annual report and accounts 2014
annual report 2014
global
quality
deliver
growth
respond
inn     v a te instruments
fluid
systems
controls
gears
every day our lives are impacted by rotork 
when you turn on a tap or switch on a light 
turn on a kettle or put fuel in your car  a flow 
control product is being used somewhere in 
the process of delivering that service rotork is 
trusted to keep the world flowing the company’s 
flow control products can be found in diverse 
industries such as peanut butter manufacture to 
nuclear power generation however  the demand 
on the products is the same our customers 
demand quality and reliability  governance strategic report directors financial statements company information
01 rotork annual report 2014
2014 highlights
•	 record	order	intake	revenue	and	profit
• operating margin increased 20 bps to 264
• continued expansion of product portfolio
• three acquisitions completed in the year for £813m
• full year dividend 501p up 43
revenue
£5947m 28
opera ting profit
£1572m 38
profit before t ax
£1412m 23
earnings per share
1190p 37
	 references	to	adjusted	profit	throughout	this	document	are	defined	as	the	ifrs	profit	whether	
operating	profit	or	profit	before	tax	with	£149m	2013	£121m	of	amortisation	of	acquired	
intangibles added back
strategic report
01 highlights
02	 keeping	the	world flowing
04 our global locations
06 market overview
08 business model and strategy
10 strategic priorities
12 strategy in action
 – a reputation for innovation
 – we’re	growing	and	 
driving	forward
16 chairman’s statement
18	 celebrating	roger	lockwood’s	
time at rotork
20 chief executive’s statement
22 business review
 – controls
 – fluid systems
 – gears
 – instruments
30 financial review
34 key performance indicators
36	 how	we	manage risk
38 principal risk and uncertainties
40 corporate social responsibility
directors
52 board of directors
governance
54 corporate governance
64 director’s remuneration report
78 report of the directors
financial statements
80 independent auditor’s report to 
the members of rotork plc
84 consolidated income statement
84 consolidated statement of 
comprehensive income
85 consolidated balance sheet
86 consolidated statement of 
changes in equity
87 consolidated statement  
of cashflows
88 notes to the group  
financial statements
122 rotork plc company balance sheet
123 notes to the company  
financial statements
company information
129 t en year trading history
130 share register information
131 corporate directory
132 notes revenue 
by enduser market
revenue
by division
controls
fluid systems
gears
instruments
oil  gas
water
power
industrial  mining
other
2014 2013
2014 2013
 
 
controls
fluid systems
gears
instruments
oil  gas
water
power
industrial  mining
other
2014 2013
2014 2013
 
 
strategic report
02 rotork annual report 2014
keeping 
flowing
the
world
rotork is a leading global designer and manufacturer of 
actuators	and	flow	control	equipment	we	pride	ourselves	
on	keeping	the	world	flowing	the	production	of	virtually	
everything that contributes to our lifestyle and improved 
environment	–	from	clean	water	to	petrol	electricity	and	
pollution	free	beaches	–	relies	on	rotork’s	innovative	flow	
control	products	somewhere	in	the	process
rotork	is	active	in	all	the	main	strategic	markets	–	power 	oil	
	gas	water	and	waste	water 	marine	mining	and	process	
industries	however 	rotork	operates	in	any	market	where	
the	flow	of	liquids	or	gases	needs	to	be	controlled
our divisions
rotork
controls
rotork
fluid systems
rotork
gears
rotork
instruments 
rotork controls design and 
manufacture electric actuators for 
valve	applications	and	network	control	
systems	serving	a	wide	variety	of	end
markets rotork controls has 
manufacturing facilities in the uk  
usa germany  spain china malaysia 
and india
rotork fluid systems design and 
manufacture pneumatic hydraulic and 
electrohydraulic actuators and control 
systems our manufacturing facilities 
are	located	in	germany 	italy 	sweden	
china uk and usa
rotork gears design and manufacture 
gearboxes adaptations and accessories 
to the international valve and actuator 
industry	with	manufacturing	facilities	in	
the uk netherlands italy  china usa 
and india
rotork instruments design and 
manufacture	products	for	flow	control	
pressure	control	flow	measurement	
and	pressure	measurement	wherever	
there is a need for high precision and 
reliability  it has manufacturing facilities 
in the usa italy  korea and uk
operating	profit
£1047m	07
revenue
£3245m
08
operating	profit
£312m	05
revenue
£1803m
36
operating	profit
£130m	03
revenue
£578m
32
operating	profit
£144m	843
revenue
£460m
844
oil  gas wa ter power industrial  other
rotork products are used on upstream 
midstream	and	downstream	activities	
ranging	from	offshore	production	
facilities	through	refining	and	
processing	to	transportation	of	finished	
products via pipelines or vessels
clean	and	dirty	water	treatment	and	
distribution are major markets for 
rotork	with	climate	change	affecting	
the	availability	of	water	in	many	areas	
of	the	world	there	is	an	increasing	need	
for	processes	which	will	maximise	
existing resources such  
as	desalination	plants	and	water	 
reuse projects
as	well	as	traditional	power	stations	
applications for rotork products are 
found	on	renewable	energy	generation	
such as thermal solar plants and on 
co
2
 emission reduction processes 
such	as	flue	gas	desulphurisation	
carbon capture and storage
other industries served by rotork 
include surface and underground 
processing applications for the mining 
industry  the ship building industry  
heating ventilating and air 
conditioning pulp and paper  food  
and beverage medical equipment 
and tyre manufacturing
our enduser markets
	 references	to	adjusted	profit	throughout	this	document	
are	defined	as	the	ifrs	profit	whether	operating	profit	
or	profit	before	tax	with	£149m	2013	£121m	of	
amortisation of acquired intangibles added back governance directors financial statements company information
03 rotork annual report 2014
strategic report
rotork
controls
rotork
fluid systems
rotork
gears
rotork
instruments 
rotork controls design and 
manufacture electric actuators for 
valve	applications	and	network	control	
systems	serving	a	wide	variety	of	end
markets rotork controls has 
manufacturing facilities in the uk  
usa germany  spain china malaysia 
and india
rotork fluid systems design and 
manufacture pneumatic hydraulic and 
electrohydraulic actuators and control 
systems our manufacturing facilities 
are	located	in	germany 	italy 	sweden	
china uk and usa
rotork gears design and manufacture 
gearboxes adaptations and accessories 
to the international valve and actuator 
industry	with	manufacturing	facilities	in	
the uk netherlands italy  china usa 
and india
rotork instruments design and 
manufacture	products	for	flow	control	
pressure	control	flow	measurement	
and	pressure	measurement	wherever	
there is a need for high precision and 
reliability  it has manufacturing facilities 
in the usa italy  korea and uk
operating	profit
£1047m	07
revenue
£3245m
08
operating	profit
£312m	05
revenue
£1803m
36
operating	profit
£130m	03
revenue
£578m
32
operating	profit
£144m	843
revenue
£460m
844
oil  gas wa ter power industrial  other
rotork products are used on upstream 
midstream	and	downstream	activities	
ranging	from	offshore	production	
facilities	through	refining	and	
processing	to	transportation	of	finished	
products via pipelines or vessels
clean	and	dirty	water	treatment	and	
distribution are major markets for 
rotork	with	climate	change	affecting	
the	availability	of	water	in	many	areas	
of	the	world	there	is	an	increasing	need	
for	processes	which	will	maximise	
existing resources such  
as	desalination	plants	and	water	 
reuse projects
as	well	as	traditional	power	stations	
applications for rotork products are 
found	on	renewable	energy	generation	
such as thermal solar plants and on 
co
2
 emission reduction processes 
such	as	flue	gas	desulphurisation	
carbon capture and storage
other industries served by rotork 
include surface and underground 
processing applications for the mining 
industry  the ship building industry  
heating ventilating and air 
conditioning pulp and paper  food  
and beverage medical equipment 
and tyre manufacturing america
united 
states
europe
africa
nigeria
chad
zaire
zaire
zambia
angola
namibia
south 
africa
botswana
zimbabwe
zimbabwe
south 
africa
zambia
uganda
rwanda
rwanda
congo
cab
gabon
cameroon
liberia
ghana
sierra
 leone
guinea
burkina
 faso
senegal
gambia
maurit ania
algeria
algeria
morocco
western
 sahara mali
mali
chad
russia
united 
states
greenland
green
land
iceland
spain
greece
greece
algeria
tunisia
libya
libya
egypt
sudan
it al y
it al y
it al y
france
france
france
belgium
austria
switzerland
germany
croa tia
poland
spain
spain
finland
sweden
sweden
norway
norway
united 
kingdom
ireland
netherlands
cuba dominican 
republic
guyana
colombia
colombia
ecuador
ecuador peru
bolivia
brazil
uruguay
chile chile chile
argentina
venezuela
gua temala
costa
rica
panama
la tin 
america
panama
mexico
mexico
usa
canada usa
loca tions
global
our
strategic report
04 rotork annual report 2014
knowing	how	to	attract	new	customers	and	service	
and support our existing customers is key to our 
continued success we realise that remaining close 
to our customers and focusing on their needs drives 
innovation t o enable closer customer ties rotork 
has	always	been	committed	to	a	global	presence	
supporting operations in some of the most remote 
and challenging environments across the globe
americas
during	the	year	we	opened	two	
offices	one	in	denver	usa	and	set	
up	a	new	subsidiary	in	santiago	
chile	in	2015	we	plan	to	open	one	
new	office	and	expand	an	existing	
one
manufacturing
facilities
8
employees
809
offices
14 europe
middle
east
africa
chad
ethiopia
eritrea
yemen
oman
uae
saudi  
arabia
iran
afghanist an
