ ______
Cash flows from operating
activities 68,164 79,647
Investing activities
Purchase of property, plant and
equipment (5,034) (4,238)
Development costs capitalised (1,018) (768)
Sale of property, plant and
equipment 154 908
Acquisition of businesses (5,621) (4,892)
Interest received 483 270
______ ______
Cash flows from investing
activities (11,036) (8,720)
Financing activities
Issue of ordinary share capital 360 372
Purchase of ordinary share
capital (2,876) (3,700)
Purchase of preference shares
treated as debt (4) -
Interest paid (88) (176)
Repayment of amounts borrowed (464) (27)
Repayment of finance lease
liabilities (102) (94)
Dividends paid on ordinary shares (35,912) (24,102)
______ ______
Cash flows from financing
activities (39,086) (27,727)
______ ______
Increase in cash and cash
equivalents 18,042 43,200
Cash and cash equivalents at 1
January 78,676 41,390
Effect of exchange rate 1,163 (5,914)
fluctuations on cash held _____ ______
Cash and cash 8 97,881 78,676
equivalents at 31 ===== =====
December
Notes to the Financial Statements
for the year ended 31 December 2010
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 2010 comprise the Company and its subsidiaries
(together referred to as the 'Group').
1. Accounting policies
Basis of preparation
The consolidated financial statements of Rotork p.l.c. 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 2006 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 below.
New accounting standards and interpretations
The following standards and interpretations became effective for
the current reporting period:
IFRS3, 'Business combinations (revised)', was adopted from 1
January 2010. The main difference to Rotork is that previously
capitalised acquisition costs are now being expensed. The change
has not had a material impact on the financial statements.
Amendments to IFRS 2, Group Cash-settled Share-based Payment
Transactions, IAS 27 Consolidated and Separate Financial
Statements, IAS 39 'Financial Instruments: Recognition and
Measurement: Eligible Hedged Items', and IAS 39 'Reclassification
of Financial Assets: Effective Date and Transition' did not have a
material impact on the financial statements.
Amendments to IFRS 1, Additional Exemptions for First-time
Adopters is not applicable to the Group.
No interpretations which became effective in 2010 were relevant
to the Group.
Recent accounting developments
Standards, amendments or interpretations which have been issued
by the International Accounting Standards Board or by the IFRIC,
and application was not mandatory in the period are not expected to
have a material impact on the Group. Subject to endorsement by the
European Union, these standards, amendments or interpretations will
be adopted in future periods.
Going concern
The Company has considerable financial resources together with a
significant order book, with customers across different geographic
areas and industries. As a consequence, the directors believe that
the Company is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
The directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Thus the going concern basis is adopted in
preparing the annual financial statements.
Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries for the year to 31
December 2010. 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 2010 or 2009. Statutory accounts
for 2009, which were prepared under International Financial
Reporting Standards as adopted by the EU, have been delivered to
the registrar of companies, and those for 2010 will be delivered in
due course. The auditors have reported on those accounts; their
reports were (i) unqualified, (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Full financial statements for the year ended 31 December 2010, will
shortly be posted to shareholders, and after adoption at the Annual
General Meeting on 21 April 2011 will be delivered to the
registrar.
2. Operating segments
The Group has chosen to organise the management and financial
structure by the grouping of related products. The three
identifiable operating segments where the financial and operating
performance is reviewed monthly by the chief operating decision
maker are as follows:
Controls - the design, manufacture and sale of electric valve
actuators
Fluid Systems - the design, manufacture and sale of pneumatic
and hydraulic valve actuators
Gears - the design, manufacture and sale of gearboxes, adaption
and ancillaries for the valve industry
Unallocated expenses comprise corporate expenses.
Geographic analysis
Rotork has a worldwide presence in all three operating segments
through its subsidiary selling offices and through an agency
network. A full list of locations can be found at www.rotork.com or
in the directory on pages 94 to 96 of the Rotork 2009 Annual Report
& Accounts.
