Rotork Regulatory News (ROR)

3 Aug 2005 07:00

Rotork PLC03 August 2005 3 August 2005 Rotork p.l.c INTERIM ANNOUNCEMENT Continued growth in turnover, operating profit and order book FINANCIAL HIGHLIGHTS • Turnover increased by 17% to £78.3m (2004: £66.8m) • Profit from operations increased by 17% to £16.2m (2004: £13.9m) • EPS 12.7p up 14% (2004: 11.1p) • Order intake 23% higher than first half of 2004 • Record order book up 29% since June 2004 excluding impact of PCI acquisition • Interim dividend of 5.9p up 10% (2004: 5.35p) • Interim Report and all comparative figures prepared under IFRS Chief Executive, Bill Whiteley, commenting on the results said: "2005 has started well and we are pleased to report further strong growth ineach of our divisions. Our worldwide markets were generally favourable with acontinued increase in projects requiring valve automation. The increase wasbroadly based with all three divisions increasing order intake and with most ofour geographic and end user markets performing well. "We are confident of meeting our growth expectations for the year." For further information, please contact: Rotork p.l.c. Tel: 01225 733200Bill Whiteley, Chief ExecutiveBob Slater, Finance Director Financial Dynamics Tel: 020 7269 7224Sally Lewis REVIEW OF OPERATIONS Financial Results We are pleased to report strong growth in all of our divisions. Turnoverincreased by 17% in a period little affected by exchange rate movements. Profitfrom operations increased by 17% compared with the 2004 results which have beenrestated under International Financial Reporting Standards. Order intake onceagain exceeded sales output leading to a new record order book level. Operating Review Our worldwide markets were generally favourable with a continued increase inprojects requiring valve automation. The order input increase of over 23% wasslightly flattered by two substantial orders being received towards the end ofthe second quarter. The increase was, however, broadly based with each of thethree divisions increasing order intake and with most of our geographic and enduser markets performing well. The largest increases came from the Asia and FarEast region with order intake from China, India and Singapore being particularlystrong. This was supported by good input in North America, RFS in Italy and thevarious UK activities. The order book, excluding acquisitions, at the end ofthe period was 29% up on the same period last year and 37% up on the end of lastyear. Although the impact of currencies was broadly neutral for the comparativeperiod the order book benefited from the stronger dollar on 30th June 2005. Electric Actuators Electric actuator input value was up 22% on the prior year. Most operationsbenefited from increased activity albeit in some of these cases the increase inbusiness was due to projects outside of their territories being placed throughlocal OEM customers. The power market was particularly active and represented33% of the input units in the period, up from 23% in the corresponding period.The main markets for these actuators are China and India which continued to showimpressive growth. However we also had important contract wins in the MiddleEast/Africa region and the UK which further boosted this figure. Units orderedby the oil & gas sector increased by 15% with substantial increases again beingseen in Asia and the Far East although as a percentage of total input it fellfrom 37% to 34%. We benefited from an increasing number of Chinese pipeline,tank farm and refinery projects in addition to a number of large contractselsewhere in the region. Actuators being sold into the water market represented25% of our total units with good levels of business in South East Asia and theU.S. Both the IQT and AWT ranges sold well above expectations in the period and had apositive impact on our ability to win major projects. Operating profit increased by over 19% in a period where, for once, there was abroadly neutral currency impact. Profits from the Bath plant were up as wecontinued to achieve increased output levels. The service & retrofitbusinesses, based in Bath and Leeds, were also very active. In Europe, goodprofit increases were achieved in Italy, Germany and Spain. The U.S. continuedto see an impressive increase in its sales and profits as did nearly all of ourAsian and Far Eastern