re

engineering 
our future
annual report and accounts 2014
renold plc   annual report and accounts 2014
progress report renold plc is an international group 
delivering high precision engineered  
and power transmission products to  
our customers worldwide
our marketleading products can be seen  
in diverse applications from cement making 
to chocolate manufacturing subway trains 
to power stations escalators to quarries  
in fact anywhere something needs to  
be lifted moved rotated or conveyed
find out more about renold on our website
visit wwwrenoldcom
 re

engineering 
our future
see page 15 for
  our three–phase 
 strategic plan contents
0280 81136
map key
manufacturing andor 
sales company
sales only location
annual report and accounts 2014 renold plc 01
case studies
see our products in action
 see page 20
understanding renold
who we are what we do and where
 see page 04
strategic overview
our direction and progress
 see page 08
strategic report 
we outline our strategy and how we  
are taking the business forward we  
then give details of our operational  
and financial performance across the 
group we also outline our approach  
to corporate responsibility and talk  
about our people and why they are 
fundamental to our success
02 highlights
04 understanding renold
06 chairman’s letter
08 chief executive’s strategic overview  
and development of the business
18 our performance
30 finance director’s review
36 principal risks and uncertainties
39 corporate social responsibilities
corporate governance
45 corporate governance report
46 board of directors
48 group governance structure
53 audit committee report
58 nomination committee report
60 directors’ remuneration report
75 directors’ report
79 statement of directors’ 
responsibilities
80 shareholder information
financial statements
group
81 independent auditor’s report
83 accounting policies
91 consolidated income statement
92  c onsolida ted sta tement  
of comprehensive income
93 consolidated balance sheet
94  consolidated statement of changes  
in equity
95  consolidated statement of cash flows
96  notes to the consolidated  
financial statements
123 group five year financial review
company
124 independent auditor’s report
125 accounting policies
127 company balance sheet
128  company statement of total  
recognised gains and losses
129  notes to the company  
financial statements
additional information
135 corporate information
136 glossary
about this report
we have changed the way we present  
our annual report and accounts to  
reflect the new legislative requirements  
of the companies act 2006 strategic 
report and directors’ report regulations 
2013 so as to describe strategic 
information and our business model  
in a way that we believe is easier to 
understand this information is set out  
in our strategic report 
the corporate governance section 
follows the strategic report and includes 
our corporate governance report audit 
and nomination committee reports  
and our directors’ remuneration report 
the directors’ report provides other 
statutory and regulatory information
the financial statements for the group  
and the company can be found at pages 
81 to 134 towards the end of the annual 
report and accounts
we use a number of technical terms  
and abbreviations within this document 
please refer to the glossary on page 136 
for the definitions and other explanatory 
information highlights
we delivered a successful first year in the turnaround phase of our 
strategic plan the results were characterised by a 129 increase in 
adjusted earnings per share that were driven primarily by the 56 
increase in underlying adjusted operating profit the £72m current  
year cash cost of the capacity reduction project was selffinanced  
with only a small rise in net debt
financial highlights
1  underlying results are retranslated to current year exchange rates adjusted results exclude the impact of exceptional items pension financing charges 
pension administration costs and any tax thereon
adjusted ebitda up 
40
cash generated  
from operations
£70m
total operating assets
£787m 
average working capital  
 of sales
177
underlying adjusted operating profit
1
£m
135
23
71
111
15
12
9
6
3
0
3
10 11 12 13 14
66
adjusted earnings per share
pence
42
14
14
32
5
4
3
2
1
0
1
2
10 11 12 13 14
20
underlying revenue
1
£m
2024
1562
1870
1840
10 11 12 13 14
1861
0
50
100
150
200
250
adjusted return on sales

67
13
38
60
7
6
5
4
3
2
1
0
1
2
10 11 12 13 14
37
net debt
£m
229
179
228
248
10 11 12 13 14
200
0
10
5
15
20
30
25
35
40
return on capital employed restated

122
18
65
111
15
12
9
6
3
0
3
10 11 12 13 14
61
renold plc annual report and accounts 2014 02 operational highlights
  successful closure of the bredbury  
plant and transfer of production to  
other renold facilities
  continued improvement in lowering  
our cost base throughout the year
  implementation of a health and safety 
improvement programme and associated 
rolling assurance programme
  contribution margin gains starting to 
be delivered by leveraging high quality 
product offering
  reorganisation of financing structure 
completed to deliver ongoing reductions  
in cost of capital
  uk pension schemes merged to complete 
delivery of £10m annual cash flow savings
  senior management team reorganised  
and enhanced by new key hires
pension deficit reduction 
£46m
biggest customer  of sales  
46
total employees  
at 31 march 2014
2208
adjusted eps  
year on year increase
129
executive summary 
the year was marked by a number of 
significant achievements in the first 
phase of our turnaround plan our focus  
has been on selfhelp measures and 
these have delivered a 56 increase in 
underlying adjusted operating profit  
in the current year whilst laying strong 
foundations for further growth in the 
new financial year 
the complex project to reduce excess 
capacity in our chain division saw 
completion of the closure of the  
bredbury facility soon after the end of  
the financial year whilst project activity  
at the recipient sites continues during  
the first quarter of the new financial year 
we expect to deliver three quarters of the 
annualised savings of £32m in the new 
financial year
the underlying revenue picture was  
mixed across the world with local 
macroeconomic conditions being the 
principal drivers of the overall 16 fall 
the americas and india both delivered 
good growth while european economies 
were mixed with the net revenue result 
being broadly flat underlying australasian 
revenues were down 76 the commodity 
dependent australian market was 
particularly weak being down 152
underlying revenue in t orque t ransmission 
fell 59 as a major mass transit contract 
wound down and demand in extractive 
industries softened
the increase in adjusted operating  
profit and adjusted earnings per share 
without the benefit of sales growth 
emphasises the value accessible through 
our selfhelp measures we remain focused 
on creating a continuous improvement 
culture in all of our locations and activities 
to deliver intelligent and sustainable 
reductions in our cost base as these 
initiatives take root towards the end of the 
new financial year we expect to turn our 
attention to the second phase of our 
strategic plan the organic growth phase
annual report and accounts 2014 renold plc 03
strategic report who we are
renold plc is an international group delivering high precision  
engineered products and solutions to our customers worldwide
renold chain
renold torque 
transmission
1
2
operating profit before 
exceptional items
£99m
external revenue
£1396m
employees at  
31 march 2014
1688
operating profit before 
exceptional items
£58m
external revenue 
£444m
employees at  
31 march 2014
469
renold plc annual report and accounts 2014 04
understanding renold
our vast range of roller chains means  
that for most requirements there is  
a renold solution our premier brand 
renold synergy offers unbeatable wear 
and fatigue performance whilst our 
allpurpose range of standard chain 
provides affordable reliability continuous 
research development innovation  
and ingenuity has led to the production  
of more specialised solutions such  
as hydroservice with its superior 
corrosionresistant coating and  
the syno range which sets a new 
benchmark for chains requiring little  
or no lubrication 
conveying applications including theme 
park rides water treatment plants 
cement mills agricultural machinery 
mining and sugar production all rely  
on the highspecification materials and 
treatment processes used in renold 
conveyor chains renold is also a market 
leader in lifting chain used in many of  
the forklift trucks produced worldwide
such as power generation rail and 
escalator transit systems metals  
and materials handling
we have manufacturing sites across  
the world including the uk the usa 
south africa and china we work closely 
alongside our customers to design and 
manufacture a solution to specific 
application needs our design capability 
and innovation is recognised by customers 
around the world and is utilised in 
customising our gearboxes and couplings 
to meet customers’ specific requirements 
our solutions deliver durability reliability 
and long life for demanding industrial 
applications renold t orque transmission 
also provides a range of freewheel clutches 
featuring both sprag and roller ramp 
technology sprag clutches are used in a 
wide range of safetycritical applications 
such as keeping riders safe on some of  
the world’s most thrilling rollercoasters
a global market leading supplier of  
chain for many applications heavy  
duty high precision indoor or outdoor 
high or low temperature and in clean  
or contaminated environments these  
are all in a day’s work
we have manufacturing sites across  
the world including germany the usa  
china india australia and malaysia in 
addition to local service capabilities in  
a number of other markets we operate 
at the leading edge of technology  
with innovative products designed to  
meet customers’ exacting standards
a global market leading manufacturer  
and developer of coupling and gearbox 
solutions from fluid couplings to 
rubberincompression and rubberin
shear couplings and a complete range  
of worm gears helical and bevel helical 
worm drives we also manufacture 
custom gear spindles and gear couplings 
for the primary metals industry and we 
are experts in providing bespoke gear 
solutions across industries worldwide   where we are
our international network includes 13 locations where we both manufacture and 
sell and a further 9 sales only companies which are strategically located to support 
our customers within our two operating divisions
map key
manufacturing andor 
sales company
sales only location
north america europe asia pacific high growth economies
north america delivered  
15 growth in underlying 
revenue with both the us  
and canada ahead of the  
prior year
renold jeffrey and renold 
ajax have been well known 
participants in the north 
american markets for  
many years with a focus on 
engineering chain and gear 
spindles and couplings
europe experienced a 27  
fall in underlying revenue 
most countries were broadly 
flat although the french 
market declined
renold chain now operates 
from one major european 
manufacturing location in 
germany renold torque 
transmission operates three 
plants in the uk exporting to 
various destinations worldwide
asia pacific experienced  
a 94 fall in underlying 
revenue driven by a 152  
fall in australia resulting from 
the weak commodity sector
we operate manufacturing 
plants in australia and 
malaysia with additional  
sales centres in new zealand 
and singapore we also 
operate a distribution network 
in australia and malaysia
our chinese and indian 
businesses both delivered 
growth in underlying  
revenue of 122 and  
47 respectively
our chinese chain plant 
primarily serves sister 
companies and has a smaller 
local focus our indian chain 
business focuses on the  
local market
38  
of global sales
36  
of global sales
19  
of global sales
7  
of global sales
annual report and accounts 2014 renold plc 05
strategic report renold plc annual report and accounts 2014 06
reengineering our future
the bredbury closure project has been  
a major undertaking for the group  
it involved the relocation of manufacturing 
operations representing just under 12 
of the chain division’s external revenue 
the project required the coordination  
of five of the six major chain production 
facilities with particular focus on the 
closing site in bredbury and the principal 
recipient sites in germany the usa and 
china i am pleased to report that the 
project is on time and on budget
elsewhere other key initiatives were  
undertaken which included some  
changes in the senior management team 
and recruitment to some newly created 
posts that fill capability gaps in the 
group such as product management 
business systems and global chain 
manufacturing we have continued  
our focus on improving existing or 
developing new business processes  
and in particular have rolled out new 
processes for hazard identification within 
our health and safety programme
overview
the past year has seen a huge amount  
of activity within the business both 
above and below the surface above  
the surface we successfully delivered  
a significant improvement in the group’s 
underlying adjusted operating profit
1
  
against a backdrop of a small decline  
in revenue below the surface we 
successfully executed a large scale and 
complex project to reduce the excess 
manufacturing capacity in the chain 
division that project is on time to 
complete in the first quarter of the new 
financial year and will deliver significant 
recurring savings in addition the senior 
operational management team was 
strengthened during the year with a 
number of new key hires made to further 
support the executive team in driving 
forward the pace of change
our balance sheet
close management of our pension 
liabilities remains a key priority for the 
board as we seek to rebuild our balance 
sheet the merger of the three uk 
defined benefit pension schemes was 
completed successfully in june 2013 with 
overall scheme membership reduced  
by 26 as 1316 eligible members took 
the option to have their benefits paid  
out in full elsewhere one of our three 
defined benefit schemes in the usa 
moved into surplus in january 2014 
following strong performance by us 
equity assets and we have now started 
the termination process which will fully 
derisk this scheme for the group in 
south africa the surplus pretax funds  
of £14m were returned to the group 
during the year
the group will continue to focus on 
measures to reduce its exposure to 
defined benefit pension obligations  
and is well placed to benefit from the 
anticipated rise in interest and discount 
rates over the coming years
chairman’s letter
“ the group is making excellent 
progress in the first phase of our 
strategic plan the successful 
delivery of the complex capacity 
reduction project in the chain 
division is a major milestone 
in significantly lowering our 
breakeven point ”
 mark harper
 chairman   supporting the chief executive in developing 
the group’s strategic plan
  continued monitoring and oversight of the 
major change initiatives being executed by 
the executive team
  challenge and review the performance of 
the business as a whole
  supporting the enhanced focus on health and 
safety performance and further embedding of 
risk and opportunity management throughout 
the business
board priorities
1  operating profit before pension administration 
costs and exceptional items at like for like  
foreign exchange rates
2  the annual average of each month’s ratio of 
working capital to rolling annual sales
annual report and accounts 2014 renold plc 07
strategic report
net debt and working capital have 
continued to be closely managed 
throughout the year the group took  
on the cash flow burden of the bredbury 
closure project which had a total 
expenditure of £72m and still delivered 
net debt only £20m higher than at the 
start of the year in parallel the group also 
managed to improve its average working 
capital ratio
2
 to 177 2013 190 
the board and our people
in a year of significant change initiatives 
within the group i am grateful for the 
extra time and commitment that the 
members of the board have made 
available to support the executive team 
the board has been closely involved in 
the governance of the major projects and 
further evolution of the strategic plan
i would also like to take this opportunity  
to place on record my heartfelt thanks  
to all of renold’s employees change is 
always a challenge for any organisation 
and our staff responded positively and 
proactively in all locations i would  
like to record my appreciation of the 
professionalism of our staff in delivering 
projects that in some cases ultimately  
led to a loss of employment their 
continued commitment is critical to  
our future success
growth towards the end of the new 
financial year the foundations we put 
in place during the turnaround phase of 
the strategic plan will be key enablers for 
robust and sustainable growth in the future 
whether organic or through acquisition
renold enjoys a hard earned global 
reputation for high quality products  
and engineering our customers have 
demanding application requirements 
which we serve via a wide range of 
bespoke and high quality standard 
products we remain well placed to 
leverage these key strengths with 
continuous improvement in business 
processes and disciplines that should 
deliver steady annual increases in earnings 
and shareholder value in future years
mark harper
chairman
dividend
the group has significant opportunities 
for investment in new capital equipment 
that will materially enhance our 
performance and support the delivery 
of our strategic objectives in the current 
year the board has therefore decided not 
to recommend the payment of a dividend 
but this will remain under review as 
performance continues to improve
outlook
the difficult conditions in some of  
our markets has moderated somewhat 
over the course of the year with some 
markets showing signs of modest growth 
overall the external picture remains 
subdued hence our focus remains on 
internal improvement selfhelp remains 
our watch word as we aim to create  
and embed a continuous improvement 
philosophy in all aspects of our business 
whether front line sales and service 
manufacturing or support functions  
we are challenging all of our people to 
make their activities more productive 
and more efficient
while we currently remain firmly focused 
on the turnaround phase of our strategic 
plan the executive team is starting to 
turn its attention to the next phase which 
we anticipate will begin to deliver organic  robert purcell discusses the strategy 
and development of the business
“ selfhelp initiatives remain the 
focus of our attention as we build  
a robust platform for growth ”
 robert purcell
 chief executive
q 
how is the turnaround  
plan progressing 
a 
we have a three phase plan to 
deliver profitable growth and 
shareholder value phase one the 
restructure phase is on track and we are 
making excellent progress concentrating 
on improving our processes across the 
board and making sure we have the right 
capacity and cost base for the business 
a key aspect of this phase is our project 
to close the bredbury facility and transfer 
production to other renold sites which 
remains on time and on budget 
our aim is to create a robust and 
sustainable business from the 
improvements we are making and it  
is pleasing to see our breakeven point 
reducing as our selfhelp measures 
continue to deliver benefits we are 
keenly aware that much remains to be 
done even with the significant progress 
made this year we still have many  
areas where we can further improve  
our business and reduce our cost base
q 
what other changes are you 
making within the business 
a 
firstly we are working hard 
on our health and safety 
performance we have introduced 
the renold framework through which 
we are ensuring that we perform to the 
same high standards around the world 
we believe a safe working environment 
is fundamentally aligned with high 
performance in the business as a whole
we are looking to achieve superior 
performance in all areas of the business 
historically the business has been 
tolerant of average performance and has 
not demanded high enough standards 
we are therefore working to simplify 
processes to give better service and 
fundamentally make ourselves easier to  
do business with our simple objective is  
to ensure that customers receive the 
product and service they require
we are focused on ensuring that the value 
we generate from our superior products 
stays within the business and delivers 
enhanced returns to shareholders an 
important aspect of this is to understand 
how and where we add value for our 
customers and to accentuate these 
characteristics in this way we aim to 
generate steady and sustainable margin 
improvements year on year this business 
is more than capable of delivering double 
digit operating margins
q 
where do you see most 
opportunities – in chain  
or in torque transmission
a 
they are both excellent 
businesses both are global 
market leaders and both offer 
excellent opportunities in chain we 
operate at the leading edge of technology 
with solutions for a range of complex 
applications and environments from 
water treatment plants to rollercoasters 
in t orque t ransmission we manufacture a 
range of specialised products from fluid 
couplings to worm gears and drives we 
work closely alongside our customers and 
will often manufacture a bespoke solution 
to meet specific application needs
renold plc annual report and accounts 2014 08 turn to page 15 for
our three–phase 
strategic plan
q 
 the geographic picture this year 
seems to have been mixed in 
which areas are you particularly 
strong or weak
a 
we currently sell our products 
in over 100 countries worldwide 
and our broad geographic 
portfolio effectively mitigates the impact  
of weak conditions in any one country 
although the global economy as a whole  
is improving region by region the picture  
is more mixed and that can be seen in 
our performance over the year north 
america which comprises 38 of our 
global sales saw good growth with 
underlying revenue up 15 australasia 
saw a decline which reflects the 
particular dependence of the australian 
economy on natural resources europe 
was broadly flat although the french 
market was more challenging and 
underlying revenue was down 12
find out more
wwwrenoldcom
q 
how are you going to strengthen 
your balance sheet – especially 
in terms of the pension liability
a 
this is an area of major importance 
for the group as we aim to reduce 
the impact of the economic cycle 
on our business we aim to ensure that our 
balance sheet is robust at all stages of the 
cycle this involves a number of initiatives 
throughout the year we have worked hard 
to manage and to reduce our cost base 
the close management of working capital 
and capital expenditure continues and net 
debt remains in line with our expectations 
we are employing a number of different 
initiatives to reduce our pensions burden 
including the completion this year of the 
merger of the uk defined benefit pension 
schemes we are also looking at realising 
value from our significant tax assets  
our objective is to ensure that we have  
a consistent and positive cash flow  
which will be clear evidence that our 
strategy is working
q 
where will future growth  
come from 
a 
towards the end of the coming 
year and next we aim to move 
into the second phase of our plan 
the organic growth phase we will look 
to leverage our excellent chain and tt 
products to capitalise on our global market 
leadership positions and to drive growth 
from improved sales and marketing 
practices we have an excellent range  
of products but with greater emphasis  
on product management we will be able  
to penetrate new areas of the market 
further into the future we believe there 
will be opportunities to leverage our  
own scale through acquisitions in our 
fragmented market all our focus right 
now though is on building a robust and 
sustainable business which delivers steady 
improvement in shareholder value and 
provides a platform for future growth
robert purcell
chief executive 
27 may 2014
annual report and accounts 2014 renold plc 09
strategic report our business model
our activities range from diagnosing our customer’s specific power 
transmission application challenges to proposing materials and their 
properties then to cutting and treating the components and finally  
to assembly into the final product
engineering centre
material performance 
can be enhanced with 
the right coating
heat treatment and 
other applications to 
optimise performance
wide range of stocked 
products and daily 
shipment options
automated 
assembly processes 
reduce lead times
ongoing performance 
monitoring ﬁeld support 
and technical advice
design
customer issues 
are often challenging 
and sometimes unique
analysing 
customer 
problem
1
coating 
speciﬁcation
manufacturing
2
making 
components
5
assembling 
components
7
after sales 
service
9
4
service
treating 
components
6
of group sales
38
distribution
shipping
8
bringing our unparalleled 
engineering capability to 
design customer solutions
deploying over 100 years 
of  manufacturing know how 
to create superior products
enhancing the customer 
experience with after sales 
service and performance monitoring
specifying the right 
grade and composition 
of metals is key
material 
speciﬁcation
3
warehouse
of group sales
41
of group sales
21
end users
original 
equipment 
manufacturers
sales 
channels
10
renold plc annual report and accounts 2014 10 how renold generates value 
our customers come to us with a wide range of technically 
challenging power transmission problems in some cases the 
answer is one of our standard solution products in other 
cases the solution requires proactive engagement with the 
customer’s engineering teams to design a bespoke solution 
this process will include specifying the exact materials and 
any additional coatings or treatment required to deliver the 
optimal performance solution for the customer
our production facilities can use unique manufacturing 
techniques to turn the designs into substance our logistics 
teams work with customers to get the products to the right 
location at the right time the after sales service teams 
respond proactively to any follow on customer requests 
from all three major sales channels the business model 
cycle can often end where it began with ongoing technical 
and service support that can be provided by an innovative 
range of performance monitoring solutions
engineering centre
material performance 
can be enhanced with 
the right coating
heat treatment and 
other applications to 
optimise performance
wide range of stocked 
products and daily 
shipment options
automated 
assembly processes 
reduce lead times
ongoing performance 
monitoring ﬁeld support 
and technical advice
design
customer issues 
are often challenging 
and sometimes unique
analysing 
customer 
problem
1
coating 
speciﬁcation
manufacturing
2
making 
components
5
assembling 
components
7
after sales 
service
9
4
service
treating 
components
6
of group sales
38
distribution
shipping
8
bringing our unparalleled 
engineering capability to 
design customer solutions
deploying over 100 years 
of  manufacturing know how 
to create superior products
enhancing the customer 
experience with after sales 
service and performance monitoring
specifying the right 
grade and composition 
of metals is key
material 
speciﬁcation
3
warehouse
of group sales
41
of group sales
21
end users
original 
equipment 
manufacturers
sales 
channels
10
annual report and accounts 2014 renold plc 11
strategic report what we do
renold manufactures and sells power transmission products 
and is configured as two separate operating divisions chain 
and torque transmission
we operate chain production facilities in seven countries 
strategically placed to serve large or growing local markets 
in reengineering the chain business and with the appointment  
of a chain manufacturing director we are aiming to create  
an integrated production base that serves our customers 
around the globe in an efficient and effective way
in torque transmission we have a number of specialised  
niche businesses that produce a range of technical products in 
both the industrial couplings and industrial gear markets we 
manufacture in the uk the usa china and south africa with 
sales and support in additional territories our couplings range 
includes fluid based systems rubberinshear and rubberin
compression products in gears we provide a complete range 
of speciality worm and helical gears and drives
who we are
renold employed an average of 2379 people around the  
world in the last year with 55 of our staff engaged in  
direct production activities the divisional split of staff aligns  
closely with the split of sales with 78 of staff in chain  
20 in torque transmission and 2 in our head office
our global presence
renold currently sells products in over 100 countries the key 
regions and territories are represented on the chart opposite
our single biggest market is the usa which represents 331  
of external group sales in addition the uk australia and 
germany each represent over 5 of group sales by destination 
with canada france switzerland china and india also being 
major contributors the remaining 24 of sales are spread  
over many other countries this geographic spread reduces  
our dependence on any particular market
we currently have a limited presence in south american 
markets which may in future represent a growth opportunity 
given our industry specific knowledge of products for sectors 
such as food and agriculture quarrying and mining and other 
natural resources – in addition to our wide range of high 
performance industrial chains
sales by division
sales by geography
employees by country
average for the year
24 
torque
transmission
76
chain
£1840m
global sales
243
other
34
india
331
usa
66
australia
66
germany
40
china
87
uk
46
switzerland
47
canada
40
france
100
countries
146
china
149
usa
201
india
126
other
234
uk
144
germany
 2379
employees
renold plc annual report and accounts 2014 12
our business model
continued  the customers we serve
our markets
customer concentration for renold is relatively low our  
biggest global customer represents less than 5 of sales of  
our five largest customers three are themselves distributors  
of a wide range of industrial power transmission equipment and 
thus even this limited concentration of our sales is effectively 
subsegmented into a huge range of endcustomers
we know from market research that these endcustomers 
often ask for renold product by name which emphasises  
that we maintain customer proximity and loyalty even  
when dealing through indirect sales channels
the remaining customer base is split between end users  
and original equipment manufacturers oems both of  
these user groups give us an opportunity to bring our  
expert knowledge including metallurgy and chemical  
coatings to bear in specifying what are often bespoke  
solutions to specific or unique issues
the chart opposite shows the extremely diverse markets for 
the approximate 62 of our sales where we serve end users 
and oems directly distribution sales are excluded from this 
analysis as visibility of the final market is somewhat limited
it can be clearly seen that we serve a very wide range  
of market sectors particularly in the chain division  
but also in the torque transmission division 
it is also clear that our products are often used in harsh and 
demanding environments where reliability and performance 
are key attributes required by customers this requirement  
is also evident in safety critical applications total cost of 
ownership is a key purchasing criterion 
similar to our geographical penetration we also currently 
estimate that we have relatively low levels of penetration  
in the addressable markets for the majority of our products 
this creates opportunities for growth in those product sectors 
where we already have an established presence
289
other
 
75
agriculture forestry
and ﬁshing
119
 
energy
14
environmental
78
food and drink
62
manufactured products
110
construction
machinery
 
81
transportation
91
material handling
81
mining and 
quarrying
 diversiﬁed 
markets
sales channels
21 
end users
38
distribution
41 
oems
5
largest customer
 of sales
markets
end users are where renold’s customer will be the actual user  
of our product oem’s are where renold’s customer places our 
goods in one of their products for onward sale
annual report and accounts 2014 renold plc 13
strategic report renold plc annual report and accounts 2014 14
1 significantly improving our health and  
safety performance while broadening  
all risk management activity
we firmly believe that a safe business is a well run and 
profitable business by changing our health and safety  
culture and developing enhanced policies and processes  
we aim to ensure everyone associated with our business goes 
home each day in the same condition that they came to work
2
 
generating margin enhancing growth  
from our superior product capability
in the markets we serve our products are among the 
best in the world we are focusing on emphasising our  
value proposition in their superior performance longevity  
and total cost of ownership to ensure that the value  
generated by these characteristics stays within the  
business and earns a return for shareholders
as the business moves from the turnaround phase of  
our strategic plan to the organic growth phase we will 
selectively target those sectors and geographies where our 
high performance products can earn an appropriate return
3 enhancing customer service by streamlining our business processes and making renold 
easier to do business with we aim to offer a seamless route  
to market with shorter lead times and improved service levels
4 optimising business processes a group wide programme is underway aimed at implementing 
standardised efficient and seamless business processes 
these will cover the full range of commercial operational  
and support activities our ultimate aim is to significantly 
reduce our cost to serve
5 lowering our breakeven point the same streamlined business processes that enhance 
customer service will also reduce our installed fixed cost  
base in all of our locations this will reduce the volatility  
of our profits in relation to changes in sales values
6  developing our people we are supplementing the knowledge and experience of our 
existing staff with new hires who bring different incremental 
skills and experience to renold we are also developing 
training solutions to support both existing and new staff
7 strengthening our balance sheet  
and improving financial performance
we retain our focus on improving our working capital 
management to support business development through  
stock availability while reducing the amount of cash tied up
we are actively working to reduce the annual cash burden 
of legacy pension liabilities though a number of different 
initiatives we also aim to realise value from significant tax 
assets and any surplus properties 
the overall aim of these activities combined with continuous 
improvement in operating results is to significantly enhance 
the cash generation capability of the group
our strategic objectives
we aim to deliver consistently improving returns to shareholders  
by reengineering everything we do our threephase strategic plan
threephase strategic plan delivering value
strong eps growth as plan progresses
march 2014
restructure unattractive segments
  some of our business segments  
deliver results below their capability  
for a number of reasons such as  
underselling inflexible overheads  
and cost to serve too high
rightsize capacity and cost base
  rightsizing capacity involves both reducing 
the absolute size of the manufacturing 
footprint and also reducing surplus 
capacity within individual processes  
in the retained facilities
  rightsizing our cost base involves 
reducing the infrastructure or support 
costs of the retained business activities 
it closely aligns to our business process  
reengineering activities
fix product margins
  we aim to achieve appropriate value  
for the highly technical products we  
offer to the market 
  effective product management will  
be key in identifying and implementing 
appropriate pricing structures for our  
wide range of high performance products
  we will drive manufacturing efficiency 
supported by a focused capital investment 
upgrade to reduce product costs
establish uniform operating processes  
and information systems across the group
  implementation of simple repeatable 
processes for all aspects of our business 
whether in manufacturing commercial 
or supporting activities will lead to more 
efficient and more robust processes
  this will be supported by investment  
in one common erp system
make right hires to drive growth
  we have strong engineering credentials 
and capability we need to ensure that 
other key parts of the business are equally 
capable such as manufacturing product 
management marketing business 
systems and commercial functions 
find out more
wwwrenoldcom
phase i 
restructure
1
  leverage superior product in chain and  
torque transmission
 leverage market and brand leading positions
  drive growth from improved sales and 
marketing practices
  pathway to organic growth between q4 
201415 and q1 201516
phase ii
organic growth 2
  significant opportunities from our scale
 fragmented market
  growth potential through selective  
bolton acquisitions adding capability  
and market share
phase iii
structural activities 3
achieve streamlined 
business fit for future
double digit margins and 
boost in shareholder value
deliverable over the 
medium term
achieving organic  
growth even 
without end  
market recovery
annual report and accounts 2014 renold plc 15
strategic report strategic objective progress in 201314 kpis
1
future aims risks and mitigation
1  significantly improving our 
health and safety 
performance
there is no simple short term solution to improving health and safety culture and performance it requires perseverance 
and constant vigilance during the year we implemented a new overarching framework for our approach to health and 
safety known as ‘the framework’ we also implemented a rolling audit programme with the recruitment of a dedicated 
and experienced health and safety auditor 
ltas
reportable  
incident rates
lost time days
safety opportunities
our overarching objective is to achieve zero accidents  
every year each site will implement a rolling programme to 
identify opportunities for safety improvements each year
we are rolling out a training programme for all managers  
to ensure a consistent and shared base level of relevant 
skills and understanding
in the new financial year we will also introduce a group 
wide health and safety awards programme to raise 
awareness and standards
organisational change increases the risk of accidents 
particularly when the change is on a large scale and in 
production environments the group is mitigating this 
risk by considering in advance of any change full risk 
assessments and new safe operating procedures
the increased focus on audit may create a false 
impression of a worsening trend which should be  
borne in mind when assessing data
2  generating margin 
enhancing growth 
from our superior 
product capability
at the current stage in our strategic plan we are not yet focused on delivering top line sales growth and hence our 
focus has been on margin enhancement through improving our efficiency and ensuring that our technical products 
achieve appropriate value in the market
our activities have included reviews of our product and margin mix through this process we have begun altering  
the mix to give ourselves a start in the trend towards higher margins
ros
adjusted eps
roce
we are aiming to deliver steady improvements in ros  
each year to ultimately achieve double digit operating 
margins we are targeting steady annual gains to ensure 
they are robust and sustainable
our objective is to deliver double digit margins  
against a zero sales growth background a significant  
fall in sales or a rapid appreciation in input costs could 
jeopardise this outcome if we were not able to respond 
quickly and effectively
3  enhancing 
customer service
our market research tells us that while customers value our products and technical capability we are not always  
as easy to do business with as we should be
therefore one of the key areas for improvement during the turnaround phase of the strategic plan is to change our 
business processes to deliver a faster more efficient and seamless service proposition to our customers
during the year we have implemented a number of new service metrics and objectives with a pilot in our european 
chain business these include target service levels to respond to customer queries and to reduce the lead times to 
deliver a quotation to a customer for standard or adapted chain
improvement in
–  customer contact 
response times
–  quotation lead 
times
–  on time delivery 
in full
our aim is to show a steady and regular improvement  
in all metrics
excellent customer service requires efficient business 
processes and systems that deliver replicable predictable 
and timely outcomes as the group is changing and 
improving many of our business processes and systems 
this creates a risk to current service levels this risk is 
being mitigated by a newly created steering committee 
with responsibility for oversight and approval of all 
business system change requests
4  o p timising 
business processes
business processes have been improved in all functional areas for example on the commercial side we have vastly 
increased the number of customer quotations coming directly from our systems thereby cutting customer response 
times in operations as part of the bredbury closure project we have implemented a service cell dedicated to fast 
turnaround times on selected chain assembled from a standard list of stocked components 
under development
each of our business 
processes will have  
its own set of kpis
our intention is to create one global integrated erp 
system our cost to serve will be reduced and this work  
will also feed into the kpis for customer service
changes to systems and processes may in the short 
term reduce performance as users learn new skills if 
changes are not managed properly the performance 
reduction and its duration can grow
our new director of business systems is a key hire  
in mitigating this risk
5  lowering our 
breakeven point
during the year we delivered a major reduction in excess chain manufacturing capacity and overhead burden through 
the closure of our bredbury facility the production processes were successfully transferred to other renold locations 
and the remaining activities are on track to complete at the end of the first quarter of the new financial year
elsewhere we built on overhead reductions started in the second half of the prior year with further reductions of £09m 
to give net year on year reductions in underlying overheads of £34m
total overheads as we reengineer our business processes we aim to reduce 
the cost to serve of all of our activities our medium term 
goal is to deliver meaningful annual reductions in our 
overheads to support the delivery of enhanced margins  
and shareholder value
overhead structures tend to be inflexible and can  
be a major financial burden in a downturn our new 
processes are being designed with more flexibility in 
mind to reduce this risk
6  de v eloping  
our people
we have created a number of new key positions in the group to emphasise and underpin our drive to manage the 
business in a more integrated way where there are benefits to be gained from sharing best practice and eliminating 
unnecessary duplication these posts include a new chain manufacturing director and a group business systems 
director we have also refreshed our senior management team and a number of other key leadership positions have 
also seen new hires with the senior team now in place the pace of change and number of initiatives under 
management can be increased
under development performance management processes and systems in the 
business are currently somewhat adhoc and inefficient  
we aim to deliver a performance management system that 
assesses performance but that also both identifies training 
and development needs and supports delivery of them
change can be unsettling for all staff creating a risk  
of some staff leaving due to feelings of uncertainty
to counter some of this we are increasing the regularity 
and content of communication to give all staff a clearer 
sense of direction
7   s tr engthening  
our balance sheet
we completed the merger of the three uk defined benefit pension schemes this has significantly reduced the ongoing 
administration costs of the schemes at the same time 1316 members with small pension pots opted to have their 
entitlements paid out as lump sums which led to a reduction in scheme liabilities and assets of £109m and £104m 
respectively fewer members in the scheme will lead to lower overall administrative costs
in the usa one of the three defined benefit schemes moved into a surplus following strong equity asset performance 
and the formal termination of that scheme has now commenced to allow it to be fully derisked
our working capital ratio further improved to 177 2013 190 equivalent to a reduction in average net debt of £24m 
based on current annual sales
annual underlying 
cost of servicing 
legacy pensions
ratio of working 
capital to rolling 
annual sales wc
gearing ratio
ultimately we aim to derisk the group from all defined 
benefit pension liabilities the short term focus is on 
managing down the larger exposures in the uk and 
germany we aim to have stable annual cash costs to 
enhance predictability we want to optimise working capital  
to support the business while minimising the cash tied up
work is ongoing to identify an appropriate level of gearing 
for the group
pension liabilities fluctuate with factors outside the 
group’s control interest rates inflation expectations 
longevity and returns on assets the key is to be ready 
to derisk when the market opportunity arises legislative 
changes can also lead to changes in liabilities and 
opportunities for derisking 
working capital can take time to unwind and in the 
event of a sudden downturn in activity the group  
could be left with excess stock
to mitigate this risk we have deployed working capital 
management tools and wc  is a monthly monitored kpi
renold plc annual report and accounts 2014 16
our strategic progress
we have made a robust start to the turnaround phase of our threephase strategic plan this turnaround phase requires us  
to rebuild our foundations to remind ourselves of the high quality and value adding products that we deliver to the market  
and to our customers and in some cases create new disciplines and basic processes that had withered in the business we are 
working to develop detailed improvement projects for all aspects of our business – whether individual geographical locations 
production facilities or worldwide business support functions we are challenging every aspect of what we do and how we do it 
– seeking to create a continuous improvement culture throughout renold hence we really are ‘reengineering everything we do’  strategic objective progress in 201314 kpis
1
future aims risks and mitigation
1  significantly improving our 
health and safety 
performance
there is no simple short term solution to improving health and safety culture and performance it requires perseverance 
and constant vigilance during the year we implemented a new overarching framework for our approach to health and 
safety known as ‘the framework’ we also implemented a rolling audit programme with the recruitment of a dedicated 
and experienced health and safety auditor 
ltas
reportable  
incident rates
lost time days
safety opportunities
our overarching objective is to achieve zero accidents  
every year each site will implement a rolling programme to 
identify opportunities for safety improvements each year
we are rolling out a training programme for all managers  
to ensure a consistent and shared base level of relevant 
skills and understanding
in the new financial year we will also introduce a group 
wide health and safety awards programme to raise 
awareness and standards
organisational change increases the risk of accidents 
particularly when the change is on a large scale and in 
production environments the group is mitigating this 
risk by considering in advance of any change full risk 
assessments and new safe operating procedures
the increased focus on audit may create a false 
impression of a worsening trend which should be  
borne in mind when assessing data
2  generating margin 
enhancing growth 
from our superior 
product capability
at the current stage in our strategic plan we are not yet focused on delivering top line sales growth and hence our 
focus has been on margin enhancement through improving our efficiency and ensuring that our technical products 
achieve appropriate value in the market
our activities have included reviews of our product and margin mix through this process we have begun altering  
the mix to give ourselves a start in the trend towards higher margins
ros
adjusted eps
roce
we are aiming to deliver steady improvements in ros  
each year to ultimately achieve double digit operating 
margins we are targeting steady annual gains to ensure 
they are robust and sustainable
our objective is to deliver double digit margins  
against a zero sales growth background a significant  
fall in sales or a rapid appreciation in input costs could 
jeopardise this outcome if we were not able to respond 
quickly and effectively
3  enhancing 
customer service
our market research tells us that while customers value our products and technical capability we are not always  
as easy to do business with as we should be
therefore one of the key areas for improvement during the turnaround phase of the strategic plan is to change our 
business processes to deliver a faster more efficient and seamless service proposition to our customers
during the year we have implemented a number of new service metrics and objectives with a pilot in our european 
chain business these include target service levels to respond to customer queries and to reduce the lead times to 
deliver a quotation to a customer for standard or adapted chain
improvement in
–  customer contact 
response times
–  quotation lead 
times
–  on time delivery 
in full
our aim is to show a steady and regular improvement  
in all metrics
excellent customer service requires efficient business 
processes and systems that deliver replicable predictable 
and timely outcomes as the group is changing and 
improving many of our business processes and systems 
this creates a risk to current service levels this risk is 
being mitigated by a newly created steering committee 
with responsibility for oversight and approval of all 
business system change requests
4  o p timising 
business processes
business processes have been improved in all functional areas for example on the commercial side we have vastly 
increased the number of customer quotations coming directly from our systems thereby cutting customer response 
times in operations as part of the bredbury closure project we have implemented a service cell dedicated to fast 
turnaround times on selected chain assembled from a standard list of stocked components 
under development
each of our business 
processes will have  
its own set of kpis
our intention is to create one global integrated erp 
system our cost to serve will be reduced and this work  
will also feed into the kpis for customer service
changes to systems and processes may in the short 
term reduce performance as users learn new skills if 
changes are not managed properly the performance 
reduction and its duration can grow
our new director of business systems is a key hire  
in mitigating this risk
5  lowering our 
breakeven point
during the year we delivered a major reduction in excess chain manufacturing capacity and overhead burden through 
the closure of our bredbury facility the production processes were successfully transferred to other renold locations 
and the remaining activities are on track to complete at the end of the first quarter of the new financial year
elsewhere we built on overhead reductions started in the second half of the prior year with further reductions of £09m 
to give net year on year reductions in underlying overheads of £34m
total overheads as we reengineer our business processes we aim to reduce 
the cost to serve of all of our activities our medium term 
goal is to deliver meaningful annual reductions in our 
overheads to support the delivery of enhanced margins  
and shareholder value
overhead structures tend to be inflexible and can  
be a major financial burden in a downturn our new 
processes are being designed with more flexibility in 
mind to reduce this risk
6  de v eloping  
our people
we have created a number of new key positions in the group to emphasise and underpin our drive to manage the 
business in a more integrated way where there are benefits to be gained from sharing best practice and eliminating 
unnecessary duplication these posts include a new chain manufacturing director and a group business systems 
director we have also refreshed our senior management team and a number of other key leadership positions have 
also seen new hires with the senior team now in place the pace of change and number of initiatives under 
management can be increased
under development performance management processes and systems in the 
business are currently somewhat adhoc and inefficient  
we aim to deliver a performance management system that 
assesses performance but that also both identifies training 
and development needs and supports delivery of them
change can be unsettling for all staff creating a risk  
of some staff leaving due to feelings of uncertainty
to counter some of this we are increasing the regularity 
and content of communication to give all staff a clearer 
sense of direction
7   s tr engthening  
our balance sheet
we completed the merger of the three uk defined benefit pension schemes this has significantly reduced the ongoing 
administration costs of the schemes at the same time 1316 members with small pension pots opted to have their 
entitlements paid out as lump sums which led to a reduction in scheme liabilities and assets of £109m and £104m 
respectively fewer members in the scheme will lead to lower overall administrative costs
in the usa one of the three defined benefit schemes moved into a surplus following strong equity asset performance 
and the formal termination of that scheme has now commenced to allow it to be fully derisked
our working capital ratio further improved to 177 2013 190 equivalent to a reduction in average net debt of £24m 
based on current annual sales
annual underlying 
cost of servicing 
legacy pensions
ratio of working 
capital to rolling 
annual sales wc
gearing ratio
ultimately we aim to derisk the group from all defined 
benefit pension liabilities the short term focus is on 
managing down the larger exposures in the uk and 
germany we aim to have stable annual cash costs to 
enhance predictability we want to optimise working capital  
to support the business while minimising the cash tied up
work is ongoing to identify an appropriate level of gearing 
for the group
pension liabilities fluctuate with factors outside the 
group’s control interest rates inflation expectations 
longevity and returns on assets the key is to be ready 
to derisk when the market opportunity arises legislative 
changes can also lead to changes in liabilities and 
opportunities for derisking 
working capital can take time to unwind and in the 
event of a sudden downturn in activity the group  
could be left with excess stock
to mitigate this risk we have deployed working capital 
management tools and wc  is a monthly monitored kpi
1  refer to glossary on page 136 for definitions of kpis
annual report and accounts 2014 renold plc 17
strategic report renold chain is a global market leading supplier of differentiated 
and value added chain products for a wide variety of end use 
applications we create innovative solutions for our customers  
who want to reduce costs and lead times and deal with 
increasingly challenging working environments the renold  
name is known in the industry for quality and performance
chain performance review
underlying external revenue of £1396m 
was virtually flat being 02 behind the 
prior year the regional picture was more 
mixed and reflected differences in local 
macroeconomic conditions the americas 
and india delivered good growth of 53 
and 47 respectively performance was 
also mixed within europe itself with an 
overall fall of £10m 17 being caused  
by a £11m 124 fall in our french 
business with broadly flat performance  
in other territories underlying revenue  
in australasia fell £18m 76 wholly 
explained by the £22m 152 fall in 
australia itself which was impacted by  
a slowdown in activity within the natural 
resources sector our chinese chain 
business focuses on supporting other 
group companies and its own direct 
external sales saw a small decline
underlying order intake grew by 14 
with the first half ahead 05 and the 
second half 22 ahead the latter being 
against a relatively weak second half  
in the prior year at a regional level 
european underlying order intake was  
up 18 and in the americas it was up 
53 similar to the underlying revenue 
picture the position was much weaker  
in australasia where underlying order 
intake was down 116 with australia 
itself down 166 the smaller regions  
of china and india in terms of externally 
focused activity both delivered growth 
the profile of our order intake and hence 
our revenue profile also has become 
more stable during the year with less 
reliance being placed on large one off 
orders which can have an adverse impact 
by disrupting our production processes
the chain division is exemplified by 
an extensive product range reaching 
into a wide number of geographies
  sales offices and distribution 
channels in over 18 countries 
worldwide
  extensive product range that  
can be customised or designed 
from scratch for any application
  solution chains for many 
challenging applications
chain facts
1
renold plc annual report and accounts 2014 18
our performance
chain the book to bill ratio in the chain division 
finished the year at 1004 indicating 
that the absolute level of underlying 
order intake was higher than the 
absolute level of revenue during the  
year a result around 100 for this key 
metric suggests relatively flat sales with  
a result over 100 suggesting sales 
growth in the future the chain division 
delivered a result over 100 for five out 
of the six months in the second half
contribution margins being the margin 
after all variable production costs 
improved during the year in part this was 
due to more predictable manufacturing 
activity following the reduction in large 
stocking orders this change allowed a 
lowering of overtime and other inefficient 
production costs and also reduced under 
utilisation in the period which would have 
followed a stocking order direct labour 
costs were adverse to the prior year by 
08 of revenue and this was largely due 
to additional activity undertaken during 
the transfer of production from the 
bredbury facility to sister sites where the 
extra labour and labour inefficiencies were 
treated as normal operating costs once 
the recipient sites have fully absorbed the 
bredbury production load a key task will 
be to deliver a second phase of operational 
efficiencies that will flow from the 
operating leverage at those sites
underlying net overheads were reduced  
by £25m in the year gross savings  
of £30m were offset by an additional 
£05m of depreciation on one of our  
erp systems overhead reductions  
in the year were delivered by all chain 
regions with the exception being india 
where overheads were flat the overall 
gains in the year were part of the global 
effort to streamline our processes and 
structures and are part of our continuous 
improvement effort
as a result of continuing reductions in 
overheads and measures to improve our 
contribution margins adjusted operating 
profit rose 46 to £99m 2013 £68m 
delivering a return on sales of 71 
2013 49 with the exception of 
australasia all chain regions delivered 
an increase in absolute levels of adjusted 
operating profit and also return on  
sales ratio irrespective of whether their 
underlying sales grew were flat or 
declined australasia and australia itself 
faced an additional challenge during the 
year of a rapidly depreciating foreign 
exchange rate for the australian dollar 
which fell by 24 against sterling and 
21 against the euro which are two  
of the principal trading currencies for  
the business this currency change is 
inevitably having an inflationary impact 
on input costs which we have taken 
action to recover with a combination  
of price rises and overhead reductions
capacity reduction project
the single largest initiative undertaken by 
the group during the year was the closure 
of the bredbury chain manufacturing 
facility and transfer of production to sister 
facilities around the world prior to its 
closure the bredbury facility produced 
chain that accounted for approximately 
12 of all renold external chain sales 
globally the transfer of this production  
to three main recipient sites was a major 
and complex undertaking and hence it 
was managed by a dedicated external 
project manager with full time support 
from a number of internal personnel the 
project also benefited from additional 
oversight from a steering committee 
chaired by the group chief executive and  
a monitoring committee of the board 
the project involved the transfer of  
over 70 pieces of existing equipment  
as well as the sourcing of new and 
reconditioned equipment in local 
markets at the recipient sites in 
germany and the usa building works 
were required to modify existing work 
areas and to create additional space  
in total the production of approximately 
17000 part numbers was relocated with 
the requirement for those same items  
to have bills of materials and routings 
transferred to the recipient sites
the expected benefits from phase one  
of the project which represents the 
difference in overhead and cost bases 
before and after the project are in the 
region of £32m on an annualised basis 
the recipient sites have also been set  
an additional phase two challenge to 
address once the production process 
transfer is complete and bedded down 
that second challenge is to deliver 
operating efficiencies by leveraging the 
additional throughput brought about by 
the transfer project and these benefits 
are targeted to start flowing in the 
second half of the new financial year
find out more
wwwrenoldcom
underlying revenue
£m
1518
1092
1398 1396
10 11 12 13 14
1377
0
50
100
150
200
250
underlying adjusted operating margin
1

