RNS Number : 9541U
Rotork PLC
04 August 2015
 

 Tuesday 4 August 2015

Rotork plc

 

2015 Half Year Results

 

 

 
HY 2015
HY 2014
% change
OCC *2
% change
Order intake
£274.0m
£302.7m
-9.5%
-12.9%
Revenue
£274.2m
£278.5m
-1.6%
-5.4%
Adjusted*1 operating profit
£65.0m
£69.1m
-5.8%
-8.6%
Profit before tax
£56.3m
£61.5m
-8.4%
-9.1%
Adjusted*1 profit before tax
£64.1m
£68.4m
-6.3%
-9.5%
Basic earnings per share
4.77p
5.15p
-7.3%
-7.9%
Adjusted*1 basic earnings per share
5.44p
5.73p
-5.1%
-8.4%
Interim dividend
1.95p
1.92p
+1.6%
 

 

*1 Adjusted figures are before the amortisation of acquired intangible assets

*2 OCC is organic constant currency which has all the acquisitions removed and are restated at 2014 exchange rates.

 

Summary

 

·      Order intake 9.5% lower than prior year (OCC -12.9%)

·      Revenue 1.6% lower than prior year (OCC -5.4%)

·      Order book of £175.9m 4.3% lower than December (OCC -0.1%)

·      Cost management programme accelerated in response to oil and gas slowdown

·      Strong growth in the Instruments division

·      Two acquisitions completed including £6.9m acquisition of M&M International Srl announced today

·      Launch of IQT3 and SI3 actuator ranges

·      Strong ongoing cash generation, 110% cash conversion

·      Interim dividend increased by 1.6% to 1.95p

 

Peter France, Chief Executive, commenting on the results, said:

"The continued weakness of the oil price and geopolitical uncertainty in some of our key markets resulted in a challenging trading environment during the first half, with lower overall activity levels and an increased number of project deferrals and cancellations.

Rotork has a lean business model and we constantly review our activities to optimise costs. We have responded to market conditions and accelerated a number of our ongoing cost management initiatives. At the same time we continue to see opportunities to gain market share and expand our product portfolio through organic development and acquisition. We will continue to invest in these opportunities to ensure that Rotork is well placed to make further progress over the medium to long term.

As in previous years we anticipate that our results will be weighted to the second half. Although we expect the oil and gas market to remain challenging, and the timing of order placement remains difficult to forecast, based on our current order book and project visibility, the Board expects overall performance to be in line with management expectations for the full year."

 

For further information, please contact:

 

Rotork plc

Tel:  01225 733200

Peter France, Chief Executive

 

Jonathan Davis, Finance Director

 

 

 

FTI Consulting

Tel:  020 3727 1340

Nick Hasell / Susanne Yule

 

 

 

Business Review

Rotork experienced challenging markets in the six months to 30 June 2015. Activity in the oil and gas market was disrupted by the continued weakness of the oil price and we saw significant political instability and market uncertainty. In addition, sterling strengthened through the period against the Euro and US dollar. Order intake was lower than the prior year by 9.5% (OCC -12.9%) whilst reported revenue was only slightly lower than the prior year, down 1.6% (OCC -5.4%). Our order book of £175.9m was £7.8m lower than the start of the period but currency accounted for the largest part of this reduction and on an OCC basis the order book was only £0.2m lower.

 

Order intake has been impacted by the slowdown in the oil and gas industry and this was felt across all sectors, upstream, midstream and downstream. Revenue mix is often impacted by the order book and this has been the case in the first half with upstream actually higher than the prior year and midstream lower. This reflects the project nature of our business. Overall oil and gas revenue fell by £14.9m compared with the first half of 2014 and now accounts for 52% of Group revenue down from 57% in the full year of 2014. Rotork Fluid System (RFS) has the largest oil and gas exposure of all the divisions and therefore saw the greatest impact with order intake 20.3% lower. Our strategy of end market diversification helped mitigate some of the reduction we saw in the oil and gas market for RFS and we saw growth in all of our other targeted markets.

 

In the period, North and South America continued to benefit from upstream expenditure. However, we anticipate this spending to slow in the second half but to be replaced by midstream and downstream projects in due course. The Asia Pacific region saw a reduction in revenue over the comparative period due to reduced spending on Australian coal seam gas exploration, although projects are still ongoing in this market. There was a more marked slowdown in China than anticipated, which we believe was due to both market conditions and leadership changes in some of our major customers, which had the effect of delaying project investment decisions. We anticipate that project activity in China will improve towards the end of the year.

 

The power market was up 2.5% while there was a slight reduction in water, mainly as a result of the start of the AMP 6 programme in the UK and the associated spend taking time to work through. Our strategy to broaden our end market exposure across the Group was successful with increases in Industrial and other market areas, principally reflected by growth in the Instruments division.

 

With the general slowdown in the market we have taken actions to manage our cost base with a freeze on new recruitment and have well advanced plans to combine a number of facilities in the future. Group headcount as of 30 June was 3,423, a reduction of 36 from the start of the period. We have also been focused on managing overheads and material cost reduction programmes although these often will take a number of months to take effect. The target annualised savings from these initiatives is £8m, split equally between materials and overheads with a benefit in the current year anticipated to be £2m.

 

A key part of our strategy continues to be the diversification of our business in terms of geography, end market and products. Despite the challenging market we have continued to focus on delivering organic sales growth by investing in our sales channels and our facilities. We also continue to seek acquisitions that provide us with new products, new geographies or access to a new end market. In the first half we acquired the actuation business of our agent in Turkey. This acquisition opens up the possibility of investing and growing our market share in this important market which will benefit all of our divisions. We are also announcing today the acquisition of M&M International Srl, a solenoid valve business located in Bergamo Italy, for a cash cost of £6.9m. This business will provide a focal point for solenoid valve manufacture for the commercial and industrial markets. We continue to look for opportunities to grow both organically and by acquisition that will support our long term strategic and financial objectives.

