REG - Rotork PLC - 2023 Preliminary Results
05/03/2024 07:00
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RNS Number : 5483F Rotork PLC 05 March 2024
Tuesday 5th March 2024
Rotork plc
2023 Preliminary Results
Strong delivery of Growth+ strategy; entering 2024 with confidence
Adjusted highlights 2023 2022 % change OCC(3) % change
Order intake(1) £723.7m £681.6m +6.2% +7.8%
Revenue £719.1m £641.8m +12.0% +13.6%
Adjusted(2) operating profit £164.5m £143.2m +14.8% +17.3%
Adjusted(2) operating margin 22.9% 22.3% +60bps +70bps
Adjusted(2) basic earnings per share 14.6p 12.7p +14.8% +17.0%
Cash conversion(4) 120% 76% - -
Reported highlights 2023 2022 % change
Revenue £719.1m £641.8m +12.0%
Operating profit £148.8m £123.6m +20.4%
Operating margin 20.7% 19.3% +140bps
Profit before tax £150.6m £124.1m +21.4%
Basic earnings per share 13.2p 10.9p +21.7%
Full year dividend 7.20p 6.70p +7.5%
Summary
· Order intake was 7.8% higher year-on-year on an OCC basis with orders
ahead at all divisions
· Deliveries accelerated in the second half as supply chain challenges
were overcome resulting in some normalisation of the order book which remained
strong at period end
· Revenue increased 12.0% year-on-year despite a significant foreign
exchange headwind which strengthened through the second half. On an OCC basis
sales grew 13.6% year-on-year with all divisions making strong progress
· Adjusted operating margins were 60bps higher year-on-year at 22.9%.
The reported operating margin was 20.7%
· Rotork received a rating of AAA in the MSCI ESG ratings assessment
and reduced its scope 1 and 2 GHG emissions by 11% year-on-year
· Closing net cash was £134.4m (December 2022: £105.9m). ROCE(4) was
33.9% (up 260bps)
· £50m share buyback programme announced
Kiet Huynh, Chief Executive, commenting on the results, said:
"We continued to make significant progress in 2023 and delivered another year
of strong organic sales growth, margin improvement and good cash flow
performance. Given the strength of our balance sheet we have today announced a
£50m share buyback whilst retaining the financial flexibility to pursue
strategic investments.
The delivery of Growth+ continues and the benefits of the strategy are
apparent, including in our organic sales growth performance in 2023. Target
Segments successes included upstream oil & gas electrification (including
methane emissions reduction), mining and metals processing (focused on the
battery value chain) and water infrastructure. Successes under Customer Value
included further progress on our programme to improve efficiency, lead times
and customer experience, and under Innovative Products & Services, the
launch of the IQ3 Pro and smartphone app.
We remain confident of delivering our financial ambition of mid-to-high single
digit sales growth and mid-20s adjusted operating margins over time and, based
on momentum in the year so far and supported by the strength of our order
book, we continue to expect 2024 to be another year of progress on an OCC
basis."
(1) Order intake represents the value of orders received during the period.
(2) Adjusted(4) figures exclude the amortisation of acquired intangible assets
and other adjustments (see note 4).
(3) OCC(4) is organic constant currency results which exclude acquired
businesses and are restated at 2022 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.
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 9.00am GMT
today in the Library at 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/65c262c077117a0c00a288ad/ndhd
(https://www.investis-live.com/rotork/65c262c077117a0c00a288ad/ndhd) . Please
join the webcast a few minutes before 9.00am to complete registration.
Summary
Purpose
Our Purpose and sustainability vision are one and the same: keeping the world
flowing for future generations. We want to help drive the transition to a
clean future where environmental resources are used responsibly. We have a
major role to play in new energies and technologies that will support the
transition to a low carbon economy, as well as helping preserve natural
resources such as fresh water and eliminating energy sector methane emissions.
Health, safety & wellbeing
The safety of our people, partners and visitors is our number one priority,
and our vision for health and safety is zero harm. In 2023, we recorded a
lost-time injury rate of 0.08, an improvement on the 0.13 recorded in 2022,
partly reflecting extensive work completed across the Group to implement our
Global Safety Standards. Our Total Recordable Injury Rate was 0.26 (2022:
0.53).
In many regions, a knock-on effect of the invasion of Ukraine has been a
further rise in consumer price inflation, which had already increased in the
aftermath of Covid, particularly on essentials such as food, energy and
housing costs. While there are signs that inflation is being brought under
control by increased interest rates, it peaked later than anticipated at
higher levels and remained higher than expected for a longer period. We took
steps to assist affected colleagues wherever we could, including through
bringing forward salary reviews.
Our employee engagement Pulse survey took place in July. The participation
rate increased to 79%, versus December 2022's survey at 75%. As part of the
engagement survey, we ask employees to rate Rotork as a place to work between
1 and 10, where 10 is highest. Engagement continues to improve, with the score
increasing to 7.4 in July, from 7.2 in December 2022 and 6.7 in June 2022.
Reflecting the encouraging trend in our engagement survey results and best
practice, we moved to an annual survey during 2023.
We have a committed team who are proud to work at Rotork and determined to
deliver on our ambitious goals. We offer our thanks and appreciation for all
their efforts throughout 2023.
Environmental performance
Sustainability is a major focus for Rotork. Whilst our impact in enabling our
customers to improve their environmental performance likely far exceeds our
Company's environmental footprint, the latter is no less important. Our
total scope 1 and 2 (market-based) emissions decreased by 11% in 2023 compared
with 2022, reflecting the implementation of energy efficiency projects and
investment in on-site renewable generation.
Our SBTi-validated near-term greenhouse gas ("GHG") emissions reduction
targets are:
• to reduce our absolute scope 1 and 2 GHG emissions 42% by 2030 from a 2020
base year
• to reduce our absolute scope 3 GHG emissions from the use of sold products
25% by 2030 from a 2020 base year
• that at least 25% of our suppliers by emissions covering purchased goods
and services will have science-based targets by 2027
We target net-zero by 2035 for scopes 1 and 2 and by 2045 for scope 3.
Underlining the importance we attach to achieving our net-zero targets, scopes
1 and 2 greenhouse gas reduction targets are included in our senior team's
long-term remuneration opportunity.
We were pleased to receive a rating of AAA in the MSCI ESG ratings assessment
(AA previously) and to once again be recognised as one of the top performing
companies rated by Sustainalytics and included in their 2023 ESG Industry Top
Rated companies list.
Growth+ strategy
The starting point of our Growth+ strategy is our Purpose, 'keeping the world
flowing for future generations'. Our Purpose is a powerful motivator, and it
drives everything we do. It also recognises the role we play in making our
world a great place to live, and the role we play in helping improve the
safety, environmental and social performances of not just ourselves but also
our end users, customers, suppliers and communities.
Our vision is for Rotork to be the leader in intelligent flow control. This
recognises the ever-increasing importance of connectivity to our end users.
Today's intelligent flow control systems ensure safety, are reliable,
efficient, easy to use, and play a vital role in ensuring the uptime of our
end users' operations (including through predictive and preventative
maintenance).
Our ambition is mid to high single-digit revenue growth and mid 20s adjusted
operating margins over time. Three powerful megatrends help drive our growth:
automation, electrification and digitalisation, as well as the trends of
sustainability, decarbonisation, energy security, water scarcity, water
quality and new energies. Our Growth+ strategy is designed to drive our growth
and to balance our investments with margin progression. At the core of our
strategy are three pillars: Target Segments, Customer Value and Innovative
Products & Services, each underpinned by our focus on 'Enabling a
Sustainable Future'.
Our 'Target Segments' are key segments within each of our divisions where we
have the right to play and where there are significant opportunities for
profitable growth. We are prioritising investment into these areas, helping us
to grow faster than our overall markets. We have already seen early benefits
from our focus on Target Segments which represented around half of group sales
in 2023 and grew 15% YoY OCC.
Successes in Oil & Gas include in North America, where our IQTF range has
established itself as the leading electric actuator for the wellhead choke
valve, and in liquified natural gas (LNG) where we benefit from a significant
installed base and are well placed to support the industry's planned
liquefaction capacity expansion. We have further developed the Target Segment
'methane emissions reduction' and now describe this as 'upstream
electrification'. The change reflects our business development as well as the
oil & gas industry's commitment to electrification which was highlighted
at COP28 in December 2023 with companies representing more than 40% of global
oil production signing the Oil & Gas Decarbonization Charter. The
medium-term opportunity is potentially greater than we originally calculated,
with North America representing the majority of the opportunity.
Chemical, Process & Industrial (CPI) plays across various markets and
sectors, and selectivity and focus are key. We are focused on identifying
growth opportunities in structurally growing markets and through share gain in
areas where Rotork has historically been under-represented. Identifying these
opportunities requires an in-depth investigation of value chains that are
often in new markets. In 2023 we made good progress in the Target Segments of
HVAC, mining (focused on the battery value chain), speciality chemicals and
decarbonisation.