kazakhst an
uzbekist an
turkmenist an
georgia georgia
pakist an t ajikist an
kyrgyzst an 
djibouti somalia
zambia
south 
africa
madagascar
botswana
zimbabwe
zimbabwe
south 
africa
zambia
uganda
kenya
rwanda
rwanda
t anzania
mozambique
australia
australia
australia
australia
new zealand
australia
australia
australia
asia
china
china
china
japan
china
china
korea
russia russia russia 
russia russia
russia
russia
russia
mongolia
india
india
nepal
burma
bhut an
thailand
laos
vietnam
hong kong
cambodia
singapore
philippines
indonesia
malaysia
papua
new
guinea
bangladesh
russia
russia
libya
egypt
sudan
croa tia
poland
group revenue
by end user destina tion
2014
n america
exc mexico
asia pacific 
far east
e europe
europe
latin america
middle east 
africa
uk
2013
 
governance directors financial statements company information
05 rotork annual report 2014
strategic report
customers	buy	our	products	in	the	knowledge	
that	the	rotork	service	network	will	provide	
worldclass	support	whether	lifeofplant	
maintenance repairs or upgrade services from a 
local	facility	wherever	they	are	in	the	world
rotork recognises the contribution of the 3500 
employees in maintaining our high reputation 
for excellence in innovation and quality of 
products and services
planning developing and delivering actuation 
facilities	across	the	globe	rotork	now	has	27	
established manufacturing facilities in 11 
countries	which	together	with	our	own	global	
network	of	local	offices	regional	centres of 
excellence and agents provide over 800 rotork 
outlets	worldwide
europe middle  
east  africa
f ollowing	the	acquisitions	made	in	2014	we	
have	two	additional	manufacturing	sites	in	
valduggia	italy	and	wolverhampton	uk	
and	a	new	factory	in	leeds	uk	t wo	new	
offices	were	opened	in	irkutsk	and	
v olgograd	russia	one	in	gliwice	poland	
and	we	expanded	the	spanish	office	in	
bilbao	in	2015	we	plan	to	move	into	a	new	
factory	in	lucca	italy	and	open	three	new	
offices	and	expand	one	facility 
manufacturing
facilities
14
employees
1793
offices
24
manufacturing 
facilities
5
employees
867
offices
27
asia  australia
with the acquisition of y oung t ech co 
ytc	in	seoul	korea	the	number	of	
manufacturing sites has increased by 
one	to	stand	at	five	new	offices	in	xi’an	
china	and	newcastle	australia	were	
opened	as	well	as	the	expansion	of	our	
office	in	upper	thomson	singapore	in	
2015	we	plan	to	open	three	new	offices rotork addressable market
£36bn
flow	control	market
£40bn
market share based on competitors’ revenue published market reports and rotork internal data 
rotork annual report 2014 06
strategic report
overview
market
rotork’s products are used in many structural 
growth	markets	with	longterm	investment	cycles	
which	provide	infrastructure	to	the	global	
economy	growing	populations	require	water 	food	
and	energy	all	of	which	require	new	infrastructure	
with	an	increased	focus	on	automation	to	drive	
improved productivity and better decisionmaking 
systems to protect and secure assets
our market share
controls fluid systems gears instruments
addressable 
market £1754m £960m £300m £553m
market share 
by division 185 188 153 79
opportunities 
for	growth
• water 	power	and	
industrial markets
• eastern europe and 
latin america
• midstream and 
downstream	 
oil  gas market
• rotork site services
• marine market
• new	product	
introduction
• geographic expansion
• new	facility	in	italy
• increased rd 
investment
• product range 
expansion
• geographic expansion
• global manufacturing 
expansion
• sales channel 
development
• rotork synergies governance directors financial statements company information
07 rotork annual report 2014
strategic report
market drivers
growth	may	be	driven	by	investment	in	new	
infrastructure to support urbanisation 
automation or refurbishment of existing plants 
population	growth	the	exploitation	of	new	
technologies and the desire to extract natural 
resources from ever more challenging locations 
are also drivers in some of our markets
urbanisation
rapid urbanisation in emerging markets and 
growth	of	urban	areas	in	developed	economies	
will	be	the	biggest	driver	of	infrastructure	
spending	over	the	next	few	decades	that	
growth	is	in	turn	creating	huge	demand	for	
private and public sector infrastructure 
development	such	as	power	stations	electricity	
grids	water	supply	and	water	treatment	plants
automation
automation advances in industry continue to 
demand highvalue customer alerts and 
realtime monitoring to provide greater 
efficiency	with	improved	safety	and	
performance
population growth
the	world’s	population	is	growing	and	placing	
stress	on	the	world’s	supply	of	water 	food	and	
energy	we	need	water	to	grow	food	and	
generate	energy	and	we	need	energy	to	move	
and	treat	water	and	process	food
new technologies
the	‘new	normal’	requires	efficiency	built	on	
technological innovations enabling businesses 
and organisations to simultaneously drive cost 
savings improve productivity and reliability
• fossil fuels
• nuclear energy
• concentrating	solar	power
• geothermal	and	other	renewables
• chemicals
• pulp  paper
• mining
• marine
• hvac
• industrial
• t unnels
• food  beverage
industrial  other
power 
oil  gas water
• onshore		offshore	production
• refining		petrochemicals
• distribution  storage
• pipelines
• lng	liquefaction		regasification
• sludge		sewage	treatment
• water treatment desalination  reuse
• environmental control
• dams reservoirs  irrigation
share of enduser market
569 
group
revenue
104 
group
revenue
163 
group
revenue
164 
group
revenue industry
knowhow
innova te
sales
project
management
sourcing
partnerships
product
assembl y
quality
control
site
services
strategic report
08 rotork annual report 2014
as	a	recognised	leader	in	the	flow	control	
market rotork is committed to continuing to 
harness the collective strength of our global 
presence	to	satisfy	the	growing	global	demand	
for	innovative	products	offering	improved	
performance and reducing environmental 
impact to support our customers’ needs around 
the	world	rotork’s	products	are	employed	in	
missioncritical	environments	where	safety	is	
paramount	and	so	we	constantly	strive	to	
improve quality and performance in pursuit of 
excellence rotork continues to innovate 
through its products technology and people 
seeking to enhance our core capabilities and 
expand market leadership
rotork	has	a	‘family’	culture	where	we	seek	to	
pursue	excellence	together 	working	as	a	global	
team to respond rapidly to changing business 
environments	introduce	new	technologies	
pioneer	new	markets	and	identify	business	
opportunities	our	global	network	of	offices	
and manufacturing sites expands each year to 
ensure our support is local to our customers 
the rotork culture of respect and excellence is 
a	core	philosophy	which	we	share	with	new	
offices	and	acquired	businesses	which	
themselves have often been purchased from an 
ownermanager 	to	ensure	our	customers	
receive consistently high quality service 
throughout	the	world	we	operate	an	
assetlight	business	model	with	most	of	our	
manufacturing sites purchasing components in 
a	finished	form	and	then	assembling	to	order 
the majority of our business in controls and 
fluid	systems	is	focused	on	winning	projects	
these projects are tracked sometimes for 
years as they evolve from an outline plan 
through to a fully detailed and costed set of 
tender	packages	against	which	the	valvemakers	
quote	we	talk	with	the	enduser 	design	
consultant and epc all through this process 
selling	the	benefits	of	a	rotork	solution	in	these	
larger projects actuators are usually sold in 
combination	with	the	valve	and	rotork	sells	to	
the valvemaker  whilst gears and instruments 
have some project sales they more often sell 
direct to enduser or in some cases through 
distribution	channels	in	each	case	only	when	we	
receive	an	order	which	is	a	contractual	
commitment	do	we	report	this	as	order	intake	
our orderbook at any point in time represents 
the	sum	of	order	intake	which	has	not	yet	been	
satisfied	by	a	delivery	of	the	required	product	or	
service once the product or service is delivered 
it is recognised as revenue and then removed 
from the order book
business model
business
 model 
 stra tegy
vision
rotork’s vision is to be the leader in our targeted 
segments	of	the	global	flow	control	market growth
innova tion
opera tional
excellence
sustain bility
governance directors financial statements company information
09 rotork annual report 2014
strategic report
growth
further develop our global sales and 
service	network	providing	local	support	to	
our	customers	around	the	world	grow	the	
company both organically and through 
acquisitions	whilst	maintaining	the	focus	
on	profitability	and	return	on	sales
read more on page 10
sustainability
be a fair  equal opportunities employer 
with	high	ethical	standards	aiming	to	
provide	safe	working	conditions	across	
our	businesses	worldwide	be	a	good	
corporate citizen supporting the local 
community	acting	with	integrity	and	
honesty	whilst	always	considering	ways	of	
improving our operational impact on the 
environment
read more on page 10
operational excellence
rotork has operated an outsourced 
manufacturing model for many years 
in	our	newly	acquired	businesses	our	
preference is also to outsource the 
low	value	add	processes	but	we	
review	each	situation	and	decide	on	a	
casebycase basis
read more on page 11
innovation
work	with	our	customers	and	provide	
them	with	the	benefits	of	innovative	
technically advanced high quality 
products and associated services
read more on page 11
t echnological leadership
our innovative company is built on talented 
people	who	drive	our	technological	leadership	
with	passion	to	ensure	we	continue	to	
reinforce our core competencies in technical 
and	performance	standards	and	develop	new	
technologies to provide solutions to our 
customers’ most pressing needs
global footprint
