TIDMROR
RNS Number : 5269U
Rotork PLC
02 August 2022
Tuesday 2(nd) August 2022
Rotork plc
2022 Half Year Results
Encouraging momentum, outlook confirmed
OCC(3)
Adjusted highlights H1 2022 H1 2021(5) % change % change
----------------------------- ---------- ----------- --------- ----------
Order intake(1) GBP340.1m GBP298.2m +14.0% +12.1%
Revenue GBP280.0m GBP288.3m -2.9% -4.8%
Adjusted (2) operating
profit GBP53.3m GBP62.7m -15.0% -17.9%
Adjusted (2) operating
margin 19.0% 21.8% -280bps -300bps
Adjusted (2) basic earnings
per share 4.8p 5.5p -12.7% -15.9%
Cash conversion (4) 68% 94% - -
--------- ----------
Statutory highlights H1 2022 H1 2021(5) % change
----------------------------- ---------- ----------- ---------
Revenue GBP280.0m GBP288.3m -2.9%
Operating profit GBP44.0m GBP50.6m -12.9%
Operating margin 15.7% 17.5% -180bps
Profit before tax GBP44.6m GBP50.7m -12.0%
Basic earnings per share 3.9p 4.4p -11.4%
Interim dividend 2.40p 2.35p +2.1%
----------------------------- ---------- ----------- ---------
Summary
-- Orders were up double-digit year-on-year, reflecting an
encouraging performance from our Chemical, Process & Industrial
and Oil & Gas divisions and price increases which were
successfully implemented in January and May
-- Our supply chain improvement initiatives are taking effect
and deliveries picked up through the period. First half revenues
were lower year-on-year as expected due to supply chain challenges
in the first quarter
-- Our Shanghai site resumed full operation in early June
following the COVID-19 lockdown and made good progress delivering
delayed shipments to customers
-- Adjusted operating profit margin remained resilient at 19.0%
despite lower volumes and the phasing of price benefit due to the
record order book. Statutory operating margin was 15.7%
-- Net cash of GBP90.4m (December 2021: GBP114.1m), lower in
part due to strategic inventory build
-- We reaffirmed our commitment to improving our ESG performance
in our Sustainability Report and highlighted how our products and
services can enable a sustainable future
-- Our continuing work on strategy confirms we are well placed
to deliver on our ambition of mid to high single-digit revenue
growth and mid 20s adjusted operating profit margins over time
Kiet Huynh, Chief Executive, commenting on the results,
said:
"We enter the second half with encouraging momentum, a record
order book, and with our supply chain improvement actions taking
effect. Whilst forecasting remains challenging due to geopolitical
and macroeconomic uncertainties we continue to expect our full year
results will have a greater than usual weighting to the second
half, which will be even more pronounced than our previous
expectations if recent sterling weakness continues.
Since presenting my first set of results in March I have spent
time, together with my senior team, determining how we will deliver
on our growth ambition. Our progress to date confirms that we are
well positioned to deliver profitable growth. To summarise our
thinking on strategy, we will target the segments which offer the
greatest opportunities for profitable growth, including those which
form part of our eco-transition portfolio, whilst making ourselves
as easy to do business with as we can be. We will expand on these
themes at our Capital Markets Event in November."
(1.) Order intake represents the value of orders received during
the period.
(2.) Adjusted (4) figures exclude the amortisation of acquired
intangible assets, restructuring costs and other adjustments (see
note 4).
(3.) OCC (4) is organic constant currency results excluding
discontinued businesses and restated at 2021 exchange rates.
(4) Adjusted figures, organic constant currency ('OCC') figures,
cash conversion and ROCE are alternative performance measures and
are used consistently throughout these results. They are defined in
full and reconciled to the statutory measures in note 2.
(5) As a result of IFRIC agenda guidance in April 2021 on
Software as a Service (SaaS) and treatment under IAS38, 2021 has
been restated to reflect the updated treatment. The detail on this
restatement can be found in note 1.
Rotork plc Tel: +44 (0)1225 733 200
Kiet Huynh, Chief Executive
Jonathan Davis, Finance Director
Andrew Carter, Investor Relations
Director
FTI Consulting Tel: + 44 (0)20 3727 1340
Nick Hasell / Susanne Yule
There will be a meeting for analysts and institutional investors
at 8.30am BST today in the Library at the offices of JPMorgan
Cazenove, 60 Victoria Embankment, London, EC4Y 0JP. The
presentation will also be webcast, with access via
https://www.investis-live.com/rotork/62cec73f299ad30e007a93d2/eabwq
. Please join the meeting a few minutes before 8.30am to complete
registration.
Summary
Purpose
Our purpose and sustainability vision are one and the same:
keeping the world flowing for future generations. We play an
integral role in enabling the transition to a low-carbon economy as
well as helping preserve natural resources such as fresh water
through our intelligent products and services.
Operating responsibly
The wellbeing of our people and partners is the number one
priority of everyone at Rotork. We are proud of our 'safety first'
culture and require our employees to complete safety training each
year. We launched our Net Zero targets earlier this year and are
working hard to achieve our emissions reduction targets.
Business performance
Group order intake in the period increased 14.0% year-on-year,
and 12.1% on an OCC basis, to GBP340.1m. Orders were strongly ahead
at both Chemical, Process & Industrial ("CPI") and Oil &
Gas. Water & Power orders were modestly higher despite a tough
prior year comparison.
During the period customers continued to spend on upgrade,
refurbishment and maintenance as well as automation,
electrification and environmental projects. Hydrocarbon prices rose
to levels not experienced since 2012 reflecting recovering demand,
earlier underinvestment and geopolitical events which have
disrupted energy supplies. These events have necessitated a
reconsideration of energy security risks globally and there are
clear signs of a recovery in related project activity, particularly
in the midstream sector. Higher energy prices have contributed to
inflation increasing to levels not seen in decades. The resulting
pressure on the consumer has caused economists to reduce their
forecasts for global growth materially.
The majority of Rotork's activity continues to be driven by
customers' operational rather than capital expenditure. We estimate
that maintenance, repair and small to mid-sized automation/upgrade
projects (individual orders less than GBP100k) generate 75% of
Group orders by value in a typical year, and that orders above
GBP1m represent only 5% of Group order intake.
Our operational teams performed well in what continued to be a
challenging environment. As we reported on 29 April, our important
Shanghai facility was closed in accordance with local COVID-19
lockdown rules in mid-April. The facility resumed full production
in June and made good progress delivering delayed shipments to
customers. We thank our team for their efforts during this
difficult time.
The COVID-19 pandemic continues to pose significant challenges
for global supply chains. During the period we continued to see
shortages of semiconductors, electronics and other components,
disrupted freight services and elevated costs. Labour rates were
higher and we also experienced an increase in the cost of key
commodities such as copper, aluminium and steel.
Our self-help initiatives - such as direct purchasing and
forward buying of semiconductor chips, the re-certification and
re-engineering of products, the securing of contracted logistics
routes and tactical inventory build - have started to offset supply
chain challenges. Our Global Strategic Sourcing and Global
Distribution teams continue to focus on mitigating the impact of
higher costs through working with our materials and logistics
suppliers. Our Commercial teams remain in close contact with
customers, so required price increases are understood and do not
come as a surprise. We completed two price increases in the period,
one on 1 January, and the other on 1 May, which will deliver
greater benefit to revenue in the second half of the year. The
delay in price increases impacting revenue due to the record order
book also means we saw a price/mix headwind in the first half.
Group revenue was 2.9% lower year-on-year (OCC: -4.8%) at
GBP280.0m with higher price realisation and favourable currency
translation more than offset by reduced volumes. The lower
deliveries reflected component availability and logistics
challenges and the cessation of deliveries to Russia. CPI revenue
was ahead double digits, with all three sectors up year-on-year.
Oil & Gas sales were down mid-single digits. Water & Power
revenues were down double-digits, particularly impacted by
semiconductor shortages.
By geography, Asia Pacific revenues by destination were
unchanged year-on-year. Europe, Middle East & Africa ("EMEA")
sales were lower, the result of a significant reduction in activity
at Oil & Gas. Americas revenues were ahead, with higher Oil
& Gas activity more than offsetting a decline at Water &
Power.
Rotork Site Services, our global service network and a key
differentiator in our industry, made good progress in the period.
Sales were broadly unchanged year-on-year despite disruption due to
supply chain issues. Rotork Site Services is managed as a separate
unit within Rotork's divisions and continues to contribute a
significant proportion of Group sales (19% in the period).
Adjusted operating profit was 15.0% lower year-on-year (17.9%
OCC) reflecting lower volumes and higher materials and labour costs
which more than offset increased sales prices and Growth
Acceleration Programme savings. Adjusted operating margins were 280
basis points lower at 19.0%.
Return on capital employed was 27.0% (H1 2021: 32.9%), driven by
lower operating profit and higher capital employed. Cash conversion
was 68% (H1 2021: 94%) reflecting the lower working capital
position at the start of this year, the investment in tactical
inventory and the phasing of sales activity within the second
quarter.
