Rotork Regulatory News (ROR)

2 Mar 2005 07:01

Rotork PLC02 March 2005 PART 2 Notes to the Financial Statementsfor the year ended 31 December 2004 Except where indicated, values in these notes are in £'000 1. Accounting policies The following principal accounting policies have been applied consistently indealing with items which are considered material in relation to the financialstatements of the Group and of the Company. Basis of accounting The financial statements have been prepared under the historical cost conventionsupplemented by the revaluations explained in note 11 to the financialstatements and have been prepared in accordance with applicable accountingstandards. The Group has fully implemented FRS 17, Retirement Benefits and UITFAbstract 38, Accounting for ESOP trusts in these financial statements. Thecomparative figures have been restated accordingly and the impact is explainedfurther in notes 12, 20, 23 and 24. Consolidation The consolidated financial statements incorporate the financial statements ofthe Company and its subsidiary undertakings for the year to 31 December 2004.The acquisition method of accounting has been adopted. Under this method, theresults of subsidiary undertakings acquired in the year are included in theconsolidated profit and loss account from the date of acquisition. A separate profit and loss account dealing with the results of the Company onlyhas not been presented, as permitted by section 230(4) of the Companies Act1985. Goodwill Goodwill arising on consolidation represents the difference between the fairvalue of the consideration given and the fair value of the separable net assetsacquired. Goodwill arising on the acquisition of subsidiaries is amortised on astraight line basis over 20 years. Foreign currencies Assets and liabilities of subsidiary undertakings in foreign currencies aretranslated into sterling at rates of exchange ruling at the end of the financialyear and the results and cash flows of foreign subsidiary undertakings aretranslated at the average rate of exchange for the year. Differences onexchange arising from the retranslation of the opening net investment insubsidiary undertakings, and from the translation of the results of thoseundertakings at average rate, are taken to reserves and are reported in thestatement of total recognised gains and losses. All other foreign exchangedifferences are taken to the profit and loss account in the year in which theyarise. Depreciation and amortisation Freehold land is not depreciated. Long leasehold buildings are amortised overfifty years or the expected useful life of the building where less than fiftyyears. Other assets are depreciated by equal annual instalments by reference totheir estimated useful lives and residual values at the following annual rates: Freehold buildings - 2% to 4% Short leasehold buildings - period of lease Machinery, plant and equipment - 10% to 30% Leases Where fixed assets are financed by leasing agreements, which give rightsapproximating to ownership, the assets are treated as if they had been purchasedand the capital element of the leasing commitments is shown as obligations underfinance leases. The rentals payable are apportioned between interest, which ischarged to the profit and loss account, and capital, which reduces theoutstanding obligation so as to give a constant rate of charge on theoutstanding lease obligations. Costs in respect of operating leases are chargedas incurred on a straight line basis in arriving at the operating profit. Stocks and work in progress Stocks and work in progress are valued at the lower of cost on a 'first in,first out' basis and net realisable value. In respect of work in progress andfinished goods, cost includes all production overheads and the attributableproportion of indirect overhead expenses. Deferred taxation Deferred tax is provided in full, without discounting, on timing differencesthat result in an obligation at the balance sheet date to pay more tax, or aright to pay less tax, at a future date at