 

 

 

 

Financial Key Performance Indicators

 

 

 

H1 2015

H1 2014

FY 2014

 

 

 

 

 

Sales growth

 

-1.6%

0.9%

2.8%

Return on sales

 

23.4%

24.6%

26.2%

Cash generation

 

110.2%

87.1%

97.4%

Return on capital employed

 

34.9%

44.3%

47.6%

Earnings per share growth

 

-5.1%

-0.5%

5.4%

 

The half year financial key performance indicators are calculated in a consistent way with those presented at the year end with the exception of return on capital employed (ROCE) where the first half year profit has been doubled to calculate the result. The majority of the reduction in ROCE in H1 is a result of the 2014 acquisitions of YTC and Midland increasing the average capital employed. As we generally have a second half profit weighting, the first half ROCE will generally be lower than the full year result.

 

 

Cash flow

At the end of 2014 we commented on the high level of trade receivables following the strong sales towards the end of the year. The subsequent collection of these receivables is the main driver behind the improvement in cash generation, with cash from operating activities rising to £51.8m compared with £39.6m in June 2014. Largely as a result of a £12.3m inflow from receivables, net working capital was a £3.5m cash inflow in the period compared with a £8.9m outflow in the first half of 2014. With acquisition related spend of £6.8m, the majority of which was the earn out payment for YTC, and capital expenditure of £4.9m, dividends were the largest outflow at £26.8m. With minimal movement in borrowings during the period, cash and cash equivalents increased by £9.0m.

 

Financial position

The balance sheet remains strong and at the period end included net cash of £37.2m (June 2014: £14.9m). Gross cash balances of £58.5m were offset by borrowings of £21.3m, £20.0m of which is provided under one of our two committed facilities. Net working capital at the period end was £152.3m, a reduction of £17.1m since the year end. This represents 27.8% of revenue compared with 28.5% at the year end.

 

 

Dividend

The interim dividend is to be increased by 1.6% to 1.95p per ordinary share and will be paid on 25 September 2015 to shareholders on the register at the close of business on 28 August 2015.

 

 

 

Operating Review

 

Rotork Controls

 

£m

H1 2015

H1 2014

Change

OCC*2 Change

 

 

 

 

 

Order intake

143.3

161.3

-11.1%

-12.1%

Revenue

146.0

150.7

-3.1%

-4.2%

Adjusted*1 operating profit

45.2

46.1

-2.1%

-3.5%

Adjusted operating margin

30.9%

30.6%

+30 bps

+20 bps

 

Order intake was lower in most regions, with North America and the Middle East being the main exceptions. In North America the underlying performance was flat with the strength of the US dollar resulting in a 7% increase in order intake. We saw underlying growth in the Middle East. In Europe and the other regions currency exaggerated the reduction in order intake. This pattern was broadly repeated for revenue, with a good performance in North America being offset by other geographies.

 

Oil and gas sales saw the greatest reduction and affected all regions.  Our power and other category declined modestly with sales to the water market slightly improved. Industrial sales showed the strongest growth, up 17%. The order book reduced 6.3% in the period to £85.9m but currency accounted for the majority of this reduction. Removing the impact of currency, the order book declined 2.9%.

 

Adjusted operating margins benefited from the cost control programmes initiated during the period and increased by 30 basis points to 30.9%. Gross margins were 100 basis points lower as a result of higher indirect manufacturing costs. Material and direct labour costs reduced at a rate slightly ahead of revenue with a neutral currency impact on the gross margin. Overheads were £3m lower than the previous period with savings spread across most cost categories and this more than offset the lower gross margin.

 

During the period we launched the IQT3 actuator, the quarter-turn variant of the IQ3. As with the IQ3, the roll out of the IQT3 will take place over the next 18 months. Last year we announced the launch of the Centork electric actuator specifically designed for the water and power markets. We have now started taking orders for this range and we anticipate sales building in the second half and into 2016.

 

 

Rotork Fluid Systems

 

£m

H1 2015

H1 2014

Change

OCC*2 Change

 

 

 

 

 

Order intake

80.5

101.0

-20.3%

-19.0%

Revenue

76.9

88.8

-13.4%

-13.4%

Adjusted*1 operating profit

7.8

14.4

-46.0%

-42.4%

Adjusted operating margin

10.1%

16.2%

-610 bps

-540 bps

 

RFS is our most oil and gas focused division with 67% of revenue coming from these end markets in the period (H1 2014: 76%).  As a result of the slowdown in oil and gas activity, revenue from these markets was £15.5m lower than the comparative period. All the other end markets for RFS showed growth but this was not sufficient to offset the decline in oil and gas. Latin America, continental Europe, the UK and North America all delivered growth but the reductions in the Far East, Middle East and Eastern Europe were greater. Whilst the timing of order intake continues to be hard to forecast, towards the end of the period we received orders for a number of North American LNG projects which we had been expecting. This contributed to the improvement in order intake despite the second quarter of 2014 having been a record and ensured the order book remained at the same level as it started the year despite a £3.6m currency headwind.

 

The reduction in revenue was weighted towards higher margin speciality products, which together with higher indirect manufacturing costs resulted in gross margin being lower by 500 basis points. Therefore whilst overheads were £1.6m lower this was not sufficient to prevent a decline in adjusted operating margin to 10.1%.