55
07
48
71
10
8
6
4
2
0
2
10 11 12 13 14
62
1  operating profit before pension administration costs and exceptional items divided by revenue at constant exchange rates
annual report and accounts 2014 renold plc 19
strategic report renold chain on 
newly commissioned 
us aircraft carrier
flt leaf chain
newly commissioned us aircraft carrier
flt chain is designed to carry very high loads by virtue  
of the numerous interlaced plates mounted on a common 
chain pin the chain has been further optimised by renold  
to give high fatigue and wear resistance through careful 
selection of materials and our production processes
the chain will be used on a newly commissioned us naval 
aircraft carrier in a critical cargo lifting role which is a key 
part of the ship’s logistics renold flt chain was chosen for 
its long life and reliability in this mission critical application 
and for the same reasons is specified widely for many  
of the world’s leading material handling companies
often used on forklift trucks hence the name this product  
is also used in a wide range of applications from port 
handling equipment to flood defence systems
find out more
wwwrenoldcom
renold plc annual report and accounts 2014 20 renold leaf chain with 4x6 lacing one of a wide range  
of chains for lifting applications
our products
in action
annual report and accounts 2014 renold plc 21
strategic report renold chain at sugar 
mill in south america
 sugar mill in south america
renold chain chosen to withstand the harsh operating conditions
a wide range of renold conveyor chains gearboxes and 
couplings are used as an integral part of the sugar cane 
production process they help convert the raw materials  
into the primary product cane sugar renold has serviced 
the sugar cane industry for over 80 years
processing of sugar cane creates a variety of environmental 
challenges for power transmission products including 
abrasion corrosion and repeated heavy loads throughout  
the various elements of the system to cope with this  
in the wash down conveyor shown customised heat 
treatment and excellent surface finish of the chain  
bush and pins contribute to a product which resists  
fatigue and other aspects of the harsh environment
the well established ability of renold products to survive  
in such environments has also encouraged adoption by 
owners of new plants in south america and elsewhere 
commissioned to exploit the increased global demand for 
ethanol and food products
find out more
wwwrenoldcom
renold plc annual report and accounts 2014 22 our products
in action
bagasse chain one of many types  
used in sugar cane production
annual report and accounts 2014 renold plc 23
strategic report our torque transmission division is an international manufacturer of 
high integrity torque transmitting products used where public safety  
or assured plant operation is critical renold’s products are integral  
but generally unseen in different facets of daily life from gearboxes 
driving heavy duty high rise escalators in london and new york  
subway systems to shaft couplings in power generation plants  
ensuring uninterrupted supply
torque transmission performance
underlying external revenue of  
£444m was 59 behind the prior year 
the majority of the £28m underlying  
fall in revenue arose from the wind  
down of a major mass transit contract 
that came to an end in the first quarter 
with a year on year reduction of £27m  
in the current year in addition revenues 
were negatively impacted by a downturn 
in the mineral extraction and processing 
sector as both the equipment manufacturers 
and the end user markets continued to 
reduce their demand during the first half 
of the year the rate of revenue decline 
slowed slightly during the second half of 
the year as key geographical markets 
show some signs of bottoming out though 
this has taken longer than first estimated
in contrast to the revenue picture 
underlying order intake for the year 
experienced a modest fall of 03 with 
the first half reduction of 23 being 
almost offset by year on year growth  
of 21 in the second half the upturn in 
order intake was less oriented towards 
the large mass transit contracts which 
tended to have lower margins in the  
past and four of the seven operating 
units posted growth in underlying order 
intake in the second half investment  
in power generation in asian markets 
returned at the start of year whilst the 
metals industry improved slightly the 
marine market which has seen very  
weak demand for several years is now 
showing early signs of recovery we are 
aiming to enhance our prospects with 
the development of new products that 
the torque transmission division 
provides a wide range of standard 
and bespoke products
 advanced modelling techniques  
to evaluate new products and 
shorten development times 
 new innovations go through 
rigorous evaluation before  
being released to customers
torque  
transmission facts 2
renold plc annual report and accounts 2014 24
our performance
torque transmission have contributed to new orders for 
example escalator products in both 
europe and america
the stronger finish to the year with 
fourth quarter orders ahead by 47 
brought the book to bill ratio for the year 
to 98 a result close to 100 for this 
key metric suggests sales should level  
off in the short term if the rate of order 
intake is maintained in absolute terms 
the underlying external order intake was 
£08m below the equivalent revenue 
figure in the year 
contribution margins being the  
margin after all variable production 
costs improved during the year as was 
the case in the chain division in part 
this was the result of the lower margin 
mass transit business that came to an 
end during the year but it was also 
supported by focusing more sales effort  
on the higher performance products  
in the portfolio other production  
cost ratios such as labour were relatively 
flat compared to the prior year leaving 
further benefits to be pursued as we 
implement more efficient manufacturing 
processes and techniques
underlying net overheads in the  
division were reduced by £09m before  
an additional £03m charge in respect  
of the depreciation of the group’s erp 
system these savings were the result  
of a number of initiatives in each location 
rather than one major restructuring 
project the overall gains in the year  
were part of the global effort to streamline 
our processes and structures and are 
part of our continuous improvement 
effort which applies as much in the 
torque transmission business as it  
does in the chain division 
the combination of the gains in 
contribution margins and ongoing 
overhead reductions led to a healthy 
increase in the adjusted net operating 
margin of 19 to 131 the absolute 
level of adjusted operating profit also 
rose by £08m to £61m before the impact 
of the additional erp depreciation of 
£03m this was achieved despite the 
reduction in external revenue of £28m 
and operating margin gains were spread 
over four of the seven units within the 
division the gains in contribution margin 
extended to five out of the seven operating 
units and net operating margin gains 
were delivered in four of the units 
however our south african business  
did encounter difficulties throughout  
the year with a range of external issues 
such as the macroeconomic situation 
particularly in the mining sector where 
investment and maintenance spend has 
been negatively impacted by industrial 
unrest and also a significant 259 
reduction in the value of the south 
african rand against sterling and  
230 against the euro
506
470 472
444
10 11 12 13 14
484
0
30
20
10
40
50
159
87
112
131
10 11 12 13 14
131
0
10
5
15
20
underlying revenue
£m
underlying adjusted operating margin

