11 March 2025
Rotork
plc
2024 full year
results
Growth+
delivering our vision with another year of strong sales growth and
margin progress
Strategic bolt-on acquisition agreed and £50m share buyback
announced
Entered
2025 with confidence, expecting a year of progress
Adjusted highlights
|
2024
|
2023
|
% change
|
% change
OCC3
|
Order intake1
|
£744.3m
|
£723.7m
|
+2.8%
|
+6.1%
|
Revenue
|
£754.4m
|
£719.1m
|
+4.9%
|
+8.2%
|
Adjusted2 operating profit
|
£178.4m
|
£164.5m
|
+8.5%
|
+12.8%
|
Adjusted2 operating margin
|
23.6%
|
22.9%
|
+70bps
|
+100bps
|
Adjusted2 basic earnings per
share
|
15.9p
|
14.6p
|
+8.7%
|
|
Cash conversion4
|
119%
|
120%
|
-
|
|
Reported highlights
|
2024
|
2023
|
% change
|
|
Revenue
|
£754.4m
|
£719.1m
|
+4.9%
|
|
Operating profit
|
£135.9m
|
£148.8m
|
-8.7%
|
|
Operating margin
|
18.0%
|
20.7%
|
-270bps
|
|
Profit before tax
|
£140.5m
|
£150.6m
|
-6.8%
|
|
Basic earnings per share
|
12.1p
|
13.2p
|
-8.1%
|
|
Full year dividend
|
7.75p
|
7.20p
|
+7.6%
|
|
Summary
·
Another year of good progress with revenue 8.2% higher
year-on-year on an OCC basis. Reported revenue was 4.9% ahead
despite a significant foreign exchange headwind
·
Adjusted operating margin was 70bps higher year-on-year at
23.6% (2023: 22.9%)
·
Acquisition of Noah, a leading South Korean electric actuator
manufacturer, for an enterprise value of £44m agreed post period
end (expected to close in the coming days), broadening our electric
actuator offering
·
Another £50m share buyback announced
· At
a divisional level, Oil & Gas and Water & Power revenues
grew low double digits year-on-year (OCC). Chemical, Process &
Industrial (CPI) returned to sales growth in the second
half
·
Rotork Service, our global service network and a key
differentiator in our industry, performed strongly growing ahead of
Group revenues
·
Group order intake increased 6.1% year-on-year (OCC) with all
divisions ahead
·
Continued momentum across all Growth+ pillars with Target
Segments sales growth 9% on an OCC basis. Target Segments
represented around half of Group sales
·
Strategic highlights included the successful opening of our
new China manufacturing facility, the launch of new products and
digital services and the rebranding of Rotork Service
·
The UK defined benefit pension scheme was de-risked via a
bulk annuity purchase, causing a one-time non-cash charge that
reduced the operating margin by 270bps to 18.0%
year-on-year
·
Closing net cash was £125.3m and broadly unchanged over the
period after the return of £113m to shareholders via dividends and
share buyback. Cash conversion was strong at 119%, driven by
improved net working capital to sales. ROCE4 was 37.3%
(up 340bps)
Kiet Huynh, Chief Executive, commenting on the results,
said:
"We delivered another year of
strong progress in 2024 with good OCC sales growth, healthy margin
improvement and an excellent cash flow performance.
"The delivery of Growth+ continues
and the benefits of the strategy are evident in our improved
financial performance. Since the programme launch in 2022, Rotork
revenue has grown at a 10.0% CAGR on an OCC basis and adjusted
operating margins have increased 110bps to 23.6% after Growth+
investments. The benefits are not only financial. We are also
making strong progress under the Customer Value pillar, putting the
customer at the forefront of everything we do. Under our Innovative
Products & Services pillar we launched important new products
and recently agreed to acquire a leading South Korean electric
actuator manufacturer, which will broaden and strengthen our
product offering.
"Rotork is highly cash generative
and benefits from having a strong balance sheet providing the
financial flexibility to pursue strategic bolt-on acquisitions
whilst also returning cash to shareholders, including another £50m
share buyback announced today.
"Three years into the Growth+
programme we remain confident of delivering our financial ambition
of mid to high single digit sales growth and mid-20s adjusted
operating margins over time. We have entered 2025 with confidence
and expect a year of progress on an OCC basis."
1 Order intake represents the
value of orders received during the period.
2 Adjusted4
figures exclude
the amortisation of acquired intangible assets and other adjusting
items (see note 4).
3 OCC4
is organic
constant currency results. During the year the
calculation of OCC performance was changed from translating
reporting period results at the prior period average exchange rates
to translating the prior period results at the reporting period's
average exchange rates. This change enables greater comparability
of results with previous periods. Adjustments for acquisitions
and/or disposals are unchanged - acquired businesses are not
included until owned for more than one year and are then included
on an equal perimeter basis, disposed businesses are excluded
entirely. Applying the previous calculation methodology to the 2024
results does not result in a material difference in the OCC
performance for the year.
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
Officer
|
|
|
Ben Peacock, Chief Financial
Officer
|
|
|
Andrew Carter, Investor Relations
Director
|
|
|
|
|
|
FTI Consulting
|
Tel: + 44 (0)20 3727 1340
|
|
Nick Hasell
|
|
|
Susanne Yule
|
|
There will be a virtual presentation for
analysts and institutional investors at 8.00am GMT today with
access via https://www.investis-live.com/rotork/679a5bb8242e93000e381604/vwerd.
Please join the
webcast a few minutes before 8.00am to complete
registration.
Summary
Purpose: keeping the world flowing for future
generations
Our Purpose, as well as our
sustainability vision, is 'keeping the world flowing for future
generations'. Our purpose is a powerful motivator and drives
everything that we do. 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 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: our number one priority
The safety of our people, partners
and visitors is our number one priority, and our objective for
health and safety is zero harm. In 2024, we recorded a lost-time
injury rate of 0.08, in line with the 0.08 recorded in 2023. Our
total recordable incident rate was 0.22 (2023: 0.26).
In 2024, we transitioned from our
internally managed pulse survey, which primarily measured employee
satisfaction, to a comprehensive engagement survey conducted with a
third-party partner. This strategic shift allows us to benchmark
our engagement levels against industry standards and enhance our
efforts to foster meaningful engagement across Rotork.
We were pleased that 80% of our
employees participated in the new survey. We retained our 'Rotork
as a Place to Work' question and scored 7.1 out of 10 in
2024.
The insights gained from this new
survey will support the work we have done in 2024 to develop our
Company culture, enabling us to measure effectively and cultivate
our cultural initiatives in the years to come.
We have a committed team who are
proud to work at Rotork and determined to deliver on our Growth+
ambitions. We offer our thanks and appreciation for all their
efforts throughout 2024.
Cultural evolution: building a stronger
Rotork
In 2024, we progressed an extensive
programme to fully understand our culture, identifying both its
strengths and any aspects that might constrain our future success.
The programme included workshops with 800 employees across 27
countries. The Board actively reviewed progress over the year and
provided strategic direction to ensure alignment with our Growth+
objectives. This guidance underscored the importance of evolving
our culture to support long-term success and foster an environment
where innovation and collaboration thrive. Through this work we
further defined our core cultural DNA by identifying our key
behaviours which will drive success: We Value Our Customers, We
Grow Together and We Win as a Team.
Our cultural DNA captures what makes
Rotork unique and establishes the foundation for how we work,
interact and succeed collectively. This evolution is a multi-year
journey to create a more connected, customer-focused and
collaborative organisation. By aligning our practices with our new
cultural values and behaviours, we are better positioned to address
challenges, seize opportunities, and unlock our full
potential.
Environmental performance: delivering on our GHG emissions
reduction targets
Sustainability is a major focus for
Rotork. Whilst our impact in enabling our customers to improve
their environmental performance likely exceeds the Group's
environmental footprint, the latter is no less important. Our total
scope 1 and 2 (market-based) emissions decreased by 7% in 2024
compared with 2023, 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 by 42% by 2030 from a 2020 base year
• To reduce our absolute scope 3 GHG
emissions from the use of sold products by 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 GHG reduction
targets are included in our senior team's long-term remuneration
opportunity.
The sustainability highlight of the
year was the opening of our new China manufacturing facility which
was designed with sustainability as a key priority and attained a
LEED Gold certification. We completed a project to decarbonise
heating at our Manchester (UK) facility. Elsewhere we refreshed our
Task Force on Climate-related Financial Disclosures (TCFD) approach
and disclosures and commenced our preparations for the EU Corporate
Sustainability Reporting Directive (CSRD), including conducting our
first double materiality assessment. Rotork is rated AAA in the
MSCI ESG ratings assessment.
Growth+ strategy: Target Segments approach delivering
significant benefits
The starting point of our Growth+
strategy is our Purpose, 'keeping the world flowing for future
generations'. Our Purpose is a powerful motivator and 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 and easy to use, and play a vital role in
ensuring the uptime of our end users' operations (including through
predictive and preventative maintenance).