In Water & Power, we have made excellent progress in our Target Segments
of water infrastructure, desalination, and alternative energy. Our teams take
a straightforward commercial approach to identifying the areas where we have a
clear 'right to play' and only then step up their pursuit of projects in these
areas. Examples include the exciting water reuse sector, where network
digitalisation and efficiency are increasingly in focus, desalination, where
electrification is a structural trend, and the alternative energy sector. In
the latter, unmanned offshore high-voltage direct current ('HVDC') platforms
require the most reliable automation equipment with advanced diagnostic
features that allow predictive and preventative maintenance techniques and
which Rotork is ideally placed to provide.
We are also making good progress on our Customer Value pillar, which puts the
customer at the forefront of everything we do. One example is the
implementation and integration of common systems and processes throughout the
Group. This will improve efficiency and ultimately deliver improved lead times
and customer experience. We successfully deployed our new Enterprise Resource
Planning system during the first half at our Bath (UK) site. The system will
be implemented across all sites over the next few years.
Our Innovative Products & Services pillar also has good momentum. We
launched the IQ3 Pro and its accompanying smartphone app during the year. This
offers greater connectivity than its predecessor and the smartphone app makes
configuration and operation easier and more convenient. Our enhanced
Intelligent Asset Management ('iAM') condition monitoring and analytics
software has been well received by end-users who appreciate its expanded
diagnostic and predictive functions.
In August, we acquired a small but strategically important business, Hanbay
Inc., adding a compact high-torque electric valve actuator to our product
offering. The Hanbay acquisition is fully consistent with the Growth+
strategy.
Market update
Energy security and the energy transition were again major trends in 2023.
Energy security became a significantly increased global priority following the
dramatic change in the energy landscape triggered by the events in Ukraine in
February 2022 and the subsequent attack on the Nord Stream pipeline as well as
conflict in Israel/Palestine. While hydrocarbon prices have fallen from the
levels they reached immediately following the Ukraine invasion, in most cases,
they remain higher than they have been for many years. The energy sector
continues to invest in traditional energy infrastructure, including in LNG,
and is seeking to catch up from earlier under-investment.
The year also saw the world's hottest summer on record (according to NASA) and
extreme weather events such as wildfires and droughts across the globe. These
events remind us of the urgency of tackling carbon emissions and adapting to
climate change. It is apparent that tackling the climate crisis and delivering
a just energy transition at pace will require a practical approach including a
balance of technologies with methane emissions reduction, LNG, carbon capture
and storage, hydrogen and direct air capture all having significant roles to
play.
Rotork has an important role to play through its eco-transition portfolio
which contributed 30% of group sales in 2023. This consists of products and
services that:
· Reduce (and in many cases eliminate) methane emissions, through the
electrification of the upstream oil & gas sector;
· Enable the energy transition, for example, through applications in
LNG, carbon capture and storage, biofuels, hydrogen and offshore wind; and
· Manage water and wastewater distribution and treatment.
Rotork has had notable success in upstream electrification, with the IQTF
being established as the leading electric actuator for upstream oil and gas
choke valve automation.
While some of these technologies are still early in their commercialisation
phase, we believe they will grow significantly. Methane emissions reduction
was a prominent topic at COP28 in Dubai in December, with companies
representing more than 40% of global oil production committing to the Oil
& Gas Decarbonization Charter and to near-zero upstream methane emissions
by 2030 including through electrification. The United States Environmental
Protection Agency issued its 'final rule' regarding methane emissions. This
requires new and existing natural gas-driven process controllers (i.e.
pneumatic actuators) across the USA to be zero emission, with few exceptions.
The growth in electric vehicle and energy storage demand continues to boost
the entire battery value chain. For Rotork's CPI division, opportunities
include metals and minerals mining and processing, speciality chemicals and
critical HVAC controls in battery and vehicle production facilities. In the
semi-conductor fabrication and data centre markets, customers increasingly
recognise the benefits of Rotork's critical HVAC product ranges and are
switching to them.
Decarbonisation remains a high-potential future market for all three of our
divisions, and recognising this we have moved to report decarbonisation
activity in each division rather than only in CPI. The United States'
Inflation Reduction Act and the European Union's similar initiatives support
the carbon capture and storage ('CCS'), hydrogen and sustainable aviation fuel
sectors. We saw a marked increase in enquiries, engineering design and
quotation activity in the period, particularly concerning carbon capture. The
Global CCS Institute reported that the capacity of CCS projects in
construction and development grew 57% year-on-year in 2023 to 312 Mtpa CO2.
The outlook for water and wastewater remains positive with continuing
investment in new and existing infrastructure. The market is focused on
delivering water availability, improving water quality, reducing leakage,
efficient water reuse, and automating and digitalising networks and processes.
Significant investment initiatives worldwide are underway or set to begin,
including in the US, China, the Middle East and the UK. The desalination
market remains active, with projects underway worldwide and, most notably, in
the Middle East.
In traditional power, the focus remains on plant modernisation, refurbishment,
and life extension. Whilst the new build market is quieter than it once was,
there continue to be new build opportunities, for example in China and India.
Renewable energy is playing an important role in delivering energy security as
well as the energy transition. According to the IEA, the amount of renewable
power capacity that will have been added worldwide in 2023 will have been ca.
30% higher than in 2022. Rotork products are specified for several
applications in offshore wind, including in HVDC transformer cooling systems,
and in concentrated solar.
Business performance
Group order intake increased 6.2% year-on-year (7.8% on an OCC basis) to
£723.7m. All three divisions booked higher orders for the full year, with
Water & Power and Oil & Gas strongly ahead. CPI reported encouraging
order growth in the final quarter. Orders, which continue to be driven
predominantly by customers' operational spend, included more large orders than
seen for some time, particularly notably in the first half.
Supply chain challenges held back deliveries to customers in the first half of
the year, resulting in during the summer a record order book relative to
sales. The supply chain situation significantly improved during the second
half allowing some normalisation of the order book. The lead time of
semi-finished components such as circuit boards which had increased
substantially following Covid was the biggest of these supply chain
challenges.
Group revenue was 12.0% higher year-on-year (13.6% higher OCC), benefitting
from both higher volumes and price increases. Oil & Gas sales rose 15.9%
(16.6% OCC), driven by strength in EMEA and the Americas and increased
upstream electrification activity. CPI sales were 7.7% ahead (9.7% OCC), with
all major geographic regions growing at similar rates. Water & Power sales
were up 10.5% (13.3% OCC), with both segments achieving good growth.
By geography, Europe, Middle East & Africa ('EMEA') sales by destination
grew double digits (OCC) and was Rotork's fastest growing region. Asia Pacific
revenues grew high-single digits year-on-year on an OCC basis with all
divisions ahead. Americas revenues were mid-teens ahead (OCC) with all
divisions in the region growing at similar rates.
Rotork Site Services, our global service network and a key differentiator in
our industry, performed well with revenues growing faster than the group
overall. Our Lifetime Management and Reliability Services programmes have good
momentum, as does our Intelligent Asset Management predictive analytics
system. Rotork Site Services is managed as a separate unit within our
divisions and contributed 21% of Group sales (2022: 21%).
Adjusted operating profit was 14.8% higher year-on-year (17.3% higher OCC) at
£164.5m, reflecting volume growth and positive net price / mix which were
partly offset by annual wage inflation and investment in our Growth+ strategy.
Adjusted operating margins recovered strongly in the second half and full year
margins were 60bps higher at 22.9% (70bps higher at 23.0% OCC) and reported
profit before tax was £150.6m.
Our eco-transition portfolio of products and services that have particular
environmental or sustainability benefits, or which enable the energy
transition and decarbonisation, consists of three sub-portfolios: 'water &
wastewater'; 'methane emissions reduction' and 'new energies &
technologies'. Eco-transition, water & wastewater and methane emissions
reduction sales grew faster than the Group year-on-year in 2023 and
represented 30% of group sales.
Return on capital employed was 33.9% (2022: 31.3%), benefitting from a greater
increase in adjusted operating profit than the increase in capital employed.
Cash conversion was 120% (2022: 76%) as 2023 saw a more normal delivery
phasing and a reduction in inventory as supply chain issues normalised.
Dividend and capital allocation
We retain a strong balance sheet and had a net cash position of £134.4m at
the period end (31 December 2022: £105.9m). This gives us the financial
flexibility to pursue our organic investment plans, pay a progressive dividend
and execute our targeted M&A strategy. We regularly review our capital
needs in line with our capital allocation strategy and have demonstrated
discipline and flexibility in using buybacks and dividends to deliver
shareholder returns.
On 4 August, Rotork acquired Montreal (Canada) headquartered Hanbay Inc.
('Hanbay'). Hanbay designs and manufactures compact, high-torque electric
valve actuators for non-hazardous and hazardous applications. The acquisition
expands Rotork's electric actuator offering, is consistent with all three
pillars of the Growth+ strategy, and increases the sales of our eco-transition
portfolio.
Rotork recognises the importance of a growing dividend to our shareholders. We
are committed to a progressive dividend policy, subject to satisfying the cash
requirements of the business.
The Board is recommending a final dividend of 4.65p per share. With the 2023
interim dividend of 2.55p, the total dividend for the year is 7.20p, a 7.5%
increase on the 2022 full-year dividend. This equals 2.0 times cover based on
adjusted earnings per share (2022: 1.9 times). The final dividend will be
payable on 24 May 2024 to shareholders on the register on 19 April 2024. The
last date to elect for the Dividend Reinvestment Plan ('DRIP') is 3 May 2024.