Analysis by Operating Segment:
Fluid
Controls Systems Gears Elimination Unallocated Group
2010 2010 2010 2010 2010 2010
--------- -------- ------- ------------ ------------ ---------
Revenue from
external
customers 243,361 106,838 30,361 - - 380,560
Inter segment
revenue - - 8,844 (8,844) - -
--------- -------- ------- ------------ ------------ ---------
Total revenue 243,361 106,838 39,205 (8,844) - 380,560
--------- -------- ------- ------------ ------------ ---------
Operating
profit
before
amortisation
of acquired
intangibles 78,786 14,911 9,161 - (3,416) 99,442
Amortisation
of acquired
intangibles - (1,659) (59) - - (1,718)
Operating
profit 78,786 13,252 9,102 - (3,416) 97,724
--------- -------- ------- ------------ ------------ ---------
Net financing
income 131
Income tax
expense (28,334)
---------
Profit for
the year 69,521
---------
Fluid
Controls Systems Gears Elimination Unallocated Group
2009 2009 2009 2009 2009 2009
--------- -------- ------- ------------ ------------ ---------
Revenue from
external
customers 227,344 99,726 26,451 - - 353,521
Inter segment
revenue - - 10,373 (10,373) - -
--------- -------- ------- ------------ ------------ ---------
Total revenue 227,344 99,726 36,824 (10,373) - 353,521
--------- -------- ------- ------------ ------------ ---------
Operating
profit
before
amortisation
of acquired
intangibles
and disposal
of property 72,033 15,313 8,086 - (3,329) 92,103
Amortisation
of acquired
intangibles - (1,093) (60) - - (1,153)
Disposal of
property 587 - - - - 587
--------- -------- ------- ------------ ------------ ---------
Operating
profit 72,620 14,220 8,026 - (3,329) 91,537
--------- -------- ------- ------------ ------------ ---------
Net financing
expense (621)
Income tax
expense (26,884)
---------
Profit for
the year 64,032
---------
Fluid
Controls Systems Gears Unallocated Consolidated
2010 2010 2010 2010 2010
Depreciation 2,634 1,124 214 - 3,972
Amortisation:
Other
intangibles
Development - 1,659 59 - 1,718
costs 639 - - - 639
Non-cash items :
equity settled
share-based
payments 609 129 111 237 1,086
Net financing income - - - 131 131
Intangible assets
acquired as part of
a business
combination - 4,102 - - 4,102
Capital expenditure 3,953 940 179 - 5,072
Fluid
Controls Systems Gears Unallocated Consolidated
2009 2009 2009 2009 2009
Depreciation 2,262 1,040 247 - 3,549
Amortisation:
Other
intangibles
Development - 1,093 60 - 1,153
costs 402 - - - 402
Non-cash items :
equity settled
share-based
payments 458 72 79 263 872
Net financing
expense - - - (621) (621)
Intangible assets
acquired as part of
a business
combination - 3,595 - - 3,595
Capital expenditure 3,083 1,094 135 - 4,312
Balance sheets are reviewed by operating subsidiary and
operating segment balance sheets are not prepared, as such no
further analysis of operating segments assets and liabilities are
presented.
Geographical analysis:
Rest of
Rest of Other the
UK Europe USA Americas World Consolidated
2010 2010 2010 2010 2010 2010
Revenue
from
external
customers
by
location
of
customer 24,277 121,595 71,036 39,488 124,164 380,560
Non-
current
assets
-
Intangible
assets 7,248 18,621 13,564 213 4,344 43,990
- Property,
plant and
equipment 6,423 10,618 4,363 230 4,146 25,780
Rest of
Rest of Other the
UK Europe USA Americas World Consolidated
2009 2009 2009 2009 2009 2009
Revenue
from
external
customers
by
location
of
customer 29,314 117,098 65,370 33,081 108,658 353,521
Non-
current
assets
-
Intangible
assets 6,869 19,217 10,207 213 4,274 40,780
- Property,
plant and
equipment 5,200 11,060 3,360 220 3,681 23,521
3. Net financing income
Recognised in the income statement 2010 2009
Interest income 540 226
Expected return on assets in the pension schemes 6,141 5,408
250 150
Foreign exchange gains ______ ______
6,931 5,784
===== =====
Interest expense 79 167
Interest charge on pension scheme liabilities 6,289 5,449
432 789
Foreign exchange losses ______ ______
6,800 6,405
===== =====
Recognised in equity
Effective portion of changes in fair value of
cash flow hedges 457 (217)
Fair value of cash flow hedges transferred to
income statement 217 5,263
Foreign currency translation differences for foreign 1,119 (11,928)
operations ______ ______
1,793 (6,882)
===== =====
Recognised in:
Hedging reserve 674 5,046
Translation reserve 1,119 (11,928)
______ ______
1,793 (6,882)
===== =====
4. Income tax expense
2010 2010 2009 2009
Current tax:
UK corporation tax on profits
for the year 8,645 13,757
Double tax relief - (6,074)
Adjustment in respect of prior (417) (146)
years ______ ______
8,228 7,537
Overseas tax on profits for the
year 18,787 18,560
Adjustment in respect of prior 42 (9)
years ______ ______
18,829 18,551
______ ______
Total current tax 27,057 26,088
Deferred tax:
Origination and reversal of other
temporary differences 1,477 704
Adjustment in respect of prior (200) 92
years ______ ______
Total deferred tax 1,277 796
_____ _____
Total tax charge for year 28,334 26,884
===== =====
Effective tax rate (based on profit
before tax) 29.0% 29.6%
Profit before tax 97,855 90,916
Profit before tax multiplied by
standard rate of corporation tax
in the UK of 28.0% (2009: 28.0%) 27,399 25,456
Effects of:
Non deductible items 785 1,468
Utilisation of overseas tax holidays
and losses (1,127) (898)
Different tax rates on overseas
earnings 1,852 921
Adjustments to tax charge in respect (575) (63)
of prior years ______ ______
Total tax charge for year 28,334 26,884
===== =====
A tax credit of GBP926,000 (2009: credit GBP670,000) 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.