Our financial ambition is to deliver
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 and water quality. Our Growth+ strategy is designed
to drive our growth and to balance making investments with
achieving 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 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 significant benefits from our focus
on Target Segments which represented around half of Group sales in
2024 and grew 9% year-on-year OCC.
Target Segment successes in Oil &
Gas included in upstream and midstream electrification and LNG. In
upstream electrification, Rotork supplied electric actuators and
related services to a North Sea oil and gas producer for its latest
platform. The platform is designed to be remotely operated and to
require only occasional maintenance visits. Also in upstream
electrification, Rotork received a significant order from a major
oil and gas producer for electric actuators equipped with integral
shutdown batteries which will be retrofitted on onshore wellheads,
replacing older, less advanced models previously supplied by a
competitor. In LNG, revenues grew in the period as earlier
liquefaction orders started to ship. Rotork is positioned to
support the liquefaction capacity increase expected in 2025 and
beyond.
Successes in Chemical, Process &
Industrial included activity in the Target Segments of specialty
chemicals and mining. In specialty chemicals, Rotork supplied
equipment to a major greenfield urea plant being built in Western
Australia. Demand for urea is forecast to grow rapidly, driven by
agricultural and transportation applications. In mining, Rotork
electric actuators were selected by a customer for an important
water reuse project. When the project is completed, the mine will
no longer have to draw water required for processing from a local
river.
In Water & Power, examples of
Target Segment successes included in wastewater treatment and
alternative energy. The reuse of water is increasingly common,
including for irrigation and industrial processes. Rotork electric
actuators were chosen for a major water reclamation project in
Singapore. In alternative energy, geothermal power has the
potential to be a bigger source of renewable energy than wind and
Rotork products play an important role in geothermal plants,
including in a major geothermal facility in New Zealand.
We continued to make strong progress
under the Customer Value pillar, which puts the customer at the
forefront of everything we do. During the year we launched our new
Group website. The new website is an important step in a multi-year
programme of customer experience improvement. In November we held
the formal opening ceremony for our new facility in China. The
23,000m2 facility is strategically located in Changshu
and was developed with sustainability as a key priority. Its 2,500
roof-mounted solar panels will generate an estimated 1,500 MWh of
renewable electricity annually.
In Innovative Products &
Services, we launched integrated ethernet functionality for our IQ
range. This is an important product enhancement which further
differentiates our flagship electric actuators, extending
compatibility, enabling higher data transfer volume and speeds,
eliminating the requirement for gateway devices and operating
seamlessly with our intelligent asset management (iAM) system.
Integrated ethernet has multiple applications across all three
Rotork sectors and the launch has been particularly well received
by water industry end users.
In March 2025 we agreed to acquire
Noah Actuation (Noah) to broaden and strengthen our product
offering in electric actuators. The acquisition's closing is
expected in the coming days. Noah is headquartered in Seoul, South
Korea and its acquisition is fully aligned to the Growth+ strategy
and to key Target Segments, especially with Water & Power,
Chemical, Process & Industrial and upstream electrification
within Oil & Gas. We estimate that Noah will deliver revenue
and adjusted EBITDA of £17.5m and £3.5m respectively in the twelve
months to December 2025.
Market update: a largely positive outlook for global flow
control markets
Elections played a major part in
global events in 2024, with almost half of the world's population
voting in national elections during the year (according to
Reuters). The most significant from a market perspective was the
Presidential election in the US. The election has the potential to
have significant economic effects on global markets, including on
manufacturing and energy.
The new US government has signalled a
more local approach to its industrial strategy which will have
implications for global manufacturing. However, we believe that any
risk of increased import tariffs to Rotork would be largely
mitigated by our predominantly local-for-local manufacturing
footprint.
Energy security and the energy
transition have been major global themes for several years and are
likely to remain so. The US's energy independence is expected to be
of higher priority, potentially meaning more exploration and
production activity. The energy transition remains a priority, but
with the fossil fuel industry potentially having a greater part to
play in the transition, for example through LNG, biofuels, carbon
capture and hydrogen. Whilst US emissions reduction regulations
might be of slightly lower importance at the Federal level, these
are likely to remain important at state and industry
levels.
In recent years, investment in global
energy sector infrastructure has accelerated, reflecting both a
previous period of underinvestment and the importance of the role
of hydrocarbons in the world's energy mix for years to come. The
electrification of upstream and midstream operations to reduce the
greenhouse gas intensity of processes that commenced with COP26's
Global Methane Pledge (in 2021) continues and methane emissions
were again a major topic at COP29 in Azerbaijan. The upstream and
midstream electrification sector represented close to 10% of Rotork
Group sales in 2024.
The downstream oil and gas sector was
particularly active in 2024, with another significant year for net
refining capacity additions globally and for the 'replumbing' of
hydrocarbon transportation and storage networks necessitated by
sanctions on Russia. The near-term outlook remains positive, with
more years of net refining additions in prospect. In the medium
term, fewer additions are expected, with investment instead
targeted at modernisation and flexibility. Refinery shutdowns are
expected to be relatively rare with refiners choosing instead to
convert sites at end of life to produce renewable fuels, or to
industrial hubs (for example producing low-carbon electricity or
hydrogen) or storage depots.
The outlook for the LNG export market
is increasingly positive. The US currently has annual export
capacity of around 90m tonnes according to Bloomberg New Energy
Finance. An additional 50m tonnes is already permitted and set to
be commissioned in the next several years, with another 180m tonnes
of capacity going through planning stages. Additional export
capacity is also under way in Qatar and Australia.
The upstream oil and gas sector grew
in both the Middle East and Europe in 2024. In the Middle East,
investment focused on major natural gas projects in the UAE and
Qatar. Investment in Europe increased, following several years of
declines, in response to energy security concerns. In the Americas,
Mexico's oil and gas production was broadly unchanged year-on-year
in 2024. US unconventional onshore activity slowed in the second
half, impacted by election uncertainty and lower hydrocarbon
prices. Following the US election, the outlook for drilling and
completion is more positive, although higher prices may be required
for a significant pickup.
There was a generally soft backdrop
to chemicals markets in 2024, reflecting weak demand from key end
markets such as construction, automotive and pharmaceuticals and
higher energy prices which particularly impacted the industry in
Europe, especially in bulk chemicals. However, Rotork's chemicals
market strategy is to target niche sectors that offer the potential
for above market growth and CPI sales into this market grew
year-on-year in 2024.
Metals and mining markets remain
attractive opportunities for Rotork. Whilst 2024 did not see the
repeat of the activity in the battery materials sector experienced
in 2023 (i.e. nickel), the wider industry continues to invest to
build the capacity required to deliver the energy transition and to
invest in sustainability projects.
Critical HVAC refers to heating,
ventilation and air conditioning systems that are essential for
maintaining specific environmental conditions in sensitive or
high-stakes environments, including temperature, humidity and air
quality. Critical HVAC is typically specified in tunnel
ventilation, data centres, clean rooms and industrial processes
such as battery production plants and semiconductor fabrication
facilities where the cost of downtime or failure can be
significant. Critical HVAC markets benefitted from strong demand
from data centre markets in 2023 and 2024 and the cooling
requirements of artificial intelligence focused data centres could
represent an exciting future opportunity.
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 already
in progress or set to begin, including in the US, China, India, the
Middle East and the UK. The desalination market remains active,
with projects underway worldwide, most notably in the Middle East.
Reverse osmosis desalination is forecast to grow high single digits
over the medium term (source: Future Market Insights).
The outlook for the global power
market is brighter than it has been for some time, driven by
electrification, economic growth, artificial intelligence and, in
the US, the repatriation of manufacturing. In response to this
accelerating demand growth, the power generation industry is
stepping up new build activity as well as plant modernisation,
refurbishment and life extension (including in the traditional and
nuclear sectors).
Renewable energy is playing an
important role in delivering energy security as well as the energy
transition. According to the IEA, renewables' share in final energy
consumption will be nearly 20% by 2030, up from 13% in 2023. Rotork
products are specified for several applications in offshore wind,
including in HVDC converter cooling systems, geothermal energy
plants and concentrated solar, as well as in facilities producing
rechargeable batteries and solar panels.
Decarbonisation remains a
high-potential market for all three Rotork divisions. 2024 saw the
world's second consecutive hottest summer on record (according to
the World Meteorological Organization) with a number of extreme
weather events such as wildfires, droughts and flooding. These
events served to remind us vividly 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, sustainable fuels, hydrogen and direct
air capture all having significant roles to play.
Business performance: a year of strong sales growth and
margin progress
Group order intake increased 2.8%
year-on-year (6.1% on an OCC basis) to £744.3m. All three divisions
booked higher orders for the full year.