The Rotork DRIP is provided by Equiniti Financial Services Limited. The DRIP
enables the Company's shareholders to elect to have their cash dividend
payments used to purchase the Company's shares. More information can be found
at www.shareview.co.uk/info/drip (http://www.shareview.co.uk/info/drip) .
Consistent with the Group's stated capital allocation policy, the Board has
decided to return a prudent level of cash to shareholders while retaining a
strong balance sheet. As a result, Rotork will be commencing a share buyback
programme of up to £50m. Rotork's financial flexibility enables it to pursue
strategic investments and the Group remains active in looking for suitable
opportunities, consistent with the Growth+ strategy. For further details see
the separate announcement today.
Board update
As announced on 12 September, Jonathan Davis will be stepping down as Group
Finance Director and from the Board at the AGM in April 2024, after 21 years
with the company. Over his time at Rotork, Jonathan has overseen significant
profitable growth, and we all wish him well for his retirement.
We are looking forward to welcoming Ben Peacock to Rotork to be our Chief
Financial Officer from 11th March. Ben was previously Vice President of
Finance & IT - Minerals Division at The Weir Group PLC. Ben brings
considerable industry knowledge and a strong record of financial expertise
within complex businesses.
I would also like to thank Peter Dilnot and Ann Christin Andersen for their
considerable contributions to Rotork over the last 5-6 years. Peter stepped
down as a Director of Rotork in December 2023, having been our Senior
Independent Non-executive Director, and we wish him all the best in his role
as Chief Executive Officer at Melrose Industries Plc.
Rotork's ESG Committee Chair Ann Christin will leave the Board following the
Company's AGM in 2024. We wish Ann Christin all the best in her new role as
Chief Executive Officer of Norwegian Energy Partners.
I am very much looking forward to welcoming two new non-executive directors to
Rotork. Andrew Heath will join the Board on 1 April 2024. Andrew is currently
Chief Executive Officer of Spectris plc, a role he has held since September
2018. He will be appointed Chair of the Safety and Sustainability Committee
from 1 May 2024, subject to election. Vanessa Simms will join the Board on
21 June 2024. Vanessa is currently Chief Financial Officer at Land Securities
Group plc. Andrew and Vanessa bring a wide range of listed company expertise,
experience in leading change and in delivering organic and non-organic growth
and will further strengthen the diverse mix of skills and experience on the
Board.
Outlook
We remain confident of delivering our financial ambition of mid-to-high single
digit sales growth and mid-20s adjusted operating margins over time and, based
on momentum in the year so far and supported by the strength of our order
book, we continue to expect 2024 to be another year of progress on an OCC
basis
Divisional review
Oil & Gas
£m 2023 2022 Change OCC(3) Change
Revenue 328.4 283.3 +15.9% +16.6%
Adjusted operating profit 83.6 64.0 +30.7% +32.7%
Adjusted operating margin 25.5% 22.6% +290bps +310bps
The recovery in oil & gas sector activity experienced in 2022 continued
through 2023. Hydrocarbon prices have fallen from the levels reached
immediately following the invasion of Ukraine, however prices remain above
investment incentive levels and there is increased spend across most segments
and geographies on increasing output, improving productivity, reducing
emissions and on decarbonisation (including carbon capture and storage and
hydrogen). The work to increase LNG export capacity in the USA and the Middle
East continues on track, and in December industry players committed to
near-zero upstream methane emissions by 2030 and to the electrification of
upstream operations.
Following a first half where deliveries continued to be somewhat restricted by
supply chain challenges the second half saw a strong recovery and full year
divisional sales were ahead 16.6% year-on-year (OCC). All segments grew and
downstream sales represented 49% of the total (50% in 2022); upstream 27%
(25%) and midstream 24% (25%).
The strongest growth in regional sales by destination was in EMEA, driven by
significantly increased customer activity in Western Europe and the Middle
East. All three EMEA segments - downstream, upstream and midstream grew at
similar rates. APAC revenues were modestly ahead overall (OCC) despite reduced
activity in the midstream segment in China. Americas sales were ahead
mid-teens with all three segments growing in the region, and upstream and
midstream growing particularly strongly. Sales to Mexico were lower due to a
project completing.
The division's adjusted operating profit was £83.6m, 30.7% up year-on-year.
Higher volumes and positive pricing more than offset increased people costs
and investment in the division's commercial teams and resulted in adjusted
operating margins rising 290 basis points to 25.5%.
Oil & Gas' focus on target segments during the year delivered notable
order wins in upstream electrification, Asia Infrastructure, decarbonisation
and Rotork Site Services. Demand from choke valve manufacturers for the Rotork
IQTF electric actuator grew strongly year-on-year as North American upstream
operators sought to eliminate incomplete flaring downstream of new and
existing wellheads. Rotork electric actuators and network control devices were
selected to provide control and safety at a major new multi-site tank farm
development in India (order secured with the help of Rotork Site Services and
included a five-year Lifetime Management contract). Rotork fluid power
actuators were also selected to control valves at an innovative new blue
hydrogen facility under construction in Louisiana (US). Blue hydrogen is
produced from reforming natural gas, with resulting carbon dioxide captured
and stored. The capture unit at the Louisiana plant is designed to capture and
permanently sequester more than 5mn tonnes of carbon each year. Rotork
actuators and network control devices were specified in the upgrade of an
integrated refinery complex in Singapore. The upgrade enables increased
production of cleaner, low sulphur fuels and the production of sustainable
aviation fuel through processing waste oils.
Chemical, Process & Industrial
£m 2023 2022 Change OCC(3) Change
Revenue 213.7 198.4 +7.7% +9.7%
Adjusted operating profit 51.3 51.2 +0.1% +1.8%
Adjusted operating margin 24.0% 25.8% -180bps -180bps
CPI is a supplier of specialist actuators and instruments for niche critical
applications in the broad chemical, process industry and industrial sectors.
The division serves a wide range of end markets including specialty and other
chemicals, metals & mining, critical HVAC, pharmaceutical, steel and
cement. The automation, electrification, digitalisation and decarbonisation
megatrends are important growth drivers for these markets. Rotork has
historically been under-represented in several of these markets and has the
opportunity to win market share in the years ahead.
The division delivered a good full year sales performance, with revenues 9.7%
higher year-on-year on an OCC basis, despite economic weakness in a number of
regions including most notably China. The division's performance clearly
benefitted from the pursuit of its chosen Growth+ target segments such as the
focus on specialty chemicals and metals & mining markets directly related
to the fast-growing battery value chain and critical HVAC including in data
centres and semi-conductor plants.
By destination, Asia Pacific sales were ahead double digits on an OCC basis
driven by strong growth in India and South Asia. North Asia revenue was
modestly ahead OCC. EMEA sales grew high-single digits OCC, driven by the
Middle East/Africa region. Americas sales also grew high-single digits OCC.
The division's adjusted operating profit was £51.3m, 0.1% higher than the
prior year. Adjusted operating margins fell 180 basis points to 24.0%.
Particularly strong revenue growth in fluid power actuators contributed to a
negative product mix which even with improved direct labour productivity meant
a decline in gross margin. With overheads then increasing below the Group
average and in line with revenue, this resulted in a 180bps adjusted operating
margin reduction.
Rotork's electric and fluid power actuators and instruments were selected by
innovative customers across the battery value chain (mining, minerals
processing and battery production) for their robustness and reliability.
Rotork's electric and fluid power actuators and control systems are being
supplied to a major chemical project being built in China. Rotork was selected
in part due to the customer's preference for the Rotork Pakscan field device
control system. A privately-owned fine chemicals company has chosen Rotork's
YTC positioners for their Indian plant expansion replacing a competitor's
existing product. Rotork's pneumatic actuators have also been selected to
control bottom door systems on 'aggregate hopper' rail wagons which will be
used on the UK's High Speed 2 rail project.
Water & Power
£m 2023 2022 Change OCC(3) Change
Revenue 177.0 160.2 +10.5% +13.3%
Adjusted operating profit 46.4 40.3 +15.3% +19.0%
Adjusted operating margin 26.2% 25.2% +100bps +120bps
Water & Power is a supplier of premium actuators, predominantly electric,
and gearboxes for applications in the water, wastewater and treatment and
power generation sectors. Rotork has significant growth opportunities
including through helping solve customers' water quality and water scarcity
challenges as well as the automation, electrification and digitalisation
trends. Water and wastewater contributed 66% of divisional sales in the year.
Full year divisional sales were ahead 13.3% year-on-year (OCC). Following
several years where water and wastewater sector sales growth clearly outpaced
the power sector, both grew at similar rates in 2023. Asia Pacific sales were
ahead high-single digits year-on-year (OCC), with very strong revenue growth
in India partly offset by more modest sales growth elsewhere. Americas sales
grew strongly year-on-year driven by water and wastewater. Power sector sales
were slightly lower in the region. EMEA was Water & Power's fastest
growing geographic region in 2023.