 

In the second half we will launch the SI3 range of electro-hydraulic actuators with IQ3 technology. We anticipate that we will start to receive SI3 orders in the second half although this will have limited impact on second half revenue.  

 

Rotork Gears

 

£m

H1 2015

H1 2014

Change

OCC*2 Change

 

 

 

 

 

Order intake

28.4

27.9

+2.0%

+4.7%

Revenue

29.8

28.7

+3.7%

+6.0%

Adjusted*1 operating profit

6.1

6.4

-4.3%

+12.5%

Adjusted operating margin

20.5%

22.2%

-170 bps

+130 bps

 

Order intake was positive with volumes in Europe, the Far East and Latin America all higher. This growth was across the product range, from the small manual gearboxes sold through our plant in the Netherlands to the larger motorised and subsea gearboxes, with sales through targeted sales subsidiaries beginning to gain traction. With a large and increasing value of sales in Europe, the weakness of the Euro masked the division's underlying growth with OCC order intake more than double the rate of reported growth.

 

Gears is the division with the greatest proportion of its sales in Europe as well as a high proportion of its cost base in the Far East. As a result currency has impacted its margins more than any other division. At gross margin level a reported 120 basis point reduction reverses to a 140 basis point increase on an OCC basis as the benefits of sourcing initiatives become visible on this basis.

 

 

 

 

Rotork Instruments

 

£m

H1 2015

 

H1 2014

 

Change

OCC*2 Change

 

Order intake

29.2

18.3

+59.3%

+1.1%

Revenue

28.8

17.4

+65.3%

+8.7%

Adjusted*1 operating profit

9.0

5.5

+65.3%

+13.6%

Adjusted operating margin

31.4%

31.4%

No change

+140 bps

 

YTC made a strong contribution in the period and exceeded expectations with Midland performing well despite its higher level of oil and gas sales. The contribution from Midland meant an increase in the proportion of oil and gas sales, rising to 38% compared with 34% in the comparative period. Revenue increases were driven both through the sales subsidiaries and through the Instruments factories, which have become more familiar with the other product lines and which continue to develop new sales channels in their regions. As the mix of product sales and routes to market evolves, this has an impact on the divisional margins.  However, with the growth in the period and effective cost management this has meant adjusted operating margins were the same as the comparative period. When the impact of currency is removed margins in the underlying business improved 140 basis points.

 

Principal risks and uncertainties

The Group has an established risk management process as part of the corporate governance framework set out in the 2014 Annual Report & Accounts. The principal risks and uncertainties facing our businesses are being monitored on an ongoing basis in line with the new Corporate Governance Code. The risk management process is described in detail on pages 36 to 39 of the 2014 Annual Report & Accounts. We identify risks in the form of strategic, operational and financial risks and set out mitigations and improvements to our processes and procedures as necessary to manage these risks. The Group has reviewed these risks and concluded that they remain applicable to the second half of the financial year.

 

The principal risks and uncertainties are:

·      Competition on price as a result of a competitor moving to manufacture in a lower cost area of the world;

·      Rotork not having the appropriate products, either in terms of features or costs;

·      Lower investment in Rotork's traditional market sectors;

·      Major in field product failure arising from a component defect or warranty issue which might require a product recall;

·      Failure of a key supplier or a tooling failure at a supplier causing disruption to planned manufacturing;

·      Failure of an acquisition to deliver the growth or synergies anticipated, due to incorrect assumptions or changing market conditions, or failure to integrate an acquisition to ensure compliance with Rotork's policies and procedures;

·      Failure of IT security systems to prevent penetration by unauthorised people and access to commercially sensitive data;

·      Volatility of exchange rates;

·      Political instability in a key end-market;

·      Defined benefit pension scheme deficit.

 

Statement of Directors' Responsibilities

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union 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.

 

The Directors of Rotork plc are listed in the Rotork plc Annual Report & Accounts for 31 December 2014. A list of current directors is maintained in the About Us section of the Rotork website: www.rotork.com.

 

 

Outlook

The continued weakness of the oil price and geopolitical uncertainty in some of our key markets resulted in a challenging trading environment during the first half, with lower overall activity levels and an increased number of project deferrals and cancellations.

Rotork has a lean business model and we constantly review our activities to optimise costs. We have responded to market conditions and accelerated a number of our ongoing cost management initiatives. At the same time we continue to see opportunities to gain market share and expand our product portfolio through organic development and acquisition. We will continue to invest in these opportunities to ensure that Rotork is well placed to make further progress over the medium to long term.

As in previous years we anticipate that our results will be weighted to the second half. Although we expect the oil and gas market to remain challenging, and the timing of order placement remains difficult to forecast, based on our current order book and project visibility, the Board expects overall performance to be in line with management expectations for the full year.

 

 

By order of the Board 

                                   

Peter France

Chief Executive

3 August 2015

 

                       

 

Independent Review Report to Rotork plc

 

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 2015 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income and Expense, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company 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" issued by the Auditing Practices Board.  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.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

 

We conducted our review 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" issued by the Auditing Practices Board 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 Ireland) 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.