Group revenue was 4.9% higher
year-on-year (8.2% OCC) at £754.4m. Oil & Gas sales rose 8.3%
(11.7% OCC), with all geographic regions growing and Europe, Middle
East & Africa (EMEA) and Asia Pacific particularly strong. The
division's growth was driven by the downstream and midstream
sectors with upstream sales broadly unchanged year-on-year. CPI
sales were 4.1% lower (down 1.1% OCC), with solid growth in EMEA
insufficient to offset lower sales in the Asia Pacific and Americas
regions. Water & Power sales were up 9.5% (13.1% OCC), with all
geographic regions delivering double-digit growth. Both sectors
grew strongly, with water outgrowing power.
By geography, EMEA sales by
destination grew double digits (OCC) and was Rotork's fastest
growing region. Asia Pacific revenues grew low single digit
year-on-year on an OCC basis, with China growth ahead of the
region. The Americas region returned to growth in the second half
and full year revenues were high single digits ahead
(OCC).
In early 2025 we rebranded Rotork
Site Services under one global brand, Rotork Service. Rotork
Service is our global service network and a key differentiator in
our industry. It performed well in 2024 with revenues growing
faster than the Group overall. Its Lifetime Management and
Reliability Services programmes have good momentum, as does its
Intelligent Asset Management predictive analytics system. Rotork
Service is managed as a separate unit by each of our divisions and
contributed 23% of Group sales (2023: 21%).
Adjusted operating profit was 8.5%
higher year-on-year (12.8% OCC) at £178.4m, reflecting volume
growth and positive net price/mix which were partly offset by wage
inflation. Adjusted operating margins were 70bps higher at 23.6%
(100bps higher OCC) and reported profit before tax was £140.5m. The
principal profit adjustments are costs relating to Business
Transformation and the defined benefit scheme
settlement.
Return on capital employed was 37.3%
(2023: 33.9%), benefitting from an increase in adjusted operating
profit and a decrease in capital employed. Cash conversion was 119%
(2023: 120%).
Dividend and capital allocation: committed to disciplined
capital allocation and progressive shareholder
returns
We have a clear and disciplined
capital allocation framework. Our priorities, in order, are organic
investment, a progressive dividend, acquisitions and other
shareholder returns. We have increased our dividend each year for
over 20 years and have completed 30 acquisitions since 2000. We
have demonstrated discipline and flexibility in using buybacks and
special dividends to deliver shareholder returns, including in
March 2024 the launch of a £50m share buyback programme which we
completed in December 2024. Net cash at period end was £125.3m (31
December 2023: £134.4m). We remain active in looking for suitable
acquisition opportunities, consistent with our Growth+ strategy,
and post period end agreed to acquire Noah, a South Korean
headquartered electric actuator supplier, for an enterprise value
of £44m with closing expected in the coming days.
The Board is recommending a final
dividend of 5.00p per share. With the 2024 interim dividend of
2.75p, the total dividend for the year is 7.75p, a 7.6% increase on
the 2023 full-year dividend. This equals 2.1 times cover based on
adjusted earnings per share (2023: 2.0 times). Subject to
shareholder approval, the 2024 final dividend will be paid on 3
June 2025, to ordinary shareholders on the register at the close of
business on 25 April 2025. The last date to elect for the Dividend
Reinvestment Plan (DRIP) is 12 May 2025.
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.
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 £50m.
Board update: changes and appointments
Tim Cobbold stepped down as a
Director of Rotork in December 2024, having been our Senior
Independent non-executive Director and Non-executive Director for
Workforce Engagement. We would like to thank Tim for his
considerable contribution to Rotork over the last six years, and we
wish him all the best in his role as Chair of Spirax Group plc. We
are pleased that with effect from 1 January 2025 Andrew Heath
agreed to become Rotork's Senior Independent non-executive
Director, and that Vanessa Simms agreed to become Rotork's
Non-executive Director for Workforce Engagement.
We were pleased to recently welcome a
new non-executive director to Rotork. Svein Richard Brandtzæg
joined the Board on 20 November 2024. Svein Richard is currently
Chair of dormakaba Holding AG, a non-executive director of Mondi
plc and also Chair of the Council on Ethics for Norges Bank
Investment Management. Svein Richard has further strengthened the
diverse mix of skills and experience on the Board and was appointed
Chair of the Remuneration Committee with effect from 1 January
2025.
Outlook
Three years into the Growth+
programme we remain confident of delivering our financial ambition
of mid to high single digit sales growth and mid-20s adjusted
operating margins over time. We have entered 2025 with confidence
and expect a year of progress on an OCC basis.
Divisional review
|
Oil
& Gas
|
|
|
|
|
|
£m
|
2024
|
2023
|
Change
|
OCC3 change
|
|
Revenue
|
355.5
|
328.4
|
+8.3%
|
+11.7%
|
|
Adjusted operating profit
|
92.0
|
83.6
|
+10.0%
|
+13.6%
|
|
Adjusted operating margin
|
25.9%
|
25.5%
|
+40bps
|
+50bps
|
Momentum in the oil and gas sector
remained strong through 2024. Hydrocarbon prices remained broadly
above investment incentive levels and most sectors saw higher
customer spend, targeting increased output, improved productivity,
electrification and decarbonisation. The industry's electrification
initiative continued with increased activity in the upstream and
midstream sectors. These sectors represented close to 10% of Rotork
Group sales in 2024. Investments to increase the world's LNG export
capacity remain ongoing.
Divisional revenue was ahead 8.3%
year-on-year and 11.7% year-on-year (OCC). The midstream and
downstream sectors grew strongly whereas upstream sales were
slightly lower due to the non-repeat of offshore projects.
Downstream sales represented 52% of the total (49% in 2023),
upstream 24% (27%) and midstream 24% (24%). Downstream sector sales
were double-digits higher year-on-year benefitting from increased
refinery and storage activity. EMEA sales grew strongly
year-on-year and the region was the fastest growing, with Middle
East / Africa growing robustly and the midstream electrification
sector particularly active. Americas sales were ahead mid to high
single digit whilst APAC sales grew low double digits, driven by
strong sales growth in India.
The division's adjusted operating
profit was £92.0m, 10.0% up year-on-year. The 40 basis point
adjusted operating profit margin improvement reflected higher
volumes which were partly offset by adverse mix and investment in
the division's commercial teams.
Oil & Gas' focus on Target
Segments during the period delivered notable successes in
electrification, Asia infrastructure, decarbonisation and Rotork
Service. One notable win in upstream electrification was supplying
actuators to a Netherlands-based customer for its latest oil and
gas platform, which is not only electrified but for safety reasons
is designed to be 'not normally manned', requiring only two 14-day
maintenance visits per year. In midstream, the division received
follow-on orders from a major liquefaction project in Texas and
several pipeline electrification projects including in Asia Pacific
and North America. In the downstream, there was significant
activity in both hydrocarbon storage and refining. The division
supplied IQ3 actuators to a major tank farm expansion in South
Korea which will enable increased LNG storage. LNG is widely seen
as a bridge fuel in the energy transition for its lower carbon
emissions compared to oil and coal, its flexibility and its
abundance. Successes in refining included major
automation/modernisation projects in EMEA, the Americas and Asia
Pacific.
|
Chemical, Process & Industrial
|
|
|
|
|
|
£m
|
2024
|
2023
|
Change
|
OCC3 change
|
|
Revenue
|
205.0
|
213.7
|
-4.1%
|
-1.1%
|
|
Adjusted operating profit
|
53.0
|
51.3
|
+3.4%
|
+7.4%
|
|
Adjusted operating margin
|
25.8%
|
24.0%
|
+180bps
|
+210bps
|
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 and mining, critical HVAC, pharmaceutical,
steel and cement. The automation, electrification, digitalisation
and decarbonisation megatrends are important growth drivers. 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 an encouraging
second half performance, 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 critical HVAC
(including sales into data centres), as well as strength in core
segments including marine.
Divisional revenues were 4.1% lower
year-on-year at £205.0m and 1.1% lower year-on-year on an OCC
basis, with the decline largely the result of reduced mining sector
large project activity, following three years of strong sales
growth. By destination, EMEA sales grew mid to high single digits
(OCC), with all subregions higher. Asia Pacific sales were lower,
despite good growth in India. China sales declined low single digit
in the full year (OCC) but were unchanged year-on-year in the
second half. Americas sales grew low single digits
(OCC).
The division's adjusted operating
profit was £53.0m, 3.4% higher than prior year. Adjusted operating
margin rose 180 basis points to 25.8%. The increase in adjusted
operating margin largely reflected positive mix as well as
disciplined cost management.