rotork’s	worldwide	geographic	footprint	
provides a resilient business portfolio 
expanding our brand’s global presence and 
strengthening	our	local	partnerships	with	
customers are key to our continued business 
success	in	many	countries	around	the	world	
rotork is considered a local company by our 
customers	local	relationships	with	customers	
not only means that rotork has clear sight of 
value generation in the longterm but also the 
ability to recognise customers’ evolving 
requirements	our	global	footprint	allows	us	to	
closely	follow	and	manage	complex	global	
projects	which	account	for	the	majority	of	our	
sales	and	to	support	customers	in	the	field
rotork	site	services	work	with	our	customers	
by installing and commissioning our actuators 
and by meeting their service requirements
diverse endmarket exposure
our broad market exposure and participation 
in	diverse	industries	means	that	wherever	
fluids	or	gases	are	being	moved	and	the	
process requires automation or to operate 
failsafe	controls	rotork	actuators	and	flow	
control products are required our actuators 
and	flow	control	instrumentation	are	used	
most	intensively	in	the	oil		gas	power	and	
water	markets	but	we	are	proud	to	serve	
many other markets
breadth of product portfolio
through product development and 
acquisitions	we	have	built	up	the	broadest	
range of actuators on the market we are also 
expanding	our	range	of	flow	control	devices	
this	ensures	we	have	the	appropriate	product	
for	the	widest	range	of	applications	within	a	
site or project
assetlight business model
over 85 of our products are built using an 
outsourced	manufacturing	model	with	our	
workforce	assembling	components	and	
configuring	products	to	match	customer	
orders	we	have	developed	a	global	network	of	
suppliers	who	manufacture	the	components	
to our designs leveraging our agile and 
international	supply	chain	allows	us	to	achieve	
and	maintain	profitable	growth	while	
supporting	new	market	entry
quality
rotork stands for technological excellence 
quality	and	reliability	meeting	or	exceeding	
international technical and performance 
standards our products are used in 
demanding environments and can be 
employed in missioncritical applications 
where	consistency	of	performance	and	safety	
is paramount customers expect rotork 
products to be reliable and our demanding 
quality	control	procedures	which	extend	to	
cover our supply chain are central to 
delivering this
competitive strengths strategic report
10 rotork annual report 2014
based on a customercentric approach and 
understanding	we	seek	to	deliver	a	high	return	on	
capital	with	strong	and	sustainable	margins	and	
consistent	yearonyear	growth	in	revenues	and	profit	
which	combined	with	our	assetlight	model	will	
continue to deliver strong cash generation
growth
strategic priorities achievements 2014 objectives 2015
organic sales growth
deliver	profitable	sales	growth	by	focusing	on	
the customer  increasing our international 
coverage continuing to broaden our 
endmarkets	and	growing	the	global	sales	of	
our recent acquisitions
moved	into	the	new	factory	in	leeds	uk	and	
opened	new	offices	in	chile	denver	usa	
russia china australia and poland and 
expanded	existing	offices	in	singapore	and	
spain
introduce a regional management structure to 
explore market opportunities including the 
establishment of a direct presence drive 
revenue synergies from recent acquisitions 
using our extensive salesforce
acquisitions
acquisitions	are	a	core	part	of	our	growth	
strategy	each	acquisition	will	deliver	a	new	
product	a	new	geographic	market	or	a	new	
market sector or some combination of these
acquired	ytc	march	rotork	midland	july	
which	expands	instruments	product	portfolio	
and	masso	december	which	adds	to	fluid	
systems product range and brings access to the 
marine market
execute	acquisition	plan	of	identified	
opportunities
service growth
expand our global service coverage and 
capability including the client support 
programme	csp
launched	the	csp	which	offers	tailormade	
service of planned preventative maintenance 
aimed	at	the	prevention	of	breakdowns	and	
failures	new	workshops	were	opened	in	poland	
and	chile	and	we	increased	the	number	of	
service engineers by 7 introduced a regional 
service management team
continue to develop the sales channels for 
delivering service support and further expand 
the	service	team	establish	new	workshops	
where	there	is	customer	demand
sust ainability
strategic priorities achievements 2014 objectives 2015
employee development
we	will	invest	in	our	people	and	encourage	
internal development to support our future 
growth	plans	we	recognise	the	benefits	of	
diversity	amongst	our	employees	and	will	
promote this both through external 
appointments and internal development
we have increased gender diversity at all levels 
of the organisation through the year  we have 
introduced	a	new	leadership	training	programme	
and expanded our online training courses 
delivered through the group
continue the rollout of the leadership training 
programme and further expand the training 
opportunities throughout the group 
continue to promote diversity
corporate social responsibility csr 
communicate best practice throughout the 
group	training	those	responsible	and	where	
appropriate verifying adoption in each 
subsidiary
our csr subcommittees continued to promote 
improvements in health and safety monitor 
initiatives to reduce co
2
 emissions and provide 
training on ethical behaviour and our employees 
gave their time and money to many charities 
around	the	world	
continue to drive safety improvement and 
deliver the csr strategy the csr report is on 
pages 40 to 51 of this report
t o	provide	shortterm	focus	we	agree	an	annual	set	of	key	objectives	the	
progress against these during the year and objectives for the coming year are 
shown	below
priorities
stra tegic governance directors financial statements company information
11 rotork annual report 2014
strategic report
opera tional excellence
strategic priorities achievements 2014 objectives 2015
manufacturing excellence
continue	to	develop	worldclass	
manufacturing
significant	progress	was	made	throughout	the	
course	of	the	year	in	implementing	new	business	
processes to achieve improved delivery 
reliability and productivity
in	conjunction	with	the	development	of	a	
manufacturing version of our global business 
system	we	will	carry	out	a	review	of	our	
procedures in order to share best practice 
within	the	group
supply chain management
rotork’s outsourced manufacturing model 
means that material costs are the most 
significant	component	of	direct	costs	managing	
these costs has been a key driver to improve 
margins across all our manufacturing sites
sourcing initiatives succeeded in both improving 
the performance of local suppliers and driving 
down	costs	of	components	during	the	year 
continue to look for opportunities to take 
cost out of all our products through sourcing 
or product development our proven sourcing 
capabilities	will	be	supported	with	increased	
resources	as	we	focus	on	recently	acquired	
businesses
global business systems
we	are	moving	from	having	a	wide	range	of	
systems	around	the	world	to	adopting	a	global	
standard erp system
rollout and enhancement of our sales and service 
office	system	progressed	during	the	year	and	
development of the manufacturing system has 
moved to the next phase of the project
continue the rollout through the sales and 
services	offices	and	continue	development	of	
the manufacturing system
innova tion
strategic priorities achievements 2014 objectives 2015
new product
capitalise	on	our	industry	knowledge	to	
develop and introduce solutions to customer 
problems
there	were	a	number	of	product	launches	and	
expansion	of	product	ranges		certifications	
during the year in all divisions spend on rd 
increased 18 in the year to £99m
a number of product launches are scheduled 
this	year	inline	with	the	product	roadmap	
established for each division development 
continues in other areas including nuclear and 
within	the	recently	acquired	businesses
• providing high quality and innovative products and 
services	to	control	the	flow	of	fluids	and	gases
• meeting customer needs through global expertise 
delivered locally
• achieving	consistent	sustainable	and	profitable	growth
• being the employer of choice
rotork stra tegy 12 rotork annual report 2014
strategic report
innova tion
a reput a tion
for
innova tion
at every stage in the company’s history rotork’s engineers have 
focused	on	solving	customer	challenges	and	developing	new	
solutions		with	levels	of	engineering	skill	and	creativity	that	satisfy	
our customers’ requirements our products are often mission
critical devices that require high quality and reliable solutions 
customer	approval	and	industry	certification	is	also	necessary	for	
some applications governance directors financial statements company information strategic report
13 rotork annual report 2014
case study
pakscan
™
	wireless	is	perfect	fit	for	tank	farm	automation
the	rotork	pakscan	wireless	network	control	
system	establishes	a	secure	wireless	mesh	
network	used	to	control	actuators	and	other	
field	devices	throughout	the	plant	gathering	
important operating data for asset 
management and preventative maintenance
t o provide robust onsite communications the 
wireless	option	operates	a	meshing	system	
which	ensures	that	all	nodes	have	the	facility	of	
at	least	two	routes	back	to	the	master	station 	
this	means	that	if	the	normal	traffic	route	is	
blocked	the	network	will	find	another	way	to	
route	the	messages the	security	of	data	is	
ensured by using encryption facilities
in 2011 a client began building a single product 
tank farm consisting of six 100000 barrel tanks 
and four booster pumps to serve nearby truck 
and ship loading terminals originally the facility 
was	designed	for	a	single	hydrocarbon	product	