Our balance sheet remains strong, with a net cash position of
GBP90.4m at the period end (December 31: GBP114.1m). This provides
us with optionality in uncertain times and the financial
flexibility to implement our organic investment plans, pay a
progressive dividend and execute our targeted M&A strategy. We
regularly review our capital needs and in the event in the future
we determine we have surplus cash, we will look to return it to
shareholders.
Dividend
We recognise the importance of a growing dividend to our
shareholders and are committed to a progressive dividend policy
subject to satisfying cash requirements, which can vary
significantly from year to year. The Board is declaring an interim
dividend of 2.4p per share which is equivalent to 2.0 times cover
based on adjusted earnings per share. The interim dividend will be
payable on 23 September 2022 to shareholders on the register on 19
August 2022.
Outlook
We enter the second half with good momentum, a record order
book, and with our supply chain improvement actions taking effect.
Whilst forecasting remains challenging due to geopolitical and
macroeconomic uncertainties we continue to expect our full year
results will have a greater than usual weighting to the second
half, which will be even more pronounced than our previous
expectations if recent sterling weakness continues.
Strategy update
During my first six months as CEO of Rotork I have spent time
together with my senior team and the Board reviewing the Group's
current shape and formulating our future strategy. Thanks to our
Growth Acceleration Programme ("GAP") Rotork's current portfolio is
well positioned for the future. GAP has enhanced many aspects of
the business: our culture; our commercial front end; our product
and services portfolio, our infrastructure and processes; our
operations and supply chain. We continue to deliver GAP initiatives
including supply chain consolidation, improving and standardising
core business processes and continuing our IT development.
Our ambition remains to deliver mid to high single-digit revenue
growth through a combination of organic growth and acquisitions and
mid 20s adjusted operating margins over time. In delivering our
growth ambition, we benefit from the industrial megatrends of
automation, electrification and digitalisation. We aim to play our
part in helping our customers better their own environmental
performance, while at the same time working to improve our own
environmental and social performance as well as those of our end
users and our suppliers.
We look forward to sharing more detail on our strategy later in
the year. Importantly our work to date has confirmed that we are
well placed to deliver on our growth ambition. Our strategy will
incorporate growth focused initiatives such as the targeting of
high potential sectors, including those in our Eco-transition
portfolio, greater customer value and the launching of new
innovative products and services.
1) Target segments
Key to our thinking is the identification of segments within
each of our divisions where we have the right to play and that we
believe offer significant opportunities for profitable growth. The
most important megatrends are:
-- Opportunities in developing markets. Industry analysts
forecast that more than half of global flow control spend over the
next five years will occur in Asia Pacific.
-- Automation, energy efficiency and electrification. AE&E
are the three major megatrends of the industrial world and are
forecast to accelerate.
-- Digitalisation and the industrial internet. Digitalisation is
transforming industry and condition monitoring and remote
diagnostics are being embraced by more and more of our
customers.
-- Infrastructure modernisation. Global infrastructure
investment and modernisation are forecast to grow significantly
faster than GDP for decades.
-- Climate change aligned. It is imperative that our target
segments are aligned with our 'enabling a sustainable future'
principle. We see significant opportunities in climate change
mitigation and adaptation.
2) Customer value
Due to GAP's Commercial and Operational Excellence initiatives
we have made good progress in becoming easier to do business with.
We can, however, go further and put customer value front and centre
of everything we do. We are looking at areas that leverage many of
GAP's commercial and operational initiatives, such as :
-- Enhancing our go to market proposition. Strengthening our
relationships with end users and key EPCs, leveraging our earlier
salesforce alignment work.
-- Global supply chain improvement. Developing a supply chain programme which will optimise our transportation network and provide an earlier warning of parts shortages.
-- Customer experience improvement and reduced lead times.
Further streamlining our internal processes allowing us to quote
more quickly and be more responsive to customer needs.
-- Leveraging our global service offering. Identifying
opportunities to expand our service footprint and our partner
programme.
3) Innovative products and services
Innovation is the lifeblood of Rotork. Over the last several
years we have brought our teams together and streamlined how we
deliver innovation and new product development. Our teams are
focused on projects aligned with our target segments and our
'enabling a sustainable future' principle. Key innovation drivers
include electrification (electric alternatives to traditional
actuation products), connectivity (wired and wireless
communications), predictive analytics (and value-added services
such as Lifetime Management) and product efficiency (including both
energy consumption and in use GHG emissions). Our engineers remain
focused on the affordability of our products and their ease of
manufacture. We will continue to innovate and develop new products
whilst always weighing 'make versus buy' arguments. Disciplined
M&A will be one of the drivers of our growth.
We will provide a further update on each area at our Capital
Markets Event in November.
Enabling a sustainable future
Managing Environmental, Social & Governance ("ESG")
opportunities and risks is integrated throughout Rotork's business.
We have worked hard to articulate our ambitions and underpin our
approach, and in June we published our second annual Sustainability
Report. In it we reaffirm our full commitment to improving our ESG
performance in all areas and highlight the many ways Rotork's
products and services can enable a sustainable future.
Sustainability is core to our Purpose and a key part of our growth
agenda.
-- We have a major role to play in the new energies and
technologies that will support the transition to a low-carbon
economy. Our products and services have applications in the
production of low- and no- carbon fuels such as hydrogen and in
climate change mitigation technologies, such as carbon capture and
storage, and helping customers to tackle methane emissions from
their operations.
-- Rotork's products and services also have applications in
processes that help preserve natural resources such as fresh water,
through leak reduction, water recovery, recycling and treatment.
Our products are widely used elsewhere to manage water, including
in flood protection and desalination.
-- In addition, Rotork can support a broad spread of industries
as they make greater use of automation, electrification and
digitalisation to reduce the environmental impact of their
operations, including through facilitating the use of renewable
energy.
Key highlights from the report include:
-- Our 'Eco-transition portfolio' of products and services, with
examples of projects that Rotork is supporting in each of the three
sub-portfolios: 'Methane emissions reduction', 'New energies &
technologies' and 'Water and wastewater'. Case studies cover our
role in global climate agreements, methane emission abatement,
lithium production, low-carbon chemical production, hydrogen market
opportunities, energy efficiency measures, and water management in
desalination, water treatment and purification.
-- Further progress in implementing the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD),
including the outputs of our work to quantify the potential impacts
of climate risks and opportunities.
-- Our net-zero roadmap and science-based targets for scopes 1
& 2 and scope 3, and how these are being integrated into
corporate strategy, new product development and our governance
processes.
-- Expanded disclosures on environmental, social and governance
topics as part of our commitment to transparency and meeting the
requirements of our stakeholders.
-- Progress on our diversity and inclusion initiatives during
the year, including refreshed schemes to develop young talent and
our new 'women@rotork' initiative to support female talent.
-- Continued good progress in Rotork's own ESG performance,
including a reduction of 7% in carbon emissions and 17% in lost
time injury rates, as well as achieving high rankings in key
external ESG ratings.
Our 2021 Sustainability Report has been prepared in accordance
with the Global Reporting Initiative (GRI) Standards: Core option.
It also provides disclosures against the SASB (Sustainability
Accounting Standards Board) framework. Alignment to these
frameworks has been independently checked by Corporate
Citizenship.
Divisional review
Oil & Gas
GBPm H1 2022 H1 2021 Change OCC Change
Revenue 122.3 129.6 -5.6% -7.4%
Adjusted operating
profit 23.6 26.9 -12.5% -12.9 %
Adjusted operating
margin 19.3% 20.8% -150bps -13 0bps
During the first half, Oil & Gas experienced a continuation
of the recovery in end markets which commenced in the second half
of 2021. As hydrocarbon demand recovered to pre-Covid levels,
customers increased their spending on upgrade, refurbishment and
maintenance as well as automation, electrification and
environmental projects. The conflict in the Ukraine saw hydrocarbon
prices rise further to levels not experienced since 2008 and
triggered an acceleration of large project planning and a
reconsideration of global energy security risks. The outlook for
oil & gas industry spending is positive for all three segments
(upstream, midstream and downstream), with spend expected to grow
over the medium term.
Divisional revenues fell 5.6% year-on-year (-7.4% OCC),
reflecting supply chain challenges and our withdrawal from Russia.
All three segments (upstream, midstream and downstream) reported
lower sales. In EMEA, growth in Lifetime Management revenue was
insufficient to offset these headwinds and the region reported the
largest year-on-year decline in sales. Asia Pacific sales were
lower, with a significant increase in upstream activity
insufficient to offset a decrease in the downstream. Americas
revenues were double digits ahead with both the downstream and the
midstream ahead. Sales of our electric products into upstream
wellhead applications grew.
Adjusted operating profits were GBP23.6m, 12.5% lower
year-on-year (-12.9% OCC). The decline in profits reflected reduced
volumes and higher component costs partly offset by efficiency
savings. The benefit from increased selling prices was reduced by
the relative size of the orderbook entering the period. Adjusted
margins fell 150 basis points to 19.3%, reflecting the above
factors plus a positive product mix.