Rotork's electric and fluid power
actuators and instruments were selected by innovative customers for
use in their energy transition projects. Rotork supplied several
hundred flow control actuators to a major greenfield urea plant
being built in Western Australia. The plant has been designed to
minimise emissions and with the capacity to achieve net-zero carbon
by 2050. Demand for urea is forecast to grow rapidly (source: the
International Renewable Energy Agency) driven by applications
including agriculture and transportation. Rotork's actuators were
chosen by an innovative steel plant in Sweden which has switched to
fossil-free hydrogen to heat steel at its rolling mill, produced
on-site by a 20MW electrolyser. In the critical HVAC market, data
centres are increasingly requiring higher levels of automation,
reliability and precision in their cooling, power and fire
protection systems. Rotork products including actuators, gearboxes,
chainwheels and limit switch boxes are regularly selected for these
projects.
|
Water & Power
|
|
|
|
|
|
£m
|
2024
|
2023
|
Change
|
OCC3 change
|
|
Revenue
|
193.9
|
177.0
|
+9.5%
|
+13.1%
|
|
Adjusted operating profit
|
56.4
|
46.4
|
+21.3%
|
+25.8%
|
|
Adjusted operating margin
|
29.1%
|
26.2%
|
+290bps
|
+300bps
|
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 to solve customers' water quality and
water scarcity challenges, as well as the automation,
electrification and digitalisation trends. Water and wastewater
contributed 68% of divisional sales in the year.
Divisional sales were ahead 9.5%
year-on-year and 13.1% ahead year-on-year (OCC), with water sector
sales growing slightly faster than those of the power sector. Asia
Pacific sales were ahead low double digits year-on-year (OCC), with
India's 'Water for All' initiative continuing to drive very strong
revenue growth in water in that country, and with the power sector
strong across the Asia Pacific region. Americas sales grew robustly
year-on-year with all subregions strong and the region was Water
& Power's fastest growing geography in the period. EMEA sales
grew low double digits (OCC) despite lower power sector
activity.
The division's adjusted operating
profit was £56.4m, 21.3% higher year-on-year. Deliveries benefitted
from an improved supply chain performance, particularly in the
first half, resulting in adjusted operating margin increasing 290
basis points to 29.1%.
In the water sector, Rotork is
focused on helping to ensure access to water and sanitation to all.
Growth of the water sector is driven by the tailwinds of network
automation, ageing infrastructure, urbanisation and climate change
as well as water scarcity, quality and affordability challenges.
Growth of the global power market is driven by electrification,
economic growth, artificial intelligence and, in the US, the
repatriation of manufacturing. The division made good progress in
its Target Segments of water infrastructure (including irrigation),
water and wastewater treatment, desalination and alternative energy
during the year.
Rotork supplies electric and fluid
power actuators to many wastewater treatment plants around the
world, enabling these to provide better quality water more
efficiently. Water & Power received additional orders in 2024
for electric actuators to be used in a highly energy-efficient
water reclamation plant in Singapore. In alternative energy,
offshore wind farms generate renewable A/C electricity, which is
typically converted to high-voltage D/C electricity (HVDC) to
minimise transmission losses. This conversion occurs on offshore
platforms, which can be as large as multiple football fields and
require critical-duty cooling systems. In 2024, Rotork secured
orders from customers for various electric actuators, including
those from the IQ3, IQTF, BBU, and Schischek families, to be used
on platforms in the North Sea. Rotork is supplying electric
actuators to a number of desalination projects around the world
which will provide potable water, and won new orders from customers
in the Middle East in the year. Actuators play a critical role in
desalination plants, managing the flows of seawater and potable
water throughout the production process. Precision control is
crucial for maintaining pressures and optimising the plant's energy
efficiency.
By
order of the Board
Kiet Huynh
Chief Executive
10 March 2025
Financial review
The Group delivered a strong
financial result for the year as order intake, revenue, adjusted
operating profit and adjusted operating margin all improved. Order
intake for the year was £744.3m (2023: £723.7m), up 2.8% from the
prior year or 6.1% on an organic constant currency (OCC) basis,
with all divisions delivering OCC growth.-
Group revenue increased 8.2% on an
OCC basis to £754.4m (2023: £719.1m). On a reported basis, revenues
increased 4.9%, impacted by a foreign exchange translation headwind
of £24.1m. Double digit OCC revenue growth in W&P of 13.1%
(9.5% reported) and O&G of 11.7% (8.3% reported) was partially
offset by a reduction in CPI of ‑1.1% (-4.1% reported) which
was largely due to reduced mining project activity compared to the
previous year.
Rotork Service, our global service
network and a key differentiator in our industry, performed
strongly in the year growing ahead of Group revenues. Rotork
Service is managed as a separate unit by each of Rotork's divisions
and contributed 23% (2023: 21%) of Group revenue.
Adjusted operating profit increased
£13.9m, or 8.5%, to £178.4m, with adjusted operating margin
increasing 70bps to 23.6% (2023: 22.9%). On an OCC basis, adjusted
operating profit increased 100bps. However adverse foreign exchange
movements of £7.1m equated to a 30bps headwind. Reported operating
profit for the year of £135.9m was £12.9m unfavourable to the prior
year, with the increase in adjusted operating profit offset by the
recognition of one-time non-cash IAS 19 settlement of £18.0m
related to the UK defined benefit pension scheme.
Net finance income was £4.6m (2023:
income of £1.9m) with the increase driven by transactional foreign
exchange gains on the Group's hedging of foreign exchange
risk.
Adjusted profit before tax was
£183.0m (2023: £166.3m), driven by the increase in adjusted
operating profit. The reported profit before tax was £140.5m (2023:
£150.6m). The reconciling items between adjusted profit before tax
and reported profit before tax are shown in the table
below.
Adjusted basic earnings per share
was 15.9p (2023: 14.6p), an increase of 8.7%. Reported basic
earnings per share was 12.1p (2023: 13.2p), a decrease of
8.1%.
Adjusted earnings reconciliation
|
|
|
|
Defined
benefit scheme settlement loss
|
Business
transformation
costs
|
|
|
|
Operating profit
|
135.9
|
2.6
|
18.0
|
17.2
|
4.7
|
178.4
|
|
Profit before tax
|
140.5
|
2.6
|
18.0
|
17.2
|
4.7
|
183.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table above shows the
adjustments between the statutory results for the significant
non-cash and other adjusting items and the adjusted results. Note 2
of the financial statements 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.
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, International Financial Reporting Standards
(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, costs
related to business transformation from implementing a new ERP
system and integrating business processes, as well as other
significant adjustments. These adjustments are made to provide
stakeholders with additional information to assess the Group's
trading performance on a consistent basis. Further details of the
adjusted items are provided in note 4.
Currency
The major currencies affecting the
income statement are the US dollar and the euro, both of which
weakened against sterling in 2024. The US dollar/sterling average
rate of $1.28 (2023: $1.24) and the euro/sterling average rate of
€1.18 (2023: €1.15) both provided a headwind. The impact of these
movements alongside the basket of other currencies was a £24.1m or
3.4% headwind to revenue and a £7.1m or 4.3% headwind to adjusted
operating profit.
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
can partially 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.
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 £250,000 (2023: £150,000) adjustment to profit and
for US dollar, and dollar-related currencies, a one cent movement
equates to approximately a £650,000 (2023: £500,000)
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 decreased 1.5% over the year to £478.4m
(2023: £485.5m). As we grew revenue and expanded our adjusted
operating profit margins in the year, ROCE increased 340bps to
37.3% (2023: 33.9%).
Taxation
The Group's effective tax rate
increased from 24.7% to 25.4%. 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 25.2% (2023: 24.5%).
The Group expects its adjusted effective tax rate to remain higher
than the standard UK rate due to higher rates of tax in China, the
US, Germany and India.
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.
Cash generation
Cash generated from operations
increased 7.5% to £212.7m (2023: £197.8m) primarily driven by the
increase in adjusted operating profit and a consistent cash
conversion ratio of 119% (2023: 120%).
Net cash generated from operating
activities increased 19.1% to £148.8m (2023: £124.9m), benefitting
from the above and the non-repeat of the £20m special contribution
to the Rotork Pension and Life Assurance Scheme in 2023. However
net cash generated from operating activities was adversely impacted
by an increase in income taxes paid to £38.8m (2023: £32.8m) and an
increase in the cash flow impact of adjusting items to £21.2m
(2023: £13.5m).
Capital expenditure in the year was
£14.0m (2023: £7.3m), excluding £1.6m in capitalised software
(2023: £2.1m) and £4.3m in capitalised product development costs
(2023: £2.4m). Capital expenditure largely related to the
completion of our new facility in China which formally opened in
November 2024. Our total Research and Development (R&D) cash
spend was £13.4m which represented 1.8% of revenue (2023: £13.9m
and 1.9% respectively).
Net cash generated in the year was
£6.4m (2023: £36.6m). In addition to the movements noted above,
this was impacted by an increase in share purchases to £10.3m
(2023: £2.4m) to support future vesting of employee share plans,
dividends paid to ordinary shareholders of £63.3m (2023: £58.8m)
and the completion of our £50m share buyback programme announced in
2024.
Balance sheet
The Group finished the year with a net cash position of £125.3m
(2023: £134.4m). This included lease liabilities of £24.6m (2023:
£12.0m), the increase in the year attributed to the long-term lease
for our new facility in Changshu, China.