rates expected to apply when theycrystallise based on current tax rates and law, except for the items explainedbelow. Timing differences arise from the inclusion of items of income andexpenditure in taxation computations in periods different from those in whichthey are included in the financial statements. Deferred tax is not provided ontiming differences arising from the revaluation of fixed assets where there isno commitment to sell the assets or on unremitted earnings of subsidiaries wherethere is no commitment to remit those earnings. Deferred tax assets arerecognised to the extent that it is regarded as more likely than not that theywill be recovered. Turnover Turnover represents gross sales made and services supplied in engineering,excluding value added tax and returns and allowances. Research and development Expenditure on research and development of the Group's products is written offagainst profits in the year in which it is incurred. Pensions The Group operates a number of pension arrangements worldwide. These includeboth defined benefit and defined contribution arrangements. The assets of allthe arrangements are held separately from the assets of the Group inindependently administered funds. The amounts charged against profits inrespect of defined contribution arrangements are the contributions payable tothose arrangements in the accounting period. For the defined benefit arrangements the assets are measured at market values.The liabilities are measured on the Projected Unit method, discounting at thecurrent rate of return of a high quality corporate bond of the appropriate termand currency to the liability, as required under FRS17. Defined benefit scheme deficits are recognised in full and presented on the faceof the balance sheet. The movement in the deficit is split between operatingcharges, financing items and actuarial gains and losses in the statement ofrecognised gains and losses. Derivative financial instruments The Group uses forward exchange contracts to reduce its exposure to foreignexchange risk. The Group does not hold or issue derivative financialinstruments for speculative purposes. For a forward exchange contract to betreated as a hedge, the instrument must be related to actual foreign currencyassets or liabilities or to a probable commitment. It must involve the samecurrency or similar currencies as the hedged item and must also reduce the riskof foreign currency exchange movements on the Group's operations. Gains and losses on foreign currency hedges are recognised in the profit andloss account when the hedged transaction is recognised. Notes to the Financial Statements 2. Analysis of turnover, profit and net assets Analysis by operation: 2004 2003 Turnover Profit before Profit Turnover Profit before Profit interest, tax before interest, tax before and goodwill interest and and goodwill interest and tax tax restated restated Electrics 109,345 26,713 26,315 105,594 25,202 24,746Gears 17,806 3,218 2,767 16,264 2,913 2,468Fluid system 23,802 3,121 2,677 18,838 2,086 1,682Unallocated - (1,902) (1,902) (1,786) (1,786)Inter segmental elimination (4,070) - - (4,732) - - _____ _____ _____ _____ _____ _____Continuing operations 146,883 31,150 29,857 135,964 28,415 27,110Discontinued operations - - - - 597 597 _____ _____ _____ _____ _____ _____ 146,883 31,150 29,857 135,964 29,012 27,707 ==== ==== ==== ==== ==== ==== 2004 2003 Net assets Net assets restated Electrics 32,031 29,768Gears 10,936 10,723Fluid system 13,090 11,960Unallocated 15,963 23,695 _____ _____Net assets excluding pension liabilities - continuing operations 72,020 76,146Pension liabilities and related deferred tax (13,885) (13,653) _____ _____Net assets including pension liabilities 58,135 62,493 ==== ==== Analysis by geographical origin: 2004 2003 Turnover Profit before Profit Turnover Profit before Profit interest, tax before interest, tax before and interest and goodwill interest and and tax tax goodwill restated restated Europe 76,596 22,836 21,944 70,075 20,412 19,532Americas 