We consider the energy transition to be a significant
opportunity where Oil & Gas plays an important role. The
production, distribution, and utilisation of low and zero carbon
fuels (including hydrogen and biofuels such as HVO) is valve and
actuator intensive. We have an important part to play in climate
change mitigation technologies such as methane emissions reduction
and carbon capture usage and storage. The focus on the oil &
gas industry's methane emissions is high on the climate policy
agenda. We believe that electrification has an important role to
play in emissions reduction across upstream, midstream and
downstream processes, and that as the world leader in electric
actuation we are well placed to assist the industry on this
journey. Gasification / fuel switching in the power generation
sector in the US and Europe and in the residential and industrial
sectors in Asia Pacific is expected to benefit the midstream
sector.
Chemical, Process & Industrial ("CPI")
GBPm H1 2022 H1 2021 Change OCC Change
Revenue 92.8 81.2 14.3% 12.4%
Adjusted operating
profit 22.7 20.6 10.2% 10.4 %
Adjusted operating
margin 24.5% 25.4% -90bps -40 bps
CPI delivered an encouraging performance in the first half. The
division serves a broad range of end markets and has a higher
proportion of short-cycle sales and a shorter order book than
Rotork's other divisions. CPI is benefiting from global growth as
well as earlier GAP initiatives such as focusing on new
opportunities in new markets including mining, hydrogen,
semi-conductor, li-ion battery and data centres.
Revenues grew 12.4% year-on-year on an OCC basis demonstrating
the benefits of the division's strategic focus. Asia Pacific saw
the strongest growth, with all segments well ahead of the prior
period and instruments particularly strong. EMEA sales were ahead
year-on-year with the chemical segment strong. Americas revenues
were unchanged despite good growth in the mining market.
The process sector represents a substantial proportion of CPI
overall. Process revenues were ahead in all geographic regions.
EMEA saw particularly strong growth in the UK. In Asia Pacific, we
continued to see strong demand from control valve OEMs in China.
Americas process sales were slightly higher. Both chemical and
industrial sector revenues were higher year-on-year.
The division's adjusted operating profit was GBP22.7m, 10.2% up
year-on-year. The shorter lead time nature of many CPI sales
ensured price increases had the greatest benefit here and this was
combined with volume growth. Despite operational gearing and
efficiency improvements, higher component costs and a higher share
of common costs as a result of the division's growth resulted in a
net decline in margins. Adjusted operating margins were 24.5%,
90bps lower year-on-year.
The decarbonisation trend presents a key opportunity for CPI -
through new industrial processes such as hydrogen, carbon capture
usage and storage and plastic recycling, as well as the
substitution of high maintenance and inefficient pneumatic systems
with electric actuators.
Water & Power
GBPm H1 2022 H1 2021 Change OCC Change
Revenue 64.9 77.5 -16.2% -18.4%
Adjusted operating
profit 13.4 21.0 -36.2% -37.4 %
Adjusted operating
margin 20.7% 27.1% -640bps -630 bps
Water & Power's products and services, and those of its
customers, are generally considered essential, and customer
activity largely continued without any significant disruption
throughout the pandemic. The world's governments have identified
water infrastructure investment as a priority, not only for
population health and safety reasons but also for economic
development and the division is well placed to support these
efforts.
The division has the highest proportion of electric actuator
sales amongst Rotork's divisions and was again the most impacted by
electronics and semiconductor shortages and cost increases in the
period. Revenues decreased 16.2% year-on-year (18.4% OCC) with
lower sales in all geographic regions on an OCC basis reflecting
component shortages and to a lesser extent the non-repeat of power
sector project business in Asia Pacific and the Americas. Water and
power segment sales were both lower in Asia Pacific. In the
Americas, both segments reported a decline with power sales down
the most due to a strong comparison. In EMEA, both segments saw
sales reduce as a result of component shortages and logistics
challenges. For the division overall, water sales were down
mid-single digits year-on-year on an OCC basis.
The division's adjusted operating profits were GBP13.4m, 36.2%
lower year-on-year. The two major power projects in the first half
of 2021 combined with delays to deliveries of electric actuators
have had a negative mix and operational gearing impact. Adjusted
margins were 20.7%, down from 27.1% the prior year. The margin
decline reflected the factors highlighted above together with the
higher component costs noted across all divisions in respect of
electric actuators.
We see significant growth opportunities in Water & Power
driven by the water sector's need to achieve higher water quality
standards, lower operational costs, reduce water leakage and
increase the lifecycle of assets above- and under- ground. In
power, our teams are targeting environmental opportunities such as
waste-to-energy investments, flue-gas desulphurisation retrofits
and seeking refurbishment opportunities within our large installed
base.
Financial Key Performance Indicators (KPIs) H1 2021
H1 2022 (Restated)(5) FY 2021
--------- ---------------- ---------
Revenue growth -2.9% 1.8% -5.9%
Adjusted operating margin 19.0% 21.8% 22.5%
Cash conversion 68.1% 94.0% 108.0%
Return on capital employed 27.0% 32.9% 30.1%
Adjusted EPS growth -12.7% 1.9% -9.6%
--------- ---------------- ---------
The KPIs are defined below:
* Revenue growth is defined as the increase in revenue
divided by prior period revenue.
* Adjusted operating margin is defined as adjusted
operating profit as a percentage of revenue (note
2a).
* Cash conversion is defined as cash flow from
operating activities before tax outflows, payments of
restructuring charges and the pension charge to cash
adjustment as a percentage of adjusted operating
profit (note 2a).
* Return on capital employed is defined as adjusted
operating profit as a percentage of average capital
employed. Capital employed is defined as
shareholders' funds less net cash held, with the
pension fund surplus net of related deferred tax
liability removed (note 2d).
* Adjusted EPS growth is defined as the
increase/(decrease) in adjusted basic EPS (based on
adjusted profit after tax) divided by the prior year
adjusted basic EPS (note 2c).
Adjusted items
Adjusted profit measures are presented alongside statutory results as
the directors believe they provide a useful comparison of business trends
and performance from one period to the next.
The statutory profit measures are adjusted to exclude amortisation of
acquired intangibles and other adjustments. Other adjustments to profit
items may include but are not restricted to: costs of significant business
restructuring, significant impairments of intangible or tangible assets,
software as a service configuration costs and other items due to their
significance, size or nature. The costs of ceasing operations in Russia
and the impairment of the gross assets of the Russian entity have been
recognised in other adjustments during the first half of 2022. Software Russia
Statutory as a market Other Adjusted
GBPm results Amortisation Service exit Adjustments results
---------- ------------- ----------- -------- ------------ ----------
Operating
profit 44.0 3.1 3.5 3.6 (0.9) 53.3
Profit
before
tax 44.6 3.1 3.5 3.6 (0.9) 53.9
Tax (10.9) (0.8) (1.3) - 0.1 (12.9)
---------- ------------- ----------- -------- ------------ ----------
Profit
after
tax 33.7 2.3 2.2 3.6 (0.8) 41.0
---------- ------------- ----------- -------- ------------ ----------
Financial position
The balance sheet remains strong and we ended the period with net cash
of GBP90.4m (Dec 2021: GBP114.1m). Net cash comprises cash balances
of GBP100.4m less loans and borrowings and leases of GBP10.0m.
Net working capital has increased by GBP33.5m since the year end to
GBP157.3m at the period end; this was largely driven by inventory and
trade receivables. Inventory levels have increased following the tactical
decision to hold higher levels of components to help mitigate the risk
of supply chain disruption. Days sales outstanding has reduced by 5
days since December 2021 to 51 days. However, trade receivables have
increased due to a greater weighting of sales being towards the end
of the period in H1. In total, net working capital as a percentage of
sales was 28.1% compared with 21.8% in December 2021 and 22.9% in June
2021.
The increase in working capital has resulted in cash conversion of 68.1%
of adjusted operating profit into operating cash, down from 94.0% in
H1 2021.
The estimated effective tax rate used for the year ending 31 December
2022 is 24.4% (2021 actual rate: 24.2%) and the estimated adjusted effective
tax rate for the year ending 31 December 2022, based on adjusted profit
before tax, is 23.9% (2021 actual: 23.8%).
Retirement benefits
The Group operates two defined benefit pension schemes, the larger of
which is in the UK. Both the UK and US schemes are closed to future
accrual.
The pension scheme has moved from a deficit of GBP7.6m at 31 December
2021 to a surplus of GBP11.2m at 30 June 2022, principally due to an
increase in the discount rate, used to determine the present value of
future obligations.
Currency
Overall, currency tailwinds increased revenue by GBP5.5m (2.0%) compared
with the first half of 2021. The average US dollar rate was $1.30 (H1
2021: $1.39) and the average Euro rate was EUR1.19 (H1 2021: EUR1.15),
whilst the rates at 30 June 2022 were $1.22 and EUR1.16 respectively
(30 June 2021: $1.38 and EUR1.17).
Dividend
The Board has declared an interim dividend of 2.40p per ordinary share.
The interim dividend will be paid on 23 September 2022 to shareholders
on the register at the close of business on 19 August 2022.