Net working capital in the balance
sheet decreased 220bps to 25.1% of revenue (2023: 27.3%), providing
a working capital cash inflow of £7.2m (2023: £11.9m outflow) in
the year. Inventory decreased slightly by £0.6m and trade
receivables days' sales outstanding1 was 56 days (2023:
55 days).
During the year the Group increased
its liquidity by entering into a £75m Revolving Credit Facility
(RCF) which matures in December 2027. As at 31 December 2024, £nil
was drawn under the RCF.
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. Where necessary, we will
take steps 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 model the
impact of these current uncertainties. The viability statement will
be published in our 2024 Annual Report and Accounts.
Supply chain disruption risk
reduced through 2024 as component shortages and constraints reduced
in comparison to prior years. Despite this reduction, supply chain
disruption continues to be a key risk for Rotork and management
actions continue to mitigate potentially more severe outcomes. The
risk 'decline in market confidence' was consolidated with the
existing 'competition' risk, as both risks deal with competitive
forces. As a result, the competition risk has increased. Business
change risk has reduced due to the increase in mitigating actions
to deliver our various Growth+ programmes.
Emerging risks and opportunities,
which are those risks and opportunities that may be ambiguous,
uncertain, and difficult to assess, continue to be monitored and
reviewed. Risks and opportunities under review include those in
relation to geopolitical 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 80% 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 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.
Where appropriate, the Group uses
financial instruments 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 liabilities of these
schemes at 31 December 2024 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 - 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.
In 2023, the Group made a special
contribution of £20m to the Rotork Pension and Life Assurance
Scheme (UK 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 was accounted for
as a buy-in. During the year the UK Scheme completed a further bulk
annuity with the full premium amounting to £70m, largely to cover
deferred pensioners. This second bulk annuity has been accounted
for as a settlement under IAS 19. Further details on the risk
transfer and associated settlement loss are provided in note
4.
The IAS 19 funding position of the
UK and US schemes reduced from a net surplus of £9.1m in 2023 to a
net deficit of £3.6m in 2024. The schemes' assets reduced in value
by £28.9m (2023: increase of £19.0m) and the schemes' liabilities
decreased by £16.1m (2023: increase of £1.8m). The Group paid total
contributions of £4.1m over the year (2023: £26.5m).
Dividends
The Board is proposing a final
dividend of 5.00p per share. When taken together with the 2.75p
interim dividend paid in September 2024, the full year dividend of
7.75p (2023: 7.20p per share) represents a 7.6% increase in
dividends over the prior year.
Ben Peacock
Chief Financial Officer
10 March 2025
1
Days' sales outstanding is calculated on a countback 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
2024
|
|
Notes
|
2024
£000
|
2023
£000
|
|
Revenue
|
3
|
754,428
|
719,150
|
|
Cost of sales
|
|
(382,494)
|
(380,054)
|
|
Gross profit
|
|
371,934
|
339,096
|
|
Other income
|
|
1,733
|
1,405
|
|
Distribution costs
|
|
(6,669)
|
(6,314)
|
|
Administrative expenses
|
|
(230,896)
|
(184,630)
|
|
Other expenses
|
|
(243)
|
(790)
|
|
Operating profit
|
3
|
135,859
|
148,767
|
|
Finance income
|
5
|
7,323
|
5,301
|
|
Finance expense
|
5
|
(2,721)
|
(3,430)
|
|
Profit before tax
|
|
140,461
|
150,638
|
|
Income tax expense
|
6
|
(35,663)
|
(37,150)
|
|
Profit for the year
|
|
104,798
|
113,488
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Owners of the parent
|
|
103,585
|
113,135
|
|
Non-controlling interests
|
|
1,213
|
353
|
|
|
|
104,798
|
113,488
|
|
|
|
|
|
|
Basic earnings per share
|
8
|
12.1p
|
13.2p
|
|
Diluted earnings per share
|
8
|
12.1p
|
13.2p
|
|
|
|
|
|
|
Operating profit
|
3
|
135,859
|
148,767
|
|
Adjustments to profit:
|
|
|
|
|
- Amortisation of acquired intangible assets
|
4
|
2,604
|
2,110
|
|
- Defined benefit scheme settlement loss
|
4
|
18,009
|
-
|
|
- Other adjustments
|
4
|
21,934
|
13,598
|
|
Adjusted operating profit
|
2,3
|
178,406
|
164,475
|
|
|
|
|
|
|
Adjusted basic earnings per share
|
2,8
|
15.9p
|
14.6p
|
|
Adjusted diluted earnings per share
|
2,8
|
15.8p
|
14.6p
|
Consolidated statement of comprehensive
income
For the year ended 31 December
2024
|
|
|
2024
£000
|
2023
£000
|
|
Profit for the year
|
|
104,798
|
113,488
|
|
Other comprehensive
income
|
|
|
|
|
Items that may be
subsequently reclassified to the income
statement:
|
|
|
|
|
Foreign exchange translation
differences
|
|
(12,915)
|
(20,271)
|
|
Effective portion of changes in fair
value of cash flow hedges net of tax
|
|
(57)
|
1,397
|
|
|
|
(12,972)
|
(18,874)
|
|
Items that may not be
subsequently reclassified to the income
statement:
|
|
|
|
|
Remeasurement gain/(loss) in
pension scheme net of tax
|
|
563
|
(7,722)
|
|
Expenses
and income recognised in other comprehensive income
|
|
(12,409)
|
(26,596)
|
|
Total comprehensive income for the
year
|
|
92,389
|
86,892
|
|
Attributable to:
|
|
|
|
|
Owners of the parent
|
|
91,102
|
86,609
|
|
Non-controlling
interests
|
|
1,287
|
283
|
|
|
|
92,389
|
86,892
|
Consolidated balance sheet
At 31 December 2024
|
|
Notes
|
2024
£000
|
2023
£000
|
|
Non-current assets
|
|
|
|
|
Goodwill
|
|
224,793
|
231,703
|
|
Intangible assets
|
|
31,429
|
31,126
|
|
Property, plant and
equipment
|
|
90,302
|
74,411
|
|
Derivative financial
instruments
|
|
120
|
206
|
|
Defined benefit scheme
surplus
|
|
-
|
9,144
|
|
Deferred tax assets
|
|
22,084
|
15,454
|
|
Total non-current assets
|
|
368,728
|
362,044
|
|
Current assets
|
|
|
|
|
Inventories
|
|
83,364
|
83,963
|
|
Trade receivables
|
|
149,479
|
152,842
|
|
Current tax
|
|
4,164
|
4,187
|
|
Derivative financial
instruments
|
|
929
|
673
|
|
Other receivables
|
|
23,839
|
23,701
|
|
Cash and cash equivalents
|
|
149,983
|
146,372
|
|
Total current assets
|
|
411,758
|
411,738
|
|
Total assets
|
|
780,486
|
773,782
|
|
Current liabilities
|
|
|
|
|
Interest-bearing loans and
borrowings
|
|
4,329
|
3,131
|
|
Trade payables
|
|
43,838
|
40,585
|
|
Employee benefits
|
9
|
29,146
|
29,754
|
|
Current tax
|
|
15,982
|
12,387
|
|
Derivative financial
instruments
|
|
362
|
538
|
|
Other payables
|
|
49,989
|
42,536
|
|
Provisions
|
|
4,757
|
4,275
|
|
Total current
liabilities
|
|
148,403
|
133,206
|
|
Non-current liabilities
|
|
|
|
|
Interest-bearing loans and
borrowings
|
|
20,320
|
8,826
|
|
Employee benefits
|
9
|
7,699
|
4,197
|
|
Deferred tax liabilities
|
|
4,037
|
3,872
|
|
Derivative financial
instruments
|
|
84
|
15
|
|
Provisions
|
|
1,441
|
1,371
|
|
Total non-current
liabilities
|
|
33,581
|
18,281
|
|
Total liabilities
|
|
181,984
|
151,487
|
|
Net assets
|
|
598,502
|
622,295
|
|
Equity
|
|
|
|
|
Issued equity capital
|
7
|
4,232
|
4,306
|
|
Share premium
|
|
21,842
|
21,004
|
|
Other reserves
|
|
495
|
13,465
|
|
Retained earnings
|
|
569,211
|
581,813
|
|
Equity attributable to the
parent
|
|
595,780
|
620,588
|
|
Non-controlling interests
|
|
2,722
|
1,707
|
|
Total equity
|
|
598,502
|
622,295
|
These financial statements were
approved by the Board of Directors and authorised for issue on 10
March 2025 and were signed on its behalf by:
K Huynh and B Peacock
Directors
Consolidated statement of changes in equity
For the year ended 31 December
2024
|
|
Issued
equity
capital
£000
|
Share
premium
£000
|
Translation
reserve
£000
|
Capital
redemption
reserve
£000
|
Hedging
reserve
£000
|
Retained
earnings
£000
|
Total attributable to owners of
the parent
£000
|
Non-controlling
interests
£000
|
Total
£000
|
|
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
flow hedges
|
-
|
-
|
-
|
-
|
1,841
|
-
|
1,841
|
-
|
1,841
|
|
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 paid on ordinary
shares
|
-
|
-
|
-
|
-
|
