TIDMAQ57 TIDM31OL
RNS Number : 0271K
GKN Holdings PLC
12 April 2010
GKN Holdings plc
2009 Annual Report
In compliance with Listing Rule 17.3.1, GKN Holdings plc has today submitted to
the UK Listing Authority two copies of each of the following documents:
Y GKN Holdings plc 2009 Annual Report; and
Y Notice of the GKN Holdings plc 2010 AGM.
Copies of the above documents will be available for inspection at the UK Listing
Authority's Document Viewing Facility which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
This announcement is made in connection with GKN Holdings plc's 6.75% Bonds due
2019 and 7% Bonds due 2012. The shares of GKN Holdings plc are not listed; the
Company is a wholly owned subsidiary of GKN plc, the ultimate holding company of
the GKN Group. In compliance with DTR 6.3.5, a description of the Company's
principal risks and uncertainties, details of related party transactions and a
responsibility statement are set out below. A condensed set of financial
statements are also appended. The 2009 full year results announcement issued by
GKN plc on 25 February 2010 included an indication of important events that
occurred during the year for the Group. The GKN Holdings plc 2009 Annual Report
is available on GKN plc's website at www.gkn.com.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's risk management process includes an assessment of the likelihood
and potential impact of a range of events to determine the overall risk level
and to identify actions necessary to mitigate their impact. As a finance,
investment and holding company within the Group, aside from holding the Group's
external term loans, its dealings are almost exclusively with intra Group
transactions. No significant risks and uncertainties have been identified other
than those stated below. In addition, market and customer related risk and
manufacturing and operational risk which could have a material impact on the
future performance of the Company's subsidiaries and cause the financial results
of those subsidiaries to differ materially from expected and historical
performance are given in the annual report of GKN plc for 2009. Additional risks
not currently known or which are regarded as immaterial could also affect future
performance.
Financial risk management
The Company's activities form an integral part of the Group's strategy with
regard to financial instruments. The Group's objectives, policies and
strategies with regard to financial instruments are disclosed in the annual
report and accounts of GKN plc. However, a summary of the key matters
applicable to the Company are summarised below.
The Group coordinates all treasury activities through a central function whose
purpose is to manage the financial risks of the Group as described below and to
secure short and long term funding at the minimum cost to the Group. The
central treasury function operates within a framework of clearly defined GKN plc
Board approved policies and procedures and is not permitted to make use of
financial instruments or other derivatives other than to hedge identified
exposures. Speculative use of such instruments or derivatives is not permitted,
and none has occurred during the year.
The Group is exposed to a variety of market risks, including the effects of
changes in foreign currency exchange rates and interest rates. In the normal
course of business, the Group also faces risks that are either non-financial or
non-quantifiable, including country and credit risk. As an investment and
holding company within the Group, the Company seeks to manage each of these
risks as follows:
Currency risk
The Group has transactional currency exposures arising from sales or purchases
by operating subsidiaries in currencies other than the subsidiaries' functional
currency, the most significant being the US dollar and the euro. Under the
Group's foreign exchange policy, transaction exposures are hedged, once they are
known, mainly through the use of forward foreign exchange contracts.
Credit risk
The Group is exposed to credit-related losses in the event of non-performance by
counterparties to financial instruments, which include trade debtors. Credit
risk relating to financial institutions is mitigated by the Group's policy of
only selecting counterparties with a strong investment graded long term credit
rating, normally at least A- or equivalent, and assigning financial limits to
individual counterparties.
Interest rate and liquidity risk
The Company funds its operations through a mixture of retained earnings and
borrowing facilities and has sought to minimise its exposure to an upward change
in interest rates by using fixed rate debt instruments.
The borrowing facilities in the main relate to capital market borrowings which
consist of GBP350 million 6.75% bonds maturing in 2019 and GBP201 million 7.0%
bonds maturing in 2012.
Pension risk
GKN Holdings plc is the principal employer for the UK defined benefit pension
scheme which was in deficit by GBP499 million as at 31 December 2009.
Deterioration in asset values, changes to real long term interest rates or the
strengthening of longevity assumptions could lead to a further increase in the
deficit or give rise to additional funding requirements. The Group's pension
deficit is recorded in the consolidated financial statements of GKN plc and no
deficit is recorded in these accounts.
RELATED PARTY TRANSACTIONS
The Company is wholly owned by GKN plc, the Company's immediate and ultimate
parent company. GKN plc is not managed independently of the GKN Holding plc
Group and therefore funds its activities through interest bearing and
non-interest bearing current accounts with GKN (United Kingdom) plc, a
subsidiary undertaking of the Company. Where charged, interest is calculated at
LIBOR plus 1%. During the year, GKN plc charged the Group interest amounting to
nil (2008: GBP1 million).
In the ordinary course of business, sales and purchases of goods take place
between subsidiaries and joint venture companies priced on an 'arm's length'
basis. Sales by subsidiaries to joint ventures in 2009 totalled GBP62 million
(2008: GBP74 million). The amount due at the year end in respect of such sales
was GBP14 million (2008: GBP11 million). Purchases by subsidiaries from joint
ventures in 2009 totalled GBP4 million (2008: GBP11 million). The amount due at
the year end in respect of such purchases was nil (2008: GBP3 million).
At 31 December 2009 a Group subsidiary had GBP1 million receivable (2008: nil)
from a joint venture in respect of a loan facility bearing interest at six month
LIBOR plus 1%.
During the year, trademark fees amounting to GBP0.9 million (2008: GBP0.9
million) were charged to GKN Driveline (India) Ltd, a subsidiary in which the
Company ultimately owns 97% of the share capital.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors as at the date of the annual report (whose names and functions are
set out below) confirm that to the best of their knowledge:
Y the Group financial statements, prepared in accordance with IFRSs as adopted
by the EU, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
Y the Directors' Report includes a fair review of the development and
performance of the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
Sir Kevin Smith (Chairman)
Ms J M Felton (Director)
Mr W C Seeger, Jr (Director)
Mr N M Stein (Director)
GKN Holdings plc consolidated financial statements
These financial statements do not form the statutory accounts of the Group. The
statutory accounts for the year ended 31 December 2009 have been filed with the
Registrar of Companies and contained an unqualified audit report.
+----------+----------------------------------------------+-------+--------+--------+
| Consolidated Income Statement |
+-----------------------------------------------------------------------------------+
| For the year ended 31 December 2009 |
+-----------------------------------------------------------------------------------+
| |Notes | 2009 | 2008 |
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| | | GBPm | GBPm |
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Sales | 1 | 4,223 | 4,376 |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| | Trading profit | 1 | 129 | 202 |
+----------+----------------------------------------------+-------+--------+--------+
| | Restructuring and impairment charges | 2 | (144) | (153) |
+----------+----------------------------------------------+-------+--------+--------+
| | Amortisation of non-operating intangible | 3 | (24) | (10) |
| | assets arising on business combinations | | | |
+----------+----------------------------------------------+-------+--------+--------+
| | Profits and losses on sale or closures of | 4 | 2 | - |
| | businesses | | | |
+----------+----------------------------------------------+-------+--------+--------+
| | Change in value of derivative and other | 5 | 76 | (124) |
| | financial instruments | | | |
+----------+----------------------------------------------+-------+--------+--------+
| Operating profit/(loss) | | 39 | (85) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Share of post-tax earnings of joint ventures | | 21 | 6 |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| | Interest payable | | (67) | (67) |
+----------+----------------------------------------------+-------+--------+--------+
| | Interest receivable | | 3 | 19 |
+----------+----------------------------------------------+-------+--------+--------+
| | Other net financing charges | | (50) | (3) |
+----------+----------------------------------------------+-------+--------+--------+
| Net financing costs | 6 | (114) | (51) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Profit/(loss) before taxation | | (54) | (130) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Taxation | 7 | 5 | (41) |
+---------------------------------------------------------+-------+--------+--------+
| Profit/(loss) from continuing operations | | (49) | (171) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Profit after taxation from discontinued operations | | 5 | 13 |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Profit/(loss) after taxation for the year | | (44) | (158) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+---------------------------------------------------------+-------+--------+--------+
| Profit attributable to non-controlling interests | | 2 | 2 |
+---------------------------------------------------------+-------+--------+--------+
| Profit/(loss) attributable to equity shareholders | | (46) | (160) |
+---------------------------------------------------------+-------+--------+--------+
| | | (44) | (158) |
+---------------------------------------------------------+-------+--------+--------+
| | | | |
+----------+----------------------------------------------+-------+--------+--------+
+----------+----------+----------+----------------+-------+---------+---------+----------+----------+-----------+----------+----------+---------+---+---------+
| Consolidated Statement of Comprehensive Income |
+-------------------------------------------------------------------------------------------------------------------------------------------------------------+
| For the year ended 31 December 2009 |
+-------------------------------------------------------------------------------------------------------------------------------------------------------------+
| | Notes | 2009 | 2008 |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | GBPm | GBPm |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Profit/(loss) after taxation for the year | | (44) | (158) |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Other comprehensive income | | | |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Currency variations | | | |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Subsidiaries | | | |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Arising in year | | (154) | 529 |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Reclassified in year | | 8 | - |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Joint ventures | | | |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Arising in year | | (12) | 36 |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Reclassified in year | | (2) | - |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| Derivative financial instruments | | | |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Transactional hedging | | | |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Arising in year | | 2 | (7) |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | Reclassified in year | | 5 | (1) |
+---------------------+----------+------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Translational hedging arising in year | | - | (213) |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Actuarial gains and losses on post-employment obligations | | | |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Subsidiaries | 12 | (190) | (386) |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Joint ventures | | - | - |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Tax on items taken directly to equity | 7 | 17 | (23) |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | (326) | (65) |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Total comprehensive income/(expense) for the year | | (370) | (130) |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| Total comprehensive income/(expense) for the year attributable to: | | | |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Equity shareholders | | (372) | (136) |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | Non-controlling interests | | 2 | 6 |
+---------------------+-----------------------------------------------------------------------------------------+----------+--------------------+-------------+
| | | (370) | (130) |
+---------------------------------------------------------------------------------------------------------------+----------+--------------------+-------------+
| |
| Consolidated Statement of Changes in Equity |
+-------------------------------------------------------------------------------------------------------------------------------------------------------------+
| For the year ended 31 December 2009 |
+-------------------------------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | Other reserves | |
+-------------------------------------------------+-------+---------+---------+----------+---------------------------------+----------------------------------+
| |Notes | Share | Share | Retained | Currency | Hedging | Other | Share- | Non- | Total |
| | | | | | | reserve | | | controlling | equity |
| | | capital | premium | earnings | reserve | GBPm | reserves | holders' | | GBPm |
| | | | | | GBPm | | | | interests | |