The division's adjusted operating profit was £46.4m, 15.3% higher year on
year. Water & Power is the division with the highest proportion of
electric actuator sales and therefore was most impacted in recent years by the
shortage of chipsets and consequent cost increases. Availability started to
normalise in the year and the division therefore benefitted the most. This,
together with improved labour productivity, resulted in adjusted operating
margins increasing 100 basis points to 26.2%.
The division made good progress in its target segments of water
infrastructure, waste and wastewater treatment, desalination and alternative
energy during the year. Rotork is supplying electric actuators and motorised
gearboxes to control the transportation and distribution of potable water to a
major new town in the Middle East. Rotork's market leading product and service
offering as well as our local presence (valve actuation centre and service
team) helped secure this high-profile order, one of the largest in Rotork's
history. Rotork is supplying electric and fluid power actuators to a number of
wastewater treatment modernisation and improvement projects around the world
which will provide better quality water more efficiently, including projects
in India, Singapore and the USA (California and Illinois). Rotork's IQ3 Pro
electric actuators have been selected for critical control duties on HVDC
transformer platforms that will be used to transport electricity generated by
North Sea windfarms back to the UK. The windfarms concerned have the
generating capacity to power approximately 5m homes.
By order of the Board
Kiet Huynh
Chief Executive
4 March 2024
Financial review
Order intake for the year was £723.7m (2022: £681.6m), up 6.2% from the
prior year or 7.8% on an organic constant currency (OCC) basis, with all
divisions ahead of the prior year.
Group revenue was £719.1m for the year, 12.0% higher (+13.6% OCC) than 2022.
Revenue for the second half of the year was £384.4m, which was 14.9% higher
than the first half of the year. Revenue grew in all three divisions with
O&G reporting the strongest year-on-year growth. O&G finished the year
15.9% ahead (+16.6% OCC), CPI grew 7.7% (+9.7% OCC) and W&P grew 10.5%
(+13.3% OCC). Within O&G, upstream sales again increased the most, up by
around a quarter OCC, sales to midstream were up low-double digits OCC and
downstream, still the largest segment, increased mid-double digits OCC.
Rotork Site Services, our global service network and a key differentiator in
our industry, performed strongly in the year with revenues growing 13.6%
compared with 2022. Again, performance in the second half of the year was
considerably stronger than the first as the improved supply chain situation
allowed more retrofit projects to proceed. Revenue was 15.1% ahead of 2022 on
an OCC basis and our lifetime management and reliability services programmes
performed well. Rotork Site Services is managed as a separate unit within
Rotork's divisions and contributed 21% (2022: 21%) of Group revenue.
Gross margin increased 170 basis points to 47.2% (+160bps OCC), in part driven
by the increase in revenue. Cost increases related to components were
successfully mitigated by the price increase at the beginning of the year with
both increases more modest than the prior two years.
Reported overheads increased by £22.2m (+13.2%) compared with 2022, largely
driven by investment in people and commercial activities. Overheads as a
percentage of revenue increased marginally from 26.2% in 2022 to 26.5% in
2023.
Reported operating profit was £148.8m, 20.4% higher year on year. Adjusted
operating profit was £164.5m, a 14.8% increase with adjusted operating margin
increasing 60 basis points to 22.9% (2022: 22.3%). On an OCC basis, adjusted
operating profit increased 70 basis points to 23.0%.
Net finance income was £1.9m (2022: income of £0.5m) benefitting from more
favourable interest rates.
Reported profit before tax was £150.6m, an increase of 21.4% from £124.1m in
2022.
Adjusted basic earnings per share was 14.6p (2022: 12.7p), an increase of
14.8%. Statutory basic earnings per share was 13.2p (2022: 10.9p), an increase
of 21.7%.
Adjusted earnings reconciliation
£m
Gain on Business Transformation
Statutory property costs Other Adjusted
results Amortisation disposal costs results
Operating profit 148.8 2.1 (0.7) 13.1 1.2 164.5
Profit before tax 150.6 2.1 (0.7) 13.1 1.2 166.3
Tax (37.1) (0.3) 0.1 (3.2) (0.2) (40.7)
Profit after tax 113.5 1.8 (0.6) 9.9 1.0 125.6
The table above shows the adjustments between the statutory results for the
significant non-cash and other adjustments and the adjusted results. Note 2
sets out the alternative performance measures used by the Group and how these
reconcile to the statutory results. Further details of the adjusting items are
provided in note 4.
Organic constant currency rates
We also present OCC figures to exclude the impacts of currency, acquisitions,
business closures and disposals.
2023 at 2022 Organic business at 2022 exchange rate (£m)
Constant exchange
2023 as currency rate Acquired business
reported adjustment (£m) (£m) 2022
% (£m) (£m) % % % (£m)
Revenue 719.1 11.9 731.0 (1.6) 729.4 641.8
Cost of sales (380.1) (6.2) (386.3) 0.7 (385.6) (350.1)
Gross profit 47.2 339.0 5.7 47.2 344.7 (0.9) 47.1 343.8 45.5 291.7
Overheads 24.3 (174.5) (1.5) 24.1 (176.0) 0.3 24.1 (175.7) 23.1 (148.5)
Adjusted operating profit(1) 22.9 164.5 4.2 23.1 168.7 (0.6) 23.0 168.1 22.3 143.2
Adjusted items
Adjusted profit measures are presented alongside statutory results as we
believe they provide a useful comparison of underlying business trends and
performance from one period to the next. The Group believes alternative
performance measures, which are not considered to be a substitute for, or
superior to, IFRS measures, provide stakeholders with additional helpful
information on the performance of the business.
The alternative profit measures are adjusted to exclude amortisation of
acquired intangibles, Business Transformation costs associated with the
implementation of a new ERP system and integration with business processes,
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 of adjusted items are provided in note 4.
Currency
In 2023 we experienced a currency tailwind in the first half which then
switched to a significant headwind in the second half. The major currencies
affecting the income statement are the US dollar and the euro. The US
dollar/sterling average rate of $1.24 (2022: $1.24) was a slight headwind,
whilst the euro/sterling average rate was €1.15 (2022: €1.17), a 2 cent
tailwind. However the average sterling rate across the basket of other
currencies, led by Chinese renminbi and Indian rupee, weakened in 2023 and
resulted in a £11.9m or 1.6% headwind reported to revenue.
The impact of currency on the Group is both translational and transactional.
Given the locations in which we operate and the international nature of our
supply chain and sales currencies, the impact of transaction settlement
differences can be very different from the translation impact. We are able
partially to mitigate the transaction impact through matching supply currency
with sales currency, but ultimately we are net sellers of both US dollars and
euros. It is the net sale of these currencies which we principally address
through our hedging policy, covering up to 75% of net trading transactions in
the next 12 months and up to 50% between 12 and 24 months.
In order to estimate the impact of currency, at the current exchange rates we
consider the effect of a one cent movement versus sterling. A one euro cent
movement now results in approximately a £150,000 (2022: £150,000) adjustment
to profit and for US dollar, and dollar-related currencies, a one cent
movement equates to approximately a £500,000 (2022: £550,000) adjustment.
Return on capital employed (ROCE)
Our capital-efficient business model and strong profit margins mean Rotork
generates a high ROCE. Our definition of ROCE is based on adjusted operating
profit as a return on the average net assets excluding net cash and the
pension scheme asset/liability, net of the related deferred tax. The average
capital employed increased 6.0% over the year to £485.5m, driven largely by
the retained profit for the year. However adjusted operating profit increased
more and as a result ROCE rose 260bps to 33.9% (2022: 31.3%).
Taxation
The Group's headline effective tax rate decreased from 24.9% to 24.7%.
Removing the impact of the adjusted items provides a better indication of the
underlying rate and, on this basis, the adjusted effective tax rate is 24.5%
(2022: 23.9%). The Group expects its adjusted effective tax rate to remain
higher than the standard UK rate due to higher rates of tax in China, Germany,
India and the US.
The Group's approach to tax continues to be to operate on the basis of full
disclosure and co-operation with all tax authorities and, where possible, to
mitigate the burden of tax within the local legislation.
Hanbay Inc. acquisition
On 4 August 2023, the Group acquired 100% of the share capital of Hanbay Inc.
('Hanbay') for £21.1m. Hanbay designs and manufactures precise, miniature
electric actuators which offer a compact profile and high torque design for
use with small valves and instrument valves in hazardous and non-hazardous
applications. It is headquartered in Montreal, Canada. The acquisition expands
the Group's electric actuator offering and supports all three pillars of the
Growth+ strategy and increases the percentage sales contribution of the
Group's eco-transition portfolio.
Cash generation
We finished the year with a net cash position of £134.4m (2022: £105.9m)
which is a conversion of 120.3% of adjusted operating profit into cash, up
significantly from 75.9% reported in 2022. The higher cash conversion is
largely explained by improvements in working capital, including reductions in
inventory levels and an improvement in days' sales outstanding(2). Capital
expenditure was £7.3m (2022: £8.3m), plus £2.1m in capitalised software
(2022: £2.1m) and £11.6m in Business Transformation costs which were
expensed in the period (2022: £8.9m). Capital expenditure in 2023 included an
initial investment in our new facility in China which is expected to open
early in 2025.