 

Conclusion

 

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 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

London

3 August 2015

 

Consolidated Income Statement

 

 

 

First half

First half

Full year

 

 

2015

2014

2014

 

Notes

£000

£000

£000

 

 

 

 

 

Revenue

2

274,158

278,543

594,739

Cost of sales

 

(147,490)

(144,908)

(309,280)

Gross profit

 

126,668

133,635

285,459

Other income

 

120

158

277

Distribution costs

 

(2,317)

(2,729)

(5,466)

Administrative expenses

 

(67,265)

(68,864)

(137,832)

Other expenses

 

(15)

(86)

(211)

 

 

 

 

 

Operating profit before the amortisation of
    acquired intangible assets

 

65,016

69,050

 

157,167

Amortisation of acquired intangible assets

 

(7,825)

(6,936)

(14,940)

Operating profit

2

57,191

62,114

142,227

Finance income

3

788

724

1,421

Finance expense

4

(1,693)

(1,357)

(2,483)

Profit before tax

 

56,286

61,481

141,165

 

 

 

 

 

Income tax expense

5

 

 

 

UK

 

(2,259)

(3,766)

(5,552)

Overseas

 

(12,615)

(13,062)

(32,411)

 

 

(14,874)

(16,828)

(37,963)

 

 

 

 

 

Profit for the period

 

41,412

44,653

103,202

 

 

 

 

 

 

 

pence

pence1

pence1

Basic earnings per share

8

4.77

5.15

11.90

Adjusted basic earnings per share

8

5.44

5.73

13.16

Diluted earnings per share

8

4.76

5.13

11.85

Adjusted diluted earnings per share

8

5.42

5.71

13.10

 

1Restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares

 

 

Consolidated Statement of Comprehensive Income and Expense

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

Profit for the period

41,412

44,653

103,202

 

 

 

 

Other comprehensive income and expense

 

 

 

Items that may be subsequently reclassified to the income statement:

 

 

 

Foreign currency translation differences

(14,014)

(6,554)

(869)

Effective portion of changes in fair value of cash flow
hedges net of tax

1,665

270

(1,810)

 

(12,349)

(6,284)

(2,679)

Items that are not subsequently reclassified to the income statement:

 

 

 

Actuarial gain / (loss) in pension scheme net of tax

4,994

(2,055)

(15,341)

Income and expenses recognised directly in equity

(7,355)

(8,339)

(18,020)

 

 

 

 

Total comprehensive income for the period

34,057

36,314

85,182

 

 

 

 

Consolidated Balance Sheet

 

 

 

30 June

30 June

31 Dec

 

 

2015

2014

2014

 

Notes

£000

£000

£000

 

 

 

 

 

Goodwill

 

143,503

136,409

149,679

Intangible assets

 

63,789

68,059

72,270

Property, plant and equipment

 

61,975

58,061

64,050

Deferred tax assets

 

12,740

11,288

15,703

Derivative financial instruments

 

851

-

-

Other receivables

 

2,102

1,530

1,976

Total non-current assets

 

284,960

275,347

303,678

 

 

 

 

 

Inventories

9

84,508

83,831

81,090

Trade receivables

 

104,774

108,564

128,472

Current tax

 

2,045

1,570

1,962

Derivative financial instruments

 

3,518

4,403

1,913

Other receivables

 

15,134

16,853

12,586

Cash and cash equivalents

 

58,541

71,626

46,816

Total current assets

 

268,520

286,847

272,839

 

 

 

 

 

Total assets

 

553,480

562,194

576,517

 

 

 

 

 

Ordinary shares

11

4,347

4,344

4,346

Share premium

 

9,563

8,882

9,422

Reserves

 

(8,379)

365

3,970

Retained earnings

 

377,692

329,089

359,057

Total equity

 

383,223

342,680

376,795

 

 

 

 

 

Interest-bearing loans and borrowings

12

1,075

1,474

1,303

Employee benefits

 

26,985

21,500

38,864

Deferred tax liabilities

 

18,212

20,129

20,358

Provisions

13

1,743

2,397

1,913

Total non-current liabilities

 

48,015

45,500

62,438

 

 

 

 

 

Interest-bearing loans and borrowings

12

20,233

55,286

20,274

Trade payables

 

37,021

40,715

40,162

Employee benefits

 

10,601

12,369

16,018

Current tax

 

16,213

16,996

15,200

Derivative financial instruments

 

247

23

1,119

Other payables

 

33,053

39,238

35,191

Provisions

13

4,874

9,387

9,320

Total current liabilities

 

122,242

174,014

137,284

 

 

 

 

 

Total liabilities

 

170,257

219,514

199,722

 

 

 

 

 

Total equity and liabilities

 

553,480

562,194

576,517

 

 

Consolidated Statement of Changes in Equity

 

 

 

 

Issued equity

capital

£000

Share

premium

£000

Translation

reserve

£000

Capital

redemption

reserve

£000

 

Hedging

reserve

£000

 

Retained earnings

£000

Total

£000

 

 

 

 

 

 

 

 

Balance at 31 December 2013

4,344

8,840

2,668

1,644

2,337

312,246

332,079

Profit for the period

-

-

-

-

-

44,653

44,653

Other comprehensive income

 

 

 

 

 

 

Foreign currency translation differences

-

-

(6,554)

-

-

-

(6,554)

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

344

-

344

Actuarial loss on defined benefit pension plans

-

-

-

-

-

(2,618)

(2,618)

Tax in other comprehensive income

-

-

-

(74)

563

489

Total other comprehensive income

-

-

-

270

(2,055)

(8,339)

Total comprehensive income

-

-

(6,554)

-

270

42,598

36,314

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

Equity settled share based payment transactions

-

-

-

-

-

(1,560)

(1,560)

Tax on equity settled share based payment transactions

-

-

-

-

-

335

335

Share options exercised by employees

-

42

-

-

-

-

42

Own ordinary shares acquired

-

-

-

-

-

(3,900)

(3,900)

Own ordinary shares awarded under share schemes

-

-

-

-

-

5,416

5,416

Dividends

-

-

-

-

(26,046)

(26,046)

Balance at 30 June 2014

4,344

8,882

(3,886)

1,644

2,607

329,089

342,680

 

 

 

 

 