| | | GBPm | account | GBPm | | | GBPm | equity | GBPm | |
| | | | | | | | | GBPm | | |
| | | | GBPm | | | | | | | |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| At 1 January 2009 | | 362 | 301 | 2,619 | 499 | (204) | (81) | 3,496 | 23 | 3,519 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Total comprehensive income/(expense) | | | | | | | | | | |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| | for the year | | - | - | (223) | (156) | 7 | - | (372) | 2 | (370) |
+----------+--------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Share-based payments | | - | - | 2 | - | - | - | 2 | - | 2 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Transfers | | - | - | 14 | - | - | (14) | - | - | - |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Dividends paid to non-controlling interests | | - | - | - | - | - | - | - | (1) | (1) |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| At 31 December 2009 | | 362 | 301 | 2,412 | 343 | (197) | (95) | 3,126 | 24 | 3,150 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| At 1 January 2008 | | 362 | 301 | 3,218 | (34) | 17 | (41) | 3,823 | 19 | 3,842 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Total comprehensive income/(expense) | | | | | | | | | | |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| | for the year | | - | - | (543) | 535 | (221) | - | (229) | 6 | (223) |
+----------+--------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Share-based payments | | - | - | 2 | - | - | - | 2 | - | 2 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Investment by non-controlling interests | | - | - | - | - | - | - | - | 1 | 1 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Transfers | | - | - | 42 | (2) | - | (40) | - | - | - |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Dividends paid to parent undertaking | 8 | - | - | (100) | - | - | - | (100) | - | (100) |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| Dividends paid to non-controlling interests | | - | - | - | - | - | - | - | (3) | (3) |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| At 31 December 2008 | | 362 | 301 | 2,619 | 499 | (204) | (81) | 3,496 | 23 | 3,519 |
+-------------------------------------------------+-------+---------+---------+----------+----------+-----------+----------+----------+-------------+---------+
| |
| Other reserves include accumulated reserves where distribution has been restricted due to legal or fiscal requirements |
| and accumulated adjustments in respect of piecemeal acquisitions. |
+-------------------------------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | |
+----------+----------+----------+----------------+-------+---------+---------+----------+----------+-----------+----------+----------+---------+---+---------+
+---------------------------------------------+-------+---------+----------+
| Consolidated Balance Sheet |
+--------------------------------------------------------------------------+
| At 31 December 2009 |
+--------------------------------------------------------------------------+
| | | | Restated |
| | | | * |
+---------------------------------------------+-------+---------+----------+
| |Notes | 2009 | 2008 |
+---------------------------------------------+-------+---------+----------+
| | | GBPm | GBPm |
+---------------------------------------------+-------+---------+----------+
| Assets | | | |
+---------------------------------------------+-------+---------+----------+
| Non-current assets | | | |
+---------------------------------------------+-------+---------+----------+
| Goodwill | | 338 | 367 |
+---------------------------------------------+-------+---------+----------+
| Other intangible assets | | 187 | 153 |
+---------------------------------------------+-------+---------+----------+
| Property, plant and equipment | | 1,636 | 1,797 |
+---------------------------------------------+-------+---------+----------+
| Investments in joint ventures | | 112 | 119 |
+---------------------------------------------+-------+---------+----------+
| Other receivables and investments | | 24 | 23 |
+---------------------------------------------+-------+---------+----------+
| Derivative financial instruments | | 16 | 42 |
+---------------------------------------------+-------+---------+----------+
| Deferred tax assets | 7 | 71 | 52 |
+---------------------------------------------+-------+---------+----------+
| | | 2,384 | 2,553 |
+---------------------------------------------+-------+---------+----------+
| Current assets | | | |
+---------------------------------------------+-------+---------+----------+
| Inventories | | 563 | 718 |
+---------------------------------------------+-------+---------+----------+
| Trade and other non-group receivables | | 644 | 645 |
+---------------------------------------------+-------+---------+----------+
| Amount receivable from parent undertaking | | 2,188 | 2,640 |
+---------------------------------------------+-------+---------+----------+
| Current tax assets | 7 | 13 | 17 |
+---------------------------------------------+-------+---------+----------+
| Derivative financial instruments | | 6 | 20 |
+---------------------------------------------+-------+---------+----------+
| Other financial assets | 9 | 20 | - |
+---------------------------------------------+-------+---------+----------+
| Cash and cash equivalents | 9 | 316 | 114 |
+---------------------------------------------+-------+---------+----------+
| | | 3,750 | 4,154 |
+---------------------------------------------+-------+---------+----------+
| Total assets | | 6,134 | 6,707 |
+---------------------------------------------+-------+---------+----------+
| | | | |
+---------------------------------------------+-------+---------+----------+
| Liabilities | | | |
+---------------------------------------------+-------+---------+----------+
| Current liabilities | | | |
+---------------------------------------------+-------+---------+----------+
| Borrowings | 9 | (72) | (97) |
+---------------------------------------------+-------+---------+----------+
| Derivative financial instruments | | (14) | (56) |
+---------------------------------------------+-------+---------+----------+
| Trade and other non-group payables | | (873) | (972) |
+---------------------------------------------+-------+---------+----------+
| Amount payable to parent undertaking | | (10) | (49) |
+---------------------------------------------+-------+---------+----------+
| Current tax liabilities | 7 | (79) | (115) |
+---------------------------------------------+-------+---------+----------+
| Provisions | | (84) | (49) |
+---------------------------------------------+-------+---------+----------+
| | | (1,132) | (1,338) |
+---------------------------------------------+-------+---------+----------+
| Non-current liabilities | | | |
+---------------------------------------------+-------+---------+----------+
| Borrowings | 9 | (564) | (725) |
+---------------------------------------------+-------+---------+----------+
| Derivative financial instruments | | (51) | (136) |
+---------------------------------------------+-------+---------+----------+
| Deferred tax liabilities | 7 | (57) | (63) |
+---------------------------------------------+-------+---------+----------+
| Trade and other non-group payables | | (97) | (38) |
+---------------------------------------------+-------+---------+----------+
| Provisions | | (87) | (54) |
+---------------------------------------------+-------+---------+----------+
| Post-employment obligations | 12 | (996) | (834) |
+---------------------------------------------+-------+---------+----------+
| | | (1,852) | (1,850) |
+---------------------------------------------+-------+---------+----------+
| Total liabilities | | (2,984) | (3,188) |
+---------------------------------------------+-------+---------+----------+
| | | | |
+---------------------------------------------+-------+---------+----------+
| Net assets | | 3,150 | 3,519 |
+---------------------------------------------+-------+---------+----------+
| | | | |
+---------------------------------------------+-------+---------+----------+
| Shareholders' equity | | | |
+---------------------------------------------+-------+---------+----------+
| Share capital | | 362 | 362 |
+---------------------------------------------+-------+---------+----------+
| Share premium account | | 301 | 301 |
+---------------------------------------------+-------+---------+----------+
| Retained earnings | | 2,412 | 2,619 |
+---------------------------------------------+-------+---------+----------+
| Other reserves | | 51 | 214 |
+---------------------------------------------+-------+---------+----------+
| | | 3,126 | 3,496 |
+---------------------------------------------+-------+---------+----------+
| Non-controlling interests | | 24 | 23 |
+---------------------------------------------+-------+---------+----------+
| Total equity | | 3,150 | 3,519 |
+---------------------------------------------+-------+---------+----------+
* The 2008 Consolidated Balance Sheet has been restated following the adoption
of the amendment to IAS 1 'Presentation of Financial Statements' covering the
current/non-current classification of derivative financial instruments.
+---------------------------------------------+-------+-------+-------+
| Consolidated Cash Flow Statement |
+---------------------------------------------------------------------+
| For the year ended 31 December 2009 |
+---------------------------------------------------------------------+
| |Notes | 2009 | 2008 |
+---------------------------------------------+-------+-------+-------+
| | | GBPm | GBPm |
+---------------------------------------------+-------+-------+-------+
| Cash flows from operating activities | | | |
+---------------------------------------------+-------+-------+-------+
| Cash generated from operations | 11 | 298 | 384 |
+---------------------------------------------+-------+-------+-------+
| Interest received | | 7 | 18 |
+---------------------------------------------+-------+-------+-------+
| Interest paid | | (68) | (67) |
+---------------------------------------------+-------+-------+-------+
| Tax paid | | (25) | (96) |
+---------------------------------------------+-------+-------+-------+
| Dividends received from joint ventures | | 15 | 24 |
+---------------------------------------------+-------+-------+-------+
| | | 227 | 263 |
+---------------------------------------------+-------+-------+-------+
| Cash flows from investing activities | | | |
+---------------------------------------------+-------+-------+-------+
| Purchase of property, plant and equipment | | (140) | (192) |
+---------------------------------------------+-------+-------+-------+
| Purchase of intangible assets | | (14) | (13) |
+---------------------------------------------+-------+-------+-------+
| Receipt of government refundable advances | | 28 | - |
+---------------------------------------------+-------+-------+-------+
| Receipt of government capital grants | | 1 | 1 |
+---------------------------------------------+-------+-------+-------+
| Proceeds from sale and realisation of fixed | | 35 | 7 |
| assets | | | |
+---------------------------------------------+-------+-------+-------+
| Acquisition of subsidiaries (net of cash | 10 | (99) | (1) |
| acquired) | | | |
+---------------------------------------------+-------+-------+-------+
| Proceeds from sale of joint ventures - | | 1 | 18 |
| continuing/discontinued | | | |
+---------------------------------------------+-------+-------+-------+
| Investment in joint ventures | | (2) | (1) |
+---------------------------------------------+-------+-------+-------+
| Investment loans and capital contributions | | (11) | 1 |
+---------------------------------------------+-------+-------+-------+
| | | (201) | (180) |
+---------------------------------------------+-------+-------+-------+
| Cash flows from financing activities | | | |
+---------------------------------------------+-------+-------+-------+
| Net proceeds from borrowing facilities | | 148 | 112 |
+---------------------------------------------+-------+-------+-------+
| Changes in current account with GKN plc - | | 403 | - |
| net proceeds of GKN plc rights issue | | | |
+---------------------------------------------+-------+-------+-------+
| Bond buy-back including buy-back premium | | (131) | - |
+---------------------------------------------+-------+-------+-------+
| Repayment of other borrowings | | (241) | (33) |
+---------------------------------------------+-------+-------+-------+
| Finance lease payments | | (1) | (9) |
+---------------------------------------------+-------+-------+-------+
| Settlement of forward foreign currency | | - | (230) |
| contracts for net investment hedging | | | |
+---------------------------------------------+-------+-------+-------+
| Dividends paid to parent undertaking | 8 | - | (100) |
+---------------------------------------------+-------+-------+-------+
| Dividends paid to non-controlling interests | | (1) | (3) |
+---------------------------------------------+-------+-------+-------+
| | | 177 | (263) |
+---------------------------------------------+-------+-------+-------+
| | | | |
+---------------------------------------------+-------+-------+-------+
| Currency variations on cash and cash | | (9) | 24 |
| equivalents | | | |
+---------------------------------------------+-------+-------+-------+
| Movement in cash and cash equivalents | | 194 | (156) |
+---------------------------------------------+-------+-------+-------+
| Cash and cash equivalents at 1 January | | 94 | 250 |
+---------------------------------------------+-------+-------+-------+
| Cash and cash equivalents at 31 December | | 288 | 94 |
+---------------------------------------------+-------+-------+-------+
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Notes to the Announcement |
+--+------------------------------------------------------------------------------------------------------+
| | For the year ended 31 December 2009 |
| | |
+--+------------------------------------------------------------------------------------------------------+
| 1| Segmental analysis |
+--+------------------------------------------------------------------------------------------------------+
| | The Group's reportable segments have been determined based on reports |
| | reviewed by the GKN plc Executive Committee led by the Chief Executive |
| | of GKN plc, the Chairman of the Company. The operating activities of |
| | the Group are structured according to the markets served: automotive, |
| | aerospace and off-highway. Automotive is managed according to product |
| | groups: driveline, structural and other components and powder |