Our Research and Development (R&D) spend increased 3.2% to £13.9m which
represents 1.9% of revenue (2022: £13.4m and 2.1%). Dividends of £58.8m, tax
payments of £32.8m, pension contributions of £26.6m and the acquisition of
Hanbay Inc £18.4m (net of cash acquired) were the other major outflows
excluding working capital.
Control of working capital as defined in the cash flow statement, using
average exchange rates, is key to achieving our cash generation KPI. Inventory
decreased by £8.3m as the need to tactically hold higher inventory to
mitigate supply chain disruption decreased. Higher year-on-year sales lead to
trade receivables increasing to £152.8m, however, this increase was in part
offset by an improvement in days' sales outstanding(2), which decreased from
58 to 55 days. Net working capital in the balance sheet decreased to 27.3% of
revenue compared with 28.7% the year before, however working capital movements
generated a £11.9m outflow in the cash flow statement driven by business
growth.
Risk update
Geopolitical instability remains at an elevated level with potential knock-on
impacts to other risks such as supply chain disruption. As a global business
we continue to monitor the trade position between all locations where we are
based or have customers or suppliers, and have considered the potential impact
of additional trade barriers between these countries. We will take steps where
necessary to mitigate any such changes but continue to believe they will not
materially impact the Group's results. We have included scenarios in the
viability assessment which models the impact of all of these current
uncertainties. The viability statement will be published in our 2023 annual
report.
Supply chain disruption remained a key risk during the year with component
shortages and constraints driving some delays in specific areas. This is a
change to the previous year where the shortages and constraints were more
widespread. Management actions to secure the supply of key components have
mitigated potentially more severe outcomes.
Various strategic initiatives continue to respond to the Group's risks and in
the year the Group has seen positive engagement on People and Health &
Safety risks in particular and has responded to the external threat of
increasingly sophisticated cyberattacks by investing in cyber strategy.
We continue to monitor and review emerging risks, which are those risks that
are hard to determine the severity. Risks under review include those in
relation to geo-political events, technological, social, environmental,
climate and sustainability risks.
Credit management
The Group's credit risk is primarily attributable to trade receivables, with
the risk spread over a large number of countries and customers, and no
significant concentration of risk. Creditworthiness checks are undertaken
before entering into contracts or commencing trade with new customers, and in
companies where insurance cover operates, the authorisation process works in
conjunction with the insurer, taking advantage of their market intelligence.
We maintained coverage of the credit insurance policy during the year and have
cover in place for virtually all of our companies at an aggregate of 90% of
receivables. Where appropriate, we use trade finance instruments such as
letters of credit to mitigate any identified risk.
Treasury
The Group operates a centralised treasury function managed by a Treasury
Committee, chaired by me and also comprising the Group Financial Controller
and Group Treasurer. The Committee meets regularly to consider foreign
currency exposure, control over deposits, funding requirements and cash
management. The Group Treasurer monitors compliance with the treasury policies
and is responsible for overseeing all of the Group's banking relationships. A
Subsidiary Treasury Policy restricts the actions subsidiaries can take and the
Group Treasury Policy and Terms of Reference define the responsibilities of
the Group Treasurer and Treasury Committee.
The Group uses financial instruments where appropriate to hedge significant
currency transactions, principally forward exchange contracts and swaps. These
financial instruments are used to reduce volatility which might affect the
Group's cash or income statement. In assessing the level of cash flows to
hedge with forward exchange contracts, the maximum cover taken is 75% of net
forecast flows. The Board receives treasury reports which summarise the
Group's foreign currency hedging position, distribution of cash balances and
any significant changes to banking relationships.
Retirement benefits
The Group accounts for post-retirement benefits in accordance with IAS 19,
Employee Benefits. The balance sheet reflects the net assets of these schemes
at 31 December 2023 based on the market value of the assets at that date, and
the valuation of liabilities using year-end AA corporate bond yields. We
closed both the main defined benefit pension schemes to new entrants; the UK
scheme in 2003 and the US scheme in 2009, in order to reduce the risk of
volatility of the Group's liabilities. In 2018 we further reduced the risk of
volatility when we completed the closure to future accrual of both the UK and
US schemes. Members of the defined benefit schemes were transferred onto the
relevant defined contribution plan operating in their country.
During the year the Group made a special contribution of £20m to the Rotork
Pension and Life Assurance Scheme. This contribution, together with some of
the existing assets, was used to purchase a bulk annuity covering the UK
scheme's existing pensioner liabilities. This has been accounted for as a
buy-in.
The most recent triennial valuation of the UK scheme took place at 31 March
2022 and showed an actuarial deficit of £35.1m and a funding level of 84%. A
recovery plan was agreed with the Trustees as part of the 2022 valuation,
which, following the special contribution of £20m, resulted in required
monthly contributions from the Company of £0.6m until September 2023 and
£0.5m from October 2023 to August 2024.
On an accounting basis the schemes moved from a deficit of £8.0m in 2022 to a
£9.1m surplus in 2023 driven principally by the £20m special contribution.
The funding level increased from 94% to 106%. The Company paid total
contributions of £26.6m over the year. The schemes' assets increased in value
by £19.0m (2022: decrease of £89.1m) and the schemes' liabilities increased
by £1.8m (2022: decrease of £88.7m).
The accounting surplus / deficit is different to the actuarial position as on
an accounting basis we are required to use AA-rated corporate bond yields to
value the liabilities. The UK scheme's actuarial valuation uses gilt yields
since this most closely matches the investment strategy which is designed in
part to hedge the interest rate and inflation risks borne by the scheme. Cash
contributions are driven by the actuarial valuation.
Dividends
The Board is proposing a final dividend of 4.65p per share. When taken
together with the 2.55p interim dividend paid in September 2023, the 7.20p
(2022: 6.70p per share) represents a 7.5% increase in dividends over the prior
year. This gives dividend cover of 2.0 times (2022: 1.9 times) based on
adjusted earnings per share.
Jonathan Davis
Group Finance Director
4 March 2024
1 Adjusted operating profit is before the amortisation of acquired
intangible assets and other adjustments (see note 4).
2 Days' sales outstanding is calculated on a count-back method. The
sales value including local sales taxes is deducted from the year-end trade
receivables to calculate the number of days sales outstanding.
Consolidated income statement
For the year ended 31 December 2023
Notes 2023 2022
£000 £000
Revenue 3 719,150 641,812
Cost of sales (380,054) (350,079)
Gross profit 339,096 291,733
Other income 1,405 1,620
Distribution costs (6,314) (6,197)
Administrative expenses (184,630) (163,177)
Other expenses (790) (372)
Operating profit 2,3 148,767 123,607
Finance income 5 5,301 3,049
Finance expense 5 (3,430) (2,554)
Profit before tax 150,638 124,102
Income tax expense 6 (37,150) (30,901)
Profit for the year 113,488 93,201
Attributable to:
Owners of the parent 113,135 93,243
Non-controlling interest 353 (42)
113,488 93,201
Basic earnings per share 8 13.2p 10.9p
Diluted earnings per share 8 13.2p 10.8p
Operating profit 2,3 148,767 123,607
Adjustments 3 2,110 7,051
- Amortisation of acquired intangible assets
- Other adjustments 4 13,598 12,587
Adjusted Operating profit 164,475 143,245
Adjusted basic earnings per share 2,8 14.6p 12.7p
Adjusted diluted earnings per share 2,8 14.6p 12.7p
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 2022
£000 £000
Profit for the year 113,488 93,201
Other comprehensive income
Items that may be subsequently reclassified to the income statement:
Foreign exchange translation differences (20,271) 21,928
Effective portion of changes in fair value of cash flow hedges net of tax 1,397 (1,627)
(18,874) 20,301
Items that are not subsequently reclassified to the income statement:
Remeasurement (loss) in pension scheme net of tax (7,722) (4,932)
Income and expenses recognised in other comprehensive income (26,596) 15,369
Total comprehensive income for the year 86,892 108,570
Attributable to:
Owners of the parent 86,609 108,561
Non-controlling interest 283 9
86,892 108,570
Consolidated balance sheet
At 31 December 2023
Notes 2023 2022
£000 £000
Non-current assets
Goodwill 231,703 228,005
Intangible assets 31,126 20,579
Property, plant and equipment 74,411 78,726
Derivative financial instruments 206 74
Defined benefit scheme surplus 9,144 -
Deferred tax assets 15,454 15,965
Total non-current assets 362,044 343,349
Current assets
Inventories 83,963 92,306
Trade receivables 152,842 134,279
Current tax 4,187 7,877
Derivative financial instruments 673 62
Other receivables 23,701 39,112
Assets classified as held for sale - 211
Cash and cash equivalents 146,372 114,770
Total current assets 411,738 388,617
Total assets 773,782 731,966
Equity
Issued equity capital 7 4,306 4,304
Share premium 21,004 19,959
Other reserves 13,465 32,269
Retained earnings 581,813 531,951
Equity attributable to owners of the parent 620,588 588,483
Non-controlling interests 1,707 1,424
Total equity 622,295 589,907
Non-current liabilities
Interest bearing loans and borrowings 8,826 5,405
Employee benefits 9 4,197 11,955
Deferred tax liabilities 3,872 4,028
Derivative financial instruments 15 215
Provisions 1,371 1,439
Total non-current liabilities 18,281 23,042
Current liabilities
Interest bearing loans and borrowings 3,131 3,431
Trade payables 40,585 42,314
Employee benefits 9 29,754 15,200
Current tax 12,387 11,893
Derivative financial instruments 538 2,729
Other payables 42,536 39,084
Provisions 4,275 4,366
Total current liabilities 133,206 119,017
Total liabilities 151,487 142,059
Total equity and liabilities 773,782 731,996
These financial statements were approved by the Board of Directors and
authorised for issue on 4 March 2024 and were signed on its behalf by:
K Huynh and JM Davis
Directors.