Ukraine conflict
Deliveries to Russia ceased at the start of March. Rotork had no manufacturing
presence in Russia and is suspending the activities of its sales and
service operations in the country in an orderly manner, with a small
number of employees retained to manage this process. The Russia, Ukraine
and Belarus region contributed around 3% to group sales in 2021. The
costs associated with exiting the Russian market and impairing the assets
have been recognised in other adjustments in the period.
Non-controlling interest
The Group invested GBP4,059,000 for 75% of the share capital in a newly-established
entity in Saudi Arabia during April 2022, with the remaining 25% owned
by a third party. Owing to this third party shareholding, a "Non-controlling
interests" position is now reported in the financial statements.
Principal risks and uncertainties
The Group has an established risk management process as part of the
corporate governance framework set out in the 2021 Annual Report and
Accounts. The principal risks and uncertainties facing our businesses
are monitored on an ongoing basis in line with the Corporate Governance
Code. The risk management process is described in detail on pages 83
to 85 of the 2021 Annual Report and Accounts. The Group's principal
risks and uncertainties have been reviewed by the Board and the Board
have concluded that they remain applicable for the second half of the
financial year. A more detailed description of the Group's principal
risks and uncertainties is set out on pages 86 to 92 of the 2021 Annual
Report and Accounts.
Risk update
Whilst there has been no change in the principal risks and uncertainties
under review by the business, the following risks have increased.
* Geopolitical instability - we have seen an increase
in geopolitical instability and continue to monitor
potential impacts such as forecasting challenges or
disruption to the business.
* Supply chain disruption - we continue to see this
risk as elevated due to component shortages and
constraints driving uncertainty in supply. Management
actions to improve the reliability of logistics and
secure the supply of key components have mitigated
potentially more severe outcomes including key
initiatives such as the global transportation
programme and the global shortages programme.
Impacts of COVID-19 on Rotork's risk profile
We continue to monitor the impact of COVID-19 across our principal risks
and uncertainties. Many of the risks associated with COVID-19 are now
part of our business as usual risk management practices.
Climate risk
We continue to monitor climate risk closely given its significance internally
and externally. As we noted in our 2021 Sustainability Report, we have
performed both a qualitative and quantitative analysis of our climate-related
risks and opportunities and the results of our analysis provide detailed
information about the magnitude of potential impacts of climate change
on our business and operations. Understanding these impacts will enable
us to strengthen the business case for investment in mitigation and
adaptation measures and address those risks that have the largest potential
impacts first.
Emerging risks
We continue to monitor and review emerging risks that may impact our
business including people, market, environmental, climate and sustainability
risks.
Principal risks and uncertainties
1. Decline in market confidence: A decline in government and private
sector confidence and spending will lead to cancellations of expected
projects or delays to existing expenditure commitments. This lower investment
in Rotork's traditional market sectors would result in a smaller addressable
market, which in turn could lead to a reduction in revenue from that
sector.
2. Increased competition: Increased competition on price or product
offering leading to a loss of sales globally or market share.
3. Geopolitical instability: Increasing social and political instability,
including Brexit, results in disruption and increased protectionism
in key geographic markets. Business disruption would impact our sales
and might ultimately lead to loss of assets located in the affected
region.
4. Failure of an acquisition to deliver value: Failure of an acquisition
to deliver the growth or synergies anticipated, either due to unforeseen
changes in market conditions or failure to integrate an acquisition
effectively. Significant financial underperformance could lead to an
impairment write down of the associated intangible assets.
5. Health, Safety and the Environment: The nature of Rotork's core
business and geographical locations involves potential risks to the
Health and Safety of our employees or other stakeholders. A failure
of our products or internal processes could have an impact on the environment.
6. Compliance with laws and regulations: Failure of our staff or third
parties who we do business with to comply with law or regulation or
to uphold our high ethical standards and values.
7. Major in-field product failure: Major in-field failure of a new
or existing Rotork product potentially leading to a product recall,
major on-site warranty programme or the loss of an existing or potential
customer.
8. Supply chain disruption: Supply chain disruption which may arise
such as a lack of availability of key components, tooling failure at
a key supplier, logistics issues or severe weather events impacting
key suppliers which would cause disruption to manufacturing at a Rotork
factory.
9. Critical IT system failure and cybersecurity: Failure to provide,
maintain and update the systems and infrastructure required by the Rotork
business. Failure to protect Rotork operations, sensitive or commercial
data, technical specifications and financial information from cybercrime.
10. Growth Acceleration Programme: The Growth Acceleration Programme
and other change projects lead to business disruption or have a negative
effect on day-to-day operations.
Statement of Directors' Responsibilities
The directors confirm that, to the best of their knowledge, this condensed
consolidated interim financial information has been prepared in accordance
with IAS 34 as adopted by the United Kingdom, the interim financial
statements give a true and fair view of the consolidated assets, liabilities,
financial position and profit of the Company and its group companies
taken as a whole; and that the interim management report includes a
fair review of the information required by DTR 4.2.7R and DTR 4.2.8R,
namely:
* An indication of important events that have occurred
during the first six months and their impact on the
condensed set of financial statements, and a
description of the principal risks and uncertainties
for the remaining six months of the financial year;
and
* Material related-party transactions in the first six
months, and any material changes in the related-party
transactions described in the last annual report.
These interim financial statements and the interim management report
are the responsibility of, and have been approved by, the directors.
A list of the current directors can be found in the "About Us" section
of the Rotork website: www.rotork.com .
By order of the Board
Kiet Huynh
Chief Executive
1 August 2022
Independent Review Report to Rotork plc
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended
30 June 2022 which comprises the condensed consolidated income statement,
the condensed consolidated statement of comprehensive income and expense,
the condensed consolidated balance sheet, the condensed consolidated
statement of changes in equity, the condensed consolidated statement
of cash flows and related notes 1 to 16.
Based on our review, nothing has come to our attention that causes us
to believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared,
in all material respects, in accordance with United Kingdom adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on
Review Engagements (UK) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group
will be prepared in accordance with United Kingdom adopted international
accounting standards. The condensed set of financial statements included
in this half-yearly financial report has been prepared in accordance
with United Kingdom adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for Conclusion section
of this report, nothing has come to our attention to suggest that the
directors have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties relating
to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance
with this ISRE (UK), however future events or conditions may cause the
entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial
report in accordance with the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate
the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the group a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our conclusion, including
our Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued
by the Financial Reporting Council. Our work has been undertaken so
that we might state to the company those matters we are required to
state to it in an independent review report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this report,
or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
1 August 2022
Condensed consolidated Income Statement
First half First half Full year
2022 2021 (Restated)(1) 2021
Notes GBP000 GBP000 GBP000
---------- ------------------ ---------
Revenue 3 280,014 288,261 569,160
Cost of sales (155,222) (155,081) (306,394)
---------- ------------------ ---------
Gross profit 124,792 133,180 262,766
Other income 374 220 587
Distribution costs (2,939) (2,504) (5,397)
Administrative expenses (78,160) (80,311) (152,064)
Other expenses (39) (34) (182)
---------- ------------------ ---------
Operating profit 3 44,028 50,551 105,710
Finance income 5 1,791 1,341 2,442
Finance expense 6 (1,229) (1,196) (2,221)
Profit before tax 44,590 50,696 105,931
Income tax expense 7 (10,882) (12,398) (25,686)
Profit for the period 33,708 38,298 80,245
Attributable to:
Owners of the parent 33,741 38,298 80,245
Non-controlling interests (33) - -
---------- ------------------ ---------
33,708 38,298 80,245
========== ================== =========
Basic earnings per share 9 3.9p 4.4p 9.2p
==========
Diluted earnings per share 9 3.9p 4.4p 9.2p
Operating profit
Adjustments: 44,028 50,551 105,710
* Amortisation of acquired intangible assets 3,096 4,655 9,001
* Other adjustments 4 6,179 7,529 13,369