and	the	specification	did	not	require	any	
automated valves to isolate the individual 
storage tanks
the client then decided to upgrade and introduce 
the	capability	to	handle	a	second	product	which	
necessitated the requirement of isolating the 
tanks to avoid crosscontamination t o achieve 
this	they	specified	rotork	electric	valve	
actuation under centralised control the 
explosionproof rotork iq nonintrusive 
intelligent	actuators	were	supplied	and	are	
monitored and controlled by a rotork pakscan p3 
digital system this rotork proprietary system is 
designed	specifically	for	valve	actuation	duties	
and	the	environments	associated	with	hazardous	
area petrochemical plants
for	this	project	the	client	was	able	to	take	
advantage of additional functionality and 
benefits	through	the	introduction	of	pakscan	
with	a	wireless	field	network	wireless	pakscan	
eliminates	virtually	all	the	costs	associated	with	
the	installation	of	network	cabling	whilst	
enabling an increased level of information from 
the actuators to be communicated over the 
wireless	network
shelley pike rotork’s systems sales manager  
explains	“the	customer	didn’t	want	to	add	a	lot	
of	new	conduit	and	wiring	to	control	the	
actuators	so	the	wireless	pakscan	system	was	a	
perfect	fit
“the	installation	consists	of	16	rotork	iq40	
nonintrusive intelligent actuators one pakscan 
p3	wireless	master	station	and	three	network	
repeaters	which	are	used	to	overcome	radio	
black spots and ensure the redundancy of the 
network	as	far	as	startups	go	this	was	by	far	
the easiest of any type of control system
some	precommissioning	of	the	wireless	
system	was	performed	at	the	rotork	factory	
prior	to	delivery	and	once	in	the	field	the	
engineer	installed	the	wireless	antennas	on	
each actuator and gave each unit its unique 
address	the	master	station	was	powered	up	
and	all	sixteen	actuators	populated	the	network	
within	a	few	minutes	the	customer	was	very	
impressed” 14 rotork annual report 2014
strategic report
growing
our	acquisition	strategy	remains	unchanged	we	continue	to	look	for	
opportunities	to	grow	through	acquisition	our	target	companies	will	
be	in	the	field	of	flow	control	and	are	tested	against	our	criteria	they	
should	satisfy	at	least	one	of	the	following	criteria	enhance	our	
position in an enduser market enhance or extend our product 
offering	or	enhance	our	position	in	a	geographic	market
growing we’re
and driving 
forward governance directors financial statements company information strategic report
15 rotork annual report 2014
case study
y oung	t ech	co	leads	the	way	in	tough	applications
process industries often depend on high 
performance valve actuation in harsh 
environments	despite	the	difficult	
surroundings process plants demand the latest 
technology	such	as	smart	positioners	which	
allow	technicians	to	use	autocalibration	and	
simple diagnostics to commission and monitor 
their entire system at the push of a button in 
many cases the valve actuator and smart 
positioner package is exposed to extreme 
temperatures dirty conditions and other 
challenges such as high vibration
y oung	t ech	co	ytc	has	developed	two	smart	
positioner products that thrive under these 
harsh	conditions	and	which	have	paved	the	way	
to	expansion	and	growth	in	tough	process	
control applications
remote sensing unit positioners
the yt 3301 introduced the concept of 
isolating and detaching the sensing feedback 
portion of the positioner from the main control 
housing the sensing unit accurately detects 
the position of the valve stem and provides a 
feedback signal to the main housing this dual 
unit	design	allows	the	operator	to	locate	the	
precision electronics elements at a considerable 
distance from the valve environment providing 
the	best	of	both	worlds	–	precision	engagement	
at the point of valve movement and a clean dry 
and ambient temperature for the electronics 
this also facilitates mounting multiple control 
housings in close proximity for convenient and 
time saving monitoring and adjustment of 
valves in the plant
t riple module remote positioners
remotely mounting the sensing unit provides 
dramatically improved reliability and 
performance	but	at	longer	distances	between	
the sensing unit and the control housing 
pneumatic signal loss may occur  in extreme 
situations this could lead to hunting and 
oscillation of the electronics and reduced valve 
and actuator positional stability
t o assure superior performance in these 
difficult	applications	in	2014	ytc	developed	the	
yt 3302 positioner  with this product a third 
module housing the driving components of the 
pilot valve and torque motor assembly is 
mounted	at	an	intermediate	location	between	
the remote sensing unit and the main control 
unit	this	configuration	delivers	higher	
performance	with	dramatically	increased	
positional accuracy
added	benefits	include	the	ease	of	maintenance	
for each of the modules and the ability to gang 
mount modules at convenient locations 
standardisation of modules and components 
also	facilitates	spare	part	simplification	and	
inventory cost reduction
the	flexibility	of	modular	smart	positioners	 
will	enable	the	instruments	business	to	grow	 
by	offering	more	user	friendly	solutions	and	
simplifying endusers’ valve control and 
maintenance tasks the increasing requirement 
for	smart	positioners	in	the	markets	that	we	
serve	mean	that	we	are	well	placed	to	increase	
our presence in this market
3
companies acquired 
in	2014
ytc korea  
rotork midland uk
masso it al y roger lockwood
chairman
strategic report
16 rotork annual report 2014
chairman’s
st a tement
financial highlights
currency	remained	a	headwind	throughout	the	
year  on an organic constant currency basis 
order	intake	grew	by	40	and	revenue	grew	by	
38	adjusted	operating	profit	was	57	
higher resulting in a record margin of 267 50 
basis	points	higher	than	2013	we	still	showed	
growth	on	a	reported	basis	on	all	these	
measures as the positive contribution from the 
acquisitions	made	in	the	year	went	someway	to	
offset	the	impact	of	currency
rotork has a strong track record of making 
acquisitions and then taking these businesses to 
their	next	phase	of	growth	this	year	we	acquired	
the	korean	based	y oung	t ech	co	ytc	in	march	
and	a	uk	subsidiary	of	xylem	inc	which	we	have	
renamed rotork midland in july  both of these 
businesses	now	sit	within	the	instruments	division	
and bring additional products that enhance 
rotork’s product portfolio integration of both 
businesses is progressing as planned and they 
made	a	good	contribution	in	their	first	year	in	
rotork	in	december	we	acquired	masso	ind	spa	
a small italian designer and manufacturer of 
pneumatic and hydraulic actuators and control 
systems for use in the marine industry and in 
f ebruary 2015 the sales and service operations of 
our former agent in t urkey 
i	would	like	to	thank	all	of	our	employees	for	
their continued high level of commitment and 
professionalism it is as a result of their hard 
work	that	we	have	been	able	to	deliver	a	record	
set of results once again
board composition
i am announcing today that i intend to retire as 
chairman at the close of the annual general 
meeting	in	april	after	working	with	rotork	for	27	
years	17	of	which	as	chairman	it	has	been	a	
great privilege to play a part in the group’s 
strong progress over that period and see it truly 
flourish	we	are	also	announcing	today	that	
martin	lamb	will	take	over	as	chairman	when	i	
retire	martin	was	appointed	a	nonexecutive	
director	in	june	2014	and	brings	a	wealth	of	
relevant experience from his 33 years at imi plc i 
wish	him	every	success	in	the	role
we	were	pleased	to	welcome	two	new	
nonexecutive directors during the year  as 
mentioned above martin lamb joined in june 
and lucinda bell joined the board in july 
lucinda is the finance director of the british 
land	company	plc	and	her	financial	experience	
in	an	unrelated	industry	brings	a	different	
perspective to the board
2014	was	another	successful	year	for	rotork	we	continued	to	
grow	by	implementing	our	strategy	of	broadening	our	product	
portfolio endmarket exposure and geographic coverage 
whilst	remaining	focused	on	our	targeted	segments	of	the	
flow	control	market
309p
per share final dividend
making a 43 increase  
in the tot al dividend   governance directors financial statements company information
17 rotork annual report 2014
strategic report
last	april	we	announced	that	graham	ogden	
group	research		development	director 	would	
retire	at	the	end	of	this	month	i	would	like	to	
thank graham personally for his contribution 
since joining rotork in 1985 and his 
appointment as an executive director in 2005 
during this period graham has been closely 
involved and latterly led the team in many key 
product developments including all three 
evolutions	of	the	awardwinning	iq	series
the	board	is	compliant	with	the	corporate	
governance	code	at	the	present	time	and	will	
remain	so	following	the	changes	noted	above	
at	the	close	of	the	agm	there	will	be	three	
executive directors four independent non
executive directors and martin lamb as 
chairman in addition 25 of the board are 
women	compared	with	11	at	the	same	time	
last year 
board performance
the	evaluation	of	board	effectiveness	was	once	
again conducted by a third party this year  the 
process	of	appointing	new	nonexecutive	
directors	a	new	chairman	and	new	auditors	
were	all	considered	in	the	evaluation	and	overall	
comments	received	were	generally	positive	the	
strong	feeling	of	mutual	respect	and	trust	which	
have been consistent characteristics of the 
board	was	found	to	be	undiminished	the	
directors	remain	aware	of	the	challenges	the	
growth	of	the	business	brings	and	the	
importance of managing the change carefully in 
order to preserve the strengths of the business 
and to continue to deliver shareholder value 
the	board	was	broadly	united	in	its	views	on	all	
the matters raised in the process and crucially 