Consolidated statement of changes in equity
Issued Share Translation Capital Hedging Retained Attributable to owners of the parent Non-controlling interest Total
equity premium reserve redemption reserve earnings £000 £000 £000
capital £000 £000 reserve £000 £000
£000 £000
Balance at 31 December 2021 4,302 18,828 9,475 1,716 828 498,931 534,080 - 534,080
Profit/(loss) for the year - - - - - 93,243 93,243 (42) 93,201
Other comprehensive income
Foreign exchange translation differences - - 21,877 - - - 21,877 51) 21,928
Effective portion of changes in fair value of cash - - - - (2,067) - - (2,067)
flow hedges
(2,067)
Actuarial loss on defined benefit pension plans - - - - - (6,727) (6,727) - (6,727)
Tax on other comprehensive income - - - - 440) 1,795 2,235 - 2,235
Total other comprehensive income/(loss) - - 21,877 - (1,627) (4,932) 15,318 51 15,369
Total comprehensive income - - 21,877 - (1,627) 88,311 108,561 9 108,570
Non-controlling interest on newly established subsidiary - - - - - - - 1,415 1,415
Transactions with owners, recorded directly in equity
Equity settled share-based payment transactions - - - - - 1,790 1,790 - 1,790
Tax on equity settled share-based payment transactions - - - - - (987) (987)
(987) -
Share options exercised by employees 2 1,131 - - - - 1,133 - 1,133
Own ordinary shares acquired - - - - - (3,475) (3,475) - (3,475)
Own ordinary shares awarded under share schemes - - - - - 2,765) 2,765 - 2,765
Dividends - - - - - (55,384) (55,384) - (55,384)
Balance at 31 December 2022 4,304 19,959 31,352 1,716 (799) 531,951 588,483 1,424 589,907
Profit for the year - - - - - 113,135 113,135 353 113,488
Other comprehensive income
Foreign exchange translation differences - - (20,201) - - - (20,201) (70) (20,271)
Effective portion of changes in fair value of cash - - - - 1,841 - 1,841 - 1,841
flow hedges
Actuarial loss on defined benefit pension plans - - - - - (9,875) (9,875) - (9,875)
Tax on other comprehensive (loss)/income - - - - (444) 2,153 1,709 - 1,709
Total other comprehensive (loss)/income - - (20,201) - 1,397 (7,722) (26,526) (70) (26,596)
Total comprehensive (loss)/income - - (20,201) - 1,397 105,413 86,609 283 86,892
Transactions with owners, recorded directly in equity
Equity settled share-based payment transactions - - - - - 2,282 2,282 - 2,282
Tax on equity settled share-based payment transactions - - - - - 43 43 - 43
Share options exercised by employees 2 1,045 - - - - 1,047 - 1,047
Own ordinary shares acquired - - - - - (2,444) (2,444) - (2,444)
Own ordinary shares awarded under share schemes - - - - - 3,388 3,388 - 3,388
Dividends - - - - - (58,820) (58,820) - (58,820)
Balance at 31 December 2023 4,306 21,004 11,151 1,716 598 581,813 620,588 1,707 622,295
Detailed explanations for equity capital, the translation reserve, capital
redemption reserve and hedging reserve can be seen in note 7.
Consolidated statement of cash flows
For the year ended 31 December 2023
Notes 2023 2022
2023 £000 2022 £000
£000 £000
Cash flows from operating activities
Profit for the year 113,488 93,201
Adjustments for:
Amortisation of acquired intangibles 2,110 7,051
Other adjustments 4 13,598 12,587
Amortisation and impairment of software and development costs 2,352 1,436
Depreciation 13,533 14,933
Equity settled share-based payment expense 5,670 4,601
Profit on sale of property, plant and equipment (342) (159)
Finance income (5,301) (3,049)
Finance expense 3,430 2,554
Income tax expense 37,150 30,901
185,688 164,056
Decrease/(increase) in inventories 5,490 (19,479)
Increase in trade and other receivables (10,488) (32,591)
Increase/(decrease) in trade and other payables 1,399 (2,902)
Operating cash flow impact of other adjustments 4 (13,496) (12,056)
Difference between pension charge and cash contribution (26,628) (6,979)
Increase/(decrease) in provisions 216 (383)
Increase in employee benefits 15,538 67
157,719 89,733
Income taxes paid (32,825) (30,221)
Net cash flows from operating activities 124,894 59,512
Investing activities
Purchase of property, plant and equipment (7,306) (8,291)
Purchase of intangible assets (2,089) (2,066)
Development costs capitalised (2,411) (2,541)
Sale of property, plant and equipment 1,883 4,629
Acquisition of business (net of cash acquired) (18,399) -
Settlement of hedging derivatives 937 9
Interest received 3,927 751
Net cash flows from investing activities (23,458) (7,509)
Financing activities
Issue of ordinary share capital 1,047 1,133
Own ordinary shares acquired (2,444) (3,475)
Interest paid (936) (817)
Repayment of bank loans - (694)
Repayment of lease liabilities (3,699) (3,966)
Dividends paid on ordinary shares (58,820) (55,384)
Receipt from non-controlling interest in newly established subsidiary - 1,415
Net cash flows from financing activities (64,852) (61,788)
Net decrease in cash and cash equivalents 36,584 (9,785)
Cash and cash equivalents at 1 January 114,770 123,474
Effect of exchange rate fluctuations on cash held (4,982) 1,081
Cash and cash equivalents at 31 December 146,372 114,770
Notes to the Group Financial Statements
For the year ended 31 December 2023
Except where indicated, values in these notes are in £000.
Rotork plc is a public company limited by shares, registered and domiciled in
England. The consolidated financial statements of the Company for the year
ended 31 December 2023 comprise the Company and its subsidiaries (together
referred to as the Group).
1. Accounting policies
The accounting policies applied in the preparation of these consolidated
financial statements are set out below. These policies have been consistently
applied to the years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of Rotork plc have been prepared in
accordance with UK-adopted international accounting standards and in
conformity with the requirements of the Companies Act 2006.
New accounting standards and interpretations
A number of 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 2024. The application of these
amendments will not have any material impact on the disclosures, net assets or
results of the Group.
Adjustments to profit
Adjustments to profit are items of income and expense which, because of the
nature, size and/or infrequency of the events giving rise to them, merit
separate presentation. These specific items are presented as a footnote to the
income statement to provide greater clarity and an enhanced understanding of
the impact of these items on the Group's financial performance. In doing so,
it also facilitates greater comparison of the Group's underlying results with
prior periods and assessment of trends in financial performance. This split is
consistent with how underlying business performance is measured internally.
Adjustments to profit items may include but are not restricted to: costs of
significant business restructuring including any associated significant
impairments of intangible or tangible assets, adjustments to the fair value of
acquisition related items such as contingent consideration, acquired
intangible asset amortisation and other items considered to be significant due
to their nature or the expected infrequency of the events giving rise to them.
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 financial statements.
In forming this view, the macroeconomic conditions and the impact of
geo-political instability on the Group have been considered. The directors
have reviewed: the current financial position of the Group, which has net cash
of £134m and unused uncommitted overdraft facilities of £24m as at the year
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. A reverse stress test, where the Group's business
model would become unviable, has been performed and the directors believe
there is no reasonably possible scenario that would lead to the conditions
modelled in the reverse stress test.
The directors are satisfied that the Group has adequate resources to continue
operating as a going concern for the foreseeable future, and that no material
uncertainties exist with respect to this assessment. 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.
Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiaries for the year to 31 December 2023. The
financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date
control ceases. Intra-Group balances and any unrealised gains or losses or
income and expenses arising from intra-Group transactions are eliminated in
preparing the consolidated financial statements.
Status of this preliminary announcement
The financial information contained in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 31 December
2023 or 2022. Statutory accounts for 2022, which have been prepared in
accordance with UK-adopted international accounting standards and in
conformity with the requirements of the Companies Act 2006 have been delivered
to the registrar of companies. Those for 2023, will be delivered in due
course. The auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006. Full financial statements for the year ended 31 December
2023 will shortly be available to shareholders, and after adoption at the
Annual General Meeting on 30 April 2024 will be delivered to the
registrar.
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
provide stakeholders with additional useful information to facilitate greater
comparison of the Group's underlying results with prior periods and assessment
of trends in financial performance.
The Group believes alternative performance measures, which are not considered
to be a substitute for, or superior to, IFRS measures, provide stakeholders
with additional helpful information on the performance of the business. These
alternative performance measures are consistent with how the business
performance is planned and reported within the internal management reporting
to the Board. Some of these measures are also used for the purpose of setting
remuneration targets.