39,284 3,846 3,582 39,992 4,374 4,053Rest of world 31,003 6,370 6,233 25,897 5,415 5,311Unallocated - (1,902) (1,902) - (1,786) (1,786) _____ _____ _____ _____ _____ _____Continuing operations 146,883 31,150 29,857 135,964 28,415 27,110Discontinued operations - - - - 597 597 _____ _____ _____ _____ _____ _____ 146,883 31,150 29,857 135,964 29,012 27,707 ==== ==== ==== ==== ==== ==== 2. Analysis of turnover, profit and net assets (continued) 2004 2003 Net assets Net assets restated Europe 28,152 23,838Americas 15,112 16,683Rest of world 12,793 11,930Unallocated 15,963 23,695 _____ _____Net assets excluding pension liabilities - continuing operations 72,020 76,146Pension liabilities and related deferred tax (13,885) (13,653) _____ _____Net assets including pension liabilities 58,135 62,493 ==== ==== Analysis of turnover by destination: Europe 66,036 62,354Americas 41,704 41,557Rest of world 39,143 32,053 _____ _____ 146,883 135,964 ==== ==== All turnover and operating profit for both the year under review and the prioryear are from continuing operations. The 2003 profit before interest and taxhas been restated to identify central costs separately rather than present themwithin the business or geographic segments. Unallocated net assets comprisecash less proposed dividends. 3. Non operating items Profit on disposal of fixed assets - 597 The freehold premises formerly occupied by Rotork Control and Safety, the tradeand assets of which were sold in November 2002, was sold in April 2003 forconsideration of £1,675,000. This profit on disposal is not taxable as it isoffset by capital losses brought forward. 4. Interest and similar items Interest receivable and similar incomeShort term deposits 776 754Other 73 87 _____ _____ 849 841Interest payable and similar chargesBank loans and overdrafts (70) (39)Other (66) (41) _____ _____ (136) (80)Other finance costsInterest on pension scheme liabilities (3,556) (3,100) Expected return on pension scheme assets 3,477 2,800 _____ ______ (79) (300) Net interest receivable and similar items 634 461 ==== ==== 5. Profit on ordinary activities before taxation Profit on ordinary activities before taxation is stated after charging or(crediting) the following: 2004 2003 restated Depreciation and other amounts written off tangible fixed assets:owned assets 2,497 2,220 assets held under finance lease contracts 80 66Amortisation of goodwill 1,293 1,305Research and development expenditure 2,434 2,071Hire of plant and machinery 538 604Other operating lease rentals 619 601Exchange differences realised (411) (244)Auditors: Audit fees and expenses 206 239 Other fees paid to KPMG Audit Plc and its associates analysed between: further assurance services 15 6 taxation services 41 60 other 61 48 The auditors' remuneration in respect of the Company was £34,000 (2003: £31,000) 6. Tax on profit on ordinary activities Current tax:UK Corporation tax on profits for the year 6,258 6,520Double tax relief (1,995) (2,566)Adjustment in respect of prior years 156 (22) _____ _____ 4,419 3,932 _____ _____ Overseas tax on profits for the year 5,879 5,700Adjustment in respect of prior years 21 (59) _____ _____ 5,900 5,641 _____ _____Total current tax 10,319 9,573 _____ _____ Deferred tax:Origination and reversal of timing differences 212 (138)Adjustment to estimated recoverable amounts of deferred tax assets arising in previous 60 34periods _____ _____Total deferred tax 272 (104) _____ _____ Tax charge on profit on ordinary activities 10,591 9,469 ==== ==== Effective tax rate (based on profit before tax and goodwill) 33.3% 32.1% 6. Tax on profit on ordinary activities (continued) 2004 2003 restated Profit before tax 30,491 28,168 Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 9,147 8,45030% (2003: 30%) Effects of:Timing differences (212) 138Non deductible expenses 150 133Unrelieved /(utilisation of) losses 25 (490)Higher tax rates on overseas earnings 644 1,030Goodwill amortisation 388 392Adjustments to tax charge in respect of prior periods 177 (80) _____ _____Current tax charge for period 10,319 9,573 ==== ==== The Group continues to expect its effective rate of corporation tax to beslightly higher than the standard UK rate due to higher rates of tax in the US,Canada, France, Germany, Italy and India. No deferred tax is recognised on the unremitted earnings of overseassubsidiaries. As the unremitted earnings are continually reinvested by theGroup, no tax is expected to be payable on them in the foreseeable future. 