 

 

 

 

Issued equity

capital

£000


Share

premium

£000


Translation

reserve

£000

Capital

redemption

reserve

£000

 

Hedging reserve

£000

 

Retained earnings

£000

Total

£000

 

 

 

 

 

 

 

 

Balance at 31 December 2013

4,344

8,840

2,668

1,644

2,337

312,246

332,079

Profit for the year

-

-

-

-

-

103,202

103,202

Other comprehensive income

 

 

 

 

 

 

Foreign currency translation differences

-

-

(869)

-

-

-

(869)

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

(2,368)

-

(2,368)

Actuarial loss on defined benefit pension plans

-

-

-

-

-

(19,832)

(19,832)

Tax in other comprehensive income

-

-

-

558

4,491

5,049

Total other comprehensive income

-

-

-

(1,810)

(15,341)

(18,020)

Total comprehensive income

-

-

(869)

-

(1,810)

87,861

85,182

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

Equity settled share based payment transactions

-

-

-

-

-

2,799

2,799

Tax on equity settled share based payment transactions

-

-

-

-

-

(274)

(274)

Share options exercised by employees

2

582

-

-

-

-

584

Own ordinary shares acquired

-

-

-

-

-

(6,300)

(6,300)

Own ordinary shares awarded under share schemes

-

-

-

-

-

5,427

5,427

Dividends

-

-

-

-

(42,702)

(42,702)

Balance at 31 December 2014

4,346

9,422

1,799

1,644

527

359,057

376,795

 

 

Consolidated Statement of Changes in Equity (continued)

 

 

 

 

Issued equity

capital

£000


Share

premium

£000


Translation

reserve

£000

Capital

redemption

reserve

£000

 

Hedging reserve

£000

 

Retained earnings

£000

Total

£000

 

 

 

 

 

 

 

 

Balance at 31 December 2014

4,346

9,422

1,799

1,644

527

359,057

376,795

Profit for the period

-

-

-

-

-

41,412

41,412

Other comprehensive income

 

 

 

 

 

 

Foreign currency translation differences

-

-

(14,014)

-

-

-

(14,014)

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

2,073

-

2,073

Actuarial gain on defined benefit pension plans

-

-

-

-

-

6,382

6,382

Tax in other comprehensive income

-

-

-

(408)

(1,388)

(1,796)

Total other comprehensive income

-

-

-

1,665

4,994

(7,355)

Total comprehensive income

-

-

(14,014)

-

1,665

46,406

34,057

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

Equity settled share based payment transactions

-

-

-

-

-

(2,999)

(2,999)

Tax on equity settled share based payment transactions

-

-

-

-

-

629

629

Share options exercised by employees

1

141

-

-

-

-

142

Own ordinary shares acquired

-

-

-

-

-

(2,785)

(2,785)

Own ordinary shares awarded under share schemes

-

-

-

-

-

4,219

4,219

Dividends

-

-

-

-

(26,835)

(26,835)

Balance at 30 June 2015

4,347

9,563

(12,215)

1,644

2,192

377,692

383,223

 

 

 

Consolidated Statement of Cash Flows

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

Profit for the period

41,412

44,653

103,202

Amortisation of acquired intangible assets

7,825

6,936

14,940

Amortisation of development costs

868

700

1,461

Depreciation

4,513

3,635

7,996

Equity settled share based payment expense

1,849

1,137

5,160

Net (gain) / loss on sale of property, plant and equipment

(61)

4

88

Finance income

(788)

(724)

(1,421)

Finance expense

1,693

1,357

2,483

Income tax expense

14,874

16,828

37,963

 

72,185

74,526

171,872

Increase in inventories

(7,151)

(7,852)

(1,891)

Decrease / (increase) in trade and other receivables

12,276

(7,133)

(16,349)

(Decrease) / increase in trade and other payables

(1,597)

6,128

(1,327)

Difference between pension charge and cash contribution

(4,249)

(4,258)

(5,241)

Decrease in provisions

(151)

(726)

(1,379)

(Decrease) / increase in employee benefits

(3,938)

(4,808)

2,176

 

67,375

55,877

147,861

Income taxes paid

(15,600)

(16,318)

(42,992)

Cash flows from operating activities

51,775

39,559

104,869

 

 

 

 

Purchase of property, plant and equipment

(4,873)

(8,715)

(17,518)

Development costs capitalised

(1,655)

(1,050)

(2,676)

Proceeds from sale of property, plant and equipment

204

128

224

Acquisition of businesses, net of cash acquired

(2,843)

(55,486)

(81,263)

Contingent consideration paid

(4,000)

(971)

(1,463)

Interest received

296

214

1,048

Cash flows from investing activities

(12,871)

(65,880)

(101,648)

 

 

 

 

Issue of ordinary share capital

142

42

584

Purchase of ordinary share capital

(2,785)

(3,900)

(6,300)

Interest paid

(249)

(198)

(1,120)

(Decrease) / increase in borrowings

(120)

54,602

19,496

Repayment of finance lease liabilities

(9)

(22)

(36)

Dividends paid on ordinary shares

(26,835)

(26,046)

(42,702)

Cash flows from financing activities

(29,856)

24,478

(30,078)

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

9,048

(1,843)

(26,857)

 

 

 

 

Cash and cash equivalents at 1 January

46,816

68,873

68,873

Effect of exchange rate fluctuations on cash held

2,677

4,596

4,800

Cash and cash equivalents at end of period

58,541

71,626

46,816

 

 

 

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 6 months ended 30 June 2015 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 2014 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006, statutory accounts for the year ended 31 December 2014 were approved by the Board on 2 March 2015 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 2014 are available from the Company's registered office or website, see note 20.