| | metallurgy. Reportable segments derive their sales from the |
| | manufacture of products. Revenue from services, inter segment trading |
| | and royalties is not significant. |
+--+------------------------------------------------------------------------------------------------------+
| (a)| Sales |
+--+------------------------------------------------------------------------------------------------------+
| | | Automotive | | | | |
+--+------------------------------+------------------------+------------+-----------+------------+--------+
| | | | Other | Powder | | | |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | | Driveline | Automotive | Metallurgy | Aerospace | OffHighway | Total |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | 2009 | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Subsidiaries | 1,817 | 52 | 512 | 1,486 | 356 | 4,223 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Joint ventures | 175 | 65 | - | - | 5 | 245 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management sales | 1,992 | 117 | 512 | 1,486 | 361 | 4,468 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | 2008 | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Subsidiaries | 2,123 | 84 | 618 | 1,002 | 549 | 4,376 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Joint ventures | 145 | 92 | - | - | 4 | 241 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management sales | 2,268 | 176 | 618 | 1,002 | 553 | 4,617 |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | |
+--+------------------------------------------------------------------------------------------------------+
| (b)| Trading profit |
+--+------------------------------------------------------------------------------------------------------+
| | | Automotive | | | | |
+--+------------------------------+------------------------+------------+-----------+------------+--------+
| | | | Other | Powder | | | |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | | Driveline | Automotive | Metallurgy | Aerospace | OffHighway | Total |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | 2009 | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | EBITDA | 102 | 1 | 24 | 217 | 3 | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Depreciation and impairment | (108) | (2) | (30) | (41) | (14) | |
| | of property, plant and | | | | | | |
| | equipment | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Amortisation of operating | (3) | - | (1) | (6) | (1) | |
| | intangible assets | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Trading profit/(loss) - | (9) | (1) | (7) | 170 | (12) | 141 |
| | subsidiaries | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Trading profit/(loss) - | 25 | (1) | - | (1) | - | 23 |
| | joint ventures | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management trading | 16 | (2) | (7) | 169 | (12) | 164 |
| | profit/(loss) | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Corporate costs | | | | | | (12) |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management trading profit including | | | | | 152 |
| | corporate costs | | | | | |
+--+------------------------------------------+------------+------------+-----------+------------+--------+
| | Less: joint venture trading | | | | | | (23) |
| | profit | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Income statement - Trading | | | | | | 129 |
| | profit | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | 2008 |
+--+------------------------------------------------------------------------------------------------------+
| | EBITDA | 168 | - | 31 | 136 | 53 | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Depreciation and impairment | (92) | (4) | (32) | (25) | (12) | |
| | of property, plant and | | | | | | |
| | equipment | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Amortisation of operating | (3) | - | (1) | (5) | (1) | |
| | intangible assets | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Trading profit/(loss) - | 73 | (4) | (2) | 106 | 40 | 213 |
| | subsidiaries | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Trading profit/(loss) - | 15 | 6 | - | (1) | - | 20 |
| | joint ventures | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management trading | 88 | 2 | (2) | 105 | 40 | 233 |
| | profit/(loss) | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Corporate costs | | | | | | (11) |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Management trading profit including | | | | | 222 |
| | corporate costs | | | | | |
+--+------------------------------------------+------------+------------+-----------+------------+--------+
| | Less: joint venture trading | | | | | | (20) |
| | profit | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | Income statement - Trading | | | | | | 202 |
| | profit | | | | | | |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
| | |
| | No income statement items between trading profit and profit before tax |
| | are allocated to management trading profit, which is the Group's |
| | segmental measure of profit or loss. |
| | |
| | Trading profit in 2009 includes a GBP5 million surplus on realisation |
| | of Aerospace fixed assets. As a result of changed customer contract |
| | requirements trading profit included a GBP3 million credit (2008: |
| | GBP5 million credit) from the release of unutilised provisions |
| | established on acquisition in an Aerospace business. Credits included |
| | within trading profit in respect of changes to US retiree benefit |
| | arrangements, net of expenses, arose as follows: Driveline GBP3 |
| | million (2008: GBP8 million); Powder Metallurgy GBP1 million (2008: |
| | GBP3 million); Aerospace GBP5 million (2008: nil); and Corporate GBP1 |
| | million (2008: nil). In 2008 trading profit included a GBP3 million |
| | charge in respect of abortive acquisition costs in Driveline. |
| | EBITDA is subsidiary trading profit before depreciation, impairment |
| | and amortisation charges included in trading profit. |
| | Restructuring and impairment disclosures, including segmental |
| | analysis, are included in note 3 (b). |
+--+------------------------------+-----------+------------+------------+-----------+------------+--------+
+--+-+----------+------------------------+-----+----------+-+-----+------+-----+------+---------+----+------+----------+-+------+----------+-+--------+
| 1| Segmental analysis (continued) |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| (c)| Goodwill, fixed assets and working capital - subsidiaries only |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| | | Automotive | | | | |
+--+-------------------------------------------+-------------------------------+----------------+----------------------+-------------------+----------+
| | | | Other | Powder | | | |
| | | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | | Driveline | Automotive | Metallurgy | Aerospace | OffHighway | Total |
| | | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | 2009 | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Property, plant and equipment and | | | | | | |
| | operating intangible | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | | fixed assets | 876 | 27 | 313 | 374 | 110 | 1,700 |
+--+-+-----------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Working capital | 82 | 5 | 65 | 80 | 31 | 263 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Net operating assets | 958 | 32 | 378 | 454 | 141 | 1,963 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Goodwill and non-operating intangible | 78 | - | 28 | 294 | 56 | 456 |
| | fixed assets | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Net investment | 1,036 | 32 | 406 | 748 | 197 | 2,419 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | 2008 | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Property, plant and equipment and | | | | | | |
| | operating intangible | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | | fixed assets | 994 | 30 | 366 | 357 | 131 | 1,878 |
+--+------------+------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Working capital | 133 | 4 | 73 | 116 | 46 | 372 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Net operating assets | 1,127 | 34 | 439 | 473 | 177 | 2,250 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Goodwill and non-operating intangible | 79 | - | 32 | 250 | 72 | 433 |
| | fixed assets | | | | | | |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | Net investment | 1,206 | 34 | 471 | 723 | 249 | 2,683 |
+--+-------------------------------------------+------------------+------------+----------------+----------------------+-------------------+----------+
| | |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| (d)| Fixed asset additions, joint venture investments and other non-cash items |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| | | Automotive | | | | | |
+--+-------------------------------------+-------------------------------+------------+--------------+-------------------+-------------------+--------+
| | | | Other | Powder | | | | |
| | | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | | Driveline | Automotive | Metallurgy | Aerospace | OffHighway | Corporate | Total |
| | | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | 2009 | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Fixed asset additions and | | | | | | | |
| | capitalised borrowing costs | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | - | property, plant and | 62 | - | 9 | 45 | 6 | - | 122 |
| | | equipment | | | | | | | |
+--+------------+------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | - | intangible assets | 1 | - | - | 14 | - | - | 15 |
+--+------------+------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Joint ventures | 86 | 24 | - | - | 2 | - | 112 |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Other non-cash items - share based | 1 | - | - | - | - | 1 | 2 |
| | payment | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | 2008 | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Fixed asset additions | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | - | property, plant and | 108 | 1 | 33 | 31 | 18 | 1 | 192 |
| | | equipment | | | | | | | |
+--+------------+------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | - | intangible assets | 3 | - | - | 9 | 1 | - | 13 |
+--+------------+------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Joint ventures | 90 | 27 | - | - | 2 | - | 119 |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | Other non-cash items - share based | 1 | - | - | - | - | 1 | 2 |
| | payment | | | | | | | |
+--+-------------------------------------+------------------+------------+------------+--------------+-------------------+-------------------+--------+
| | |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| (e)| Country analysis |
+--+--------------------------------------------------------------------------------------------------------------------------------------------------+
| | | United | | | Other | Total | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | Kingdom | USA | Germany | countries | Non-UK | Total |
| | | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | 2009 | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | Management sales by origin | 794 | 1,327 | 729 | 1,618 | 3,674 | 4,468 |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | Goodwill, other intangible assets, property, plant | | | | | | |
| | and | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | equipment and investments in joint | 318 | 677 | 330 | 948 | 1,955 | 2,273 |
| | | ventures | | | | | | |
+--+------------+-----------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | 2008 | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | Management sales by origin | 546 | 1,338 | 880 | 1,853 | 4,071 | 4,617 |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | Goodwill, other intangible assets, property, plant | | | | | | |
| | and | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | equipment and investments in joint | 185 | 799 | 394 | 1,058 | 2,251 | 2,436 |
| | | ventures | | | | | | |
+--+------------+-----------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | | | | | | |
+--+------------------------------------------------------+--------------+------------+---------+-----------+-------------------+---------------------+
| | | | | | | | | | | | | | | | | | | | |
+--+-+----------+------------------------+-----+----------+-+-----+------+-----+------+---------+----+------+----------+-+------+----------+-+--------+
+--+----------+----------------+----+--------+----------+-+------+----------+-+----+--+--+------+---+------+-----+------+---+-+-------+
| 2| Restructuring and impairment charges |
+--+----------------------------------------------------------------------------------------------------------------------------------+
| | | | |
+--+--------------------------------+----------------------------------------------------+--------------------------------------------+
| | | 2009 | 2008 |
+--+--------------------------------+----------------------------------------------------+--------------------------------------------+
| | | Subsidiaries | Joint | Total | Subsidiaries | Joint | Total |
| | | | ventures | | | ventures | |
| | | | | | | | |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | Restructuring programmes | | | | | | |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | 2008 programme | (144) | 3 | (141) | (149) | (10) | (159) |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | 2004 programme | - | - | - | (4) | - | (4) |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | | (144) | 3 | (141) | (153) | (10) | (163) |
+--+--------------------------------+-------------------+-------------------+------------+-----------------+------------+-------------+
| | The Group's 2004 restructuring programme concluded in the first half of 2008. The 2004 programme charges |
| | in 2008 related to Driveline. In response to the severe economic downturn in our automotive markets and in |
| | anticipation of activity reductions in both off-highway and aerospace markets, the Group commenced further |
| | restructuring in the final quarter of 2008. |
| | |
| | The 2008 programme restructuring actions comprise facility and operation closures, permanent headcount |
| | reductions achieved through redundancy programmes and the structured use of short-time working |
| | arrangements, available through national or state legislation, by European, Japanese and North American |
| | subsidiaries. Where short-time working is utilised as the restructuring response to the severe economic |
| | and activity downturn it is the most cost-effective option available at that time. Employees subject to |