-
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
103,585
|
103,585
|
1,213
|
104,798
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation
differences
|
-
|
-
|
(12,989)
|
-
|
-
|
-
|
(12,989)
|
74
|
(12,915)
|
|
Effective portion of changes in fair
value of cash
flow hedges
|
-
|
-
|
-
|
-
|
(76)
|
-
|
(76)
|
-
|
(76)
|
|
Actuarial gain on defined benefit
pension plans
|
-
|
-
|
-
|
-
|
-
|
922
|
922
|
-
|
922
|
|
Tax on other comprehensive
income/(loss)
|
-
|
-
|
-
|
-
|
19
|
(359)
|
(340)
|
-
|
(340)
|
|
Total other comprehensive
(loss)/income
|
-
|
-
|
(12,989)
|
-
|
(57)
|
563
|
(12,483)
|
74
|
(12,409)
|
|
Total comprehensive
(loss)/income
|
-
|
-
|
(12,989)
|
-
|
(57)
|
104,148
|
91,102
|
1,287
|
92,389
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded
directly in equity
|
|
|
|
|
|
|
|
|
|
|
Equity settled share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
4,046
|
4,046
|
-
|
4,046
|
|
Tax on equity settled share-based
payment transactions
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
-
|
9
|
|
Share options exercised by
employees
|
2
|
838
|
-
|
-
|
-
|
-
|
840
|
-
|
840
|
|
Own ordinary shares
acquired
|
-
|
-
|
-
|
-
|
-
|
(10,348)
|
(10,348)
|
-
|
(10,348)
|
|
Own ordinary shares awarded under
share schemes
|
-
|
-
|
-
|
-
|
-
|
3,134
|
3,134
|
-
|
3,134
|
|
Share buyback programme
|
(76)
|
-
|
-
|
76
|
-
|
(50,326)
|
(50,326)
|
-
|
(50,326)
|
|
Dividends paid on ordinary
shares
|
-
|
-
|
-
|
-
|
-
|
(63,265)
|
(63,265)
|
-
|
(63,265)
|
|
Dividends paid to non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(272)
|
(272)
|
|
Balance at 31 December
2024
|
4,232
|
21,842
|
(1,838)
|
1,792
|
541
|
569,211
|
595,780
|
2,722
|
598,502
|
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
2024
|
|
Notes
|
2024
£000
|
2024
£000
|
2023
£000
|
2023
£000
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Cash generated from
operations
|
10
|
212,738
|
|
197,843
|
|
|
Operating cash flow impact of other
adjustments
|
4
|
(21,200)
|
|
(13,496)
|
|
|
Difference between pension charge
and cash contribution
|
|
(4,007)
|
|
(26,628)
|
|
|
Income taxes paid
|
|
(38,757)
|
|
(32,825)
|
|
|
Net cash flows from operating
activities
|
|
|
148,774
|
|
124,894
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(13,983)
|
|
(7,306)
|
|
|
Purchase of intangible
assets
|
|
(1,635)
|
|
(2,089)
|
|
|
Product development costs
capitalised
|
|
(4,327)
|
|
(2,411)
|
|
|
Sale of property, plant and
equipment
|
|
224
|
|
1,883
|
|
|
Acquisition of business (net of cash
acquired)
|
|
-
|
|
(18,399)
|
|
|
Settlement of hedging
derivatives
|
|
2,677
|
|
937
|
|
|
Interest received
|
|
4,097
|
|
3,927
|
|
|
Net cash flows from investing
activities
|
|
|
(12,947)
|
|
(23,458)
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
Issue of ordinary share
capital
|
|
840
|
|
1,047
|
|
|
Own ordinary shares
acquired
|
|
(10,348)
|
|
(2,444)
|
|
|
Interest paid
|
|
(1,884)
|
|
(936)
|
|
|
Repayment of lease
liabilities
|
|
(4,217)
|
|
(3,699)
|
|
|
Share buyback programme
|
|
(50,326)
|
|
-
|
|
|
Dividends paid on ordinary
shares
|
|
(63,265)
|
|
(58,820)
|
|
|
Dividends paid to non-controlling
interests
|
|
(272)
|
|
-
|
|
|
Net cash flows from financing
activities
|
|
|
(129,472)
|
|
(64,852)
|
|
Net increase in cash and cash
equivalents
|
|
|
6,355
|
|
36,584
|
|
Cash and cash equivalents at 1
January
|
|
|
146,372
|
|
114,770
|
|
Effect of exchange rate fluctuations
on cash held
|
|
|
(2,744)
|
|
(4,982)
|
|
Cash and cash equivalents at 31
December
|
|
|
149,983
|
|
146,372
|
Notes to the Group financial statements
For the year ended 31 December
2024
Except where indicated, values in
these notes are in £000.
Rotork plc (the Company) is a public
company limited by shares, registered and domiciled in England and
Wales, its ordinary shares have a commercial companies (equity
shares) category listing on the London Stock Exchange. The
consolidated financial statements of the Company for the year ended
31 December 2024 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.
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 2025. 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 results with prior periods and assessment of trends in
financial performance. This split is consistent with how business
performance is measured internally.
Adjustments to profit items may
include but are not restricted to: costs of significant business
restructuring and any associated 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 geopolitical instability
on the Group have been considered. The directors have reviewed: the
current financial position of the Group, which has net cash of
£125m, an undrawn committed revolving credit facility of £75m and
unused overdraft facilities of £33m as at the period end; the
significant order book, which contains customers spread across
different geographic areas and industries; and the trading and cash
flow forecasts for the Group. 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 a period of not less than 12 months from the date of
this report, 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 2024. 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 2024 or 2023.
Statutory accounts for 2023, 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 2024, 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 2024 will shortly be available to
shareholders, and after adoption at the Annual General Meeting on 2
May 2025 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 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 adjusting items 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.
|
|
2024
|
2023
|
|
Profit before tax
|
140,461
|
150,638
|
|
Adjustments:
|
|
|
|
Amortisation of acquired intangible
assets
|
2,604
|
2,110
|
|
Defined benefit scheme settlement
loss
|
18,009
|
-
|
|
Gain on disposal of
property
|
-
|
(723)
|
|
Business Transformation
costs
|
17,214
|
13,097
|
|
Other costs
|
4,720
|
1,224
|
|
Adjusted profit before tax
|
183,008
|
166,346
|
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:
|
|
2024
|
2023
|
|
Net profit attributable to ordinary
shareholders
|
103,585
|
113,488
|
|
Adjustments:
|
|
|
|
Amortisation of acquired intangible
assets
|
2,604
|
2,110
|
|
Defined benefit scheme settlement
loss
|
18,009
|
-
|
|
Gain on disposal of
property
|
-
|
(723)
|
|
Business Transformation
costs
|
17,214
|
13,097
|
|
Other costs
|
4,720
|
1,224
|
|
Tax effect on adjusted
items
|
(10,526)
|
(3,567)
|
|
Adjusted net profit attributable to ordinary
shareholders
|
135,606
|
125,629
|
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.
|
|
2024
|
2023
|
|
Adjusted operating profit
|
178,406
|
164,475
|
|
Capital employed
|
|
|
|
Net assets
|
598,502
|
622,295
|
|
Cash and cash
equivalents
|
(149,983)
|
(146,372)
|
|
Interest-bearing loans and
borrowings
|
24,649
|
11,957
|
|
Pension deficit/(surplus) net of
deferred tax
|
2,686
|
(6,904)
|
|
Capital employed
|
475,854
|
480,976
|
|
Average capital employed
|
478,415
|
485,507
|
|
Return on capital employed
|
37.3%
|
33.9%
|
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 adjust for currency
movements and for acquisitions and disposals.
Key headings in the income statement
are reconciled to OCC as follows:
|
|
2023
|
Foreign
exchange
|
Acquisitions
|
Organic
constant currency
|
2024
|
|
Revenue
|
719,150
|
(24,110)
|
2,209
|
57,179
|
754,428
|
|
Cost of sales
|
(380,054)
|
13,463
|
(895)
|
(15,008)
|
(382,494)
|
|
Gross profit
|
339,096
|
(10,647)
|
1,314
|
42,171
|
371,934
|
|
Overheads
|
(174,621)
|
3,526
|
(383)
|
(22,050)
|
(193,528)
|
|
Adjusted operating profit
|
164,475
|
(7,121)
|
931
|
20,121
|
178,406
|
During the year the calculation of
OCC performance was changed from translating reporting period
results at the prior period average exchange rates to translating
the prior period results at the reporting period's average exchange
rates. This change enables greater comparability of results over
multiple previous periods. Adjustments for acquisitions and/or
disposals are unchanged - acquired businesses are not included
until owned for more than one year and are then included on an
equal perimeter basis, disposed businesses are excluded
entirely.