 

Basis of preparation

 

The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2015 comprise 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 European Union.  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 2014, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

Going concern

 

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial information. In forming this view, the directors have considered trading and cash flow forecasts, financial commitments, the significant orderbook with customers spread across different geographic areas and industries and the significant net cash position.

 

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 2014.

 

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 2014.

 

 

 

1.       Status of condensed consolidated interim statements, accounting policies and basis of significant estimates (continued)

 

New accounting standards and interpretations

 

The following narrow scope amendments which were issued as part of the IFRS Annual improvement cycle have been applied from 1 January 2015:

·    Amendment to IAS19 Defined benefit plans - Employee contributions

·    IFRS2 Share-based payment - Definition of vesting condition

·    IFRS3 Business combination - Accounting for contingent consideration

·    IFRS8 Operating segments - Aggregation of operating segments and Reconciliation of the total of reportable assets.

·    IFRS13 Fair value measurement - Short-term receivable and payables

·    IAS24 Related party disclosure - Key management personnel services

Application of these standards and amendments has not had any material impact on the disclosures, net assets or results of the Group.

 

Recent accounting developments
 

IFRS15 Revenue from contracts with customers has been issued but is not yet effective and has not been adopted as application was not mandatory for the year. The new standard requires the separation of performance obligations within contracts with customers and the contractual value to be allocated to the performance obligations. Once a performance obligation is satisfied revenue should be recognised on that element of the contract. The introduction of the standard is likely to have some impact on Rotork but this is unlikely to be material due to the relatively straightforward contractual terms and conditions with customers. An assessment will be carried to understand the impact of this standard prior to it becoming effective in January 2017.

 

IFRS 9 Financial Instruments has been issued but is not yet effective and has not been adopted as application was not mandatory for the year. The directors anticipate that the adoption of this standard will not have a material impact on the disclosures, net assets or results of the Group.

 

The narrow scope amendments in the Annual Improvements to IFRSs: 2012 - 2014 cycle which are mandatory for periods commencing after 1 January 2016 will not have a material impact on the disclosures, net assets or results of the Group.

 

 

2.       Analysis by operating segment
 

The Group has chosen to organise the management and financial structure by the grouping of related products. The four 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 actuators

Fluid Systems - the design, manufacture and sale of pneumatic and hydraulic actuators

Gears - the design, manufacture and sale of gearboxes, adaption and ancillaries for the valve industry

Instruments - the manufacture of high precision pneumatic controls and power transmission products for a wide range of industries

 

Unallocated expenses comprise corporate expenses.

 

2.         Analysis by operating segments (continued)

 

Half year to 30 June 2015

 

 

 

Controls

£000

Fluid
Systems
£000

 

Gears
£000

 

Instruments

£000

 

Elimination
£000

 

Unallocated
£000

 

Group
£000

Revenue from external customers

145,956

76,888

23,571

27,743

-

-


274,158

Inter segment revenue

-

-

6,234

1,034

(7,268)

-

-

Total revenue

145,956

76,888

29,805

28,777

(7,268)

-

274,158

 

 

 

 

 

 

 

 

Operating profit before amortisation of acquired intangible assets

45,154

7,764

6,104

9,034

-

(3,040)

65,016

Amortisation of acquired intangibles assets

(1,651)

(995)

(232)

(4,947)

-

-

(7,825)

Operating profit

43,503

6,769

5,872

4,087

-

(3,040)

57,191

Net financing expense

 

 

 

 

 

 

(905)

Income tax expense

 

 

 

 

 

 

(14,874)

Profit for the period

 

 

 

 

 

 

41,412

 

 

Half year to 30 June 2014

 

 

Controls

£000

Fluid
Systems
£000

 

Gears
£000

 

Instruments

£000

 

Elimination
£000

 

Unallocated
£000

 

Group
£000

Revenue from external customers

150,689

88,831

22,315

16,708

-

-

278,543

Inter segment revenue

-

-

6,418

697

(7,115)

-

-

Total revenue

150,689

88,831

28,733

17,405

(7,115)

-

278,543

 

 

 

 

 

 

 

 

Operating profit before amortisation of acquired intangible assets

46,107

14,390

6,375

5,465

-

(3,287)

69,050

Amortisation of acquired intangibles assets

(1,860)

(851)

(211)

(4,014)

-

-

(6,936)

Operating profit

44,247

13,539

6,164

1,451

-

(3,287)

62,114

Net financing expense

 

 

 

 

 

 

(633)

Income tax expense

 

 

 

 

 

 

(16,828)

Profit for the period

 

 

 

 

 

 

44,653

 

 

Full year to 31 December 2014

 

 

Controls
£000

Fluid
Systems
£000

 

Gears
£000

 

Instruments

£000

 

Elimination
£000

 

Unallocated
£000

 

Group
£000

Revenue from external customers

324,539

180,260

45,771

44,169

-

-

594,739

Inter segment revenue

-

-

12,035

1,788

(13,823)

-

-

Total revenue

324,539

180,260

57,806

45,957

(13,823)

-

594,739

 

 

 

 

 

 

 

 

Operating profit before amortisation of acquired intangible assets

104,709

31,180

13,011

14,433

-

(6,166)

157,167

Amortisation of acquired intangibles assets

(3,477)

(1,585)

(428)

(9,450)

-

-

(14,940)

Operating profit

101,232

29,595

12,583

4,983

-

(6,166)

142,227

Net financing expense

 

 

 

 

 

 

(1,062)

Income tax expense

 

 

 

 

 

 

(37,963)

Profit for the year

 

 

 

 

 

 

103,202

2.         Analysis by operating segments (continued)

 