| | short-time working arrangements are not engaged in any activity (productive or non-productive) for or on |
| | behalf of the Group. Short-time working charges represent the labour and associated costs borne by the |
| | Group in respect of these employees for the period of short-time work. |
| | |
+--+----------------------------------------------------------------------------------------------------------------------------------+
| | 2008 Restructuring programme |
+--+----------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | | GBPm | GBPm |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Goodwill impairment | (7) | - |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Tangible fixed asset impairments/reversals | (2) | (125) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Other asset write-downs | (3) | (4) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Impairments | (12) | (129) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Short-time working costs | (24) | (2) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Redundancy and post-employment costs | (86) | (14) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Other reorganisation costs | (22) | (4) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Redundancy and other costs | (132) | (20) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Subsidiaries | (144) | (149) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Impairment reversal/impairment of joint ventures | 3 | (10) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | Subsidiaries and joint ventures | (141) | (159) |
+--+-------------------------------------------------------------------------------------------------------------+----------+---------+
| | | | | | | |
+--+-------------------------------------------------------------+-----------------+------------+----------------+----------+---------+
| | 2008 Restructuring programme - analysis by segment |
+--+----------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-------------+----------------+------------------------------------------------------+-----------------------------------------------+
| | | Impairments | Short-time | Redundancy | Total | Impairments | Short-time | Redundancy | Total |
| | | | | and other costs | | | | | |
| | | | working | | | | working | and other | |
| | | | | | | | | costs | |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Driveline | 1 | (19) | (63) | (81) | (25) | (1) | (7) | (33) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Other | - | - | (4) | (4) | (11) | - | (2) | (13) |
| | Automotive | | | | | | | | |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Powder | - | (4) | (16) | (20) | (100) | (1) | (5) | (106) |
| | Metallurgy | | | | | | | | |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Aerospace | (1) | - | (9) | (10) | (3) | - | - | (3) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | OffHighway | (9) | (1) | (16) | (26) | - | - | (3) | (3) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Corporate | - | - | - | - | - | - | (1) | (1) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | | (9) | (24) | (108) | (141) | (139) | (2) | (18) | (159) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Subsidiaries | (12) | (24) | (108) | (144) | (129) | (2) | (18) | (149) |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | Joint ventures | 3 | - | - | 3 | (10) | - | - | (10) |
| | | | | | | | | | |
+-------------+----------------+-------------+------------+-------------------+-------+-------------+------------+------------+-------+
| | |
| | In Driveline, the closures of two facilities were announced in 2009 as part of the UK |
| | rationalisation programme with associated redundancy, pension and reorganisation charges of GBP6 |
| | million being made. Fixed asset impairments relating to this programme were charged in 2008 |
| | with subsequent utilisation of some of these assets resulting in partial reversal in 2009. In |
| | Japan, one facility closure was announced in 2009 as part of a facility rationalisation review, |
| | with activity transferred to another Japanese operation. Impairments and reorganisation costs |
| | of GBP5 million were charged. Elsewhere, headcount reductions have been progressing mainly in |
| | Germany, Spain, France and Australia. Short-time working costs relate mainly to European and |
| | Japanese operations. Closure of one joint venture facility was concluded in the year with |
| | another joint venture sold. The Group's investments in these joint ventures were written off in |
| | 2008. The sale of the latter joint venture enabled a partial reversal of the prior year |
| | impairment charge to its net realisable value. |
| | |
| | In Other Automotive, actions continue relating to the ongoing rationalisation of a UK facility |
| | with charges incurred relating to redundancy and pension costs. |
| | |
| | In Powder Metallurgy, the closures of two facilities were announced in the year which, combined |
| | with the completion of the closure previously announced in 2008, resulted in a GBP6 million |
| | redundancy and reorganisation charge. Redundancy costs of GBP8 million were also charged in |
| | relation to ongoing fixed cost reduction programmes across North American and European |
| | operations. Short-time working costs relate mainly to European operations. |
| | |
| | In OffHighway, actions have been initiated in the period to concentrate/exit production for |
| | certain product categories in certain regions and concentrate activities on one area of |
| | operation. As a consequence the closures of five facilities and rationalisation of a sixth have |
| | been commenced with an associated cost of GBP5 million and impairments of GBP9 million. |
| | Redundancy charges of GBP11 million were also made in respect of capacity and fixed cost |
| | reductions. |
| | |
| | In Aerospace, the closures of two facilities were announced, one in the UK and one in North |
| | America, with a GBP2 million charge made in respect of redundancies, product transfer costs and |
| | asset impairments. A further GBP8 million redundancy charge was made for rationalisation |
| | actions at other facilities. |
| | |
| | Restructuring cash outflow in respect of 2008, 2004 and earlier periods' restructuring plans |
| | amounts to GBP99 million (2008: GBP28 million). |
+-------------+-----------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | | | | | | | |
+--+----------+----------------+----+--------+----------+-+------+----------+-+----+--+--+------+---+------+-----+------+---+-+-------+
+---+-+-----------------------------------------+------+--------+--------+----------+
| 3 | Amortisation of non-operating intangible assets arising on | |
| | business combinations | |
+---+--------------------------------------------------------------------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| | | 2009 | 2008 | |
+---+--------------------------------------------------+--------+--------+----------+
| | | GBPm | GBPm | |
+---+--------------------------------------------------+--------+--------+----------+
| | Marketing related | (1) | - | |
+---+--------------------------------------------------+--------+--------+----------+
| | Customer related | (20) | (7) | |
+---+--------------------------------------------------+--------+--------+----------+
| | Technology based | (3) | (3) | |
+---+--------------------------------------------------+--------+--------+----------+
| | | (24) | (10) | |
+---+--------------------------------------------------+--------+--------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| 4 | Profits and losses on sale or closures of businesses | |
+---+--------------------------------------------------------------------+----------+
| | | 2009 | 2008 | |
+---+--------------------------------------------------+--------+--------+----------+
| | | GBPm | GBPm | |
+---+--------------------------------------------------+--------+--------+----------+
| | Profit on sale of joint venture | 2 | - | |
+---+--------------------------------------------------+--------+--------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| | On 10 October 2009 the sale of the Group's 50% share in Jilin GKN | |
| | Norinco Drive Shaft Company Ltd to the Group's joint venture | |
| | partner was completed. The Group's equity interest in Jilin was | |
| | fully provided against in 2008 as a joint venture restructuring | |
| | charge. This provision was partially reversed in 2009 to reflect | |
| | the realisable value. The 2009 impairment reversal is shown as a | |
| | restructuring credit. The profit above represents the recycling | |
| | of cumulative translation adjustments. | |
+---+--------------------------------------------------------------------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| 5 | Change in value of derivative and other financial instruments | |
+---+--------------------------------------------------------------------+----------+
| | | 2009 | 2008 | |
+---+--------------------------------------------------+--------+--------+----------+
| | | GBPm | GBPm | |
+---+--------------------------------------------------+--------+--------+----------+
| | Forward currency contracts (not hedge accounted) | 106 | (175) | |
+---+--------------------------------------------------+--------+--------+----------+
| | Embedded derivatives | (29) | 43 | |
+---+--------------------------------------------------+--------+--------+----------+
| | Commodity contracts (not hedge accounted) | 2 | (1) | |
+---+--------------------------------------------------+--------+--------+----------+
| | | 79 | (133) | |
+---+--------------------------------------------------+--------+--------+----------+
| | Net gains and losses on intra-group funding | | | |
+---+--------------------------------------------------+--------+--------+----------+
| | | Arising in year | 5 | 9 | |
+---+-+------------------------------------------------+--------+--------+----------+
| | | Reclassified in year | (8) | - | |
+---+-+------------------------------------------------+--------+--------+----------+
| | | (3) | 9 | |
+---+--------------------------------------------------+--------+--------+----------+
| | | 76 | (124) | |
+---+--------------------------------------------------+--------+--------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| | IAS 39 requires derivative financial instruments to be valued at | |
| | the balance sheet date and any difference between that value and | |
| | the intrinsic value of the instrument to be reflected in the | |
| | balance sheet as an asset or liability. Any subsequent change in | |
| | value is reflected in the income statement unless hedge accounting | |
| | is achieved. Such movements do not affect cash flow or the | |
| | economic substance of the underlying transaction. In 2009 and | |
| | 2008 the Group used transactional hedge accounting in a limited | |
| | number of instances. | |
+---+--------------------------------------------------------------------+----------+
| | | |
+---+--------------------------------------------------------------------+----------+
| 6 | Net financing costs | |
+---+--------------------------------------------------------------------+----------+
| | | | 2009 | 2008 | |
+---+-------------------------------------------+------+--------+--------+----------+
| | | | GBPm | GBPm | |
+---+-------------------------------------------+------+--------+--------+----------+
| | Interest payable and fee expense | | | | |
+---+-------------------------------------------+------+--------+--------+----------+
| | | Short term bank, other borrowings and | | (13) | (12) | |
| | | government refundable advances | | | | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Loans repayable within five years | | (24) | (29) | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Loans repayable after five years | | (24) | (26) | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Bond buy back premium | | (7) | - | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Borrowing costs capitalised | | 1 | - | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Finance leases | | - | - | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | | (67) | (67) | |
+---+-------------------------------------------+------+--------+--------+----------+
| | Interest receivable | | | | |
+---+-------------------------------------------+------+--------+--------+----------+
| | | Short term investments, loans and | | 3 | 7 | |
| | | deposits | | | | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Net investment hedges | | - | 9 | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | AgustaWestland escrow receipt (note 6) | | - | 3 | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | | 3 | 19 | |
+---+-------------------------------------------+------+--------+--------+----------+
| | Net interest payable and receivable | | (64) | (48) | |
+---+-------------------------------------------+------+--------+--------+----------+
| | Other net financing charges | | | | |
+---+-------------------------------------------+------+--------+--------+----------+
| | | Expected return on scheme assets | | 121 | 163 | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Interest on post-employment obligations | | (170) | (166) | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Post-employment finance charges | | (49) | (3) | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | Unwind of discounts | | (1) | - | |
+---+-+-----------------------------------------+------+--------+--------+----------+
| | | | (50) | (3) | |
+---+-------------------------------------------+------+--------+--------+----------+
| | | | (114) | (51) | |
+---+-------------------------------------------+------+--------+--------+----------+
| | The capitalisation rate on specific funding was 6.4% and on general |
| | borrowings was 6.1%. |
+---+-+-----------------------------------------+------+--------+--------+----------+
+-----+-+-----------------------------------------+------+----+--+-----+-+--------+
| 7 | Taxation | | |
+-----+-------------------------------------------------------+--------+----------+
| (a) | Tax expense | | |
+-----+-------------------------------------------------------+--------+----------+
| | | | |
+-----+-------------------------------------------------------+--------+----------+
| | | 2009 | 2008 |
+-----+-------------------------------------------------------+--------+----------+
| | Analysis of charge in year | GBPm | GBPm |
+-----+-------------------------------------------------------+--------+----------+
| | Current tax (charge)/credit | | |
+-----+-------------------------------------------------------+--------+----------+