in its focus for 2015 and beyond
reviewing	the	strategy	for	achieving	growth	in	
the current economic climate the evolution of 
the internal control environment risk 
assessment processes succession planning 
and	talent	development	within	the	executive	
management are among the key areas for the 
coming	year 	overall	i	am	satisfied	that	there	is	
an appropriate balance of skills experience 
independence	and	knowledge	of	the	company	
to enable the directors to discharge their duties 
and	responsibilities	effectively
corporate governance
the board is committed to high standards of 
governance	which	we	view	as	central	to	delivering	
increasing shareholder value over the longterm 
the board considers all the aspects of the 
business necessary to provide good governance 
and these are set out in the corporate 
governance report i am pleased to be able to 
confirm	that	rotork	complies	with	all	aspects	of	
the 2012 uk corporate governance code
dividend
the	board	recommends	a	final	dividend	of	309p	
per	share	a	30	increase	over	the	2013	final	
dividend	t aken	with	the	2014	interim	dividend	
the	total	dividend	is	501p	per	share	2013	
4805p	representing	a	43	increase	in	the	
total	dividend	on	2013	the	final	dividend	will	be	
payable on 18 may 2015 to shareholders on the 
register on 10 april 2015
outlook
in	the	year	ahead	we	will	continue	to	invest	for	
growth	increasing	our	international	sales	
network	and	expanding	our	product	portfolio	
both organically and by acquisition to 
strengthen	our	presence	in	the	wider	flow	
control market
whilst our endmarkets in the upstream oil  
gas sector may become more challenging in the 
near term our other global markets remain 
active our geographic reach endmarket 
exposure and diverse product portfolio provide 
the	board	with	confidence	of	achieving	further	
progress in the coming year 
roger lockwood
chairman
2 march 2015
water treatment 
plant in spain
	 references	to	adjusted	profit	throughout	this	
document	are	defined	as	the	ifrs	profit	whether	
operating	profit	or	profit	before	tax	with	£149m	
2013	£121m	of	amortisation	of	acquired	
intangibles added back
occ organic constant currency results are the 2014 
figures	restated	at	2013	exchange	rates	and	with	the	
incremental contribution from acquisitions removed   turnover	£m
		 pre t ax	profit	£m
  core dividend  		 additional	dividend	paid	pence
25
130
124
21
122
108
27
122
118
22
93
93
15
54
80
70
25
109
101
19
80
91
77
14
13
11
10
52
57
51
39
8
6
27
30
33
37
43
48
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
strategic report
18 rotork annual report 2014
1988
roger	lockwood	joins	
the rotork board
1993
launch	of	the	first	iq	
nonintrusive 
intelligent electric 
actuator 
commissioning 
without	removing	
electrical covers
1995
dedicated	fluid	power	
division launched 
operating from the 
uk usa and 
singapore
1998
roger	lockwood	
becomes chairman of 
rotork’s board
1999
rotork acquires 
fluid system srl 
situated in the heart of 
the italian valvemaking 
industry at lucca
2000
the iq mark 2 actuator 
launched keeping 
rotork at the vanguard 
of intelligent valve 
actuation and the 
skilmatic 
electrohydraulic 
product range is 
acquired 26
139
134
138
481
578
57
217
37
158
175
46
182
207
31
151 59
116
93
115
115
230
147
28
148
136
91
284
354
76
260
320
98
325
381
113
373
448
124
430
512
236
141
501
595
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
governance directors financial statements company information
19 rotork annual report 2014
strategic report
roger	joined	the	board	in	1988	as	one	of	two	nonexecutive	directors	in	the	subsequent	27	years	
roger	has	seen	rotork	grow	and	establish	itself	as	a	global	leader	in	flow	control	equipment
in	1988	rotork’s	turnover	was	£341m	and	had	
an	operating	profit	of	£45m	the	business	was	
operating in 12 countries and had 584 
employees during the subsequent 10 years in 
roger’s term as a nonexecutive director  the 
group	grew	substantially	initially	under	the	
leadership of t om eassie as ceo and then under 
bill whiteley
in	1998	roger	was	asked	to	become	chairman	
at	this	time	the	board	composition	was	similar	
to	1988	with	two	nonexecutive	directors	and	
three executive directors in 1997 revenue had 
increased	to	£928m	and	the	operating	profit	
was	£204m	with	812	staff	in	19	countries
as chairman roger has been a central part of 
the team that has continued to drive rotork 
forward	making	it	the	company	it	is	today	
roger has set high standards and is passionate 
about the culture style and integrity of the 
business and its people he has promoted 
diversity and board performance and the board 
has	been	strengthened	during	his	tenure	it	now	
comprises	five	independent	nonexecutive	
directors four executive directors and the 
chairman roger leaves the group in a strong 
position	both	financially	and	operationally	in	
2014 the group had direct operations in 37 
countries	with	3469	staff	revenue	of	£5947m	
and	operating	profit	of	£1422m
roger	will	retire	from	the	company	at	the	
conclusion of the agm on 24 april in the history 
of rotork there have only ever been four ceos 
and	roger	has	worked	with	three	of	them	on	
behalf of them the board and rotork employees 
past	and	present	i	would	like	to	wish	him	the	best	
for	the	future	and	on	a	personal	note	i	would	like	
to thank roger for the guidance and support he 
has given me over the years
peter france
chief executive
2003
fluid systems 
relocates in lucca to 
factory four times 
larger than the 
previous one
2004
the iqt quarterturn 
version of the iq 
launched dramatic 
growth	prevalent	in	
electric actuator 
business
2006
iqpro third generation 
intelligent actuator 
and rotork site 
services created to 
provide lifetime 
support for all rotork 
and other 
manufacturers’ 
products
2008
launch of the cva 
actuator  born out of 
iq technology and 
offering	expansion	into	
new	process	industry	
sectors and smart 
valve	monitoring	svm	
technology added to 
fluid systems product 
range
2010
wireless version of 
pakscan launched 
keeping the product at 
the forefront of valve 
control technology
2012
introduction of iq3 
third generation 
intelligent actuator  
maintaining rotork 
predominance of 
nonintrusive actuator 
technology launch of 
cma compact 
modulating electric 
actuator 
complementing the 
successful cva range 
of process valve 
actuators strategic report
20 rotork annual report 2014
order	intake	for	the	year	was	£5956m	up	29	on	
the	prior	year 	currency	was	a	headwind	during	the	
year	and	on	an	organic	constant	currency	occ	
basis	order	intake	was	40	ahead	of	2013
as	in	prior	years	the	fourth	quarter	was	a	record	in	
terms	of	shipments	revenue	for	the	full	year	was	
£5947m up 28 on the prior year and up 38 on 
an occ basis the adjusted

	operating	profit	margin	
was	264	a	20	basis	point	improvement	on	2013	
excluding the impact of acquisitions and currency  
the	adjusted	operating	margin	was	267
during the year  through both organic 
development	and	acquisitions	we	have	expanded	
our	international	presence	and	now	have	27	
manufacturing	sites	65	national	offices	and	85	
regional	locations	in	37	countries	in	total	we	have	
over 800 sales channels in 99 countries building a 
strong	international	sales	network	to	support	our	
customers remains a key element of our strategy 
in	2014	we	invested	£813m	in	acquisitions	to	drive	
further	growth	and	strengthen	our	market	
position through the acquisitions of ytc midland 
masso and the operations of our sales agent in 
t urkey 	acquired	in	f ebruary	2015	we	extended	our	
product range in attractive segments and 
increased and strengthened our geographic reach 
we	will	continue	to	pursue	acquisition	
opportunities in 2015 to enhance and expand our 
offering	to	customers	we	also	opened	seven	new	
sales	and	service	offices	during	the	year 	
completed the expansion of our facilities in 
singapore and relocated to larger premises in 
spain	in	addition	we	opened	a	new	worldclass	
factory	in	leeds	uk	and	purchased	a	larger	
factory	in	lucca	italy	which	we	will	move	into	
during	2015	these	key	investments	will	ensure	
that	rotork	continues	to	be	best	placed	to	benefit	
from	the	anticipated	growth	of	the	global	flow	
control market
our markets
the	world	economy	is	being	shaped	by	longterm	
global	trends	that	include	population	growth	
urbanisation and automation these trends are 
driving	heightened	demand	for	flow	control	
products and services to deliver cleaner energy  
greater	fuel	efficiency	and	improved	resource	
utilisation	the	group	benefits	from	market
leading	flow	control	expertise	and	remains	well	
positioned	to	support	these	growth	opportunities
another positive trend is the increased focus by our 
customers on cost reduction and stricter 
environmental	regulations	as	a	result	we	are	seeing	
good	demand	for	energy	efficient	products	across	
all our endmarkets as manufacturers focus on 
improved operational performance and cost 
efficiencies	they	are	investing	in	automation	 
and	more	complex	processes	flow	control	 
chief executive’s
st a tement
oil	refinery	in
the netherlands
“excluding the impact of acquisitions and 
currency the adjusted operating margin 
was 267”
the continued expansion of our product portfolio 
international sales channels and our broad endmarket 
exposure enabled us to achieve record results in 2014
peter france
chief executive governance directors financial statements company information
21 rotork annual report 2014
strategic report
and valves in particular  are key elements of this 
investment process given our broad geographic 
exposure participation in diverse industries and 
broad	product	and	service	offering	rotork	is	best	
placed to meet our customers’ needs as they make 
these	investments	whilst	our	actuators	and	flow	
control instruments are used most intensively in the 
oil		gas	power	and	water	markets	the	expansion	of	
our	product	portfolio	means	that	we	are	increasingly	