during the year the divisional 
management team itself has changed  
at the start of the second half of the  
year the new leadership was tasked  
with halting the revenue decline 
improving business efficiency and laying 
the foundations to deliver future growth 
within the framework of the group’s 
strategic plan key changes to senior 
management within the division were 
made with new leaders appointed in 
south africa and north america both 
businesses are engaged in change 
programmes which will impact on  
every part of their operation likewise  
the uk businesses are undergoing 
organisational changes that will position 
them well to deliver the group’s strategic 
plan our ongoing commitment to invest  
in research and development and the 
latest manufacturing technology in all  
of t orque transmission’s facilities will 
continue to provide solutions with lasting 
benefits for renold and our customers
find out more
wwwrenoldcom
annual report and accounts 2014 renold plc 25
strategic report renold couplings  
for nasa launch  
pad tower
dihedral couplings
nasa launch pad tower
currently nasa is refurbishing the hinge boxes and 
associated couplings that are used in the new space launch 
system for various swing arm umbilicals renold is the 
supplier for the new coupling seals and fasteners and  
is also working with nasa to provide technical support  
for the coupling refurbishment activities
nasa originally specified renold couplings for use on the 
hinge boxes that were used in the shuttle programme for  
the orbiter access arm and before that on the crew access  
arm part of the launch umbilical tower during the apollo 
programme the couplings were installed within a hinge box 
which rotates the entire crew access arm truss assembly
renold was chosen because of our ability to design and 
manufacture a coupling to meet the rigorous torque 
demands in a special vertical installation 
the dihedral coupling supplied is made from high tensile 
steel with nitrided gear teeth designed to handle the  
high torque requirements of the application
find out more
wwwrenoldcom
renold plc annual report and accounts 2014 26 our products
in action
renold ajax dihedral couplings
annual report and accounts 2014 renold plc 27
strategic report renold couplings for 
tyre manufacture
rubber mixer couplings
tyre manufacture
renold supplies couplings to a global tyre manufacturer for  
use on their rubber mixers the mixers are used to mix over 
200 raw materials which go into the production of a tyre 
couplings are used on various sizes of mixers and connect 
the gearbox to the mixer a spacer or floating shaft assembly 
is used so that if any maintenance is required the equipment 
does not have to be moved 
renold couplings were selected because of their high torque 
capacity gear tooth design and the distortion free process  
used to harden the gear teeth renold worked closely  
with the customer to standardise the designs to allow  
for interchangeability between various plant locations 
couplings connecting the motor to the gearbox on the  
mixers are also supplied by renold as well as couplings  
and universal joints on extruder and calendar equipment
find out more
wwwrenoldcom
renold plc annual report and accounts 2014 28 our products
in action
renold ajax spacer couplings
annual report and accounts 2014 renold plc 29
strategic report “ the group successfully delivered  
a complex and significant plant 
closure project against a 
background of improving margins 
working capital reductions and 
close management of our cash 
resources in parallel long term 
benefits were secured for our  
cost of capital and medium term 
pension funding costs ”
 brian tenner 
 finance director
renold plc annual report and accounts 2014 30
overview
we have delivered a number of key  
steps to support our strategic objective  
to strengthen our balance sheet improve 
our ability to generate free cash flow and 
to reduce our exposure to legacy pension 
cash costs we were also able to continue 
improvements in our average working 
capital ratio achieving a reduction for the 
fourth year in succession during the year 
the group completed the restructuring  
of its internal capital structure this 
optimises the benefits of the refinancing 
in 201213 and will further reduce our cost 
of debt in 201415 the completion of the 
uk pension scheme merger in june 2013 
achieves an annual cash flow saving of 
£10m with a full year’s benefit in 201415
orders and revenue
order intake during the year was  
almost identical to revenue with the 
underlying ratio of orders to revenue 
book to bill being 998 2013 972 
as expected the first half had a slower 
start with underlying orders £03m  
below underlying revenue 2013 orders  
£51m below revenue in the second  
half orders exceeded revenue by £20m 
2013 orders £08m below revenue as 
set out on pages 18 and 19 and 24 and 
25 chain and torque transmission 
experienced mixed performance in the 
two halves of the year
group revenue for the year decreased by 
33 to £1840m on an underlying basis 
excluding the impact of foreign exchange 
the decrease was lower at 16 £30m 
the chain division was virtually flat year 
on year with a 01 fall in underlying 
revenue torque transmission therefore 
accounted for the overall drop in group 
revenue with a divisional fall of 59
operating result
the group generated £51m of adjusted 
operating profit in the first half  
2013 £36m and £60m in the second 
half 2013 £36m with a full year result  
of £111m 2013 £72m the second half 
result was achieved on 26 £24m 
lower underlying revenue than the first 
half this reflects improving margin 
outcomes and ongoing cost reduction 
activity as we continue to lower our 
breakeven point the year on year 
reduction in net overheads of £34m was 
achieved against the headwind of £08m 
of additional depreciation on the erp 
system which began to depreciate in the 
fourth quarter of the prior year all chain 
regions and the torque transmission 
division contributed to this reduction in 
overheads as set out in the divisional 
performance reviews
changes in foreign exchange rates 
resulted in operating charges of £04m  
in the year all else being equal there 
would be a further reduction of £05m 
operating profit if the year end exchange 
rates applied throughout the year
finance director’s review impact on average net debt due to 
reduction in average working capital  
in the year
£24m
annual report and accounts 2014 renold plc 31
strategic report
exceptional items
the exceptional charges of £118m  
2013 £123m were predominantly driven 
by the closure of the bredbury facility 
and are detailed in note 2c to the group 
financial statements with additional 
narrative in the chain performance 
review on pages 18 and 19
financing costs
external net interest costs in the  
year were £18m 2013 £29m the 
decrease on the prior year was the  
result of the restructuring of the group’s 
internal capital structure following the  
refinancing in the prior year of the 
group’s principal borrowing facilities the 
annual charge includes £03m in respect 
of amortisation of the refinancing costs 
paid in 2012 which are being expensed 
over the four year term of the facility
net ias 19 finance charges which are a 
noncash item were £28m 2013 £25m 
the net movement being due to lower 
interest rates on a higher opening liability 
figure all figures in respect of pension 
financing costs have been restated in 
accordance with the changes to the 
relevant accounting standard ias 19 
employee benefits and the impact of  
that change is set out in more detail in the 
accounting policies section to the financial 
statements in the current year the actual 
return on assets was £15m higher than 
the return used in the interest calculation 
as specified in ias 19 the difference 
appears as a gain in the statement of 
other comprehensive income
result before tax
profit before tax and exceptional items 
was £59m 2013 £06m restated the 
loss before tax after exceptional items 
was £59m 2013 loss of £119m restated
the business uses underlying measures 
of orders and sales in its daily reporting 
activities this metric retranslates the 
prior year orders and sales to the 
current year foreign exchange rates to 
give a more meaningful comparison of 
performance the same is also true for 
operating profit and earnings measures 
which are stated on an adjusted  
basis that strips out the impact of 
exceptional items foreign exchange  
the administration costs of closed 
legacy pension schemes and pension  
financing charges as these adjusted 
items are deemed to better reflect the 
performance of the ongoing business
2014 2013 restated
order 
intake revenue
operating 
profit
loss
order 
intake revenue
operating 
profit
loss
as reported 1837 1840 13 1852 1903 64
impact of foreign 
exchange
– – –
33 33 01
exceptional items – – 118 – – 123
pension 
administration costs
– – 06
– – 13
underlyingadjusted 1837 1840 111 1819 1870 71 renold plc annual report and accounts 2014 32
debt facility and capital structure
the group’s primary banking facility  
is for a four year term maturing in  
october 2016 the facility comprises  
a committed £41m multicurrency 
revolving credit facility mrcf and  
an additional £8m of ancillary facilities 
these facilities have been provided  
by lloyds bank plc and svenska 
handelsbanken ab 
the principal covenants are the net 
debtadjusted ebitda ratio calculated 
on a rolling 12 months basis which  
has been set at a maximum of 25 times 
until maturity and adjusted ebitda
interest cover which is required to be 
greater than 40 times until maturity  
the net debtadjusted ebitda ratio  
as at 31 march 2014 is 15 times  
2013 19 times based on the period  
end net debt of £248m 2013 net 
debt £228m the adjusted ebitda
interest cover as at 31 march 2014 is  
87 times 2013 42 times
the group also benefits from numerous 
other smaller overseas facilities totalling 
£34m
at 31 march 2014 the group had unused 
credit facilities totaling £90m and cash 
balances of £67m total group credit 
facilities amounted to £444m with 
£410m being committed
treasury and financial instruments
the group’s treasury policy approved  
by the directors is to manage its  
funding requirements and treasury risks 
without undertaking any speculative 
risks treasury and financing matters  
are assessed further in the section on 
principal risks and uncertainties on 
pages 36 to 38 note 25 to the group 
financial statements provides further 
details of financial instruments
taxation
the current year tax charge of £48m 
2013 tax credit of £01m is made up  
of a current tax charge of £12m  
2013 charge of £07m and a deferred  
tax charge of £36m 2013 credit of 
£08m the group cash tax paid was 
much lower at £09m 2013 £07m and 
the difference is due to the utilisation  
of tax losses and other tax assets in 
various parts of the group
group results for the financial period
loss for the financial year ended  
31 march 2014 was £107m 2013 loss  
of £118m and the basic and diluted loss 
per share 49p 2013 loss 54p for both 
the basic and diluted adjusted earnings 
per share was 32p 2013 earnings 14p
balance sheet
net assets at 31 march 2014 were £181m 
2013 £310m the net liability for 
retirement benefit obligations was 
£493m 2013 £563m after allowing  
for a net deferred tax asset of £156m 
2013 £132m overseas schemes now 
account for £188m 38 of the post tax 
pension deficits and £163m of this is in 
respect of the german scheme which is 
not required to be prefunded see 
pensions section on pages 33 to 35
cash flow and borrowings
cash generated from operations was 
£61m 2013 £82m capital expenditure 
was increased to £71m 2013 £49m 
largely due to £21m of capital expenditure 
incurred on the bredbury closure project 
further gains were made in working 
capital management with reductions 
equivalent to £24m 
these gains were despite a planned 
increase in safety stock as part of the 
bredbury closure project 
group net borrowings at 31 march 2014  
of £248m were £20m higher than the 
opening position of £228m comprising 
cash and cash equivalents of £67m  
2013 £98m and borrowings which 
include £05m of preference stock of 
£315m 2013 £326m
to manage foreign currency exchange 
risk on the translation of net investments 
certain dollar denominated borrowings 
taken out in the uk to finance us 
acquisitions had been designated as  
a hedge of the net investment in us 
subsidiaries at 31 march 2014 this hedge 
was fully effective the carrying value of 
these borrowings at 31 march 2014 was 
£52m 2013 £64m 
the impact of transactional foreign 
exchange gains and losses during the year 
was a loss of £04m which is included  
in the operating profit result this was 
primarily driven by the appreciation  
in the value of sterling purchases in 
overseas locations such as australia  
and india as well as the impact of the 
euro appreciating against the us dollar
at 31 march 2014 the group had 2 
2013 2 of its gross debt at fixed 
interest rates cash deposits are  
placed short term with banks where 
security and liquidity are the primary 
objectives the group has no significant 
concentrations of credit risk with sales 
made to a wide spread of customers 
industries and geographies policies  
are in place to ensure that credit  
risk on individual customers is  
kept to a minimum
finance director’s review
continued annual report and accounts 2014 renold plc 33
strategic report
detailed information on the group’s 
pension schemes is set out in note 18  
to the group financial statements 
including the key assumptions used by 
the actuaries in arriving at the ias 19r 
funding position
the group is responsible for a number of 
defined benefit pension schemes which  
it accounts for in accordance with ias 19 
employee benefits changes to ias 19 
have taken effect for 2014 reporting with 
the prior year comparative figures being 
restated for further details of the impact 
of these changes see accounting policies 
section to these consolidated financial 
statements on pages 89 and 90
the group’s retirement benefit 
obligations decreased from £695m 
restated – £563m net of deferred tax  
at 31 march 2013 to £649m £493m net 
of deferred tax at 31 march 2014 the 
drivers of change are shown on the 
waterfall chart on page 35 one of the 
group’s us pension schemes has moved 
into surplus during the year and since  
the year end the formal termination 
process has begun to wind up the 
scheme secure member benefits and 
hence fully derisk it from the group’s 
perspective at minimal additional cost
the aggregate expense of administering  
the pension schemes was £06m  
2013 £13m which is now included  
in operating costs but is excluded in 
arriving at adjusted operating profit 
exceptional pension merger and asset 
backed funding costs of £nil 2013 £07m 
were incurred to complete a project 
initiated in the second half of the prior 
year this has led to a £10m reduction  
in annualised cash costs in the uk with 
effect from the end of the first quarter  
of the current financial year 
summary
the focus for the management team 
remains on steady and continuous 
improvement in our day to day  
business processes and performance  
we are working to support this activity 
with initiatives to improve our working 
capital management including adding 
stock or resources to support business 
development activity separately we  
aim to ensure that the legacy issues  
the group faces are ring fenced as  
much as possible from the day to day 
operation of the business to ensure  
they are neither a distraction nor a 
hindrance the improvements in our  
cost of debt and pension liability 
management represent a series of 
successful outcomes in delivering our 
strategic goal of strengthening our 
balance sheet
brian tenner
finance director
uk pensions scheme merger and  
asset backed funding structure
agreement was reached at the end  
of the last financial year to merge the  
three uk schemes into the renold 
supplementary pensions scheme 
subsequently renamed the renold 
pension scheme ‘rps’ the merger  
was completed on 26 june 2013 with 
1316 members taking windup lump  
sums to the value of £104m and as a 
result a small settlement gain of £05m 
was recognised the remaining assets  
of the renold group pensions scheme 
and js retirement benefit plan were 
transferred into the rps and full windup 
of those schemes was triggered on 
27 june 2013 the merged scheme had 
3635 members as at 31 march 2014 
compared to 5118 at the start of the year
the merged uk pension funds are 
underpinned by a 25 year asset backed 
partnership structure which provides 
annual cash contributions of £25m to 
the pension fund with annual increases 
linked to rpi and capped at 5 the 
contribution includes the first £05m  
of annual scheme operating expenses 
each year with the company meeting  
any excess expense costs the detailed 
structure and mechanics of the merger 
and underpinning asset backed funding 
structure are set out in note 18 to  
the accounts the triennial actuarial 
valuation of the rps as at 5 april 2013 
was completed following the year end 
and no additional contributions in excess 
of those generated by the asset backed 
funding structure are currently required
the new arrangements do not have a 
substantive net impact on the group’s 
tax position
pension’s assets and liabilities
the group has a mix of uk 82 of gross liabilities and overseas 18 defined benefit pension obligations as shown below
assets  
£m
2014  
liabilities  
£m
deficit  
£m
assets  
£m
2013  
restated 
liabilities  
£m
deficit  
£m
defined benefit schemes
uk funded 1449 1830 381 1560 1991 431
overseas funded 141 173 32 159 186 27
overseas unfunded – 236 236 – 237 237
1590 2239 649 1719 2414 695
deferred tax asset 156 132
net deficit 493 563 pensions
39
pensioners
46
deferred
15
dependents
3635
members
uk membership
18
gilts
32
equities
22
hedge and 
diversiﬁed 
funds
1
other
27
bonds
£1449m
uk assets
uk assets
renold plc annual report and accounts 2014 34
 → the pie charts show the current make up of the uk pension scheme 
membership and asset allocation as at 31 march 2014
 → the membership profile has changed over the last decade with 54  
of members being either pensioners or dependents today compared  
to 48 in 2002
 → the total number of scheme members has fallen by 60 since 2002  
to 3635 today of this reduction net mortality explains 41 with a 
further 32 due to net leavers from the schemes whether through the 
recent trivial commutation exercises or members opting to transfer 
their entitlements elsewhere
 → given the relative maturity of the scheme 45 of assets are now 
invested in gilts and corporate bonds it is expected that these are held  
to maturity and they are held primarily to generate an income stream 
that supports the ongoing annual pension payments made currently 
circa £106m per annum including cash lump sums on retirement
 → the overall target for uk portfolio returns is 66
 → the actual return in the year was 46 compared to the return based on 
the discount rate on the scheme liabilities used in the ias 19 financing 
charge calculation of 43 this led to a gain of £09m which added to 
overseas outperformance of £06m gives a gain of £15m included within 
remeasurement gains of £29m disclosed in the statement of other 
comprehensive income
 → it should be noted that the hedge fund and dynamic diversified growth 
funds both have characteristics of gilts in that returns are lower and  
aim to be less volatile than equities but that their returns are targeted  
to be higher than simple gilts and bonds
 → the chart shows the evolution of the number of members of the uk 
defined benefit schemes over the last ten years 
 → the chart also shows the profile of the different categories of member  
the category shown as pensioners includes surviving dependents of 
pensioners who are drawing their benefits as a spouse or dependent child
 → all three uk defined benefit schemes were closed to new members  
and future accrual by march 2010 and hence membership of the active 
category fell to zero
 → the significant step down in total membership and in individual 
membership of the deferred and pensioner categories in 2014 followed 
the scheme merger in june 2013 at that time 1316 members opted to 
have their small pension entitlements paid out as a lump sum and hence 
they ceased to be members of the scheme
 → other movements in each year mainly result from deferred members 
either retiring or transferring out of the schemes or from mortality 
amongst pensioner members
 → the group is currently reviewing the potential impact of the proposed 
changes in legislation as set out in the recent budget that legislation 
suggests that more members will be entitled to take their pension  
pots as a lump sum benefit which may have implications for the future 
membership of the uk scheme and on its costs of administration the 
legislation has not yet been enacted and hence it is not yet possible to 
be definitive on any potential impact
finance director’s review
continued
uk defined benefit schemes member numbers
2005 2006 2008 2007 2010 2009 2012 2011 2014 2013
0
6000
5000
4000
3000
2000
1000
7000
8000
9000
active deferred pensioners annual report and accounts 2014 renold plc 35
strategic report
movements in pension deficits
£m
discounted cash flows – uk 
discounted cash flows – germany 
14
49
15
14
05
3 4 2 0 1 1 2 5
bad good
05
uk discount 
rate
overseas
discount rate
settlement 
gain
asset 
performance
south african 
surplus
other
 → the chart shows the key drivers of change for the group’s defined 
benefit pension schemes over the last year
 → uk discount rates increased by 02 reducing the deficit by £49m 
 → uk discount rates remain around 11 below their historical average
 → german and american discount rates fell by 035 and 03 
respectively increasing the deficit by £10m and £04m in each case
 → the settlement gain arose on the merger of the uk pension schemes  
as 1316 members withdrew their entitlements in a lump sum
 → net asset out performance compared to the ias 19 discount rate  
reduced the deficit by £15m
 → the south african surplus was returned to the group as an unrestricted 
asset and hence is no longer considered a pension asset
 → the charts show the future cash outflows expected for the uk and 
german pension schemes split between scheme members who have 
already retired and those who have not yet retired both cash flow  
profiles have been discounted using the discount rates used to value  
the total liabilities of the schemes as shown in the financial statements 
 → the chart for the uk scheme shows that the scheme has already passed 
peak funding this means that the peak annual cash outflow has already 
been passed and therefore all else being equal future cash flows will 
reduce in line with the profile above it should be noted however that 
the profile assumes that all members draw their pension in regular 
payments rather than pursuing the small lump sum or trivial 
commutation route noted above
2015 2025 2035 2045 2055 2065
0
40
20
10
50
30
60
70
80
90
£m 100
deferred        retired
2015 2020 2025 2035 2045 2050 2030 2040 2055
0
07
05
04
03
02
01
08
06
09
10
11
12
£m
13
deferred        retired
 → the german chart also shows that peak funding has been passed but 
also the maturity of the scheme as evidenced by the relatively steep 
decline in annual cash flows in the medium term by the end of the  
fifth year the annual cash outflow will have reduced by 15 compared  
to the cash flow this year and by 30 by the end of the tenth year
 → the german scheme closed to new members in 1992 and the current 
average age of members is 68 years old
 → the group has initiated action to close the scheme to future accrual  
and the outcome of the court mediation process is expected to be 
known in the second half of the new financial year renold’s risk management framework is designed to identify and assess the probability 
and consequences of risks occurring and to manage the actions necessary to reduce the 
risks and to mitigate their impact
set out below are the known principal risks and uncertainties which could have a material impact on the group together with the 
corresponding mitigating actions that have been taken by the group additional risks not currently known or which are currently 
regarded as immaterial could also affect future performance
risk potential impact mitigation
strategic risks
↓ business strategy
a strategy which does not match the  
group’s circumstances capabilities  
or potential will fail to create  
shareholder value
the group is developing a new strategy  
to deliver a turnaround in performance and  
to make that performance more stable and  
less exposed to revenue volatility unless 
successfully implemented the group will  
continue to experience volatile results and  
weak levels of cash generation these are  
basic requirements to allow the delivery  
of sustainable and consistent growth in 
shareholder value
a new three phase strategic plan has been developed 
refer to page 15 in parallel a new and detailed 
operating model has also been specified and is now 
in the process of being implemented
structural reengineering of our business processes 
and cost base is also underway and has already 
delivered significant reductions in our breakeven 
point this is an ongoing process which will be 
embedded as continuous improvement in all of our 
business activities
new and relevant key performance indicators are 
being developed for all of our activities to monitor  
the delivery of the three phase strategy
↓ macroeconomic and political
we operate in 18 countries and sell to 
customers in over 100 and therefore  
we are necessarily exposed to economic 
and political risks in these territories  
such as recession or the imposition of 
trade barriers
the continuing fragile macroeconomic 
climate in the eurozone and australia  
is a specific source of risk
key territory sales profile is shown below
usa 33 of group sales
germany 7
uk  9
australia  7
adverse macroeconomic or political changes in 
any of these territories could have a material 
negative effect on the group’s financial 
performance and condition and is a key driver 
for the objective to lower our breakeven point
our diversified geographic footprint inherently 
exposes us to more countries where risks arise  
but conversely mitigates the risk of overexposure  
in any one country
actions to lower the group’s overall breakeven  
point also serve to reduce the impact of a global 
economic slowdown
continuous monitoring of macroeconomic trends  
industry specific and internal leading indicators
strong core banking group with multicurrency  
debt facility supported by matching cash flows  
plus improving ebitda
← → raw material price volatility
increases in the cost of raw materials  
may not always be recoverable or have 
delays in recovery due to weakness in 
demand or competitor actions
if raw material costs fall the group  
may face customer pressure to reduce 
prices or experience a fall in demand
approximately 35 of the group’s sales  
value is spent on raw materials with steel  
being the primary purchase
steel prices experienced by the group  
have been relatively stable recently  
following previous periods of considerable 
volatility unrecovered cost increases  
would have a material effect on the group’s 
financial performance
continuous monitoring of different international  
steel price indices to give early warning of  
negative trends
where contractually possible we pass on  
price increases
stock holdings are managed to maintain a  
forward hedge on input costs and time buffer  
to allow negotiations with customers and  
suppliers on price increases
← →  competitive markets and  
technology advancements
renold operates in highly competitive 
markets with customer decisions based 
typically on quality technology service  
and price new entrants or consolidation  
of existing competitors could restrict our 
ability to deliver our strategic objectives
renold may lose customers to competitors  
if we are unable to adapt to market 
developments due to changes in consumer 
preferences regulatory or industry 
requirements or competitive technologies
highly fragmented market may reduce risk  
of significant competitive pressure
strategic objective to improve service and  
enhance customer relationships will deliver  
a more loyal customer base
investment in new technology and  
engineering capabilities
key
↓ risk trending downwards
←→ risk trend unchanged
↑ risk trending upwards
renold plc annual report and accounts 2014 36
principal risks and uncertainties risk potential impact mitigation
operational risks
← → health and safety in the workplace
a lack of robust safety processes and 
procedures could result in accidents 
involving renold employees and others  
on renold premises
the risk assessment reflects the fact  
that increased focus and auditing is part 
of the rising rate trends seen on page 40
accidents caused by a lack of robust safety 
procedures could result not only in civil or  
criminal liability for both the group and the 
directors but also
 →business interruption
 →significant fines and penalties and
 →reputational damage
revised group wide health and safety policies 
contained within a documented management system 
‘the framework’  have been rolled out during the year 
health and safety audits and enhanced reporting has 
been implemented at all sites and a new group hse 
assurance manager has been appointed
continual risk assessments to ensure awareness  
of risks
live tracking of accident rates and root cause 
analysis via the integrated risk management system
← → manufacturing disruption
a catastrophic loss of the use of all or a 
portion of any of renold’s manufacturing  
or distribution facilities due to accident 
labour issues fire weather terrorism 
natural disaster or otherwise which in 
the short or long term could adversely 
affect the group’s ability to meet the 
demands of its customers
some of the assets maintained by the  
group such as it systems and machinery  
are critical to the manufacture and 
delivery of a particular product
a material disruption to operational facilities  
or the loss of critical assets may negatively  
affect the group’s
 →production capability and asset base
 →supply chain management
 →customer relationships and reputation and
 →financial performance
dedicated production teams focused on  
demand fulfilment
preventative maintenance programme
alternate manufacturing capacity exists for a 
substantial portion of the group’s product range
inventory maintained to absorb and flatten out  
raw material supply and production volatility
the group has insurance cover to mitigate the  
impact of a number of these risks
↓ erp systems
the group is presently implementing a 
global erp system to replace numerous 
legacy systems
legacy systems are less robust and less 
efficient than new systems
the risk continues that an unsuccessful 
implementation at an individual site could  
seriously impact the group’s performance
risks have reduced by virtue of the  
experience gained and lessons learned  
from previous implementations
old systems may not support delivery  
of business objectives
use of specialist external consultants on the project
recruitment of experienced personnel
phased implementation rather than ‘big bang’
project assurance and lessons learned reviews to 
continuously improve the quality of successive roll outs
ongoing project to replace and upgrade legacy systems
← →  compliance risks –  
laws and regulations
risks related to regulatory and  
legislative changes include the inability  
of the group to comply with current 
changing or new requirements
many of the group’s business activities  
are subject to increasing regulation and 
enforcement by relevant authorities
failure by the group or its representatives  
to abide by applicable laws and regulations 
could result in
 →administrative civil or criminal liability
 →significant fines and penalties
 →suspension of the group from trading and
 →reputational damage
communication of a clear compliance culture
risk assessments and ongoing compliance reviews
published up to date policies and procedures
monitoring of compliance with nominated 
accountable managers in each business unit
clear guidance and training issued to all employees
↓ bredbury site closure
a complex project was initiated to  
close the bredbury site and transfer 
approximately 12 of the chain division 
sales to other renold sites
the scale of the project in terms of the  
revenue streams being transferred as well  
as the complexity inherent in moving major 
production processes could if executed  
poorly have a major impact on group sales 
profitability and customer relationships  
in the short term and potentially in the  
longer term too
as at the date of this report the project is largely 
complete with all production equipment moved to 
new locations or new equipment sourced in those 
locations all of the new production lines are running 
though with some still to reach full capacity
additional safety stock created during the project  
will now be worked out during the new financial year
↓  a lack of technical expertise or 
management skills
the group’s international operations  
are dependent upon existing key 
executives and certain other employees  
in order to sustain and grow its business 
and there can be no assurances that  
these employees will remain with the 
group the success of the group will 
depend upon its ability to attract  
retain and motivate highly qualified  
and trained employees
if the group fails to retain attract or  
motivate the required calibre of employees  
then its operational and financial performance 
may be negatively impacted
competitive reward programmes focused training  
and development
ongoing reviews of succession plans based on  
business needs
personal development reviews and training programmes
management team strengthened with new capability 
from external hires and internal promotions
annual report and accounts 2014 renold plc 37
strategic report risk potential impact mitigation
financial risks
↓ liquidity
in the new economic reality all  
companies face risk in relation  
to the availability of debt to fund  
their ongoing operations
if the group fails to obtain the required  
funding then this could negatively impact
 →ongoing operations of the business and
 →going concern
the group’s primary banking facility expires  
october 2016
further improvements in results will increase  
the headroom in that facility
constant management focus to enhance working  
capital management processes
← → foreign exchange rate volatility
transactional exchange risk exposure
if the group does not manage these risks 
appropriately then this could result in the  
group’s earnings and cash flows being exposed  
to currency risk on its sales and purchases and 
balances of foreign nonfunctional currencies
the board has approved a net cash flow hedging 
strategy for major currencies that extends for four 
quarters on a rolling diminishing coverage basis 
transactions are covered primarily by simple  
forward foreign exchange contracts
borrowings denominated in foreign currency  
are supported and serviced by cash flows in  
the same currencies
dollar denominated borrowings taken out in the  
uk to finance us acquisitions have been designated  
as a hedge of the net investment in us subsidiaries
← → interest rate volatility
borrowings at variable rates expose the 
group to cash flow interest rate risk
exposure to variable exchange rates could 
negatively impact the financial performance  
of the group
facility in place for interest rate swaps to manage  
part of this exposure if volatility arises
↓ pensions deficit volatility
estimates of the amount and timing  
of future funding obligations for the  
group’s pension plans are based  
upon a number of assumptions
pension deficits are dependent on  
market based assumptions for  
discount rates and inflation
changes in these assumptions can materially 
impact the performance and financial condition  
of the group
the major uk pension cash flows 50 of all  
defined benefit pension cash costs are fixed  
under the 25 year asset backed funding scheme  
put in place during 2013 a further 25 of the  
annual cash flows are pensions in payment in 
germany in a mature scheme that has passed  
its peak funding requirement
all pension risks are actively managed in line with  
the group’s risk management system covering 
investment and liability management issues
the group is represented by a company nominated  
trustee on the investment committee which sets  
the asset strategies
renold plc annual report and accounts 2014 38
principal risks and uncertainties
continued we believe that consideration of corporate social responsibility is integral 
to ensuring the protection of the long term interests of our shareholders
the board has overall responsibility for 
corporate social responsibility including 
environmental policy and health and 
safety matters with the chief executive 
taking direct leadership responsibility 
supported by the regional and business 
unit executive teams
ethics
we recognise our duty to stakeholders  
to operate the business in an ethical  
and responsible manner
within the dynamic global business 
environment we expect our employees 
and business operations to conduct 
themselves ethically and to be honest 
fair and courteous in their dealings 
the highest standards of ethical business 
conduct are required of our employees  
in the performance of their duties 
employees may not engage in conduct  
or activity that may raise questions  
as to renold’s honesty impartiality  
or reputation or otherwise cause 
embarrassment to the group our 
employees are required to neither  
offer nor accept improper andor illegal 
gifts hospitality or payments a new  
group gifts and hospitality policy was 
implemented during the year
every renold employee has the 
responsibility to ask questions  
seek guidance and report suspected 
violations of the group’s code of ethics
a free of charge independent whistle 
blowing hotline continues to be available 
to all employees across the group 
enabling them to report any concerns 
about theft fraud and other malpractice  
in the workplace
following implementation of the  
uk bribery act in 2011 the group put  
in place training for all members of  
staff whose roles involve working in 
environments or activities where there 
was a perceived risk a revised group 
anticorruption policy was implemented 
during the year and a further training 
programme commissioned which will  
be refreshed on an annual basis other 
control processes and updates to formal 
contractual arrangements with agents 
and distributors have been put in  
place to ensure compliance with the 
requirements of the uk bribery act
health and safety 
renold is committed to providing a  
safe workplace for all its employees  
and those affected by its activities  
no activity is so critical or urgent  
that it may be done in an unsafe and 
uncontrolled manner at renold the 
individual’s safety is the top priority
the group health and safety policy 
reviewed and updated last year is 
supported by the group health and 
safety management framework 
structured to assist all parts of renold  
to understand the board’s expectations 
regarding health and safety performance
the framework is not a set of rules and 
regulations to be applied mechanically 
across the group it contains principles 
and expectations describing a set of 
outcomes it is a structured process to 
manage specific health and safety risks 
encompassing continual monitoring and 
periodic review the framework is 
consistent with internationally recognised 
standards including ohsas 18001
the group health and safety management framework
each stage has a number of key components
plan
 → determine the scope of the 
management system 
 → set objectives and timescales and 
identify resource requirements 
 →  de v elop perf ormanc e indica tors 
based upon desired objectives
learn
 → undertake periodic reviews  
of the management system’s 
effectiveness 
 → identify areas for improvement
do
 → create a management  
structure with clearly assigned 
roles and responsibilities 
 → create and implement processes 
and procedures including 
controls and training people 
 → maintain records
measure
 → conduct timely monitoring and 
measurement confirming the 
status of compliance 
 → develop and implement 
correctivepreventative actions
plan do
measure learn
annual report and accounts 2014 renold plc 39
strategic report
corporate social responsibilities 1  the lost time accident frequency rate is calculated 
using the rolling lost time accident figure for the  
year to date divided by the number of hours  
worked in the year and multiplied by 1000000  
thus providing the lost time accident rate per 
1000000 hours worked
the plandomeasurelearn cycle is  
a key part of the framework it is an 
iterative process which enables a site  
to establish implement and improve its 
management system and hence manage 
the targeted risks it is applicable at all 
levels in the organisation from the top 
management through to every employee 
in every activity within the group
a rolling programme of assurance audits 
commenced during the year the internal 
assurance audit tests and reports site 
compliance against the requirements of 
the framework the framework presents 
a focus for continuous improvement  
and so is reflected in the audit outputs 
incorporated into a site action plan
the importance of individual 
contributions to the continuous 
improvement of our systems is  
well recognised and we ensure  
all improvement opportunities are 
captured via the integrated risk 
management system irms the  
irms supports a number of business 
processes including standardised 
reporting for accidents incidents  
near misses safety opportunities and 
related action tracking and has been 
further enhanced during the year 
the additional functionality includes a 
hazard assessment reporting feature 
that provides both a consistent and 
transparent view of the ongoing health 
and safety risks during the year roll  
out of the online hazard assessment 
module has focused on the larger sites 
with a plan that all areas will be using  
the system during 2014 this supports 
our drive to deliver improvements to  
our health and safety risk management 
processes and the quality of risk 
information generated allowing  
optimum focus of resources
the board regularly reviews health and 
safety performance and ensures that any 
issues identified are promptly addressed 
reporting enhancements have been 
made to broaden the performance 
measures trend reviews have also  
been completed on behalf of the board 
focusing on particular incident types 
the following charts show the group’s 
health and safety performance for the 
four years to 31 march 2014 
the group uses an average manufacturing 
index for reportable incident rates  
rir as the performance benchmark for 
each of our locations that benchmark  
is a score of 1500 or lower sites with  
a score in excess of 1500 are required  
to implement remediation actions to 
improve their performance
the deterioration in the performance 
metrics is believed to be primarily due to 
the improved accident reporting and 
investigation processes introduced in 
january 2013 other concurrent 
remediation actions including a global 
health and safety training programme and 
the introduction of the group wide health 
and safety awards scheme are designed 
to encourage performance improvement 
against the now established benchmarks
following a successful assessment  
of compliance to ohsas 18001 the 
management system for occupational 
health and safety the milnrow mulgrave 
and hangzhou facilities were recommended 
for certification the halifax site is  
also a holder of this standard all other 
production facilities across the group 
which are not currently certified have 
declared a target to achieve ohsas 
18001 all sites are required to develop 
specific health and safety plans to 
highlight areas that require particular 
attention and are monitored on a regular 
basis by the health and safety team
employees
the motivation and commitment of our 
employees is essential to drive forward 
our business the recruitment retention 
and development of motivated effective 
people will be key to the successful 
delivery of the revised strategy for the 
group that revised strategy will itself 
include assessing opportunities to 
improve our processes for managing  
and developing people
110
72
140
20
15
10
5
0
11 12 13 14
180
average lost time accident frequency rates
1
average number
1050
481
587
1500
1200
900
600
300
0
11 12 13 14
1250
working days lost
days lost
1050
748
1665
2000
1500
1000
500
0
11 12 13 14
1200
reportable injury rates average trend
average reportable injury rate
renold plc annual report and accounts 2014 40
corporate social responsibilities
continued annual report and accounts 2014 renold plc 41
strategic report
during the year ended 31 march 2014  
the following activities were carried  
out across the group
engaging our people
we place a strong emphasis on  
employee communications and two  
way feedback the group’s intranet  
site enables access to the latest group 
information as well as group policies  
we have also commenced regular 
presentations to employees throughout 
the group where the half year and 
yearend financial results are presented 
and explained by senior management 
this helps to achieve a common 
awareness amongst employees of  
the financial and economic factors 
affecting the performance of the group
we also use electronic bulletin boards  
for the sharing of knowledge and 
information across the world 
employment policies
arrangements for consulting and 
involving group employees on matters 
affecting their interests at work and 
informing them of the performance of 
their employing business and the group 
are developed in ways appropriate to 
each business a variety of approaches  
is adopted aimed at encouraging the 
involvement of employees in effective 
communication and consultation and  
the contribution of productive ideas  
at all levels
employment policies are designed to 
provide equal opportunities irrespective 
of race caste national origin religion 
age disability gender marital status 
sexual orientation or political affiliation 
group policy is to ensure that disabled 
applicants for employment are given  
full and fair consideration having regard 
to their particular aptitudes and abilities 
and that existing disabled employees  
are given equal access to training  
career development and promotion 
opportunities in the event of existing 
employees becoming disabled all 
reasonable means would be explored  
to achieve retention in employment in 
the same or an alternative capacity 
including arranging appropriate training
on human rights the concept of human 
beings as having universal rights or 
status regardless of legal jurisdiction or 
other localising factors such as ethnicity 
nationality and sex 
the group respects all human rights  
and in conducting its business regards 
the right to nondiscrimination and fair 
treatment as the most relevant to its  
key stakeholder groups these being 
customers employees and suppliers  
the group’s employment policies  
and procedures reflect principles  
of equal treatment 
the group has not been made aware of 
any incident in which the organisation’s 
activities have resulted in an abuse of 
human rights
environment
renold is committed to managing  
its activities to provide appropriate  
levels of care for the environment  
for customers and for employees in 
particular renold seeks to develop  
and manufacture products that  
minimise their environmental impact  
as far as practicable to cooperate  
with industry government bodies  
suppliers and customers to develop  
and achieve improved standards of 
environmental care and to conduct 
operations in compliance with relevant 
statutory provisions concerning 
environmental matters
four sites within the group are  
now accredited with the iso 14001 
environmental management standard 
and four more sites are actively targeting 
accreditation the systems introduced 
will further assist in ensuring that renold 
meets all legal requirements continues 
its efforts in preventing pollution and 
improves its environmental performance 
across all its activities
carbon reduction commitment scheme
renold remains compliant with the  
uk government’s carbon reduction 
commitment scheme submitting both  
a carbon footprint report and annual 
return to the environment agency  
on behalf of the impacted uk sites
diversity
the group is committed to equal 
opportunities and operates a non
discriminatory working environment  
we expect staff and job applicants to be 
treated equally regardless of age race 
religion disability gender or sexuality
as at 31 march 2014 the group employed 
2208 people including 392 in the uk  
of the total number of employees  
605 being 274 are female the 
company recognises the need to 
encourage and support more gender 
diversity throughout the employee 
population as well as at board level  
details of the board’s diversity policy  
are set out in the nomination committee 
report at pages 58 and 59
we set out in the table below a 
breakdown of the gender of our board 
members and in accordance with the 
new reporting requirements the number 
of ‘senior managers’ including directors 
of the company’s subsidiary companies 
and employees as at 31 march 2014  
a senior manager is defined in the 
legislation as an employee who has 
responsibility for planning directing or 
controlling the activities of the company 
or a strategically significant part of the 
company whilst falling within the 
definition of ‘senior manager’ the most 
senior leadership population below the 
board the group executive is shown 
separately in the table below
employees male female
board membership 5 0
group executive 6 1
senior managers 
including those on 
renold’s subsidiary 
boards
36 5
employees 1556 599
human rights
as a result of the new reporting 
requirements the group is required  
to make a disclosure in relation to  
human rights
the board has overall responsibility  
for ensuring the group upholds and 
promotes respect for human rights and 
has adopted the definition of human 
rights within the european convention  renold plc annual report and accounts 2014 42
corporate social responsibilities
continued
the group continues to strive to reduce 
its energy costs and the impact of its 
activities on the environment with this 
aim in mind there have been a number 
of environment related improvement 
initiatives during the year ended 
31 march 2014 including the following 
 → our german chain facility has  
applied improved waste streaming  
to ensure maximum recovery and 
reuse opportunities where waste is 
generated in addition heat from the 
heat treatment ovens is recovered to 
provide work environment warming
 → energy efficient lighting introduced  
at our australian and us facilities has 
replaced inefficient fluorescent fittings
 → chemical spill team training and 
simulations have been conducted  
to prepare a rapid and appropriate 
response in the event of an onsite  
spill occurring
 → hazardous waste generation has  
been reduced by 21 within the  
paint process at our us torque 
transmission facility
 → a project to cure air leaks and 
introduce improvements in the 
efficiency of air compressors at a  
uk torque transmission facility is 
lowering electricity consumption
greenhouse gas ghg emissions
the group is committed to minimising 
the impacts of its business operations  
on the environment and our policy is  
to cooperate with government bodies 
regulators suppliers and customers to 
develop and achieve improved standards 
of environmental protection
the organisational boundary is  
the boundary that determines the 
operations owned or controlled by the 
reporting company the operational 
boundary is the boundary that 
determines the direct and indirect 
emissions associated with operations 
owned or controlled by the reporting 
company both are as defined by the 
greenhouse gas protocol corporate 
accounting and reporting standard 
issued in may 2013 ghg protocol  
the operational boundary assessment 
allows a company to establish which 
operations and sources cause direct  
and indirect emissions and to decide 
which indirect emissions to include that  
are a consequence of its operations
the financial control approach is where 
the company has the ability to direct  
the financial and operating policies of  
the organisation with a view to gaining 
economic benefits from its activities as 
defined in the environmental reporting 
guidelines including mandatory 
greenhouse gas emissions reporting 
guidance june 2013
greenhouse gas emission sources
scope 1 direct emissions from  
activities owned or controlled by our 
organisation that release emissions  
into the atmosphere
scope 2 energy indirect emissions 
released into the atmosphere associated 
with our consumption of purchased 
electricity heat steam and cooling  
these are indirect emissions that are  
a consequence of our organisation’s 
activities but which occur at sources  
we do not own or control our reported 
scope 2 emissions are limited to those 
associated with purchased electricity  
as no location within the business 
purchases steam heating or cooling  
from a third party
scope 3 other indirect emissions arising 
as a consequence of our actions which 
occur at sources which we do not own  
or control and which are not classed as 
scope 2 emissions
effective environmental management is 
integral to the group’s business strategy 
and we endeavour to achieve the highest 
practicable environmental standards of 
performance to ensure compliance with 
our statutory obligations to support 
good environmental stewardship our 
manufacturing facilities have an active 
programme to implement environmental 
management systems compliant to  
iso 14001 this provides an opportunity  
not only to identify the environmental 
impacts of the business but to consider 
opportunities to manage and optimise 
energy usage this approach to both 
existing processes and new projects is 
embedded within our business model 
and will feature in the business’s 
developing carbon management plan
the reporting of carbon emissions  
is undertaken at many facilities in 
compliance with local country legislation 
however the financial year ending 
31 march 2014 will see the first unified 
ghg report of all locations controlled  
by renold a ‘trial’ reporting project 
conducted in 2013 allowed us to verify 
our global reporting process this 
provided the opportunity to resolve  
any practical issues identified ahead  
of the final data reporting
after setting the organisational  
boundary using the financial control 
approach all scope 1 and 2 emissions  
as defined below arising from the assets 
and operations within this control 
boundary are reported for the period 
1 april 2013 to 31 march 2014 100  
of operational boundary emissions for 
entities within the organisational 
boundary have been reported
using this 12 month period avoids  
the need to include consumption 
estimations when calculating the 
emissions for scope 1 combusted  
fuel and scope 2 purchased electricity 
scope 3 emissions are not reported annual report and accounts 2014 renold plc 43
strategic report
where possible emissions have  
been calculated based upon direct 
measurement or purchase invoices of 
fuel and energy in other cases including 
those in relation to some group transport 
and refrigerant gases it has been necessary 
to make consumption estimations where 
there is considered significant uncertainty 
in the activity data used this will be 
identified an overall ranking of uncertainty 
will be applied high good fair or poor  
so activity data quality is made using an 
internal procedure consistent with that 
suggested by the ghg protocol chapter 7
the baseline will be amended where a 
variation of 5 or more results from 
acquisition and divestment or significant 
change in reporting methodology
community
we aim to be a part of the communities 
in which we work and seek to assist local 
projects with support where possible 
we encourage volunteering and working 
with local educational institutions in the 
promotion and raising of awareness of 
engineering and manufacturing
whilst the group is not currently in a 
position to provide financial support to 
local projects it is the board’s intention 
to review this in the future as part of a 
wider review of the group’s corporate 
social responsibility policy
developing capability 
we strongly believe it is essential to 
maintain our skill pool a good example 
of this is the commitment to a healthy 
flow of apprentices being recruited 
trained and potentially permanently 
employed in some of our factories 
in the uk we have an apprentice  
training school at the renold gears 
facility apprentices spend their first year 
learning basic engineering skills before 
transferring to the shop floor and other 
areas of the business such as planning 
quality purchasing and distribution so 
that they also gain an appreciation  
and awareness of the wider business 
operations and how these work together 
we have engaged a third party 
consultancy eef the manufacturers’ 
association with expertise in converting 
utility usage into carbon emissions to 
provide advice and review the ongoing 
data collection process in addition eef 
undertakes an assurance audit on the 
12 months reported data
co
2
e is the unit of measurement to 
indicate the global warming potential 
gwp of each of the six greenhouse 
gases expressed in terms of the gwp of 
one unit of carbon dioxide it is used to 
evaluate releasing or avoiding releasing 
different greenhouse gases against a 
common basis
the combined co
2
e emissions arising from 
owned transport and fugitive refrigerant 
gases were calculated to be 06 of the 
total emissions we considered these 
emissions to be immaterial and they are 
not therefore included in the final reported 
figures for co
2
e 
to ensure we have the ability to compare 
future years to our base year we have 
adopted an intensity measure where we 
express the combined scope 1 and 2  
ghg emissions as tonnes of co
2
e per £m 
external revenue for the financial year 
ending 31 march 2014 
global ghg emissions data for period  
1 april 2013 to 31 march 2014 
tonnes co
2
e
scope 1 emissions 11175
scope 2 emissions 21353
company’s chosen intensity 
measurement total 
emissions reported above 
normalised to £m external 
revenue for the financial year 
ending 31 march 2014
1768
our report methodology has used the 
ghg protocol data gathered to fulfil  
our requirements under the crc energy 
efficiency scheme and emission  
factors from the uk government’s  
ghg conversion factors for company 
reporting 2014 conversion of the  
source data into equivalent emissions 
was undertaken using the defra 
department for environment food  
and rural affairs datasets ‘greenhouse 
gas conversion factor repository’  
which can be found on their website  
wwwukconversionfactorscarbonsmart
couk 
the apprentices themselves value  
this mix of formal learning and the  
‘hands on’ experience they gain from 
working alongside their colleagues  
there are currently 14 apprentices  
in the training school at various  
stages of a four year programme
our german chain facility currently 
employs 18 apprentices there are  
a number of different types of 
apprenticeship in germany for school 
leavers the various roles including 
bachelor of engineering bachelor of 
business administration industrial clerk 
industrial mechanic and toolmaker in 
addition to role specific training wider 
education and experience is also offered 
from exchange programmes with  
other local companies participation in 
simulated business competitions training 
and attendance at business exhibitions 
in addition to traditional apprentice 
schemes renold also employs school 
leavers at a trainee level in the uk who 
continue to progress through higher 
education on a day release basis 
currently there is one trainee member  
in the sales team and three trainees 
working in finance extensive training  
in the areas in which the trainees work  
is given internally to complement the 
external courses being undertaken
renold also continues to liaise closely 
with various universities which conduct 
relevant research we serve our 
engineering pipeline through these 
relationships with key universities and 
through sponsorship
strategic report approval
the strategic report on pages 2 to 43 
incorporates the highlights understanding 
renold chairman’s letter chief executive’s 
strategic overview our performance 
finance director’s review principal risks 
and uncertainties and corporate social 
responsibility report and was approved 
by the board on 27 may 2014
for and on behalf of the board
louise brace
company secretary
27 may 2014 renold plc annual report and accounts 2014 44
81133 4580
corporate governance
45 corporate governance report
46 board of directors
48 group governance structure
53 audit committee report
58 nomination committee report
60 directors’ remuneration report
75 directors’ report
79 statement of directors’ 
responsibilities
80 shareholder information
financial statements
group
81 independent auditor’s report
83 accounting policies
91 consolidated income statement
92  c onsolida ted sta tement  
of comprehensive income
93 consolidated balance sheet
94  consolidated statement of changes  
in equity
95  consolidated statement of cash flows
96  notes to the consolidated  
financial statements
123 group five year financial review
company
124 independent auditor’s report
125 accounting policies
127 company balance sheet
128  company statement of total  
recognised gains and losses
129  notes to the company  
financial statements
additional information
135 corporate information
136 glossary corporate governance report
chairman’s letter
annual report and accounts 2014 renold plc 45
corporate governance
“ the group is committed to and recognises 
the importance of high standards of 
corporate governance and behaviour we 
believe that good corporate governance 
leads to good business and is an essential 
basis for long term corporate success ”
 mark harper
 chairman
following the appointment of robert purcell as chief executive 
on 1 january 2013 this has been the first full financial year since 
the newly constituted board has taken effect on behalf of the 
board i am pleased to present the corporate governance 
report for the year ending 31 march 2014
in this report we explain the group’s approach to corporate 
governance and provide the information required of us by the 
governance code we therefore detail how the company is 
directed and controlled via the board and its committees and 
importantly how the board considers its own effectiveness also 
in addressing the governance structure of the group we set out 
how the board oversees risk monitoring and internal control
we include a section in this report addressing how the 
company communicates with shareholders i would like  
to take this opportunity to emphasise that in addition to  
the prescribed methods by which we communicate with 
shareholders for example the agm we are pleased to  
receive feedback from shareholders at all times
finally we include separate reports of the audit at pages 53  
to 57 and nomination committees at pages 58 and 59 and 
the directors’ remuneration report at pages 60 to 74 all  
of which are incorporated into this report by reference
compliance with the governance code
the group is committed to high standards of corporate 
governance in order to facilitate efficient effective and 
entrepreneurial management of the company the board 
acknowledges its contribution to achieving management 
accountability improving risk management and ultimately 
to creating shareholder value over the longer term 
the governance code sets out guidance for companies with  
a premium listing in the form of main principles and specific 
provisions of good governance 
the rules of the fca require listed companies incorporated  
in the uk to disclose in relation to the governance code  
how they have applied those principles and whether they have 
complied with the provisions throughout the financial year
the governance code is available to view on the frc’s website  
at wwwfrcorguk
the board reviews its compliance with the governance code 
regularly and considers that the company has complied  
with all provisions set out in the governance code that are 
applicable to it throughout the year ended 31 march 2014 
except where highlighted in this report board of directors
the board provides entrepreneurial 
leadership of the company within a 
framework of prudent and effective 
controls which enables risk to be  
assessed and managed 
on these pages we set out the age tenure and biographical 
details of each board member and the company secretary
for details of how our governance structure works including 
how the board and its committees are composed and how  
they work see pages 48 to 52
mark harper chairman 
committee memberships appointment to the board
may 2012
experience 
mark aged 58 was appointed to the board as a nonexecutive 
director and chairmanelect on 1 may 2012 he took on the  
role of chairman at the close of the annual general meeting  
on 12 july 2012 prior to joining renold mark became the  
chief executive of filtrona plc at the time of its demerger from 
bunzl plc in june 2005 and led a successful period of growth  
until his retirement in may 2011 he also held a number of senior 
operational management positions within bunzl plc being 
appointed to the bunzl plc board in september 2004 and has 
previously acted as a nonexecutive director of bba aviation plc
robert purcell chief executive 
committee memberships appointment to the board
january 2013
experience 
robert aged 52 joined the group on 21 january 2013  
as chief executive prior to joining renold robert was 
managing director of filtrona plc’s protection and finishing 
products division he has also held a managing director role  
at low and bonar plc within its technical textiles business  
his early career was in operational management within 
courtaulds plc during which time he gained an mba from  
the cranfield school of management
committee memberships key
audit committee
nomination committee
remuneration committee
 executive risk management and monitoring committee
renold plc annual report and accounts 2014 46 john allkins senior independent nonexecutive director 
committee memberships appointment to the board
april 2008
experience 
john aged 64 was appointed to the board and to the chair  
of the audit committee in april 2008 and became the senior 
independent nonexecutive director on 21 january 2013 john 
brings strong relevant technical experience to the role having 
served as the finance director of the publicly quoted companies 
mytravel group plc and equant nv since 2007 he has served 
as a nonexecutive director on a number of boards of public 
and private companies and is currently a nonexecutive director  
of fairpoint group plc punch taverns plc nobina ab and  
volex plc john is a fellow of the chartered institute of 
management accountants
brian tenner finance director 
committee memberships appointment to the board
september 2010
experience 
brian aged 45 joined the group in september 2010 as  
finance director until 31 august 2010 he was group finance 
director and a member of the board of scapa group plc  
prior to this he was group finance director for the former 
british nuclear group brian held various finance director 
posts within national grid and his first industry role was  
as head of investor relations of lattice group plc his early  
career was spent with pricewaterhousecoopers where he 
qualified as a chartered accountant and he completed  
several extended international assignments and a wide  
range of consulting and corporate finance projects
ian griffiths nonexecutive director 
committee memberships appointment to the board
january 2010
experience 
ian aged 63 was appointed to the board in january 2010 and  
to the chair of the remuneration committee in november 2010  
his appointment to both was extended in january 2013  
he was previously managing director of royal mail letters  
and a director of royal mail holdings plc he has also been a 
nonexecutive director of ultra electronics holdings plc and 
held executive director roles at gkn plc and gkn holdings plc 
where he was group managing director gkn automotive
louise brace group legal manager and company secretary 
date of appointment
november 2012
experience 
louise aged 41 joined renold as group legal manager  
in june 2012 and was appointed company secretary in 
november 2012 louise qualified as a solicitor at a leading  
city law firm in 1998 and specialised in london market 
insurance litigation and insurance insolvency until 2003  
she then held senior roles in private practice at addleshaw 
goddard llp and pannone llp advising in relation to 
commercial litigation and dispute resolution
annual report and accounts 2014 renold plc 47
corporate governance group governance structure
renold plc annual report and accounts 2014 48
the board is collectively responsible for the effective 
oversight of the group and its businesses 
in addition it is responsible for strategic business planning 
including reviewing succession planning and risk management  
and the development of group policies for areas such as  
health safety and environmental matters directors’ and  
senior managers’ remuneration and ethics the executive 
directors have authority to deal with all other matters  
affecting the group
feedback is provided to the board following presentations to 
investors and meetings with shareholders in order to ensure 
that its members and in particular nonexecutive directors 
develop an understanding of the views of major shareholders 
about their company
the board has approved a schedule of matters reserved for 
decision by it to ensure that it takes all major strategy policy 
and investment decisions affecting the group as part of the 
board’s oversight of operations it must ensure maintenance 
of a sound system of internal control and risk management 
the board and its committees
the board delegates authority to a number of committees  
to deal with specific aspects of the management and control  
of the group these committees are summarised below  
and details about the structure and activities of each are  
set out in the separate committee reports the committees 
communicate and work together where required 
audit committee remuneration committee nomination committee
oversees the company’s financial reporting 
and internal controls and their effectiveness 
together with the procedures for identifying 
assessing and reporting risks it also oversees  
the services provided by the external auditors 
and their remuneration
determines remuneration policy and practices 
to attract motivate and retain highcalibre 
executive directors and other senior 
employees to deliver performance for all our 
stakeholders and ensure a close alignment  
of executive pay to the company’s strategic 
objectives and performance
responsible for considering the structure  
size and composition of the board and 
committees and succession planning it  
also identifies and proposes individuals to  
be directors where new appointments are  
to be made and leads that process
report at pages 53 to 57 report at pages 60 to 74 report at pages 58 and 59
executive risk management  
and monitoring committee
attendance at board and committee meetings during the year 
is set out on page 50
led by the chief executive the principal  
role of the executive risk management  
and monitoring committee is to evaluate  
and manage the risks to the group
see further at pages 51 and 52 annual report and accounts 2014 renold plc 49
corporate governance
committee membership and terms of reference
committee membership may not be refreshed as frequently  
as would be the case for a company with a larger board 
however the board is satisfied that no undue reliance is  
placed on particular individuals
as a result of changes to the governance code and new 
legislation a full review of the schedule of matters reserved 
for the board and the terms of reference for each of the 
committees has been carried out during the year revised 
terms have been implemented as a result and are available 
on the company’s website at wwwrenoldcom
louise brace has acted as secretary to the committees  
during the year ended 31 march 2014 the revisions to the 
terms of reference of the remuneration committee included  
an amendment to provide for the group company secretary  
to act as secretary of that committee the role previously 
having been undertaken by the group hr director
board focus during the year
during the year ended 31 march 2014 the board has provided 
its main focus on the following matters
 → review of group strategy
 → project to review manufacturing capacity in the chain division
 → health and safety performance
 → pension liabilities
 → balance sheet
 → margins and profitability
 → cashflow
 → organisational development and
 → consideration of the new governance code
expected board focus for next year
the board will continue to review the matters listed above 
including the completion of the project to review manufacturing 
capacity in addition it is anticipated that the following areas will 
form areas of focus for the board for the year ended 31 march 2015
 → continued review of strategy and supporting the  
chief executive in developing the group’s strategic plan
 → organic growth opportunities
 → customer service enhancement
 → financial performance
 → succession planning and
 → erp effectiveness
board composition
there have been no changes to the composition of the board 
during the year ended 31 march 2014 there being a balance of 
executive and nonexecutive directors currently the board 
comprises a nonexecutive chairman two nonexecutive 
directors and two executive directors 
the board’s consideration of its composition in the context of 
its diversity is more fully detailed in the nomination committee 
report on pages 58 and 59 together with a statement on the 
board’s diversity policy
the members of the board maintain the appropriate balance 
of status experience independence and knowledge of the 
company to enable them to discharge their respective duties 
and responsibilities and to ensure the board is of a sufficient 
size that the requirements of the business can be met
the roles of chairman and chief executive are separated  
with a clear division of responsibilities set out in writing and 
agreed by the board the chairman’s primary role is to ensure 
the effectiveness of the board in setting the direction of the 
company and the agenda of the board the chief executive has 
responsibility for managing the business and implementing the 
strategy agreed by the board
biographical and experience details of the current directors 
appear on pages 46 and 47 details of committee membership 
and attendance are set out on page 50 for further details of 
the directors’ service contracts and letters of appointment are 
set out in the directors’ remuneration report
director induction and development
board members are able to seek independent legal or other 
professional advice in respect of their duties as they may 
require at the company’s expense and have access to the 
advice and services of the company secretary who ensures 
that board procedures are complied with 
the training needs of the board are discussed as part of the 
board performance evaluation process updates are provided 
to the board at regular intervals in order to refresh the 
directors’ knowledge 
the company has a detailed framework for the induction of 
new directors this includes the issuing of all key documents 
relating to the new director’s role on the board to the new 
director as well as site visits and facetoface meetings with 
senior executives upon joining the group in january 2013 and 
throughout the year ended 31 march 2014 robert purcell has 
visited all renold’s sites on at least one occasion including 
those in the us china australia india and germany the board 
itself has met at renold manufacturing sites in the uk china 
and india during the year
nonexecutive director independence
the nonexecutive directors throughout the year are considered 
to be independent in character and judgement the board is of 
the opinion that all of the directors take decisions objectively 
and in the best interests of the company and that no individual 
or small group of individuals can dominate the board’s decision 
taking the balance between nonexecutive and executive 
directors allows independent challenge to the executive 
directors and senior management group governance structure
continued
renold plc annual report and accounts 2014 50
the following table shows the number of meetings of the board 
and its committees during the year and individual attendance 
by board and committee members at those meetings
number attended
board
audit 
committee
nomination 
committee
remuneration 
committee
executive risk
 management
and 
monitoring
committee
brian tenner 9 4 – 3 4
john allkins 9 4 1 6 –
ian griffiths 8 3 1 6 –
mark harper 9 4 1 6 –
robert 
purcell
9 4 – 5 4
total number 
of meetings
9 4 1 6 4
  robert purcell mark harper and brian tenner attended remuneration 
committee andor audit committee meetings or parts thereof by invitation
there has been one instance of non attendance by a board 
member during the year this was considered and determined 
to be reasonable due to individual circumstances otherwise 
there has been full attendance of members at all board and 
committee meetings
risk monitoring and internal control
the board has overall responsibility for the group’s system of 
internal control including financial operational and compliance 
controls and risk management systems and for reviewing 
internal control effectiveness 
the ongoing process in accordance with the frc’s ‘internal 
control revised guidance for directors on the combined code 
october 2005’ for review of the system of internal controls by 
the directors to identify evaluate and manage the significant 
risks faced by the group has been in place for the year ended 
31 march 2014 and up to the date of approval of this report and 
the financial statements 
internal controls and the risk management process are 
reviewed on a regular basis by the audit committee which 
reports directly to the board this review includes a report 
from the executive risk management and monitoring 
committee at each meeting of the audit committee further 
details of the audit committee’s oversight of the executive risk 
management and monitoring committee can be found in the 
audit committee report on page 55
board evaluation and effectiveness
the board is supportive of the principle of evaluation of the 
board as set out in paragraph b6 of the governance code 
a formal process for evaluating the performance of the board  
its members and its committees is planned and is conducted 
annually this process gives the directors the opportunity to 
identify areas for improvement both jointly and individually 
through the use of questionnaires andor open discussion 
an evaluation of the chairman is also carried out annually  
led by the senior independent nonexecutive director 
evaluations of the board including of the chairman the  
audit committee the nomination committee and the 
remuneration committee were carried out during the  
year ended 31 march 2014
the evaluation process commences with the completion of 
a written questionnaire for each separate review compilation 
of a summary of the results and feedback obtained and then 
discussion between the participants
in accordance with the governance code the evaluation  
process also included a number of discussions during the  
year between the chairman and the nonexecutive directors 
without the executive directors present to discuss feedback 
arising from the process and the performance of each 
executive director the senior independent director also  
met with the other directors as part of the chairman’s 
performance evaluation process
election of directors
the governance code recommends that all directors of  
ftse 350 companies should be subject to annual election  
by shareholders this provision is not applicable to the 
company however with a view to complying voluntarily  
with all terms of the governance code where possible the 
board has considered this provision in conjunction with its 
review of the new terms of the governance code as a result 
the board has agreed that all nonexecutive directors will be 
subject to annual election given the size of the company it 
would not be practicable for the two executive directors to  
be subject to annual election
board and committee membership and attendance
the board meets on a regular basis with an agenda and 
necessary papers for discussion distributed in advance of 
each meeting the meetings are scheduled to coincide with  
the internal financial reporting timetable of the company and 
key events including interim and final results and the agm annual report and accounts 2014 renold plc 51
corporate governance
during the year ended 31 march 2014 the responsibility to 
review internal control effectiveness was discharged by the 
audit committee and reported to the board as follows 
 → receiving and considering regular reports from the internal 
audit function on the status of internal control across the 
group the audit committee also reviewed the internal audit 
function’s findings annual audit plan and the resources 
available to it to perform its work 
 → reviewing the external auditor’s findings on internal financial 
control and 
 → monitoring the adequacy and timeliness of management’s 
response to identified audit issues
the executive team is accountable to the directors for 
implementing board policies on internal control and for 
monitoring and reporting to the board that it has done so 
group internal controls are designed to mitigate rather than 
eliminate the risks identified and can provide only reasonable 
and not absolute assurance against material misstatement 
or loss 
the key features of the group’s internal control and risk 
management systems are 
 → an executive risk management and monitoring committee 
which oversees on behalf of the audit committee and 
ultimately the board that appropriate policies are 
implemented to identify and evaluate risks a critical review 
project commenced in the previous year to ensure that the risk 
management processes continue to meet the requirements  
of the group board this has led to further changes in the 
current year and ensures continuous improvement output 
from the new risk management processes comprising risk 
profiles and full action tracking have been subject to review  
by each meeting of the audit committee to ensure that risks 
deemed to be significant are receiving commensurate 
management attention 
 → access for all group employees to a free of charge 
independent whistle blowing hotline enabling them  
to report any concerns about theft fraud or other 
malpractice in the workplace 
 → an internal audit function which assists management  
and the audit committee in the fulfilment of the board’s 
responsibility for ensuring that the group’s financial and 
accounting systems provide accurate and uptodate 
information about its current financial position whilst also 
permitting the accurate preparation of financial statements 
 → an organisational structure which supports clear lines of 
communication and tiered levels of authority 
 → a schedule of matters reserved for the board’s approval to 
ensure it maintains control over appropriate strategic 
financial organisational and compliance issues 
 → the preparation of detailed annual financial plans covering 
profit and cash flow which are approved by the board 
 → the review of detailed regular reports comparing actual 
performance with plans and of updated financial forecasts 
 → procedures for the appraisal approval and control of capital 
investment proposals 
 → procedures for the appraisal approval and control of 
acquisitions and disposals 
 → monitoring procedures which include a system of key 
financial controls self assessment questionnaires and 
 → enhancements in internal controls have been achieved from  
the standardisation of processes and core transactional controls 
as supported by the implementation of the erp system 
the board has approved a corporate governance compliance 
statement which contains terms of reference for the board  
and each of the board committees the terms of reference  
are available on the company’s website at wwwrenoldcom 
internal controls are in place at both local and group level 
in addition the renold internal control statement contains 
details of such matters as group signing authorities contracting 
principles and ethics policy to ensure that all group employees 
conduct business on behalf of the group on the same basis and 
in accordance with approved policies and procedures this 
has been approved by the board and has been fully rolled 
out across the group separate group policies also address 
anticorruption and gifts and hospitality
control over financial reporting
there are also in place internal control systems in relation to 
the company’s financial reporting process and the group’s 
process for preparation of consolidated accounts these 
systems include policies and procedures that pertain to the 
maintenance of records that in reasonable detail accurately 
and fairly reflect transactions and dispositions of assets 
provide reasonable assurance that transactions are recorded 
as necessary to permit the preparation of financial statements 
in accordance with ifrs require representatives of the 
businesses to certify that their reported information gives  
a true and fair view of the state of affairs of the business and 
its results for the period and review and reconcile reported 
data the audit committee is responsible for overseeing these 
internal control systems
executive risk management and monitoring committee
the principal role of the executive risk management and 
monitoring committee is to evaluate and manage the risks 
to the group 
the executive risk management and monitoring committee is 
chaired by the chief executive robert purcell and is comprised 
of the executive directors the chairman invites attendance to 
the executive risk management and monitoring committee of 
any employee as appropriate depending upon the nature of the 
risks to be considered at any one time 
the following people currently attend by invitation the group 
business systems director the group hr director the group 
head of business process and assurance and the group legal 
manager and company secretary group governance structure
continued
renold plc annual report and accounts 2014 52
the executive risk management and monitoring committee 
meets quarterly and reports to the audit committee at least 
twice each year during the year ended 31 march 2014 the 
executive risk management and monitoring committee met 
four times details of the attendance by the executive directors 
can be found at page 50
the executive risk management and monitoring committee 
considers the principal risks to the group and the appropriate 
actions to be taken to minimise such risks it is also provided 
with information in the form of reports on health and safety 
treasury insurance and material litigation the chairman of 
the executive risk management and monitoring committee 
reports to the audit committee
communications with shareholders
communications with shareholders are given high priority 
the board is accountable to shareholders and therefore  
it is important for the board to appreciate the requirements  
of shareholders and equally that shareholders understand  
how the actions of the board and short term financial 
performance relate to the achievement of longer term goals 
the nonexecutive directors make themselves available to 
meet shareholders on request attend shareholder visits at 
company sites and are available for discussions with analysts 
and the company’s broker
the reporting calendar is driven by the publication of interim 
and final results each year in which the board reports to 
shareholders on its management of the company comments 
on group financial performance in the context of the business 
risks faced and objectives and plans for the future are set out 
in the strategic report on pages 2 to 43
at other times during the year presentations are given by the 
executive directors to analysts and updates provided to the 
london stock exchange and shareholders via the company’s 
website at wwwrenoldcom in addition the chairman chief 
executive and finance director meet with major shareholders 
to discuss governance and group strategy 
the senior independent nonexecutive director does not 
generally attend meetings with shareholders although makes 
himself available to attend such meetings if and when required 
whilst the company is not in compliance with paragraph e11 
of the governance code the chairman ensures that the chief 
executive and finance director provide feedback to the board 
following presentations to investors and meetings with 
shareholders and analysts’ and brokers’ briefings are circulated 
to all directors in order to ensure that board members and in 
particular nonexecutive directors develop an understanding 
of the views of major shareholders about their company 
the annual general meeting provides an opportunity for 
communication with private and institutional investors 
shareholders are encouraged to attend the annual general 
meeting and we welcome their participation
at the annual general meeting the chairman of the board 
and the chairmen of the audit remuneration nomination 
and executive risk management and monitoring committees 
together with the executive directors will be available to 
answer questions notice of the annual general meeting is sent 
to shareholders at least 20 business days before the meeting 
details of the proxy votes lodged on each resolution are made 
available and shareholders are invited to talk informally to the 
directors after the formal proceedings audit committee report
annual report and accounts 2014 renold plc 53
corporate governance
audit committee members and meetings attended
names position meetings attended
john allkins chairman 4 of 4
ian griffiths nonexecutive director 3 of 4
in addition to the oversight of the major change initiatives 
underway in the business as a whole we are implementing 
continuous improvements in the financial control and risk 
monitoring environment our aim is to ensure that the new  
and more efficient business processes are matched with 
appropriate embedded financial controls
key objective
in support of the board’s duty of stewardship the committee 
aims to ensure appropriate corporate governance is applied to 
the group’s systems of internal control risk management and 
other compliance matters the committee also monitors the 
integrity of financial information published externally for use 
by shareholders we ensure that the integrity of the financial 
statements are supported by an effective external audit
governance
the terms of reference of the audit committee appear on the 
company website at wwwrenoldcom
responsibilities
 → reviewing the group’s financial results announcements  
and financial statements
 → reporting to the board on the appropriateness of existing 
accounting policies and the manner in which they are applied 
across the group
 → as a matter of course confirming that the going concern basis 
remains appropriate for preparing the financial statements
 → advising the board on the application of any new or modified 
accounting and reporting standards
 → the board has delegated to the committee responsibility  
for advising on the adequacy of the processes required to 
confirm that the annual report and accounts when taken as  
a whole are fair balanced and understandable and include 
the information necessary to allow shareholders to assess  
the group’s performance business model and strategy
 → oversight of the internal audit function
 → reviewing the annual internal audit plan including detailed 
reviews of areas of focus
 → oversight of the relationship with the external auditor 
including the appointment and where appropriate  
reappointment of the external auditor
 → assessing and making recommendations to the board on  
the activities and reporting from the group’s executive risk 
management committee
 → reviewing and reporting to the board on the group’s internal 
control and compliance processes
“ consistent with the group’s strategic drive 
to improve our basic business processes 
we have focused our efforts on ensuring 
that the major change projects that are 
ongoing are appropriately controlled 
and monitored this serves to ensure the 
accurate tracking of performance but 
more importantly to ensure that financial 
control is maintained during this period of 
significant change ”
 john allkins
 audit committee chairman audit committee report
continued
renold plc annual report and accounts 2014 54
 → reviewing the procedures for responding to whistle blowing 
fraud or potential breaches of antibribery legislation and 
oversight of any and all reports summarising the concerns 
raised how they were investigated and the response to 
the same
 → the committee reports to the board at appropriate times  
on how it is discharging its responsibilities
composition
the committee was chaired by me during the year the second 
member of the committee is ian griffiths also an independent 
nonexecutive director
the composition of the committee therefore remains 
unchanged in the year and complies with the requirements  
of the governance code for a smaller company this being to 
have two independent nonexecutive members 
biographical details and experience of members are set out 
on pages 46 and 47
expertise
the committee members have been selected to give  
an appropriate range of financial commercial and risk 
management expertise to allow the committee to fulfil its 
duties the board considers that i have recent and relevant 
financial experience as required by the governance code to 
perform the role of committee chairman
committee meetings
the committee meets at least four times each year during 
the year ended 31 march 2014 the committee met four times 
the meetings are attended by the independent nonexecutive 
directors the members the company secretary and by 
invitation the chairman the chief executive the group finance 
director and the group head of risk and assurance full details 
of director attendance during the year are set out in the table 
of all committee meetings on page 50
other members of the group’s management team are also 
invited to attend to present or respond to queries on particular 
areas of focus our external auditor ey also attended the 
committee meetings each meeting includes an opportunity  
for the external auditors to raise any matters in confidence 
which they consider should be brought to the attention of the 
committee without the executive directors present
main activities of the committee during the year
significant issues considered in relation to the financial statements
the committee monitors the integrity of the company’s 
financial information and other formal documents relating  
to its financial performance and makes appropriate 
recommendations to the board before publication
a key factor in the integrity of financial statements is ensuring 
that suitable and compliant accounting policies are adopted 
and applied consistently on a yearonyear basis and across 
the company in this respect the committee also considered 
the estimates and judgements made by management when 
accounting for nonstandard transactions the treatment of 
exceptional items and in provision calculations
these considerations are supported by input from other 
assurance providers for example the group’s actuarial 
advisers the group internal audit and assurance team 
as well as our external auditors
summarised below are some of the significant issues the 
committee considered in relation to the financial statements 
during the year these are separated into items of particular 
focus this year and items on which the committee would 
normally spend some time on
reporting of exceptional items current year focus item  
see note 2c to the financial statements on page 99 
for a second year in succession the size and scale of the current 
restructuring activities has created a number of exceptional  
items within the group’s income statement the committee has 
reviewed each of these items to ensure that they genuinely need 
to be excluded to allow a user of the accounts to form an accurate 
assessment of the performance of the underlying business
impairment of tangible assets current year focus item  
see notes 2c and 8 to the financial statements on pages 99  
and 103 respectively 
the project to close the uk chain bredbury facility led to  
a significant pool of potentially impaired tangible assets 
whether property plant and equipment or stock a committee 
member therefore attended the regular project steering 
committee meetings and separate discussions were held  
with the project manager 
in addition to ensuring that appropriate controls were in place  
to ensure that economic value was not lost in the execution  
of the closure plan the committee also reviewed the basis  
on which assets were either written down at the yearend or 
maintained in the balance sheet with positive carrying values 
the committee also reviewed the bredbury assets that were 
impaired at the prior year end to ensure that the assumptions 
made at that time were still valid the review of tangible assets 
has led to further net write offs of £06m 
defined benefit pension accounting recurring annual item 
see note 18 to the financial statements on pages 110 to 115
during the year the group adopted the modified accounting 
standard ias 19 employee benefits as described in more detail  
in note 18 and accounting policies on page 90 the new standard 
had a material impact on the group’s net pension financing 
charge particularly for the uk defined benefit schemes and 
required prior year results to be restated the details of these 
changes are set out in the accounting policies on page 90 
pension accounting is a relatively complex matter and the 
committee devoted a significant amount of time to assessing  
the impact of the modified standard and the appropriate 
reporting thereof the committee concluded that the costs  
of administering the closed defined benefit pension schemes  annual report and accounts 2014 renold plc 55
corporate governance
 → the revised annual process for control selfassurance  
and reporting
 → the accounting for the charges under the new 2013 
performance share plan
 → the programme to improve the efficiency of financial control 
processes in the business 
 → the training and update programme covering business  
ethics and antibribery legislation and awareness
 → recordability of trade debtors and adequacy of doubtful  
debt provision and
 → going concern assumptions and scenario modelling
internal control risk and compliance
we evaluate regularly the integrity of financial reporting and 
the robustness of internal controls to ensure compliance with 
applicable legal and internal requirements we also review the 
group’s policies and procedures which are designed to identify 
material business risks ensuring that excessive risks are 
treated so that these operate within acceptable tolerances
during the year enhanced risk management techniques have 
been implemented these are derived from the committee of 
sponsoring organisations of the treadway commission coso 
and the international risk standard iso 31000
the executive risk management and monitoring committee 
and the audit committee receive regular reports from the 
group head of risk and assurance to convey the status of risk 
profiles and actions arising from the risk assessment process 
the executive risk management and monitoring committee 
reports the results of its discussions to the committee 
the group’s management team makes regular use of an 
integrated risk management system which is delivered via the 
group’s intranet this system facilitates both the identification  
of risks and their relative priority in each functional area or 
each geographic location the system also allows users to 
develop and implement action plans to mitigate those risks 
the system has extensive reporting functionality that allows 
senior management and the executive risk management and 
monitoring committee to review progress in mitigating the 
risks faced by the group
further details of our internal control and risk management 
systems including over the financial reporting process can  
be found on pages 50 to 52 in the corporate governance 
report with our risk factors in full in the strategic report  
on pages 36 to 38
confidential reporting procedures and whistle blowing
the integrity of the financial statements is further supported 
by the confidential reporting and whistle blowing procedures 
in place the committee reviews these procedures once a  
year to ensure that appropriate processes are in place to  
treat complaints confidentially and implement proportionate 
independent investigation in all cases visibility and accessibility  
of communications to staff on whistle blowing policy are 
regularly reviewed by the committee including first hand 
inspection during site visits
should be included in operating profit but for the purposes  
of assessing underlying performance as reported in adjusted 
operating profit and adjusted eps should be excluded from 
these calculations as the costs relate to closed legacy pension 
schemes that have no bearing on relevance to understanding  
the underlying performance of the ongoing business see note 18 
to the financial statements on pages 110 to 115
pension accounting is also an area where values are very 
sensitive to management judgement and estimates as has  
been the case for a number of years the committee reviews 
management estimates compared to third party benchmarks 
and also receives expert input from the actuarial team at ey 
on the reasonableness of the assumptions used as a result  
of those reviews the committee was satisfied that the 
assumptions are within an acceptable range and no  
changes were made to management assumptions 
as part of the review of defined benefit pension accounting the 
committee also reviews the carrying value and recoverability 
of the deferred tax assets which are the corollary of the gross 
pension deficit the committee was satisfied that the extended 
duration of the pension liabilities in germany and the uk and their 
priority in recognition justified the extended recovery periods 
for the associated deferred tax assets which were also fully 
supported by future expectations
review of carrying value of intangible assets deferred tax 
assets and investments in subsidiary undertakings recurring 
annual item see note 7 to the financial statements on pages 
102 and 103 and note 17 on pages 108 and 109
the group holds a number of valuable assets such as goodwill 
and deferred tax in addition the parent company and other 
subsidiary holding companies also hold investments in various 
subsidiaries the judgements on the carrying value of these 
assets are normally a key area for committee scrutiny these 
are areas where management estimates play a key role in 
supporting the carrying values reported in the balance sheet 
the committee reviews the assumptions underlying the 
discounted cash flow calculations and the likelihood of long  
term recovery of the asset values the details of the impairment 
review and the sensitivities performed are in note 7 pages 102 
and 103 short term cash flows are confirmed by reference to 
the board approved budget for the following year and this is 
also a key area of focus for the external auditors
review of inventory valuation and provisioning recurring annual 
item see note 11 to the financial statements on page 106
as a manufacturer the group adds value to raw materials as 
part of its normal production processes in order to provide 
shorter lead times and better customer service the group also 
holds a significant amount of stock the committee reviews 
the valuation bases and application of the group’s policy on 
providing for slow moving and obsolete stock the committee is 
satisfied that the net book value shown in note 11 on page 106 
is appropriate and that any management judgements formed  
in arriving at those values are reasonable
other matters reviewed by the committee
 → the revised corporate risk reporting and mitigation policy audit committee report
continued
renold plc annual report and accounts 2014 56
nonaudit services where fees exceed an agreed limit are 
subject to the prior approval of the committee this policy  
is available on the website at wwwrenoldcom
during the year ended 31 march 2014 the committee 
continued with the appointment of other accountancy firms  
to provide nonaudit services to the group and anticipates  
that this will continue during the year ending 31 march 2015
approval is also given on the basis the service is a natural 
extension of the audit or if there are overriding business or 
efficiency reasons making the external auditors most suited  
to provide the service certain services are prohibited from 
being performed by the external auditors
total nonaudit services provided by ey during the year ended  
31 march 2014 were £02m 2013 £03m which comprised  
46 2013 88 of total audit and audit related fees total 
audit and audit related fees include the statutory audit fee and  
fees paid to ey for other services which the external auditors  
are required to perform for example reporting to banking 
partners in territories where no statutory accounts are 
required to be prepared nonaudit fees represent all other 
services provided by ey not included in the above significant 
nonaudit services provided by ey in the year included tax 
advisory and compliance services £01m that were provided  
in territories where it would be prohibitive for the group to 
employ its own full time tax manager
the committee considered that some overseas tax advisory 
and compliance services were most efficiently provided by the 
external auditors as much of the information used in preparing 
computations and returns is derived from audited financial 
information in order to maintain the external auditors’ 
independence and objectivity group and local management 
reviewed and considered ey’s findings and ey did not make  
any decisions on behalf of management
the committee also discussed the level of fees and considered 
them appropriate given the current size of the group the 
committee is satisfied that the level and scope of nonaudit 
services undertaken by the external auditor does not impair 
its independence or objectivity and considers that the company 
receives particular benefit from the advice provided by its 
external auditor given its wide and detailed knowledge of 
the group and its international operations an assignment 
would not be given to the external auditor when the result 
may be that as part of the statutory audit it is required  
to report directly on its own nonaudit work it makes 
management decisions on behalf of the group it acts as 
advocate for the group or the level of nonaudit fees is  
such relative to audit fees as to raise concerns about its  
ability to form objective judgements
audit focus
to ensure appropriate focus on key risk areas identified by 
the committee before the audit commences the committee 
reviews and challenges the proposed external audit plan to 
ensure that ey have developed appropriately targeted audit 
procedures these are closely aligned with the current year 
focus items noted above in the section main activities of the 
internal audit
the committee receives and considers reports on the control 
environment from the group head of risk and assurance 
these reports highlight key improvement themes and recommend 
areas for business focus with additional observations provided 
around root cause analysis and cultural and behavioural 
themes in addition the committee has visibility of management 
responses and action tracking via the group’s integrated risk 
management system the audit plan which contains mandatory 
riskbased and cyclical reviews was approved by the committee 
in february 2013 and was built around focus areas such as 
organisational change major projects security business 
resilience and capital spend
the annual internal audit plan is built on a riskbased approach 
for the majority of work but also includes an element to ensure 
coverage of key processes over a defined period the inherent 
risk of each process is assessed and in turn is used to inform 
audit frequency with elements of higher risk processes being 
audited on a more frequent basis the committee supports  
this approach and comments on particular areas of focus or 
concern that we wish to see addressed
external audit
the committee is responsible for overseeing relations with  
the external auditors including the approval of fees and  
makes recommendations to the board on their appointment 
and where appropriate reappointment based upon reviews  
of audit effectiveness
details of total remuneration for the auditors for the year 
including audit services audit related services and other 
nonaudit services can be found in note 2b of the  
consolidated financial statements on page 98
auditor independence and objectivity
the independence of the external auditors is essential to the 
provision of an objective opinion on the true and fair view 
presented in the financial statements auditor independence 
and objectivity is safeguarded by limiting the nature and value 
of nonaudit services performed by the external auditors the 
group has a policy of not recruiting employees of the external 
auditors who have worked on the audit in the past two years  
to senior financial positions within the group and the rotation 
of the lead engagement partner at least every five years the 
current lead engagement partner has held the position for 
three years
nonaudit services provided by the external auditors
the committee is responsible for ensuring that an appropriate 
relationship is maintained between the group and the external 
auditor nonaudit services can only be provided by the external 
auditors if there is no potential conflict of interest or material 
risk of values being included in the financial statements that 
have both been advised on and audited by the external auditors 
to safeguard the independence and objectivity of the auditor 
the committee has approved a policy on nonaudit services 
provided by the auditors in line with professional practice and 
in accordance with ethical standards published by the audit 
practices board this control is exercised by ensuring that all  annual report and accounts 2014 renold plc 57
corporate governance
committee during the year they also reflect the relative 
changes in profitability and materiality of each of the group’s 
operating units during the year in some cases as a result of  
the ongoing restructuring activities
assessment of effectiveness of external audit and reappointment 
the committee has a formal system for evaluating the 
performance and independence of the external auditors 
this system involves active dialogue with the lead engagement 
partner a formal questionnaire and feedback process involving 
senior management in direct contact with the audit team and 
ey’s response to accounting financial control and audit issues 
as these arise
an annual review is conducted by the committee of the 
structure and approach taken in the external audit the level 
of nonaudit fees and the effectiveness independence and 
objectivity of the external auditors this includes 
consideration of
 → the global external audit process
 → the auditor’s performance
 → the expertise of the firm and our relationship with them and
 → the results of the questionnaire process
following the review the committee makes a recommendation 
to the board on the reappointment of the external auditors
following this year’s annual review the committee was satisfied 
with the effectiveness independence and objectivity of the 
external auditors and recommended to the board their 
reappointment for a further year a resolution to reappoint 
ey and giving authority to the directors to determine their 
remuneration will be submitted to shareholders at the 
2014 agm
audit tender
ey were first appointed as the company’s external auditors 
in 2007 following a tender process where assessment 
criteria included quality of service qualifications expertise 
independence effectiveness and scale of international  
network to service the company
the governance code requires ftse 350 companies to put  
the contract for audit services out to tender at least once  
every ten years while the company is not covered by this 
requirement as part of the annual process to review the 
effectiveness and performance of the external auditors the 
committee considers whether a tender process would create 
an opportunity for a more effective audit the committee is 
able to draw on the experience of its members on the boards  
of other listed companies with different external auditors to 
compare performance and effectiveness the committee is 
satisfied that the external audit quality and effectiveness is 
such that a tender would not add value at this stage and has 
therefore recommended the reappointment of ey as noted 
above the company may put the audit out to tender at any 
time and there are no contractual obligations restricting our 
choice of external auditors and no auditor liability agreement 
has been entered into and i will be available at the agm to 
answer questions the committee is aware of the differing 
emphasis on the audit tender question being made by the eu 
and the uk competition and markets authority the company 
will continue to comply with regulatory requirements once 
these are properly defined
audit information
having made the requisite enquiries so far as the directors  
in office at the date of the approval of this report are aware 
there is no relevant audit information of which the auditors are 
unaware and each director has taken all reasonable steps to 
make themselves aware of any relevant audit information and  
to establish that the auditors are aware of that information
disclosure committee
as part of the process of ensuring that all disclosures made  
by the company are timely and accurate and meet the legal  
and regulatory obligations and requirements arising under  
the financial conduct authority’s listing and disclosure  
and transparency rules the group established a disclosure 
committee whose membership includes the chairman of the 
committee as chair group finance director group chief 
accountant company secretary and the group head of risk 
and assurance
the following additional activities were carried out by the 
disclosure committee
 → all those contributing were briefed on the new requirements 
of the governance code with specific emphasis on the fair 
balanced and understandable requirements
 → a number of senior managers who were knowledgeable 
about the business but otherwise not involved in the 
preparation of the annual report and accounts each 
performed an independent review and their comments 
incorporated accordingly
 → as in previous years a documented verification file of all 
substantive facts and assertions is maintained and reviewed 
for completeness prior to finalisation of the annual report 
and accounts
the disclosure committee presents its findings and 
recommendations to the committee as part of its review of 
processes to enable the fair balanced and understandable 
statement to be made
we welcome feedback from shareholders on this report  
and i will be available at the agm to answer questions
john allkins
on behalf of the audit committee
27 may 2014 nomination committee report
renold plc annual report and accounts 2014 58
nomination committee members and meetings attended
names position meetings attended
mark harper chairman 1 of 1
john allkin nonexecutive director 1 of 1
ian griffiths nonexecutive director 1 of 1
role of the nomination committee
the nomination committee has delegated authority from  
the board the duties of the nomination committee include  
the following
 → to review the structure size and composition of the board 
and recommend any proposed changes
 → where new appointments of executive andor nonexecutive 
directors are to be made to lead that process and identify 
and nominate candidates to the board and
 → to give full consideration to succession planning for directors 
and other senior executives taking account of the challenges 
and opportunities facing the company
composition of the nomination committee
i chair the committee and our two nonexecutive directors  
are members of the committee and have been so throughout 
the year the committee meets during the year as required
policy on appointments to the board
in accordance with the provisions of the governance code 
when reviewing the board structure the committee’s primary 
objective is to ensure that the executive and nonexecutive 
directors have the relevant skills knowledge and experience  
to create a balanced and effective board and to support the 
group in delivering its overall strategic objectives this is in 
parallel with ensuring that the costs and composition of the 
board reflect the size of business and also the current stage of 
development of the business our policy extends to ensuring 
that the various subcommittees of the board also have an 
appropriate range of skills and experience to deliver their  
terms of reference 
in addition to skills and experience we will also consider  
factors such as how an individual’s personal attributes would 
complement and enhance the diversity on the board for the 
appointment of nonexecutive directors additional factors for 
consideration include independence and time commitment
in selecting candidates for the shortlist for any appointment 
the board always considers candidates from a wide range of 
backgrounds and on merit and against objective criteria 
“ the nomination committee plays a key 
role in the future success of the company 
leading the process in structuring the  
board and making recommendations  
for changes the nomination and 
appointment process is vital in ensuring 
that the company has a board with the 
right balance of skills and experience ”
 mark harper
 committee chairman annual report and accounts 2014 renold plc 59
corporate governance
activities during the year
here we set out the principal activities of the committee  
during the year 
diversity policy
approval of the board diversity policy see details in  
adjacent column
board composition 
the committee discussed the current board composition and 
more specifically a question posed to the company on whether  
or not there are a sufficient number of nonexecutive directors  
on the board to achieve a balance of skills and experience  
we consider that the chairman of the board and the two 
nonexecutive directors have a strong range of technical 
knowledge and breadth of experience that is sufficient to  
deal with the operational and commercial activities  
challenges and risks that the group currently faces 
we are also conscious that the company is in the turnaround 
phase of its strategic plan and that this involves reductions  
in staffing levels and pay restraint throughout the group  
we therefore consider that the current capability and cost  
of the board is appropriate during this period of the  
group’s transformation
while there have been no appointments to the board during 
the year ended 31 march 2014 in the prior year there were a 
significant number of changes to the composition of the board 
with the former chairman standing down and being replaced 
and one of the nonexecutive directors also standing down 
without a replacement the new chief executive was appointed 
and took office in january 2013 the group and the board have 
therefore benefitted in this last year from the stability and 
continuity of membership
mark harper
on behalf of the nomination committee
27 may 2014 
the board is already aware of the need to consider the  
benefits of diversity on the board in all its aspects the board 
recognises that gender is one important aspect of diversity  
and while all current members of the board are male the 
company secretary who is also the group’s most senior  
legal professional is female an analysis of the gender of  
all employees is set out in the strategic report on page 41 
other than in relation to gender the current board is diverse  
in terms of the different skill sets of each member these 
include professional qualifications and career work experience 
but also wider experience relevant to our global business most 
of the board members having worked and lived overseas for 
significant periods for example
given recent changes to the governance code the issue  
of diversity was specifically debated by the board in  
november 2013 and a formal board diversity policy adopted 
in any future changes to its composition the board will 
therefore continue to be mindful of the issues of diversity 
including gender and these factors will be taken into account 
alongside the overriding objective of appointing the best 
possible candidate for the role
the board does not believe it is appropriate to set measurable 
objectives for the implementation of the policy at this time 
the board supports the engagement of executive search  
firms who have signed up to the voluntary code of conduct  
on gender diversity and best practice the board has most 
recently worked with korn ferry whitehead mann who 
themselves are signatories to the voluntary code
as an international business with operations in multiple 
locations we employ a very diverse work force with a broad 
range of ethnicity which extends to senior management and 
leadership posts in the various territories
the process for making appointments to the board commences 
with the evaluation described above the committee will then 
seek to identify suitable candidates usually with the use of 
external recruitment consultants or where appropriate the  
use of open advertising in addition to korn ferry whitehead 
mann odgers berndtson also provide recruitment consultancy 
services to the company neither of these firms have any other 
connection to the company directors’ remuneration report
annual statement
renold plc annual report and accounts 2014 60
this year’s remuneration report has been prepared in 
accordance with schedule 8 to the large and mediumsized 
companies and groups accounts and reports regulations 
2008 this amended schedule 8 was introduced by the 
department for business innovation and skills for financial 
years ending on or after 30 september 2013 in the large and 
mediumsized companies and groups accounts and reports 
amendment regulations 2013 the regulations
our report is now structured in two sections following this 
annual statement
directors’ remuneration policy pages 62 to 68 which sets  
out the company’s proposed policy on directors’ remuneration 
for three years from the 2014 agm the directors’ remuneration 
policy is subject to a binding shareholder vote at this year’s 
agm and after that at least every third year
annual report on remuneration pages 69 to 74 which shows 
the implementation of the directors’ remuneration policy the 
annual report on remuneration together with this letter is 
subject to an advisory shareholder vote at the 2014 agm 
examples of new disclosures include the chief executive’s total 
remuneration over the last five years page 73 options vesting 
history and the spend on executive director pay in proportion 
to a number of key business metrics page 73
key responsibilities of the committee
the committee determines on behalf of the board and  
within agreed terms of reference set by the board the overall 
remuneration packages for the executive directors and the 
chairman and the terms of the service contracts and all other 
terms and conditions of employment of the executive directors
the overriding objective is to ensure that executive pay  
is strongly aligned to the company’s business priorities and  
the interests of shareholders our policy is also designed  
to attract motivate and retain individuals who will deliver 
strong performance for all of our stakeholders the committee 
takes into account the pay and employment conditions of 
employees within the group when determining executive 
directors’ remuneration
in line with the association of british insurers’ guidelines on 
responsible investment disclosure the committee ensures  
that the incentive structure for the executive directors will  
not raise environmental social or governance risks by 
inadvertently motivating irresponsible behaviour
key decisions and changes in remuneration policy
the committee decided to leave all fixed elements of salary  
and benefits unchanged for both of the company’s executive 
directors this aligns directly to the key strategic goal of 
lowering the group’s breakeven point it also reflects the  
pay restraint that is in force in all renold locations
the maximum achievable annual bonus remains unchanged 
the targets reflect the need to improve operating margins  
and reduce average levels of net debt now structured as a 
matrix to ensure that one goal cannot be pursued at the 
expense of the other
“ as chairman of the remuneration 
committee i am pleased to present the 
directors’ remuneration report for the  
year ended 31 march 2014 during the  
year we made a number of changes  
to our remuneration policy which we 
believe enhance the alignment between 
executive directors’ incentives and the 
interests of shareholders ”
 ian griffiths
 chairman of the remuneration committee  annual report and accounts 2014 renold plc 61
corporate governance
the 2013 performance share plan psp approved by shareholders 
at the 2013 agm has been introduced to increase the alignment 
of directors’ remuneration with shareholder value motivate 
the achievement of strong growth in the long term and increase 
the proportion of variable pay it is a three year plan and the 
awards this year have required 50 growth each year in 
adjusted eps for maximum vesting as a result it is both 
challenging and firmly aligned to shareholders’ interests  
this year growth of 129 in adjusted eps has been achieved
finally having undertaken a review of best practice in 
remuneration policy provisions to enable awards to be  
clawed back prior to vesting have been introduced to the  
2013 psp as well as a shareholding requirement for executive 
directors in addition a provision has been added so that part  
or all of an annual bonus may be forfeited or sought to be 
clawed back in certain circumstances
committee membership
all members of the committee are independent members  
of the committee during the year are set out below and  
further biographical details can be found on page 46 and 47 
 → ian griffiths chairman 
 → john allkins
committee activities
the committee’s terms of reference require meetings to be held at least twice a year this year the committee met on six 
occasions to discuss the following themes and agenda items
theme agenda items
best practice →the company’s remuneration policy in light of the regulations and consideration of any agm feedback
 →review of the current uk corporate governance environment and the implications for the company
directors’ remuneration policy  →consideration and approval of the remuneration policy as summarised in this report
annual report on remuneration →consideration and approval of the annual report on remuneration to be put to shareholders
executive directors →the basic salaries payable to each of the executive directors
 →the annual bonus and payments for the financial year ended 31 march 2014
 →the annual bonus structure and performance targets for the financial year ending 31 march 2015
 →the company’s 2013 psp and awards made during the year
the committee is focused on clear reporting of past remuneration and future policy we welcome feedback from shareholders on 
this new format of report
ian griffiths
chairman of the remuneration committee 
27 may 2014
the company secretary attends all committee meetings 
the executive directors and the chairman attend meetings 
by invitation no director is involved in deciding his own 
remuneration whether determined by the committee or 
in the case of the nonexecutive directors by the board
an evaluation of the committee was undertaken and  
i can report that this review concluded the committee  
has operated effectively
the terms of reference of the committee are available on 
the company’s website at wwwrenoldcom none of the 
committee members has any personal financial interest 
other than as shareholders in the matters to be decided  
or any conflict of interest crossdirectorships or daytoday 
involvement in the running of the business
the company’s auditors are required to report on certain  
parts of the directors’ remuneration report and to state 
whether in their opinion those parts of the report have  
been properly prepared in accordance with the relevant 
accounting regulations audited sections of the report are 
indicated accordingly directors’ remuneration report
directors’ remuneration policy
renold plc annual report and accounts 2014 62
remuneration principles for executive directors
our directors’ remuneration policy has been designed to  
deliver two key aims
to attract motivate and retain executives who will deliver  
high performance for all our stakeholders
we believe the mix of our remuneration package provides an 
appropriate and balanced set of rewards executive reward at 
renold is relatively modest compared to our peer group and 
this has been validated by independent third parties in part 
this reflects a number of years of business underperformance 
but it is also consistent with the key strategic objective of 
lowering our breakeven point by reducing our cost base – this 
applies to executive pay as much as it does to any business 
expenditure however we are careful to ensure appropriate 
incentive opportunities remain for sustainable improvements 
in business performance
to ensure a close alignment of executive pay to the  
company’s strategic objectives and performance
we review our incentive plans each year to ensure they remain 
closely aligned with the company’s strategic objectives and  
our shareholders’ interests while continuing to motivate and 
engage the team leading the company to achieve stretching 
targets one consequence of this approach during the last year 
was to launch the 2013 psp that includes demanding three year 
performance targets to achieve the maximum vesting the 
compound annual growth rate cagr in adjusted eps has to 
be more than 50 per annum that would result in an adjusted 
eps figure more than three times that achieved in the year 
ended 31 march 2013 the current and forecast dilution levels 
from our share plans remain well below prescribed limits
in addition we aim to make the remuneration framework for 
executive directors relatively simple – the incentive plans are 
now therefore limited to an annual bonus and the 2013 psp
the committee believes the requirement to build up and 
maintain a direct shareholding in the company ensures that 
executive directors share a significant level of risk with the 
company’s shareholders and their interests are aligned 
having reviewed current best practice we have introduced 
a shareholding requirement for executive directors equal to 
100 of annual salary to be achieved over a five year period 
unvested sharesunexercised options are not counted within 
the shareholding requirement otherwise the shareholding 
requirements can be met through purchase from salary  
bonus or through vested long term incentive shares as at  
31 march 2014 the executive directors both hold shares  
of a value in excess of this requirement 
we also operate a mitigation policy in the event of early 
termination by the company of an executive director’s 
employment during the year the committee introduced  
a formal claw back policy for executive directors in respect  
of annual bonuses and longterm incentive awards this  
claw back policy is to come into effect so as to apply from  
1 april 2014 and has been introduced to provide the  
committee with discretionary powers to claw back 
performance based remuneration should exceptional 
circumstances occur such circumstances would include  
fraud misconduct significant misstatement of financial  
results or incorrect calculation of performance conditions
should the committee in its opinion consider such 
circumstances to have occurred during a performance  
period from 1 april 2014 onwards then the claw back policy  
will provide the committee discretion to determine that any 
amounts paid or payable under the annual bonus or awards 
under the 2013 psp which have not yet vested by reference  
to the relevant period may be clawed back the committee will 
take into consideration any claw back events when determining 
future awards andor bonus payments for executive directors
shareholder views
the committee constantly welcomes the views of shareholders 
in respect of pay policy as well as those views expressed on 
behalf of shareholders by their respective proxy advisers the 
committee documents all remuneration related comments 
made at the company’s agm and feedback received during 
consultation with shareholders throughout the year any 
feedback received is fully considered by the committee and 
where thought necessary amendments made to 
remuneration policy
discretion of the committee
the committee has discretion in various areas of policy as set 
out in this report the committee may also exercise operational 
and administrative discretions under relevant plan rules 
approved by shareholders as set out in those rules in addition 
the committee has the discretion to amend policy with regard 
to minor or administrative matters where it would be in the 
opinion of the committee disproportionate to seek or await 
shareholder approval annual report and accounts 2014 renold plc 63
corporate governance
policy table
based on our view of current market practice and the principles of our remuneration policy we have established the 
remuneration policy set out in this report the following table summarises the fixed and variable elements of remuneration  
for the executive directors
the policy described here is intended to apply for three years beginning on the date of the 2014 agm subject to shareholders’ 
approval each of the elements of remuneration set out below are forward looking other than the 2004 option plans which  
is a provision of previous remuneration policy and although it will not be used going forward it will continue to apply until all 
outstanding awards vest and is therefore included in the policy table as required by the regulations
remuneration 
element
purpose and link to 
corporate strategy operation of the element
maximum potential value  
and payment at threshold
review basis performance metrics
base salary to ensure 
competitive salaries 
to attract retain  
and motivate those 
responsible for 
executing strategy 
while ensuring the 
company pays no 
more than is 
necessary
base salary is paid in 12 equal monthly instalments 
during the year 
reviewed annually the policy is to provide  
third quartile salary for comparable jobs in 
manufacturing companies of a similar size 
influenced by
→  role experience and performance
→ changes in broader workforce salary and
→  salaries payable in similar companies
reviewed annually and set  
on 1 august each year
annual rate for each  
executive director is set  
out in the annual report on 
remuneration on page 69
salary increases will  
normally be in line with 
increases for the wider 
employee population
higher increases may be 
awarded in circumstances 
such as following recruitment 
into a role at a belowmarket 
rate or due to a change in role 
or responsibilities
for new recruits the salary 
increases may be higher than 
the wider workforce until the 
individual is aligned with 
market levels
none
benefits as base salary 
above benefits are 
nonpensionable
the company pays the cost of providing the 
benefits on a monthly basis or as required for 
oneoff events 
benefits consist of a fully expensed company car  
or cash equivalent and private medical insurance  
in addition to a lump sum deathinservice benefit  
of five times base salary deathinservice benefit is 
also available to all uk staff at five times base salary 
for those who opt to join the company pension 
scheme and at two times for those opting out
in the case that an executive director is required to 
relocate either on recruitment or during service as 
a director reasonable relocation expenses will be 
provided in line with market practice
the committee may change the benefits offered in 
line with local market practice or the operational 
needs of the business
reviewed annually and set  
on 1 august each year in  
line with the company’s  
car policy to a maximum of 
£11000 per annum cash 
allowance or equivalent  
lease value
the maximum opportunity  
for other benefits is defined 
by the nature of the benefit 
itself and the cost of 
providing it as the cost of 
providing such insurance 
benefits varies according to 
premium rates and the cost 
of other benefits is 
dependent on market  
rates and other factors  
there is no formal maximum 
monetary value 
none
pension as base  
salary above
the executive directors are not members of  
the company pension scheme and have their  
own pension arrangements the company’s  
only pension liability is to make annual cash 
contributions to the personal pension  
arrangements of the executive directors
cash allowances equivalent 
to 15 of base salary
none renold plc annual report and accounts 2014 64
directors’ remuneration report
directors’ remuneration policy
continued
remuneration 
element
purpose and link to 
corporate strategy operation of the element
maximum potential value  
and payment at threshold
review basis performance metrics
annual bonus to incentivise 
delivery of the 
corporate strategy 
and reward delivery 
of superior 
performance
annual bonuses are paid shortly after the end  
of the financial year end to which they relate
bonuses are normally payable in cash but the 
committee has flexibility to introduce a deferral  
if it deems it appropriate
bonus payments are based on group financial 
targets maximum bonus payments are made only 
on the achievement of outstanding performance 
bonuses are not pensionable
performance targets are set at the start of the 
financial year and the level of bonus paid is 
determined by the committee after the year  
end based on performance against target
a claw back facility will apply from 1 april 2014 
under which part or all of the cash bonus may be 
forfeited or clawed back if any of the circumstances 
outlined on page 62 arise
for executive directors  
the maximum annual  
bonus payable is 100  
of base salary
no bonuses will be payable 
unless a minimum level of 
financial performance has 
been achieved 50 is 
payable at threshold 
performance
the bonus may be based on a  
range of financial nonfinancial  
and personal targets as set by  
the committee from year to year 
financial targets will comprise at 
least half of the bonus
details of the measures and 
weightings will be set out in the 
annual report on remuneration 
following the end of each 
financial year
notwithstanding the achievement 
of performance targets any bonus 
payable will be determined by the 
committee in accordance with the 
relevant plan rules including the 
committee’s right to exercise its 
discretion fairly and reasonably  
in any circumstances which the 
committee considers it appropriate 
to do so
the committee has the discretion 
to vary the weighting of 
performance metrics over the life 
of this remuneration policy
2013 psp to incentivise 
delivery of 
longterm 
shareholder value
the 2013 psp was approved by shareholders  
at the agm on 23 july 2013 the key features  
are as follows
→  conditional share awards or options may be 
granted under the psp the exercise price of 
options is set by the committee and can be nil
→  the committee will impose demanding 
performance conditions on the vesting of awards
→  outstanding commitments to issue new shares 
under all share plans operated by the company  
are subject to a maximum of 10 of the company’s 
issued share capital in any ten year period
→  the psp includes the ability to grant options under 
an hm revenue  customs approved schedule
a claw back facility is in operation with effect from 
1 april 2014 under which part or the whole of the 
psp award can be recovered prior to vesting if any 
of the circumstances outlined on page 62 arise 
including if there is a restatement of the financial 
accounts or the individual is dismissed for cause
a maximum grant is 
permitted of 100 of  
base salary each year  
200 of base salary in 
exceptional circumstances 
such as recruitment
vesting is dependent on 
performance conditions  
on achievement of threshold 
performance 25 of the 
award vests for 30 cagr  
in adjusted eps
performance condition based on 
cagr in adjusted eps which must 
be met over a three year period 
in exceptional circumstances the 
committee has discretion to 
change the performance measures 
targets and weightings between 
measures during the performance 
period if there is a significant event 
which causes the committee to 
believe that the original conditions 
are no longer appropriate any 
amendments would be such that 
the new conditions are not 
materially less difficult to satisfy 
than the original conditions
the committee also has discretion 
to reduce the percentage that vests 
in cases where it believes the 
outcome of the performance 
conditions is not a fair reflection  
of the company’s performance
shareholding 
requirement
to strengthen the 
alignment between 
the interests of 
executive directors 
and those of 
shareholders
executive directors must build up over five years
unvested ltip or deferred shares are not taken  
into account share price is measured at the end  
of each financial year
all ltip or deferred share awards vesting net of 
income tax and national insurance contributions 
must be retained until the shareholding 
requirement is met
executive directors –  
100 of salary
none
provisions  
of previous 
policy that 
continue to 
apply – ltip 
awards made 
prior to and in 
2013 under 
the 2004 
option plans
to align the 
interests of 
executive directors 
with those of 
shareholders
the outstanding awards under the 2004 option 
plans will continue to form part of the 
remuneration policy until vesting
details in relation to the background terms and use 
of the 2004 option plans are set out on page 67
a maximum of 200  
of salary
market value options exercisable on 
the third anniversary of the grant
the performance condition is  
based on a varying percentage  
of the shares under option 
becoming exercisable depending  
on the company’s share price on 
the date three years following the 
date of grant annual report and accounts 2014 renold plc 65
corporate governance
changes to remuneration policy from that operating in 201314
element
operation of 
component
maximum 
potential value
performance metrics  
used weighting and 
time period applicable
base salary no change no change no change
benefits no change no change no change
pension no change no change no change
annual bonus previously 
no claw 
back 
provision
no change previously included  
individual director 
performance targets
long term 
incentive 
2013 psp
previously 
no claw 
back 
provision
no change no change
shareholder 
requirement
previously 
no 
shareholder 
requirement
100 of 
salary
none
long term 
incentive 2004 
option plans
no change no change no change
differences in remuneration policy for all employees
all employees of the group are entitled to base salary  
and benefits the group operates a number of pension  
plans for employees which it operates in line with local  
market practice some employees in senior roles are  
entitled to participate in an annual bonus scheme the 
maximum opportunity available is based on the seniority  
and responsibility of the role
conditional share awards are only available to senior  
executives and directors since 2008 share option grants  
and conditional share awards have been made only to 
employees at senior executive level
statement of consideration of employment conditions 
elsewhere in the group
the committee invites the hr director to present at a meeting  
on the proposals for salary increases for the employee population 
generally and on any other changes to remuneration policy 
within the group the committee limits any salary increases  
for executive directors to the inflationary increase available  
to employees unless there has been a change in role or they  
are progressing through a development phase
the hr director consults with the committee on the performance 
metrics for executive directors’ bonuses and to the extent to 
which these should be cascaded to other employees the 
committee approves the overall annual bonus cost to the 
group each year the committee has oversight over the grant 
of all ltip awards across the group
the group does not specifically invite employees to comment 
on the directors’ remuneration policy but any comments made 
by employees are taken into account
the committee is provided with data on the remuneration 
structure for senior management in the three tiers below 
executive director and uses this information to work with  
the human resources team to ensure consistency of approach 
throughout the group
notes to the policy table
performance measure and targets for the annual bonus  
plan and the 2013 psp
the performance targets are determined annually  
by the committee
adjusted ebitda is defined as earnings before interest tax 
depreciation amortisation closed defined benefit pension 
scheme charges and excludes exceptional items average net 
debt is the net sum of external borrowings finance leases and 
cash and cash equivalents measured at each month end to 
produce a simple annual average which excludes preference 
stock from targets and results adjusted eps excludes 
exceptional items pension administration costs ias 19 
financing charges and the tax thereon from earnings
the committee selected the performance conditions because 
these are central to the company’s overall strategy the annual 
bonus plan metrics of adjusted ebitda and average net debt 
provide a balanced mix of targets to deliver improving business 
performance and enhanced cash generation importantly 
both are consistent with the longer term goals of generating 
additional shareholder value and facilitating additional 
investment in the business itself and hence align with the long 
term incentive plan average net debt has been chosen as the 
appropriate measure of cash performance as it encourages 
continuous focus on cash and working capital management 
throughout the year rather than focusing on a single point in 
time the two targets are structured as a matrix to ensure that 
management must have regard to both metrics to maximise 
reward equally if either metric falls below a specified minimum 
level of performance then no reward can be earned irrespective 
of performance on the other metric
the committee considers cagr in adjusted eps to be the  
most appropriate performance condition to align the longer 
term goals of executive management with the interests of 
shareholders the performance period is three years at which 
point testing occurs and awards either vest or lapse there is 
no opportunity for testing to be deferred or for retesting at a 
later date minimum and maximum targets at which 25 and 
100 of awards vest are set at the time each award is made 
and are adjusted to ensure that they remain suitably 
demanding but also motivating
the committee is of the opinion that the performance targets 
for the annual bonus are commercially sensitive in respect of 
the group and that it would be detrimental to the interests of 
the group to disclose them renold plc annual report and accounts 2014 66
total remuneration opportunity
the chart below demonstrates the total amount of 
remuneration payable to the chief executive robert purcell  
and finance director brian tenner under the proposed 
remuneration policy for the year ending 31 march 2015 should 
they achieve minimum ontarget or maximum performance 
the amounts shown represent £’000s and for share related 
elements are the face value of awards
the chart shows that at minimum levels of performance the 
executive directors only form of remuneration is the fixed 
element of base pay benefits in kind and pension contributions 
for performance above minimum the variable element of pay 
for the chief executive increases to approximately 63 of total 
reward or 168 of the fixed elements of pay noted the ratios 
are similar for the finance director
the executive directors’ base salaries are assessed independently 
of the ability to earn variable awards under the annual and long 
term incentive plans and hence future bonus opportunities are 
not a consideration when setting base pay
total remuneration
26
100
£358
13
£583
minimum ontarget
robert purcell
maximum minimum ontarget
brian tenner
maximum
0
400
200
600
800
remuneration £’000
1000
61
31
31
£958
38
100
£224 26
13
£363
63
31
31
£594
38
psp        annual bonus       salary beneﬁts and pension
note ontarget assumes 50 of maximum bonus is earned and threshold vesting 
under the 2013 psp share price growth is excluded
service contracts remuneration and exit payments
as a matter of policy the length of service contracts and  
notice periods is determined by the committee at the time 
of appointment in light of the then prevailing market practice 
details of the executive directors’ terms of appointment and 
notice periods are as follows
date of contract
expiry date of current  
termnotice period
robert purcell 21 january 2013 no specified termterminable 
on 12 months’ notice
brian tenner 1 september 2010 no specified termterminable 
on 12 months’ notice
other than normal payments due during notice periods  
there are no express provisions for compensation on early 
termination of the executive directors’ contracts in the event 
of early termination the company’s policy is to act fairly in all 
circumstances the committee has noted the association of 
british insurers’ and national association of pension funds’ 
joint statement on executive contracts and severance neither 
of the executive directors’ contracts provide for compensation 
in the event of a change of control of the company copies of 
the two service contracts are available for inspection by 
shareholders at the company’s registered office
change of control
in the event of a change of control any outstanding awards 
under the long term incentive plan may vest awards will 
become exercisable immediately the proportion of award 
vesting will be determined by the committee based on the 
proportion of the performance period completed and the 
extent to which the performance condition has been met  
at the date the change of control occurs 
the committee has discretion to waive any performance condition 
if it considers this appropriate in the particular circumstances
directors’ remuneration report
directors’ remuneration policy 
continued
leavers
the committee’s policy for exit payments on a leaver event involving an executive director is
item policy details
salary pension and benefits a maximum of 12 months’ salary pension and benefits 
may be payable
payments may be subject to mitigation if the leaver 
finds alternative employment
annual bonus no annual bonus normally payable unless the 
committee uses its discretion to treat as a good leaver
good leavers are entitled to receive a bonus based on 
performance to date of termination prorated for the  
period of service to termination
psp the committee will use its discretion to determine  
whether the individual should be treated as a good  
leaver or a bad leaver
in the event of death or retirement an individual will 
be treated as a good leaver
bad leavers will forfeit outstanding psp awards
good leavers’ awards shall vest prorata based on the 
proportion of the vesting period completed and based 
on the extent to which the performance condition has 
been met at the date of leaving
awards may be exercised within a six month period 
following date of leaving in the case of death the 
award may be exercised within a 12 month period 
following death annual report and accounts 2014 renold plc 67
corporate governance
in determining whether an individual should be treated as a  
good leaver or a bad leaver and in assessing the extent to which 
any award will vest the committee will consider the specific 
circumstances of the departure the individual’s performance 
prior to departure and the performance of the company
approach to recruitment remuneration
in the event of the appointment of a new director the same 
principles would apply as they do today to the existing directors
the remuneration package of any new executive director 
would therefore include the elements and maximum award size 
set out on pages 63 and 64 in accordance with the company’s 
remuneration policy and subject to the same discretions
the committee’s approach to recruitment remuneration is to 
set the salary level in accordance with the remuneration policy 
and having taken into account the individual’s experience the 
nature of the role and their existing remuneration package
where it is necessary to ‘buy out’ an individual’s awards from 
a previous employer the committee will seek to match the 
expected value of the awards that vest over a timeframe similar 
to those given up with a commensurate reduction in quantum 
where the new awards will be subject to performance conditions 
that are not as stretching as those on the awards given up this 
would be an additional element of remuneration to the normal 
maxima as set out in the policy table on pages 63 and 64
details of the company’s approach to the remuneration of 
nonexecutive directors are set out on page 68
external nonexecutive directorships
the board encourages executive directors to broaden  
their experience outside the company by taking up a  
nonexecutive directorship
long term incentive plans – 2004 option plans  
audited information
the 2004 option plans were not used during the year ended 
31 march 2014 as indicated in the resolution approving the 
2013 psp at the annual general meeting on 23 july 2013 the 
final use of these plans was an award of options to robert 
purcell in january 2013 on joining the company the information 
presented below is therefore purely in respect of awards made 
in previous years the plans consist of the renold plc 2004 
inland revenue approved company share option plan and  
the renold plc 2004 noninland revenue approved company 
share option plan together the ‘2004 option plans’ their  
key features are
 → market value options exercisable three years after grant 
 → the maximum annual grant limit is 200 of base salary and 
 → outstanding commitments to issue new shares under all 
share plans operated by the company are subject to a 
maximum of 10 of the company’s issued share capital in 
any ten year period
for options granted since the year ended 31 march 2010 the 
performance condition is based on a varying percentage of the 
share options becoming exercisable depending on the company’s 
share price on the date three years following the date of the 
grant the following tables show the different conditions for 
existing awards not yet subject to performance testing
granted 8 june 2011
1
 – performance test 8 june 2014
share price p
 of shares 
under option 
that become 
exercisable
2
45 25
55 50
60 75
65 100
granted 21 january 2013
3
 – performance test 21 january 2016
share price p
 of shares 
under option 
that become 
exercisable
2
30 0
35 50
40 100
1 the closing share price on the date of grant 8 june 2011 was 3713 pence
2  with the corresponding number of shares being rounded down to the nearest 
whole number 
3 the closing share price on the date of grant 21 january 2013 was 255 pence renold plc annual report and accounts 2014 68
long term incentive plans – 2013 psp audited information
the key features of the 2013 psp are set out in the table on page 64 the performance conditions attaching to options granted 
under the 2013 psp in the year ended 31 march 2014 measured as the equivalent cagr in adjusted eps over a three year period 
are as follows
entry threshold maximum performance period
performance  vesting performance  vesting performance  vesting
30 0 30 25 50 100 
3 years from  
1 april 2013
nonexecutive directors
appointment details and fees of the nonexecutive directors are set out below
name date of appointment unexpired term months date of electionlast reelection contractual fees
mark harper 1 may 2012 13 12 july 2012 £110000
john allkins 17 april 2008
1
35 23 july 2013 £43000
2
ian griffiths 13 january 2010
3
21 23 july 2013 £38000
1 john allkins’ appointment was renewed with effect from 17 april 2014 and for a period of three years in line with best practice guidelines
2  john allkins’ fee includes an additional £2500 payable with effect from 21 january 2013 as a result of his appointment as the senior independent nonexecutive director
3 ian griffiths’ appointment was renewed on 14 january 2013 for a period of three years in line with best practice guidelines
the company’s policy for nonexecutive directors’ remuneration is managed by the board their remuneration is confined to fees 
alone with no performancerelated element reasonable expenses are also reimbursed as incurred
fees for the nonexecutive directors are determined by the chairman and the executive directors the level of fees is reviewed from 
time to time with regard to fees paid in comparable organisations and the time commitment required the chairman’s remuneration 
is determined by the committee and the board and is subject to the same basis of review as the other nonexecutive directors
the letters of appointment for each of the nonexecutive directors confirm that their appointment is for a specified term and  
that reappointment is not automatic when making a decision on reappointment the board reviews the nonexecutive director’s 
attendance and performance at meetings and the composition and skill of the board as a whole each nonexecutive director is 
appointed for an initial period of three years subject to earlier termination by either party thereafter the appointment may be 
renewed provided that both the nonexecutive director and the board agree their respective appointments continue on an 
annual basis subject to reelection at each agm the letters of appointment contain no provision for payment or compensation  
on early termination copies of the individual letters of appointment are available for inspection by shareholders at the company’s 
registered office
directors’ remuneration report
directors’ remuneration policy 
continued annual report and accounts 2014 renold plc 69
corporate governance
directors’ remuneration report
annual report on remuneration
the year 201314 delivered a good start to the business turnaround plan with significant progress on the key strategic objective to 
lower the group’s breakeven point a number of critical operational milestones were achieved as well as fundamental improvements 
in underlying business processes and systems this was reflected in significant improvements in operational and financial performance 
as evidenced by adjusted earnings growth at the same time financial risks associated with leverage and pensions continued to be 
managed down all of these factors were taken into account when remuneration was assessed
the composition of the committee is set out on page 61 of the report
the differences between the remuneration policy for 2013 and the policy on which shareholders will vote at the 2014 agm are set 
out on page 65
directors’ remuneration 
total remuneration – single total figure table audited information
the total remuneration for the period and for the year ending 31 march 2013 in order to permit comparison for each director is 
set out in the table below
executive directors
salary
 £’000
benefits 
£’000
bonus 
£’000
2
ltip 
£’000
3
pensions 
£’000
total 
£’000
robert purcell 2014 300
1
14 300 – 45 659
2013 59 3 – – 9 71
brian tenner 2014 185 11 185 36 28 445
2013 185 11 58 – 28 282
robert davies
4
2014 – – – – – –
2013 218 25 35 – 33 311
nonexecutive directors’ fees
2014 
£’000
2013 
£’000
change 
£’000
mark harper
5
110 87 23
john allkins
6
43 41 2
ian griffiths 38 38 –
1  robert purcell joined the company on 21 january 2013 with an annual salary of £300000 his base salary has not increased this year
2  further details in relation to the annual bonus paid to executive directors are on page 70 within the director’s remuneration report
3  further details of awards to the executive directors under the 2004 option plans and 2013 psp are on pages 70 to 72 the ltip uses the closing share price on the 
day of vesting less the option exercise price to calculate the value of the award
4  robert davies left the company on 31 december 2012 the salary shown for 2013 was in respect of the nine months of service in the previous year £218000 it was agreed 
that an amount of £367000 be paid to robert davies as compensation for loss of office equivalent to one years basic salary of £291000 benefits of £33000 and 
pension contributions of £43000
5  mark harper’s fee was £40000 upon appointment as nonexecutive director on 1 may 2012 and increased to £110000 upon his appointment as chairman on 12 july 2012
6  john allkins’ fee was increased to £43000 on his appointment as senior independent nonexecutive director with effect from 21 january 2013
1 fixed elements of pay 
i base salary
consistent with the key strategic goal of lowering the group’s breakeven point and the pay restraint that continued across the 
group there were no pay rises for executive directors during the period robert purcell’s annual salary from 1 april 2013 therefore 
remained at £300000 and brian tenner’s annual salary at £185000 these figures are outlined in the total remuneration 
table above 
the proportion of the group’s basic salary bill attributable to the executive directors’ base salaries for the year ended  
31 march 2014 was 087 2013 093
ii pension
the executive directors only pension entitlements are cash contributions by the company to their individual personal pension 
plans cash contributions equivalent to 15 of base salary were paid during the year ended 31 march 2014 for robert purcell 
 of £45000 2013 £8831 in the period from appointment in january 2013 to 31 march 2013 and brian tenner of £27750  
2013 £27750 these figures are shown in the total remuneration table above  renold plc annual report and accounts 2014 70
directors’ remuneration report
annual report on remuneration 
continued
iii benefits
the executive directors received the following benefits during the period robert purcell received a noncash benefit of £14000  
for his company car and private healthcare brian tenner received a cash benefit of £10000 for his company car allowance and 
£1000 noncash benefit for private healthcare these figures are outlined in the total remuneration table on page 69
nonexecutive directors do not receive any benefits
2 variable elements of pay – awards vested in year
i annual bonus payable in cash 
the annual bonus which is payable in cash provides the executive directors with the opportunity to receive an annual  
bonus based on achievement of certain performance targets for the year ended 31 march 2014 the annual bonus scheme  
for executive directors was structured as follows 
maximum adjusted ebitda average net debt paid in cash
total paid as 
 maximum
 salary weight achieved weight achieved £’000 
robert purcell 100 70 100 30 100 300 100
brian tenner 100 70 100 30 100 185 100
the two metrics shown were structured as a matrix such that failure to deliver a minimum result in either metric would have led 
to no bonus being achievable in the other similarly in order to achieve the maximum award superior performance would be 
required against both metrics there was no allowance for personal objectives during the year for the year ended 31 march 2013 
this was 20 
the following table sets out an indication of the actual performance against the targets for the year ended 31 march 2014  
the performance targets for the annual bonus are based on internal targets and considered commercially sensitive  
consequently these will not be disclosed
adjusted ebitda average net debt
below 
threshold
between 
threshold  
and maximum at maximum
below 
threshold
between 
threshold  
and maximum at maximum
robert purcell ✓ ✓
brian tenner ✓ ✓
ii 2004 options performance testing during the year
awards made under the 2004 option plans in 2010 had a three year performance period ending on 27 september 2013 with 
share price targets as shown in the table below
granted 27 september 2010 – tested on 27 september 2013
share price p
 of shares 
under option 
that become
 exercisable
1
30 25
40 50
50 75
60 100
1 with the corresponding number of shares being rounded down to the nearest whole number 
of the 678898 options awarded to brian tenner on 27 september 2010 with an exercise price of 2725p 325446 equivalent  
to 479 of the maximum award vested on 27 september 2013 as the midmarket price of the company’s shares on the three 
preceding trading days was 3835p
iii 2013 psp awards performance testing during the year
the year ended 31 march 2014 was the first year in which awards were made under the 2013 psp and none were due for testing 
in the same year annual report and accounts 2014 renold plc 71
corporate governance
3  variable elements of pay – awards made in year
awards made to executive directors during the year under the 2013 psp and associated performance conditions are set 
out below
i 2013 psp granted in year 
awards equal to 100 of salary were made
type of award face value
number of
 shares
1
date of award
robert purcell nil price option £300000 1065089 23 july 2013
brian tenner nil price option £185000 656805 23 july 2013
1 the number of shares is based on the average midmarket share price for the three business days preceding the date of grant 2817 pence
the performance conditions attaching to options granted under the 2013 psp in the year ended 31 march 2014 measured as the 
equivalent compound annual growth rate in adjusted eps over a three year period are as follows on achievement of threshold 
performance 25 of the award vests straight line vesting occurs between threshold and maximum performance
threshold maximum 
performance  vesting performance  vesting performance period
30 25 50 100 3 years from 1 april 2013
ii other long term incentive plans granted in year
the company has in the past made grants under a savings related share option scheme saye scheme in which the executive 
directors are eligible to participate no saye scheme options were granted during the year ended 31 march 2014 and all previous 
options have lapsed
directors’ shareholding and share interests audited information
1 vesting history of the 2004 options plan and psp
the following table shows the vesting history of the 2004 options plans over the last five years as a percentage of the total  
award to executive directors the first awards under the 2013 psp were made in the year ended 31 march 2014 and will be due  
for testing in july 2016
award 200607 
vesting 200910
award 200708 
vesting 201011
award 200809 
vesting 201112
award 200910 
vesting 201213
award 201011 
vesting 201314
vesting  nil nil nil nil 479
the table illustrates that with the exception of the current year the performance of the business whether in terms of total 
shareholder return tsr share price appreciation or improvements in adjusted eps has consistently fallen short of the targets  
set for even entry level vesting of awards the vested award relates to options awarded to brian tenner in 201011 further details 
are set out on page 70
2 directors’ interests 
the beneficial interest of each of the directors and their connected persons in the ordinary shares of the company is detailed 
below and these amounts were unchanged between the year ended 31 march 2014 and the date of this report
executive directors 
executive directors are required to build up a shareholding equal to 100 of salary over a five year period unvested shares and 
unexercised options are not counted within the shareholding requirement the table below sets out the extent to which this 
requirement was met as at 31 march 2014
 31 march 
2014
shareholding 
requirement 
 of salary
shareholding 
at 31 march 
2014 
 of salary
31 march 
2013
robert purcell 3748526 100 697 1748526
brian tenner 408396 100 123 408396 renold plc annual report and accounts 2014 72
nonexecutive directors
the shareholdings of the nonexecutive directors are
31 march 2014 31 march 2013
mark harper 469189 276207
john allkins 75000 75000
ian griffiths 10000 10000
3 directors’ share options
awards over shares in which the executive directors retain an interest are detailed in the table below and were unchanged 
between the year ended 31 march 2014 and the date of this report
number of share options 
robert purcell
options held 
at 1 april 2013
granted  
in year
lapsed  
in year
options held 
at 
31 march 
2014
option 
price p
date from 
which 
exercisable expiry date
2004 options plan 1145038 – – 1145038 2620 21012016 20012023
2013 psp – 1065089 – 1065089 nil 25072016 25072023
total 1145038 1065089 – 2210127
number of share options 
brian tenner
options held 
at 1 april 2013
granted  
in year
vestedlapsed  
in year
options held 
at 
31 march 2014
option 
price p
date from 
which 
exercisable expiry date
2004 options plan 678898 – 353452 325446 2725 27092013 26092020
495978 – – 495978 3730 08062014 07062021
total 2004 options plan 1174876 – 353452 821424 nil na na
2013 psp – 656805 – 656805 nil 25072016 25072023
total 1174876 656805 353452 1478229
the performance conditions to which the share options are subject are disclosed on page 71 and are included in this audited 
information section by reference none of the terms and conditions of the share options was varied in the year
performance graph and table 
directors’ remuneration report
annual report on remuneration 
continued
the graph above shows the company’s total shareholder return share price growth plus dividends reinvested where applicable 
for each of the last five financial years of a holding of shares in the company against a hypothetical holding of shares in the ftse 
allshare industrial engineering index the committee considers this index to be an appropriate index for total shareholder return 
and comparison disclosure as it represents a broad equity index of which the company is a constituent
the market capitalisation of the company at 31 march 2014 was £124358571 and the lowest and highest share prices during the 
year were 20p and 675p respectively with a share price on 31 march 2014 of 5575p
tuesday 31 march 09 financial year end monday 31 march 14
source thomson financial – thomson one banker
0
200
100
300
400
600
500
renold plc        ftse allshare industrial engineering index annual report and accounts 2014 renold plc 73
corporate governance
chief executive’s remuneration for the period 200910 to 201314
the following table shows the history of the chief executive’s total remuneration and proportions of annual bonus and options 
vesting each year as a percentage of the maximum over the last five years 
200910 201011 201112 201213
2
201314
chief executive’s total remuneration
1
 £’000 337 667 494 311 659
annual bonus as  of maximum awarded 0 81 44 16 100
lti as  of maximum vesting 100 0 0 0 na
1  the values use the same methodology as that shown in calculating the single figure basis of remuneration in the table on page 69 the total remuneration figure for 
the year ended 31 march 2013 has therefore been recalculated to exclude a sum of £367000 paid as compensation for loss of office to robert davies
2  figures for 200910 to 201213 are in respect of robert davies who left the company on 31 december 2012 robert purcell was appointed as ceo on 21 january 2013 
and his total remuneration for the year ended 31 march 2013 was £71000 robert purcell did not participate in the annual bonus plan for the year ended 31 march 2013 
and was not eligible for any vesting incentives during this year figures for the year ended 31 march 2014 are in respect of robert purcell who was not eligible for any 
vesting under long term incentives during the year
chief executive pay and employee pay 
the table below shows the percentage change from the preceding financial year in respect of the total of the chief executive’s 
remuneration on a single total remuneration basis as shown in the table above on page 69
percentage 
change in 
salary
percentage 
change in 
benefits
percentage 
change in 
annual bonus
chief executive
1
83 500 757
workforce
3
≤10
2
00 36
1  due to a change in the chief executive in the prior year the remuneration paid was less than would normally be expected in a comparative 12 month period
2 the figures include only those employees who were not promoted and did not change role during the year to provide a likeforlike comparison
3  the group uses the uk workforce as an appropriate comparator group as the executives are based in the uk and the structure of remuneration varies considerably 
based on local market practice in other countries in which the group operates
relative importance of spend on pay 
the table below sets out the total of the executive directors’ remuneration on a single total remuneration basis as shown in  
the table on page 69 compared to a number of other key financial metrics the metrics chosen are considered of interest and 
relevance to both the group’s actual performance in the period and also to be of relevance to different stakeholder groups
employee 
remuneration
shareholder 
distributions
market 
capitalisation revenue
1
adjusted
2
 