7. Dividends Additional interim paid 5.85p per ordinary share 5,056 -Interim paid 5.35p per ordinary share (2003: 5.25p) 4,592 4,445Final proposed 9.70p per ordinary share (2003: 9.50p) 8,303 8,142 _____ _____Ordinary dividends on equity shares 17,951 12,5879.5% cumulative preference dividend on non-equity shares 4 5 _____ _____ 17,955 12,592 ==== ==== 8. Earnings per share Earnings per share is calculated for both the current and previous years usingthe profit attributable to the ordinary shareholders for the year. The earningsper share calculation is based on 85.8 million shares (2003 restated: 85.7million shares) being the weighted average number of ordinary shares in issuefor the year. The adjusted earnings per share is based on the profit for the year attributableto the ordinary shareholders before the amortisation of goodwill. The adjustednumbers provide a more consistent measure of operating performance. Diluted earnings per share is based on the profit for the year attributable tothe ordinary shareholders and 86.4 million shares (2003 restated: 86.1 millionshares). The number of shares is equal to the weighted average number ofordinary shares in issue adjusted to assume conversion of all dilutive potentialordinary shares. The Company has two categories of dilutive potential ordinaryshares: those share options granted to employees where the exercise price isless than the average market price of the Company's ordinary shares during theyear and contingently issuable shares awarded under the Long-Term IncentivePlan. 2004 2003 restatedProfit for the financial year attributable to ordinary shareholders 19,896 18,694Amortisation of goodwill 1,293 1,305 _____ _____Adjusted profit 21,189 19,999 Basic earnings per share based on profit for the financial year 23.2p 21.8pBasic earnings per share based on adjusted profit 24.7p 23.3pDiluted earnings per share 23.0p 21.7p 9. Directors and employees 2004 2003 No. No. During the year, the average weekly number of employees, analysed by business activity,was: Electrics 865 846Gears 124 128Fluid system 151 139 _____ _____ 1,140 1,113 ==== ==== UK 419 420Overseas 721 693 _____ _____ 1,140 1,113 ==== ==== £'000 £'000Staff costs during the year were: restated Wages and salaries 28,442 27,321 Social security costs 2,950 2,688 Pension costs 2,035 1,934 _____ _____ 33,427 31,943 ==== ==== 9. Directors and employees (continued) Directors' interests The interests of the directors in the ordinary share capital of the Companyaccording to the register required to be kept by section 325 of the CompaniesAct 1985, at 31 December were as follows: No. No. RC Lockwood - -JW Matthews 10,600 10,000A Walker 5,000 5,000GE Malcolm 29,430 27,025WH Whiteley 87,478 86,321RE Slater 20,911 19,642RH Arnold 14,384 12,925 All interests were beneficial and include directors' directly held and familyshare interests. The beneficial interests at 31 December included the following ordinary sharesheld under the Rotork Share Incentive Plan (SIP), and the Rotork Profit-LinkedShare Plan (PLSS) in trust: GE Malcolm 3,693 3,404WH Whiteley 4,159 4,407RE Slater 3,623 3,250*RH Arnold 2,841 2,601 *RH Arnold participates in the Rotork Overseas Profit-Linked Share Scheme(OPLSS), and the figures shown for RH Arnold for 2004 and the prior year relatesolely to OPLSS. Details of directors remuneration and allocations to directors in 2004 andfurther details of the SIP and OPLSS schemes are provided in the remunerationreport on pages 17 to 22. The only changes in the directors interests post year end relate to sharespurchased by the UK based directors monthly under the Rotork SIP partnershipplan to a maximum £125 per month. Save as disclosed, no director or his family had any interest in the shares ofthe Company at 31 December 2004. 