-------------------------------------------------- ------ ---------- ------------------ ---------
Adjusted Operating profit 53,303 62,735 128,080
Adjusted basic earnings per share 2 4.8p 5.5p 11.3p
Adjusted diluted earnings per share 2 4.8p 5.5p 11.2p
-------------------------------------------------- ------ ---------- ------------------ ---------
1 See note 1 for details of the prior period restatement
Condensed consolidated Statement of Comprehensive Income and Expense
First half First half Full year
2022 2021 (Restated)(1) 2021
GBP000 GBP000 GBP000
---------- ------------------ ---------
Profit for the period 33,708 38,298 80,245
Other comprehensive income and expense
Items that may be subsequently reclassified
to the income statement:
Foreign currency translation differences 19,676 (8,559) (8,899)
Effective portion of changes in fair value
of cash flow
hedges net of tax (1,786) 342 (88)
---------- ------------------ ---------
17,890 (8,217) (8,987)
Items that are not subsequently reclassified
to the income statement:
Actuarial gain in pension scheme net of tax 11,412 10,241 19,469
---------- ------------------ ---------
Income and expenses recognised directly
in equity 29,302 2,024 10,482
Total comprehensive income for the period 63,010 40,322 90,727
Attributable to:
Owners of the parent 64,043 40,322 90,727
Non-controlling interests (33) - -
---------- ------------------ ---------
63,010 40,322 90,727
========== ================== =========
1 See note 1 for details of the prior period restatement
Condensed consolidated Balance Sheet
30 June 30 June 31 Dec
2021
2022 (Restated)(1) 2021
Notes GBP000 GBP000 GBP000
------- -------------- -------
Goodwill 224,575 218,283 216,778
Intangible assets 24,337 28,459 25,722
Property, plant and equipment 79,507 80,593 77,798
Deferred tax assets 10,428 12,511 10,183
Other receivables 41 332 -
Defined benefit scheme surplus 11 11,233 - -
Total non-current assets 350,121 340,178 330,481
Inventories 10 90,521 63,077 68,447
Trade receivables 108,117 104,104 94,189
Current tax 10,255 5,740 9,558
Derivative financial instruments 16 288 1,676 1,896
Other receivables 40,281 33,308 35,824
Assets classified as held for sale - - 2,884
Cash and cash equivalents 100,382 153,361 123,474
------- -------------- -------
Total current assets 349,844 361,266 336,272
Total assets 699,965 701,444 666,753
======= ============== =======
Issued equity capital 12 4,302 4,371 4,302
Share premium 19,266 17,153 18,828
Other reserves 29,909 12,717 12,019
Retained earnings 509,810 518,705 498,931
------- -------------- -------
Equity attributable to owners of the
parent 563,287 552,946 534,080
Non-controlling interests 1,382 - -
------- -------------- -------
Total equity 564,669 552,946 534,080
------- -------------- -------
Interest bearing loans and borrowings 13 6,454 5,051 5,464
Employee benefits 11 4,064 22,042 11,336
Deferred tax liabilities 2,696 1,906 1,580
Derivative financial instruments 16 403 40 106
Other payables - 314 -
Provisions 1,524 1,707 1,559
------- -------------- -------
Total non-current liabilities 15,141 31,060 20,045
Interest bearing loans and borrowings 13 3,505 4,038 3,872
Trade payables 41,332 35,385 38,800
Employee benefits 10,771 19,006 14,440
Current tax 14,071 13,074 12,226
Derivative financial instruments 16 1,024 - -
Other payables 45,902 38,316 37,986
Provisions 3,550 7,619 5,304
------- -------------- -------
Total current liabilities 120,155 117,438 112,628
Total liabilities 135,296 148,498 132,673
Total equity and liabilities 699,965 701,444 666,753
======= ============== =======
1 See note 1 for details of the prior
period restatement
Condensed consolidated Statement of Changes in Equity
Attributable
Issued Capital to owners
equity Share Translation redemption Hedging Retained of the Non-controlling
capital premium reserve reserve reserve earnings parent interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Balance at 31
December 2021 4,302 18,828 9,475 1,716 828 498,931 534,080 - 534,080
Profit for the
period - - - - - 33,741 33,741 (33) 33,708
Other
comprehensive
(expense)/income
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Foreign currency
translation
differences - - 19,676 - - - 19,676 - 19,676
Effective portion
of changes in
fair value of
cash flow hedges - - - - (2,205) - (2,205) - (2,205)
Actuarial gain
on defined
benefit
pension plans - - - - - 15,500 15,500 - 15,500
Tax in other
comprehensive
(expense)/income - - - - 419 (4,088) (3,669) - (3,669)
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Total other
comprehensive
(expense)/income - - 19,676 - (1,786) 11,412 29,302 - 29,302
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Total
comprehensive
income - - 19,676 - (1,786) 45,153 63,043 (33) 63,010
Non-controlling
interest on
newly-established
subsidiary - - - - - - - 1,415 1,415
Transactions
with owners,
recorded directly
in equity
Equity settled
share based
payment
transactions - - - - - (869) (869) - (869)
Tax on equity
settled share
based payment
transactions - - - - - 164 164 - 164
Shares issued
to satisfy
employee
awards - 438 - - - - 438 - 438
Own ordinary
shares acquired - - - - - (1,600) (1,600) - (1,600)
Own ordinary
shares awarded
under share
schemes - - - - - 2,818 2,818 - 2,818
Dividends - - - - - (34,787) (34,787) - (34,787)
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Balance at 30
June 2022 4,302 19,266 29,151 1,716 (958) 509,810 563,287 1,382 564,669
======== ======== ============ =========== ========= ========== ============= ================ =========
Condensed consolidated Statement of Changes in Equity
(continued)
Attributable
Issued Capital to owners
equity Share Translation redemption Hedging Retained of the Non-controlling
capital premium reserve reserve reserve earnings parent interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Balance at 31
December 2020
(Restated) (1) 4,370 16,826 18,374 1,644 916 528,624 570,754 - 570,754
Profit for the
period - - - - - 38,298 38,298 - 38,298
Other
comprehensive
(expense)/income
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Foreign currency
translation
differences - - (8,559) - - - (8,559) - (8,559)
Effective portion
of changes in
fair value of
cash flow hedges - - - - 422 - 422 - 422
Actuarial gain
on defined
benefit
pension plans - - - - - 12,837 12,837 - 12,837
Tax in other
comprehensive
(expense)/income - - - - (80) (2,596) (2,676) - (2,676)
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Total other
comprehensive
(expense)/income - - (8,559) - 342 10,241 2,024 - 2,024
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Total
comprehensive
income - - (8,559) - 342 48,539 40,322 - 40,322
Transactions
with owners,
recorded directly
in equity
Equity settled
share based
payment
transactions - - - - - (4,325) (4,325) - (4,325)
Tax on equity
settled share
based payment
transactions - - - - - 817 817 - 817
Shares issued
to satisfy
employee
awards 1 327 - - - - 328 - 328
Own ordinary
shares acquired - - - - - (5,409) (5,409) - (5,409)
Own ordinary
shares awarded
under share
schemes - - - - - 5,455 5,455 - 5,455
Dividends - - - - - (54,996) (54,996) - (54,996)
-------- -------- ------------ ----------- --------- ---------- ------------- ---------------- ---------
Balance at 30
June 2021
(Restated)
(1) 4,371 17,153 9,815 1,644 1,258 518,705 552,946 - 552,946
======== ======== ============ =========== ========= ========== ============= ================ =========
1 See note 1 for details of the prior period restatement
Condensed consolidated Statement of Cash Flows
First half First half Full year
2022 2021 (Restated)(1) 2021
Notes GBP000 GBP000 GBP000
---------- ------------------ ---------
Cash flows from operating activities
Profit for the period 33,708 38,298 80,245
Adjustments for:
Amortisation of acquired intangible
assets 3,104 4,655 9,001
Other adjustments 4 6,179 7,529 13,369
Amortisation and impairment of development
costs 741 978 1,657
Depreciation 7,426 7,905 15,673
Equity settled share-based payment expense 2,118 1,951 3,333
Net profit on sale of property, plant
and equipment (60) (27) -
Finance income (1,791) (1,341) (2,442)
Finance expense 1,229 1,196 2,221
Income tax expense 10,882 12,398 25,686
63,536 73,542 148,743
(Increase) in inventories (16,852) (3,070) (8,330)
(Increase)/decrease in trade and other
receivables (9,439) (1,070) 5,944
Increase/(decrease) in trade and other
payables 2,514 (1,667) 2,583
Cash impact of other adjustments (5,030) (5,320) (13,346)
Difference between pension charge and
cash contribution (3,474) (3,733) (7,562)
Increase/(decrease) in provisions 341 (162) (937)
(Decrease) in employee benefits (3,823) (8,615) (9,632)
---------- ------------------ ---------
27,773 49,905 117,463
Income taxes paid (12,053) (15,245) (32,021)
---------- ------------------ ---------
Net cash flows from operating activities 15,720 34,660 85,442
Investing activities
Purchase of property, plant and equipment (3,887) (7,541) (13,170)
Purchase of intangible assets (1,041) (2,507) (5,174)
Development costs capitalised (1,327) (815) (1,806)
Sale of property, plant and equipment 4,097 3,028 3,808
Settlement of hedging derivatives (474) 205 4,102
Interest received 499 540 857
---------- ------------------ ---------
Net cash flows from investing activities (2,133) (7,090) (11,383)
Financing activities
Issue of ordinary share capital 438 328 2,006
Own ordinary shares acquired (1,600) (5,409) (7,809)
Share buyback programme - - (50,324)
Interest paid (440) (458) (881)
Decrease in bank loans (686) (34) (67)
Repayment of lease liabilities (2,536) (2,380) (4,904)
Dividends paid on ordinary shares (34,787) (54,996) (75,515)
Receipt for non-controlling interest 1,415 - -
Net cash flows from financing activities (38,196) (62,949) (137,494)
Net decrease in cash and cash equivalents (24,609) (35,379) (63,435)
Cash and cash equivalents at 1 January 123,474 187,204 187,204
Effect of exchange rate fluctuations
on cash held 1,518 1,536 (295)
---------- ------------------ ---------
Cash and cash equivalents at end of
period 100,383 153,361 123,474
========== ================== =========
1 See note 1 for details of the prior period restatement
Notes to the Half Year Report
1. Status of condensed consolidated interim statements,
accounting policies and basis of significant estimates
General information
Rotork plc is a company domiciled in England and Wales. The
Company has its premium listing on the London Stock Exchange.