operating 
profit ebitda
3
executive 
directors’ 
total 
remuneration
2014 £640m nil £1244m £1840m £111m £165m £11m
2013 £661m nil £531m £1903m £72m £118m £11m
difference  32 nil 134 33 542 398
1 and 2  note 2 to the company financial statements sets out the calculation of revenue total operating costs and adjusted operating profit
3 ebitda is adjusted operating profit before depreciation and amortisation charges
statement of implementation of remuneration policy in next financial year
the remuneration policy as set out in the policy table and notes on pages 63 to 65 will be implemented with effect from the agm in 2014 
base salary
the committee reviewed base salaries for executive directors and agreed that there would be no increase with effect from  
1 august 2014 there will be no change to the nonexecutive directors’ base salaries for the year ended 31 march 2015 their  
salaries are set out on page 68
base salaries for the executive directors are set out below
201314
from  
1 august 2014
robert purcell £’000 300 300
brian tenner £’000 185 185 renold plc annual report and accounts 2014 74
directors’ remuneration report
annual report on remuneration 
continued
annual bonus
the performance measures and weightings for the 201415 annual bonus are unchanged from 201314 
the performance measures and weightings are as follows
weighting
adjusted ebitda 70
average net debt 30
adjusted ebitda is defined as earnings before interest tax depreciation amortisation closed defined benefit pension scheme 
charges and exceptional items average net debt is the net sum of external borrowings finance leases and cash and cash 
equivalents measured at each month end to produce a simple annual average
the performance targets for the annual bonus are based on internal targets and considered commercially sensitive consequently 
these will not be disclosed
long term incentive plan – 2013 psp
the performance conditions attaching to options that will be granted under the 2013 psp in the year commencing 1 april 2014 
measured as the equivalent cagr in adjusted eps over a three year period are as follows on achievement of threshold 
performance 25 of the award vests straight line vesting occurs between threshold and maximum performance performance 
will be measured from an adjusted eps figure of 32p for the year to 31 march 2014
threshold maximum
performance  vesting performance  vesting performance period
20 25 30 100 
3 years from  
1 april 2014
the performance targets for the annual bonus are based on internal targets and considered commercially sensitive consequently 
these will not be disclosed 
advisers to the committee
during the year the committee received independent advice from ey in relation to the 2013 psp with total fees for services 
provided amounting to £34890 plus vat the fee for this advice was negotiated in advance of the work being undertaken given 
the nature of the project ey is the company’s external auditor and was appointed by the committee to advise following an 
assessment and interview process in relation to the 2013 psp alone ey also provide tax services to the company full details  
of ey’s remuneration are set out in note 2b to the company financial statements on page 98
the committee has also received advice from pwc with total fees for services provided over the year amounting to £3150 plus 
vat pwc was appointed by the committee following an assessment and interview process and has advised on various issues  
including remuneration policy and the regulations and updating the committee on trends in compensation matters fees  
charged have been on a timespent basis pwc is a member of the remuneration consultants group and adheres to that  
group’s code of conduct pwc has provided internal audit and pensions related services to the company the committee  
has chosen to retain pwc as its adviser 
statement of shareholder voting 
votes cast in respect of the committee’s remuneration report for the preceding financial year are detailed in the table below
 no of votes 
votes cast 121518866 5497 of issued capital
abstained including those withheld 84656
for 119571992 984 of votes cast
against 1946874 16 of votes cast
approved by the board
ian griffiths
chairman of the remuneration committee 
27 may 2014 annual report and accounts 2014 renold plc 75
corporate governance
directors’ report
the directors submit their report and the financial statements 
as set out on pages 81 to 122
the directors’ report which comprises pages 75 to 78  
is prepared in accordance with the requirements of the 
companies act 2006 and the fca’s listing and disclosure  
and transparency rules
in accordance with section 414c 11 of the companies act 2006 
information about the employment of disabled persons employee 
involvement and greenhouse gas emissions which is required 
to be included in the directors’ report has been included in  
the strategic report the corporate governance report also 
forms part of the directors’ report where statutory and other 
disclosures have been made elsewhere in the annual report 
and accounts they are cross referenced accordingly and 
therefore incorporated by reference
the strategic report provides an overview of the performance 
of the business in the year ended 31 march 2014 and covers likely 
future developments in the business of the company and the group
group
the company is a public limited company incorporated  
in england registered number 249688 with its registered 
office at renold house styal road wythenshawe 
manchester m22 5wl 
the group is an international engineering group producing 
a wide range of high quality engineering products which  
are sold in over 100 countries worldwide 
a summary of the principal undertakings of the group is  
set out in note xiv to the company financial statements
results
loss before tax for the year ended 31 march 2014 is  
£107m compared with a loss of £118m for the year  
ended 31 march 2013
dividends
details about dividend policy are set out on page 88 of the 
group financial statements
the board has decided to recommend that no ordinary 
dividend be paid in respect of the year ended 31 march 2014 
but it will consider future dividend policy in the light of results 
from the business going forward
dividend payments in respect of the 6 cumulative  
preference stock in the company were made on 1 july 2013 
and 1 january 2014
directors
the current directors’ biographical details including the date 
upon which they were appointed to the board can be found 
on pages 46 and 47 
the appointment and replacement of directors of the company 
is governed by its articles of association and legislation the 
company’s articles of association give power to the board to 
appoint directors to fill a vacancy or as additional directors 
but also require directors to retire and submit themselves for 
election at the first annual general meeting following their 
appointment in addition all nonexecutive directors are 
subject to annual election please refer to the corporate 
governance report on page 50 for further details 
as a result brian tenner mark harper john allkins and  
ian griffiths will be standing for reelection at the 2014 agm 
under the terms of reference of the nomination committee 
appointments to the board are recommended by the 
nomination committee for approval by the board for a  
full description of the company’s policy on appointments  
to the board see the nomination committee report at  
pages 58 and 59
shareholders may also appoint a director by ordinary resolution
directors’ interests
details of the interests of the directors and their connected 
persons in the company’s share capital and in options held 
under the company’s share option schemes along with any 
changes in such interests since the end of the year are detailed  
in the directors’ remuneration report on pages 60 to 74  
no director had any interests in contracts of significance  
in relation to the company’s business during the year
directors’ and officers’ liability insurance
liability insurance for directors and officers was maintained 
throughout the year no qualifying third party indemnity 
provision or qualifying pension scheme indemnity provision 
was in force when this directors’ report was approved or was 
in force during the year
statement of directors’ responsibilities
please refer to page 79 for the statement of directors’ 
responsibilities in respect of the annual report and accounts 
and for the directors’ statement as to disclosure of information 
to auditors directors’ report
continued
renold plc annual report and accounts 2014 76
conflicts of interest
the company’s articles of association were amended at the 
2008 annual general meeting in line with the companies act 
2006 to allow the board to authorise potential conflicts of 
interest of directors on such terms if any as the board thinks 
fit when giving any authorisation any decision of the board to 
authorise a conflict of interest is only effective if it is approved 
without the conflicted directors voting or without their votes 
being counted and in making such a decision the directors 
must act in a way they consider in good faith will be most likely 
to promote the success of the company the board considers 
that the procedures it has in place for reporting and considering 
conflicts of interest are effective and a review of previously 
approved conflicts is carried out annually
shares
share capital
on 13 and 22 august 2013 respectively the company allotted 
500063 and 1500187 fully paid new ordinary shares pursuant  
to the exercise of warrants by royal bank of scotland plc  
at a price of 2106 pence per share both allotments were 
conditional only on admission of the new shares to the official  
list and to trading on the london stock exchange’s main 
market for listed securities becoming effective admission to 
the main market became effective on 16 and 29 august 2013 
respectively the warrants were originally granted in august 
2009 as part of the refinancing agreed with the company’s 
banks at that time being royal bank of scotland plc and fortis 
bank uk branch the warrants were subsequently modified 
during the equity placement in december 2009 at which time 
the exercise price was fixed at 2106 pence following the two 
exercises by royal bank of scotland plc during the year there 
are no remaining warrants
as a result of the above allotment as at 31 march 2014 the 
issued share capital of the company was £2714665775 divided 
into 223064703 ordinary shares of 5p each 580482 units of  
6 cumulative preference stock of £1 each and 77064703 
deferred shares of 20p each the ordinary shares represent 
4108 of the company’s total share capital the preference 
stock represents 214 and the deferred shares represent 
5678 the company’s ordinary shares and preference stock  
are listed on the london stock exchange the deferred shares 
have no voting or dividend rights and are not able to be traded 
the company obtained shareholder authority at the 2013 
annual general meeting to make market purchases of up to 
22106445 ordinary shares in the company which remains 
outstanding until the conclusion of the 2014 annual general 
meeting the minimum price which must be paid for any 
ordinary share is the nominal value of such share at the time  
of the purchase and the maximum price is that permitted under 
the fca’s listing rules or in the case of a tender offer 5 
above the average of the middle market quotations of the 
company’s ordinary shares as derived from the london  
stock exchange’s daily official list for the five business days 
immediately preceding the date on which the tender offer  
is announced as at the date of this report the company had 
not purchased any of its own ordinary shares in the market 
pursuant to such authority the directors will seek authority 
from shareholders at the forthcoming annual general meeting 
for the company to purchase in the market up to 22306470 
of its own ordinary shares which represents approximately 
10 of the company’s ordinary share capital as at the date of 
this report either to be cancelled or retained as treasury shares 
details of the company’s share capital are also set out in 
note 19 to the group financial statements on page 115
the rights and obligations attaching to the company’s shares 
are contained in the company’s articles of association a copy of 
which is available at wwwrenoldcom or can be obtained upon 
request to the company secretary the articles of association 
may only be changed by a special resolution passed at a 
general meeting of the company
voting rights
the directors confirm that no person has any special rights of 
control over the company’s share capital and that no shares 
have been issued that carry any special rights with regard to 
control of the company 
participants in employee share schemes have no voting or 
other rights in respect of the shares subject to those awards 
until the options are exercised at which time the shares rank 
pari passu in all respects with shares already in issue no such 
schemes carry any special rights with regard to control of 
the company 
no member shall unless the directors otherwise determine 
be entitled to vote at a general meeting either personally or by 
proxy or to exercise any other right conferred by membership 
in relation to meetings of the company if any call or other sum 
presently payable by him to the company in respect of such 
shares remains unpaid the directors also have powers to 
suspend voting rights in certain limited circumstances when 
a shareholder has failed to comply with a notice issued under 
section 793 of the companies act 2006 annual report and accounts 2014 renold plc 77
corporate governance
full details of the deadlines for exercising voting rights and 
appointing a proxy or proxies in respect of the resolutions to 
be considered at the annual general meeting are set out in 
the notice of annual general meeting
major shareholdings
as at 31 march 2014 the company had been notified of the 
following major holdings of voting rights attached to its ordinary 
shares under the fca’s disclosure and transparency rule 5
shareholder
number of  
voting rights
 of total  
number of  
voting rights
schroder investment management 35738773 1602
prudential plc group of companies 31431331 1409
henderson global investors limited 26309814 1179
mg investment funds 3
1
24540170 1100
1   mg investment funds 3 is an open ended investment company oeic  
and is not a prudential group company and must be separately disclosed  
the prudential plc group holding includes the holding of mg investment  
funds 3 as mg investment management ltd is a wholly owned subsidiary  
of prudential plc
the company has not been notified of any major holdings  
of voting rights subsequent to the year end 31 march 2014
no major shareholder had any interest in derivatives or 
financial instruments relating to shares carrying voting  
rights that are linked to the company’s shares
directors’ rights in respect of shares
the board which is responsible for the management of  
the company’s business may exercise all the powers of  
the company subject to the provisions of relevant legislation 
and the company’s articles of association the powers of the 
directors set out in the articles of association include those 
in relation to the issue and buyback of shares
issue of shares
the directors are authorised to issue equity securities either 
by way of a rights issue or in any other way provided that the 
shares issued other than by way of a rights issue open offer 
or other preemptive offer or under the various share option 
schemes of the company be limited to shares with an aggregate 
nominal value of £55266113 being equal to 5 of the 
aggregate nominal amount of the company’s ordinary share 
capital in issue as at the date of the notice of the company’s 
2013 annual general meeting the authority will expire at the 
forthcoming annual general meeting the directors will seek 
authority from shareholders at the annual general meeting to 
issue equity securities either by way of a rights issue or in any 
other way provided that the shares issued other than by way 
of a rights issue open offer or other preemptive offer or under 
the various share option schemes of the company be limited to 
shares with an aggregate nominal value of £55766176
in addition the directors have authority to allot shares up to 
a maximum nominal amount of £736144628 representing 
approximately two thirds of the issued ordinary share capital 
as at the date of the notice of the company’s 2013 annual 
general meeting the authority will expire at the forthcoming 
annual general meeting the directors will seek authority from 
shareholders at the annual general meeting to allot shares up 
to a maximum nominal amount of £742805461 representing 
approximately 666 of the issued ordinary share capital as at 
the date of the notice of the annual general meeting
transfer of shares
the registration of transfers may be suspended at such  
times and for such periods as the directors may determine  
the directors may refuse to register the transfer of any share  
which is not a fully paidup share and may refuse to register 
any transfer in favour of more than four persons jointly the 
directors may also refuse to recognise any instrument of 
transfer unless it is in respect of any one class of share is 
lodged at the requisite place and where appropriate is 
accompanied by any relevant share certificate and such  
other evidence as the directors may reasonably require  
to show the right of the transferor to make the transfer 
the directors may suspend transfers where a shareholder  
has failed to comply with a notice issued under section 793  
of the companies act 2006 
there are no other restrictions on the transfer of shares  
in the company other than certain restrictions which may  
from time to time be imposed by laws and regulations for 
example insider trading laws and market requirements  
relating to close periods and pursuant to the fca’s listing 
rules whereby certain employees of the company require the 
approval of the company to deal in the company’s securities
the directors are not aware of any agreements between 
holders of securities which may result in restrictions  
on the transfer of securities or voting rights
finance
financial instruments
financial risk management objectives and policies and 
exposure to risk including credit risk are discussed in the 
strategic report section on pages 36 to 38 and in note 25 to  
the group financial statements on pages 118 to 122
donations
during the year the group made no political donations directors’ report
continued
renold plc annual report and accounts 2014 78
contracts
change of control provisions
the company’s main uk banking facilities agreement with 
lloyds bank plc and svenska handelsbanken ab contains  
a change of control provision this requires the company  
to provide notification to the agent in the event of a change  
of control the banks may then demand cancellation and 
repayment of the commitments and the loans 
the share subscription and shareholders’ agreement  
between l g balakrishnan  bros ltd renold international 
holdings limited and renold chain india private limited  
dated 24 june 2008 contains certain change of control 
provisions on the change of control of a shareholder being  
one of the parties to the agreement the other shareholder  
has a right to terminate the agreement andor to require the 
shareholder suffering the change of control to sell at a fair 
price all of its equity shares to the terminating shareholder  
or a nominee of such shareholder 
no other material contracts contain change of control provisions 
there are no agreements between the company and its 
directors or employees providing for compensation for loss of 
office or employment whether through resignation purported 
redundancy or otherwise that occurs because of a takeover bid 
note 18 to the group financial statements on pages 110 to 115 
details the group’s obligations to contribute to the uk defined 
benefit pension schemes
details of the effect of any change of control in relation to 
awards under the long term incentive plan are set out on  
page 66 within the directors’ remuneration report
important events affecting the group since  
31 march 2014
note 27 to the financial statements refers to post balance  
sheet events and is incorporated by reference here
going concern
after making enquiries we the directors have a reasonable 
expectation that the group has adequate resources to  
continue in operational existence for the foreseeable future  
we therefore continue to adopt the going concern basis in 
preparing the financial statements
the basis on which this conclusion has been reached is set  
out on page 83 which is incorporated by reference here
the directors’ report was approved by the board on 
27 may 2014
for and on behalf of the board
louise brace
company secretary 
27 may 2014 annual report and accounts 2014 renold plc 79
corporate governance
statement of directors’ responsibilities 
in relation to the group financial statements and annual report
consolidated financial statements prepared under ifrs
the directors are responsible for preparing the annual report 
and the consolidated financial statements in accordance with 
applicable united kingdom law and regulations and ifrs as 
adopted by the european union
company law requires the directors to prepare financial 
statements for each financial year under that law the directors 
must not approve the financial statements for the group unless 
they are satisfied that they give a true and fair view of the state 
of affairs of the group and of the profit or loss of the group for 
that period under ifrs the directors are required to prepare 
financial statements that present fairly the financial position of 
the group and the financial performance and cash flows of the 
group for that period in preparing these financial statements 
the directors are required to 
 → select suitable accounting policies and apply them consistently 
 → present information including accounting policies in a 
manner that provides relevant reliable comparable and 
understandable information 
 → make judgements and estimates that are reasonable 
 → provide additional disclosures when compliance with the 
specific requirements in ifrs is insufficient to enable users 
to understand the impact of particular transactions other 
events and conditions on the group’s financial position and 
financial performance 
 → state that the group has complied with ifrs subject to any 
material departures disclosed and explained in the financial 
statements and 
 → prepare the financial statements on a going concern basis 
unless it is inappropriate to presume that the group will 
continue in business
the directors are responsible for keeping adequate accounting 
records which show and explain the group’s transactions and 
disclose with reasonable accuracy at any time the financial 
position of the group and enable them to ensure that the 
financial statements comply with the companies act 2006 and 
article 4 of the ias regulation they are also responsible for 
safeguarding the assets of the group and hence for taking 
reasonable steps for the prevention and detection of fraud  
and other irregularities
the directors are also responsible for preparing the strategic 
report the directors’ report the directors’ remuneration 
report and the corporate governance report in accordance 
with the companies act 2006 and applicable regulations 
including the requirements of the listing rules and the 
disclosure and transparency rules
parent company financial statements prepared under uk gaap
the directors are responsible for preparing the parent company 
financial statements in accordance with applicable united 
kingdom law and regulations
company law requires the directors to prepare financial 
statements for each financial year under that law the directors 
have elected to prepare the financial statements in accordance 
with uk gaap under company law the directors must not 
approve the financial statements unless they are satisfied  
that they give a true and fair view of the state of affairs of  
the company and of the profit and loss of the company for 
that period
in preparing these financial statements the directors  
are required to 
 → select suitable accounting policies and then apply  
them consistently 
 → make judgements and estimates that are reasonable  
and prudent 
 → state whether applicable accounting standards have  
been followed subject to any material departures  
disclosed and explained in the financial statements and 
 → prepare the financial statements on the going concern  
basis unless it is inappropriate to presume that the  
company will continue in business
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the company and enable them to ensure 
that the financial statements comply with the companies act 
2006 they are also responsible for safeguarding the assets of 
the company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities 
the directors who were members of the board at the time of 
approving the directors’ report are listed on pages 46 and 47 
having made enquiries of fellow directors and of the 
company’s auditor each of these directors confirms that 
 → to the best of each director’s knowledge and belief there 
is no information that is information needed by the group’s 
auditor in connection with preparing its report of which the 
company’s auditor is unaware and 
 → each director has taken all the steps a director might 
reasonably be expected to have taken to be aware of 
relevant audit information and to establish that the 
company’s auditor is aware of that information
directors’ responsibility statements pursuant to dtr4
each of us for himself and on behalf of each other director  
who held office on 31 march 2014 confirms that to the best  
of his or her knowledge 
 → the consolidated financial statements prepared in 
accordance with ifrs as adopted by the eu give a true  
and fair view of the assets liabilities financial position  
and result of the company and the undertakings included  
in the consolidation as a whole and 
 → the strategic report comprising pages 2 to 43 and the 
directors’ report on pages 75 to 78 includes 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 it faces
 → the board confirms that the annual report and accounts 
taken as a whole is fair balanced and understandable and 
provides the information necessary for shareholders to assess 
the performance strategy and business model of the company
on behalf of the board
robert purcell brian tenner
chief executive finance director shareholder information
renold plc annual report and accounts 2014 80
the company’s website at wwwrenoldcom which presents 
additional information about the group is regularly updated 
and includes the posting of the interim and final preliminary 
results and interim management statements on the day they 
are announced 
if you wish to advise a change of name address or dividend 
mandate please contact the company’s registrar capita  
asset services whose contact details appear on page 135 
alternatively you can view uptodate information and  
manage your shareholding through capita’s share portal  
where you will be able to access and maintain your holding  
at your own convenience you will require your unique  
investor code which can be found on your share certificate  
the url for the portal is wwwcapitashareportalcom 
beware of share fraud
fraudsters use persuasive and highpressure tactics to lure investors into scams they may offer to sell shares that turn out 
to be worthless or nonexistent or to buy shares at an inflated price in return for an upfront payment while high profits are 
promised if you buy or sell shares in this way you will probably lose your money
how to avoid share fraud 
1  keep in mind that firms authorised by the fca are unlikely to contact you out of the blue with an offer to buy or sell shares 
2  do not get into a conversation note the name of the person and firm contacting you and then end the call 
3  check the financial services register from wwwfcaorguk to see if the person and firm contacting you is authorised  
by the fca 
4  beware of fraudsters claiming to be from an authorised firm copying its website or giving you false contact details 
5  use the firm’s contact details listed on the register if you want to call it back 
6  call the fca on 0800 111 6768 if the firm does not have contact details on the register or you are told they are out of date 
7  search the list of unauthorised firms to avoid at wwwfcaorgukscams 
8  consider that if you buy or sell shares from an unauthorised firm you will not have access to the financial ombudsman 
service or financial services compensation scheme 
9  think about getting independent financial and professional advice before you hand over any money 
10    r emember if it sounds too good to be true it probably is 
report a scam 
if you are approached by fraudsters please tell the fca using the share fraud reporting form at wwwfcaorgukscams 
where you can find out more about investment scams 
you can also call the fca consumer helpline on 0800 111 6768 
if you have already paid money to share fraudsters you should contact action fraud on 0300 123 2040 independent auditor’s report  
to the members of renold plc 
annual report and accounts 2014 renold plc 81
financial statements
we have audited the group financial statements of renold plc  
for the year ended 31 march 2014 which comprise the 
consolidated income statement the consolidated statement  
of comprehensive income the consolidated balance sheet the 
consolidated statement of changes in equity the consolidated 
statement of cash flows the accounting policies and the 
related notes 1 to 27 the financial reporting framework that 
has been applied in their preparation is applicable law and 
international financial reporting standards ifrss as adopted  
by the european union 
this report is made solely to the company’s members as a 
body in accordance with chapter 3 of part 16 of the companies 
act 2006 our audit work has been undertaken so that we 
might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other 
purpose to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other than the 
company and the company’s members as a body for our audit 
work for this report or for the opinions we have formed
respective responsibilities of directors and auditor 
as explained more fully in the statement of directors’ responsibilities 
set out on page 79 the directors are responsible for the preparation 
of the group financial statements and for being satisfied that they 
give a true and fair view our responsibility is to audit and express 
an opinion on the group financial statements in accordance with 
applicable law and international standards on auditing uk and 
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors 
scope of the audit of the financial statements 
an audit involves obtaining evidence about the amounts  
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or error 
this includes an assessment of whether the accounting policies 
are appropriate to the group’s circumstances and have been 
consistently applied and adequately disclosed the reasonableness 
of significant accounting estimates made by the directors and  
the overall presentation of the financial statements
in addition we read all the financial and nonfinancial 
information in the annual report and accounts to identify 
material inconsistencies with the audited financial statements 
and to identify any information that is apparently materially 
incorrect based on or materially inconsistent with the knowledge 
acquired by us in the course of performing the audit if we 
become aware of any apparent material misstatements or 
inconsistencies we consider the implications for our report 
opinion on financial statements 
in our opinion the group financial statements 
 → give a true and fair view of the state of the group’s affairs  
as at 31 march 2014 and of its loss for the year then ended 
 → have been properly prepared in accordance with ifrss as 
adopted by the european union and 
 → have been prepared in accordance with the requirements of 
the companies act 2006 and article 4 of the ias regulation
our assessment of risks of material misstatement 
we identified the following risks that have had the greatest  
effect on the overall audit strategy the allocation of resources  
in the audit and directing the efforts of the engagement team 
 → revenue recognition
 → inventory provisioning
 → accounting for defined benefit pension schemes
 → group restructuring
 → deferred tax
 → risk of misstatement due to fraud and error
our application of materiality 
we apply the concept of materiality both in planning  
and performing our audit and in evaluating the effect of 
misstatements on our audit and on the financial statements  
for the purposes of determining whether the financial 
statements are free from material misstatement we define 
materiality as the magnitude of misstatement that makes it 
probable that the economic decisions of a reasonably 
knowledgeable person relying on the financial statements 
would be changed or influenced 
we also determine a lower level of performance materiality 
which we use to determine the extent of testing needed to 
reduce to an appropriately low level the probability that the 
aggregate of uncorrected and undetected misstatements 
exceeds materiality for the financial statements as a whole
when establishing our overall audit strategy we determined  
a magnitude of uncorrected misstatements that we judged  
would be material for the financial statements as a whole we 
determined materiality for the group to be £415000 which is 
approximately 5 of forecast adjusted profit before interest  
and tax we adjusted profit before interest and tax to exclude 
exceptional costs which do not reflect the underlying  
performance of the group
on the basis of our risk assessments together with our 
assessment of the group’s overall control environment our 
judgement was that overall performance materiality ie our 
tolerance for misstatement in an individual account or balance 
for the group should be 50 of planning materiality namely 
£207000 our objective in adopting this approach was to 
ensure that total uncorrected and undetected audit differences  
in all accounts did not exceed our planning materiality level
we agreed with the audit committee that we would report to 
the committee all audit differences in excess of £20750 as 
well as differences below that threshold that in our view 
warranted reporting on qualitative grounds
an overview of the scope of our audit 
following our assessment of the risk of material misstatement 
to the group financial statements we selected 11 components 
which represent the principal business units within the group’s 
two reportable segments and account for 69 of the group’s 
profit before interest and tax and 86 of the group’s revenue  renold plc annual report and accounts 2014 82
independent auditor’s report  
to the members of renold plc 
continued
five of these were subject to a full scope audit whilst the 
remaining nine were subject to a specific scope audit where the 
extent of audit work was based on our assessment of the risks 
of material misstatement and of the materiality of the group’s 
business operations at those locations they were also selected 
to provide an appropriate basis for undertaking audit work to 
address the risks of material misstatement identified above 
for the remaining components we performed other procedures to 
confirm there were no significant risks of material misstatement 
in the group financial statements 
the group audit team continued to follow a programme of 
planned visits that has been designed to ensure that the senior 
statutory auditor visits each of the locations where the group 
audit scope was either full scope or identified as a higher risk 
location annually for all entities in scope the group audit  
team reviewed key working papers and participated in the 
component team’s audit planning including the component 
team’s discussion of fraud and error and audit planning including 
the component team’s discussion of fraud and error and  
the audit closing meeting
our response to the risks identified above was as follows
 → revenue recognition – we carried out substantive testing  
and analytical procedures including cutoff testing verifying  
the recognition of revenue to contractual shipping terms  
and goods dispatched we confirmed management’s  
policies for revenue recognition continue to be robust  
and are applied consistently 
 → inventory provisioning – we tested the standard costs used 
to value inventory at year end challenged management’s key 
assumptions such as labour and overhead absorption rates 
we tested managements’ calculation of the inventory 
provision challenged management’s judgements formed in 
arriving at those values for appropriatenes and confirmed 
that the provision was derived in line with group policy  
we also checked that a consistent approach to inventory 
valuation and provisioning had been adopted globally 
 → accounting for defined benefit pension schemes – we 
challenged the assumptions and methodology applied in 
calculating the defined benefit pension scheme deficit for 
consistency and appropriateness including specifically the 
discount rates inflation rates and mortality assumptions used
 → group restructuring – we reviewed the exceptional costs 
recognised in the financial statements as a result of the 
group restructuring to test that the costs have been 
appropriately accounted for and disclosed in line with ifrs
 → deferred tax – we considered the appropriateness of 
management’s assumptions and estimates in relation to  
the likelihood of generating suitable future taxable profits  
to support the recognition of deferred tax assets described  
in note 17 challenging those assumptions and considering 
supporting forecasts and estimates
 → risk of misstatement due to fraud and error – we carried out 
analytical procedures and journal entry testing in order to 
identify and test the risk of fraud arising from management 
override of controls 
opinion on other matter prescribed by the companies act 2006 
in our opinion the information given in the strategic report and 
the directors’ report for the financial year for which the group 
financial statements are prepared is consistent with the group 
financial statements 
matters on which we are required to report by exception 
we have nothing to report in respect of the following 
under the isas uk and ireland we are required to report  
to you if in our opinion information in the annual report  
and accounts is 
 → materially inconsistent with the information in the audited 
financial statements or 
 → apparently materially incorrect based on or materially 
inconsistent with our knowledge of the group acquired in 
the course of performing our audit or is otherwise misleading 
in particular we are required to consider whether we have 
identified any inconsistencies between our knowledge  
acquired during the audit and the directors’ statement that they 
consider the annual report and accounts are fair balanced and 
understandable and whether the annual report appropriately 
discloses those matters that we communicated to the audit 
committee which we consider should have been disclosed 
under the companies act 2006 we are required to report to 
you if in our opinion 
 → certain disclosures of directors’ remuneration specified by 
law are not made or 
 → we have not received all the information and explanations  
we require for our audit 
under the listing rules we are required to review 
 → the directors’ statement set out on page 78 in relation  
to going concern and 
 → the part of the corporate governance statement relating  
to the company’s compliance with the nine provisions of the 
uk corporate governance code specified for our review 
other matter 
we have reported separately on the parent company financial 
statements of renold plc for the year ended 31 march 2014 and 
on the information in the directors’ remuneration report that 
is described as having been audited 
gary harding 
senior statutory auditor
for and on behalf of ernst  young llp statutory auditor 
manchester 
27 may 2014
  annual report and accounts 2014 renold plc 83
financial statements
accounting policies
basis of preparation
renold plc is a public limited company incorporated and 
domiciled in the united kingdom the consolidated financial 
statements of the company comprise the company and its 
subsidiaries together referred to as the group the company 
financial statements present information about the company  
as a separate entity and not about the group the consolidated 
financial statements have been prepared in accordance with 
ifrss as adopted by the eu in addition the financial statements 
have been prepared in accordance with those parts of the 
companies act 2006 applicable to groups reporting under ifrs 
the company has elected to prepare its parent company 
financial statements in accordance with uk gaap these are 
presented on pages 124 to 134 the financial statements were 
approved by the board on 27 may 2014
basis of consolidation 
the consolidated financial statements incorporate the financial 
statements of the company and entities controlled by the 
company its subsidiaries control is defined as where the group 
has an interest of more than one half of the voting rights or 
otherwise has power to govern financial and operating policies
subsidiaries are consolidated from the date on which control  
is transferred to the group and are no longer consolidated  
from the date that control ceases intercompany transactions 
balances and unrealised gains on transactions between group 
companies are eliminated unrealised losses are also eliminated 
unless the cost cannot be recovered
the results and financial position of renold scottish limited 
partnership slp have been consolidated in the consolidated 
financial statements of renold plc renold plc is the parent 
undertaking of the general partner in the slp see note xiv  
to the company financial statements accordingly advantage 
has been taken of the exemption conferred by paragraph 7  
of the partnerships accounts regulations 2008 from the 
requirements for preparation delivery and publication of  
the partnership’s accounts
going concern
the financial statements have been prepared on a going 
concern basis in determining the appropriate basis of 
preparation of the financial statements the directors are 
required to consider whether the group can continue in 
operational existence for the foreseeable future
further information in relation to the group’s business activities 
together with the factors likely to affect its future development 
performance and position is set out in the strategic report on 
pages 2 to 43
the financial position of the group its cash flows liquidity 
position and borrowing facilities are described in the  
strategic report on pages 2 to 43 in addition note 25  
to the financial statements includes the group’s objectives 
policies and processes for managing its capital its financial  
risk management objectives details of its financial instruments 
and hedging activities and its exposure to foreign exchange 
credit and interest rate risk further details of the group’s cash 
balances and borrowings are included in notes 13 14 and 24  
of the financial statements
the directors have assessed the future funding requirements  
of the group and the company and compared them to the level 
of available borrowing facilities the assessment included a 
detailed review of financial and cash flow forecasts financial 
instruments and hedging arrangements for at least the  
12 month period from the date of signing the annual report  
and accounts the directors considered a range of potential 
scenarios within the key markets the group serves and how 
these might impact the group’s cash flow facility headroom 
and banking covenants the directors also considered what 
mitigating actions the group could take to limit any adverse 
consequences the group’s forecasts and projections show  
that the group should be able to operate within the level of  
its borrowing facilities and covenants 
having undertaken this work the directors are of the opinion 
that the company and the group have adequate resources to 
continue in operational existence for the foreseeable future 
accordingly they continue to adopt the going concern basis  
in preparing the annual report and accounts
foreign currency translation
items included in the financial statements of each entity in the 
group are measured using the currency that best reflects the 
economic substance of the underlying events and circumstances 
relevant to that entity the functional currency the consolidated 
financial statements are presented in sterling which is the 
functional and presentational currency of the parent company 
renold plc 
foreign currency transactions are translated into the  
functional currency using the exchange rates prevailing  
at the date of the transaction or average rates where 
applicable foreign exchange gains and losses resulting from 
the settlement of such transactions and from the translation  
at year end exchange rates of monetary assets and liabilities 
denominated in foreign currencies are recognised in the 
income statement except for monetary items that form part  
of the net investment in foreign operations which are taken  
to other comprehensive income 
assets and liabilities of overseas subsidiaries are translated  
into sterling at the exchange rates ruling at the end of the 
financial year income statements and cash flows are translated  
at the appropriate average rates of exchange for the year 
differences on exchange arising on the retranslation of net 
assets in overseas subsidiaries at the beginning of the year 
borrowings used to finance or provide a hedge against those 
investments and from the translation of the results at average 
rates are taken directly to other comprehensive income on  
loss of control of a foreign entity related exchange differences 
previously recognised in other comprehensive income are 
recognised in the income statement as part of the gain or  
loss on sale  renold plc annual report and accounts 2014 84
accounting policies
continued
revenue 
revenue comprises the fair value of goods and services 
provided to external customers after deducting value added  
tax or other sales related taxes and trade discounts revenue 
from the sale of goods is recognised when significant risks  
and rewards of ownership of goods are transferred to the 
buyer which is normally the point of despatch revenue  
from the sale of services is recognised when the service  
has been provided
exceptional items 
items which individually or if of a similar type in aggregate  
are material to an understanding of the group’s financial 
performance are separately disclosed as memorandum 
information on the face of the income statement 
borrowing costs 
borrowing costs directly attributable to the acquisition 
construction or production of an asset that necessarily takes  
a substantial period of time to get ready for its intended use  
or sale are capitalised as part of the costs of the respective 
assets all other borrowing costs are expensed in the period 
they occur borrowing costs consist of interest and other costs 
that an entity incurs in connection with the borrowing of funds
taxation 
the tax charge comprises current tax payable and deferred tax
the group is subject to taxes in numerous jurisdictions the 
current tax charge represents an estimate of the amounts 
payable to tax authorities in respect of taxable profits it is 
based on tax rates and laws that have been enacted or 
substantively enacted by the balance sheet date
deferred income tax is provided in full using the liability 
method on temporary differences arising between the tax 
bases of assets and liabilities and their carrying amounts in  
the consolidated financial statements currently enacted or 
substantively enacted tax rates as at the balance sheet date 
are used in the determination of deferred income tax
deferred income tax assets are recognised to the extent that  
it is probable that future taxable profit will be available against 
which the temporary differences can be utilised or taxable 
profit will be available against which unused tax losses can  
be utilised before they expire
deferred income tax is provided on taxable temporary 
differences arising on investments in subsidiaries except  
where the timing of the reversal of the temporary difference 
can be controlled by the group and it is probable that the 
temporary difference will not reverse in the foreseeable future
the carrying amount of deferred income tax assets is reviewed 
at each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profit will be available to 
allow all or part of the deferred income tax asset to be utilised 
unrecognised deferred income tax assets are reassessed at each 
balance sheet date and are recognised to the extent that it has 
become probable that future taxable profit will allow the 
deferred tax asset to be recovered 
deferred income tax relating to items recognised directly in other 
comprehensive income is recognised in other comprehensive 
income and not the income statement similarly income tax  
is charged or credited to equity if it relates to items that are 
credited or charged directly to equity otherwise income tax  
is recognised in the income statement
deferred income tax assets and deferred income tax liabilities 
are offset if a legally enforceable right exists to set off current 
income tax assets against current income tax liabilities and the 
deferred income taxes relate to the same taxable authority  
and taxable entity or where deferred tax relates to different 
taxable entities the tax authority permits the group to make  
a single net payment
business combinations and goodwill – prior to 1 april 2010
the purchase method of accounting was used to account for 
the acquisition of subsidiaries of the group goodwill represents 
the excess of the cost of an acquired entity over the fair value 
of the group’s share of the net identifiable assets liabilities  
and contingent liabilities of the acquired entity at the date of 
acquisition goodwill arising on the acquisition of an entity is 
included as an intangible asset goodwill is not amortised but  
is tested at least annually for impairment and carried at cost 
less accumulated impairment losses any impairment charge  
is recognised immediately in the income statement
in circumstances where the fair value of the interest acquired  
in an entity’s assets liabilities and contingent liabilities exceeds 
the consideration paid the excess is recognised immediately as 
a gain in the income statement
as permitted by ifrs 1 the group elected not to apply ifrs 3 
business combinations to business acquisitions that occurred 
before 4 april 2004 therefore the carrying amount of 
goodwill being cost less accumulated amortisation included 
under uk gaap forms the ‘cost’ of goodwill recognised under 
ifrs at the date of transition goodwill that was written off 
directly to reserves under former uk gaap will not be taken 
into account when determining the gain or loss on disposal of 
previously acquired businesses after 4 april 2004
business combinations and goodwill – post 1 april 2010
there have been no business combinations post 1 april 2010 
ifrs 3r will apply for any business combinations prospectively 
and will result in the following changes in accounting treatment 
from the policy adopted prior to 1 april 2010 
 → acquisition costs incurred will be expensed and included  
in expenses
 → contingent consideration will be recognised at fair value at 
the acquisition date subsequent changes to the fair value of 
the contingent consideration will be recognised in accordance 
with ias 39 either in the profit or loss account or in other 
comprehensive income annual report and accounts 2014 renold plc 85
financial statements
interests in joint ventures
the group has a contractual arrangement with another  
party which represents a joint venture whereby there is an 
agreement to share control over a jointly controlled entity  
the group recognises its interest in the entity’s assets and 
liabilities using the equity method of accounting under the 
equity method the interest in the joint venture is carried in  
the balance sheet at cost plus postacquisition changes in  
the group’s share of its net assets less distributions received 
and less any impairment in value of individual investments  
the group income statement reflects the share in the jointly 
controlled entity’s results after tax
intangible assets
a computer software
computer software that is not integral to an item of plant  
and equipment is recognised separately as an intangible asset 
amortisation is charged on a straightline basis so as to charge 
the cost of software to the income statement over its expected 
useful life which is between three and seven years costs 
associated with maintaining computer software programmes 
are recognised as an expense as incurred
b research and development
research expenditure is recognised as an expense as incurred 
costs incurred on development projects relating to the design 
and testing of new or improved products are only recognised  
as intangible assets in circumstances where certain strict criteria 
are satisfied these include the expectation that it is probable 
that the project will be a success considering its commercial  
and technological feasibility and that all associated costs can  
be measured reliably otherwise development expenditure is 
recognised as an expense as incurred development costs 
previously recognised as an expense are not recognised as  
an asset in a subsequent period development costs that have 
been capitalised are amortised from the commencement of  
the commercial production of the product on a straightline 
basis over the period of its expected benefit
property plant and equipment 
property plant and equipment are stated at cost being 
purchase cost plus any incidental costs of acquisition less 
accumulated depreciation
depreciation is calculated on a straightline basis so as to 
charge the depreciable amount of the respective assets to the 
income statement over their expected useful lives the useful 
lives of assets are as follows
 