Revenue by location of subsidiary

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

UK

29,312

25,683

57,424

Italy

26,503

34,803

66,447

Rest of Europe

45,252

57,737

110,790

USA

70,032

68,970

144,366

Other Americas

16,382

12,290

36,327

Rest of the World

86,677

79,060

179,385

 

274,158

278,543

594,739

  


 

 

3.         Finance income

 

 

 

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

Interest income

598

500

1,057

Foreign exchange gain

190

224

364

 

788

724

1,421

 

 

 

4.         Finance expense

 

 

 

 

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

Interest expense

527

495

1,159

Interest charge on pension scheme liabilities

582

394

788

Foreign exchange loss

584

468

536

 

1,693

1,357

2,483

 

 

 

5.         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 average annual tax rate used for the year ending 31 December 2015 is 26.4% (the effective tax rate for the year ended 31 December 2014 was 26.9%).

 

The Group continues to expect its effective corporation tax rate to be higher than the standard UK rate due to higher tax rates in the US, China, Canada, France, Germany, Italy, Japan and India.

 

 

 

 

 

6.         Acquisitions

 

On 26 February 2015 Rotork Turkey purchased the actuation sales and service business of Omas Teknik Pazarlama AS for £2,843,000, which was fully paid for in cash. The acquired business will be reported under the Controls Division. In the four months to 30 June 2015 Rotork Turkey contributed £90,000 to Group revenue and a loss of £34,000 to the Group operating profit.

 

The provisional fair value of the net assets acquired was £1,522,000 of which £1,477,000 were customer relationships. The amortisation charge of these customer relationships was £138,000 in the period from acquisition to 30 June 2015. The goodwill of £1,321,000 represents the value attributed to staff expertise and the assembled workforce, which did not meet the recognition criteria for a separate intangible asset.

 

 

7.         Dividends

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

3.09p1 final dividend (2014: 3.00p1)

26,835

26,046

26,046

1.92p1 interim dividend

-

-

16,656

 

26,835

26,046

42,702

 

 

 

 

 

 

 

 

 

 

 

3.09p1 final dividend

-

-

26,861

1.95p interim dividend declared (2014: 1.92p1)

16,954

16,680

-

 

16,954

16,680

26,861

 

The interim dividend of 1.95p pence will be payable to shareholders on 25 September 2015 to those on the register on 28 August 2015.

 

1Restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares

 

 

 

8.         Earnings per share

 

Earnings per share is calculated using the profit attributable to the ordinary shareholders for the period and 867.6m shares (six months to 30 June 2014: 867.5m1; year to 31 December 2014: 867.4m1) 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 870.7m shares (six months to 30 June 2014: 870.6m1; year to 31 December 2014: 870.9m1). 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.

 

Adjusted basic and diluted earnings per share is calculated using the profit attributable to the ordinary shareholders for the period after adding back the amortisation charge net of tax.

 

 

First half

First half

Full year

 

2015

2014

2014

 

£000

£000

£000

 

 

 

 

Net profit attributable to ordinary shareholders

41,412

44,653

103,202

Amortisation

7,825

6,936

14,940

Tax effect on amortisation at effective rate

(2,068)

(1,898)

(4,018)

Adjusted net profit attributable to ordinary shareholders

47,169

49,691

114,124

 

 

 

 

                                                           

1Restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares

 

 

9.         Inventories

 

 

30 June

2015

£000

30 June 2014

£000

31 Dec 2014

£000

 

 

 

 

Raw materials and consumables

59,531

56,568

58,590

Work in progress

8,967

12,036

10,088

Finished goods

16,010

15,227

12,412

 

84,508

83,831

81,090

 

 

                                   

10.       Pension schemes - Defined Benefit deficit

 

The defined benefit obligation at 30 June 2015 of £26,083,000 (30 June 2014: £18,952,000; 31 December 2014: £36,132,000) is estimated based on the latest full actuarial valuations at 31 March 2014 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 2015 by independent actuaries to reflect updated assumptions regarding discount rates, inflation rates and asset values.

 

 

30 June

2015

%

30 June

2014

%

31 Dec 2014

%

 

 

 

 

Discount rate

3.9

4.4

3.6

Rate of inflation

3.3

3.3

3.1

 

 

In addition, the defined benefit plan assets and liabilities have been updated to reflect the regular payments, the £3.7 million payment made in March 2015 in respect of past service and the benefits earned during the period to the 30 June 2015.

 

 

 

11.       Share capital and reserves

 

On 24 April 2015 an ordinary resolution was passed to sub-divide the ordinary share capital by 10, resulting in the original 5p ordinary shares becoming 0.5p ordinary shares.  The number of ordinary 0.5p shares in issue at 30 June 2015 was 869,425,000 (30 June 2014: 868,745,0001; 31 December 2014: 869,279,0001). All issued shares are fully paid.

 

The Group acquired 1,113,108 of its own shares through purchases on the London Stock Exchange during the period (30 June 2014: 1,433,3501; 31 December 2014: 2,347,2501). The total amount paid to acquire the shares was £2,785,000 (30 June 2014: £3,900,000; 31 December 2014: £6,300,000), and this has been deducted from shareholders equity. At 30 June 2015 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 1,421,465 (30 June 2014: 1,081,160; 31 December 2014: 2,020,980).

 

Awards under the Group's long-term incentive plan and share investment plan vested during the period and 453,210 and 1,286,540 shares respectively were transferred to employees.

 

Employee share options schemes: options exercised during the period to 30 June 2015 resulted in 146,050 ordinary 0.5p shares being issued (30 June 2014: 39,120 shares), with exercise proceeds of £142,000 (30 June 2014: £42,000). The weighted average market share price at the time of exercise was £2.46 (30 June 2014: £2.65) per share.