operations. Material costs were kept under good controlalthough some increases, due to high raw material and energy costs, came throughinto our component prices. Actions aimed at strengthening our supply chain werealso responsible for some modest cost increases but a number of initiativesbeing worked upon at the moment will mean that savings in component costs shouldbe re-established next year. Rotork Fluid System We continued to achieve rapid growth in this business with total order intakerising 41%. On a like for like basis, excluding PCI which was purchased duringthe first half of the year, order intake was up 29%. In addition to thecontinued growth of this business through our international network of salescompanies, a number of large contracts were won by the Italian and U.S.operations. Due to the timing of these projects the order book climbed by 63%excluding PCI. The upstream oil and gas, transmission markets and projectsconnected with LNG production and shipments remain active. This means that weare confident that there will be good progress for the year as a whole in spiteof the modest first half performance, when the return on sales was negativelyimpacted by losses in the U.S. and Canada. These operations were profitable in2004 and are forecasting profits for the year as a whole. The acquisition of PCI in March has helped to add new high pressure products andnew markets to this division. This business, which is based in NorthernGermany, was purchased in March for €9.8m including deferred consideration.During our period of ownership it has contributed £2.1m of output with a net tosales return of 13% before adjustments for IFRS intangible amortisation. Rotork Gears Gears' input grew at 6% despite some weaknesses within its business. The orderbook, which tends to be shorter within this division due to the nature andapplication of its products, grew by 32%. During the half year sales outputgrew by 12% and operating profits by a particularly strong 23% due to goodperformances at both the Leeds and Losser plants, which have focussed on theircosts of materials and operational efficiency. Dividend The interim dividend is to be increased by 10% to 5.9p, and will be payable on27 September to all shareholders on the register at 2 September 2005. Outlook Many of our important geographic and end user markets remain active withcontinuing high levels of investment being planned. However we may not benefitfrom specific large project orders to the same extent as in the first half ofthe year. The output comparisons are flattered by a somewhat productionconstrained first half of 2004. Further production increases are anticipated inthe second half, which are supported by the order book at the end of June. Thismakes us confident of meeting our growth expectations for the year. BILL WHITELEYChief Executive2 August 2005 Consolidated Income Statement Unaudited First half First half Full year 2005 2004 2004 Notes £000 £000 £000 Revenue 2 78,324 66,829 146,883 Profit from operations 2 16,224 13,871 30,432 Financial income 3 2,169 2,206 4,766Financial expenses 3 (2,116) (1,829) (3,692) Profit before tax 16,277 14,248 31,506 Tax expense (5,372) (4,581) (10,508) Profit for the period 10,905 9,667 20,998 pence pence pence Basic earnings per share 4 12.7 11.1 24.5Diluted earnings per share 4 12.6 11.0 24.3 Consolidated Statement of Recognised Income and Expense Unaudited First half First half Full year 2005 2004 2004 £000 £000 £000 Foreign exchange translation differences 890 (1,792) (1,212)Cash flow hedges: effective portion of changes (210) - -in fair valueActuarial loss in pension scheme - - (5,792)Movement on deferred tax relating to actuarial - - 237loss Net gain / (loss) recognised directly in 680 (1,792) (6,767)equity Profit for the period 10,905 9,667 20,998 Total recognised income and expense for the 11,585 7,875 14,231period Consolidated Balance Sheet Unaudited 30 June 30 June 31 Dec 2005 2004 2004 £000 £000 £000 Property, plant and equipment 17,644 14,091 13,877Intangible assets 21,536 19,955 20,169Deferred tax assets 5,905 6,500 6,988Other receivables 231 493 489Total non-current assets 45,316 41,039 41,523 Inventories 26,310 20,929 21,015Trade receivables 31,094 27,566 34,060Income tax receivable 2,147 1,194 2,176Other receivables 3,887 3,485 2,525Cash and cash equivalents 20,502 18,794 25,298Total