years
freehold buildings 50
leasehold properties 50 years or the period  
of the lease if less
general plant and equipment 15
fixtures 15
precision cutting and  
grinding machines
10
motor vehicles 3
useful lives and residual values are reviewed annually and 
where adjustments are required these are made prospectively 
where the carrying amount of an asset is greater than its 
estimated recoverable amount it is written down immediately  
to its recoverable amount
gains and losses on disposals are determined by comparing 
proceeds with carrying amounts and are included in  
operating profit
as permitted by ifrs 1 at 4 april 2004 the group has 
measured its freehold properties on a fair value basis and  
used that value as the deemed cost at the transition date
asset impairment 
intangible assets and property plant and equipment are 
reviewed at least annually to ensure that assets are not carried 
above their recoverable amounts where some indication of 
impairment exists calculations are made of the discounted 
cash flows resulting from continued use of the assets value in 
use or from their disposal fair value less costs to sell where 
these values are less than the carrying amount of the assets  
an impairment loss is charged to the income statement 
leases 
tangible assets held under finance leases which are those  
where substantially all the risks and rewards of ownership  
of the asset have passed to the group are capitalised in the 
balance sheet at the lower of the fair value of the leased asset  
or the present value of the minimum lease payments assets 
acquired under finance leases are depreciated over the shorter of 
the useful life of the asset or the lease term the corresponding 
liability to the leasing company net of finance charges is 
included as an obligation under finance leases in creditors the 
interest element of the lease payment is charged to the income 
statement on a basis which produces a constant rate of charge 
over the period of the liability
leases where a significant portion of the risk and reward of 
ownership is retained by the lessor are classified as operating 
leases payments made under operating leases net of any 
incentives received from the lessor are charged to the income 
statement on a straightline basis over the period of the lease 
investment property 
one of the group’s properties is classified as an investment 
property on the basis that it will be held for the longterm 
earning a rental income this is a contractual arrangement 
arising from the disposal of a former business segment
the investment property was previously a manufacturing 
facility of the group but owneroccupation ceased upon 
disposal of the automotive business on the date of disposal  
a transfer was made from property to investment property  
the cost model has been applied since that date and 
depreciation charged at 2 on a straightline basis renold plc annual report and accounts 2014 86
accounting policies
continued
inventories 
inventories are stated at the lower of cost and estimated  
net realisable value after due allowance for obsolete or  
slow moving items cost includes all direct expenditure and 
attributable overhead expenditure incurred in bringing goods  
to their current state under normal operating conditions the 
first in first out method of valuation is used net realisable 
value is the estimated selling price in the ordinary course of 
business less the costs of completion and selling expenses  
in the group accounts unrealised profit on sales within the 
group is deducted from inventories
assets held for sale 
assets are classified as held for sale if their carrying amount 
will be recovered by sale rather than by continuing use in the 
business and where the sale is highly probable assets that are 
classified as held for sale are measured at the lower of their 
carrying amount or fair value less costs to sell
trade receivables 
trade receivables are recognised and carried at the original 
invoice amount less an allowance for any identified impairment 
the impairment allowance is charged to the income statement 
when there is objective evidence that the group will not collect 
all amounts due under the original terms of the transaction 
balances are written off when the probability of recovery is 
assessed as remote
financial assets and liabilities
a financial assets 
financial assets are recognised when the group becomes a  
party to the contracts that give rise to them and are classified  
as financial assets at fair value through the income statement  
or loans and receivables as appropriate the group determines  
the classification of its financial assets at initial recognition and 
where allowed and appropriate reevaluates this designation  
at each financial year end when financial assets are recognised 
initially they are measured at fair value being the transaction 
price plus in the case of financial assets not at fair value through 
the income statement directly attributable transaction costs  
the group considers whether a contract contains an embedded 
derivative when the entity first becomes a party to it the 
embedded derivatives are separated from the host contract if  
it is not measured at fair value through the income statement 
and when the economic characteristics and risks are not closely 
related to those of the host contract reassessment only occurs  
if there is a change in the terms of the contract that significantly 
modifies the cash flows that would otherwise be required
all standard purchases and sales of financial assets are 
recognised on the trade date being the date that the group 
commits to purchase or sell the asset standard transactions 
require delivery of assets within the time frame generally 
established by regulation or convention in the market place 
the subsequent measurement of financial assets depends on 
their classification as follows
i financial assets at fair value through the income statement
financial assets classified as held for trading and other assets 
designated as such on inception are included in this category 
financial assets are classified as held for trading if they are 
acquired for sale in the short term derivatives including 
separated embedded derivatives are also classified as held  
for trading unless they are designated as effective hedging 
instruments assets are carried in the balance sheet at fair 
value with gains or losses recognised in the income statement 
financial assets may be designated at initial recognition as  
at fair value through the income statement if the following 
criteria are met i the designation eliminates or significantly 
reduces the inconsistent treatment that would otherwise arise 
from measuring the assets or recognising gains or losses on 
them on a different basis or ii the assets are part of a group 
of financial assets which are managed and their performance 
evaluated on a fair value basis in accordance with a documented 
risk management strategy or iii the financial asset contains an 
embedded derivative that would need to be separately recorded
ii loans and receivables 
loans and receivables are nonderivative financial assets with 
fixed or determinable payments that are not quoted in an active 
market do not qualify as trading assets and have not been 
designated as either fair value through the income statement  
or available for sale such assets are carried at amortised cost 
using the effective interest method if the time value of money  
is significant gains and losses are recognised in the income 
statement when the loans and receivables are derecognised  
or impaired as well as through the amortisation process
b impairment of financial assets 
the group assesses at each balance sheet date whether  
a financial asset or group of financial assets is impaired
i assets carried at amortised cost 
if there is objective evidence that an impairment loss on assets 
carried at amortised cost has been incurred the amount of the 
loss is measured as the difference between the asset’s carrying 
amount and the present value of estimated future cash flows 
excluding future credit losses that have not been incurred 
discounted at the financial asset’s original effective interest 
rate ie the effective interest rate computed at initial 
recognition the carrying amount of the asset is reduced 
through the use of an allowance account the amount of the 
loss is recognised in administration costs 
if in a subsequent period the amount of the impairment loss 
decreases and the decrease can be related objectively to an 
event occurring after the impairment was recognised the 
previously recognised impairment loss is reversed any 
subsequent reversal of an impairment loss is recognised in the 
income statement to the extent that the carrying value of the 
asset does not exceed its amortised cost at the reversal date annual report and accounts 2014 renold plc 87
financial statements
in relation to trade receivables a provision for impairment  
is made when there is objective evidence such as the 
probability of insolvency or significant financial difficulties  
of the debtor that the group will not be able to collect all  
of the amounts due under the original terms of the invoice  
the carrying amount of the receivable is reduced through  
use of an allowance account impaired debts are derecognised 
when they are assessed as irrecoverable
ii assets carried at cost 
if there is objective evidence that an impairment loss on an 
unquoted equity instrument that is not carried at fair value 
because its fair value cannot be reliably measured or on a 
derivative asset that is linked to and must be settled by 
delivery of such an unquoted equity instrument has been 
incurred the amount of the loss is measured as the difference 
between the asset’s carrying amount and the present value of 
estimated future cash flows discounted at the current market 
rate of return for a similar financial asset
c interestbearing loans and borrowings 
obligations for loans and borrowings are recognised when  
the group becomes party to the related contracts and are 
measured initially at the fair value of consideration received  
less directly attributable transaction costs after initial 
recognition interestbearing loans and borrowings are 
subsequently measured at amortised cost using the effective 
interest method gains and losses arising on the repurchase 
settlement or otherwise cancellation of liabilities are recognised 
respectively in finance revenue and finance cost 
d financial liabilities at fair value through the income statement 
includes financial liabilities held for trading and financial 
liabilities designated upon initial recognition as at fair value 
through the income statement 
financial liabilities are classified as held for trading if they  
are acquired for the purpose of selling in the near term 
derivatives including separated embedded derivatives are 
also classified as held for trading unless they are designated  
as effective hedging instruments gains or losses on liabilities 
held for trading are recognised in the income statement
financial instruments 
the group uses derivative financial instruments such as 
forward currency contracts to hedge its risks associated  
with foreign currency and interest rate fluctuations since  
1 april 2005 such derivative financial instruments have  
been initially recognised at fair value on the date on which  
a derivative contract is entered into and are subsequently 
remeasured at fair value derivatives are carried as assets 
when the fair value is positive and as liabilities when the fair 
value is negative
the fair value of forward currency contracts is calculated by 
reference to current forward exchange rates for contracts  
with similar maturity profiles
for those derivatives designated as hedges and for which 
hedge accounting is desired the hedging relationship is 
formally designated and documented at its inception this 
documentation identifies the risk management objective and 
strategy for undertaking the hedge the hedging instrument 
the hedged item or transaction the nature of the risk being 
hedged and how effectiveness will be measured throughout its 
duration such hedges are expected at inception to be highly 
effective in offsetting changes in fair value or cash flows and 
are assessed on an ongoing basis to determine that they 
actually have been highly effective throughout the reporting 
period for which they were designated
for the purpose of hedge accounting hedges are classified as 
 → cash flow hedges when hedging exposure to variability in 
cash flows that is either attributable to a particular risk 
associated with a recognised asset or liability or a highly 
probable forecast transaction or 
 → hedges of a net investment in a foreign operation
there are no fair value hedges
any gains or losses arising from changes in the fair value of 
derivatives that do not qualify for hedge accounting are taken to 
the income statement the treatment of gains and losses arising 
from revaluing derivatives designated as hedging instruments 
depends on the nature of the hedging relationship as follows 
a cash flow hedges 
for cash flow hedges the effective portion of the gain or  
loss on the hedging instrument is recognised directly in  
other comprehensive income while the ineffective portion  
is recognised in the income statement amounts taken to  
other comprehensive income are transferred to the income 
statement when the hedged transaction affects the income 
statement such as when a forecast sale occurs 
if a forecast transaction is no longer expected to occur 
amounts previously recognised in other comprehensive  
income are transferred to the income statement if the  
hedging instrument expires or is sold terminated or  
exercised without replacement or rollover or if its designation  
as a hedge is revoked amounts previously recognised in other 
comprehensive income remain in equity until the forecast 
transaction occurs and are transferred to the income statement  
or to the initial carrying amount of a nonfinancial asset or 
liability as above if the related transaction is not expected  
to occur the amount is taken to the income statement
b hedges of a net investment 
hedges of a net investment in a foreign operation including a 
hedge of a monetary item that is accounted for as part of the 
net investment are accounted for in a way similar to cash flow 
hedges gains or losses relating to the effective portion are 
recognised in other comprehensive income while any gains or 
losses relating to the ineffective portion are recognised in the 
income statement on loss of control of the foreign operation 
the cumulative value of any such gains or losses recognised 
directly in other comprehensive income is transferred to the 
income statement renold plc annual report and accounts 2014 88
accounting policies
continued
derivatives embedded in other financial instruments or  
other host contracts are treated as separate derivatives when 
their risks and characteristics are not closely related to those  
of the host contract and the host contract is not stated at  
its fair value with changes in its fair value recognised in the 
income statement
from 1 april 2005 the group’s 6 cumulative preference stock 
of £1 each ‘preference stock’ has been classified as a liability 
dividends payable are included within net finance costs 
employee benefits
a pension obligations 
the group operates a number of defined benefit plans  
around the world the costs are calculated by independent 
actuaries using the projected unit credit method any past 
service costs resulting from enhanced benefits are recognised 
immediately in income administration costs other than plan 
asset management costs which are included in the actual 
return on plan assets are charged to operating costs  
including the pension protection fund levy
remeasurement gains and losses comprising of actuarial gains 
and losses and the return on plan assets excluding amounts 
included in net interest are recognised in other comprehensive 
income in the period in which they occur 
the defined benefit liability or asset recognised in the balance 
sheet represents the net total for each plan of the present value 
of the benefit obligation at the balance sheet date less the fair 
value of plan assets for funded schemes at the balance sheet 
date if a plan records a surplus the asset recognised is limited  
to the present value of any amount expected to be recoverable 
by the group by way of refunds or reduction in future contributions
under the uk pension scheme rules any notional surplus arising 
on payment of agreed contributions is fully recoverable
for defined contribution plans the group’s contributions are 
charged to the income statement in the period in which they 
fall due once the contributions have been paid the group has 
no further payment obligation
b sharebased compensation 
the group operates equity settled sharebased compensation 
plans the fair value of the employee services received in 
exchange for the grant of the options is calculated using a 
blackscholes pricing model and is recognised as an expense 
over the vesting period the total amount to be expensed over 
the vesting period is determined by reference to the fair value  
of the options or performance shares granted at each balance 
sheet date the group revises its estimates of the number of 
options that are expected to become exercisable it recognises 
the impact of the revision of original estimates if any in the 
income statement and a corresponding adjustment to equity 
over the remaining vesting period no expense is recognised  
for awards that do not ultimately vest except for awards  
where vesting is conditional upon market or nonvesting 
conditions which are treated as vesting irrespective of whether  
or not the market or nonvesting condition is satisfied provided 
that all other performance or service conditions are satisfied  
the marketbased conditions are linked to the market price  
of shares in the company
where the terms of an equitysettled award are modified or  
a new award is designated as replacing a cancelled or settled 
award the cost based on the original award terms continues  
to be recognised over the original vesting period in addition  
an expense is recognised over the remainder of the new vesting 
period for the incremental fair value of any modification based 
on the difference between the fair value of the original award 
and the fair value of the modified award both as measured on 
the date of the modification no reduction is recognised if this 
difference is negative
as permitted by ifrs 1 the group has applied ifrs 2 share
based payment only to equity settled awards granted after  
7 november 2002 and which vested on or after 1 january 2005
cash and cash equivalents 
cash and cash equivalents are carried in the balance sheet at 
cost for the purposes of the cash flow statement cash and cash 
equivalents comprise cash on hand deposits held at call with 
banks other short term highly liquid investments with original 
maturities of three months or less and bank overdrafts bank 
overdrafts are included within borrowings in current liabilities  
on the balance sheet
provisions 
provisions are recognised when the group i has a present 
legal or constructive obligation as a result of past events  
ii it is more likely than not that an outflow of resources will  
be required to settle the obligation and iii a reliable estimate 
of the amount can be made where the group expects a 
provision to be reimbursed for example under an insurance 
contract the reimbursement is recognised as a separate asset 
but only when the reimbursement is virtually certain
costs related to ongoing activities of the group are not 
provided in advance
dividend distribution 
dividend distribution to the company’s shareholders is 
recognised as a liability in the group’s financial statements  
in the period in which the dividends are paid or approved by 
the company’s shareholders
significant accounting judgements estimates and assumptions
the preparation of financial statements in conformity with 
generally accepted accounting principles requires the use of 
estimates and assumptions that affect the reported amounts  
of assets and liabilities and disclosure of contingent assets  
and liabilities at the date of the financial statements and  
the reported amounts of revenues and expenses during the 
reporting period although these estimates are based on 
management’s best knowledge of current events and actions 
actual results ultimately may differ from those estimates
however uncertainty about these assumptions and  
estimates could result in outcomes that could require a  
material adjustment to the carrying value of the group’s  
assets or liabilities in the future annual report and accounts 2014 renold plc 89
financial statements
the key sources of estimation uncertainty that have a potential risk of causing material adjustment to the carrying amounts  
of assets and liabilities within the next financial year are as follows 
a impairment of nonfinancial assets 
the group assesses whether there are any indicators of impairment for all nonfinancial assets at each reporting date  
goodwill is tested for impairment annually and at other times when such indicators exist
when value in use calculations are undertaken management must estimate the expected future cash flows from the asset  
or cash generating unit and choose a suitable discount rate in order to calculate the net present value of those cash flows  
further details are included in note 7 
b deferred tax assets 
deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available 
against which the losses can be utilised significant management judgement is required to determine the amount of deferred tax 
assets that can be recognised based upon the likely timing and level of future taxable profits together with future tax planning 
strategies actual outcomes may vary that could require a material adjustment to the carrying amounts further details are 
contained in note 17 
c retirement benefit obligations 
the valuation of the group’s defined benefit plans are determined by using actuarial valuations these involve making assumptions 
about discount rates future salary increases mortality rates and future pension increases due to the long term nature of these plans 
such estimates are subject to significant uncertainty net interest is calculated by applying the discount rate to the net defined benefit 
liability further details are given in note 18
d onerous lease 
the group has assessed an existing operating lease obligation at the bredbury facility in the period and concluded that an onerous  
lease provision is required this involves making assumptions upon future sublet income streams and the discount rate used  
refer to note 2c and 16
changes in accounting policy and disclosures
the group has not adopted the following pronouncements which have been issued by the international accounting standards 
board iasb but are not effective for the year ended 31 march 2014
international accounting standards iasifrss effective date
1
ias 27 separate financial statements 1 january 2014
ias 28 investments in associates and joint ventures 1 january 2014
ias 32 offsetting financial assets and financial liabilities 1 january 2014
ifrs 9 financial instruments classification and measurement no date confirmed
ifrs 10 consolidated financial statements 1 january 2014
ifrs 11 joint arrangements 1 january 2014
ifrs 12 disclosures of interests in other entities 1 january 2014
ifric 21 levies 1 january 2014 
annual improvements 20102012 cycle 1 july 2014
annual improvements 20112013 cycle 1 july 2014
1  the effective dates stated above are those given in the original iasbifric standards and interpretations except that for ias 27 ias 28 ifrs 1012 the dates reflect 
the later mandatory endorsement date in the eu as the group prepares its financial statements in accordance with ifrs as adopted by the european union the 
application of new standards and interpretations will be subject to their having being endorsed for use in the eu via the eu endorsement mechanism in the majority  
of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsements restricts the group’s 
discretion to early adopt standards
the group has adopted all applicable amendments to standards with an effective date from 1 april 2013 the group has adopted 
amendments to ias 19 employee benefits including consequential amendments to other standards with a date of initial 
application of 1 january 2013 and restated the prior year’s results accordingly  renold plc annual report and accounts 2014 90
accounting policies
continued
the group has changed its accounting policies in accordance with the modified accounting standard ias 19r with respect to the 
basis for accounting for financing incomeexpense on the value of the defined benefit pension schemes’ assetsliabilities and with 
respect to the costs of administering the defined benefit pension schemes the group now determines financing incomeexpense 
for the period by applying the discount rate used for valuing the schemes’ liabilities to the value of the net pension assetliability  
at the beginning of the year taking into account any changes during the period as a result of contributions and benefit payments 
previously the group calculated financing income by applying the expected return on assets to the value of the schemes’ assets  
at the beginning of the year and financing expense by applying the discount rate to the value of the schemes’ liabilities at the 
beginning of the year taking into account any changes during the period as a result of contributions and benefit payments 
administration costs of defined benefit pension schemes are now included as operating costs except those relating to plan  
asset management which are recognised in other comprehensive income as part of the difference between actual return  
and net interest income previously it was accounted for as a reduction in the expected return on schemes’ assets
in the course of the process of determining the impact of implementing ias 19r the directors have also reconsidered the 
treatment required by ifric 14 which deals with refunds of pension surpluses under the scheme rules any notional surplus 
arising on payment of the agreed contributions is fully recoverable and therefore the additional liability of £69m and increase  
in deferred tax asset of £45m that was recognised at 31 march 2013 has been reversed with the net result of increasing other 
comprehensive income by £24m if we applied ifric 14 consistently with the prior year an additional liability of £82m and an 
increase in deferred tax asset of £54m would be recognised
for the year to 31 march 2013 the restatement on implementation of ias 19r has reduced operating profit before exceptional 
items for the period as previously reported by £13m increased operating exceptional costs by £07m increased net financing 
costs by £22m reduced tax by £10m and increased other comprehensive income by £32m
there was no impact on the balance sheet at 31 march 2012 of these changes and consequently no opening balance sheet at  
1 april 2012 has been presented
the group has also adopted ifrs 7 ‘disclosures offsetting financial assets and financial liabilities’  ifrs 13 ‘fair value measurement’ 
both effective from 1 january 2013 and ias 1r ‘presentation of financial statements’ in the period the group has also adopted early 
amendments to ias 36 ‘impairment of assets‘ effective date 1 january 2014 adoption of these standards did not have any material 
impact on financial performance or position of the group the group disaggregated the foreign exchange differences disclosed in the 
statement of other comprehensive income in 2013 relating to hedging of net investments
changes in accounting policies and disclosures
impact on the consolidated income statement and the consolidated statement of other comprehensive income
 