 

The share based payment charge for the period was £1,849,000 (30 June 2014: £2,537,000; 31 December £5,160,000).

 

1Restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares

 

 

12.       Loans and borrowings

 

The following loans and borrowings were issued and repaid during the six months ended 30 June 2015:
 

 

Year of maturity

Interest rate

Carrying value

£000

 

 

 

 

Balance at 1 January 2015

 

 

21,577

 

 

 

 

Movement in the period:

 

 

 

Repayment of Euro denominated loans

2015-32

1.818%

(120)

Repayment of finance leases

2015-17

0% - 5.6%

(9)

Exchange differences

 

 

(140)

 

 

 

 

Balance at 30 June 2015

 

 

21,308

 

 

 

 

Current

 

 

20,233

Non-current

 

 

1,075

 

 

 

21,308

 

The Group has committed loan facilities of £75,000,000 (First half 2014: £75,000,000; Full year 2014: £75,000,000), of which £20,000,000 (30 June 2014: £55,000,000; 31 December 2014: 20,000,000) has been drawn down, the outstanding amount attracts a blended interest rate of LIBOR plus 0.35%. Repayment of the outstanding loan is due by May 2016 when the facilities are due for renewal.   

 

 

13.       Provisions

 

Contingent consideration

£000

Warranty provision

£000

Carrying value

£000

 

 

 

 

Balance at 1 January 2015

5,493

5,740

11,233

Exchange differences

(104)

(198)

(302)

Provisions used during the period

(4,000)

(652)

(4,652)

Credited to the Income Statement

-

338

338

Balance at 30 June 2015

1,389

5,228

6,617

 

Maturity at 30 June 2015

 

 

 

Non-current

-

1,743

1,743

Current

1,389

3,485

4,874

 

1,389

5,228

6,617

 

Maturity at 31 December 2014

 

 

 

Non-current

-

1,913

1,913

Current

5,493

3,827

9,320

 

5,493

5,740

11,233

 

.

14.       Financial instruments fair value disclosure

 

The Group held forward currency contracts designated as hedge instruments in a cash flow hedging relationship. At 30 June 2015 the fair value of these contracts was a net asset of £4,122,000 (30 June 2014: a net asset of £4,380,000; 31 December 2014: a net asset of £794,000). 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 of 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.

 

 

 

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 2014 Annual Report & 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.

 

Sales to subsidiaries and associates of Severn Trent PLC, a related party by virtue of Martin Lamb's directorship of that company, totalled £683,000 during the period to 30 June 2015 (Full year 2014: £1,352,000) and £225,000 was outstanding at 30 June 2015 (31 December 2014: £226,000).

 

 

16.       Key management emoluments

 

The emoluments of those members of the management team, including directors, who are responsible for planning, directing and controlling the activities of the Group are:

 

 

First half

2015

£000

First half 2014

£000

Full year 2014

£000

 

 

 

 

Emoluments including social security costs

1,951

2,475

4,594

Post employment benefits

237

274

549

Share based payments

404

743

1,134

 

2,592

3,492

6,277

 

 

 

17.       Share-based payments

 

A grant of shares was made on 6 March 2015 to selected members of senior management at the discretion of the Remuneration Committee. The key information and assumptions from this grant were:

 

 

Equity Settled
TSR condition

Equity Settled

EPS condition

 

 

 

Grant date

6 March 2015

6 March 2015

Share price at grant date

£2.49

£2.49

Shares awarded under scheme

599,450

599,450

Vesting period

3 years

3 years

Expected volatility

22.6%

22.6%

Risk free rate

0.9%

0.9%

Expected dividends expressed as a dividend yield

2.0%

2.0%

Probability of ceasing employment before vesting

5% p.a.

5% p.a.

Fair value

£1.11

£2.36

 

The basis of measuring fair value is consistent with that disclosed in the 2014 Annual Report & Accounts.

 

 

 

18.       Events Post Balance Sheet Date

 

On 3 August 2015 the Group acquired 100% of the share capital of M&M International srl, a leading manufacturer of solenoid valves and Piston actuated valves based in Bergamo, Italy. The acquired business will be reported within the Rotork Instruments division. The provisional consideration was £7,700,000 and the net cash outflow on completion was £6,900,000. The business will contribute to Group revenue and operating profit in the second half of the year.

 

The provisional net assets are £2,400,000, including cash of £800,000. If this acquisition had occurred on 1 January 2015 the businesses would have contributed £4,800,000 to Group revenue and £800,000 to Group operating profit in the six months to 30 June.

 

Due to the proximity of the acquisition to the date of approval of the interim financial statements the initial accounting for this business combination is incomplete and therefore the disclosures regarding the fair value of the assets acquired and liabilities assumed, the valuation of the goodwill and other intangibles, the amount of goodwill expected to be deductible for tax purposes, the fair value of contingent liabilities and assets and the amount and treatment of acquisition costs cannot be made.

 

 

19.       Shareholder information

 

This interim report is being sent to shareholders who requested it and copies are available to the public from the Registered Office at the address below.  The interim report is also available on the Rotork website at www.rotork.com.

 

General shareholder contact numbers:

Shareholder General Enquiry Number (UK):             0871 384 2030

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: 0871 384 2268

 

 

20.       Group information

 

Secretary and registered office:

Stephen Rhys Jones

Rotork plc

Rotork House

Brassmill Lane

Bath

BA1 3JQ

 

Company website:

www.rotork.com

 

Investor Section:

http://www.rotork.com/en/investors/index/

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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