10. Intangible fixed assets Group GoodwillCost At 1 January 2004 25,919Exchange differences (269) Goodwill arising on acquisition 671 _____At 31 December 2004 26,321 Aggregate amortisationAt 1 January 2004 6,862Exchange differences (8)Charge for the year 1,293 _____At 31 December 2004 8,147 Net book amount at 31 December 2004 18,174 ==== Net book amount at 31 December 2003 19,057 ==== 11. Tangible fixed assets Group Company Machinery Machinery Land and plant and Land and plant and buildings equipment Total buildings equipment Total Cost or valuation At 1 January 2004 10,490 17,544 28,034 840 13 853Exchange differences (158) (221) (379) 16 - 16Additions 939 2,307 3,246 785 - 785Disposals (173) (882) (1,055) (173) - (173)Acquisition of subsidiary - 32 32 - - - _____ _____ _____ _____ _____ _____At 31 December 2004 11,098 18,780 29,878 1,468 13 1,481 ==== ==== ==== ==== ==== ==== Depreciation At 1 January 2004 3,078 11,316 14,394 173 10 183Exchange differences (23) (132) (155) 2 - 2Charge for year 333 2,244 2,577 30 3 33Disposals (24) (791) (815) (24) - (24) _____ _____ _____ _____ _____ _____At 31 December 2004 3,364 12,637 16,001 181 13 194 ==== ==== ==== ==== ==== ==== Net book value 7,734 6,143 13,877 1,287 - 1,287 at 31 December 2004 ==== ==== ==== ==== ==== ==== At 31 December 2003 7,412 6,228 13,640 667 3 670 _____ _____ _____ _____ _____ _____ The net book value of the Group's plant and machinery includes £186,000 (2003:£144,000) in respect of assets held under finance leases and hire purchasecontracts. Group Group 2004 2003 Land and buildings stated in accordance with the historical cost convention were:Cost 9,421 8,812Depreciation (2,680) (2,457) _____ _____Net book value at 31 December 6,741 6,355 ==== ==== Net book value of land and buildings can be analysed between: Group Group Company 2004 Company 2003 2004 2003 Freehold land 1,095 1,117 60 82Freehold buildings 5,195 4,733 1,227 585Long leasehold 1,439 1,557 - -Short leasehold 5 5 - - _____ _____ _____ _____Net book value at 31 December 7,734 7,412 1,287 667 ==== ==== ==== ==== 11. Tangible fixed assets (continued) The cost or valuation figure of £11,098,000 (2003: £10,490,000) included the followingproperties at the revalued amounts shown. The year of revaluation is also given. 2004 2003 Bath freehold, 1991 105 105Bath leasehold, 1991 2,245 2,245Spain freehold, 1997 284 284 _____ _____ 2,634 2,634 ==== ==== The revaluation of the Bath properties was based on the market value for theexisting use. Under a statutory option the Spanish property was revalued usingthe retail price index on 1 January 1997. 12. Investments (held as fixed assets) Investments previously shown in the Group balance sheet represented shares heldfor future payments under the Share Incentive Plan and Long-Term Incentive Plan.Under UITF 38 these have now been reclassified as a deduction from reserves.Further details are set out in note 20. Investments in the Company balance sheet: Investment in subsidiary undertaking At 1 January 2004 1,398Prior year adjustment (see note 24) (341) _____At 1 January 2004 as restated 1,057 ==== At 31 December 2004 1,057 ==== A listing of the major investments is included in the directory on pages 51 to53. 