REG - Spirax-Sarco Engng - Final Results <Origin Href="QuoteRef">SPX.L</Origin> - Part 3
09/03/2017 07:05
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46.3 29.3
Capital additions include property, plant and equipment of £36.9m (2015:
£26.3m), of which £9.0m (2015: £0.6m) was from acquisitions in the period, and
other intangible assets of £33.3m (2015: £20.0m) of which £26.8m (2015:
£12.8m) relates to acquired intangibles from acquisitions in the period.
Capital additions split between the UK and rest of the world are UK £41.9m
(2015: £11.6m), rest of the world £28.3m (2015: £34.7m).
*Restated, to exclude profit on disposal of fixed assets (£0.5m), to be on a
consistent basis as 2016.
4. NET FINANCING INCOME AND EXPENSE
2016£m 2015£m
Financial expenses:
Bank and other borrowing interest payable (1.4) (1.3)
Interest on pension scheme liabilities (2.6) (2.3)
(4.0) (3.6)
Financial income:
Bank interest receivable 1.4 2.1
Net financing expense (2.6) (1.5)
Net pension scheme financial expense (2.6) (2.3)
Net bank interest - 0.8
Net financing expense (2.6) (1.5)
(1.5)
5. TAXATION
2016£m 2015£m
Analysis of charge in period
UK corporation tax:
Current tax on income for the period 3.2 2.0
Adjustments in respect of prior periods (0.1) (0.7)
3.1 1.3
Double taxation relief - (0.4)
3.1 0.9
Foreign tax:
Current tax on income for the period 48.6 44.2
Adjustments in respect of prior periods (0.8) (0.6)
47.8 43.6
Total current tax charge 50.9 44.5
Deferred tax - UK 0.8 1.1
Deferred tax - Foreign (1.6) (2.6)
Tax on profit on ordinary activities 50.1 43.0
(1.6)
(2.6)
Tax on profit on ordinary activities
50.1
43.0
The Group's tax charge in future years is likely to be affected by the
proportion of profits arising and the effective tax rates in the various
territories in which the Group operates.
6. EARNINGS PER SHARE
2016 2015
Profit attributable to equity shareholders (£m) 121.1 96.5
Weighted average shares in issue (million) 73.4 74.3
Dilution (million) 0.2 0.3
Diluted weighted average shares in issue (million) 73.6 74.6
Basic earnings per share 165.0p 129.9p
Diluted earnings per share 164.5p 129.4p
Basic and diluted earnings per share calculated on an adjusted profit basis
are included in Note 2. The dilution is in respect of unexercised share
options and the Performance Share Plan.
7. DIVIDENDS
2016£m 2015£m
Amounts paid in the year:
Final dividend for the year ended 31st December 2015 of 48.2p (2014: 45.0p) per share 35.4 34.1
Special dividend for the year ended 31st December 2015 of nil (2014: 120.0p) per share 91.0
Interim dividend for the year ended 31st December 2016 of 22.5p (2015: 20.8p) per share 16.5 15.2
Total dividends paid 51.9 140.3
Amounts arising in respect of the year:
Interim dividend for the year ended 31st December 2016 of 22.5p (2014: 20.8p) per share 16.5 15.2
Proposed final dividend for the year ended 31st December 2016 of 53.5p (2015: 48.2p) per share 39.3 35.4
Total dividends arising 55.8 50.6
8. ANALYSIS OF CHANGES IN NET CASH
At1st Jan 2016£m Cash flow£m Exchangemovement£m At 31st Dec 2016£m
Current portion of long term borrowings (0.3) (0.2)
Non-current portion of long term borrowings (80.7) (58.2)
Short term borrowing (10.1) (33.0)
Total borrowings (91.1) (91.4)
Comprising:
Borrowings (90.6) 1.7 (2.1) (91.0)
Finance Leases (0.5) 0.1 - (0.4)
(91.1) 1.8 (2.1) (91.4)
Cash at bank 99.8 5.0 14.4 119.2
Bank overdrafts (3.9) 3.9 (0.4) (0.4)
Net cash and cash equivalents 95.9 8.9 14.0 118.8
Net cash 4.8 10.7 11.9 27.4
9. PURCHASE OF BUSINESSES
2016
Acquisitions
Book value£m Fair valueadjustment£m Fair value£m
Non-current assets:Property, plant and equipment 6.9 2.1 9.0
Intangibles - 26.8 26.8
6.9 28.9 35.8
Current assets:InventoriesTrade receivablesOther receivables 6.83.80.4 (0.3)-- 6.53.80.4
Total assets 17.9 28.6 46.5
Current liabilities:Trade payables Deferred tax 2.3- -4.8 2.34.8
Total liabilities 2.3 4.8 7.1
Total net assetsGoodwill 15.6 23.8 39.427.1
Total 66.5
Satisfied by
Cash paid 66.5
Deferred consideration
66.5
Cash outflow for acquired businesses in the Cash Flow Statement:
Cash paid for businesses acquired in the period 66.5
Less cash acquired -
Deferred consideration for businesses acquired in prior years -
Net cash outflow 66.5
1. The acquisition of the assets of the process control valve
manufacturer, Hiter Industria e Comercio de Controles Termo-Hidraulicos Ltda
(Hiter) was completed on 1st July 2016. The acquisition method of accounting
has been used. Consideration of £3.9 million was paid on completion.