Applying the previous calculation
methodology to the 2024 results does not result in a material
difference in the OCC performance for the year.
i. Cash
conversion
Cash conversion is calculated as cash
generated from operations (titled adjusted operating cash flow in
prior year) as a percentage of adjusted operating profit. It is
monitored to illustrate how efficiently adjusted operating profits
are converted into cash. Cash generated from operations is
calculated in note 10.
|
|
2024
|
2023
|
|
Cash generated from operations (note 10)
|
212,738
|
197,843
|
|
Adjusted operating profit (note 4)
|
178,406
|
164,475
|
|
Cash conversion
|
119%
|
120%
|
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
The Group's customers are allocated
to a segment. Sales to that customer, along with all directly
associated costs of that sale, are reported under the segment to
which that customer is allocated. Where customers sell into
multiple segments, a lead segment is identified. Sales to these
customers will generally be allocated to the lead segment unless
the sale is of significance and an alternative segment has been
identified, in which case it will be reported under the alternative
segment.
Costs not directly attributed to a
sale are allocated across the three segments. There are some costs
which are directly attributable to a segment, but most support
costs and facility costs are not directly attributable to a segment
and are generally allocated based on split of revenue.
Analysis by operating
segment:
|
|
Oil &
Gas
2024
|
Chemical, Process &
Industrial
2024
|
Water &
Power
2024
|
Corporate
expenses
2024
|
Group
2024
|
|
Revenue from external customers
|
355,506
|
205,028
|
193,894
|
-
|
754,428
|
|
Segment result / Adjusted operating profit*
|
91,983
|
52,987
|
56,359
|
(22,923)
|
178,406
|
|
Adjusting items
|
|
|
|
|
(42,547)
|
|
Operating profit
|
|
|
|
|
135,859
|
|
Net finance income
|
|
|
|
|
4,602
|
|
Income tax expense
|
|
|
|
|
(35,663)
|
|
Profit for the year
|
|
|
|
|
104,798
|
|
|
Oil &
Gas
2023
|
Chemical,
Process & Industrial
2023
|
Water
& Power
2023
|
Corporate
expenses
2023
|
Group
2023
|
|
Revenue from external
customers
|
328,391
|
213,712
|
177,047
|
-
|
719,150
|
|
Segment result / Adjusted operating
profit*
|
83,627
|
51,253
|
46,445
|
(16,850)
|
164,475
|
|
Adjusting items
|
|
|
|
|
(15,708)
|
|
Operating profit
|
|
|
|
|
148,767
|
|
Net finance income
|
|
|
|
|
1,871
|
|
Income tax expense
|
|
|
|
|
(37,150)
|
|
Profit for the year
|
|
|
|
|
113,488
|
*Adjusted operating profit is
operating profit before adjusting items (see note 4).
|
|
Oil &
Gas
2024
|
Chemical, Process &
Industrial
2024
|
Water &
Power
2024
|
Group
2024
|
|
Depreciation
|
6,489
|
3,782
|
4,021
|
14,292
|
|
Amortisation of development
costs
|
1,283
|
748
|
794
|
2,825
|
|
|
Oil &
Gas
2023
|
Chemical,
Process & Industrial
2023
|
Water
& Power
2023
|
Group
2023
|
|
Depreciation
|
6,180
|
4,022
|
3,331
|
13,533
|
|
Amortisation of development
costs
|
774
|
504
|
417
|
1,695
|
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:
Rotork has a worldwide presence in
all three operating segments. A full list of locations can be found
at www.rotork.com.
|
Revenue by end destination
|
2024
|
2023
|
|
UK
|
54,594
|
48,124
|
|
Other EMEA
|
233,935
|
212,689
|
|
Total EMEA
|
288,529
|
260,813
|
|
China
|
112,478
|
111,284
|
|
India
|
49,242
|
40,925
|
|
Other APAC
|
93,555
|
105,290
|
|
Total APAC
|
255,275
|
257,499
|
|
USA
|
143,523
|
132,840
|
|
Other Americas
|
67,101
|
67,998
|
|
Total Americas
|
210,624
|
200,838
|
|
|
754,428
|
719,150
|
4.
ADJUSTING ITEMS
Refer to note 1 for details on the
adjustments to profit, including an explanation of 'other
adjustments'. The adjustments to profit included in statutory
profit are as follows:
|
|
2024
|
2023
|
|
Amortisation of acquired intangible
assets
|
(2,604)
|
(2,110)
|
|
Defined benefit scheme settlement
loss
|
(18,009)
|
-
|
|
Gain on disposal of
property
|
-
|
723
|
|
Business Transformation
costs
|
(17,214)
|
(13,097)
|
|
Other costs
|
(4,720)
|
(1,224)
|
|
Other adjustments
|
(21,934)
|
(13,598)
|
|
Total adjusting items
|
(42,547)
|
(15,708)
|
Defined benefit scheme settlement loss
In August 2024 the UK defined
benefit pension scheme transacted a second bulk annuity, covering
the benefits of the remaining UK Scheme's membership (mainly
deferred pensioners). Given all the UK Scheme's liabilities are now
insured, this second bulk annuity has been accounted for as
a settlement under IAS 19 and therefore a loss of £18,009,000
has been recognised in the income statement.
Business Transformation costs
During the year £17,214,000 (2023:
£13,097,000) of costs were incurred on Business Transformation. The
multi-year transformation includes the implementation and
integration of common systems and processes throughout the Group,
including a new cloud-based ERP system. This brings the total
expensed under the programme to £62,134,000. 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. Over the next three
years we will deploy the Business Transformation programme,
including the new ERP system, across all other Group entities at an
estimated further cost of £60m to £65m.
Other costs
£4,720,000 (2023: £1,224,000) of
other costs have been incurred, largely in relation to relocation
of the Shanghai (China) facility to Changshu (China).
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 £21,200,000 (2023: £13,496,000) and a net
investing cash inflow of £nil (2023: £955,000).
5. finance Income and
EXPENSE
|
|
2024
|
2023
|
|
Interest income
|
4,391
|
4,203
|
|
Net interest income on pension
scheme liabilities
|
215
|
352
|
|
Foreign exchange gains
|
2,717
|
746
|
|
Finance income
|
7,323
|
5,301
|
|
|
2024
|
2023
|
|
Interest expense
|
(1,480)
|
(807)
|
|
Interest expense on lease
liabilities
|
(761)
|
(495)
|
|
Foreign exchange losses
|
(480)
|
(2,128)
|
|
Finance expense
|
(2,721)
|
(3,430)
|
6. Income tax expense
|
|
2024
|
2024
|
2023
|
2023
|
|
Current tax
|
|
|
|
|
|
UK corporation tax on profits for
the year
|
6,658
|
|
4,865
|
|
|
Adjustment in respect of prior
years
|
486
|
|
435
|
|
|
|
|
7,144
|
|
5,300
|
|
Overseas tax on profits for the
year
|
37,459
|
|
32,091
|
|
|
Adjustment in respect of prior
years
|
(1,940)
|
|
146
|
|
|
|
|
35,519
|
|
32,237
|
|
Total current tax
|
|
42,663
|
|
37,537
|
|
Deferred tax
|
|
|
|
|
|
Origination and reversal of other
temporary differences
|
(6,303)
|
|
1,187
|
|
|
Impact of rate change
|
(71)
|
|
(591)
|
|
|
Adjustment in respect of prior
years
|
(626)
|
|
(983)
|
|
|
Total deferred tax
|
|
(7,000)
|
|
(387)
|
|
Total tax charge for year
|
|
35,663
|
|
37,150
|
|
Profit before tax
|
|
140,461
|
|
150,638
|
|
Profit before tax multiplied by the
blended standard rate of
corporation tax in the UK of 25.0% (2023: 23.5%)
|
|
35,115
|
|
35,400
|
|
Effects of:
|
|
|
|
|
|
Different tax rates on overseas
earnings
|
|
(177)
|
|
2,131
|
|
Irrecoverable withholding tax on
dividends
|
|
3,777
|
|
2,421
|
|
Permanent differences
|
|
695
|
|
(118)
|
|
Losses not recognised
|
|
126
|
|
166
|
|
Tax incentives
|
|
(1,722)
|
|
(1,587)
|
|
Impact of rate change
|
|
(71)
|
|
(861)
|
|
Adjustments to tax charge in
respect of prior years
|
|
(2,080)
|
|
(402)
|
|
Total tax charge for year
|
|
35,663
|
|
37,150
|
|
Effective tax rate
|
|
25.4%
|
|
24.7%
|
|
Adjusted profit before tax (note
2b)
|
|
183,008
|
|
166,346
|
|
Total tax charge for the
year
|
|
35,663
|
|
37,150
|
|
Amortisation of acquired intangible
assets
|
|
549
|
|
286
|
|
Defined benefit scheme settlement
loss
|
|
4,502
|
|
-
|
|
Business Transformation
costs
|
|
4,357
|
|
3,220
|
|
Other adjustments (note
4)
|
|
1,118
|
|
61
|
|
Adjusted total tax charge for the year
|
|
46,189
|
|
40,717
|
|
Adjusted effective tax rate
|
|
25.2%
|
|
24.5%
|
A tax credit of £9,000 (2023:
£43,000) in respect of share-based payments has been recognised
directly in equity in the year.