2014 
£m
2013 
£m
pension administration costs 06 13 
exceptional items – 07
operating loss 06 20
net ias 19 financing costs 34 22
net financing costs 34 22
loss before tax 40 42
taxation 08 10
loss for the financial year 32 32
attributable to
owners of the parent 32 32 
 32 32
statement of other comprehensive income
remeasurement gain on retirement benefit obligations 122 111
tax on remeasurement gains 62 55
other comprehensive income for the year net of tax 60 56
total comprehensive income for the year 28 24
loss per share
basic and diluted loss per share 14p 15p
the change in accounting policies did not have an impact on the statement of cash flows or on the adjusted earnings per share annual report and accounts 2014 renold plc 91
financial statements
consolidated income statement
for the year ended 31 march 2014
 note
2014 
£m 
2013 
restated 
£m 
revenue 1 1840 1903 
operating costs before pension administration costs and exceptional items 2 1729 1831
operating profit before pension administration costs and exceptional items 111 72 
pension administration costs excluding exceptional items 2 06 13
exceptional items 2 118 123 
operating loss 13 64 
share of posttax loss of jointly controlled entity – 01 
financial costs 18 27 
net ias 19 financing costs 28 25 
exceptional financing costs – 02 
net financing costs 3 46 54 
loss before tax 59 119 
taxation 4 48 01
loss for the financial year 107 118 
attributable to 
owners of the parent 109 119 
noncontrolling interests 02 01 
  107 118 
earningsloss per share 5
basic loss per share 49p 54p
diluted loss per share 49p 54p
adjusted earnings per share
1
 32p 14p
diluted adjusted earnings per share
1
 32p 14p
1  adjusted for the after tax effects of pension administration costs exceptional items and the ias 19 financing costs renold plc annual report and accounts 2014 92
consolidated statement  
of comprehensive income
for the year ended 31 march 2014
 
2014
£m 
2013 
restated
£m 
loss for the year 107 118 
other comprehensive incomeexpense
items that may be reclassified to profit or loss in subsequent periods
net gainslosses on cash flow hedges 02 02 
foreign exchange translation differences 85 22
foreign exchange differences on loans hedging the net investment in foreign operations 06 04
 77 16
items not to be reclassified to profit or loss in subsequent periods
remeasurement gains losses on retirement benefit obligations 29 144
tax on remeasurement gainslosses on retirement benefit obligations 21 24 
50 120
other comprehensive expense for the year net of tax 27 104
total comprehensive expense for the year net of tax 134 222
attributable to
owners of the parent 135 223
noncontrolling interest 01 01 
 134 222 annual report and accounts 2014 renold plc 93
financial statements
consolidated balance sheet
as at 31 march 2014
 note
2014
£m 
2013
restated
£m 
assets 
noncurrent assets 
goodwill 7 198 218 
other intangible assets 7 61 62 
property plant and equipment 8 393 431 
investment property 9 13 14 
other noncurrent assets 12 02 04 
deferred tax assets 17 189 214
retirement benefit surplus 18 04 –
  860 943 
current assets 
inventories 11 359 409 
trade and other receivables 12 297 328 
retirement benefit surplus 18 – 14 
derivative financial instruments 25 01 –
cash and cash equivalents 13 67 98 
  724 849 
noncurrent asset classified as held for sale 10 16 –
740 849
total assets 1600 1792
liabilities 
current liabilities 
borrowings 14 01 63
trade and other payables 15 349 398
current tax 17 14
derivative financial instruments 25 – 02
provisions 16 24 16
  391 493
net current assets 349 356 
noncurrent liabilities 
borrowings 14 309 258
preference stock 14 05 05
trade and other payables 15 06 08
deferred tax liabilities 17 02 06
retirement benefit obligations 18 653 709
provisions 16 53 03
  1028 989
total liabilities 1419 1482
net assets 181 310 
equity 
issued share capital 19 266 265 
share premium account 299 296 
currency translation reserve 21 17 61 
other reserves 21 12 12 
retained earnings 21 404 348
equity attributable to equity holders of the parent 156 286 
noncontrolling interests 25 24 
total shareholders’ equity 181 310 
approved by the board on 27 may 2014 and signed on its behalf by 
robert purcell brian tenner
chief executive finance director renold plc annual report and accounts 2014 94
consolidated statement of changes in equity
for the year ended 31 march 2014
 
share 
capital
£m
share 
premium 
account
£m
retained 
earnings 
£m 
currency 
translation 
reserve 
£m 
other  
reserves  
£m 
attributable 
to owners of 
parent
£m 
non 
controlling 
interests
£m
total equity 
restated
£m 
 note 19 note 21 note 21 note 21 note 21  
at 1 april 2012 264 294 107 43 15 509 23 532 
lossprofit for the year restated – – 119 – – 119 01 118 
other comprehensive incomeexpense – – 120 18 02 104 – 104 
total comprehensive incomeexpense 
for the year – – 239 18 02 223 01 222 
employee share options   
 –  value of employee services – – 03 – – 03 – 03 
exercise of share warrants   
 –  release of share warrant reserve – – 01 – 01 – – – 
 –  proceeds from share issue 01 02 – – – 03 – 03 
at 31 march 2013 restated 265 296 348 61 12 286 24 310 
lossprofit for the year – – 109 – – 109 02 107
other comprehensive incomeexpense – – 50 78 02 26 01 27
total comprehensive incomeexpense 
for the year – – 59 78 02 135 01 134
employee share options
 –  value of employee services – – 01 – – 01 – 01
exercise of share warrants
 –  release of share warrant reserve – – 02 – 02 – – –
 –  proceeds from share issue 01 03 – – – 04 – 04
at 31 march 2014 266 299 404 17 12 156 25 181 annual report and accounts 2014 renold plc 95
financial statements
consolidated statement of cash flows
for the year ended 31 march 2014
2014 
£m
2013  
£m
cash flows from operating activities note 24
cash generated from operations 70 89
income taxes paid 09 07
net cash from operating activities 61 82
cash flows from investing activities
purchase of property plant and equipment 60 31
purchase of intangible assets 11 18
net cash from investing activities 71 49
cash flows from financing activities
proceeds from issue of ordinary shares 04 03
financing costs paid 15 28
proceeds from borrowings 80 431
repayment of borrowings 80 361
payment of finance lease liabilities – 01
net cash from financing activities 11 44
net decreaseincrease in cash and cash equivalents 21 77
net cash and cash equivalents at beginning of year 92 12
effects of exchange rate changes 05 03
net cash and cash equivalents at end of year note 13 66 92 renold plc annual report and accounts 2014 96
1 segmental information
for management purposes the group is organised into two operating segments according to the nature of their products and 
services and these are considered by the directors to be the reportable operating segments of renold plc as shown below
 → the chain segment manufactures and sells power transmission and conveyor chain and also includes sales of  
torque transmission product through chain national sales companies ‘nscs’ and
 → the torque transmission segment manufactures and sells torque transmission products such as gearboxes and couplings
no operating segments have been aggregated to form the above reportable segments
the chief operating decision maker ‘codm’ for the purposes of ifrs 8 ‘operating segments’ is considered to be the board of 
directors of renold plc management monitor the results of the separate reportable operating segments based on operating  
profit and loss which is measured consistently with operating profit and loss in the consolidated financial statements the same 
segmental basis applies to decisions about resource allocation however group net financing costs retirement benefit obligations 
and income taxes are managed on a group basis and therefore are not allocated to operating segments transfer prices between 
operating segments are on an arm’s length basis in a manner similar to transactions with third parties 
year ended 31 march 2014
chain ii 
£m 
torque 
transmission
£m
head office 
costs and 
eliminations 
£m 
consolidated
£m 
revenue
external customer 1396 444 – 1840
intersegment i 03 50 53 –
total revenue 1399 494 53 1840
operating profitloss before pension administration costs and exceptional items 99 58 46 111
pension administration costs – – 06 06
exceptional items 115 03 – 118
operating profitloss 16 55 52 13
net financing costs 46
loss before tax 59
other disclosures
working capital iii 226 86 11 301
capital expenditure iv 48 13 10 71
depreciation and amortisation 31 11 12 54
year ended 31 march 2013 restated
chain ii 
£m 
torque 
transmission
£m 
head office 
costs and 
eliminations 
£m 
consolidated
£m 
revenue
external customer 1419 484 – 1903
intersegment i 08 46 54 – 
total revenue 1427 530 54 1903 
operating profitloss before pension administration costs and exceptional items 69 53 50 72 
pension administration costs – – 13 13
exceptional items 95 07 35 123
operating lossprofit 26 60 98 64
share of posttax loss of jointly controlled entity 01
net financing costs 54
loss before tax 119
other disclosures
working capital iii 185 86 60 331
capital expenditure iv 23 08 18 49
depreciation and amortisation 32 10 04 46
notes to the consolidated financial statements annual report and accounts 2014 renold plc 97
financial statements
1 segmental information continued
the board reviews the performance of the business using information presented at consistent exchange rates ‘underlying’  
the prior year results have been restated using this year’s exchange rates as follows
year ended 31 march 2013 restated
chain ii 
£m 
torque 
transmission 
£m 
 head office 
costs and 
eliminations 
£m 
consolidated 
£m 
revenue
external customer 1419 484 – 1903 
foreign exchange 21 12 – 33
underlying external sales 1398 472 – 1870 
operating profitloss before pension administration costs and exceptional items 69 53 50 72 
foreign exchange 01 – – 01
underlying operating profitloss before pension administration costs  
and exceptional items 68 53 50 71
i  intersegment revenues are eliminated on consolidation
ii   included in chain external sales is £76m 2013 £88m of torque transmission product sold through the chain nscs usually in countries where torque transmission 
does not have its own presence
iii  the measure of segment assets reviewed by the codm is total working capital defined as inventories and trade and other receivables less trade and other 
payables working capital is also measured as a ratio of rolling annual sales
iv  capital expenditure consists of additions to property plant and equipment and intangible assets including through acquisitions
geographical analysis of external sales by destination noncurrent asset location and average employee numbers
the uk is the home country of the parent company renold plc the principal operating territories the proportions of group 
external revenue generated in each customer location external revenues noncurrent assets asset location and average 
employee numbers in each are as follows
revenue ratio external revenues noncurrent assets employee numbers
 
 2014

2013

2014
£m
2013
£m
2014
£m
2013
£m 2014 2013
united kingdom 87 92 160 176 138 140 558 635
rest of europe 277 263 510 501 128 132 405 418
north america 378 364 695 693 248 260 355 352
australasia 120 136 220 258 70 84 157 167
china 41 25 75 48 35 42 348 397
india 34 38 62 72 38 48 479 495
other countries 63 82 118 155 08 19 77 81
 100 100 1840 1903 665 725 2379 2545
all revenue relates to the sale of goods and services no individual customer or group of customers represents more than 10  
of group revenue 2013 none
noncurrent assets consist of goodwill other intangible assets property plant and equipment and investment property other 
noncurrent assets and deferred tax assets are not included above renold plc annual report and accounts 2014 98
2 operating costs and exceptional items
a operating loss is stated after chargingcrediting
 2014
2013 
restated
 £m £m £m £m
change in finished goods and work in progress 15 44 
raw materials and consumables 640 751 
other external charges 348 311 
employee costs
 gross wages and salaries 556 568 
 social security costs 64 74
 pension costs
 – defined benefit note 18 04 03
 – defined contribution note 18 15 19
 sharebased incentive plans 01 03 
640 661
depreciation of property plant and equipment 
 – owned assets 42 42 
amortisation of intangible assets 12 04 
operating leases – minimum lease payments 
 – plant and machinery 04 04 
 – property 16 18
20 22 
other operating income 08 15
loss on disposal of property plant and equipment 01 –
research and development expenditure 07 07 
auditors’ remuneration note 2b 07 06 
trade receivables impairment 01 01 
foreign exchange 04 03
operating costs before pension administration costs and exceptional items 1729 1831 
pension administration costs excluding exceptional items 06 13
exceptional items note 2c 118 123 
total operating costs 1853 1967 
b auditors’ remuneration
2014
£000
total
2013
£000
total
audit of the group’s annual financial statements 180 69
audit of the company’s subsidiaries 327 271
total audit fees 507 340
tax compliance services 50 51
tax advisory services 75 190
all other assurance services 60 42
all other nonaudit services 48 15
740 638
this is analysed in the following captions in the financial statements 
exceptional reorganisation and restructuring costs 54 153
operating costs 686 485
740 638
the group’s auditors also received fees of £74000 for audit services provided to group pension schemes 2013 £37000 these 
were the only services provided to the pension schemes the increase reflecting additional work on the asset backed funding 
structure and subsequent uk scheme merger
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 99
financial statements
2 operating costs and exceptional items continued 
c exceptional chargesincome
2014 
£m
2013 
restated 
£m
included in operating costs
bredbury factory closure costs 47 –
bredbury site onerous lease provision 57 –
chain business model review  
 – impairment of goodwill renold hangzhou – 15 
 – impairment of intangible assets – 11
 – impairment of property plant and equipment 01 37
 – impairment of inventory and production tooling 05 28 
 – provision for onerous licence costs – 03 
impairment of investment in jointly controlled entity – 01 
impairment of investment property note 9 – 05 
other reorganisation and redundancy costs 08 26 
pension merger and asset backed funding costs – 07 
insurance proceeds on machine destroyed by fire – 10
118 123
included in financing costs  
costs associated with refinancing impairment of unamortised arrangement fees – 02
bredbury factory closure costs include redundancy costs of £26m and £27m of other project costs incurred during the closure of 
the manufacturing facility and transfer of production to other renold plants the costs above include £11m expected to be incurred  
during the next financial year the bredbury onerous lease provision is based on a discounted cash flow using the risk free rate  
of 335 of the remaining committed payments under the unexpired lease term of 16 years less an allowance for assumed rental 
income from potential subleasing of the facility a working group is currently reviewing options to mitigate this liability including 
the options for a sublease
in the prior year the group carried out a review of the business model for the chain division which resulted in the identification 
and impairment of a number of assets largely driven by excess production capacity asset impairments of £57m were recognised 
in respect of the bredbury site which subsequently closed as described above in addition due to a reduction in the number of 
management units and expected users resulting from restructuring activities a proportion of the costs in respect of the erp 
system were also impaired intangible assets impairment charge of £11m a provision of £03m was also made for future 
payments for licences that are now unlikely to be used
also in the prior year an impairment charge of £01m was made against the carrying value of the investment in the jointly 
controlled entity renold transmission technology jiangsu inc the carrying value of this investment at 1 april 2013 was £nil 
other reorganisation and redundancy costs incurred in the current and prior year relate primarily to redundancy costs associated 
with the global initiative to reduce overheads in all of our operations 
in the prior year costs associated with the pension merger and asset backed funding projects have been treated as exceptional 
following the restatement required for ias 19r see page 90 
exceptional refinancing costs of £02m were recognised in the prior year representing costs associated with the previous 
borrowing arrangements that would have been amortised over the duration of those facilities
d employees and key management compensation
employee costs including directors are set out in note 2a key management personnel are represented by the board and their 
aggregate emoluments were as follows
2014
£000
2013
restated
£000
directors’ remuneration 1231 843
payment in respect of loss of office – 367
postemployment benefits – contributions direct to defined contribution schemes 28 28
statutory directors’ remuneration 1259 1238
sharebased payments 75 270
social security costs 103 122
total 1437 1090 renold plc annual report and accounts 2014 100
2 operating costs and exceptional items continued
d employees and key management compensation continued
in the prior year figures have been restated to exclude pension benefits included within directors’ remuneration of £28000 paid  
in cash and £9000 reclassified from postemployment benefits to directors’ remuneration only one director received direct 
payment for pension contributions 2013 one 
the remuneration listed in the table above differs from the single total figure table in the directors’ remuneration report on  
page 69 for the following reasons 
 → only pensions payable directly to pension schemes are included in the postemployment benefits in the table on page 99  
£45000 2013 £9000 additional cash payments for pensions paid indirectly were included in directors’ remuneration 
 → the table above excludes ltip’s vested in the form of share options and
 → 2013 includes former directors’ compensation for loss of office of £367000
further details of the remuneration of directors are provided in the directors’ remuneration report on pages 60 to 74 
a geographical split of the group’s average number of employees during the year is included in note 1 the total number of 
employees employed by the group at 31 march 2014 was 2208 2013 2466
3 net financing costs 
2014 
£m
2013  
restated  
£m
financial costs
interest payable on bank loans and overdrafts 15 26
amortised financing costs 03 01
exceptional refinancing charges – 02
total financing costs 18 29
net ias 19 financing costs 28 25
net financing costs 46 54
4 taxation
analysis of tax chargecredit in the year
2014 
£m
2013  
restated 
£m 
united kingdom 
uk corporation tax at 23 2013 24 – –
less double taxation relief – – 
– –
overseas taxes 
corporation taxes 10 06 
withholding taxes 02 01 
current income tax charge 12 07 
deferred tax 
uk – origination and reversal of temporary differences 30 06
overseas – origination and reversal of temporary differences 06 02
total deferred tax chargecredit 36 08
tax chargecredit on loss on ordinary activities 48 01
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 101
financial statements
4 taxation continued
2014 
£m
2013 
restated 
£m 
tax on items taken to other comprehensive income 
deferred tax on changes in net pension deficits 21 24
tax credit in the statement of other comprehensive income 21 24
factors affecting the group tax charge for the year
the uk finance act 2013 proposed reductions in the main rate of uk corporation tax from 23 to 20 reducing the rate to 21 
from 1 april 2014 and then 20 from 1 april 2015 as at 31 march 2014 these reductions have been enacted and their effect has 
been incorporated into the closing deferred tax balances in the company’s financial statements
this has resulted in a £04m deferred tax charge to the income statement and a £13m deferred tax charge to other comprehensive 
income due to the reduction in the value of the deferred tax assets recognised in the uk
the group’s tax charge in future years will be affected by the profit mix effective tax rates in the different countries where the 
group operates and utilisation of tax losses no deferred tax is recognised on the unremitted earnings of overseas subsidiaries 
the actual tax on the group’s loss before tax differs from the theoretical amount using the uk corporation tax rate as follows
2014 
£m
2013  
restated 
£m 
loss on ordinary activities before tax 59 119
theoretical tax credit at 23 2013 24 14 29
effects of 
permanent differences 02 03 
overseas tax rate differences 04 04 
deferred tax not recognised 52 19 
change in uk tax rate 04 02 
total tax chargecredit 48 01 
5 lossearnings per share
lossearnings per share eps is calculated by reference to the lossearnings for the year and the weighted average number  
of shares in issue during the year as follows
2014 2013 restated
loss
£m
shares 
thousands
per share
amount 
pence
loss
£m
shares 
thousands
per share
amount
 pence
basic eps
loss attributed to ordinary shareholders 109 222398 49 119 220939 54
basic eps 109 222398 49 119 220939 54
2014 2013 restated
loss 
earnings 
£m
shares 
thousands
per share 
amount 
pence
loss
earnings 
£m
shares 
thousands
per share 
amount 
pence
adjusted eps
basic eps 109 222398 49 119 220939 54
effect of exceptional items after tax
 exceptional items in operating costs 114 51 119 54
 exceptional refinancing costs – – 02 01
 exceptional tax charge 35 16 – –
  pension administration costs included  
in operating costs 06 03 11 05
 net pension financing costs 24 11 18 08
adjusted eps 70 222398 32 31 220939 14 renold plc annual report and accounts 2014 102
notes to the consolidated financial statements
continued
5 lossearnings per share continued
inclusion of the dilutive securities comprising 4105000 2013 30000 additional shares due to share options and nil 2013 434000  
due to warrants over shares in the calculation of adjusted eps does not change the amount shown above 2013 no change 
further details in relation to the warrants can be found in note 19
the adjusted eps numbers have been provided in order to give a useful indication of underlying performance by the exclusion  
of exceptional items due to the existence of unrecognised deferred tax assets there was no associated tax credit on some of  
the exceptional charges and in these instances exceptional costs are added back in full
6 dividends
no ordinary dividend payments were paid or proposed in either the current or prior year
7 intangible assets 
goodwill
£m
computer
software
£m
total
£m
cost 
at 1 april 2012 223 89 312
exchange adjustment 10 03 13
additions – 18 18
disposals – 01 01
at 1 april 2013 233 109 342
exchange adjustment 21 – 21
additions – 11 11
disposals – 07 07
at 31 march 2014 212 113 325
accumulated amortisation and impairment 
at 1 april 2012 – 31 31
exchange adjustment – 01 01
amortisation charge – 04 04
impairment charge 15 11 26
at 1 april 2013 15 47 62
exchange adjustment 01 – 01
amortisation charge – 12 12
disposals – 07 07
at 31 march 2014 14 52 66
net book amount at 31 march 2014 198 61 259
net book amount at 31 march 2013 218 62 280
net book amount at 31 march 2012 223 58 281
the group performed its annual impairment test of goodwill at 31 march 2014 that compares the current book value to the 
recoverable amount from the continued use or sale of the related business no impairment charge has been recognised in  
the period in the prior year the chain division business model review identified excess production capacity in a number of 
manufacturing processes within the division which resulted in an impairment of £15m of goodwill in respect of the acquisition  
of renold hangzhou company limited see note 2c
the recoverable amount of each cash generating unit cgu has been determined on a value in use basis value in use is calculated  
as the net present value of cash flows derived from detailed financial plans for the next financial year as approved by the board  
cash flows beyond this are extrapolated using the long term country growth rates disclosed overleaf annual report and accounts 2014 renold plc 103
financial statements
7 intangible assets continued
growth rates discount rates carrying values
2014