able	to	address	a	widening	range	of	endmarkets
the longterm global trends described above and 
opposite	are	all	positive	for	rotork	however	during	
the latter part of 2014 global energy markets 
experienced a sharp decline in the oil price whilst 
we	have	yet	to	see	any	noticeable	impact	in	
customer	order	activity 	we	believe	that	the	
increased	uncertainty	created	by	this	decline	will	
present	rotork	with	a	more	challenging	market	
backdrop in the oil  gas sector  oil  gas 
represents	57	of	group	revenue	with	
downstream	the	largest	element	at	27	and	
upstream and midstream both at 15
we remain focused on responding quickly to any 
changes in activity in our oil  gas related business 
but	we	are	confident	that	our	resilient	competitive	
position broad endmarket exposure and global 
sales	and	servicing	coverage	will	continue	to	
provide	us	with	opportunities	to	grow 
research and development rd
our investment in rd increased further in the 
year  up 183 to £99m all divisions introduced 
new	products	or	extended	product	ranges	to	
expand our product portfolio our design teams 
have	been	working	with	the	business	development	
teams on future products and developing product 
road maps and these activities support continued 
investment in our infrastructure and engineers 
projects	to	which	we	dedicated	significant	
development time during the year included the 
nuclear product range and the introduction of the 
centork electric actuator 
rotork site services rss
we launched our client support programme 
csp	in	2014	which	offers	a	tailormade	service	
of planned preventative maintenance aimed at 
the	prevention	of	breakdowns	and	failures	the	
primary goal of our csp is to prevent the failure of 
equipment before it occurs this includes 
equipment	checks	replacement	of	worn	
components and partial or complete overhauls at 
specified	periods
planned preventative maintenance is a much 
better alternative to risking a potentially damaging 
breakdown	of	equipment	and	enables	our	
customers to realise the full potential of their 
business by ensuring the maximum reliability  
and availability of our products wherever our 
customers	are	in	the	world	rotork	is	able	to	
support	them	we	have	workshops	strategically	
located	around	the	world	with	trained	staff	and	full	
test and maintenance facilities
as part of the csp  customers have 247 access to 
the	rotork	support	centres	with	priority	technical	
assistance	backed	by	comprehensive	website	
resources	and	priority	software	support	with	over	
370 directly employed engineers and more service 
technicians	employed	by	our	agents	worldwide	
we	have	the	infrastructure	required	to	effectively	
support all of our customers’ needs
corporate social responsibility
creating	a	growing	and	successful	company	
takes	more	than	just	delivering	financial	results	
which	is	why	we	pay	particular	attention	not	just	
to	what	we	do	but	how	we	do	it	rotork’s	
success	depends	upon	being	a	company	with	
whom	our	customers	want	to	do	business	and	
for	whom	our	employees	want	to	work	as	such	
rotork places key importance on our reputation 
ethical conduct and our approach to health 
safety and environmental matters
we	want	to	continue	to	be	a	business	that	our	staff	
are	proud	to	work	for	and	that	serves	our	customers	
well	over	the	short	medium	and	longterm	we	do	
this in part through the social and economic 
contribution our business makes and through our 
commitment to act responsibly day to day 
during	the	year	we	supported	two	global	charities	
and donated £60000 to both wateraid and 
sightsavers i am also very pleased by the fact that 
many of our employees are involved in charitable 
endeavours in their local communities the group 
has contributed a further £175000 to support 
these causes bringing the total group 
contributions	to	£295000	2013	£254000
f or	more	information	of	the	work	carried	out	by	the	
csr committee please refer to pages 40 to 51
our people
rotork	is	recognised	by	the	majority	of	staff	as	a	
great	place	to	work	we	foster	an	open	and	honest	
culture based on employee involvement our 
annual	employee	satisfaction	survey	was	
completed by the highest number of employees in 
its history although the response rate slightly 
declined from the high of last year 79 to 75 
this year  the overall satisfaction score remained 
the same as last year at 36 the global results 
showed	that	people	continue	to	value	the	quality	
of our products and services our approach and 
concern	for	their	wellbeing	in	terms	of	health	and	
safety  our open culture and ability to discuss 
issues	with	management	and	job	security 
the	rotork	family	continues	to	grow	and	during	
2014	our	staff	numbers	increased	by	412	to	3469	
191 joined us as part of the ytc midland and 
masso	acquisitions	and	the	rest	were	recruited	as	
part	of	our	organic	growth	in	various	locations	
around	the	world
during the year there have been a number of 
changes to our management team unfortunately 
alex	busby 	divisional	managing	director	dmd	
for	rotork	fluid	systems	rfs	who	has	been	
instrumental	in	the	growth	of	the	division	over	the	
last	few	years	had	to	step	down	from	his	role	on	
health	grounds	everyone	at	rotork	wishes	him	
well	as	he	focuses	on	returning	to	full	health	david	
littlejohns has been appointed as dmd for rfs 
david joined rotork in 1986 and has most recently 
been in charge of the gears division pamela 
bingham	will	take	over	from	david	as	dmd	gears	
pamela joined the company in 2012 as group 
business development director and has been 
heavily involved in a number of acquisitions since 
joining	david	and	pamela	will	continue	to	be	
members of the rotork management board
last	year	we	also	announced	that	graham	ogden	
would	be	retiring	in	march	after	30	years	of	service	
graham	was	the	first	electronics	manager	
employed	by	rotork	and	was	instrumental	in	the	
development of the electric actuator and 
especially in the introduction of the iq range of 
electric actuators that revolutionised the market 
in	the	last	few	years	graham	was	a	member	of	the	
rotork management board and a plc director  his 
contribution to the success of the company 
cannot be underestimated and he has left a strong 
legacy and a highly capable team to carry on his 
work	on	behalf	of	all	the	staff	i	would	like	to	thank	
graham for his contribution to the company and 
wish	him	all	the	best	in	retirement
the success of rotork continues to be driven by 
the	dedication	and	hard	work	of	our	staff	i	would	
like to take this opportunity to personally thank 
each of them for their contribution and for making 
rotork	the	worldclass	company	it	is
peter france
chief executive
2 march 2015
	 references	to	adjusted	profit	throughout	this	document	
are	defined	as	the	ifrs	profit	whether	operating	profit	or	
profit	before	tax	with	£149m	2013	£121m	of	
amortisation of acquired intangibles added back
occ	 organic	constant	currency	results	are	the	2014	figures	
restated	at	2013	exchange	rates	and	with	the	
incremental contribution from acquisitions removed grant wood
managing director 
rotork controls
strategic report
22 rotork annual report 2014
controls	delivered	another	year	of	growth	in	
2014	on	an	organic	constant	currency	occ	
basis	order	intake	grew	71	revenue	by	64	
and	adjusted	operating	profit	by	56	
acquisitions made only a small contribution to 
the division during the year  the much greater 
effect	on	the	reported	results	came	from	
currency 	which	was	felt	throughout	the	year 	and	
which	resulted	in	a	headwind	equating	to	around	
6	of	order	intake	revenue	and	profit	this	
meant reported order intake increased by 13 
to £3204m revenue by 08 to £3245m and 
adjusted	operating	profit	declined	by	07	to	
£1047m adjusted operating margin reduced 
by 30 basis points to 325 on an occ basis and 
a further 20 basis points as a result of currency 
over the course of 2014 some of the division’s 
endmarkets	were	challenging	but	we	
responded by enhancing our global capability 
and further strengthening our customer 
relationships looking at the end destination of 
our products north america and latin america 
both	showed	strong	growth	whilst	the	far	east	
declined	in	total	within	this	region	china	
performed	very	well	but	australia	was	lower	
following	a	strong	comparable	period	of	activity	
last	year	when	we	delivered	a	number	of	coal	
bed methane projects in north america and 
latin america oil  gas remains our largest 
endmarket	with	downstream	the	largest	
subsector 	this	contrasts	with	the	far	east	
where	our	exposure	is	much	more	balanced	and	
power 	led	by	china	is	larger	than	oil		gas
review
controls
business 
“over the course of 2014 some of the 
division’s endmarkets were challenging but 
we responded by enhancing our global 
capability and further strengthening our 
customer relationships”
3245
3219
2932
2780
2434
1047
1055
948
921
788 2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
revenue
£m
adjusted opera ting profit
£m governance directors financial statements company information
23 rotork annual report 2014
strategic report
the division continues to pursue geographic 
expansion capitalising on our core competences 
and	the	strength	of	our	brand	to	move	into	new	
markets we are focused on delivering longterm 
profitable	growth	which	we	will	achieve	by	
expanding	and	deploying	our	market	leading	flow	
control	expertise	in	endmarkets	where	we	can	
achieve	leading	positions	and	where	there	is	
longterm demand for our products and services 
even in our more mature markets the increased 
drive	towards	automation	with	a	requirement	for	
increased asset management information 
provides	opportunities	to	grow
during	the	year	we	invested	in	a	number	of	
facilities	the	largest	of	which	was	the	new	factory	
in	leeds	uk	this	multidivision	site	houses	the	
headquarters	of	our	uk	sales	subsidiary	where	
our northern uk service team is based we also 
relocated	our	sales	subsidiary	in	bilbao	spain	to	