5. Intangible assets
Development Other Development Other
Goodwill costs intangibles Total Goodwill costs intangibles Total
2010 2010 2010 2010 2009 2009 2009 2009
Cost
Balance at 1
January 33,204 4,647 8,409 46,260 32,792 3,879 6,941 43,612
Exchange
differences 230 - 468 698 (1,696) - (19) (1,715)
Internally
developed
during the
year - 1,018 - 1,018 - 768 - 768
Acquisition
through
business 2,473 - 1,629 4,102 2,108 - 1,487 3,595
combinations ______ ______ ______ _____ ______ ______ ______ _____
Balance at 31
December 35,907 5,665 10,506 52,078 33,204 4,647 8,409 46,260
Amortisation
Balance at 1
January - 2,555 2,925 5,480 - 2,153 1,763 3,916
Exchange
differences - - 251 251 - - 9 9
Amortisation
for the year - 639 1,718 2,357 - 402 1,153 1,555
______ ______ ______ _____ ______ ______ ______ _____
Balance at 31 - 3,194 4,894 8,088 - 2,555 2,925 5,480
December ----------------------------_____ _____ _____ _____ ----------------------------_____ _____ _____ _____
Net book 35,907 2,471 5,612 43,990 33,204 2,092 5,484 40,780
value at 31 ===== ===== ===== ===== ===== ===== ===== =====
December Net 32,792 1,726 5,178 39,696
book value
at 31
December
2008
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.
2010 2009
Controls 6,828 6,687
Fluid Systems 21,436 18,753
Gears 7,643 7,764
_____ _____
35,907 33,204
===== =====
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. The
discount rate used is 12.1% (2009: 9.8%), this represents a
reasonable rate for a market participant in this sector. The
discount rate of each business segment is not materially different
to 12.1%. For the Goodwill to become impaired in the CGU with the
minimum headroom, the discount rate would have to increase by 24%.
On this basis each business segment has sufficient headroom and
therefore no impairment write downs are required.
6. Inventories
2010 2009
Raw materials and consumables 30,345 26,998
Work in progress 11,411 13,692
Finished goods 6,485 6,022
______ ______
48,241 46,712
===== =====
Included in cost of sales was GBP147,651,000 (2009:
GBP140,728,000) in respect of inventories consumed in the year.
7. Trade and other receivables
2010 2009
Non-current assets:
Insurance policy 1,158 995
132 124
Other _____ _____
1,290 1,119
Other receivables ===== =====
Current assets:
Trade receivables 72,208 55,384
(1,846) (1,593)
Less provision for impairment of receivables ______ ______
70,362 53,791
Trade receivables - net ===== =====
2,398 1,818
Corporation tax ______ ______
2,398 1,818
Current tax ===== =====
Other non-trade receivables 3,943 3,729
Prepayments and accrued income 2,741 2,468
______ ______
Other receivables 6,684 6,197
===== =====
8. Cash and cash equivalents
2010 2009
Bank balances 40,865 29,704
Cash in hand 95 89
Short-term deposits 56,921 48,883
______ ______
Cash and cash equivalents 97,881 78,676
in the consolidated statement ===== =====
of cash flows
9. Capital and reserves
Share capital and share premium
5p 5p
Ordinary Ordinary
shares shares
5p Issued GBP1 5p Issued GBP1
Ordinary and Non-redeemable Ordinary and Non-redeemable
shares fully preference shares fully preference
Authorised paid up shares Authorised paid up shares
2010 2010 2010 2009 2009 2009
At 1
January 5,449 4,330 42 5,449 4,325 42
Preference
shares
redeemed - - (2) - - -
Issued
under
employee
share - 4 - - 5 -
schemes _____ _____ _____ _____ _____ _____
At 31
December 5,449 4,334 40 5,449 4,330 42
===== ===== ===== ===== ===== =====
108,990 86,682 108,990 86,613
===== ===== ===== =====
The ordinary shareholders are entitled to receive dividends as
declared and are entitled to vote at meetings of the Company.