| | | Current year charge | (41) | (84) |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Utilisation of previously unrecognised tax losses | 1 | 44 |
| | | and other assets | | |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Adjustments in respect of prior years | 5 | (1) |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Net movement on provisions for uncertain tax | 25 | - |
| | | positions | | |
+-----+-+-----------------------------------------------------+--------+----------+
| | | (10) | (41) |
+-----+-------------------------------------------------------+--------+----------+
| | Deferred tax (charge)/credit | | |
+-----+-------------------------------------------------------+--------+----------+
| | | Origination and reversal of temporary differences | 54 | 69 |
| | | (excluding post-employment obligations) | | |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Tax in respect of post-employment obligations | 1 | 5 |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Current year tax on change in value of derivative | (3) | 2 |
| | | financial instruments | | |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Other changes in unrecognised deferred tax assets | (42) | (80) |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Changes in tax rates | 2 | 2 |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Adjustments in respect of prior years | 3 | 2 |
+-----+-+-----------------------------------------------------+--------+----------+
| | | 15 | - |
+-----+-------------------------------------------------------+--------+----------+
| | Total tax (charge)/credit for the year | 5 | (41) |
+-----+-------------------------------------------------------+--------+----------+
| | | | |
+-----+-------------------------------------------------------+--------+----------+
| | Tax in respect of restructuring, impairments, derivative and other |
| | financial instruments and other net financing charges |
+-----+---------------------------------------------------------------------------+
| | | Current tax credit | - | 6 |
+-----+-+-----------------------------------------------------+--------+----------+
| | | Deferred tax credit | 26 | 5 |
+-----+-+-----------------------------------------------------+--------+----------+
| | | 26 | 11 |
+-----+-------------------------------------------------------+--------+----------+
| | | | |
+-----+-------------------------------------------------------+--------+----------+
| | Current tax on foreign currency gains and losses on intra-group funding |
+-----+---------------------------------------------------------------------------+
| | | Current tax (charge)/credit | (6) | 29 |
+-----+-+-----------------------------------------------------+--------+----------+
| | |
+-----+---------------------------------------------------------------------------+
| | The Group is required to estimate the income tax due in each of the |
| | jurisdictions in which it operates. This requires an estimation of the |
| | current tax liability together with an assessment of the temporary |
| | differences which arise as a consequence of differing accounting and tax |
| | treatments. These temporary differences result in deferred tax assets or |
| | liabilities which are measured using substantively enacted tax rates |
| | expected to apply when the temporary differences reverse. Recognition of |
| | deferred tax assets, and hence credits to the income statement, is based |
| | on forecast future taxable income and therefore involves judgement |
| | regarding the future financial performance of particular legal entities |
| | or tax groups in which the deferred tax assets are recognised. |
| | |
| | The Group is subject to many different tax jurisdictions and tax rules as |
| | a consequence of its geographic spread. It is therefore subject to tax |
| | audits which, by their nature, are often complex and can require several |
| | years to conclude. The total accrual for income tax in any period is, |
| | therefore based on management judgement, interpretation of country |
| | specific tax law and the likelihood of challenge of uncertain tax |
| | positions and subsequent settlement. Tax benefits are not recognised |
| | unless it is probable that the tax positions are sustainable. As amounts |
| | set aside in any period could differ from actual tax liabilities, |
| | adjustments may be required in subsequent periods which may have a |
| | material impact on the Group's income statement and/or cash tax payments. |
| | Payments in respect of tax liabilities for an accounting period comprise |
| | payments on account and payments on the final resolution of open items |
| | with tax authorities and, as a result, there can be substantial |
| | differences between the charge in the income statement and cash tax |
| | payments. Interest on provisions for uncertain tax positions is, where |
| | relevant, provided for in the tax charge. |
| | |
+-----+---------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-----+-------------------------------------------+--------------+----------------+
| | Tax reconciliation | GBPm | % | GBPm | % |
| | | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Profit/(loss) before tax | (54) | | (130) | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Less share of post-tax earnings of joint | (21) | | (6) | |
| | ventures | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Profit/(loss) before tax excluding joint | (75) | | (136) | |
| | ventures | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Tax (charge)/credit calculated at 28% | 21 | 28 | 39 | 29 |
| | (2008: 28.5%) standard UK corporate tax | | | | |
| | rate | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Differences between UK and overseas | 2 | 3 | 10 | 7 |
| | corporate tax rates | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Non-deductible and non-taxable items | (3) | (4) | (11) | (8) |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Utilisation of previously unrecognised | 1 | 1 | 44 | 32 |
| | tax losses and other assets | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Other changes in unrecognised deferred | (42) | (56) | (80) | (59) |
| | tax assets | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Changes in tax rates | 2 | 3 | 2 | 1 |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Tax losses surrendered by parent | (10) | (13) | (51) | (37) |
| | undertaking | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Deferred tax credit/(charge) in respect | 1 | 1 | 5 | 4 |
| | of post-employment obligations | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Current year tax (charge)/credit on | (28) | (37) | (42) | (31) |
| | ordinary activities | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Net movement on provision for uncertain | 25 | 33 | - | - |
| | tax positions | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Other adjustments in respect of prior | 8 | 11 | 1 | 1 |
| | years | | | | |
+-----+-------------------------------------------+------+-------+-------+--------+
| | Total tax (charge)/credit for the year | 5 | 7 | (41) | (30) |
+-----+-------------------------------------------+------+-------+-------+--------+
| | | | | | | |
+-----+-+-----------------------------------------+------+-------+-------+--------+
| | | | | | | | | |
+-----+-+-----------------------------------------+------+----+--+-----+-+--------+
+-----+-----------------------+----------+----------+--------+----------+-------+----------+----------+------+-+--+------+-+---------+
| 7 | Taxation (continued) |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| (b) | Tax in equity |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Tax on items included in equity credit/(charge) | GBPm | GBPm |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Deferred tax on post-employment obligations | 14 | - |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Deferred tax on non-qualifying assets | (1) | 3 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Deferred tax on foreign currency gains and losses on intra-group funding | (2) | 3 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Current tax on foreign currency gains and losses on intra-group funding | 6 | (29) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | 17 | (23) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | | |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| (c) | Current tax | | |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | 2009 | 2008 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | GBPm | GBPm |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Assets | 13 | 17 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Liabilities | (79) | (115) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | (66) | (98) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| (d) | Recognised deferred tax |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | Deferred tax is calculated in full on temporary differences under the liability method. |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | GBPm | GBPm |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Deferred tax assets | 71 | 52 |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | Deferred tax liabilities | (57) | (63) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | | 14 | (11) |
+-----+------------------------------------------------------------------------------------------------------+-----------+-----------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction |
| | as permitted by IAS 12) during the period are shown below: |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | | | | | |
+-----+-----------------------+-------------------------------------------------+----------+-------------------------------+---------+
| | | Assets | | Liabilities | Total |
+-----+-----------------------+-------------------------------------------------+----------+-------------------------------+---------+
| | | Pensions | Tax losses | Other | | Fixed assets | Other | |
| | | | | | | | | |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | | GBPm | GBPm | GBPm | | GBPm | GBPm | GBPm |
| | | | | | | | | |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | At 1 January 2009 | 44 | 27 | 87 | | (166) | (3) | (11) |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Other movements | 32 | - | (32) | | - | - | - |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Included in the | (9) | 19 | (5) | | 10 | - | 15 |
| | income statement | | | | | | | |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Included in equity | 14 | - | - | | (1) | (2) | 11 |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Subsidiaries acquired | 1 | - | - | | - | - | 1 |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Currency variations | (8) | (1) | (4) | | 12 | (1) | (2) |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | At 31 December 2009 | 74 | 45 | 46 | | (145) | (6) | 14 |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | At 1 January 2008 | 21 | 47 | 69 | | (140) | (16) | (19) |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Included in the | 5 | (29) | (19) | | 34 | 9 | - |
| | income statement | | | | | | | |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Included in equity | - | - | - | | 3 | 3 | 6 |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Other movements | 11 | (11) | - | | - | - | - |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | Currency variations | 7 | 20 | 37 | | (63) | 1 | 2 |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | At 31 December 2008 | 44 | 27 | 87 | | (166) | (3) | (11) |
+-----+-----------------------+----------+------------------------------+-------+----------+----------------------+--------+---------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | Deferred tax assets totalling GBP41 million (2008: GBP14 million) have been recognised relating to territories where tax |
| | losses have been incurred in the year. It is anticipated that future profitability arising from restructuring and other |
| | actions will result in their realisation. |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| (e) | Unrecognised deferred tax assets |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | Deferred tax assets have not been recognised in relation to certain taxable losses and other temporary differences on |
| | the basis that their future economic benefit is uncertain. The gross and tax values of these unrecognised assets |
| | together with any expiry dates where relevant are shown below. The tax value of the assets has been calculated using |
| | tax rates enacted or substantively enacted at the balance sheet date. |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | | | | |
+-----+-----------------------+------------------------------------------------------------+----------+------------------------------+
| | | 2009 | | 2008 |
+-----+-----------------------+------------------------------------------------------------+----------+------------------------------+
| | | Tax value | Gross | Expiry | | Tax | Gross | Expiry |
| | | | | | | value | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | | GBPm | GBPm | period | | GBPm | GBPm | period |
| | | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | Tax losses - with | 293 | 846 | 2010 - 2029 | | 300 | 867 | 2009-2028 |
| | expiry: national | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | Tax losses - with | 41 | 491 | 2010 - 2029 | | 44 | 532 | 2009-2028 |
| | expiry: local | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | Tax losses - without | 98 | 323 | | | 62 | 188 | |
| | expiry | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | Other temporary | 192 | 660 | | | 71 | 215 | |
| | differences | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | Unrecognised deferred | 624 | 2,320 | | | 477 | 1,802 | |
| | tax assets | | | | | | | |
+-----+-----------------------+---------------------+--------+-----------------------------+----------+--------+---------+-----------+
| | |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | No deferred tax is recognised on the unremitted earnings of overseas subsidiaries except where the distribution of such |
| | profits is planned. If the earnings were remitted in full tax of GBP19 million (2008: GBP28 million) would be payable. |
+-----+------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | |
+-----+-----------------------+----------+----------+--------+----------+-------+----------+----------+------+-+--+------+-+---------+
+--+----------------------------------------+-------+-------+-------+-------+
| 8| Dividends |
+--+------------------------------------------------------------------------+
| | | Paid or | Recognised |
| | | proposed in | |
| | | respect of | |