Separately identified intangibles are recorded as part of the fair value
adjustment. The goodwill recognised represents the opportunity to achieve
synergies from being part of the Group and to sell to a wider customer base.
Goodwill arising is not expected to be tax deductible. Hiter has generated
£0.7 million of revenue and a small pre-tax loss since acquisition. Had the
acquisition been made on 1st January 2016, the revenue and pre-tax profit
would have been approximately double the figures disclosed above.
2. The acquisition of Aflex Hose Limited and its subsidiary Aflex
Hose USA LLC was completed on 30th November 2016. The acquisition method of
accounting has been used. Consideration of £62.5 million was paid on
completion. Separately identified intangibles are recorded as part of the
provisional fair value adjustment. The goodwill recognised represents the
skilled workforce acquired and the opportunity to achieve synergies from being
part of a larger Group. Goodwill arising is not expected to be tax deductible.
The acquisition has generated £2.0 million of revenue and £0.5 million of
pre-tax profit since acquisition. Had the acquisition been made on 1st January
2016, the revenue and pre-tax profit would have been approximately twelve
times the figures disclosed.
3. £0.5 million of acquisition related costs were incurred during
the year. The acquired intangibles relate to manufacturing designs and core
technology, brand names and trademarks, customer relationships and non-compete
undertakings.
10. BASIS OF PREPARATION
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31st December 2016 or 31st
December 2015. Statutory accounts for 2015, which were prepared under
accounting standards adopted by the EU, have been delivered to the registrar
of companies and those for 2016 will be delivered following the Company's
Annual General Meeting. The Auditors have reported on these accounts; their
report was (i) unqualified, (ii) did not include any references to any matters
to which the auditors drew attention by way of emphasis without qualifying and
(iii) did not contain statements under sections 498(2) or (3) of the Companies
Act 2006.
If approved at the Annual General Meeting on 9th May 2017, the final dividend
will be paid on 26th May 2017 to shareholders on the register at 28th April
2017. No scrip alternative to the cash dividends is being offered.
Copies of the Annual Report will be sent on 24th March 2017 to shareholders
who have requested a hard copy and can be obtained from our registered office
at Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER.
The report is also available on our website at
www.SpiraxSarcoEngineering.com.
11. RESPONSIBILITY statement OF THE DIRECTORS ON THE ANNUAL REPORT
The Responsibility Statement below has been prepared in connection with the
company's full Annual Report for the year ending 31st December 2016. Certain
parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
· the Financial Statements, prepared in accordance with IFRS as adopted by
the EU, give a true and fair view of the assets, liabilities, financial
position and profit and loss of the company and the undertakings included in
the consolidation taken as a whole; and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face; and
· the Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary to assess
the Company's performance, business model and strategy.
This Responsibility Statement was approved by the Board of Directors on 8th
March 2017 and is signed on its behalf by:
N.J. Anderson, Chief Executive
K.J. Boyd, Group Finance Director
12. Cautionary statement
All statements other than statements of historical fact included in this
document, including, without limitation, those regarding the financial
condition, results, operations and businesses of Spirax-Sarco Engineering plc
and its strategy, plans and objectives and the markets and economies in which
it operates, are forward-looking statements. These forward-looking statements
which reflect management's assumptions made on the basis of information
available to it at this time, involve known and unknown risks, uncertainties
and other important factors which could cause the actual results, performance
or achievements of Spirax-Sarco Engineering plc or the markets and economies
in which we operate to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Spirax-Sarco Engineering plc and its Directors accept no liability
to third parties in respect of this report save as would arise under English
law. Accordingly, any liability to a person who has demonstrated reliance on
any untrue or misleading statement or omission shall be determined in
accordance with schedule 10A of the Financial Services and Markets Act 2000.
It should be noted that schedule 10A contains limits on the liability of the
Directors of Spirax-Sarco Engineering plc so that their liability is solely to
Spirax-Sarco Engineering plc.
13. EXCHANGE RATE IMPACTS
Whilst not an IFRS disclosure or part of the audited accounts, set out below
is an additional disclosure that highlights the movements in a selection of
average exchange rates between 2016 and 2015.
Average exchange rates to sterling have been as follows:
Average2016 Average2015 Change%
Bank of England sterling index 82.3 91.4 +10%
US$ 1.36 1.53 +11%
Euro 1.23 1.38 +11%
Renminbi 9.00 9.60 +6%
Won 1,574 1,728 +9%
Real 4.74 5.11 +7%
Argentine Peso 19.99 14.28 -40%
About Spirax Sarco
Spirax-Sarco Engineering plc is the world leader in each of its two
businesses, Spirax Sarco for steam specialties and Watson-Marlow Fluid
Technology Group for niche peristaltic pumps and associated fluid path
technologies. The Steam Specialties business provides a broad range of fluid
control products, engineered packages, site services and systems expertise for
a diverse range of industrial and institutional customers. The Company helps
its end users to improve production efficiency, reduce energy costs, water
usage and emissions, improve product quality and enhance the safety of their
operations. Watson-Marlow Fluid Technology Group offers the ideal solution for
a wide variety of demanding fluid path applications with highly accurate,
controllable and virtually maintenance free pumps and associated technologies.
The Group is headquartered in Cheltenham, England, has strategically located
manufacturing plants around the world and employs over 5,300 people, of whom
nearly 1,400 are direct sales and service engineers. Its shares have been
listed on the London Stock Exchange since 1959 (symbol: SPX).
Further information can be found at www.spiraxsarcoengineering.com
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