2013

2014

2013

2014
£m
2013
£m
jeffrey chain usa 31 33 136 143 174 191
ace chains australia 30 32 136 153 05 06
renold chain india 67 69 237 230 19 21
198 218
key assumptions used in the value in use calculations
sales volume selling prices and cost changes
the group prepares cash flow forecasts based on the latest management estimates for the next financial year the expected sales 
prices and volumes reflect management’s experience of how sales will develop at this point of the economic cycle the expected 
profit margin reflects management’s experience of each cgu’s profitability at the forecast level of sales and incorporates the 
impact of any restructuring that took place during the year ended 31 march 2014
cash flows beyond the period of projections are extrapolated using long term growth rates published by the organisation for 
economic cooperation and development for the territory in which the cgu is based the discount rates applied to the cash  
flows of each of the cgus are based on the risk free rate for long term bonds typically ten years issued by the government  
in the respective market this is then adjusted to reflect both the increased risk of investing in equities and the systematic risk  
of the specific cgu using an average of the betas of comparable companies
management believe that no reasonably possible change in any of the key assumptions would cause the carrying value of  
jeffrey chain and ace chains to materially exceed each cgu’s recoverable amount with respect to renold chain india if  
long term growth rates fell by approximately 15 2013 25 the goodwill in respect of that unit may become impaired
computer software
no impairment charge has been recognised in the period in the prior period £11m was recognised in relation to the erp  
system as a result of the reduction in the number of management units and expected users see note 2c for details   renold plc annual report and accounts 2014 104
notes to the consolidated financial statements
continued
8 property plant and equipment 
land and 
buildings
£m
plant and 
equipment
£m
total
£m
cost 
at 1 april 2012 234 1205 1439
exchange adjustment 17 12 29
additions 02 29 31
disposals 03 33 36
at 1 april 2013 250 1213 1463
exchange adjustment 16 63 79
additions 09 51 60
transfer to asset held for sale 23 – 23
disposals 30 152 182
at 31 march 2014 190 1049 1239
accumulated depreciation and impairment 
at 1 april 2012 38 929 967
exchange adjustment 10 07 17
charge for the year 05 37 42
impairment charge 07 30 37
disposals – 31 31
at 1 april 2013 60 972 1032
exchange adjustment – 43 43
charge for the year 08 34 42
transfer to asset held for sale 07 – 07
disposals 30 148 178
at 31 march 2014 31 815 846
net book amount at 31 march 2014 159 234 393
net book amount at 31 march 2013 190 241 431
net book amount at 31 march 2012 196 276 472
the prior year impairments are described in more detail in note 2c
future capital expenditure
at 31 march 2014 capital expenditure contracted for but not provided for in these accounts amounted to £01m 2013 £10m
asset held for sale
during the year the former manufacturing site located in seclin france was reclassified as an asset held for sale see note 10  annual report and accounts 2014 renold plc 105
financial statements
9 investment property 
£m
cost 
at 1 april 2012 20
exchange adjustment –
at 1 april 2013 20
exchange adjustment 01
at 31 march 2014 19
accumulated depreciation 
at 1 april 2012 01
charge for the year –
impairment charge 05
at 1 april 2013 06
charge for the year –
impairment charge –
at 31 march 2014 06
net book amount at 31 march 2014 13
net book amount at 31 march 2013 14
net book amount at 31 march 2012 19
the property has been accounted for on a cost model basis with a value of £14m in respect of land and £06m in respect of the 
building a valuation of the property was conducted in march 2013 by bnp paribas french chartered surveyors and property 
consultants at that date the fair value of the property was assessed at £19m excluding depollution costs based on ongoing 
rental for industrial use as a result of this valuation an impairment charge of £05m was made in the prior period to include 
estimated depollution costs the directors are not aware of any long term circumstances that have arisen to materially alter  
that external valuation the group is currently assessing options with regard to the future use of this site following the end of  
the most recent tenancy
10 asset held for sale 
2014
£m
2013
£m
 
property 16 –
at 31 march 2014 16 –
the asset held for sale is the former chain manufacturing facility located in seclin france since the transfer of manufacturing in 
201112 part of the facility has been used as a distribution and sales office the property is being actively marketed for sale by an 
independent real estate agent in france in the event of a sale the company may retain an interest in the part of the facility that  
is in use in the business or seek alternate premises for that activity the property was independently valued by bnp paribas real 
estate on 29 october 2012 on the basis of a freehold sale the value disclosed above reflects that valuation and in the opinion of 
the directors no changes have occurred that would alter that valuation renold plc annual report and accounts 2014 106
11 inventories 
2014
£m
2013
£m
raw materials 58 66
work in progress 68 83
finished products and production tooling 233 260
359 409
inventories pledged as security for liabilities amounted to £275m 2013 £231m
12 trade and other receivables 
2014 
current
£m
2014
noncurrent
£m
2013
current
£m
2013
noncurrent
£m
trade receivables
1
268 – 301 –
less impairment provision 06 – 08 –
trade receivables net 262 – 293 –
other receivables
1
17 02 17 04
prepayments 18 – 18 –
297 02 328 04
1 financial assets carried at cost
the group has no significant concentration of credit risk but does have a concentration of translational and transactional foreign 
exchange risk in both us dollars and euros however the group hedges against these risks
trade receivables are noninterest bearing and are generally on 3090 days’ terms see note 25d for the group’s credit risk 
policy as at 31 march the ageing analysis of trade receivables is as follows
neither past 
due nor 
impaired
£m
 past due but not impaired
total
£m
 30 days
£m
3060 days
£m
6090 days
£m
 90 days
£m
2014 262 222 23 08 02 07
2013 293 244 30 07 03 09
2014
£m
2013
£m
movement on impairment provision 
opening provision 08 07
net charge to income statement 01 01
utilised in year through assets written off 03 –
closing provision 06 08
13 cash and cash equivalents 
in the group cash flow statement net cash and cash equivalents are shown after deducting bank overdrafts as follows
2014
£m
2013
£m
cash and cash equivalents 67 98
less overdrafts note 14 01 06
net cash and cash equivalents 66 92
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 107
financial statements
14 borrowings 
2014
£m
2013
£m
amounts falling due within one year 
overdrafts 01 06
bank loans – 57
01 63
amounts falling due after more than one year 
bank loans net of capitalised costs 309 258
preference stock 05 05
314 263
total borrowings note 25d 315 326
all financial liabilities above are carried at amortised cost
core banking facilities
on 28 september 2012 renold agreed a new banking facility agreement for a four year period maturing in october 2016 the  
new facilities comprise a £41m multicurrency revolving credit facility mrcf and an additional £8m of ancillary facilities these 
facilities have been provided by a banking group comprised of lloyds bank plc and svenska handelsbanken ab the mrcf is fully 
committed and available until maturity 
at the year end the undrawn facility was £90m 2013 £131m the group pays interest at libor plus a variable margin in respect 
of this facility the average rate of interest paid in the year was libor plus 275 for the euro and sterling denominated facility 
and libor plus 3 for the us dollar denominated facility 2013 all facilities libor plus 4 before the refinancing and the same 
rates as this year after the refinancing this facility has two primary financial covenants which are tested on a six monthly basis 
the first is net debt as a ratio of rolling annual ebitda with a maximum ratio of 25 times the second is interest cover with a 
minimum ratio of 40 times rolling annual ebitda divided by net financial interest cost the group also benefits from a number  
of overseas facilities totaling £34m costs of £11m associated with the refinancing were capitalised and offset against loans and 
are being amortised over the life of the facility
secured borrowings
included in group borrowings are secured borrowings of £275m 2013 £287m security is provided by fixed and floating charges 
over assets including certain property plant and equipment primarily in the uk usa france germany and australia
finance leases
the group has no obligations under finance leases
preference stock
at 31 march 2014 there were 580482 units of preference stock in issue 2013 580482
all payments of dividends on the preference stock have been paid on the due dates the preference stock has the following rights
i  a fixed cumulative preferential dividend at the rate of 6 per annum payable half yearly on 1 january and 1 july in each year
ii  rank both with regard to dividend including any arrears on the commencement of a winding up and return of capital in 
priority to all other stock or shares in the company but with no further right to participate in profits or assets
iii  no right to attend or vote either in person or by proxy at any general meeting of the company or to have notice of any such 
meeting unless the dividend on the preference stock is in arrears for six calendar months and
iv  no redemption entitlement and no fixed repayment date
there is no significant difference between the carrying value of financial liabilities and their equivalent fair value renold plc annual report and accounts 2014 108
notes to the consolidated financial statements
continued
15 trade and other payables
2014
current
£m
2014
noncurrent
£m
2013
current
£m
2013
noncurrent
£m
trade payables
1
173 – 209 –
other tax and social security 14 – 18 –
other payables
1
14 – 16 –
accruals
1
148 06 155 08
349 06 398 08
1 financial liabilities carried at amortised cost
trade payables are noninterest bearing and are normally settled within 60 day terms the group does have a concentration  
of translational foreign exchange risk in both us dollars and euros however the group hedges against this risk
16 provisions
business 
restructuring 
£m
onerous  
lease 
£m
onerous  
licences 
£m
contingent 
consideration 
£m
total  
provisions 
£m
at 1 april 2013 10 – 03 06 19
arising during the year 61 57 – – 118
utilised in the year 60 – – – 60
at 31 march 2014 11 57 03 06 77
allocated as
2014 
£m
2013 
£m
current provisions 24 16
noncurrent provisions 53 03
77 19
business restructuring
this provision relates to the reorganisation and restructuring of various parts of the business with the majority related to the 
bredbury plant closure and will be completed within the next financial year see note 2c on exceptional charges for more details
onerous lease
a provision was established in relation to onerous lease costs in respect of the lease of the bredbury plant the lease expires  
in may 2030 see note 2c
onerous licences
a provision was established in relation to onerous licence costs in respect of the erp system that is being implemented these 
leases expire in march 2023 
contingent consideration 
renold hangzhou co limited china
a provision was established for the purchase of the outstanding 10 of the equity following the acquisition of 90 of the equity 
interest in renold hangzhou co limited in the period ended 31 march 2008 and is due to be paid at the latest by 15 june 2017
17 deferred tax
assets liabilities net
2014
£m
2013
restated
£m
2014 
£m
2013 
£m
2014 
£m
2013
restated
£m
accelerated capital allowances 17 03 03 05 20 02
pension plans 156 135 – 03 156 132
tax losses 67 94 – 02 67 96
other temporary differences 17 18 01 – 16 18
tax assetsliabilities 189 214 02 06 187 208
net off liabilitiesassets 02 06 02 06 – –
net deferred tax assets 187 208 – – 187 208 annual report and accounts 2014 renold plc 109
financial statements
17 deferred tax continued
the net deferred tax asset recoverable after more than one year is £187m 2013 restated £208m the pension plan deferred tax 
asset has been restated following the adoption of ias 19r in the course of the process of determining the impact of implementing 
ias 19r the directors have also reconsidered the treatment required by ifric 14 this adjustment is no longer required and the 
deferred tax asset of £45m in respect of an additional pension liability of £69m recognised at 31 march 2013 has been reversed 
see note 18 for more details
the movement in the net deferred tax balance relating to assets is as follows
2014
opening 
balance 
£m
exchange 
adjustments 
£m
recognised  
in income 
statement 
£m
recognised 
directly in other 
comprehensive 
income 
£m
closing  
balance 
£m 
accelerated capital allowances 03 02 22 – 17
pension plans 135 02 02 21 156
tax losses 94 09 18 – 67
other temporary differences 18 02 01 – 17
214 07 39 21 189
2013 
opening 
balance 
£m
exchange 
adjustments 
£m
recognised in 
income 
statement 
£m
recognised 
directly in other 
comprehensive 
income 
£m
closing  
balance 
restated 
£m
accelerated capital allowances 04 – 01 – 03
pension plans 109 – 02 24 135
tax losses 77 03 14 – 94
other temporary differences 09 – 09 – 18
181 03 06 24 214
the movement in the net deferred tax balance relating to liabilities in the year is as follows
2014
opening 
balance 
£m
exchange 
adjustments 
£m
recognised in 
income 
statement 
£m
recognised 
directly in other 
comprehensive 
income 
£m
closing 
balance 
£m
accelerated capital allowances 05 01 01 – 03
pension plans 03 – 03 – –
tax losses 02 – 02 – –
other temporary differences – – 01 – 01
06 01 03 – 02
2013
opening 
balance 
£m
exchange 
adjustments 
£m 
recognised in 
income 
statement 
£m
recognised 
directly in other 
comprehensive 
income 
£m
closing 
balance 
£m
accelerated capital allowances 02 – 03 – 05
pension plans 04 – 01 – 03
tax losses 01 – 01 – 02
other temporary differences 03 – 03 – –
08 – 02 – 06
during the year the group has reported an operating profit before exceptional items and pensions administration costs of £111m  
the businesses in all jurisdictions where deferred tax assets have been recognised will more likely than not generate suitable profits 
based on approved management forecasts from which the future reversal of the underlying timing differences can be deducted
unrecognised deferred tax assets amount to £274m 2013 £250m arising from unrecognised losses of £159m 2013 £161m 
representing losses of £560m 2013 £546m and other timing differences of £115m 2013 £89m based on available evidence  
it is considered unlikely that these amounts will be recovered within the foreseeable future the significant majority of these 
losses are not subject to time limits renold plc annual report and accounts 2014 110
18 pensions
the group operates a number of pension plans throughout the world covering many of its employees the plans are a mix of defined 
benefit and defined contribution plans in a defined benefit plan the members are guaranteed a certain level of benefits that depend 
on a number of factors such as service salary and inflation defined benefit plans can be supported by an asset fund that will be  
used to pay member benefits or can be unfunded in which case obligations to members are paid by the sponsoring employer as they 
fall due in a defined benefit plan because the level and duration of the members’ benefits are uncertain the risk of any increase or 
decrease in the cost of providing those benefits stays with the employer this contrasts with a defined contribution plan where the 
employer’s only obligation is to pay the amount agreed in the employment contract into a pension plan
any change in the total expected cost of providing defined benefits can produce either funding shortfalls or surpluses in the  
case of an expected funding shortfall the company is required to agree a schedule of additional contributions to make good  
the shortfall over an agreed period of time sometimes referred to as a ‘funding plan’ or a minimum funding requirement ‘mfr’ 
which can also include an allowance for some of the shortfall to be made good by future asset outperformance in the case of a 
surplus mechanisms are available in all of the renold schemes to return that surplus to the group
in the course of the process of determining the impact of ias 19r the directors have also considered the treatment required by 
ifric14 details of the restatement made is disclosed on page 90
uk pension plans
the principal fund is the renold pension plan ‘rpp’ in the uk that was formed by the merger in june 2013 of three predecessor 
plans i the renold group pension scheme ‘rgps’ ii the jones  shipman plc retirement benefits plan 1971 ‘js rbp’ and iii 
the renold supplementary pension scheme 1967 ‘rsps’ which was then renamed the rpp the rpp is a funded defined benefit 
plan with assets held in separate trustee administered funds the rpp closed to the future accrual of member benefits between 
august 2008 and june 2009 and is also closed to new members
the trustees are chaired by an independent professional trustee firm and have access to a range of professional advisers  
the trustee board is required to consult the company in matters such as investment policy and to obtain agreement to any 
amendments to benefits the company can make proposals to the trustees on a range of issues but cannot insist on their 
adoption the majority of trustees are either independent or member nominated with company nominated trustees being  
in the minority to mitigate the risk of potential conflict of interests no directors of renold plc are trustees of the uk scheme
the merger of the uk schemes was implemented to reduce the administration costs of running three separate pension schemes 
during the merger 1316 members with smaller pension entitlements opted at that time to have their entire entitlement paid out in 
wind up lump sums all other members had their benefits transferred in full into the rpp in total £109m of scheme liabilities were 
discharged for cash payments of £104m with the small difference being a net reduction in the scheme deficit the merger had no 
material impact on the group’s tax position the rgps and js rbp are now progressing through a formal liquidation process
the merged scheme is underpinned by a 25 year asset backed partnership structure the ‘slp’ the partnership holds an 
intercompany loan from renold international holdings limited the holding company for most of the group’s overseas trading 
companies the capital rights to the assets in the slp belong to renold except in the event of a corporate insolvency of the 
scheme sponsor renold plc the income rights in the slp belong to the rpp the loan generates interest income that will provide 
annual cash contributions of £25m to the pension fund with annual increases linked to rpi plus 15 and capped at 5 the 
income stream is used to fund deficit repair payments and the first £05m of annual administrative expenses with the company 
bearing any excess in the event that the rpp becomes fully funded on a buyout basis the income stream will instead accrue to 
renold the slp was put in place with the expectation that the period to recover the funding shortfall was agreed at 25 years the 
slp therefore helps reduce the volatility in short term cash funding by following an agreed payment plan over a longer period of 
time the interest in the slp held by the schemes is not reported as a plan asset in the consolidated financial statements as it is  
a nontransferable interest issued by the group
the new arrangement replaces all other existing funding arrangements for the uk defined benefit schemes and there is no 
separate schedule of contributions as at 31 march 2014 the slp therefore represents the entirety of the cash element of the 
funding plan for the rpp the funding plan also assumes an allowance for asset outperformance of 10 that is assets are 
expected to return an amount of 10 more than the discount rate applied to the liabilities the ias 19r deficit will be reduced  
as the cash contributions under the scheme are made
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 111
financial statements
18 pensions continued
total cash costs for uk deficit repair payments and uk administrative expenses in the period were £27m 2013 £38m the 
current year figure includes the £25m noted above in connection with the slp and £02m in respect of the costs of setting  
up the slp the group has also agreed that if operating profits reach an absolute predetermined level in the year ended  
31 march 2017 additional contributions will become payable while profits remain above this level the predetermined profit  
level is significantly higher than the operating results disclosed in the current year
an opening valuation of the merged scheme has been carried out during the year with an effective date of 28 june 2013 the 
valuation was carried out by barnett waddingham professionally qualified actuaries no additional schedule of contributions  
was required as a result of the review with the annual cash contributions being limited to those disclosed above under the  
asset backed funding structure
the renold group money purchase pension scheme ‘rgmps’ is a defined contribution type plan future contributions to the 
rgmps ceased in april 2009 all current and future uk employees have the opportunity to join the renold personal pension plan 
which is a contract based defined contribution scheme
overseas pension plans
germany
in germany in addition to participating in the government pension scheme the group operates an unfunded defined benefit 
scheme no other group company operates an unfunded defined benefit scheme the scheme has no asset backing and the  
group pays member benefits as they fall due the scheme closed to new members on 1 april 1992 the group has commenced 
proceedings aimed at closing the scheme to future accrual and an arbitration hearing is scheduled for the coming financial year  
if successful depending on the terms of the closure there would be a reduction in the scheme liabilities all else being equal
united states of america
in the us the group operates three defined benefit pension schemes in the torque transmission business all three schemes are 
closed to new members and two of the schemes closed to future accrual at the same time only the hourly paid scheme remains 
open to future accrual following strong asset performance last year one of the closed schemes has moved into surplus and a 
project has been initiated to secure the members benefits and terminate the scheme the us chain business operates a defined 
contribution scheme
in aggregate the three defined benefit schemes in the us have combined assets of £80m 2013 £80m and liabilities of £114m 
2013 £116m giving a net deficit of £34m 2013 £36m the change in the net deficit was due to a reduction in the discount rate 
more than offset by asset performance and net foreign exchange gains
other overseas schemes
other overseas employees participate in a variety of different pension arrangements of the defined contribution or defined  
benefit type funded in accordance with local practice
in aggregate the other overseas defined benefit schemes have combined assets of £57m 2013 £75m and liabilities of £61m 
2013 £74m giving a net deficit of £04m 2013 net surplus of £01m the primary change was the liquidation of the scheme 
surplus in south africa which reduced the scheme assets by £14m which was returned to the company in cash partly offset  
by various reductions in liabilities
the pension disclosures in the financial statements are based on the most recent actuarial valuations where material these  
have been updated to the balance sheet date by qualified independent actuaries the disclosures provided are presented on a  
weighted average basis where appropriate plan assets are stated at their market values at the respective balance sheet dates
the weighted average duration for both the uk and german pension schemes are 14 years 2013 14 years respectively renold plc annual report and accounts 2014 112
18 pensions continued
significant assumptions
the principal financial assumptions used to calculate plan liabilities as at 31 march 2014 are presented below the assumptions 
adopted by the plans’ actuaries represent the best estimates chosen from a range of possible actuarial assumptions which due  
to the timescale covered may not necessarily be borne out in practice
uk germany other overseas
2014 2013 2014 2013 2014 2013
rate of increase in pensionable salaries
1
– – 15 15 23 24
rate of increase in pensions in payment  
and deferred pensions 19 19 15 15 – –
discount rate 45 43 33 37 39 39
inflation assumption
2
22 22 15 15 24 25
expected return on plan assets
3
na 61 na na na 77
1 no increase applies following the closure of the uk defined benefit pension schemes to future accrual
2  inflation assumption used for uk schemes was changed to a blend of rpi and cpi in 2012 in addition the company implemented a pension increase exchange 
programme in 201112 in which members are entitled to take a one off increase in their pension payments in return for giving up future pension inflationary  
increases in some of their benefits on average approximately 25 of members took this option which has the effect of partially derisking the scheme to inflation 
3  following the implementation of ias 19r the expected return on net assets is no longer used in calculating the net financing charge shown in the income statement 
however it remains a relevant disclosure that enables an assessment of the potential level of outperformance of assets compared to the return assumed in the 
income statement that is equal to the discount rate applied to the liabilities
the predominant defined benefit obligation for funded plans within the group resides in the uk £1830m of the £2239m group 
obligation for funded plans in addition to the assumptions shown previously mortality assumptions have a significant bearing  
on the calculated obligation the assumed life expectancy for the rpp members on retirement at age 65 is as follows
2014 2013
males
 currently aged 45 213 205
 currently aged 65 203 195
females
 currently aged 45 236 238
 currently aged 65 225 226
the postretirement mortality tables used for the uk plan are the s1pa series tables published by the uk actuarial profession with 
a 20 uplift in mortality the scheme uses its own specific experience to then reduce or uplift the mortality rates assumed in the 
standard tables the rpp experiences mortality significantly in excess of the national average the mortality rates for the rpp are 
based on average year of birth for both nonpensioners and pensioners with an allowance for the medium cohort projection 
in germany the mortality expectations for the scheme are in line with the local national averages as is the case in the united 
states and australia
sensitivity analysis on uk schemes
assumption change in assumption impact on plan liabilities
discount rate increasedecrease by 025 decrease by £61mincrease by £66m
rate of inflation increasedecrease by 025 increase by £35mdecrease by £34m
rate of mortality increasedecrease by 1 year
1
increasedecrease by £65m
1 calculated using a reduction to assumed mortality rates of 125 at all ages this is broadly equivalent to an increase in life expectancy of one year at age 65
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 113
financial statements
18 pensions continued
the market values of assets of the principal defined benefit plans of the group together with the present value of plan liabilities 
are shown below it should be noted that the market values of the plans’ assets are stated as at the group’s year end and since  
it is not intended to realise the assets in the short term the value may change significantly before being realised the present 
values of the plans’ liabilities are derived from cash flow projections over long periods and are thus inherently uncertain charts on 
pages 33 to 35 set out the profiles of those expected discounted cash flows for the two principal schemes in the uk and germany
the fair values of plan assets were
uk
£m
2014 
overseas
£m
total
£m
uk
£m
2013  
overseas
£m
total
£m
uk equities 203 – 203 172 – 172
overseas equities 261 71 332 250 73 323
hedge funds and diversified growth funds 319 – 319 374 – 374
corporate bonds 391 40 431 452 36 488
gilts 261 07 268 281 08 289
other 14 23 37 31 42 73
total market value of assets 1449 141 1590 1560 159 1719
equities include investments in quoted equities funds of hedge funds and in the prior year property investment vehicles the 
assets held are materially a reflection of the underlying liabilities in that lower risk assets such as gilts and bonds are deemed  
to be a match for pensioner liabilities whereas equities are deemed a better match for the liabilities associated with scheme 
members not yet in retirement
pension obligations
the movement in the present value of the defined benefit obligation is as follows
uk
£m
2014  
overseas
£m
total
£m
uk
£m
2013  
restated 
overseas
£m
total
£m
opening obligation 1991 423 2414 1806 385 2191
current service cost – 04 04 – 03 03
interest expense 81 15 96 86 15 101
contributions by plan participants – 01 01 – 01 01
remeasurement gains losses by changes in
 – experience 03 04 07 28 06 34
 – demographic assumptions 25 – 25 – – –
 – financial assumptions 49 17 32 183 25 208
liabilities extinguished on settlement 109 – 109 – – –
benefits paid 106 20 126 112 24 136
exchange adjustment – 27 27 – 12 12
closing obligation 1830 409 2239 1991 423 2414
the total defined benefit obligation can be analysed  
as follows 
funded pension plans 1830 173 2003 1991 186 2177
unfunded pension plans – 236 236 – 237 237
1830 409 2239 1991 423 2414 renold plc annual report and accounts 2014 114
18 pensions continued
pension assets
the movement in the present value of the defined benefit plan assets is as follows
uk
£m
2014 
overseas
£m
total
£m
uk
£m
2013  
restated 
overseas
£m
total
£m
opening assets 1560 159 1719 1491 143 1634
interest income 63 05 68 71 05 76
remeasurement gains 09 06 15 92 06 98
employer contributions
1
27 11 38 18 12 30
participant contributions – 01 01 – 01 01
benefits paid 106 21 127 112 12 124
assets distributed on settlement 104 – 104 – – –
exchange adjustment – 20 20 – 04 04
closing assets 1449 141 1590 1560 159 1719
 
balance sheet reconciliation
plan obligations 1830 409 2239 1991 423 2414
plan assets 1449 141 1590 1560 159 1719
net plan deficit 381 268 649 431 264 695
analysed as follows 
current assets 
retirement benefit surplus – – – – 14 14
noncurrent assets
retirement benefit surplus – 04 04 – – –
noncurrent liabilities 
retirement benefit obligations 381 272 653 431 278 709
net deficit 381 268 649 431 264 695
1  £20m of pension administration costs were included in the uk employer contributions in the prior year before restatement for ias 19r these are now included in 
the income statement
the retirement benefit surplus relates to the australian scheme which moved into surplus as a result of an increase in discount 
rates of 05 and asset performance in excess of the expected return the surplus shown in the prior year was a net £14m 
balance in respect of a closed south african defined benefit pension scheme that was liquidated during the year and the surplus 
returned to the group as a cash payment this is included within the £21m benefits paid disclosed in overseas above
the net amount of remeasurement gains and losses taken to other comprehensive income is as follows
uk
£m
2014 
overseas
£m
total
£m
uk
£m
2013  
restated
overseas
£m
total
£m
remeasurement gainslosses arising on plan obligations 27 13 14 211 31 242
remeasurement gainslosses arising on plan assets 09 06 15 92 06 98
net gainslosses 36 07 29 119 25 144
the actual return on plan assets was £83m 2013 £174m restated
an analysis of amounts charged to operating costs is set out below
2014
£m
2013
restated
£m
operating costs 
pension administration costs 06 13
exceptional pension administration costs – 07
current service cost 04 03
settlement gains 05 –
05 23
 
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 115
financial statements
18 pensions continued
the settlement gains of £05m 2013 £nil relate to the merger of the three uk schemes in june 2013
the cost for the period of the various defined contribution schemes was £15m 2013 £19m and was fully paid up
19 called up share capital
issued
2014
£m
2013
£m
ordinary shares of 5p each 112 111
deferred shares of 20p each 154 154
266 265
at 31 march 2014 the issued ordinary share capital comprised 223064703 ordinary shares of 5p each 2013 221064453 and 
77064703 deferred shares of 20p each 2013 77064703 
in august 2013 the company issued 2000250 fully paid ordinary shares of 5p each 2013 1499750 pursuant to the exercise of 
warrants by royal bank of scotland at a price of 2106p the warrants had a seven year term commencing from 13 august 2009 
during which they could be exercised at any time and were granted as part of the refinancing agreed with the group’s banks at 
that time there are no outstanding warrants as at 31 march 2014
20 sharebased payments
details of the sharebased payment arrangements are provided in the directors’ remuneration report on pages 60 to 74  
at 31 march 2014 unexercised options for ordinary shares amounted to 7609971 2013 5343642 
the fair value per option granted in the period and the assumptions used in the calculation are as follows
2014  
executive share option scheme 
2013  
executive share option scheme
grant date 61213 26913 25713 21113 31712
share price at date of grant 499p 383p 282p 255p 285p
exercise price 00p 00p 00p 262p 294p
number of employees 10 2 8 1 1
shares under option 520887 319427 3236249 1145038 258449
vesting period years 3 3 3 3 3
expected volatility 59 59 58 56 51
option life years 10 10 10 10 10
expected life years 6 6 6 6 6
risk free interest rate 10 10 08 08 03
assumed dividends expressed as a dividend yield zero zero zero zero zero
possibility of ceasing employment before vesting zero zero zero zero zero
fair value per option 499p 383p 282p 131p 133p
weighted probability of meeting market based vesting conditions 375 375 375 60 24
the expected volatility is based on historical volatility over the last three years the expected life is the average expected  
period to exercise based on historical data the risk free rate of return is the yield on zero coupon uk government bonds of  
a term consistent with the assumed option life dividend yields indicated above are an expression of assumed dividends over  
the respective periods included in the calculation these assumptions may not be borne out in practice a reconciliation of  
option movements over the year ended 31 march 2014 is shown overleaf renold plc annual report and accounts 2014 116
20 sharebased payments continued
executive share option schemes
2014 2013
number
weighted 
average  
exercise price number
weighted 
average  
exercise price
outstanding at 1 april 5343642 355p 9737599 351p
granted 4076563 00p 1403487 268p
lapsed 23488 711p 2273400 237p
forfeited 1786746 272p 3524044 385p
outstanding at 31 march 7609971 183p 5343642 355p
exercisable at 31 march 819826 345p 387551 677p
2014 2013
weighted 
average 
exercise price
number of 
shares
weighted average remaining life weighted 
average 
exercise price
number of 
shares
weighted average remaining life
range of exercise prices expected contractual expected contractual
nil 00p 3420252 54 94 – – – –
20p to 30p 269p 2082385 40 80 269p 2082385 50 90
30p to 40p 373p 1966406 32 72 373p 2873706 42 82
40p to 100p 696p 140928 – 21 677p 387551 – 28
no options have been exercised in the period 2013 nil the total charge for the year relating to employee sharebased payment 
plans was £01m 2013 credit £03m all of which related to equity settled sharebased transactions after deferred tax the total 
charge was £01m 2013 credit £03m
the middle market price of ordinary shares at 31 march 2014 was 5575p and the range of prices during the year was 20p to 6775p
21 reserves
the currency translation reserve is used to record exchange differences arising from the translation of financial statements of 
foreign operations and the proportion of the gains or losses on hedging instruments used to hedge against movements in net 
investments in foreign operations that are determined to be effective
other reserves record the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an 
effective hedge
cumulative goodwill written off directly to group reserves at 31 march 2014 amounted to £35m 2013 £35m
included in retained earnings is an amount of £61m net of tax 2013 £65m relating to the revaluation of freehold property that 
was undertaken at the date of ifrs adoption the amount is not distributable until it is realised
22 operating lease obligations
the group has entered into leases on commercial properties and plant and equipment minimum rental commitments under non 
cancellable operating leases at the year end are as follows
2014 2013
properties
£m
equipment
£m
properties
£m
equipment
£m
within one year 19 03 18 02
between two and five years 64 03 52 01
over five years 129 – 157 –
212 06 227 03
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 117
financial statements
22 operating lease obligations continued
certain of the leased properties have been sublet and the future minimum sublease payments expected to be received under 
noncancellable sublease agreements is £30m 2013 £33m
an onerous lease provision of £57m see note 16 has been established following the closure of the bredbury manufacturing 
facility see note 2c for more details the lease expires in may 2030 at a rental cost of £08m per annum these lease obligations 
have been included in the analysis
23 contingent liabilities and commitments
performance guarantees given to third parties in respect of group companies were £nil 2013 £nil
various uk group companies have given guarantees to the merged uk pension scheme to cover the full cost of buying out  
the liabilities in the event that the sponsoring employers defaulted on the agreed deficit repair plan as one of the sponsoring 
employers of the uk scheme is renold plc the continuing obligation is effectively unchanged and is to fully fund the member’s 
accrued benefits
24 additional cash flow information
reconciliation of operating profit to net cash flows from operations
2014 
£m
2013
restated 
£m
cash generated from operations 
operating loss 13 64
depreciation and amortisation 54 46
impairment of goodwill – 15
impairment of intangible assets – 11
impairment of property plant and equipment – 37
impairment of inventories – 28
impairment of investment in jointly controlled entity – 01
impairment of investment property – 05
proceeds from plant and equipment disposals 02 04
equity share plans 01 03
decrease in inventories 18 28
decrease in receivables 08 13
decreaseincrease in payables 18 01
increase in provisions 58 04
movement on pension plans 38 38
movement in derivative financial instruments 02 01
cash generated from operations 70 89
reconciliation of net change in cash and cash equivalents to movement in net debt
2014
£m
2013
£m
decrease in cash and cash equivalents 21 77
change in net debt resulting from cash flows – 70
foreign currency translation differences 04 06
noncash movement – amortisation of refinancing costs 03 –
change in net debt during the period 20 01
net debt at start of year 228 229
net debt at end of year 248 228
net debt comprises 
cash and cash equivalents note 13 67 98
total borrowings note 14 315 326
248 228 renold plc annual report and accounts 2014 118
25 financial instruments
these notes should be read in conjunction with the narrative disclosures in the finance director’s review on pages 30 to 35
foreign currency risk and sensitivity
as a result of the significant operations in the us and europe the group’s balance sheet can be affected significantly by 
movements in the us dollarsterling and eurosterling exchange rates
the following table demonstrates the impact of reasonably possible changes in the us dollar us and euro exchange rates  
with all other variables held constant on the group’s result before tax due to the effect of foreign exchange on monetary assets 
and liabilities denominated in a different currency to the functional currency of operation and the group’s equity due to the effect 
on other comprehensive income of changes in the fair value of forward exchange contracts and the effect of hedging borrowings 
the impact of translating the net assets of foreign operations into sterling is excluded from the sensitivity analysis
change in us dollar rate an ‘increase’ being a fall in the value of sterling compared to us
increase
decrease in 
us rate
effect  
on loss 
 before tax
£m
effect on 
shareholders’ 
equity
£m
2014 25 01 16
10 – 09
2013 25 02 19
10 02 10
change in euro rate an ‘increase’ being a fall in the value of sterling compared to the euro
increase
decrease in 
euro rate
effect  
on loss  
before tax
£m
effect on 
shareholders’ 
equity
£m
2014 25 – –
10 – –
2013 25 01 01
10 01 01
interest rate sensitivity
the following table demonstrates the sensitivity to a reasonably possible change in the basis points of the group’s floating interest rates
increase in 
basis points
2014  
effect  
on loss  
before tax
£m
2013  
effect  
on loss  
before tax
£m
sterling 150 03 02
us dollar 150 01 01
euro 150 01 01
other 150 – 01
05 05
a the balance sheet position on financial instruments is set out below
2014
£m
2013
£m
current assetsliabilities 
forward foreign currency contracts cash flow hedge 01 02
the cash flow hedges of the expected future transactions in us dollars and euros were assessed to be highly effective in the 
period £nil 2013 £nil was transferred to operating costs in the income statement in the period
b short term receivables and payables
the carrying amount of short term receivables and payables being those with a remaining life of less than one year is deemed  
to approximate to their fair value
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 119
financial statements
25 financial instruments continued
c hedge of net investment in foreign entity 
the group has us dollar denominated borrowings which it has designated as a hedge of the net investment in its subsidiaries  
in the us the carrying value of the us dollar borrowings at 31 march 2014 was £52m 1 april 2013 £64m £06m of exchange 
gain 2013 £04m loss on translation of the borrowings into sterling is included as part of the hedging reserve movement in  
other comprehensive income as the hedge was deemed to be effective
d currency and interest rate profile of financial liabilities of the group
2014 2013
currency
fixed rate 
£m
floating rate 
£m
total
£m
fixed rate 
£m
floating rate 
£m
total
£m
sterling
 – financial liabilities – 205 205 – 123 123
 – preference stock 05 – 05 05 – 05
us dollar – 59 59 – 77 77
euro – 45 45 – 56 56
other – 01 01 – 65 65
05 310 315 05 321 326
floating rate financial liabilities bear interest at rates based on relevant national base rate equivalents which can fluctuate on  
a daily basis the other financial instruments of the group that are not included in the above tables are noninterest bearing and 
are therefore not subject to interest risk
interest rate risk
exposure to the risk of changes in market interest rates relates primarily to the group’s sterling us dollar and euro debt obligations
credit risk
the group trades only with recognised creditworthy third parties it is the group’s policy that all customers who wish to trade on 
credit terms are subject to credit verification procedures in addition receivable balances are monitored on an ongoing basis with 
the result that the group’s exposure to bad debts is not significant the maximum exposure is the carrying amount as disclosed in 
note 12 there are no significant concentrations of credit risk within the group
with respect to credit risk arising from other financial assets of the group which comprise cash and cash equivalents and certain 
derivative instruments the group’s exposure to credit risk has a maximum exposure equal to the carrying value of these instruments
e currency and interest rate profile of financial assets at 31 march 2014
cash at bank and in hand by currency
2014 
£m
2013
£m
sterling 12 19
euro 06 32
us dollar 25 14
other 24 33
67 98
cash balances are held with the group’s bankers these deposits are held largely in canada and australia and earn interest at 
bank deposit interest rates for periods of up to three months renold plc annual report and accounts 2014 120
25 financial instruments continued
f maturity of financial liabilities
the maturity profile of the contracted amount of the group’s financial liabilities was as follows
2014
one year or less 
on demand
£m
one to  
two years
£m
two to  
five years
£m
more than  
five years
£m
total
£m
interest bearing loans and borrowings – – 327 – 327
trade payables 173 – – – 173
forward foreign exchange contracts – outflow 32 – – – 32
preference stock
1
– – – 05 05
205 – 327 05 537
2013
one year or less 
on demand
£m
one to  
two years
£m
two to  
five years
£m
more than  
five years
£m
total
£m
interest bearing loans and borrowings 70 – 273 – 343
trade payables 209 – – – 209
forward foreign exchange contracts – outflow 54 – – – 54
preference stock
1
– – – 05 05
333 – 273 05 611
1 no fixed repayment date
the group has contracted forward contracts consisting of euro forward contracts of nil 2013 £11m and us dollar forward 
contracts of £32m 2013 £43m both of which are predominantly made up of sell contracts as the group tends to have a surplus  
in both currencies 
a lease became onerous in 2014 see note 22 for details of rentals payable under this lease
g borrowing facilities
the group has the following undrawn committed borrowing facilities available at the year end date in respect of which all 
conditions precedent had been met at that date
2014
£m
2013
£m
expiring within one year or less or on demand 25 30
expiring between one and two years – –
expiring between two and five years 90 131
115 161
the facilities expiring in one year or less or on demand are primarily annual facilities subject to review at various dates during the 
year ending 31 march 2015
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 121
financial statements
25 financial instruments continued
h fair values 
set out below is a comparison by category of the carrying amounts and fair values of the group’s financial instruments excluding 
derivatives short term trade payables and short term trade receivables which are already carried at fair value or where the 
carrying amount approximates fair value
carrying value fair value
2014
£m
2013
£m
2014
£m
2013
£m
financial assets  cash 67 98 67 98
financial liabilities – floating rate bank overdraft 01 06 01 06
interest bearing loans and borrowings
 floating rate borrowing 309 315 309 315
 preference stock 05 05 05 05
the fair value of borrowings have been calculated by discounting the expected future cash flows at prevailing interest rates
with reference to the fair value hierarchy below the above financial instruments are level 2 except preference stock which is level 1
fair value hierarchy
the group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique
 → level 1 quoted unadjusted prices in active markets for identical assets or liabilities
 → level 2 other techniques for which all inputs which have a significant effect on the recorded fair value are observable either 
directly or indirectly and
 → level 3 techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable 
financial market data
as at 31 march 2014 the group held the following financial instruments measured at fair value
total
£m
level 1
£m
level 2
£m
level 3
£m
assets measured at fair value
forward foreign currency contracts cash flow hedge 01 – 01 –
as at 31 march 2013
total
£m
level 1
£m
level 2
£m
level 3
£m
liabilities measured at fair value
forward foreign currency contracts cash flow hedge 02 – 02 –
the fair value of derivatives has been calculated by reference to current forward exchange rates for contracts with similar 
maturity profiles  renold plc annual report and accounts 2014 122
25 financial instruments continued
i capital management
the primary objective of the group’s capital management is to ensure that it maintains a satisfactory credit rating and capital 
ratios in order to support its business and maximise shareholder value
the group manages its capital structure and makes adjustments to it in light of changes in economic conditions to maintain  
or adjust the capital structure the group may adjust the dividend payment to shareholders return capital to the shareholders  
or issue new shares no changes were made in the objectives policies or processes during the years ended 31 march 2014 and  
31 march 2013
the group monitors capital using two gearing ratios one of which is net debt divided by total capital plus net debt and the other  
is the ratio of net debt to adjusted ebitda
2014
£m
2013
restated
£m
net debt note 24 248 228
total capital 156 286
capital and net debt 404 514
gearing ratio 61 44
adjusted ebitda
1
 £m 165 118
net debt to adjusted ebitda 15 times 19 times
1  adjusted ebitda is calculated as operating profit before pension administration costs and exceptional items adding back depreciation and amortisation charges  
in the period
26 business combinations
there were no acquisitions in the current or prior year
27 post balance sheet events
there have been no post balance sheet events
notes to the consolidated financial statements
continued annual report and accounts 2014 renold plc 123
financial statements
group five year financial review unaudited
 
2014  
£m
2013
restated
3
£m
2012
£m
2011
£m
2010
£m
group revenue 1840 1903 2095 1910 1561
operating profitloss before exceptional items  
and pension administration costs 111 72 141 70 21
operating lossprofit 13 64 120 43 48
lossprofit before tax 59 119 76 13 136
taxation 48 01 12 04 39
lossprofit for the year 107 118 64 09 97
net assets employed
tangible and intangible fixed assets 467 507 549 551 536
working capital and other net assets 320 333 402 369 379
operating assets 787 840 951 920 915
goodwill 198 218 223 224 235
net debt 248 228 229 200 179
deferred and current taxation 170 194 159 152 218
provisions 77 19 15 12 11
net assets excluding pension obligations 830 1005 1089 1084 1178
pension obligations 649 695 557 515 730
total net assets 181 310 532 569 448
other data and ratios
return on capital employed restated 
1
111 65 122 61 18
return on sales restated 
2
60 38 67 37 13 
capital expenditure £m 71 49 56 66 42
basic lossearnings per share restated p 49 54 28 04 80
employees at year end
4
2208 2466 2569 2521 2257
1 being operating profit before exceptional items and pension administration costs divided by average operating assets and goodwill
2 based on operating profit before exceptional items and pension administration costs divided by revenue
3 only 2013 has been restated for the impact of ias 19r and hence some of the income statement figures in the earlier years are not fully comparable
4 basis of calculation of employee numbers changed to include temporary workers in 2013 onwards renold plc annual report and accounts 2014 124
we have audited the parent company financial statements of 
renold plc for the year ended 31 march 2014 which comprise 
the company balance sheet the company statement of total 
recognised gains and losses the accounting policies and the 
related notes i to xiv the financial reporting framework that 
has been applied in their preparation is applicable law and 
united kingdom accounting standards united kingdom 
generally accepted accounting practice
this report is made solely to the company’s members as a 
body in accordance with chapter 3 of part 16 of the companies 
act 2006 our audit work has been undertaken so that we 
might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other 
purpose to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other than the 
company and the company’s members as a body for our audit 
work for this report or for the opinions we have formed
respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ 
responsibilities for the company financial statements set out  
on page 125 the directors are responsible for the preparation  
of the parent company financial statements and for being 
satisfied that they give a true and fair view our responsibility  
is to audit and express an opinion on the parent company 
financial statements in accordance with applicable law and 
international standards on auditing uk and ireland those 
standards require us to comply with the auditing practices 
board’s ethical standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts  
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or error 
this includes an assessment of
 → whether the accounting policies are appropriate to the 
company’s circumstances and have been consistently  
applied and adequately disclosed
 → the reasonableness of significant accounting estimates  
made by the directors and
 → the overall presentation of the financial statements
in addition we read all the financial and nonfinancial 
information in the annual report and accounts to identify 
material inconsistencies with the audited financial statements 
and to identify any information that is apparently materially 
incorrect based on or materially inconsistent with the 
knowledge acquired by us in the course of performing the audit 
if we become aware of any apparent material misstatements or 
inconsistencies we consider the implications for our report
opinion on financial statements
in our opinion the company financial statements
 → give a true and fair view of the state of the company’s affairs 
as at 31 march 2014
 → have been properly prepared in accordance with united 
kingdom generally accepted accounting practice and
 → have been prepared in accordance with the requirements  
of the companies act 2006
opinion on other matters prescribed by the companies act 2006
in our opinion
 → the part of the directors’ remuneration report to be  
audited has been properly prepared in accordance with  
the companies act 2006 and
 → the information given in the strategic report and the 
directors’ report for the financial year for which the  
financial statements are prepared is consistent with  
the company financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters 
where the companies act 2006 requires us to report to you if 
in our opinion
 → adequate accounting records have not been kept by the 
company or returns adequate for our audit have not been 
received from branches not visited by us or
 → the company financial statements and the part of the 
directors’ remuneration report to be audited are not in 
agreement with the accounting records and returns or
 → certain disclosures of directors’ remuneration specified  
by law are not made or
 → we have not received all the information and explanations  
we require for our audit
other matters
we have reported separately on the group financial statements 
of renold plc for the year ended 31 march 2014
 
gary harding
senior statutory auditor for  
and on behalf of ernst  young llp
statutory auditor 
manchester
27 may 2014
independent auditor’s report 
to the members of renold plc annual report and accounts 2014 renold plc 125
financial statements
accounting policies
a summary of the principal company accounting policies is  
set out below these have been applied on a consistent basis 
unless otherwise indicated
as permitted by section 408 of the companies act 2006 the 
company has not presented its own profit and loss account
basis of accounting 
the accounts have been prepared in compliance with the 
companies act 2006 and in accordance with uk generally 
accepted accounting principles they have been prepared 
under the historical cost convention
statement of directors’ responsibilities for the company 
financial statements
the directors are responsible for preparing the strategic 
report the directors’ report and the financial statements in 
accordance with applicable law and regulations 
company law requires the directors to prepare financial 
statements for each financial year under that law the  
directors have elected to prepare the company financial 
statements in accordance with united kingdom generally 
accepted accounting practice united kingdom accounting 
standards and applicable law under company law the 
directors must not approve the financial statements unless 
they are satisfied that they give a true and fair view of the  
state of affairs of the company and of the profit or loss of  
the company for that period in preparing those financial 
statements the directors are required to
 → select suitable accounting policies and then apply  
them consistently
 → make judgements and estimates that are reasonable  
and prudent
 → state whether applicable uk accounting standards  
have been followed subject to any material departures 
disclosed and explained in the financial statements and
 → prepare the financial statements on the going concern  
basis unless it is inappropriate to presume that the  
company will continue in business
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the company and enable them to ensure 
that the financial statements comply with the companies act 
2006 they are also responsible for safeguarding the assets of 
the company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities
foreign currencies 
foreign currency transactions are translated into the functional 
currency using the exchange rates prevailing at the date of the 
transaction foreign exchange gains and losses resulting from 
the settlement of such transactions and from the translation  
at year end exchange rates of monetary assets and liabilities 
denominated in foreign currencies are recognised in the  
income statement
 
financial instruments and risk management 
the accounting policies of the company in respect of financial 
instruments are consistent with those of the group and are 
detailed in the consolidated financial statements in accordance 
with paragraph 2d of financial reporting standard frs 29 
the company is exempt from the disclosure requirements of 
frs 29 the company’s financial instruments are consolidated 
with those of the group and are incorporated into the 
disclosures in note 25
derivative financial instruments 
the company uses derivative financial instruments to hedge  
the group’s exposure to foreign exchange risks arising from 
operating and financing activities in accordance with its 
treasury policy the company does not hold or use derivative 
financial instruments for trading or speculative purposes
tangible fixed assets 
tangible fixed assets represented by properties and equipment 
are stated at cost being purchase cost plus any incidental costs 
of acquisition less accumulated depreciation the book values of 
certain assets which were the subject of past revaluations have 
been retained as permitted by the transitional arrangements of 
frs 15 tangible fixed assets depreciation is calculated by 
reference to original cost at fixed percentages assuming 
effective useful lives as follows
 → leasehold properties the period of the lease
 → equipment and fixtures 10 to 15 years
 → motor vehicles 25 per annum for three years leaving 25 
residual value
 → computer software three to seven years 
where appropriate adjustments are made to the remaining 
effective useful lives of assets to reflect changes in circumstances 
to those envisaged when the asset was brought into use
leases 
annual rentals in respect of operating leases are charged 
against the profit of the year on a straightline basis over the 
lease term
investments 
investments in subsidiary companies are accounted for at  
cost and reviewed for impairment on an annual basis where 
indicators of impairment are present the cashflows of the 
underlying entities are reviewed to determine whether the 
investment value is recoverable
the results and financial position of renold scottish limited 
partnership slp have been consolidated in the consolidated 
financial statements of renold plc renold plc is a parent 
undertaking of the general partner in the slp see note xiv  
to the company financial statements accordingly advantage 
has been taken of the exemption conferred by paragraph 7  
of the partnerships accounts regulations 2008 from the 
requirements for preparation delivery and publication of  
the partnerships accounts renold plc annual report and accounts 2014 126
deferred tax 
deferred tax is recognised on all timing differences that have 
originated but not reversed at the balance sheet date where 
transactions or events that result in an obligation to pay more 
or a right to pay less tax in the future have occurred at the 
balance sheet date with the following exceptions
 → provision is not made for tax that would arise on the 
remittance of retained earnings of overseas subsidiaries 
unless the dividends have been accrued as receivable at  
the balance sheet date
 → deferred tax assets are recognised only to the extent that 
based on all available evidence it is considered more likely 
than not that there will be suitable taxable profits from  
which the future reversal of the underlying timing  
differences can be deducted
deferred tax is measured on a nondiscounted basis at the  
tax rates that are expected to apply in the periods in which  
the timing differences are expected to reverse based on  
tax rates and laws enacted or substantively enacted by the  
balance sheet date
pension costs 
employees of the company participate in the pension plans 
operated by the group in the uk these include pension plans of 
the defined benefit and defined contribution types however the 
contributions paid by the company are accounted for as defined 
contribution plans in all cases this is because the company is 
unable to identify its share of the underlying assets and liabilities 
in the respective plans as required by frs 17 retirement 
benefits therefore contributions paid to the respective pension 
plans are charged to the profit and loss account as incurred 
disclosures associated with the group defined benefit plans 
 are provided in the group financial statements
sharebased compensation 
the company operates equity settled sharebased compensation 
plans as detailed in the group financial statements
the fair value of the employee services received in exchange  
for the grant of the options is calculated using a blackscholes 
pricing model and is recognised as an expense over the vesting 
period the total amount to be expensed over the vesting period  
is determined by reference to the fair value of the options 
granted at each balance sheet date the company revises its 
estimates of the number of options that are expected to become 
exercisable it recognises the impact of the revision of original 
estimates if any in the income statement and a corresponding 
adjustment to equity over the remaining vesting period no 
expense is recognised for awards that do not ultimately vest 
except for awards where vesting is conditional upon market or 
nonvesting conditions which are treated as vesting irrespective 
of whether or not the market or nonvesting condition is satisfied 
provided that all other performance or service conditions are 
satisfied the marketbased conditions are linked to the market 
price of shares in the company
 