+--+----------------------------------------+---------------+---------------+
| | | 2009 | 2008 | 2009 | 2008 |
| | | pence | pence | GBPm | GBPm |
| | | | | | |
+--+----------------------------------------+-------+-------+-------+-------+
| | 2008 interim dividend paid | - | 13.8 | - | 100 |
+--+----------------------------------------+-------+-------+-------+-------+
| | |
+--+------------------------------------------------------------------------+
| | The Directors have decided not to pay a final dividend in respect |
| | of the financial year ended 31 December 2009. |
+--+----------------------------------------+-------+-------+-------+-------+
+--+-------+------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| 9| Net borrowings |
+--+----------------------------------------------------------------------------------------------+
| | |
+--+----------------------------------------------------------------------------------------------+
| (a)| Analysis of net borrowings |
+--+----------------------------------------------------------------------------------------------+
| | |Notes | Current | | Non-current | Total |
| | | | | | | |
+--+--------------------------------+-------+---------+-+--------------------------------+--------+
| | | | Within | | One to | Two | More | Total | |
| | | | | | two | to | than | | |
| | | | | | | five | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | | | one | | years | years | five | | |
| | | | year | | | | years | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | | | GBPm | | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | 2009 | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | GBP350 million 6¾% 2019 | i | - | | - | - | (347) | (347) | (347) |
| | unsecured bond | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | GBP201 million 7% 2012 | i | - | | - | (201) | - | (201) | (201) |
| | unsecured bond | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other secured US$ | | (2) | | (2) | (5) | - | (7) | (9) |
| | denominated loan | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other long term | | (6) | | (6) | - | - | (6) | (12) |
| | borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Finance lease obligations | iv | (1) | | (1) | (1) | (1) | (3) | (4) |
| | | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Bank overdrafts | | (28) | | - | - | - | - | (28) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other short term bank | | (35) | | - | - | - | - | (35) |
| | borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Borrowings | | (72) | | (9) | (207) | (348) | (564) | (636) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Bank balances and cash | | 132 | | - | - | - | - | 132 |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Short term bank deposits | ii | 184 | | - | - | - | - | 184 |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Cash and cash equivalents | v | 316 | | - | - | - | - | 316 |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other financial assets - | iii | 20 | | - | - | - | - | 20 |
| | bank deposits | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Net borrowings | | 264 | | (9) | (207) | (348) | (564) | (300) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | 2008 | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | GBP350 million 6¾% 2019 | i | - | | - | - | (346) | (346) | (346) |
| | unsecured bond | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | GBP325 million 7% 2012 | i | - | | - | (325) | - | (325) | (325) |
| | unsecured bond | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other secured US$ | | (2) | | (1) | (4) | (5) | (10) | (12) |
| | denominated loan | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other long term | | (7) | | (37) | (3) | - | (40) | (47) |
| | borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Finance lease obligations | iv | (1) | | (1) | (2) | (1) | (4) | (5) |
| | | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Bank overdrafts | | (20) | | - | - | - | - | (20) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other short term bank | | (67) | | - | - | - | - | (67) |
| | borrowings | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Borrowings | | (97) | | (39) | (334) | (352) | (725) | (822) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Bank balances and cash | | 102 | | - | - | - | - | 102 |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Short term bank deposits | ii | 12 | | - | - | - | - | 12 |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Cash and cash equivalents | v | 114 | | - | - | - | - | 114 |
| | | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Net borrowings | | 17 | | (39) | (334) | (352) | (725) | (708) |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | | | | | | | | | |
+--+--------------------------------+-------+---------+-+--------+-------+-------+-------+--------+
| | Other borrowings include: Unsecured GBP350 million (2008: GBP350 million) |
| | 6¾% bond maturing in 2019 less unamortised issue costs of GBP3 million |
| | (2008: GBP4 million); unsecured GBP201 million (2008: GBP325 million) 7% |
| | bond maturing in 2012 less unamortised issue costs of nil (2008: nil); and |
| | a secured term loan of GBP9 million (2008: GBP12 million) secured by way of |
| | a fixed and floating charge on certain Aerospace fixed assets. |
| | |
| | Notes |
+--+----------------------------------------------------------------------------------------------+
| | (i) | Denotes borrowings at fixed rates of interest until maturity. All other |
| | | borrowings and cash and cash equivalents are at variable interest rates. |
| | | |
+--+-------+--------------------------------------------------------------------------------------+
| | (ii) | The average interest rate on short term bank deposits was 0.5% (2008: |
| | | 2.2%).Deposits at 31 December 2009 had no fixed maturity date (2008: no |
| | | fixed maturity date). |
| | | |
+--+-------+--------------------------------------------------------------------------------------+
| | (iii) | The interest rate on bank deposits was 0.85%; deposits mature on 1 April |
| | | 2010. |
| | | |
+--+-------+--------------------------------------------------------------------------------------+
| | (iv) | Finance lease obligations gross of finance charges fall due as follows: |
| | | GBP1 million within one year (2008: GBP1 million), GBP3 million in one |
| | | to five years (2008: GBP4 million) and GBP1 million in more than five |
| | | years (2008: GBP2 million). |
| | | |
+--+-------+--------------------------------------------------------------------------------------+
| | (v) | GBP9 million (2008: GBP10 million) of the Group's cash and cash |
| | | equivalents are held by the Group's captive insurance company to |
| | | maintain solvency requirements and as collateral for Letters of Credit |
| | | issued to the Group's principal external insurance providers. These |
| | | funds, therefore, are not circulated within the Group on demand. |
| | | |
+--+-------+--------------------------------------------------------------------------------------+
| (b)| Fair values |
+--+----------------------------------------------------------------------------------------------+
| | | 2009 | 2008 |
+--+-------------------------------------------------------------+---------------+----------------+
| | | Book | Fair | Book | Fair |
| | | value | value | value | value |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | | GBPm | GBPm | GBPm | GBPm |
| | | | | | |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Borrowings, other financial assets and cash | | | | |
| | and cash equivalents | | | | |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Other borrowings | (569) | (570) | (730) | (520) |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Finance lease obligations | (4) | (4) | (5) | (5) |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Bank overdrafts and other short term bank | (63) | (63) | (87) | (87) |
| | borrowings | | | | |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Bank balances and cash | 132 | 132 | 102 | 102 |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Short term bank deposits and other bank | 204 | 204 | 12 | 12 |
| | deposits | | | | |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | | (300) | (301) | (708) | (498) |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Trade and other payables | | | | |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Government refundable advances | (28) | (28) | - | - |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | Deferred and contingent consideration | (32) | (32) | - | - |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | | (60) | (60) | - | - |
+--+-------------------------------------------------------------+-------+-------+-------+--------+
| | |
| | The following methods and assumptions were used in estimating fair values |
| | for financial instruments: |
| | |
| | Unsecured bank overdrafts, other short term bank borrowings, bank balances |
| | and cash and short term bank deposits approximate to book value due to |
| | their short maturities. For other amounts, the repayments which the Group |
| | is committed to make have been discounted at the relevant interest rates |
| | applicable at 31 December 2009. Bonds included within other borrowings |
| | have been valued using quoted closing market values. |
+--+----------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+--+-------+------------------------+-------+---------+-+--------+-------+-------+-------+--------+
+----+------------+------+------------------------------+--------+----------+--------+----------+----------+
| 10 | Acquisitions |
+----+-----------------------------------------------------------------------------------------------------+
| | |
+----+-----------------------------------------------------------------------------------------------------+
| | On 5 January 2009, the Group acquired the trade and assets of the wing component |
| | manufacturing and assembly operation of Airbus UK which is located on the Airbus Filton site |
| | in the UK ("Filton"). |
+----+-----------------------------------------------------------------------------------------------------+
| | | | | |
+----+--------------------------------------------------+--------+-------------------+---------------------+
| | | IFRS carrying | | |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | values at | Fair value | Fair |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | acquisition | adjustments | values |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | GBPm | GBPm | GBPm |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Intangible | - order book | - | 5 | 5 |
| | assets | | | | |
+----+-------------------+------------------------------+-------------------+-------------------+----------+
| | | - customer relationships | - | 79 | 79 |
+----+-------------------+------------------------------+-------------------+-------------------+----------+
| | Property, plant and equipment | 48 | 9 | 57 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Inventories | 38 | (2) | 36 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Trade and other receivables | - | - | - |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Trade and other payables | - | - | - |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Provisions | - post-employment obligations | - | (20) | (20) |
| | | | | | |
+----+------------+-------------------------------------+-------------------+-------------------+----------+
| | | - other | - | (34) | (34) |
+----+------------+-------------------------------------+-------------------+-------------------+----------+
| | Deferred tax | - | 1 | 1 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Cash and cash equivalents | - | - | - |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | 86 | 38 | 124 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Goodwill | | | 8 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Total fair value of consideration | | | 132 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Consideration satisfied by: | | | |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Cash | | | 94 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Deferred and contingent consideration | | | 32 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Directly attributable costs | | | 6 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | | | 132 |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | | | | |
+----+--------------------------------------------------+-------------------+-------------------+----------+
| | Goodwill is attributable to the value of the assembled workforce, expectation of winning |
| | future contracts with Airbus, gaining customer relationships with other customers and |
| | synergies. No technological rights or marketing related assets were acquired. |
| | |
| | Fair value adjustments to 'Provisions - other' relate to non-beneficial lease rentals. The |
| | Group was apportioned floor area for the wing component manufacturing and assembly operation |
| | out of the larger Airbus headlease. The freeholder is a third party and the full above |
| | market rental cost of the apportioned Airbus headlease rental is required by covenant with |
| | the freeholder to be passed from Airbus to the Group. The Group is committed to the lease |
| | for the remaining seventeen year term of the headlease. The provision has been discounted. |
| | |
| | The fair value of deferred and contingent consideration recognised upon acquisition includes |
| | GBP8 million (GBP9 million undiscounted) of consideration contingent upon Filton achieving |
| | certain levels of sales in 2013, 2014 and 2015. The undiscounted contingent consideration |
| | payable ranges from nil to GBP9 million. |
| | |
| | The acquisition date coincided with the first day of operations in 2009. During the year |
| | Filton contributed sales of GBP330 million and trading profit of GBP40 million. |
+----+-----------------------------------------------------------------------------------------------------+
| | | | | | | | | |
+----+------------+------+------------------------------+--------+----------+--------+----------+----------+
+-----+--+-+-----------------------------------------------+--------+--------+
| | | | |
| 11 | Notes to the cash flow statement | | |
+-----+----------------------------------------------------+--------+--------+
| | | 2009 | 2008 |
+-----+----------------------------------------------------+--------+--------+
| (a) | Cash generated from operations | GBPm | GBPm |
+-----+----------------------------------------------------+--------+--------+
| | Operating profit/(loss) | 39 | (85) |