The Group received proceeds of GBP360,000 (2009: GBP372,000) in
respect of the 68,955 (2009: 102,861) ordinary shares issued during
the year: GBP4,000 (2009: GBP5,000) was credited to share capital
and GBP356,000 (2009: GBP367,000) 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 262,528 (2009: 363,196)
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:
2010 2009
17.25p final dividend (2009: 16.75p) 14,928 14,470
12.75p interim dividend (2009: 11.15p) 11,033 9,632
2010 additional interim dividend 11.5p (2009: 9,951 -
nil) _____ _____
35,912 24,102
===== =====
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.
2010 2009
Final proposed dividend per qualifying ordinary
share
19.75p 17,120
=====
17.25p 14,943
=====
Additional interim dividend of 11.5p per qualifying 10,000
ordinary share proposed for 2011 =====
Additional interim dividend of 11.5p per qualifying 9,960
ordinary share proposed for 2010 =====
10. 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 86.4m shares (2009: 86.3m shares) being the weighted
average number of ordinary shares in issue (net of own ordinary
shares held) for the year.
2010 2009
69,521 64,032
Net profit attributable to ordinary shareholders ===== =====
Weighted average number of ordinary shares
Issued ordinary shares at 1 January 86,250 86,096
Effect of own shares held 131 172
Effect of shares issued under Share option schemes 24 13
/ Sharesave plans _____ _____
Weighted average number of ordinary shares for 86,405 86,281
the year ===== =====
Basic earnings per share 80.5p 74.2p
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 (2009:
86.7m 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 ('LTIP').
2010 2009
69,521 64,032
Net profit attributable to ordinary shareholders ===== =====
Weighted average number of ordinary shares
(diluted)
Weighted average number of ordinary shares for
the year 86,405 86,281
Effect of share options in issue 9 11
Effect of Sharesave options in issue 108 68
Effect of LTIP shares in issue 145 327
----_____ ----_____
Weighted average number of ordinary shares 86,667 86,687
(diluted) for the year ===== =====
Diluted earnings per share 80.2p 73.9p
11. Provisions
Warranty
Provision
Balance at 1 January 2010 4,914
Exchange differences 295
Provisions used during the year (1,078)
Acquired as part of a business combination 664
1,169
Charged in the year _____
Balance at 31 December 2010 5,964
=====
Maturity at 31 December 2010
Non-current 1,968
3,996
_____
5,964
Current =====
Maturity at 31 December 2009
Non-current 1,664
Current 3,250
_____
4,914
=====
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 12 months, the typical warranty period is now 18 months.
12. Trade and other payables
2010 2009
Trade payables 30,447 26,031
- 319
Bills of exchange ______ ______
30,447 26,350
Trade payables ===== =====
10,821 9,768
Corporation tax ______ ______
10,821 9,768
Current tax ===== =====
Other taxes and social security 4,066 3,627
Non-trade payables and accrued expenses 22,268 21,063
______ ______
Other payables 26,334 24,690
===== =====
13. 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 in the directory on pages 94 to 96 of the Rotork 2009
Annual Report & Accounts. Transactions between two subsidiaries
for the sale and purchase of products or the subsidiary and parent
Company 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 GBP21,000 during the year
(2009: GBP20,000) and no amount was outstanding at 31 December 2010
(2009: GBP19,000).
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 were:
2010 2009
Emoluments including social security costs 2,990 2,455
Post employment benefits 370 424
Share-based payments 755 843
_____ _____
4,115 3,722
===== =====
14. Post balance sheet event
On 23 February 2011 the Group signed a contract to acquire all
the outstanding issued share capital of Rotork Servo Controles de
Mexico S.A. de C.V. ('RSCM'), its Mexican sales and service agent.
Formal completion will take place following certain share transfer
formalities being finalised. Gross assets of RSCM are approximately
GBP1.6 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DKFDQBBKDDBB
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