current assets 83,940 71,968 85,074 Total assets 129,256 113,007 126,597 Issued capital 4,308 4,297 4,300Preference shares - 47 47Share premium 5,498 4,871 4,993Reserves 1,299 (155) 425Retained earnings 61,299 57,098 58,489Total equity 72,404 66,158 68,254 Interest bearing loans and borrowings 1,415 163 268Employee benefits 22,023 17,985 23,569Deferred tax liabilities 989 740 1,155Provisions 531 427 521Total non-current liabilities 24,958 19,315 25,513 Bank overdraft 268 - 473Interest bearing loans and borrowings 197 61 253Trade payables 13,909 12,623 15,609Income tax payable 7,062 6,280 5,779Other payables 9,396 7,715 9,674Provisions 1,062 855 1,042Total current liabilities 31,894 27,534 32,830 Total liabilities 56,852 46,849 58,343 Total equity and liabilities 129,256 113,007 126,597 Consolidated Statement of Cash Flows Unaudited First half First half Full year 2005 2004 2004 £000 £000 £000 Profit from operations 16,224 13,871 30,432Amortisation of intangibles 169 47 70Amortisation of development costs 146 161 322Depreciation 1,357 1,181 2,577Charge for share schemes 134 76 208Loss / (profit) on sale of fixed assets 42 - (72) 18,072 15,336 33,537Increase in inventories (3,680) (2,615) (2,600)Decrease / (increase) in trade and other receivables 4,225 (815) (6,228)(Decrease) / increase in trade and other payables (1,551) 220 4,130Decrease in provisions (16) (443) (130)Difference between pension charge and cash contribution (753) (5,243) (5,633)(Decrease) / increase in other employee benefits (794) (191) 748Income taxes paid (3,933) (3,609) (10,441)Cash flows from operating activities 11,570 2,640 13,383 Purchase of tangible fixed assets (738) (1,903) (3,099)Development costs capitalised (120) (51) (102)Proceeds from sale of tangible fixed assets 11 35 295Acquisition of subsidiary net of cash acquired (7,256) (784) (912)Interest received 285 674 973Cash flows from investing activities (7,818) (2,029) (2,845) Issue of ordinary share capital 513 333 458Purchase of ordinary share capital (913) (691) (691)Purchase of own preference shares - (5) (5)Interest paid (75) (16) (136)Repayment of amounts borrowed (319) (33) 188Repayment of finance lease liabilities (53) (34) (58)New borrowings 1,503 - -Dividends on ordinary shares (8,342) (13,157) (17,751)Dividends on preference shares - (2) (4)Cash flows from financing activities (7,686) (13,605) (17,999) Net decrease in cash and cash equivalents (3,934) (12,994) (7,461) Cash and cash equivalents at 1 January 24,825 32,134 32,134Effect of exchange rate fluctuations on cash held (657) (346) 152Cash and cash equivalents at end of period 20,234 18,794 24,825 Notes to the Interim Report 1. Status of Interim Report and accounting policies The interim report was approved by the Directors on 2 August 2005. It should beread in conjunction with the 2004 audited IFRS restated accounts announced on 21June 2005, which contain the accounting policies adopted under IFRS and areconciliation of the 2004 income statement and opening and closing balancesheets from UK GAAP to IFRS. The financial information for the six months to 30 June 2005 and the comparativefigures for the six months to 30 June 2004 are unaudited and have been preparedon the basis of the accounting policies set out in the Group's audited IFRSrestated accounts announced on 21 June 2005 for the year ended 31 December 2004.A reconciliation of the adjustments made to the June 2004 income statement andbalance sheet is shown in note 6. The directors have assumed that the December 2004 amendment to IAS 19 - EmployeeBenefits and the 2005 amendments to IAS 39 will be adopted by the EU insufficient time that they will be available for use in the IFRS financialstatements for the year ending 31 December 2005. In addition, the adopted IFRSsthat will be effective (or available for early adoption) in the financialstatements are still subject to change and to additional interpretations andtherefore cannot be determined with certainty. Accordingly the accountingpolicies for the year ended 31 December 2005 will be determined finally onlywhen the financial statements for that year are prepared. As permitted by IFRS 1, the following standards: IFRS 5 - Non-current AssetsHeld for Sale and Discontinued Operations, IAS 32 - Financial Instruments:Disclosure and Presentation and IAS 39 - Financial Instruments: Recognition andMeasurement have not been applied until 1 January 2005 and accordingly noadjustment has been made to the 30 June 2004 or 31 December 2004 numbers. The comparative figures for the financial year ended 31 December 2004 are notthe Company's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the registrar of companies. The report of the auditors wasunqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The IFRS financial information for the year ended 31December 2004 is an abridged version of the accounts for that year whichreceived an unqualified report from the auditors prior to their release on 21June 2005. 