equitysettled share based payments granted to employees  
of the group providing services to subsidiary undertakings  
are treated as an investment in the company’s balance sheet
as permitted under the transitional provisions of frs 20  
the company has applied the standard only to equity settled 
awards granted after 7 november 2002 and which vested  
on or after 1 january 2005
interest bearing loans and borrowings
all interest bearing loans and borrowings are initially 
recognised at net proceeds after initial recognition debt  
is subsequently measured at amortised cost using the  
effective interest method
dividends 
final dividend distributions to the company’s shareholders  
are recognised as a liability in the financial statements in the 
period in which the dividends are approved by the company’s 
shareholders while interim dividend distributions are 
recognised in the period in which the dividends are declared  
and paid dividends receivable from subsidiary undertakings 
are similarly recognised on this basis
cash flow statement 
as permitted by frs 1 cash flow statements revised 1996 
the financial statements do not contain a cash flow statement 
as the financial statements of the group which are publicly 
available contain a cash flow statement
related party transactions 
the company has taken advantage of the exemption not to 
disclose related party transactions with wholly owned subsidiaries 
of the group under frs 8 related party disclosures
accounting policy on derivatives 
financial assets and financial liabilities are disclosed in the group 
financial statements
accounting policies
continued annual report and accounts 2014 renold plc 127
financial statements
company balance sheet
as at 31 march 2014
note
2014
£m
2013
£m
fixed assets 
tangible assets i 67 70
investments in subsidiary undertakings ii 1430 1157
1497 1227
current assets 
debtors iii 23 129
derivative financial instruments vii 01 –
cash and short term deposits 10 131
34 260
creditors amounts falling due within one year 
other creditors iv 88 33
derivative financial instruments vii – 01
net current liabilitiesassets 54 226
total assets less current liabilities 1443 1453
creditors amounts falling due after more than one year 
other creditors iv 625 625
bank borrowings vi 147 78
preference stock vi 05 05
provisions for liabilities v 03 06
net assets 663 739
capital and reserves 
called up share capital ix 266 265
share premium account x 299 296
profit and loss account x 98 178
shareholders’ funds 663 739
approved by the board on 27 may 2014 and signed on its behalf by
robert purcell brian tenner
director director renold plc annual report and accounts 2014 128
company statement of total  
recognised gains and losses
for the year ended 31 march 2014
2014 
£m
2013
£m
loss for the year 81 132
total recognised losses for the year 81 132
all attributable to the equity shareholders of the company annual report and accounts 2014 renold plc 129
financial statements
notes to the company financial statements
i tangible assets
property
£m
equipment
£m
total
£m
cost
at beginning of year 04 93 97
additions at cost – 07 07
at end of year 04 100 104
depreciation
at beginning of year 03 24 27
depreciation for the year 01 09 10
at end of year 04 33 37
net book value at end of year – 67 67
net book value at beginning of year 01 69 70
future capital expenditure
at 31 march 2014 contracted capital expenditure not provided for in these financial statements for which contracts have been 
placed amounted to £nil 2013 £nil
ii investments in subsidiary undertakings
shares
£m
advances
£m
total
£m
subsidiary undertakings
cost or valuation
at beginning of year 620 537 1157
net additionsrepayments – 273 273
at end of year 620 810 1430
the principal subsidiary undertakings of the company at 31 march 2014 are set out in note xiv
iii debtors
2014
£m
2013
£m
amounts owed by subsidiary undertakings 16 121
deferred tax asset – 01
other debtors 01 02
prepayments 06 05
23 129
the analysis of the deferred tax asset is as follows
2014
£m
2013
£m
all amounts falling due after more than one year
decelerated capital allowances – 01
unrecognised deferred tax assets amount to £41m 2013 £18m arising from unrecognised losses of £33m 2013 £17m 
representing losses of £164m 2013 £76m and other timing differences of £08m 2013 £01m based on available evidence  
it is considered unlikely that these amounts will be recovered within the foreseeable future none of these losses are subject  
to time limits renold plc annual report and accounts 2014 130
notes to the company financial statements
continued
iv other creditors
2014
£m
2013
£m
amounts falling due within one year
trade creditors 07 13
amounts owed to subsidiary undertakings 67 07
other taxation and social security 02 02
accruals 12 11
88 33
2014
£m
2013
£m
amounts falling due after one year
loan from subsidiary undertakings 625 625
a 25 year loan of £625m was established with renold international holdings limited in the prior period interest of £25m per annum 
increasing in line with rpi plus 15 capped at 5 is payable for the period of the loan
v provisions for liabilities
2014
£m
2013
£m
at beginning of year 06 –
redundancy provision 03 03
onerous licence provision – 03
at end of year 03 06
the redundancy provision was fully utilised during the year it is anticipated that the onerous licence provision of £03m will be 
utilised over the remaining life of the erp system which is deemed to be eight more years
vi borrowings
2014
£m
2013
£m
amounts falling due after one year
bank loans repayable in two to five years 147 78
summary of total borrowings
bank loans 147 78
preference stock 05 05
total borrowings 152 83
bank borrowings are secured by fixed and floating charges over the assets of uk subsidiaries
banking facilities
the group’s core banking facilities comprise a £41m multicurrency revolving credit facility mrcf and an additional £8m  
of ancillary facilities which mature in october 2016 these facilities have been provided by a banking group comprised of  
lloyds bank plc and svenska handelsbanken ab the mrcf is fully committed and available until maturity see note 14  
to the consolidated financial statements for more details
preference stock
details of the company’s preference stock are set out in note 14 to the consolidated financial statements annual report and accounts 2014 renold plc 131
financial statements
vii derivative financial instrument
2014
£m
2013
£m
forward foreign currency contracts – cash flow hedge 01 01
the group has contracted forward contracts to sell foreign currency consisting of euro forward contracts of £nil 2013 £11m  
and us dollar forward contracts £32m 2013 £43m
viii pensions
employees of the company include members of the principal uk defined benefit schemes however the contributions paid by  
the company are accounted for under a defined contribution scheme because the company is unable to identify with any degree 
of reasonable certainty its share of the underlying assets and liabilities in the respective schemes this is due to the fact that the 
company cannot attribute the members of the schemes to the individual sponsoring employer company as a consequence the 
deficit in the uk defined benefit schemes is only recognised as a liability in the group balance sheet the basis used to determine 
the deficit in the schemes is disclosed in note 18 in the group financial statements 
no contributions are outstanding at the year end as the pension schemes are in a deficit position a plan has been put in place  
for the participating employers to make additional payments into the schemes the company will continue to make payments  
in line with the plan agreed with the trustees see note 18 to the consolidated financial statements for more details
ix called up share capital
issued
2014
£m
2013
£m
equity interests
ordinary shares of 5p each 112 111
deferred shares of 20p each 154 154
preference stock
1
05 05
271 270
1 included in borrowings – see note vi
at 31 march 2014 the issued ordinary share capital comprised 223064703 ordinary shares of 5p each 2013 221064453 and 
77064703 deferred shares of 20p each 2013 77064703 
in august 2013 the company issued 2000250 fully paid ordinary shares of 5p each 2013 1499750 pursuant to the exercise of 
warrants by royal bank of scotland at a price of 2106p the warrants had a seven year term commencing from 13 august 2009 
during which they could be exercised at any time and were granted as part of the refinancing agreed with the group’s banks at 
that time there are no outstanding warrants as at 31 march 2014
disclosures in respect of capital management can be found in note 25 of the consolidated financial statements renold plc annual report and accounts 2014 132
notes to the company financial statements
continued
share options
at 31 march 2014 unexercised options for ordinary shares amounted to 7609971 2013 5343642 made up as follows
date normally exercisable scheme
option price
p per share
number  
of shares
2014
number  
of shares
2013
within seven years from
27 november 2006 1995 scheme 711 – 41104
22 november 2007 2004 scheme 633 29360 88080
26 july 2009 2004 scheme 525 64592 164415
02 january 2010 2004 scheme 972 46976 93952
27 september 2013 2004 scheme 273 678898 678898
08 june 2014 2004 scheme 373 1966406 2873706
31 july 2015 2004 scheme 294 258449 258449
21 january 2016 2004 scheme 262 1145038 1145038
25 july 2016 2013 scheme 00 2579938 –
26 september 2016 2013 scheme 00 319427 –
06 december 2016 2013 scheme 00 520887 –
7609971 5343642
further details of sharebased payment schemes operated by the company are provided in the directors’ remuneration report 
and note 20 of the consolidated financial statements
x reserves
profit and  
loss account 
£m
share  
premium 
£m
total  
reserves
£m
at beginning of year 178 296 474
loss for the year 81 – 81
proceeds from share issue – 03 03
employee share option schemes – value of employee services 01 – 01
at end of year 98 299 397
as permitted by section 408 of the companies act 2006 no profit and loss account is presented in these financial statements  
the company’s loss for the financial year was £81m 2013 loss £132m
total fees payable by the company to ernst  young llp for work in respect of the audit of the company were £30000  
2013 £50000 fees paid to the company’s auditor for nonaudit services to the company are not disclosed in these  
financial statements because the group financial statements are required to disclose such fees on a consolidated basis
xi operating lease obligations
at the end of the year there were annual commitments under noncancellable operating leases in relation to a property as follows
2014
£m
2013
£m
leases expiring
 – between one and two years 02 –
 – between two and five years – 02
02 02 annual report and accounts 2014 renold plc 133
financial statements
xii contingent liabilities
the company has guaranteed borrowings by subsidiary undertakings of £02m 2013 £94m no material loss is expected  
to arise as a result of these contingent liabilities
xiii related party transactions
the company has taken advantage of the exemption in frs 8 not to disclose transactions with its wholly owned subsidiaries
during the year the company entered into transactions in the ordinary course of business with its 90 owned subsidiary  
renold hangzhou company limited its 75 owned subsidiary renold chain india private limited and its 50 jointly controlled 
entity renold transmission technology jiangsu inc transactions entered into and trading balances outstanding at 31 march 2014 
and 2013 with renold transmission technology jiangsu inc are not material transactions entered into and trading balances 
outstanding at 31 march with renold hangzhou company limited and renold chain india private limited are as follows
2014
£m
2013
£m
amounts receivable as at 31 march
 –  renold hangzhou company limited 01 –
 –  renold chain india private limited 02 –
03 –
amounts payable as at 31 march
 –  renold hangzhou company limited – 01
– 01
transactions with key management personnel
there were no transactions with key management personnel during the year
xiv significant undertakings as at 31 march 2014
united kingdom 
renold power transmission limited held directly by renold plc 
renold international holdings limited 
renold europe limited 
renold scottish limited partnership address 35 melville street edinburgh scotland uk eh3 7pe
europe other than the united kingdom
austria renold gmbh 
france brampton renold sas 
germany renold gmbh 
russia renold russia obshchestvo s ogranichennoj otvetstvennost’u 
switzerland renold switzerland gmbh
north america 
canada renold canada limited 
usa renold inc 
 jeffrey chain lp
other countries 
australia renold australia proprietary limited 
china renold transmission shanghai company limited 
 renold technologies shanghai company limited 
 renold hangzhou company limited 
 renold transmission technology jiangsu inc 
india renold chain india private limited 
malaysia renold malaysia sdn bhd 
new zealand renold new zealand limited 
singapore renold transmission limited incorporated in the united kingdom 
south africa renold crofts pty limited renold plc annual report and accounts 2014 134
the subsidiary undertakings listed are those which in our opinion principally affected the results and assets of the group 
companies of minor importance are omitted by virtue of section 410 of the companies act 2006 
all of our companies with the exception of renold hangzhou company limited renold chain india private limited and renold 
transmission technology jiangsu inc are direct or indirect subsidiaries of renold plc a company incorporated in england and 
wales which ultimately holds a 100 except for those companies in which the group does not hold all of the shares and voting 
rights as set out above interest in the equity shares and voting rights renold power transmission limited renold international 
holdings limited and renold europe limited are registered in england and wales
the group has the following interests in the exceptions noted above
equity shares voting rights
subsidiary undertaking
renold hangzhou company limited 90 90
renold chain india private limited 75 75
jointly controlled entity
renold transmission technology jiangsu inc 50 50
our overseas companies are incorporated in the countries in which they operate except where otherwise stated
notes to the company financial statements
continued annual report and accounts 2014 renold plc 135
corporate information
corporate calendar
annual general meeting 
interim management statement first 
half year end 201415
announcement of half year 201415 results
interim management statement second
year end 201415
announcement of annual results 201415
payment of preference dividends
company details 
registered office
renold house 
styal road 
wythenshawe 
manchester 
m22 5wl
company secretary
louise brace
auditor
ernst  young llp
broker and financial adviser
arden partners
financial pr consultants
instinctif partners limited
registrars
capita asset services 
the registry 
34 beckenham road 
beckenham 
kent 
br3 4tu
telephone  if calling from the uk 0871 664 0300 calls cost 10p per minute plus network extras 
lines are open 830am to 530pm monday to friday
 if calling from overseas 44 208 639 3399
 email shareholderenquiriescapitacouk
 website wwwcapitaassetservicescom
 registrars’ share portal wwwcapitashareportalcom 
if you receive two or more copies of this report please write to capita registrars at the registry 
34 beckenham road beckenham kent br3 4tu and ask for your accounts to be amalgamated
22 july 2014
between 9 june 2014 and 17 august 2014
30 september 2014
november 2014
between 9 december 2014 and 16 february 2015
31 march 2015
may 2015
1 july 2014 and 1 january 2015
registered number 249688
telephone 44 0161 498 4500
fax 44 0161 437 7782
email enquiryrenoldcom
website wwwrenoldcom
additional information renold plc annual report and accounts 2014 136
glossary
2013 psp 2013 performance share plan approved by shareholders at the 2013 agm
adjusted  add back pension administration costs and exceptional items
agm  annual general meeting of shareholders of the company held each year to consider 
ordinary and special business as provided in the notice of agm
board the board of directors of the company for more information see pages 46 to 47
cagr compound annual growth rate
company group renold we our or us  we use these terms depending on the context to refer to either renold plc itself  
or to renold plc and its subsidiaries collectively
directorsexecutive directors the directorsexecutive directors and nonexecutive directors of the company 
nonexecutive directors whose names are set out on pages 46 and 47 of this report
ebitda  earnings before interest tax depreciation and amortisation calculated as operating 
profit before pension administration costs and exceptional items adding back 
depreciation and amortisation charged
eps  earnings per share profit for the year attributable to equity shareholders of the 
parent allocated to each ordinary share
ey the company’s external auditor ernst and young llp
fca financial conduct authority
financial year for renold this is an accounting year ending on 31 march
frs  a uk financial reporting standard as issued by the uk financial reporting council frc
ias or ifrs  an international accounting standard or international financial reporting standard as 
issued by the international accounting standards board iasb ifrs is also used as the 
term to describe international generally accepted accounting principles as a whole 
financial statements are prepared in independence with ifrs as adopted by the eu
lta lost time accident
ordinary shares voting shares entitling the holder to part ownership of a company
roce  return on capital employed is calculated as follows operating profit before pension 
administration expenses and exceptional items divided by average operating assets 
and goodwill operating assets include tangible and intangible fixed assets working 
capital other noncurrent assets
ros  return on sales is calculated as follows operating profit before pension administration 
expenses and exceptional items divided by revenue
subsidiary a company or other entity that is controlled by renold
governance code  guidance issued by the financial reporting council in 2010 on how companies  
should be governed applicable to uk listed companies including renold a new 
edition of the uk corporate governance code was published in september 2012  
the new governance code
uk gaap  united kingdom generally accepted accounting practice generally accepted 
accounting principles in the uk these differ from ifrs and from us gaap
underlying  restate prior period information at current year exchange rates this report has been printed in the uk our printers are 
environmental management system iso 14001 accredited  
and forest stewardship council fsc chain of custody certified  
all inks are vegetable based
designed and produced by instinctif partners wwwinstinctifcom renold plc
renold house
styal road
wythenshawe
manchester m22 5wl
telephone 44 0161 498 4500
web wwwrenoldcom
renold plc   annual report and accounts 2014


Summary:
 robert purcell discusses the strategy 
and development of the business
“ selfhelp initiatives remain the 
focus of our attention as we build  
a robust platform for growth ”
 robert purcell
 chief executive
q 
how is the turnaround  
plan progressing 
a 
we have a three phase plan to 
deliver profitable growth and 
shareholder value phase one the 
restructure phase is on track and we are 
making excellent progress concentrating 
on improving our processes across the 
board and making sure we have the right 
capacity and cost base for the business 
a key aspect of this phase is our project 
to close the bredbury facility and transfer 
production to other renold sites which 
remains on time and on budget 
our aim is to create a robust and 
sustainable business from the 
improvements we are making and it  
is pleasing to see our breakeven point 
reducing as our selfhelp measures 
continue to deliver benefits we are 
keenly aware that much remains to be 
done even with the significant progress 
made this year we still have many  
areas where we can further improve  
our business and reduce our cost base
q 
what other changes are you 
making within the business 
a 
firstly we are working hard 
on our health and safety 
performance we have introduced 
the renold framework through which 
we are ensuring that we perform to the 
same high standards around the world 
we believe a safe working environment 
is fundamentally aligned with high 
performance in the business as a whole
we are looking to achieve superior 
performance in all areas of the business 
historically the business has been 
tolerant of average performance and has 
not demanded high enough standards 
we are therefore working to simplify 
processes to give better service and 
fundamentally make ourselves easier to  
do business with our simple objective is  
to ensure that customers receive the 
product and service they require
we are focused on ensuring that the value 
we generate from our superior products 
stays within the business and delivers 
enhanced returns to shareholders an 
important aspect of this is to understand 
how and where we add value for our 
customers and to accentuate these 
characteristics in this way we aim to 
generate steady and sustainable margin 
improvements year on year this business 
is more than capable of delivering double 
digit operating margins
q 
where do you see most 
opportunities – in chain  
or in torque transmission
a 
they are both excellent 
businesses both are global 
market leaders and both offer 
excellent opportunities in chain we 
operate at the leading edge of technology 
with solutions for a range of complex 
applications and environments from 
water treatment plants to rollercoasters 
in t orque t ransmission we manufacture a 
range of specialised products from fluid 
couplings to worm gears and drives we 
work closely alongside our customers and 
will often manufacture a bespoke solution 
to meet specific application needs
renold plc annual report and accounts 2014 08 turn to page 15 for
our three–phase 
strategic plan
q 
 the geographic picture this year 
seems to have been mixed in 
which areas are you particularly 
strong or weak
a 
we currently sell our products 
in over 100 countries worldwide 
and our broad geographic 
portfolio effectively mitigates the impact  
of weak conditions in any one country 
although the global economy as a whole  
is improving region by region the picture  
is more mixed and that can be seen in 
our performance over the year north 
america which comprises 38 of our 
global sales saw good growth with 
underlying revenue up 15 australasia 
saw a decline which reflects the 
particular dependence of the australian 
economy on natural resources europe 
was broadly flat although the french 
market was more challenging and 
underlying revenue was down 12
find out more
wwwrenoldcom
q 
how are you going to strengthen 
your balance sheet – especially 
in terms of the pension liability
a 
this is an area of major importance 
for the group as we aim to reduce 
the impact of the economic cycle 
on our business we aim to ensure that our 
balance sheet is robust at all stages of the 
cycle this involves a number of initiatives 
throughout the year we have worked hard 
to manage and to reduce our cost base 
the close management of working capital 
and capital expenditure continues and net 
debt remains in line with our expectations 
we are employing a number of different 
initiatives to reduce our pensions burden 
including the completion this year of the 
merger of the uk defined benefit pension 
schemes we are also looking at realising 
value from our significant tax assets  
our objective is to ensure that we have  
a consistent and positive cash flow  
which will be clear evidence that our 
strategy is working
q 
where will future growth  
come from 
a 
towards the end of the coming 
year and next we aim to move 
into the second phase of our plan 
the organic growth phase we will look 
to leverage our excellent chain and tt 
products to capitalise on our global market 
leadership positions and to drive growth 
from improved sales and marketing 
practices we have an excellent range  
of products but with greater emphasis  
on product management we will be able  
to penetrate new areas of the market 
further into the future we believe there 
will be opportunities to leverage our  
own scale through acquisitions in our 
fragmented market all our focus right 
now though is on building a robust and 
sustainable business which delivers steady 
improvement in shareholder value and 
provides a platform for future growth
robert purcell
chief executive 
27 may 2014
annual report and accounts 2014 renold plc 09
strategic report our business model
our activities range from diagnosing our customer’s specific power 
transmission application challenges to proposing materials and their 
properties then to cutting and treating the components and finally  
to assembly into the final product
engineering centre
material performance 
can be enhanced with 
the right coating
heat treatment and 
other applications to 
optimise performance
wide range of stocked 
products and daily 
shipment options
automated 
assembly processes 
reduce lead times
ongoing performance 
monitoring ﬁeld support 
and technical advice
design
customer issues 
are often challenging 
and sometimes unique
analysing 
customer 
problem
1
coating 
speciﬁcation
manufacturing
2
making 
components
5
assembling 
components
7
after sales 
service
9
4
service
treating 
components
6
of group sales
38
distribution
shipping
8
bringing our unparalleled 
engineering capability to 
design customer solutions
deploying over 100 years 
of  manufacturing know how 
to create superior products
enhancing the customer 
experience with after sales 
service and performance monitoring
specifying the right 
grade and composition 
of metals is key
material 
speciﬁcation
3
warehouse
of group sales
41
of group sales
21
end users
original 
equipment 
manufacturers
sales 
channels
10
renold plc annual report and accounts 2014 10 how renold generates value 
our customers come to us with a wide range of technically 
challenging power transmission problems in some cases the 
answer is one of our standard solution products in other 
cases the solution requires proactive engagement with the 
customer’s engineering teams to design a bespoke solution 
this process will include specifying the exact materials and 
any additional coatings or treatment required to deliver the 
optimal performance solution for the customer
our production facilities can use unique manufacturing 
techniques to turn the designs into substance our logistics 
teams work with customers to get the products to the right 
location at the right time the after sales service teams 
respond proactively to any follow on customer requests 
from all three major sales channels the business model 
cycle can often end where it began with ongoing technical 
and service support that can be provided by an innovative 
range of performance monitoring solutions
engineering centre
material performance 
can be enhanced with 
the right coating
heat treatment and 
other applications to 
optimise performance
wide range of stocked 
products and daily 
shipment options
automated 
assembly processes 
reduce lead times
ongoing performance 
monitoring ﬁeld support 
and technical advice
design
customer issues 
are often challenging 
and sometimes unique
analysing 
customer 
problem
1
coating 
speciﬁcation
manufacturing
2
making 
components
5
assembling 
components
7
after sales 
service
9
4
service
treating 
components
6
of group sales
38
distribution
shipping
8
bringing our unparalleled 
engineering capability to 
design customer solutions
deploying over 100 years 
of  manufacturing know how 
to create superior products
enhancing the customer 
experience with after sales 
service and performance monitoring
specifying the right 
grade and composition 
of metals is key
material 
speciﬁcation
3
warehouse
of group sales
41
of group sales
21
end users
original 
equipment 
manufacturers
sales 
channels
10
annual report and accounts 2014 renold plc 11
strategic report what we do
renold manufactures and sells power transmission products 
and is configured as two separate operating divisions chain 
and torque transmission
we operate chain production facilities in seven countries 
strategically placed to serve large or growing local markets 
in reengineering the chain business and with the appointment  
of a chain manufacturing director we are aiming to create  
an integrated production base that serves our customers 
around the globe in an efficient and effective way
in torque transmission we have a number of specialised  
niche businesses that produce a range of technical products in 
both the industrial couplings and industrial gear markets we 
manufacture in the uk the usa china and south africa with 
sales and support in additional territories our couplings range 
includes fluid based systems rubberinshear and rubberin
compression products in gears we provide a complete range 
of speciality worm and helical gears and drives
who we are
renold employed an average of 2379 people around the  
world in the last year with 55 of our staff engaged in  
direct production activities the divisional split of staff aligns  
closely with the split of sales with 78 of staff in chain  
20 in torque transmission and 2 in our head office
our global presence
renold currently sells products in over 100 countries the key 
regions and territories are represented on the chart opposite
our single biggest market is the usa which represents 331  
of external group sales in addition the uk australia and 
germany each represent over 5 of group sales by destination 
with canada france switzerland china and india also being 
major contributors the remaining 24 of sales are spread  
over many other countries this geographic spread reduces  
our dependence on any particular market
we currently have a limited presence in south american 
markets which may in future represent a growth opportunity 
given our industry specific knowledge of products for sectors 
such as food and agriculture quarrying and mining and other 
natural resources – in addition to our wide range of high 
performance industrial chains
sales by division
sales by geography
employees by country
average for the year
24 
torque
transmission
76
chain
£1840m
global sales
243
other
34
india
331
usa
66
australia
66
germany
40
china
87
uk
46
switzerland
47
canada
40
france
100
countries
146
china
149
usa
201
india
126
other
234
uk
144
germany
 2379
employees
renold plc annual report and accounts 2014 12
our business model
continued  the customers we serve
our markets
customer concentration for renold is relatively low our  
biggest global customer represents less than 5 of sales of  
our five largest customers three are themselves distributors  
of a wide range of industrial power transmission equipment and 
thus even this limited concentration of our sales is effectively 
subsegmented into a huge range of endcustomers
we know from market research that these endcustomers 
often ask for renold product by name which emphasises  
that we maintain customer proximity and loyalty even  
when dealing through indirect sales channels
the remaining customer base is split between end users  
and original equipment manufacturers oems both of  
these user groups give us an opportunity to bring our  
expert knowledge including metallurgy and chemical  
coatings to bear in specifying what are often bespoke  
solutions to specific or unique issues
the chart opposite shows the extremely diverse markets for 
the approximate 62 of our sales where we serve end users 
and oems directly distribution sales are excluded from this 
analysis as visibility of the final market is somewhat limited
it can be clearly seen that we serve a very wide range  
of market sectors particularly in the chain division  
but also in the torque transmission division 
it is also clear that our products are often used in harsh and 
demanding environments where reliability and performance 
are key attributes required by customers this requirement  
is also evident in safety critical applications total cost of 
ownership is a key purchasing criterion 
similar to our geographical penetration we also currently 
estimate that we have relatively low levels of penetration  
in the addressable markets for the majority of our products 
this creates opportunities for growth in those product sectors 
where we already have an established presence
289
other
 
75
agriculture forestry
and ﬁshing
119
 
energy
14
environmental
78
food and drink
62
manufactured products
110
construction
machinery
 
81
transportation
91
material handling
81
mining and 
quarrying
 diversiﬁed 
markets
sales channels
21 
end users
38
distribution
41 
oems
5
largest customer
 of sales
markets
end users are where renold’s customer will be the actual user  
of our product oem’s are where renold’s customer places our 
goods in one of their products for onward sale
annual report and accounts 2014 renold plc 13
strategic report renold plc annual report and accounts 2014 14
1 significantly improving our health and  
safety performance while broadening  
all risk management activity
we firmly believe that a safe business is a well run and 
profitable business by changing our health and safety  
culture and developing enhanced policies and processes  
we aim to ensure everyone associated with our business goes 
home each day in the same condition that they came to work
2
 
generating margin enhancing growth  
from our superior product capability
in the markets we serve our products are among the 
best in the world we are focusing on emphasising our  
value proposition in their superior performance longevity  
and total cost of ownership to ensure that the value  
generated by these characteristics stays within the  
business and earns a return for shareholders
as the business moves from the turnaround phase of  
our strategic plan to the organic growth phase we will 
selectively target those sectors and geographies where our 
high performance products can earn an appropriate return
3 enhancing customer service by streamlining our business processes and making renold 
easier to do business with we aim to offer a seamless route  
to market with shorter lead times and improved service levels
4 optimising business processes a group wide programme is underway aimed at implementing 
standardised efficient and seamless business processes 
these will cover the full range of commercial operational  
and support activities our ultimate aim is to significantly 
reduce our cost to serve
5 lowering our breakeven point the same streamlined business processes that enhance 
customer service will also reduce our installed fixed cost  
base in all of our locations this will reduce the volatility  
of our profits in relation to changes in sales values
6  developing our people we are supplementing the knowledge and experience of our 
existing staff with new hires who bring different incremental 
skills and experience to renold we are also developing 
training solutions to support both existing and new staff
7 strengthening our balance sheet  
and improving financial performance
we retain our focus on improving our working capital 
management to support business development through  
stock availability while reducing the amount of cash tied up
we are actively working to reduce the annual cash burden 
of legacy pension liabilities though a number of different 
initiatives we also aim to realise value from significant tax 
assets and any surplus properties 
the overall aim of these activities combined with continuous 
improvement in operating results is to significantly enhance 
the cash generation capability of the group
our strategic objectives
we aim to deliver consistently improving returns to shareholders  
by reengineering everything we do our threephase strategic plan
threephase strategic plan delivering value
strong eps growth as plan progresses
march 2014
restructure unattractive segments
  some of our business segments  
deliver results below their capability  
for a number of reasons such as  
underselling inflexible overheads  
and cost to serve too high
rightsize capacity and cost base
  rightsizing capacity involves both reducing 
the absolute size of the manufacturing 
footprint and also reducing surplus 
capacity within individual processes  
in the retained facilities
  rightsizing our cost base involves 
reducing the infrastructure or support 
costs of the retained business activities 
it closely aligns to our business process  
reengineering activities
fix product margins
  we aim to achieve appropriate value  
for the highly technical products we  
offer to the market 
  effective product management will  
be key in identifying and implementing 
appropriate pricing structures for our  
wide range of high performance products
  we will drive manufacturing efficiency 
supported by a focused capital investment 
upgrade to reduce product costs
establish uniform operating processes  
and information systems across the group
  implementation of simple repeatable 
processes for all aspects of our business 
whether in manufacturing commercial 
or supporting activities will lead to more 
efficient and more robust processes
  this will be supported by investment  
in one common erp system
make right hires to drive growth
  we have strong engineering credentials 
and capability we need to ensure that 
other key parts of the business are equally 
capable such as manufacturing product 
management marketing business 
systems and commercial functions 
find out more
wwwrenoldcom
phase i 
restructure
1
  leverage superior product in chain and  
torque transmission
 leverage market and brand leading positions
  drive growth from improved sales and 
marketing practices
  pathway to organic growth between q4 
201415 and q1 201516
phase ii
organic growth 2
  significant opportunities from our scale
 fragmented market
  growth potential through selective  
bolton acquisitions adding capability  
and market share
phase iii
structural activities 3
achieve streamlined 
business fit for future
double digit margins and 
boost in shareholder value
deliverable over the 
medium term
achieving organic  
growth even 
without end  
market recovery
annual report and accounts 2014 renold plc 15
strategic report strategic objective progress in 201314 kpis
1
future aims risks and mitigation
1  significantly improving our 
health and safety 
performance
there is no simple short term solution to improving health and safety culture and performance it requires perseverance 
and constant vigilance during the year we implemented a new overarching framework for our approach to health and 
safety known as ‘the framework’ we also implemented a rolling audit programme with the recruitment of a dedicated 
and experienced health and safety auditor 
ltas
reportable  
incident rates
lost time days
safety opportunities
our overarching objective is to achieve zero accidents  
every year each site will implement a rolling programme to 
identify opportunities for safety improvements each year
we are rolling out a training programme for all managers  
to ensure a consistent and shared base level of relevant 
skills and understanding
in the new financial year we will also introduce a group 
wide health and safety awards programme to raise 
awareness and standards
organisational change increases the risk of accidents 
particularly when the change is on a large scale and in 
production environments the group is mitigating this 
risk by considering in advance of any change full risk 
assessments and new safe operating procedures
the increased focus on audit may create a false 
impression of a worsening trend which should be  
borne in mind when assessing data
2  generating margin 
enhancing growth 
from our superior 
product capability
at the current stage in our strategic plan we are not yet focused on delivering top line sales growth and hence our 
focus has been on margin enhancement through improving our efficiency and ensuring that our technical products 
achieve appropriate value in the market
our activities have included reviews of our product and margin mix through this process we have begun altering  
the mix to give ourselves a start in the trend towards higher margins
ros
adjusted eps
roce
we are aiming to deliver steady improvements in ros  
each year to ultimately achieve double digit operating 
margins we are targeting steady annual gains to ensure 
they are robust and sustainable
our objective is to deliver double digit margins  
against a zero sales growth background a significant  
fall in sales or a rapid appreciation in input costs could 
jeopardise this outcome if we were not able to respond 
quickly and effectively
3  enhancing 
customer service
our market research tells us that while customers value our products and technical capability we are not always  
as easy to do business with as we should be
therefore one of the key areas for improvement during the turnaround phase of the strategic plan is to change our 
business processes to deliver a faster more efficient and seamless service proposition to our customers
during the year we have implemented a number of new service metrics and objectives with a pilot in our european 
chain business these include target service levels to respond to customer queries and to reduce the lead times to 
deliver a quotation to a customer for standard or adapted chain
improvement in
–  customer contact 
response times
–  quotation lead 
times
–  on time delivery 
in full
our aim is to show a steady and regular improvement  
in all metrics
excellent customer service requires efficient business 
processes and systems that deliver replicable predictable 
and timely outcomes as the group is changing and 
improving many of our business processes and systems 
this creates a risk to current service levels this risk is 
being mitigated by a newly created steering committee 
with responsibility for oversight and approval of all 
business system change requests
4  o p timising 
business processes
business processes have been improved in all functional areas for example on the commercial side we have vastly 
increased the number of customer quotations coming directly from our systems thereby cutting customer response 
times in operations as part of the bredbury closure project we have implemented a service cell dedicated to fast 
turnaround times on selected chain assembled from a standard list of stocked components 
under development
each of our business 
processes will have  
its own set of kpis
our intention is to create one global integrated erp 
system our cost to serve will be reduced and this work  
will also feed into the kpis for customer service
changes to systems and processes may in the short 
term reduce performance as users learn new skills if 
changes are not managed properly the performance 
reduction and its duration can grow
our new director of business systems is a key hire  
in mitigating this risk
5  lowering our 
breakeven point
during the year we delivered a major reduction in excess chain manufacturing capacity and overhead burden through 
the closure of our bredbury facility the production processes were successfully transferred to other renold locations 
and the remaining activities are on track to complete at the end of the first quarter of the new financial year
elsewhere we built on overhead reductions started in the second half of the prior year with further reductions of £09m 
to give net year on year reductions in underlying overheads of £34m
total overheads as we reengineer our business processes we aim to reduce 
the cost to serve of all of our activities our medium term 
goal is to deliver meaningful annual reductions in our 
overheads to support the delivery of enhanced margins  
and shareholder value
overhead structures tend to be inflexible and can  
be a major financial burden in a downturn our new 
processes are being designed with more flexibility in 
mind to reduce this risk
6  de v eloping  
our people
we have created a number of new key positions in the group to emphasise and underpin our drive to manage the 
business in a more integrated way where there are benefits to be gained from sharing best practice and eliminating 
unnecessary duplication these posts include a new chain manufacturing director and a group business systems 
director we have also refreshed our senior management team and a number of other key leadership positions have 
also seen new hires with the senior team now in place the pace of change and number of initiatives under 
management can be increased
under development performance management processes and systems in the 
business are currently somewhat adhoc and inefficient  
we aim to deliver a performance management system that 
assesses performance but that also both identifies training 
and development needs and supports delivery of them
change can be unsettling for all staff creating a risk  
of some staff leaving due to feelings of uncertainty
to counter some of this we are increasing the regularity 
and content of communication to give all staff a clearer 
sense of direction
7   s tr engthening  
our balance sheet
we completed the merger of the three uk defined benefit pension schemes this has significantly reduced the ongoing 
administration costs of the schemes at the same time 1316 members with small pension pots opted to have their 
entitlements paid out as lump sums which led to a reduction in scheme liabilities and assets of £109m and £104m 
respectively fewer members in the scheme will lead to lower overall administrative costs
in the usa one of the three defined benefit schemes moved into a surplus following strong equity asset performance 
and the formal termination of that scheme has now commenced to allow it to be fully derisked
our working capital ratio further improved to 177 2013 190 equivalent to a reduction in average net debt of £24m 
based on current annual sales
annual underlying 
cost of servicing 
legacy pensions
ratio of working 
capital to rolling 
annual sales wc
gearing ratio
ultimately we aim to derisk the group from all defined 
benefit pension liabilities the short term focus is on 
managing down the larger exposures in the uk and 
germany we aim to have stable annual cash costs to 
enhance predictability we want to optimise working capital  
to support the business while minimising the cash tied up
work is ongoing to identify an appropriate level of gearing 
for the group
pension liabilities fluctuate with factors outside the 
group’s control interest rates inflation expectations 
longevity and returns on assets the key is to be ready 
to derisk when the market opportunity arises legislative 
changes can also lead to changes in liabilities and 
opportunities for derisking 
working capital can take time to unwind and in the 
event of a sudden downturn in activity the group  
could be left with excess stock
to mitigate this risk we have deployed working capital 
management tools and wc  is a monthly monitored kpi
renold plc annual report and accounts 2014 16
our strategic progress
we have made a robust start to the turnaround phase of our threephase strategic plan this turnaround phase requires us  
to rebuild our foundations to remind ourselves of the high quality and value adding products that we deliver to the market  
and to our customers and in some cases create new disciplines and basic processes that had withered in the business we are 
working to develop detailed improvement projects for all aspects of our business – whether individual geographical locations 
production facilities or worldwide business support functions we are challenging every aspect of what we do and how we do it 
– seeking to create a continuous improvement culture throughout renold hence we really are ‘reengineering everything we do’  strategic objective progress in 201314 kpis
1
future aims risks and mitigation
1  significantly improving our 
health and safety 
performance
there is no simple short term solution to improving health and safety culture and performance it requires perseverance 
and constant vigilance during the year we implemented a new overarching framework for our approach to health and 
safety known as ‘the framework’ we also implemented a rolling audit programme with the recruitment of a dedicated 
and experienced health and safety auditor 
ltas
reportable  
incident rates
lost time days
safety opportunities
our overarching objective is to achieve zero accidents  
every year each site will implement a rolling programme to 
identify opportunities for safety improvements each year
we are rolling out a training programme for all managers  
to ensure a consistent and shared base level of relevant 
skills and understanding
in the new financial year we will also introduce a group 
wide health and safety awards programme to raise 
awareness and standards
organisational change increases the risk of accidents 
particularly when the change is on a large scale and in 
production environments the group is mitigating this 
risk by considering in advance of any change full risk 
assessments and new safe operating procedures
the increased focus on audit may create a false 
impression of a worsening trend which should be  
borne in mind when assessing data
2  generating margin 
enhancing growth 
from our superior 
product capability
at the current stage in our strategic plan we are not yet focused on delivering top line sales growth and hence our 
focus has been on margin enhancement through improving our efficiency and ensuring that our technical products 
achieve appropriate value in the market
our activities have included reviews of our product and margin mix through this process we have begun altering  
the mix to give ourselves a start in the trend towards higher margins
ros
adjusted eps
roce
we are aiming to deliver steady improvements in ros  
each year to ultimately achieve double digit operating 
margins we are targeting steady annual gains to ensure 
they are robust and sustainable
our objective is to deliver double digit margins  
against a zero sales growth background a significant  
fall in sales or a rapid appreciation in input costs could 
jeopardise this outcome if we were not able to respond 
quickly and effectively
3  enhancing 
customer service
our market research tells us that while customers value our products and technical capability we are not always  
as easy to do business with as we should be
therefore one of the key areas for improvement during the turnaround phase of the strategic plan is to change our 
business processes to deliver a faster more efficient and seamless service proposition to our customers
during the year we have implemented a number of new service metrics and objectives with a pilot in our european 
chain business these include target service levels to respond to customer queries and to reduce the lead times to 
deliver a quotation to a customer for standard or adapted chain
improvement in
–  customer contact 
response times
–  quotation lead 
times
–  on time delivery 
in full
our aim is to show a steady and regular improvement  
in all metrics
excellent customer service requires efficient business 
processes and systems that deliver replicable predictable 
and timely outcomes as the group is changing and 
improving many of our business processes and systems 
this creates a risk to current service levels this risk is 
being mitigated by a newly created steering committee 
with responsibility for oversight and approval of all 
business system change requests
4  o p timising 
business processes
business processes have been improved in all functional areas for example on the commercial side we have vastly 
increased the number of customer quotations coming directly from our systems thereby cutting customer response 
times in operations as part of the bredbury closure project we have implemented a service cell dedicated to fast 
turnaround times on selected chain assembled from a standard list of stocked components 
under development
each of our business 
processes will have  
its own set of kpis
our intention is to create one global integrated erp 
system our cost to serve will be reduced and this work  
will also feed into the kpis for customer service
changes to systems and processes may in the short 
term reduce performance as users learn new skills if 
changes are not managed properly the performance 
reduction and its duration can grow
our new director of business systems is a key hire  
in mitigating this risk
5  lowering our 
breakeven point
during the year we delivered a major reduction in excess chain manufacturing capacity and overhead burden through 
the closure of our bredbury facility the production processes were successfully transferred to other renold locations 
and the remaining activities are on track to complete at the end of the first quarter of the new financial year
elsewhere we built on overhead reductions started in the second half of the prior year with further reductions of £09m 
to give net year on year reductions in underlying overheads of £34m
total overheads as we reengineer our business processes we aim to reduce 
the cost to serve of all of our activities our medium term 
goal is to deliver meaningful annual reductions in our 
overheads to support the delivery of enhanced margins  
and shareholder value
overhead structures tend to be inflexible and can  
be a major financial burden in a downturn our new 
processes are being designed with more flexibility in 
mind to reduce this risk
6  de v eloping  
our people
we have created a number of new key positions in the group to emphasise and underpin our drive to manage the 
business in a more integrated way where there are benefits to be gained from sharing best practice and eliminating 
unnecessary duplication these posts include a new chain manufacturing director and a group business systems 
director we have also refreshed our senior management team and a number of other key leadership positions have 
also seen new hires with the senior team now in place the pace of change and number of initiatives under 
management can be increased
under development performance management processes and systems in the 
business are currently somewhat adhoc and inefficient  
we aim to deliver a performance management system that 
assesses performance but that also both identifies training 
and development needs and supports delivery of them
change can be unsettling for all staff creating a risk  
of some staff leaving due to feelings of uncertainty
to counter some of this we are increasing the regularity 
and content of communication to give all staff a clearer 
sense of direction
7   s tr engthening  
our balance sheet
we completed the merger of the three uk defined benefit pension schemes this has significantly reduced the ongoing 
administration costs of the schemes at the same time 1316 members with small pension pots opted to have their 
entitlements paid out as lump sums which led to a reduction in scheme liabilities and assets of £109m and £104m 
respectively fewer members in the scheme will lead to lower overall administrative costs
in the usa one of the three defined benefit schemes moved into a surplus following strong equity asset performance 
and the formal termination of that scheme has now commenced to allow it to be fully derisked
our working capital ratio further improved to 177 2013 190 equivalent to a reduction in average net debt of £24m 
based on current annual sales
annual underlying 
cost of servicing 
legacy pensions
ratio of working 
capital to rolling 
annual sales wc
gearing ratio
ultimately we aim to derisk the group from all defined 
benefit pension liabilities the short term focus is on 
managing down the larger exposures in the uk and 
germany we aim to have stable annual cash costs to 
enhance predictability we want to optimise working capital  
to support the business while minimising the cash tied up
work is ongoing to identify an appropriate level of gearing 
for the group
pension liabilities fluctuate with factors outside the 
group’s control interest rates inflation expectations 
longevity and returns on assets the key is to be ready 
to derisk when the market opportunity arises legislative 
changes can also lead to changes in liabilities and 
opportunities for derisking 
working capital can take time to unwind and in the 
event of a sudden downturn in activity the group  
could be left with excess stock
to mitigate this risk we have deployed working capital 
management tools and wc  is a monthly monitored kpi
1  refer to glossary on page 136 for definitions of kpis
annual report and accounts 2014 renold plc 17
strategic report