The condensed consolidated interim financial statements for the
six months ended 30 June 2022 are unaudited and the auditor has
reported in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the
Entity'.
The information shown for the year ended 31 December 2021 does
not constitute statutory accounts within the meaning of Section 435
of the Companies Act 2006. Statutory accounts for the year ended 31
December 2021 were approved by the Board on 28 February 2022 and
delivered to the Registrar of Companies. The auditor's report on
those financial statements was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 (2) or (3) of the Companies Act 2006. The
consolidated financial statements of the Group for the year ended
31 December 2021 are available from the Company's registered office
or website.
Basis of preparation
The condensed consolidated interim financial statements of the
Company for the six months ended 30 June 2022 comprise the results
for the Company and its subsidiaries (together referred to as 'the
Group'). These condensed consolidated interim financial statements
have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with
International Accounting Standard 34, 'Interim Financial Reporting'
as adopted by the United Kingdom. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2021, which
have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards (IFRSs)
adopted by the United Kingdom.
Going concern
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, we continue to adopt the going concern basis in
preparing the condensed consolidated interim financial
information.
In forming this view, the ongoing impact of COVID-19, supply
chain disruption and geo-political instability on the Group has
been considered. The directors have reviewed: the current financial
position of the Group, which has net cash of GBP90m and unused
overdraft facilities of GBP32m as at the period end; the
significant order book, which contains customers spread across
different geographic areas and industries; and the trading and cash
flow forecasts for the Group. The directors are satisfied that any
downside scenarios are considered remote and that the Group would
continue to have headroom within current cash balance and overdraft
facilities. The Group also has a number of mitigating actions that
it can take at short notice to preserve cash, for example reduction
in capital programmes, dividend deferral and other reductions in
discretionary spend.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
historical experience, and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the current financial year
are discussed in the financial statements for the year ended 31
December 2021.
Accounting policies
The accounting policies applied and significant estimates used
by the Group in these condensed consolidated interim financial
statements are the same as those applied by the Group in its
consolidated financial statements for the year ended 31 December
2021, except for the adoption of new standards effective as of 1
January 2022. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Non-controlling interests
Non-controlling interests in subsidiaries are identified
separately from the Group's equity therein. The interest of
non-controlling shareholders is initially measured at the
non-controlling interests' proportion of the share of the fair
value of the acquiree's identifiable net assets. Subsequent to
acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the
non-controlling interests' share of subsequent changes in equity.
Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
New accounting standards and interpretations
Change in accounting policy - Software as a Service ('SaaS')
arrangements
As noted and restated within the Annual Report for the year
ended 31 December 2021, the Group has changed its accounting policy
related to the capitalisation of certain software costs. This
change follows the IFRIC Interpretation Committee's agenda decision
published in April 2021, which clarifies the accounting treatment
of the costs of configuring or customising application software
under Software as a Service arrangements.
The Group's accounting policy has historically been to
capitalise costs directly attributable to the configuration and
customisation of SaaS arrangements as assets in the Balance Sheet.
Following the adoption of the above IFRIC agenda guidance, current
SaaS arrangements, principally relating to the Group's ongoing
transformation programme, were identified and assessed to determine
if the Group has control of the software and associated configured
and customised elements. For those arrangements where the Group
does not have control of the developed software, the Group
derecognised the asset previously capitalised.
This change in accounting policy led to adjustments in the 30
June 2021 reported financial results. Accordingly, the prior period
Balance Sheet at 30 June 2021 has been restated in accordance with
IAS 8, together with related notes. The tables on the following
page show the impact of the change in accounting policy on
previously reported financial results.
Impact on the consolidated balance sheet
(As previously
reported) (Restated)
First half Impact of First half
2021 restatement 2021
GBP000 GBP000 GBP000
============================= ============== ============= ===========
Intangible assets 46,450 (17,991) 28,459
Deferred tax assets 8,036 4,475 12,511
Other assets 660,474 --- 660,474
------------------------------ -------------- ------------- -----------
Total assets 714,960 (13,516) 701,444
------------------------------ -------------- ------------- -----------
Retained earnings 533,067 (14,362) 518,705
Deferred tax liabilities 1,060 846 1,906
Other equity and liabilities 180,833 - 180,833
------------------------------ -------------- ------------- -----------
Total equity and liabilities 714,960 (13,516) 701,444
------------------------------ -------------- ============= ===========
Impact on the consolidated income statement and statement of
comprehensive income
(As previously
reported) (Restated)
First half Impact of First half
2021 restatement 2021
GBP000 GBP000 GBP000
====================================== ============== ============= ===========
Adjusted operating profit 62,735 --- 62,735
--------------------------------------- -------------- ------------- -----------
Adjustments
- Amortisation of acquired intangible
assets (4,655) --- (4,655)
- Other adjustments (4,076) (3,453) (7,529)
--------------------------------------- -------------- ------------- -----------
Operating profit 54,004 (3,453) 50,551
--------------------------------------- -------------- ------------- -----------
Profit before tax 54,149 (3,453) 50,696
--------------------------------------- -------------- ------------- -----------
Income tax expense (13,265) 867 (12,398)
--------------------------------------- -------------- ------------- -----------
Profit for the year 40,884 (2,586) 38,298
--------------------------------------- -------------- ------------- -----------
Estimated effective tax rate 24.5% - 24.5%
--------------------------------------- -------------- ------------- -----------
Total comprehensive income for the
year 42,908 (2,586) 40,322
--------------------------------------- -------------- ============= ===========
Impact on basic and diluted earnings per share
(As previously
reported) (Restated)
First half Impact of First half
2021 restatement 2021
------------------------------------ -------------- ------------- -----------
Basic earnings per share 4.7p (0.3)p 4.4p
Adjusted basic earnings per share 5.5p --- 5.5p
Diluted earnings per share 4.7p (0.3)p 4.4p
Adjusted diluted earnings per share 5.5p --- 5.5p
------------------------------------- -------------- ------------- -----------
Impact on the consolidated statement of cash flows
(As previously
reported) (Restated)
Impact of First half
2021 restatement 2021
GBP000 GBP000 GBP000
========================================= === ============== ============= ============
Net cash flows from operating activities 38,317 (3,657) 34,660
Net cash flows from investing activities (10,747) 3,657 (7,090)
Net cash flows from financing activities (62,949) - (62,949)
Cash and cash equivalents at 30 June 153,361 - 153,361
---------------------------------------------- -------------- ------------- ------------
No impact on the overall increase in cash and cash equivalents
for the year.
Other amendments
A number of other amended standards became applicable for the
current reporting period. The application of these amendments has
not had any material impact on the disclosures, net assets or
results of the Group.
New standards and interpretations not yet adopted
Further narrow scope amendments have been issued which are
mandatory for periods commencing on or after 1 January 2022. The
application of these amendments will not have any material impact
on the disclosures, net assets or results of the Group.
2. Alternative performance measures
The Group uses adjusted figures as key performance measures in
addition to those reported under adopted IFRS, as management
believe these measures facilitate greater comparison of the Group's
underlying results with prior periods and assessment of trends in
financial performance.
The key alternative performance measures used by the Group
include adjusted profit measures and organic constant currency
(OCC). Explanations of how they are calculated and how they are
reconciled to IFRS statutory results are set out below.
a. Adjusted operating profit
Adjusted operating profit is the Group's operating profit
excluding the amortisation of acquired intangible assets and other
adjustments that are considered to be significant and where
treatment as an adjusted item provides stakeholders with additional
useful information to assess the trading performance of the Group
on a consistent basis. Further details on these adjustments are
given in note 4.
b. Adjusted profit before tax
The adjustments in calculating adjusted profit before tax are
consistent with those in calculating adjusted operating profit
above.
First half First half Full year
2022 2021 (Restated) 2021
GBP000 GBP000 GBP000
---------- --------------- ---------
Profit before tax 44,590 50,696 105,931
Adjustments:
Amortisation of acquired intangible assets 3,096 4,655 9,001
Gain on disposal of property (1,209) (1,569) (1,569)
Software as a Service configuration costs 3,549 3,453 8,493
Redundancy costs 254 2,863 3,871
Other restructuring costs 29 2,782 2,574
Russia market exit 3,555 - -
Adjusted profit before tax 53,864 62,880 128,301
---------- --------------- ---------
c. Adjusted basic and diluted earnings per share
Adjusted basic earnings per share is calculated using the
adjusted net profit attributable to the ordinary shareholders and
dividing it by the weighted average ordinary shares in issue.