2. Segmental reporting First half First half Full year First half First half Full year 2005 2004 2004 2005 2004 2004 £000 £000 £000 £000 £000 £000 Revenue Profit from operationsAnalysis by operation Electrics 58,243 50,574 109,345 14,554 12,179 26,054Gears 9,339 8,334 17,806 1,857 1,507 3,203Fluid system 13,267 9,976 23,802 784 967 3,016Unallocated costs - - - (971) (782) (1,841)Inter-segmental elimination (2,525) (2,055) (4,070) - - - 78,324 66,829 146,883 16,224 13,871 30,432 Segment assets Segment liabilities Electrics 59,942 55,842 58,083 37,684 33,510 43,081Gears 13,025 14,024 12,997 2,681 3,126 3,901Fluid system 27,741 16,653 21,054 6,556 2,969 3,433Unallocated 28,548 26,488 34,463 9,931 7,244 7,928 129,256 113,007 126,597 56,852 46,849 58,343 Revenue from external customers by location of customer First half First half Full year 2005 2004 2004 £000 £000 £000 Europe 33,761 29,630 66,036Americas 22,544 19,877 41,704Rest of world 22,019 17,322 39,143 78,324 66,829 146,883Segment assets by location of assets First half First half Full year 2005 2004 2004 £000 £000 £000 Europe 63,024 52,983 58,494Americas 23,608 21,513 20,139Rest of world 14,076 12,023 13,501Unallocated 28,548 26,488 34,463 129,256 113,007 126,597 3. Financial income / expenses First half First half Full year 2005 2004 2004 £000 £000 £000 Interest income 309 464 849Expected return on assets in the pension schemes 1,828 1,738 3,477Foreign exchange gain 32 4 440 2,169 2,206 4,766 Interest expense (80) (33) (136)Interest charge on pension scheme liabilities (1,965) (1,778) (3,556)Foreign exchange loss (71) (18) - (2,116) (1,829) (3,692) 4. Earnings per share Earnings per share is calculated using the profit attributable to the ordinaryshareholders for the period and 86.0 million shares (six months to 30 June 2004:85.7 million; year to 31 December 2004: 85.8 million) being the weighted averageordinary shares in issue. Diluted earnings per share is calculated using the profit attributable to theordinary shareholders for the period and the weighted average ordinary shares inissue adjusted to assume conversion of all dilutive potential ordinary sharesunder the Group's option schemes and Long-Term Incentive Plan. 5. Reconciliation of movements in equity Share Preference Share Translation Hedging Capital Retained Total shares premium reserve reserve redemption earnings Capital reserve Equity at 1 January 4,300 47 4,993 (1,212) - 1,637 58,489 68,2542005Reclassification of - (47) - - - - - (47)preference sharecapital as debtunder IAS32Hedging reserve at - - - - 194 - - 1941 January 2005 onimplementation ofIAS39Restated equity at 4,300 - 4,993 (1,212) 194 1,637 58,489 68,4011 January 2005Profit for the - - - - - - 10,905 10,905periodOther items in the - - - 890 (210) - - 680statement ofrecognised incomeand expenseEquity settled - - - - - - 11 11transactions net oftaxShare options 8 - 505 - - - - 513exercised byemployeesOwn ordinary shares - - - - - - (913) (913)acquiredOwn ordinary shares - - - - - - 1,149 1,149awarded under shareschemesDividends to - - - - - - (8,342) (8,342)shareholdersEquity at 30 June 4,308 - 5,498 (322) (16) 1,637 61,299 72,4042005 Share Preference Share Translation Hedging Capital Retained Total Capital shares premium reserve reserve redemption earnings reserve Equity at 1 January 4,292 50 4,543 - - 1,634 60,567 71,0862004Profit for the - - - - - - 9,667 9,667periodOther items in the - - - (1,792) - - - (1,792)statement ofrecognised incomeand expenseEquity settled - - - - - - 17 17transactions net oftaxShare options 5 - 328 - - - - 333exercised byemployeesOwn ordinary shares - - - - - - (691) (691)acquiredOwn ordinary shares - - - - - - 702 702awarded under shareschemesOwn preference - (3) - - - 3 (5) (5)shares acquiredPreference share - - - - - - (2) (2)dividendsDividends to - - - - - - (13,157) (13,157)shareholdersEquity at 30 June 4,297 47 4,871 (1,792) - 1,637 57,098 66,1582004 Share Preference Share Translation Hedging Capital Retained Total Capital shares premium reserve reserve redemption earnings reserve Equity at 1 January 4,292 50 4,543 - - 1,634 60,567 71,0862004Profit for the - - - - - - 20,998 20,998periodOther items in the - - - (1,212) - - (5,555) (6,767)statement ofrecognised incomeand expenseEquity settled - - - - - - 228 228transactions net oftaxShare options 8 - 450 - - - - 458exercised byemployeesOwn ordinary shares - - - - - - (691) (691)acquiredOwn ordinary shares - - - - - - 702 702awarded under shareschemesOwn preference - (3) - - - 3 (5) (5)shares acquiredPreference share - - - - - - (4) (4)dividendsDividends to - - - - - - (17,751) (17,751)shareholdersEquity at 31 4,300 47 4,993 (1,212) - 1,637 58,489 68,254December 2004 6. Explanation of transition to IFRS An explanation of the impact of the transition to IFRS on the December 2004financial statements was included in the audited 2004 accounts restated underIFRS announced on 21 June 2005. This note identifies the impact of restatementon the income statement for the six months to June 2004 and the balance sheet at30 June 2004. Balance sheets 1 January 2004 30 June 2004 Notes Previous Effect of IFRS Previous Effect of IFRS GAAP transition to GAAP transition to IFRS IFRS Assets Property, plant and 13,640 - 13,640 14,091 - 14,091equipmentIntangible assets a, c 19,057 992 20,049 18,484 1,471 19,955Deferred tax assets b - 6,605 6,605 - 6,500 6,500Other receivables 486 - 486 493 - 493 _______ _______ _______ _______ _______ _______Total non-current assets 33,183 7,597 40,780 33,068 7,971 41,039 Inventories 18,570 - 18,570 20,929 - 20,929Trade receivables 28,973 - 28,973 27,566 - 27,566Income tax receivable 1,226 - 1,226 - 1,194 1,194Other receivables b, e 2,767 (954) 1,813 9,453 (5,968) 3,485Cash and cash equivalents 32,253 - 32,253 18,794 - 18,794 _______ _______ _______ _______ _______ _______Total current assets 83,789 (954) 82,835 76,742 (4,774) 71,968 _______ _______ _______ _______ _______ _______Total assets 116,972 6,643 123,615 109,810 3,197 113,007 ======= ======= ======= ======= ======= =======EquityIssued capital 4,292 - 4,292 4,297 - 4,297Preference shares 50 - 50 47 - 47Share premium 4,543 - 4,543 4,871 - 4,871Reserves d 4,039 (2,405) 1,634 4,042 (4,197) (155)Retained earnings 49,569 10,998 60,567 47,393 9,705 57,098 _______ _______ _______ _______ _______ _______Total equity 62,493 8,593 71,086 60,650 5,508 66,158 _______ _______ _______ _______ _______ _______ LiabilitiesInterest bearing loans 129 - 129 163 - 163and borrowingsEmployee benefits e 13,653 9,113 22,766 13,511 4,474 17,985Deferred tax liabilities f 128 665 793 108 632 740Provisions e 1,612 (1,037) 575 1,618 (1,191) 427 _______ _______ _______ _______ _______ _______Total non-current 15,522 8,741 24,263 15,400 3,915 19,315liabilities Bank overdraft 119 - 119 - - -Interest bearing loans 118 - 118 61 - 61and borrowingsTrade payables 12,460 - 12,460 12,623 - 12,623Income tax payable 5,020 - 5,020 5,086 1,194 6,280Other payables e , g 20,090 (10,691) 9,399 15,135 (7,420) 7,715Provisions 1,150 - 1,150 855 - 855 _______ _______ _______ _______ _______ _______ Total current liabilities 38,957 (10,691) 28,266 33,760 (6,226) 27,534 Total liabilities 54,479 (1,950) 52,529 49,160 (2,311) 46,849 _______ _______ _______ _______ _______ _______Total equity and 116,972 6,643 123,615 109,810 3,197 113,007liabilities ======= ======= ======= ======= ======= ======= Notes to the explanation of transition to IFRS Following completion of an actuarial valuation of the main defined benefitpension scheme in the second half of 2004, the Board decided that the accountingrequirements of FRS17 should be adopted for the 2004 financial statements. Thiswas reflected as a prior year adjustment in the 2004 accounts. In the 2004accounts restated under IFRS announced on 21 June 2005 the adjustments arisingfrom adopting FRS17 were included in the UK GAAP numbers for both 1 January and31 December 2004. To ensure consistency the UK GAAP numbers for 30 June 2004have also been restated from those announced last year to reflect FRS17, theimpact of this