+-----+----------------------------------------------------+--------+--------+
| | Adjustments for: | | |
+-----+----------------------------------------------------+--------+--------+
| | Depreciation, impairment and amortisation of fixed | | |
| | assets | | |
+-----+----------------------------------------------------+--------+--------+
| | | Charged to trading profit | | |
+-----+--+-------------------------------------------------+--------+--------+
| | | | Depreciation | 193 | 165 |
+-----+--+-+-----------------------------------------------+--------+--------+
| | | | Impairment | 2 | 1 |
+-----+--+-+-----------------------------------------------+--------+--------+
| | | | Amortisation | 11 | 10 |
+-----+--+-+-----------------------------------------------+--------+--------+
| | | Amortisation of non-operating intangible assets | 24 | 10 |
| | | arising on business combinations | | |
+-----+--+-------------------------------------------------+--------+--------+
| | | Restructuring and impairment charges | 9 | 127 |
+-----+--+-------------------------------------------------+--------+--------+
| | Changes in fair value of derivative and other | (71) | 133 |
| | financial instruments | | |
+-----+----------------------------------------------------+--------+--------+
| | Amortisation of capital grants | (1) | (2) |
+-----+----------------------------------------------------+--------+--------+
| | Net profits on sale of fixed assets | (6) | (1) |
+-----+----------------------------------------------------+--------+--------+
| | Profits and losses on sale or closure of | (2) | - |
| | businesses | | |
+-----+----------------------------------------------------+--------+--------+
| | Charge for share-based payments | 2 | 2 |
+-----+----------------------------------------------------+--------+--------+
| | Movement in post-employment obligations | (45) | (26) |
+-----+----------------------------------------------------+--------+--------+
| | Changes in current accounts with parent | 10 | 55 |
| | undertaking | | |
+-----+----------------------------------------------------+--------+--------+
| | Change in inventories | 133 | 7 |
+-----+----------------------------------------------------+--------+--------+
| | Change in receivables | (36) | 93 |
+-----+----------------------------------------------------+--------+--------+
| | Change in payables and provisions | 36 | (105) |
+-----+----------------------------------------------------+--------+--------+
| | | 298 | 384 |
+-----+----------------------------------------------------+--------+--------+
| | | | |
+-----+----------------------------------------------------+--------+--------+
| (b) | Movement in net debt | | |
+-----+----------------------------------------------------+--------+--------+
| | Net movement in cash and cash equivalents | 194 | (156) |
+-----+----------------------------------------------------+--------+--------+
| | Net movement in other borrowings | 93 | (79) |
+-----+----------------------------------------------------+--------+--------+
| | Bond buy back | 124 | - |
+-----+----------------------------------------------------+--------+--------+
| | Finance leases | 1 | 9 |
+-----+----------------------------------------------------+--------+--------+
| | Currency variations | (4) | 24 |
+-----+----------------------------------------------------+--------+--------+
| | Subsidiaries acquired and sold | - | - |
+-----+----------------------------------------------------+--------+--------+
| | Movement in year | 408 | (202) |
+-----+----------------------------------------------------+--------+--------+
| | Net debt at beginning of year | (708) | (506) |
+-----+----------------------------------------------------+--------+--------+
| | Net debt at end of year | (300) | (708) |
+-----+----------------------------------------------------+--------+--------+
| | | | |
+-----+----------------------------------------------------+--------+--------+
| | Reconciliation of cash and cash equivalents | | |
+-----+----------------------------------------------------+--------+--------+
| | Cash and cash equivalents per balance sheet | 316 | 114 |
+-----+----------------------------------------------------+--------+--------+
| | Bank overdrafts included within "current | (28) | (20) |
| | liabilities - borrowings" | | |
+-----+----------------------------------------------------+--------+--------+
| | Cash and cash equivalents per cashflow | 288 | 94 |
+-----+--+-+-----------------------------------------------+--------+--------+
+-----+--+-------+-------------+-------------+-----------+----------+--+------+----------+-------------+-+----+----------+----------+--+-----------+
| 12 | Post-employment obligations | | |
+-----+-------------------------------------------------------------------------------------------------------+------------------------+-----------+
| | | 2009 | 2008 |
+-----+-------------------------------------------------------------------------------------------------------+------------------------+-----------+
| | Post-employment obligations as at the year end comprise: | GBPm | GBPm |
+-----+-------------------------------------------------------------------------------------------------------+------------------------+-----------+
| | Pensions | - funded | (597) | (417) |
+-----+----------+--------------------------------------------------------------------------------------------+------------------------+-----------+
| | | - unfunded | (345) | (348) |
+-----+----------+--------------------------------------------------------------------------------------------+------------------------+-----------+
| | Medical | - funded | (13) | (18) |
+-----+----------+--------------------------------------------------------------------------------------------+------------------------+-----------+
| | | - unfunded | (41) | (51) |
+-----+----------+--------------------------------------------------------------------------------------------+------------------------+-----------+
| | | (996) | (834) |
+-----+-------------------------------------------------------------------------------------------------------+------------------------+-----------+
| | | | |
+-----+-------------------------------------------------------------------------------------------------------+------------------------+-----------+
| | The Group's pension arrangements comprise various defined benefit and defined contribution schemes |
| | throughout the world. The main externally funded defined benefit pension schemes operate in the UK, US |
| | and Japan. In Europe, funds are retained within certain businesses to provide defined benefit pension |
| | benefits. In addition, in the US and UK a number of retirement plans are operated which provide |
| | certain employees with post-employment medical benefits. |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| (a) | Defined benefit schemes - measurement and assumptions |
| | Independent actuarial valuations of all major defined benefit scheme assets and liabilities were |
| | carried out at 31 December 2009. The present value of the defined benefit obligation, the related |
| | current service cost and the past service cost were measured using the projected unit credit method. |
| | |
| | Key assumptions were: |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | | UK | Americas | Europe | ROW |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | | % | % | % | % |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | 2009 | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increase in pensionable salaries | 4.25 | 3.5 | 2.50 | 3.5 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increase in payment and deferred | 3.40 | 2.0 | 1.75 | n/a |
| | pensions | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Discount rate | 5.70 | 6.0 | 5.40 | 2.0 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Inflation assumption | 3.25 | 2.5 | 1.75 | 1.0 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increases in medical costs: | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | | initial/long term | 7.0/4.5 | 9.0/5.0 | n/a | n/a |
+-----+--+----------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | 2008 | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increase in pensionable salaries | 3.9 | 3.5 | 2.50 | 3.5 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increase in payment and deferred | 3.0 | 2.0 | 1.75 | n/a |
| | pensions | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Discount rate | 6.5 | 5.8 | 6.00 | 2.0 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Inflation assumption | 2.9 | 2.5 | 1.75 | 1.0 |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | Rate of increases in medical costs: | | | | |
+-----+-------------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | | initial/long term | 6.6/4.5 | 9.0/5.0 | n/a | n/a |
+-----+--+----------------------------------------------------------+---------+--------------------------+--------------------------+--------------+
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | The discount rates in the table above for the UK and Europe were referenced against specific iBoxx |
| | indices, whilst the Citigroup liability index was the reference point for the USA discount rate. The |
| | reference for the UK discount rate was the yield as at 31 December on the iBoxx GBP Corporate rated AA |
| | bonds with a maturity of 15 years plus. The reference for the European discount rate was the yield as |
| | at 31 December on the iBoxx Euro Corporate rated AA bonds with a maturity of 10 years plus of 5.1%, |
| | adjusted to reflect the duration of liabilities. For the USA, the discount rate matched the Citigroup |
| | liability index as at 31 December 2009 of 6.0%. |
| | |
| | The underlying mortality assumptions for the major schemes are as follows: |
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | United Kingdom |
| | Such is the size and profile of the UK scheme that data on the scheme's mortality experience is |
| | collected and reviewed annually. The key current year mortality assumptions for the scheme use PA92 |
| | (Year of Birth) tables with a plus 2.5 year age adjustment to reflect actual mortality experience for |
| | the scheme together with medium cohort projected improvement in longevity. Using these assumptions a |
| | male aged 65 lives for a further 19.8 years, whilst a male aged 40 is expected to live a further 21 |
| | years after retiring at 65. The prior period valuations used the same mortality assumptions. |
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | Overseas |
| | In the USA, CL2009 tables have been used whilst in Germany the RT2005-G tables have again been used. |
| | In the USA the longevity assumption for a male aged 65 is that he lives a further 19 years whilst in |
| | Germany for a further 18.1 years. The longevity assumption for a USA male currently aged 40 is that he |
| | also lives for a further 19 years once attaining 65 years, with the German equivalent assumption being |
| | 18.2 years. These assumptions are based solely on the prescribed tables not on actual GKN experience. |
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | Assumption sensitivity analysis |
| | The impact of a one percentage point movement in the primary assumptions on the defined benefit net |
| | obligations as at 31 December 2009 is set out below: |
| | |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | | UK | Americas | Europe | ROW |
+-----+------------------------+-------------------------+-------------------------------+-------------------------------+-------------------------+
| | | Liabilities | Income | Liabilities | Income | Liabilities | Income | Liabilities | Income |
| | | | | | statement | | statement | | |
| | | GBPm | statement | GBPm | GBPm | GBPm | GBPm | GBPm | statement |
| | | | | | | | | | |
| | | | GBPm | | | | | | GBPm |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Discount rate +1% | 341 | 4.2 | 40 | (0.1) | 43 | 0.2 | 4 | 0.2 |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Discount rate -1% | (406) | (1.7) | (49) | 0.4 | (54) | (0.1) | | (0.2) |
| | | | | | | | | (4) | |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Rate of inflation +1% | (324) | (24.8) | - | - | (32) | (2.5) | - | - |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Rate of inflation -1% | 292 | 21.7 | - | - | 29 | 2.1 | - | - |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Rate of increase in | (1) | - | (1) | - | - | - | - | - |
| | medical costs +1% | | | | | | | | |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | Rate of increase in | 1 | - | 1 | - | - | - | - | - |
| | medical costs -1% | | | | | | | | |
+-----+------------------------+-------------+-----------+-------------+-----------------+-------------+-----------------+-------------+-----------+
| | A 1% underpin to Medium Cohort annual improvements in mortality for the UK scheme increases liabilities |
| | by GBP63 million. |
+-----+--------------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | | | |
+-----+--+-------+-------------+-------------+-----------+----------+--+------+----------+-------------+-+----+----------+----------+--+-----------+
+-----+------------+--------------+---------+---+--+----+-+---+------+-----+--------+------+-+----------+---------+----------+----------+
| 12 | Post-employment obligations (continued) |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| (b) | Defined benefit schemes - reporting |
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | The amounts included in operating profit are: |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | | Trading Profit | | |
+-----+--------------------------------------------+-----------------------+---------------+--------------------------------------------+
| | | | Redundancy | Restructuring | |
| | | | | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | Employee | and | and | |
| | | | other | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | benefit | employment | impairment | |
| | | | | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | expense | amounts | charges | Total |
| | | | | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | GBPm | GBPm | GBPm | GBPm |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | 2009 | | | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Current service cost | (34) | - | - | (34) |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Past service cost | 5 | - | (1) | 4 |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Settlement/curtailments | 7 | - | - | 7 |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | (22) | - | (1) | (23) |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | 2008 | | | | |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Current service cost | (35) | - | - | (35) |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Past service cost | (1) | (1) | (1) | (3) |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | Settlement/curtailments | 12 | - | - | 12 |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | | (24) | (1) | (1) | (26) |