The effective tax rate for the year
is 25.4% (2023: 24.7%). The adjusted effective tax rate is 25.2%
(2023: 24.5%) and is lower than the effective tax rate for the year
principally because of the tax treatment of expenses included in
adjusting items.
The adjusted effective tax rate has
increased from 24.5% in 2023 to 25.2% in 2024, principally because
of increases in tax rates in jurisdictions in which Rotork operate,
including the blended UK corporation tax rate which increased from
23.5% in 2023 to 25.0% in 2024. The consequent increase in the
adjusted effective tax rate has been partially offset by the
recovery of withholding tax relating to prior year distributions,
which is also the predominant driver of the prior year adjustment
to overseas tax above. 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 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.
The Pillar Two tax charge borne by
the Rotork plc does not have a material impact on its current tax
expense.
The Group will continue 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 £357,208,000 (2023: £320,839,000).
7. Capital and reserves
|
|
0.5p Ordinary shares
issued
and fully
paid up
2024
|
£1 Non-
redeemable
preference
shares
2024
|
0.5p
Ordinary shares issued
and
fully
paid
up
2023
|
£1
Non-
redeemable
preference
shares
2023
|
|
At 1 January
|
4,306
|
40
|
4,304
|
40
|
|
Issued under employee share
schemes
|
2
|
-
|
2
|
-
|
|
Cancelled following share buyback
programme
|
(76)
|
-
|
-
|
-
|
|
At 31 December
|
4,232
|
40
|
4,306
|
40
|
|
Number of shares (000)
|
846,381
|
|
861,201
|
|
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
£840,000 (2023: £1,047,000) in respect of the 321,000 (2023:
430,000) ordinary shares issued during the year: £2,000 (2023:
£2,000) was credited to share capital and £838,000 (2023:
£1,045,000) to share premium.
Own shares held
Within the retained earnings reserve
are own shares held in Rotork's Employee Benefit Trust. The Group
acquired 3,129,000 of its own shares during the year (2023:
773,000). The total amount paid to acquire the shares was
£10,348,000 (2023: £2,444,000), and this has been deducted from
shareholders' equity. During the year, 973,000 (2023: 1,038,000)
ordinary shares were released to satisfy share plan awards. The
investment in own shares held is £12,271,000 (2023: £5,056,000) and
represents 3,722,000 (2023: 1,566,000) 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.
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:
|
|
Payment
date
2024
|
2024
|
2023
|
|
4.65p final dividend for 2023
(final dividend for 2022: 4.30p)
|
24
May
|
39,881
|
36,926
|
|
2.75p interim dividend for 2024
(interim dividend for 2023: 2.55p)
|
23
September
|
23,384
|
21,894
|
|
|
|
63,265
|
58,820
|
After the balance sheet date the
following dividends per qualifying ordinary share were proposed by
the directors. The dividends have not been provided for.
|
|
2024
|
2023
|
|
Final proposed dividend per qualifying ordinary
share
|
|
|
|
5.00p
|
42,133
|
-
|
|
4.65p
|
-
|
40,046
|
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 853.6m shares (2023: 859.3m shares) being
the weighted average number of ordinary shares in issue (net of own
ordinary shares held) for the year.
|
|
2024
|
2023
|
|
Net profit attributable to ordinary
shareholders
|
103,585
|
113,488
|
|
Weighted average number of ordinary shares
|
|
|
|
Issued ordinary shares net of own
shares held at 1 January
|
859,636
|
858,940
|
|
Effect of own shares
held
|
82
|
198
|
|
Effect of share buyback
programme
|
(6,174)
|
-
|
|
Effect of shares issued under
Sharesave plans
|
102
|
122
|
|
Weighted average number of ordinary
shares during the year
|
853,646
|
859,260
|
|
Basic earnings per share
|
12.1p
|
13.2p
|
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.
|
|
2024
|
2023
|
|
Adjusted net profit attributable to
ordinary shareholders
|
135,606
|
125,629
|
|
Weighted average number of ordinary
shares during the year
|
853,646
|
859,260
|
|
Adjusted basic earnings per
share
|
15.9p
|
14.6p
|
Diluted earnings per
share
Diluted earnings per share is based
on the profit for the year attributable to the ordinary
shareholders and 857.0m shares (2023: 862.4m 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).
|
|
2024
|
2023
|
|
Net profit attributable to ordinary
shareholders
|
103,585
|
113,488
|
|
Weighted average number of ordinary shares
(diluted)
|
|
|
|
Weighted average number of ordinary
shares for the year
|
853,646
|
859,260
|
|
Effect of Sharesave
options
|
798
|
730
|
|
Effect of LTIP share
awards
|
2,549
|
2,398
|
|
Weighted average number of ordinary
shares (diluted) during the year
|
856,993
|
862,388
|
|
Diluted earnings per
share
|
12.1p
|
13.2p
|
Adjusted diluted earnings per
share
|
|
2024
|
2023
|
|
Adjusted net profit attributable to
ordinary shareholders
|
135,606
|
125,629
|
|
Weighted average number of ordinary
shares (diluted) during the year
|
856,993
|
862,388
|
|
Adjusted diluted earnings per
share
|
15.8p
|
14.6p
|
9. Employee benefits
|
|
2024
|
2023
|
|
Recognised liability for defined
benefit obligations
|
3,618
|
-
|
|
Other pension scheme
liabilities
|
153
|
673
|
|
Employee bonuses
|
24,773
|
25,497
|
|
Employee indemnity
provision
|
1,884
|
2,016
|
|
Other employee benefits
|
6,417
|
5,765
|
|
|
36,845
|
33,951
|
|
Non-current
|
7,699
|
4,197
|
|
Current
|
29,146
|
29,754
|
|
|
36,845
|
33,951
|
10. CASH GENERATED FROM
OPERATIONS
|
|
Note
|
2024
£000
|
2023
£000
|
|
Profit for the year
|
|
104,798
|
113,488
|
|
Income tax expense
|
6
|
35,663
|
37,150
|
|
Finance income
|
5
|
(7,323)
|
(5,301)
|
|
Finance expense
|
5
|
2,721
|
3,430
|
|
Operating profit
|
|
135,859
|
148,767
|
|
Amortisation of acquired intangible
assets
|
|
2,604
|
2,110
|
|
Defined benefit scheme settlement
loss
|
4
|
18,009
|
-
|
|
Other adjustments
|
4
|
21,934
|
13,598
|
|
Depreciation
|
|
14,292
|
13,533
|
|
Amortisation and impairment of
development costs
|
|
3,614
|
2,352
|
|
Equity settled share-based
payments
|
|
6,664
|
5,670
|
|
Profit on sale of property, plant and
equipment
|
|
(109)
|
(342)
|
|
Increase in provisions
|
|
922
|
216
|
|
Cash
generated from operations before working capital cash
flows
|
|
203,789
|
185,904
|
|
(Increase)/decrease in
inventories
|
|
(1,437)
|
5,490
|
|
Increase in trade and other
receivables
|
|
(1,064)
|
(10,488)
|
|
Increase in trade and other
payables
|
|
12,017
|
1,399
|
|
(Decrease)/increase in employee
benefits
|
|
(567)
|
15,538
|
|
Cash
generated from operations
|
|
212,738
|
197,843
|
11. 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.
12. Post balance sheet
events
On 10 March 2025 Rotork agreed to
acquire 100% of the equity interest in Noah Actuation Co. Ltd. a
company headquartered in Seoul, South Korea for an enterprise value
of £44m. The acquisition will expand Rotork's electric actuator
offering and is fully aligned to the Growth+ strategy. Completion
is expected in the coming days and therefore the
initial accounting for the business combination
has not yet been completed. Further
information will be provided in the condensed consolidated interim
financial statements of the Group for the period ended 30 June
2025.
Financial calendar
|
11 March 2025
|
Preliminary announcement of annual
results for 2024
|
|
24 April 2025
|
Ex-dividend date for proposed final
2024 dividend
|
|
25 April 2025
|
Record date for proposed final 2024
dividend
|
|
2 May 2025
|
Announcement of trading
update
|
|
2 May 2025
|
Annual General Meeting to be held at
Bailbrook House Hotel, Eveleigh Avenue, London Road West, Bath,
Somerset, BA1 7JD
|
|
3 June 2025
|
Payment date for proposed final 2024
dividend (subject to shareholder approval at the 2025
AGM)
|
|
5 August 2025
|
Announcement of interim financial
results for 2025
|
|
19 November 2025
|
Announcement of trading
update
|