a	new	larger	facility	having	outgrown	the	previous	
one	due	to	the	growth	of	our	retrofit	and	factory	
fit	activities	in	poland	we	opened	a	new	office	
and	workshop	to	serve	and	grow	our	customer	
base	in	eastern	europe	and	towards	the	end	of	
the	year	we	set	up	a	small	subsidiary	in	chile	
both	these	new	offices	are	in	locations	where	we	
have previously operated through an agent but 
where	we	have	now	decided	that	the	time	is	right	
to have a direct presence
meanwhile	we	continued	to	focus	on	
technological advancements and innovation 
during	the	year	we	launched	our	new	centork	
product	range	rotork’s	specialist	offering	for	the	
water 	industrial	and	power	markets	the	product	
range features modularity  easy selection setting 
and mounting we continue to anticipate strong 
growth	in	the	water	and	waste	water	industries	
driven by increased urbanisation in developing 
countries and increased environmental and 
scarcity concerns globally 
we expect the recent fall in the oil price to 
mainly	affect	the	upstream	sector	of	the	oil		
gas industry whilst 51 of the division’s sales 
are into the oil  gas industry our market 
exposure	is	diversified	across	various	sub
sectors	large	numbers	of	our	actuators	are	
supplied	into	both	midstream	and	downstream	
applications	which	have	been	more	shielded	
from the recent soft pricing environment a 
significant	proportion	of	our	supply	is	also	
retrofit	upgrade	or	replacement	work	where	
spend is less sensitive to oil spot prices
case study
rotork	iq3	valve	actuators	were	selected	to	replace	actuators	
from	another	manufacturer	after	a	chamber	flooded	with	hot	
water	at	the	metropolitan	copenhagen	heating	t ransmission	
company	ctr
although	the	problem	was	quickly	rectified	all	
the electric valve actuators installed in the 
chamber had been completely submerged in 
the	water 	subsequent	inspection	revealed	
that the robust doublesealed design of the 
installed rotork iq actuators had protected 
them from any damage and maintained the 
integrity of their standard ip68 temporarily 
submersible	enclosure	specification	by	
comparison the actuators from the other 
manufacturer had been badly damaged by the 
effects	of	the	hot	water	reaching	internal	
electric and electronic components
opportunities
• water 	power		industrial	markets
• eastern europe  latin america
• midstream	and	downstream	 
oil  gas market
• rotork site services strategic report
24 rotork annual report 2014
following	three	years	of	double	digit	growth	
2014	was	a	year	of	consolidation	at	rotork	fluid	
systems	rfs	there	were	no	major	acquisitions	
during the year but the integration of recent 
acquisitions product development and a drive on 
key component sourcing initiatives all made good 
progress	the	work	we	have	undertaken	on	
sourcing	was	one	of	the	key	factors	behind	the	70	
basis point improvement in adjusted operating 
margin	we	achieved	in	2014
revenue	was	£1803m	36	lower	than	2013	on	
a	reported	basis	however 	reversing	the	54	
currency	headwind	and	adjusting	for	the	part	
year contribution from acquisitions in 2013 this 
decline is reduced to 07 on an organic constant 
currency	occ	basis	order	intake	was	similarly	
impacted	with	the	£1846m	being	47	below	
2013	or	18	below	the	prior	year	excluding	
currency and acquisitions although the currency 
headwind	was	even	greater	on	profit	the	
benefits	of	sourcing	initiatives	and	an	improved	
product mix resulted in reported adjusted 
operating	profit	of	£312m	compared	with	
£310m in 2013 this gave a margin of 173 
which	was	70	basis	points	higher	than	last	year 	
on	an	occ	basis	this	difference	increased	to	130	
basis points and a 179 margin
review
fluid systems
business 
david littlejohns
managing director 
rotork fluid systems
“whilst oil  gas is the largest endmarket it 
has diminished 5 compared with 2013 as 
our exposure to water general industrial and 
particularly the power endmarkets has 
increased”
1803
1870
1609
1326
1068
312
310
246
171
149 2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
revenue
£m
adjusted opera ting profit
£m governance directors financial statements company information
25 rotork annual report 2014
strategic report
oil  gas remains the largest endmarket for rfs 
representing 72 of the division’s revenue in the 
year	with	the	overall	split	between	upstream	
midstream	and	downstream	relatively	even	this	
is	spread	across	many	different	applications	
within	oil		gas	and	across	many	geographic	
regions ranging from shale in north america to 
gas condensate projects in central asia we 
continued to see good business in the year on 
safety systems for tank storage applications in 
the	downstream	market	whilst	oil		gas	is	the	
largest endmarket it has diminished 5 
compared	with	2013	as	our	exposure	to	water 	
general	industrial	and	particularly	the	power	
endmarkets has increased the acquisition of 
masso	based	in	valduggia	italy	in	december	
2014 introduces a further element of 
diversification	to	rfs	masso	designs	and	
manufactures hydraulic actuators and control 
systems for use in shipboard applications and 
brings	with	it	a	range	of	products	and	customers	
new	to	the	division
mexico continued to be an important market 
where	we	won	several	significant	orders	we	
received a large order in june for the next phase 
of	the	scada	pipeline	project	the	first	phase	of	
which	was	won	in	2013	in	addition	k t ork	based	
in	dallas	usa	won	a	large	power	project	for	
their t ype k damper drive application both these 
orders have multiyear delivery periods overall 
latin	america	was	the	end	destination	which	
reported	the	strongest	growth	within	rfs	partly	
due	to	the	completion	of	deliveries	on	the	first	
phase of the scada project in contrast eastern 
europe	was	the	region	which	reported	the	
sharpest	decline	and	this	was	driven	by	a	
combination of project timing and in the latter 
part of the year  the impact of sanctions and the 
weaker	rouble	on	russian	business	the	£6m	
impact	we	reported	in	the	third	quarter	is	higher	
than	the	expected	ongoing	impact	but	this	will	
remain	a	headwind	into	2015
we also continued to invest in our regional 
infrastructure	to	ensure	that	we	provide	
support	locally	to	our	customers	with	upgraded	
facilities	in	leeds	uk	and	bilbao	spain	and	
the	new	offices	in	poland	and	chile	all	having	an	
rfs	capability	we	also	invested	in	a	new	factory	
in	lucca	italy	near	our	existing	leased	facility	
not	only	will	this	recently	purchased	facility	
provide	us	with	security	of	tenure	for	the	future	
but	it	will	also	allow	us	to	modify	our	production	
processes	and	bring	greater	efficiency	to	our	
largest factory
we achieved an improved margin this year 
mainly as a result of a number of sourcing 
initiatives	across	the	world	volumes	within	the	
division	have	risen	rapidly	in	recent	years	which	
has	now	made	sourcing	from	low	cost	regions	
viable for some of our components for 
example	we	reviewed	the	supply	chain	of	our	
small scotch yoke actuators manufactured in 
sweden	and	the	rack	and	pinion	range	we	
acquired	with	gt a	as	they	are	able	to	share	
certain components similar initiatives in the 
usa	and	italy	have	already	delivered	benefits	
and	they	will	continue	to	do	so	in	2015
case study
mining presents some of the most arduous valve actuation 
applications	slurry	pipelines	transporting	tailings	–	waste	
product from ore processing – are particularly challenging these 
environments suit the balanced design of rotork rhq heavy duty 
rack and pinion actuators
an rhq actuator on a 36 inch severe service 
ball	valve	helps	to	provide	critical	flow	control	
on the tailings pipeline pump station at a 
copper mine in the andes the actuator is 
operated	by	an	hpu	hydraulic	power	unit	
manufactured	by	flowquip	the	hpu	
incorporates local controls and stored energy 
to	operate	the	actuator	when	electrical	power	
is	not	available	precise	flow	control	is	
essential if the abrasive slurry moves too 
quickly it can destroy the pipeline from the 
inside	if	it	moves	too	slowly	it	can	separate	
out and cause a blockage
opportunities
• marine market
• new	product	introduction
• geographic expansion
• new	facility	in	italy
we continued to invest in rd and this is 
reflected	in	the	launch	of	our	third	generation	of	
the si actuator planned for 2015 aimed at 
safety	related	emergency	shutdown	esd	and	
remotely	operated	shutoff	valve	rosov	
duties	we	also	worked	on	extending	the	k t ork	
range	ready	for	launch	in	2015	and	together	with	
the	gt	and	rc	ranges	this	has	widened	our	
portfolio	aimed	at	the	industrial	power	and	
petrochemical	industries	we	look	forward	to	
further penetration of these markets in 2015 strategic report
26 rotork annual report 2014
gears made good progress in order intake 
revenue	and	profit	throughout	the	year 	our	
performance continues to demonstrate the 
benefit	of	our	industryleading	expertise	gained	
over	several	decades	working	at	the	forefront	of	
manual and motorised gear technology for the 
valve industries in the many market sectors that 
we	serve
revenue	of	£578m	was	32	higher	than	2013	
despite	a	43	currency	headwind	on	an	
organic	constant	currency	occ	basis	revenue	
grew	by	50	with	the	acquisition	of	renfro	in	
2013	accounting	for	25	of	the	growth	order	
intake	was	similarly	affected	by	currency	with	
reported	growth	of	02	which	at	constant	
currency	and	with	the	benefit	of	the	acquisition	
increased	to	19	adjusted	operating	profit	
was	£130m	03	ahead	of	2013	which	resulted	
in a 60 basis point reduction in operating margin 
to	225	on	an	occ	basis	the	growth	in	
adjusted	operating	profit	was	41	and	the	
margin 229 each of the gears factories 
improved	margins	in	the	year 	with	the	
exception	of	the	leeds	uk	operation	which	
was	affected	by	the	costs	of	moving	into	the	
new	facility	and	an	increase	in	more	competitive	
larger	project	sales	had	a	negative	effect	on	
margins in the period
review
gears
business 
pamela bingham