Adjusted net profit attributable to ordinary shareholders is
calculated as follows:
First half First half Full year
2022 2021 (Restated) 2021
GBP000 GBP000 GBP000
---------- --------------- ---------
Net profit attributable to ordinary
shareholders 33,708 38,298 80,245
Adjustments:
Amortisation of acquired intangible assets 3,096 4,655 9,001
Gain on disposal of property (1,209) (1,569) (1,569)
Software as a Service configuration costs 3,549 3,453 8,493
Redundancy costs 254 2,863 3,871
Other restructuring costs 29 2,782 2,574
Russia market exit 3,555 - -
Tax effect on adjusted items (2,000) (2,595) (4,785)
Adjusted net profit attributable to
ordinary shareholders 40,982 47,887 97,830
---------- --------------- ---------
Diluted earnings per share is calculated by using the adjusted
net profit attributable to ordinary shareholders and dividing it by
the weighted average ordinary shares in issue adjusted to assume
conversion of all potentially dilutive ordinary shares (see note
9).
d. Return on capital employed
The return on capital employed ratio is used by management to
help ensure that capital is used efficiently.
First half First half Full year
2022 2021 (Restated) 2021
GBP000 GBP000 GBP000
---------- --------------- ---------
Adjusted operating profit
As reported - - 128,080
Rolling 12 months 118,648 144,041 -
Capital employed
Shareholders' funds 564,669 552,946 534,080
Cash and cash equivalents (100,382) (153,361) (123,474)
Interest bearing loans and borrowings 9,959 9,089 9,336
Pension (surplus)/deficit net of deferred
tax (8,747) 17,228 6,023
Capital Employed 465,499 425,902 425,965
---------- --------------- ---------
439,122 424,815
Average capital employed (1) 438,348(1) (2)
---------- --------------- ---------
Return on capital employed 27.0% 32.9% 30.1%
---------- --------------- ---------
(1) defined as the average of the capital employed at June 2021,
December 2021 and June 2022 (2021: June 2020, December 2020, and
June 2021).
(2) defined as the average of the capital employed at December
2020 and December 2021.
e. Working capital as a percentage of revenue
Working capital as a percentage of revenue is monitored as
control of working capital is key to achieving our cash generation
targets. It is calculated as inventory plus trade receivables, less
trade payables, divided by revenue.
f. Organic constant currency (OCC)
OCC results remove the results of businesses acquired or
disposed of during the period that are not consistently presented
in both periods' results. The 2022 half year results are restated
using the average exchange rates applied for the 2021 comparative
period.
For businesses acquired, the full results are removed from the
year of acquisition. In the following year, the results for the
number of months equivalent to the pre-acquisition period in the
prior year are removed. For disposals and closure of businesses,
the results are removed from the current and prior periods.
There are no acquisitions or disposals in the current and prior
periods.
Key headings in the income statement are reconciled to OCC as
follows:
OCC First half
First First
half half 2021
Currency (Restated
2022 adjustment 2022 )
---------- ------------- ---------- -----------
Revenue 280,014 (5,549) 274,465 288,261
Cost of sales (155,222) 3,208 (152,014) (155,081)
---------- ------------- ---------- -----------
Gross margin 124,792 (2,341) 122,451 133,180
Net overheads (71,489) 563 (70,926) (70,445)
---------- ------------- ---------- -----------
Adjusted operating profit 53,303 (1,778) 51,525 62,735
---------- ------------- ---------- -----------
Adjusted operating margin 19.0% 18.8% 21.8%
Adjusted profit before tax 53,865 (1,816) 52,049 62,880
Adjusted basic earnings
per share 4.8p - 4.8p 5.5p
---------- ------------- ---------- -----------
3. Analysis by operating segment
The Group has chosen to organise the management and financial
structure by the grouping of end markets. The three identifiable
operating segments where the financial and operating performance is
reviewed monthly by the chief operating decision maker are as
follows:
-- Oil & Gas
-- Chemical, Process & Industrial
-- Water & Power
Unallocated expenses comprise corporate expenses.
Half year to 30 June 2022
Oil & Chemical, Water Group
Gas Process & Power Unallocated
& Industrial
GBP000 GBP000 GBP000 GBP000 GBP000
--------- -------------- --------- -------------- ---------
Revenue 122,287 92,813 64,914 - 280,014
Adjusted operating
profit 23,560 22,730 13,405 (6,392) 53,303
Amortisation of acquired intangibles
assets (2,195) (613) (288) - (3,096)
--------- -------------- --------- -------------- ---------
Segment result before other
adjustments 21,365 22,117 13,117 (6,392) 50,207
Other adjustments (6,179)
--------- -------------- --------- -------------- ---------
Operating profit 44,028
Net financing income 562
Income tax expense (10,882)
---------
Profit for the period 33,708
---------
Half year to 30 June 2021 (Restated)
Oil & Chemical, Group
Gas Process Water & Unallocated
& Industrial Power
GBP000 GBP000 GBP000 GBP000 GBP000
--------- -------------- ---------- -------------- ---------
Revenue 129,562 81,203 77,496 - 288,261
Adjusted operating
profit 26,924 20,627 21,019 (5,835) 62,735
Amortisation of acquired intangibles
assets (3,300) (922) (433) - (4,655)
--------- -------------- ---------- -------------- ---------
Segment result before other
adjustments 23,624 19,705 20,586 (5,835) 58,080
Other adjustments (7,529)
--------- -------------- ---------- -------------- ---------
Operating profit 50,551
Net financing expense 145
Income tax expense (12,398)
---------
Profit for the period 38,298
---------
Full year to 31 December 2021
Oil & Chemical, Group
Gas Process Water & Unallocated
& Industrial Power
GBP000 GBP000 GBP000 GBP000 GBP000
--------- -------------- ---------- -------------- ---------
Revenue 260,153 160,454 148,553 - 569,160
--------- -------------- ---------- -------------- ---------
Adjusted operating
profit 56,342 42,775 40,430 (11,467) 128,080
Amortisation of acquired intangibles
assets (6,381) (1,782) (838) - (9,001)
--------- -------------- ---------- -------------- ---------
Segment result 49,961 40,993 39,592 (11,467) 119,079
Other adjustments (13,369)
--------- -------------- ---------- -------------- ---------
Operating profit 105,710
Net financing income 221
Income tax expense (25,686)
---------
Profit for the year 80,245
---------
Revenue by location of subsidiary
First
half First half Full year
2022 2021 2021
GBP000 GBP000 GBP000
-------- ----------- ----------
UK 25,120 29,569 55,971
Italy 23,855 27,440 49,150
Rest of Europe 44,750 51,860 102,501
USA 54,861 51,619 96,565
Other Americas 17,890 19,560 40,152
China 54,527 46,109 98,011
Rest of World 59,011 62,104 126,810
-------- ----------- ----------
280,014 288,261 569,160
-------- ----------- ----------
4. Other adjustments
The other adjustments are adjustments that management consider
to be significant and where separate disclosure enables
stakeholders to assess the underlying trading performance of the
Group on a consistent basis.
The other adjustments to profit included in statutory profit are
as follows:
First
half First half Full year
2022 2021 (Restated) 2021
GBP000 GBP000 GBP000
-------- ---------------- ----------
Gain on disposal of properties 1,209 1,569 1,569
Redundancy costs (255) (2,863) (3,871)
Other restructuring costs (29) (2,782) (2,574)
Russia market exit (3,555) - -
Software as a Service configuration costs (3,549) (3,453) (8,493)
(6,179) (7,529) (13,369)
-------- ---------------- ----------
The GBP1,209,000 (2021: GBP1,569,000) gain on disposal of
properties relates to the sale of one property in the period.
The Russia market exit costs are in relation to the ceasing of
operations in Russia and the impairment of the gross assets of the
Russian entity.
During the period, GBP3,549,000 of Software as a Service
configuration costs were expensed as part of the multi-year IT
transformation programme. This brings the total amount expensed
through the income statement as part of this programme to
GBP26,504,000. These costs were expensed as they do not meet the
capitalisation criteria under IAS 38.
All adjustments are included in administrative expenses. The
adjustments are taxable or tax deductible in the country in which
the expense is incurred.
5. Finance income
First
half First half Full year
2022 2021 2021
GBP000 GBP000 GBP000
------- ----------- ----------
Interest income 592 697 1,123
Foreign exchange gains 1,199 644 1,319
Finance Income 1,791 1,341 2,442
------- ----------- ----------
6. Finance expense
First
half First half Full year
2022 2021 2021
GBP000 GBP000 GBP000
Interest expense 370 376 818
Interest expense on lease liabilities 197 206 404
Interest charge on pension scheme liabilities 17 275 522
Foreign exchange losses 645 339 477
Finance Expense 1,229 1,196 2,221
------- ----------- ----------
7. Income taxes
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year. The estimated effective tax rate used
for the year ending 31 December 2022 is 24.4%. This is higher than
the effective tax rate for the year ended 31 December 2021 of
24.2%, reflecting the mix of taxable profits in group companies
worldwide.
The estimated adjusted effective tax rate for the year ending 31
December 2022, based on the adjusted profit before tax, is 23.9%
(2021 actual: 23.8%).