prior year adjustment is: First half Full year 2004 2004 £000 £000 Increase in profit from operations 243 633Increase in financial expenses (39) (79)Increase in tax expense (61) (137)Increase in retained profit 143 417 Increase in employee benefits (13,510) (13,885) a) Intangible assets No amortisation of goodwill is charged to the income statement in the periodunder IFRS. Under UK GAAP £636,000 was charged during the period so this hasbeen reversed. Development costs of £992,000 at 1 January 2004 and £882,000 at 30 June 2004that qualified for recognition as an intangible asset under IFRSs had not beenrecognised under UK GAAP. They are recognised under IFRS at the date oftransition and at 30 June 2004 respectively. During the first half of 2004£161,000 of development expenditure was amortised and £51,000 of costs expensedunder UK GAAP were capitalised. Total adjustments to intangibles are made up as follows: 1 January 2004 30 June 2004 Reverse goodwill amortised through the income statement - 636Capitalised development costs 992 882Amortised intangible assets - (47) 992 1,471 b) Deferred tax assets Under UK GAAP the defined benefit pension scheme liability was reflected in thefinancial statements net of deferred taxation. On transition to IFRS this hasbeen shown in the accounts as a deferred tax asset. The deferred tax asset onaccumulated actuarial gains and losses at 1 January 2004 was £5,850,000, the taxcredit in the period was £62,000 resulting in an asset of £5,788,000 at 30 June2004. Deferred tax assets which were shown within debtors have been transferredto non-current assets and deferred tax has been provided on the share basedpayments and the amortisation of intangibles: 1 January 2004 Movement 30 June 2004Deferred tax assetPreviously in employee benefits under UK GAAP 5,850 (62) 5,788Previously in other receivables under UK GAAP 954 14 968Amortisation of intangibles - 14 14Share based payments 155 (71) 84Set off of tax (354) - (354) _____ _____ _____ Total 6,605 (105) 6,500 ===== ===== ===== c) Acquisition of subsidiary The acquisition of Deanquip Valve Automation in January 2004 has been restatedunder IFRS3. As a consequence of applying IFRS3 the acquisition has beenre-examined with a view to identifying specific intangibles. As a resultintangibles previously treated as goodwill and amortised over 20 years are nowbeing held on the balance sheet and are amortised over their estimated usefullives. The intangible assets identified and the charge to the accounts in 2004in respect of these intangibles is as follows: Intangible at Amortisation acquisition charge in 2004 Company name 31 10Customer relationships 233 8Order backlog at acquisition 25 25Agency agreements 60 6Currency adjustment - (2) _____ _____ 349 47Goodwill 322 - _____ _____ 671 47 ===== ===== The intangible amortisation for the period has been charged partly in cost ofsales (£37,000) and partly in administration expenses (£10,000). d) Reserves A number of reserves are required under IFRS which were not recorded under UKGAAP. The breakdown of this movement at 30 June 2004 is as follows: UK GAAP Adjustment IFRS Capital redemption reserve 1,637 - 1,637Revaluation reserve 2,405 (2,405) -Translation reserve - (1,792) (1,792) _____ _____ _____ Total 4,042 (4,197) (155) ===== ===== ===== The revaluation reserve is eliminated under IFRS as on first time adoption thevalue at which the assets are held is deemed to be cost. The translation reserve historically under UK GAAP has been included in theretained earnings reserve. e) Employee benefits Rotork adopted FRS17 for the 2004 year end under UK GAAP. Liabilities under theGroup defined benefit pension schemes were shown on the face of the balancesheet but were stated net of the associated deferred tax asset. Under IFRS thedeferred tax has been transferred to non-current assets (see note b) and thepension liability shown gross under employee liabilities. At 1 January 2004 thegross liability was £19,503,000 and at 30 June 2004, £19,299,000. Under IFRS certain liabilities have been reclassified as employee benefits frompayables and provisions. These are: 1 January 2004 Movement 30 June 2004 UK GAAP employee benefit (defined benefit 13,653 (142) 13,511pension scheme deficit net of deferred tax)Transfer to deferred tax assets (see note b) 5,850 (62) 5,788Transfer from other