13. Stocks and work in progress Group Group 2004 2003 Raw materials and purchased components 14,590 12,436Work in progress 3,585 3,077Finished stocks 2,840 3,057 _____ _____ 21,015 18,570 ==== ==== 14. Debtors Group Group Company Company 2003 2004 restated 2004 2003 Amounts falling due within one year:Trade debtors 34,060 28,973 - -Amounts owed by subsidiary undertakings - - 34,991 14,635Other debtors 1,345 687 297 144Prepayments and accrued income 1,180 1,125 9 142Corporation tax 2,176 1,226 414 473Deferred taxation 917 955 425 247 _____ _____ _____ _____ 39,678 32,966 36,136 15,641 ==== ==== ==== ====Amounts falling due after more than one year:Amounts owed by subsidiary undertakings - - - 99Other debtors 489 486 - - _____ _____ _____ _____ 489 486 - 99 _____ _____ _____ _____ 40,167 33,452 36,136 15,740 ==== ==== ==== ==== A deferred tax asset of £917,000 has been recognised at 31 December 2004 (2003:£955,000). This asset principally relates to other timing differences in the USof £472,000 and Rotork Controls in the UK of £227,000. The directors are of theopinion, based on recent and forecast trading that the level of UK and USprofits in the current and future years make it more likely than not that theasset will be recovered. A deferred tax asset of £3.9 m (2003: £3.5m) has not been recognised in relationto capital losses (£2.2m) and certain tax credits, tax losses and other timingdifferences. These assets may be recovered if sufficient taxable or capitalprofits are made in future in the companies concerned. 15. Cash at bank and in hand Group Group Company Company 2004 2003 2004 2003 Cash at bank and in hand 7,469 4,833 45 47Term deposits 17,829 27,420 13,731 25,227 _____ _____ _____ _____ 25,298 32,253 13,776 25,274 ==== ==== ==== ==== Cash flow analysis Group Group 2004 restated 2003 Reconciliation of operating profit to net cash flow from operating activities:Operating profit 29,857 27,110Goodwill amortisation 1,293 1,305Depreciation 2,577 2,286(Profit) on sale of fixed assets (72) (29)Special pension contribution (5,000) -Difference between pension charge and cash contributions (633) (397)(Increase) in stocks (2,600) (969)(Increase) / decrease in debtors (6,228) 329Increase in creditors and provisions 4,266 3,546 _____ _____Net cash inflow from operating activities 23,460 33,181 ==== ==== 15. Cash at bank and in hand (continued) Reconciliation of net cash flow to movement in net funds 2004 2003 Increase in cash in the year 2,464 411Cash flow from change in debt and lease financing (248) 88Cash flow from change in short term deposits (9,485) 11,301 _____ _____Change in net funds resulting from cash flows (7,269) 11,800Translation difference (314) 44 _____ _____Movement in net funds in the year (7,583) 11,844Net funds at 1 January 31,887 20,043 _____ _____Net funds at 31 December 24,304 31,887 ==== ==== Analysis of net funds At 1 January Other non-cash Exchange At 31 2004 movements movement December 2004 Cash flow Cash at bank and in hand 4,833 2,806 - (170) 7,469Overdrafts (119) (342) - (12) (473) _____ _____ _____ _____ _____ 4,714 2,464 - (182) 6,996 Debt due within one year (55) (105) - (5) (165)Debt due after one year (68) (83) - (18) (169)Finance leases (124) 58 (118) (3) (187)Term deposits 27,420 (9,485) - (106) 17,829 _____ _____ _____ _____ _____Total 31,887 (7,151) (118) (314) 24,304 ==== ==== ==== ==== ==== 16. Creditors: amounts falling due within one year Group Group Company Company 2004 2003 2004 2003 Bank loans and overdrafts 638 174 4,941 3,065Net obligations under finance leases 88 63 - - _____ _____ _____ _____Borrowings 726 237 4,941 3,065 Trade creditors 15,363 12,284 110 75Bills of exchange 246 176 - -Amounts owed to subsidiary undertakings - - 1,058 1,058Corporation tax 5,779 5,020 14 9Other taxes and social security 1,709 1,452 11 10Other creditors 2,800 2,254 2,050 1,465Accruals and deferred income 8,752 8,192 129 138Dividends payable 8,392 8,192 8,392 8,192 _____ _____ _____ _____ 43,767 37,807 16,705 14,012 ==== ==== ==== ==== Bank loans are secured by accepted letters of credit and corporate guarantees. Obligations under operating leases are shown under note 21. 17. Creditors: amounts falling due after more than one year Group Group 2004 2003 Bank loans 169 68Finance lease obligations 99 61 _____ _____ 268 129 ==== ==== Bank loans are for overseas subsidiaries and are secured by accepted letters ofcredit. 