+-----+--------------------------------------------+----------+------------+---------------+--------------------------------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | The 2009 past service credit of GBP5 million largely relates to changes to life insurance arrangements in the |
| | USA, whilst the charge of GBP1 million relates to augmentations arising in the UK on redundancy programmes. |
| | The 2008 past service cost charge relates to augmentations arising in the UK on redundancy programmes and |
| | additional charges in respect of a continental European subsidiary. |
| | The 2009 settlement/curtailment credit arises from the closure of two pension schemes to future accrual in |
| | the USA together with the impact of redundancy programmes in Japan. The 2008 credit in |
| | settlements/curtailments was in respect of changes to freeze pension benefit entitlements in Driveline and |
| | Powder Metallurgy businesses in the USA. |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | The amounts recognised in the balance sheet are: |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | |
+-----+---------------------------+---------------------------------------------------------------------+-------------------------------+
| | | UK | Americas | Europe | ROW | Total | 2008 | |
| | | | | | | | | |
+-----+---------------------------+---------+-----------+------------+--------------+-------------------+---------+---------------------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | |
| | | | | | | | | |
+-----+---------------------------+---------+-----------+------------+--------------+-------------------+---------+---------------------+
| | Present value of funded | (2,429) | (318) | (20) | (33) | (2,800) | (2,444) | |
| | obligations | | | | | | | |
+-----+---------------------------+---------+-----------+------------+--------------+-------------------+---------+---------------------+
| | Fair value of plan assets | 1,930 | 215 | 27 | 18 | 2,190 | 2,009 | |
+-----+---------------------------+---------+-----------+------------+--------------+-------------------+---------+---------------------+
| | Net obligations | (499) | (103) | 7 | (15) | (610) | (435) | |
| | recognised in the balance | | | | | | | |
| | sheet | | | | | | | |
+-----+---------------------------+---------+-----------+------------+--------------+-------------------+---------+---------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | The contributions expected to be paid by the Group during 2010 to the UK schemes is GBP60 million and to |
| | overseas schemes GBP33 million. |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | Cumulative actuarial gains and losses recognised in equity are as follows: |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | | 2009 | 2008 | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | | GBPm | GBPm | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | At 1 January | (144) | 242 | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | Net actuarial gains/(losses) in year | (190) | (386) | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | At 31 December | (334) | (144) | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | | | | |
+-----+-----------------------------------------------------------------------------+--------+-------------------------------+----------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | Post-employment obligations |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | Movement in schemes' obligations (funded and unfunded) during the year |
+-----+---------------------------------------------------------------------------------------------------------------------------------+
| | | UK | Americas | Europe | ROW | Total |
| | | | | | | |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | At 1 January 2009 | (2,043) | (401) | (353) | (46) | (2,843) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Subsidiaries acquired | (20) | - | - | - | (20) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Current service cost | (20) | (5) | (6) | (3) | (34) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Interest | | (129) | (21) | (19) | (1) | (170) |
+-----+------------+----------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Contributions by participants | (4) | - | - | - | (4) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Actuarial gains and losses | (346) | 5 | (22) | 1 | (362) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Benefits paid | 123 | 15 | 17 | 3 | 158 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Past service cost | (1) | 6 | (1) | - | 4 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Curtailments | - | 6 | - | 1 | 7 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Currency variations | - | 40 | 32 | 6 | 78 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | At 31 December 2009 | (2,440) | (355) | (352) | (39) | (3,186) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | At 1 January 2008 | (2,264) | (270) | (268) | (24) | (2,826) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Current service cost | (20) | (7) | (5) | (3) | (35) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Interest | | (131) | (18) | (16) | (1) | (166) |
+-----+------------+----------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Contributions by participants | (7) | - | - | - | (7) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Actuarial gains and losses | 258 | (22) | 10 | (2) | 244 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Benefits paid | 123 | 12 | 15 | 2 | 152 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Past service cost | (2) | 1 | (2) | - | (3) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Curtailments | - | 12 | - | - | 12 |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | Currency variations | - | (109) | (87) | (18) | (214) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | At 31 December 2008 | (2,043) | (401) | (353) | (46) | (2,843) |
+-----+-----------------------------------------+---------+----------+--------------+-------------------+-------------------------------+
| | | | | | | | | | | | | | | | | | |
+-----+------------+--------------+---------+---+--+----+-+---+------+-----+--------+------+-+----------+---------+----------+----------+
+----------+---+-----------------+----------+----+----+-----+----+-----+-----+------+---+----+---+-------+--+---------+
| 12 | Post-employment obligations (continued) |
+--------------+------------------------------------------------------------------------------------------------------+
| | |
+--------------+------------------------------------------------------------------------------------------------------+
| (b) | Defined benefit schemes - reporting (cont'd) |
+--------------+------------------------------------------------------------------------------------------------------+
| | | | | | | |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Movement in schemes' assets during | | | | | |
| | the year | | | | | |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | | UK | Americas | Europe | ROW | Total |
| | | | | | | |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | At 1 January 2009 | 1,759 | 202 | 29 | 19 | 2,009 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Subsidiaries acquired | - | - | - | - | - |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Expected return on assets | 106 | 13 | 2 | - | 121 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Actuarial gains and losses | 152 | 21 | (1) | - | 172 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Contributions by Group | 32 | 15 | 1 | 3 | 51 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Contributions by participants | 4 | - | - | - | 4 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Benefits paid | (123) | (15) | (1) | (2) | (141) |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Currency variations | - | (21) | (3) | (2) | (26) |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | At 31 December 2009 | 1,930 | 215 | 27 | 18 | 2,190 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | At 1 January 2008 | 2,248 | 212 | 21 | 14 | 2,495 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Expected return on assets | 144 | 17 | 1 | 1 | 163 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Actuarial gains and losses | (539) | (87) | - | (4) | (630) |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Contributions by Group | 22 | 12 | 1 | 2 | 37 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Contributions by participants | 7 | - | - | - | 7 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Benefits paid | (123) | (11) | (1) | (2) | (137) |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | Currency variations | - | 59 | 7 | 8 | 74 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | At 31 December 2008 | 1,759 | 202 | 29 | 19 | 2,009 |
+--------------+--------------------------------------------+----------+------------+--------+-----------+------------+
| | |
+--------------+------------------------------------------------------------------------------------------------------+
| | The defined benefit obligation is analysed between funded and unfunded schemes |
| | as follows: |
+--------------+------------------------------------------------------------------------------------------------------+
| | |
+--------------+------------------------------------------------------------------------------------------------------+
| | | 2009 | |
+--------------+---------------------------------+----------------------------------------------------------+---------+
| | | UK | Americas | Europe | ROW | Total | 2008 |
| | | | | | | | |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | Funded | (2,429) | (318) | (20) | (33) | (2,800) | (2,444) |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | Unfunded | (11) | (37) | (332) | (6) | (386) | (399) |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | | (2,440) | (355) | (352) | (39) | (3,186) | (2,843) |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | | | | | | | |
+--------------+---------------------------------+----------+----------+------------+--------+--------------+---------+
| | | The fair value of the assets in the schemes and the expected rates of return |
| | | were: |
+----------+---+------------------------------------------------------------------------------------------------------+
| | | | UK | Americas | Europe | ROW |
+----------+---+-----------------+--------------------+----------------------+-------------------+--------------------+
| | | | Long | | Long | | Long | | Long | |
| | | | term | | term | | term | | term | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | rate | | rate | | rate | | rate | |
| | | | of | | of | | of | | of | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | return | | return | | return | | return | |
| | | | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | expected | Value | expected | Value | expected | Value | expected | Value |
| | | | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | % | GBPm | % | GBPm | % | GBPm | % | GBPm |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | At 31 December | | | | | | | | |
| | | 2009 | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Equities (inc. | 7.8 | 696 | 8.5 | 143 | - | - | 5.70 | 8 |
| | | Hedge Funds) | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Bonds | 5.3 | 1,054 | 4.2 | 67 | - | - | 1.35 | 7 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Property | 6.6 | 82 | - | - | - | - | - | - |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Cash/short term | 0.5 | 67 | 3.2 | 5 | - | - | - | 2 |
| | | mandate | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Other assets | 5.7 | 31 | - | - | 5.1 | 27 | 1.25 | 1 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | | 1,930 | | 215 | | 27 | | 18 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | At 31 December | | | | | | | | |
| | | 2008 | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Equities (inc. | 8.0 | 667 | 8.5 | 125 | - | - | 5.6 | 7 |
| | | Hedge Funds) | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Bonds | 5.3 | 912 | 5.5 | 70 | - | - | 1.6 | 8 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Property | 6.8 | 80 | - | - | - | - | - | - |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Cash/short term | 2.0 | 74 | 4.4 | 7 | - | - | 1.1 | 2 |
| | | mandate | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | Other assets | 6.5 | 26 | - | - | 5.6 | 29 | 0.9 | 2 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | | 1,759 | | 202 | | 29 | | 19 |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | | | | | | | | | |
+----------+---+-----------------+----------+---------+----------+-----------+----------+--------+----------+---------+
| | | The expected return on plan assets is a blended average of projected long term |
| | | returns for the various asset classes. Equity returns are developed based on |
| | | the selection of the equity risk premium above the risk-free rate which is |
| | | measured in accordance with the yield on government bonds. Bond returns are |
| | | selected by reference to the yields on government and corporate debt, as |
| | | appropriate to the plan's holdings of these instruments, all other asset |
| | | classes returns are determined by reference to current experience. |
| | | The actual return on plan assets was GBP293 million (2008: GBP467 million |
| | | negative). |
+----------+---+------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | | | |
+----------+---+-----------------+----------+----+----+-----+----+-----+-----+------+---+----+---+-------+--+---------+
+----+-------------------------------------------------------------------+
| 13 | Post balance sheet event |
+----+-------------------------------------------------------------------+
| | |
+----+-------------------------------------------------------------------+
| | In February 2010 the GKN plc Group announced its intention to |
| | exit its OffHighway axles operations. In 2009 the axles |
| | operations reported a trading loss of GBP4 million, over 30% of |
| | the OffHighway trading loss for the year. All exit options are |
| | being explored. The results of this business will be reported |
| | and disclosed separately in 2010. |
| | |
+----+-------------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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