receivables - pension - (5,000) (5,000)lump sum contributionTransfer from provisions 1,037 154 1,191Transfer from other payables - non share 1,447 9 1,456based payment accrualsTransfer from other payables - share based 1,102 375 1,477payment accrualsAdjustment of share based payments to IFRS (323) (115) (438) ______ ______ ______ Total 22,766 (4,781) 17,985 ====== ====== ====== f) Deferred taxation liabilities Under UK GAAP certain properties had been revalued. This revaluation was shownwithin reserves as a separate reserve but under IFRS this has been consolidatedinto retained earnings. On transition, following IFRS1 the past revaluationshave been adopted as deemed cost. As a consequence deferred tax of £722,000 hasbeen provided on the balance at 1 January and 30 June 2004. In addition, thecapitalisation of development costs has led a reduction in the historic chargeto the income statement and requires the creation of a deferred tax liability.The liability at 1 January 2004 was £297,000 reducing by £33,000 during the yearto £264,000 at 30 June 2004. 1 January 2004 Movement 30 June 2004Deferred tax liabilityUK GAAP deferred tax liabilities 128 (20) 108Revaluation reserve tax liability 722 - 722Capitalised development costs liability 297 (33) 264Set off of tax (354) - (354) _____ _____ _____ Total 793 (53) 740 ===== ===== ===== g) Other payables Under UK GAAP dividends are accounted for once proposed but IFRS only reportsdividends as a charge to the accounts once paid. Reversal of the proposeddividend has reduced other payables by £4,487,000. Together with the £2,933,000transfer in respect of UK GAAP employee benefits noted above this accounts forthe £7,420,000 reduction in other payables. Income statement Notes Previous Effect of IFRS GAAP transition to IFRS Revenue 66,829 - 66,829 Profit from operations a, c, h, j 13,346 525 13,871Net financial income j 390 (13) 377 _______ _______ _______Profit before tax 13,736 512 14,248Tax expense i (4,616) 35 (4,581) _______ _______ _______Net profit for the year 9,120 547 9,667 ======= ======= ======= Basic earnings per share 10.5p 0.6p 11.1pDiluted earnings per share 10.4p 0.6p 11.0p h) Employee share schemes The Group applied IFRS2 to its active share based payment arrangements at 1January 2004 except for those granted before 7 November 2002 and not vested bydate of transition or 1 January 2005. The effect of accounting for equitysettled share based payment transactions at fair value is to increase profitfrom operations by £33,000. The increase in profit reflects the reversal ofprovisions made under UK GAAP for the Long-Term Incentive Plan offsetting thecharges for the option and Save As You Earn schemes. i) Tax expense The income tax charge in the income statement has changed as a result by the taxeffect of some of the UK GAAP to IFRS adjustments. The analysis of the netchange is: Amortisation of intangibles (see note b) 14Capitalised development costs (see note f) 33Cash settled share based payments 13Equity settled share based payments (25) _____ 35 ===== j) Exchange gains and losses Under UK GAAP exchange gains and losses were reported in operating profit.Under IFRS any gains and losses resulting from retranslation of currencydeposits are shown in net financial income which has resulted in profit fromoperations being increased by £13,000 and net financial income being reduced bythe same amount. 7. Shareholder information This interim report is being sent to all shareholders and copies are availableto the public from the Registered Office at the address below. The interimreport is also available on the company's website at www.rotork.com. We offer shareholders a dividend reinvestment plan (DRIP) under whichshareholders can reinvest their cash dividends in the company, by buying sharesin the market at competitive dealing rates. If you have already elected to jointhe DRIP, there is no further action for you to take. If you would like to join for the first time, please contact our registrarsbelow. Lloyds TSB RegistrarsThe CausewayWorthingWest SussexBN99 6DA Share dividend helpline number - 0870 241 3018 8. Group information Secretary and registered office:Stephen Rhys JonesRotork plcRotork HouseBrassmill LaneBath BA1 3JQ Company website:www.rotork.com This information is provided by RNS The company news service from the London Stock Exchange