The key alternative performance measures that the Group use 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 as defined in
note 1. 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.
2023 2022
Profit before tax 150,638 124,102
Adjustments:
Amortisation of acquired intangible assets 2,110 7,051
Gain on disposal of property (723) (1,208)
Business Transformation costs 13,097 8,868
Other costs 1,224 1,372
Russia market exit - 3,555
Adjusted profit before tax 166,346 143,740
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 (see note 8). Adjusted net profit
attributable to ordinary shareholders is calculated as follows:
2023 2022
Net profit attributable to ordinary shareholders 113,488 93,201
Adjustments:
Amortisation of acquired intangible assets 2,110 7,051
Gain on disposal of property (723) (1,208)
Business Transformation costs 13,097 8,868
Other costs 1,224 1,372
Russia market exit - 3,555
Tax effect on adjusted items (3,567) (3,440)
Adjusted net profit attributable to ordinary shareholders 125,629 109,399
Adjusted 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 8).
d. Adjusted dividend cover
Dividend cover is calculated as earnings per share divided by dividends per
share. Adjusted dividend cover is calculated as adjusted earnings per share as
defined in note 2c above divided by dividends per share.
e. Total shareholder return
Total shareholder return is the movement in the price of an ordinary share
plus dividends during the year, divided by the opening share price.
f. Return on capital employed
The return on capital employed ratio is used by management to help ensure that
capital is used efficiently.
2023 2022
Adjusted operating profit 164,475 143,245
Capital employed
Shareholders' funds 622,295 589,907
Cash and cash equivalents (146,372) (114,770)
Interest bearing loans and borrowings 11,957 8,836
Pension (surplus)/deficit net of deferred tax (6,904) 6,065
Capital employed 480,976 490,038
Average capital employed 485,507 458,002
Return on capital employed 33.9% 31.3%
Average capital employed is defined as the average of the capital employed at
the start and end of the relevant year.
g. 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.
h. 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
2023 results are restated at 2022 exchange rates.
Key headings in the income statement are reconciled to OCC as follows:
31 December Currency adjustment OCC
2023 Acquisition adjustment 31 December
2023
Revenue 719,150 11,857 (1,599) 729,408
Cost of sales (380,054) (6,233) 714 (385,573)
Gross margin 339,096 5,624 (885) 343,835
Overheads (174,621) (1,454) 324 (175,751)
Adjusted operating profit 164,475 4,170 (561) 168,084
Interest 1,871 (268) 54 1,657
Adjusted profit before tax 166,346 3,902 (507) 169,741
Adjusted taxation (40,717) (956) 137 (41,536)
Adjusted profit after tax 125,629 2,946 (370) 128,205
i. Cash conversion
Cash conversion is calculated as adjusted operating cash flow as a percentage
of adjusted operating profit. It is monitored to illustrate how efficiently
adjusted operating profits are converted into cash. Adjusted operating cash
flow is calculated as follows:
2023 2022
Adjusted operating cash flow
Operating cash flow 157,719 89,733
Operating cash flow impact of other adjustments 13,496 12,056
Difference between pension charge and cash contribution 26,628 6,979
Adjusted operating cash flow 197,843 108,768
Adjusted operating profit 164,475 143,245
Cash conversion 120% 76%
3. Operating segments
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
Each of our customers is allocated to a division. Sales to that customer,
along with all directly associated costs of that sale, are reported under the
division to which that customer is allocated. Where some of our customers sell
into multiple end markets, a lead end market is identified. Sales to these
customers will generally be allocated to the lead end market unless the sale
is of significance and an alternative end market has been identified, in which
case it will be reported under the alternative end market.
For all costs not directly attributed to a sale, these are allocated across
the three divisions within each of our businesses. There are some costs that
are directly attributable to a division, but most support costs and facility
costs are not directly attributable to a division and are generally allocated
based on split of revenue. Amortisation of acquired intangible assets is
allocated based on the split of revenue of the entity to which the asset
relates.
Unallocated expenses comprise corporate expenses.
Geographic analysis
Rotork has a worldwide presence in all three operating segments through its
subsidiary selling offices and through an agency network. A full list of
locations can be found at www.rotork.com.
Analysis by operating segment:
Oil & Gas Chemical, Process & Industrial Water & Power Unallocated Group
2023 2023 2023 2023 2023
Revenue from external customers 328,391 213,712 177,047 - 719,150
Adjusted operating profit* 83,627 51,253 46,445 (16,850) 164,475
Amortisation of acquired intangible assets (1,100) (848) (162) - (2,110)
Segment result 82,527 50,405 46,283 (16,850) 162,365
Other adjustments (13,598)
Operating profit 148,767
Net finance income 1,871
Income tax expense (37,150)
Profit for the year 113,488
Oil & Gas Chemical, Process & Industrial Water & Power Unallocated Group
2022 2022 2022 2022 2022
Revenue from external customers 283,266 198,355 160,191 - 641,812
Adjusted operating profit* 63,960 51,206 40,293 (12,214) 143,245
Amortisation of acquired intangible assets (5,063) (1,410) (578) - (7,051)
Segment result 58,897 49,796 39,715 (12,214) 136,194
Other adjustments (12,587)
Operating profit 123,607
Net finance income 495
Income tax expense (30,901)
Profit for the year 93,201
*Adjusted operating profit is operating profit before the amortisation of
acquired intangible assets and other adjustments (see note 4).
Oil & Gas Chemical, Process & Industrial Water & Power Unallocated Group
2023 2023 2023 2023 2023
Depreciation 6,180 4,022 3,331 - 13,533
Amortisation:
- Acquired intangible assets 1,100 848 162 - 2,110
- Development costs 774 504 417 - 1,695
Oil & Gas Chemical, Process & Industrial Water & Power Unallocated Group
2022 2022 2022 2022 2022
Depreciation 6,591 4,615 3,727 - 14,933
Amortisation:
- Acquired intangible assets 5,063 1,410 578 - 7,051
- Development costs 1,239 701 868 - 2,808
Balance sheets are reviewed by subsidiary and operating segment balance sheets
are not prepared. Therefore no further analysis of operating segments assets
and liabilities is presented.
Geographical analysis:
Revenue by location of subsidiary 2023 2022
UK 75,568 55,146
Italy 65,553 52,997
Rest of Europe 105,293 96,627
USA 141,046 129,499
Other Americas 59,419 44,161
China 102,133 120,188
Rest of World 170,138 143,194
719,150 641,812
4. OTHER ADJUSTMENTS
Refer to note 1 for details on the adjustments to profit, including an
explanation of 'other adjustments'.
The other adjustments to profit included in statutory profit are as follows:
2023 2022
Gain on disposal of property 723 1,208
Other costs (1,224) (1,372)
Business Transformation costs (13,097) (8,868)
Russia market exit - (3,555)
Other adjustments (13,598) (12,587)
Gain on disposal of property
The £723,000 (2022: £1,208,000) gain on disposal of property relates to the
sales of property in Ballarat, Australia and Radstock, UK. These disposals are
the last of the Growth Acceleration Programme operational footprint actions.
Other costs
£1,224,000 (2022: £1,372,000) of other costs have been incurred, largely in
relation to acquisition and pension buy-in advisory costs.
Business Transformation costs
During the year £13,097,000 (2022: £8,868,000) of costs were incurred on
Business Transformation. The multi-year transformation includes the
implementing and integrating of common systems and processes throughout the
Group, including a new cloud-based ERP system. This brings the total expensed
under the programme to £44,920,000. These costs were expensed as they do not
meet the capitalisation criteria under IAS 38. Costs include an allocation of
personnel expenses in respect of employees directly involved in the programme.
The new ERP system launched at the Bath, UK factory in Q1 2023 and also went
live at the Head Office site in Q3 2023. These costs will continue to be
reported in adjusted items. Over the next 3 - 3.5 years we will deploy the
Business Transformation programme, including the new ERP system, across all
other Group entities at an estimated further cost of £45m to £50m.
Russia market exit
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.
Income statement disclosure
All adjustments are included in administrative expenses. The adjustments are
taxable or tax deductible in the country in which the expense is incurred.
Cash flow statement disclosure
Other adjustments have a net operating cash outflow of £13,496,000 (2022:
£12,056,000) and a net investing cash inflow of £955,000 (2022:
£4,049,000).