The Group continues to operate in many jurisdictions where local
profits are taxed at their national statutory rates. As a result,
the Group income tax charge will be subject to fluctuation
depending on the actual profit mix. The Group continues to expect
its effective tax rate to be higher than the standard UK
corporation tax rate of 19% due to higher tax rates in the majority
of overseas subsidiaries.
8. Dividends
First half First half Full year
2022 2021 2021
GBP000 GBP000 GBP000
---------- ---------- ---------
The following dividends were paid in the
period per
qualifying ordinary share:
4.05p final dividend (2021: 6.30p) 34,787 54,996 54,996
2.40p interim dividend (2021: 2.35p) - - 20,519
34,787 54,996 75,515
---------- ---------- ---------
The following dividends per qualifying
ordinary share were
declared/proposed at the balance sheet
date:
4.05p final dividend proposed - - 34,780
2.40p interim dividend declared (2021: 2.35p) 20,613 20,523 -
20,613 20,523 34,780
---------- ---------- ---------
In 2020 in response to the COVID-19 pandemic the recommendation
to pay a 3.90 pence per share final dividend in respect of 2019 was
withdrawn and no dividend was paid in the period to 30 June 2020.
An interim dividend of 3.90 pence was declared in the second half
of 2020, which was equivalent to the previously deferred 2019 final
dividend. In March 2021 a dividend, reflecting the combined interim
and final dividends, was proposed in respect of the year to 31
December 2020 and this was paid in May 2021. In 2021 we returned to
the regular schedule of dividend payments.
9. Earnings per share
Earnings per share is calculated using the profit attributable
to the ordinary shareholders for the period and 858.9m shares (six
months to 30 June 2021: 873.1m; year to 31 December 2021: 869.5m)
being the weighted average ordinary shares in issue.
Diluted earnings per share is based on the profit for the year
attributable to the ordinary shareholders and 859.7m shares (six
months to 30 June 2021: 874.2m; year to 31 December 2021: 870.5m).
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.
10. Inventories
30 June 30 June 31 Dec
2022 2021 2021
GBP000 GBP000 GBP000
-------- -------- --------
Raw materials and consumables 69,810 49,461 52,083
Work in progress 5,551 3,755 3,871
Finished goods 15,160 9,861 12,493
-------- -------- --------
90,521 63,077 68,447
-------- -------- --------
11. Defined benefit pension schemes
The defined benefit asset at 30 June 2022 of GBP11,233,000 (30
June 2021: liability of GBP22,184,000 included within employee
benefits; 31 December 2021: liability of GBP7,625,000 included
within employee benefits) is estimated based on the latest full
actuarial valuations at 31 March 2019 for UK and US plans. The
valuation of the most significant plan, namely the Rotork Pension
and Life Assurance Scheme in the UK, has been updated at 30 June
2022 by independent actuaries to reflect updated assumptions
regarding discount rates, inflation rates and asset values. The
full actuarial valuation updated to 31 March 2022 is currently in
progress.
30 June 30 June
31 Dec
2022 2021 2021
% % %
--------- -------- -------
Discount rate 3.8 1.8 1.9
Rate of inflation 3.0 3.2 3.3
--------- -------- -------
In addition, the defined benefit plan assets and liabilities
have been updated to reflect the regular payments and the GBP3.4
million payment made in respect of past service.
12. Share capital and reserves
The number of ordinary 0.5p shares in issue at 30 June 2022 was
860,467,000 (30 June 2021: 874,147,000; 31 December 2021:
860,276,000). All issued shares are fully paid.
The Group acquired 482,000 of its own shares through purchases
on the London Stock Exchange during the period (30 June 2021:
1,468,000; 31 December 2021: 2,154,000). The total amount paid to
acquire the shares was GBP1,600,000 (30 June 2021: GBP5,409,000; 31
December 2021: GBP7,809,000), and this has been deducted from
shareholders' equity. At 30 June 2022 the number of shares held in
trust for the benefit of directors and employees for future
payments under the Share Incentive Plan and Long-term incentive
plan was 1,177,000 (30 June 2021: 814,000; 31 December 2021:
1,500,000). In the period 488,000 shares were transferred from the
trust to employees in respect of the share investment plan and the
overseas profit linked share plan.
During the second half of 2021, the Group bought back a total of
14,404,000 Ordinary shares of 0.5p each for a total value of
GBP50,324,000 including costs of GBP324,000. These repurchased
shares were then cancelled in the same period.
In respect of the SAYE scheme, options exercised during the
period to 30 June 2022 resulted in 190,486 ordinary 0.5p shares
being issued (30 June 2021: 193,000 shares), with exercise proceeds
of GBP438,000 (30 June 2021: GBP328,000). The weighted average
market share price at the time of exercise was GBP3.13 (30 June
2021: GBP3.46) per share.
The share based payment charge for the period was GBP2,178,000
(30 June 2021: GBP1,951,000; 31 December 2021: GBP3,333,000).
13. Loans and borrowings
The following loans and borrowings were issued and repaid during
the six months ended 30 June 2022:
Lease Preference
liabilities Bank loans shares Total
GBP000 GBP000 GBP000 GBP000
------------- ----------- ----------- --------
Balance at 31 December 2021 8,611 685 40 9,336
Additions/drawdowns 3,430 - - 3,430
Repayment (2,536) (686) - (3,222)
Disposals (145) - - (145)
Exchange differences 559 1 - 560
Balance at 30 June 2022 9,919 - 40 9,959
------------- ----------- ----------- --------
Lease Preference
liabilities Bank loans shares Total
GBP000 GBP000 GBP000 GBP000
------------- ----------- ----------- --------
Current 3,505 - - 3,505
Non-current 6,414 - 40 6,454
Balance at 30 June 2022 9,919 - 40 9,959
------------- ----------- ----------- --------
The GBP60,000,000 committed loan facility in place on 30 June
2021 (31 December: GBP60,000,000) expired on the 25 June 2022 and
the Group decided not to renew the facility past this date given
the strong cash position. Of the GBP60,000,000 loan facility GBPnil
was drawn down at 30 June 2021 and 31 December 2021.
14. Share-based payments
A grant of share options was made on 24 March 2022 to selected
members of senior management at the discretion of the Remuneration
Committee. The key information and assumptions from this grant
were:
Equity Settled Equity Settled Equity Settled
TSR condition EPS condition ROIC condition
--------------- --------------- ----------------
Grant date 24 March 2022 24 March 2022 24 March 2022
Share price at grant date GBP3.33 GBP3.33 GBP3.33
Shares awarded under scheme 438,831 438,831 438,831
Vesting period 3 years 3 years 3 years
Expected volatility 33.5% N/A N/A
Risk free rate 1.4% N/A N/A
Expected dividends expressed
as a dividend yield nil nil nil
Probability of ceasing employment
before vesting 5% p.a. 5% p.a. 5% p.a.
Fair value GBP1.49 GBP2.41 GBP2.41
--------------- --------------- ----------------
The basis of measuring fair value is consistent with that
disclosed in the 2021 Annual Report & Accounts.
15. 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 2021 Annual Report and Accounts. Transactions
between key subsidiaries for the sale and purchase of products or
between the subsidiary and parent for management charges are priced
on an arm's length basis.
There were no significant changes in the nature and size of
related party transactions for the period to those reported in the
2021 Annual Report and Accounts.
16. Financial instruments fair value disclosure
The Group held forward currency contracts designated as hedge
instruments in a cash flow hedging relationship. At 30 June 2022
the fair value of these contracts was a net liability of
GBP1,139,000 (30 June 2021: a net asset of GBP1,636,000; 31
December 2021: a net asset of GBP1,790,000). The fair value was
estimated using period end spot rates adjusted for the forward
points to the appropriate value dates, and gains and losses are
taken to equity estimated using market foreign exchange rates at
the balance sheet date. All derivative financial instruments are
categorised at Level 2 of the fair value hierarchy. There was no
ineffectiveness to be recorded from the use of foreign exchange
contracts.
The other financial instruments, comprising trade and other
receivables/payables and contingent consideration, are classified
as Level 3 in the fair value hierarchy and their carrying amount is
deemed to reflect the fair value. The Group had no derivative
financial instruments in the current or previous year with fair
values that would be classified as Level 3 in the fair value
hierarchy.
Shareholder information
The interim report and half year results presentation is
available on the Rotork website at www.rotork.com .
General shareholder contact numbers:
Shareholder General Enquiry Number
(UK): 0371 384 2280
International Shareholders - General
Enquiries: (00) 44 121 415 7047
For enquires regarding the Dividend Reinvestment Plan (DRIP)
contact:
The Share Dividend Team
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0371 384 2280
Group information
Secretary and registered office:
Stuart Pain
Rotork plc
Rotork House
Brassmill Lane
Bath
BA1 3JQ
Company website:
www.rotork.com
Investors section:
http://www.rotork.com/en/investors/
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END
IR BKDBQOBKDOFK
(END) Dow Jones Newswires
August 02, 2022 02:00 ET (06:00 GMT)
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