18. Provisions for liabilities and charges Group Company Deferred taxation Warranty Other Total Other Total Balance at 1 January 2004 128 1,725 1,037 2,890 277 277Exchange differences 39 (30) (15) (6) - -Utilised during the year - (362) (505) (867) - -Transfer to current assets (164) - - (164) - -Acquisition - - 54 54 - -Charged in the profit and loss account 272 230 67 569 - - _____ _____ _____ _____ _____ _____Balance at 31 December 2004 275 1,563 638 2,476 277 277 ==== ==== ==== ==== ==== ==== Provisions should be utilised over a period not exceeding five years. Theprovision for product warranties reflects the anticipated costs that will beincurred in respect of unexpired warranties granted to customers. The amounts provided for deferred taxation are: Group Group Company Company restated 2004 2003 2004 2003 Difference between accumulated depreciation and capital allowances 284 329 77 74Short term timing differences (926) (1,156) (127) (321)Pension liabilities (5,951) (5,850) - - _____ _____ _____ _____ (6,593) (6,677) (50) (247) ==== ==== ==== ====Analysed between:Debtors (917) (955) (50) (247)Provisions for liabilities and charges 275 128 - -Pension liabilities (note 23) (5,951) (5,850) - - _____ _____ _____ _____ (6,593) (6,677) (50) (247) ==== ==== ==== ==== The majority of the pensions provision related to projected obligations underRotork Controls Inc.'s Employee Benefit Plan. 19. Share capital Authorised Issued and fully paid-up 2004 2003 2004 2003 Non-equity 9.5% cumulative preference shares of £1 each 47 50 47 50Equity ordinary shares of 5p each 5,449 5,449 4,300 4,292 _____ _____ _____ _____ 5,496 5,499 4,347 4,342 ==== ==== ==== ==== Number of equity ordinary shares of 5p each (thousands) 108,990 108,990 85,994 85,833 The preference shareholders take priority over the ordinary shareholders on adistribution in the winding-up of the Company or on a reduction of capitalinvolving a return of capital. The holders of preference shares are entitled tovote at a general meeting of the Company if a preference dividend is in arrearsfor six months or the business of the meeting includes the consideration of aresolution for winding-up the Company or the alteration of the preferenceshareholders' rights. The only ordinary shares issued during the year were 161,137 (2003: 188,664)under The Rotork Employee Share Option Schemes at prices between 192p and 328pwith a total consideration of £457,000. No shares were issued under The RotorkShare Incentive Plan or under The Overseas Profit-Linked Share Scheme during2004. On 1 May 2004 options over 166,015 shares exercisable after three years (subjectto satisfying performance criteria) at 3.87p were granted under The RotorkEmployee Share Option Scheme (1995). On 8 October 2004 options over 162,357shares were granted under the Rotork Sharesave Scheme at 319.6p. Of theseoptions, 63,336 were exercisable after 3 years and 99,021 after 5 years. There were 528,941 (2003: 524,063) outstanding options under The Rotork EmployeeShare Option Schemes at 31 December 2004, exercisable at various prices between192p and 387per ordinary share and between 2005 and 2014. The investment in own shares represents 130,671 (2003:135,819) ordinary sharesof the Company held in trust for the benefit of directors and employees forfuture payments under the Share Incentive Plan and Long-Term Incentive Plan.The market value of these shares at 31 December 2004 was £540,000 (2003:497,000). The dividends on these shares have been waived. 20. Equity reserves Group Share Capital Revaluation Profit and premium redemption reserve loss account account reserve At 1 January 2004 4,543 1,634 2,405 63,563Prior year adjustments (note 24) - - - (13,994) _____ _____ _____ _____At 1 January 2004 as restated 4,543 1,634 2,405 49,569Profit retained - - - 1,945Premium on new shares issued 450 - - -Actuarial loss net of deferred tax - - - (5,555)Purchase of own ordinary shares - - - (691)Shares awarded under share schemes - - - 702Purchase of own preference shares - 3 - (5)Exchange differences - - - (1,212) _____ _____ _____ _____At 31 December 2004 4,993 1,637 2,405 44,753 ==== ==== ==== ==== 20. Equity reserves (continued) 2004 2003 Profit and loss reserve excluding pension liability 58,638 63,222