5. finance Income and EXPENSE
2023 2022
Interest income 4,203 1,235
Net interest income on pension scheme liabilities 352 -
Foreign exchange gains 746 1,814
Finance income 5,301 3,049
2023 2022
Interest expense (807) (744)
Interest expense on lease liabilities (495) (406)
Net interest charge on pension scheme liabilities - (110)
Foreign exchange losses (2,128) (1,294)
Finance expense (3,430) (2,554)
6. Income tax expense
2023 2023 2022 2022
Current tax:
UK corporation tax on profits for the year 4,865 3,173
Adjustment in respect of prior years 435 (942)
5,300 2,231
Overseas tax on profits for the year 32,091 30,242
Adjustment in respect of prior years 146 (287)
32,237 29,955
Total current tax 37,537 32,186
Deferred tax:
Origination and reversal of other temporary differences 1,187 (1,935)
Impact of rate change (591) 252
Adjustment in respect of prior years (983) 398
Total deferred tax (387) (1,285)
Total tax charge for year 37,150 30,901
Profit before tax 150,638 124,102
Profit before tax multiplied by the blended standard rate of 35,400 23,579
corporation tax in the UK of 23.5% (2022: 19.0%)
Effects of:
Different tax rates on overseas earnings 4,552 9,339
Permanent differences (118) 404
Losses not recognised 166 93
Tax incentives (1,587) (1,935)
Impact of rate change (861) 252
Adjustments to tax charge in respect of prior years (402) (831)
Total tax charge for year 37,150 30,901
Effective tax rate 24.7% 24.9%
Adjusted profit before tax (note 2b) 166,346 143,740
Total tax charge for the year 37,150 30,901
Amortisation of acquired intangible assets 286 1,109
Business Transformation costs 3,220 2,217
Other adjustments (note 4) 61 114
Adjusted total tax charge for the year 40,717 34,341
Adjusted effective tax rate 24.5% 23.9%
A tax credit of £43,000 (2022: charge of £987,000) in respect of share-based
payments has been recognised directly in equity in the year.
The effective tax rate for the year is 24.7% (2022: 24.9%). The adjusted
effective tax rate is 24.5% (2022: 23.9%) and is lower than the effective tax
rate for the year principally because of the tax treatment of expenses
included in other adjustments.
The adjusted effective tax rate has increased from 23.9% in 2022 to 24.5% in
2023, principally because of an increase in the UK corporation tax rate. The
UK corporation tax rate increased from 19% to 25% on 1 April 2023 leading to a
blended rate of 23.5% in the Accounting Period. The Group expects its
adjusted effective tax rate to continue to move in line with the trends in
corporate tax rates in the jurisdictions where Rotork operates. The adjusted
effective tax rate will continue to be higher than the standard UK rate
principally due to higher rates of tax in China, the US, Germany and India.
On 20 June 2023 legislation was substantively enacted in the UK to introduce
the OECD's Pillar Two global minimum tax rules together with a UK qualified
domestic minimum top-up tax, with effect from 1 January 2024. Under the
legislation Rotork plc will be required to pay to the UK tax authorities
top-up tax on profits of its subsidiaries that are taxed at an effective tax
rate of less than 15 per cent.
Based on Pillar Two impact assessments carried out on prior years' data,
Rotork plc considers that Pillar Two will not have a material impact on its
current tax expense in future years.
The Group has applied the mandatory temporary IAS 12 exception from the
accounting requirements for deferred taxes in IAS 12, such that the group will
not recognise or disclose information on deferred tax assets and liabilities
related to Pillar Two income taxes.
The Group is continuing to assess the impact of the Pillar Two income taxes
legislation on its future financial performance.
There is an unrecognised deferred tax liability for temporary differences
associated with investments in subsidiaries. Rotork plc controls the dividend
policies of its subsidiaries and the timing of the reversal of the temporary
differences. The value of temporary differences associated with unremitted
earnings of subsidiaries for which deferred tax has not been recognised is
£320,839,000 (2022: £272,249,000).
7. Capital and reserves
0.5p Ordinary £1 Non- 0.5p Ordinary £1 Non-
shares redeemable shares redeemable
issued preference issued preference
and fully shares and fully shares
paid up 2023 paid up 2022
2023 2022
At 1 January 4,304 40 4,302 40
Issued under employee share schemes 2 - 2 -
Share buyback programme - - - -
At 31 December 4,306 40 4,304 40
Number of shares (000) 861,201 860,771
The ordinary shareholders are entitled to receive dividends as declared and
are entitled to vote at meetings of the Company.
Share issue
The Group received proceeds of £1,047,000 (2022: £1,133,000) in respect of
the 429,946 (2022: 494,972) ordinary shares issued during the year: £2,000
(2022: £2,000) was credited to share capital and £1,045,000 (2022:
£1,131,000) to share premium.
Own shares held
Within the retained earnings reserve are own shares held. The Group acquired
773,000 of its own shares during the year (2022: 1,124,000). The total amount
paid to acquire the shares was £2,444,000 (2022: £3,475,000), and this has
been deducted from shareholders' equity. During the year, 1,038,000 (2022:
793,000) ordinary shares were released to satisfy share plan awards. The
investment in own shares held is £4,314,000 (2022: £6,000,000) and
represents 1,566,000 (2022: 1,831,000) ordinary shares of the Company held in
trust for the benefit of directors and employees for future payments under the
Share Incentive Plan and Long Term Incentive Plan. The dividends on these
shares have been waived.
7. Capital and reserves (continued)
Preference shares
The preference shareholders take priority over the ordinary shareholders when
there is a distribution upon winding up the Company or on a reduction of
equity involving a return of capital. The holders of preference shares are
entitled to vote at a general meeting of the Company if a preference dividend
is in arrears for six months or the business of the meeting includes the
consideration of a resolution for winding up the Company or the alteration of
the preference shareholders' rights.
Translation reserve
The translation reserve comprises all foreign exchange differences arising
from the translation of the financial statements of foreign operations.
Capital redemption reserve
The capital redemption reserve arises when the Company redeems shares wholly
out of distributable profits.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net
change in the fair value of cash flow hedging instruments that are determined
to be an effective hedge.
Dividends
The following dividends were paid in the year per qualifying ordinary share:
2023 2023 2022
Payment date
4.30p final dividend for 2022 (final dividend for 2021: 4.05p) 24 May 36,926 34,787
2.55p interim dividend for 2023 (interim dividend for 2022: 2.40p) 22 September 21,894 20,597
58,820 55,384
After the balance sheet date the following dividends per qualifying ordinary
share were proposed by the directors. The dividends have not been provided
for.
2023 2022
Final proposed dividend per qualifying ordinary share
4.65p 40,046 -
4.30p - 37,013
8. Earnings per share
Basic earnings per share
Earnings per share is calculated for both the current and previous years using
the profit attributable to the ordinary shareholders for the year. The
earnings per share calculation is based on 859.3m shares (2022: 858.9m shares)
being the weighted average number of ordinary shares in issue (net of own
ordinary shares held) for the year.
2023 2022
Net profit attributable to ordinary shareholders 113,488 93,201
Weighted average number of ordinary shares
Issued ordinary shares at 1 January 858,940 858,776
Effect of own shares held 198 6
Effect of shares issued under Sharesave plans 122 167
Weighted average number of ordinary shares during the year 859,260 858,949
Basic earnings per share 13.2p 10.9p
Adjusted basic earnings per share
Adjusted basic earnings per share is calculated for both the current and
previous years using the profit attributable to the ordinary shareholders for
the year after adding back the after tax impact of the adjustments. The
reconciliation showing how adjusted net profit attributable to ordinary
shareholders is derived is shown in note 2.
2023 2022
Adjusted net profit attributable to ordinary shareholders 125,629 109,399
Weighted average number of ordinary shares during the year 859,260 858,949
Adjusted basic earnings per share 14.6p 12.7p
Diluted earnings per share
Diluted earnings per share is based on the profit for the year attributable to
the ordinary shareholders and 862.4m shares (2022: 860.6m shares). The number
of shares is equal to the weighted average number of ordinary shares in issue
(net of own ordinary shares held) adjusted to assume conversion of all
potentially dilutive ordinary shares. The Company has two categories of
potentially dilutive ordinary shares: those share options granted to employees
under the Sharesave plan where the exercise price is less than the average
market price of the Company's ordinary shares during the year and contingently
issuable shares awarded under the Long Term Incentive Plan (LTIP).
2023 2022
Net profit attributable to ordinary shareholders 113,488 93,201
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares for the year 859,260 858,949
Effect of Sharesave options 730 562
Effect of LTIP share awards 2,398 1,119
Weighted average number of ordinary shares (diluted) during the year 862,388 860,630
Diluted earnings per share 13.2p 10.8p
Adjusted diluted earnings per share
2023 2022
Adjusted net profit attributable to ordinary shareholders 125,629 109,399
Weighted average number of ordinary shares (diluted) during the year 862,388 860,630
Adjusted diluted earnings per share 14.6p 12.7p
9. Employee benefits
2023 2022
Recognised liability for defined benefit obligations - 8,006
Other pension scheme liabilities 673 158
Employee bonuses 25,497 11,524
Employee indemnity provision 2,016 1,925
Other employee benefits 5,765 5,542
33,951 27,155
Non-current 4,197 11,955
Current 29,754 15,200
33,951 27,155
10. Related parties
The Group has a related party relationship with its subsidiaries and with its
directors and key management. Transactions between two subsidiaries for the
sale and purchase of products or the subsidiary and parent Company for
management charges are priced on an arm's length basis.
Financial calendar
5 March 2024 Preliminary announcement of annual results for 2023
18 April 2024 Ex-dividend date for proposed final 2023 dividend
19 April 2024 Record date for proposed final 2023 dividend
24 May 2024 Payment date for proposed final 2023 dividend
30 April 2024 Announcement of trading update
30 April 2024 Annual General Meeting to be held at Bailbrook House Hotel, Eveleigh Avenue,
London Road West, Bath, Somerset, BA1 7JD
6 August 2024 Announcement of interim financial results for 2024
20 November 2024 Announcement of trading update
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