managing director 
rotork gears
“central to our successful longterm track 
record are our worldclass sales and 
engineering teams who provide our 
customers with the latest innovative gearing 
technology using leadingedge design 
methods”
578
560
529
466
392
130
130
121
103
92 2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
revenue
£m
adjusted opera ting profit
£m governance directors financial statements company information
27 rotork annual report 2014
strategic report
central to our successful longterm track record 
are	our	worldclass	sales	and	engineering	teams	
who	provide	our	customers	with	the	latest	
innovative gearing technology using leading
edge design methods the sales process in gears 
differs	from	controls	and	fluid	systems	and	
whilst	there	are	project	sales	often	in	
conjunction	with	other	rotork	divisions	more	
typically	we	sell	directly	to	the	valvemaker	on	an	
ongoing basis accordingly  our objective is to 
build	a	relationship	with	the	valvemaker	so	that	
they	use	our	gearboxes	in	conjunction	with	their	
valves	when	the	package	is	not	being	automated
this	year 	following	strong	growth	in	the	far	
east	there	was	a	reasonably	even	spread	of	
revenue across the key regions of the americas 
far east and western europe although western 
europe remained the largest accounting for 
37 of sales our factories are located in these 
areas	so	that	we	are	close	to	our	customers	the	
middle	east	and	africa	was	the	only	region	to	
report	a	marked	reduction	in	sales	but	this	was	
after an unusually strong performance in 2013 
the endmarket exposure of gears is like the 
group	as	a	whole	weighted	to	oil		gas	which	
accounts for 57 of sales but these are spread 
across all segments of this market water and 
waste	water	is	the	second	largest	endmarket	
where	small	manual	valves	account	for	the	
majority of sales
in	line	with	our	aim	to	become	our	customers’	
preferred	partner 	we	have	a	strong	commitment	
to	improving	the	efficiency	of	our	operations	and	
those of our customers and suppliers that aim 
was	a	key	factor	in	our	move	to	a	new	stateof
theart manufacturing facility in leeds during the 
year  the larger facility has given us the 
opportunity to increase the dedicated research 
and	development	team	who	are	engaged	in	every	
aspect	of	new	product	design	and	development	
from concept to customer 
gears provides innovative solutions that meet 
the individual requirements of our valve gearbox 
and	valve	accessory	customers	by	drawing	upon	
our unrivalled range of marketleading products 
during	the	year	we	strengthened	our	wide	
portfolio	of	gearboxes	with	the	launch	of	our	
new	manual	hob	multiturn	product	range	this	
range	offers	our	customers	a	more	
comprehensive solution for multiturn manual 
applications	our	new	leeds	facility	also	has	
extensive test facilities including a 
comprehensive set of test rigs for testing 
multiturn and quarterturn gearboxes across a 
wide	range	of	torques	our	rd	remains	
focused	on	developing	cost	effective	and	
innovative	solutions	that	will	continue	to	provide	
gears	with	access	to	new	customers	and	new	
market sectors
the	five	million	cubic	metre	capacity	terminal	
is a part of the country’s economic 
t ransformation programme with the 
completion of phase 1a of the project 274 
explosionproof	iq3	actuators	fitted	with	the	ib	
bevel gearboxes have been installed
the actuators are monitored and controlled by 
eight pakscan p3 120channel hotstandby 
master stations situated onsite in three 
cabinets	and	linked	to	a	centralised	y okogawa	
scada system
opportunities
• increased rd investment
• product range expansion
• geographic expansion
case study
rotork’s ib bevel gearboxes have been installed at malaysia’s 
pengerang	t erminal	to	help	operate	gate	valves	on	flow	control	
applications at the import jetty and storage tank facilities strategic report
28 rotork annual report 2014
this	was	a	year	of	strong	growth	for	the	
instruments	division	which	saw	the	number	of	
businesses	double	in	2014	following	the	
completion	of	two	important	acquisitions	we	
focused	on	delivering	our	key	priorities	
continuing	to	widen	our	offering	in	flow	control	
and pressure control products by acquiring or 
developing	new	technologies	close	to	the	
actuator the integration of acquisitions 
leveraging global sales synergies and delivering 
cost reduction and productivity improvements
in	march	we	acquired	y oung	t ech	co	ytc	a	
korean based manufacturer of valve positioners 
and	accessories	mainly	associated	with	
pneumatic	valve	actuation	ytc	has	a	wide	
range of positioners and smart positioners 
which	are	complementary	to	rotork’s	existing	
portfolio of products this acquisition not only 
enlarged our range of instrumentation products 
and our addressable market but also provided 
instruments	with	a	platform	and	sales	channels	
in	the	important	asiapacific	market
in	july	we	acquired	xylem	flow	control	based	in	
wolverhampton	uk	this	added	the	
established brands of midlandacs alcon and 
landon	kingsway	into	instruments	under	what	
we	now	call	rotork	midland	this	business	
brought	with	it	a	strong	reputation	for	delivering	
innovative	solutions	for	a	wide	range	of	
applications including control systems for 
pneumatic and hydraulic control valves 
electropneumatic and electrohydraulic 
actuators local control panels manifolds and 
components such as solenoid valves level 
controls	gas	detection	and	firefighting	
equipment
review
instruments
business 
alan paine
managing director 
rotork instruments
revenue
£m
adjusted opera ting profit
£m
“ytc has a wide range of positioners and 
smart positioners which are complementary 
to rotork’s existing portfolio of products”
460
249
164
14
144
78
51
04
2011
2012
2013
2014
2011
2012
2013
2014
2010
2010 governance directors financial statements company information
29 rotork annual report 2014
strategic report
the	financial	results	for	the	year	were	heavily	
influenced	by	these	acquisitions	both	of	which	
performed	in	line	with	our	expectations	
reported revenue increased by 844 despite a 
51	currency	headwind	but	on	an	organic	
constant	currency	occ	basis	the	increase	was	
still	86	the	results	for	order	intake	were	very	
similar 	in	what	is	generally	a	short	leadtime	
division	with	the	headline	increase	of	830	
reduced to 87 for fairchild and soldo at 
constant	currency	adjusted	operating	profit	
rose 843 to £144m a margin of 314 the 
same as 2013 unlike the other divisions 
currency improved reported margins for 
instruments because prior to the acquisition of 
midland the division had no sterling costs whilst 
acquisitions	were	accretive	in	total	occ	
adjusted operating margin declined to 296 a 
180 basis point reduction this is largely due to 
the expansion of the divisional executive team 
which	has	been	required	to	support	this	pace	of	
growth	and	to	ensure	that	the	benefits	of	the	
acquisitions are delivered
the	midland	product	range	now	within	
instruments complements the highprecision 
pneumatic control devices and motion control 
equipment manufactured by fairchild the soldo 
range of control accessories for valve 
automation and ytc’s market leading range of 
valve positioners and accessories we also have 
instruments companies located in europe the 
usa	and	the	far	east	and	we	are	integrating	
our	international	sales	networks	to	support	
sales of products of all four companies by 
training	our	sales	forces	on	all	of	the	new	
products and by using crossselling techniques 
with	customers	we	have	been	successful	in	
penetrating	new	geographic	markets	with	our	
growing	product	portfolio
similarly	we	have	been	using	our	strategically	
located facilities to ensure local assembly and 
inventory management for the entire range of 
our products ensuring fast ontime delivery for 
our	customers	for	instance	we	are	now	using	
our soldo facility in italy as the european hub for 
ytc	products	whilst	our	fairchild	facility	is	
ensuring access to the usa market for the 
soldo and ytc product ranges work to qualify 
the full range of products to meet various 
national	and	international	certification	
standards	is	underway	and	2015	will	see	
completion of this for the key products this not 
only supports our third party customers but also 
case study
a rotork midland custom designed and built dual regulation 
manifold	has	eliminated	severe	corrosion	problems	suffered	by	
instrumentation equipment previously used for an arduous 
offshore	application
the enduser manufactures umbilical reeling 
equipment	for	offshore	subsea	applications	
including rov operations and cable laying 
existing air preparation units that feed air to 
pneumatic	powered	gear	motors	were	found	
to	be	corroding	badly	in	offshore	conditions	
leading to reliability problems
due to the resultant short operational life of 
these units the enduser sought a stainless 
steel solution from rotork midland’s customer 
opportunities
• global manufacturing 
expansion
• sales channel 
development
• rotork synergies
allows	us	to	support	the	local	rotork	offices	and	
factories	where	there	are	opportunities	to	use	a	
wide	range	of	instruments’	products	in	
automating pneumatic and hydraulic actuators
each	of	the	businesses	have	their	own	product	
development	plans	and	work	has	started	to	align	
these and create a single divisional plan each 
business	brings	a	level	of	expertise	in	its	own	
product lines and often complementary skills 
during	the	year	each	business	has	launched	new	
variants of products and extensions to existing 
ranges either broadening the range of materials 
for a product or the industries and applications 
for	which	it	can	be	used strategic report
30 rotork annual report 2014
this	year	we	have	achieved	growth	in	order	intake	
revenue	and	profit	all	of	which	increased	both	on	a	
reported	and	an	organic	constant	currency	occ
basis and a record adjusted operating margin
our	2014	results	were	heavily	influenced	by	the	
strength	of	sterling	compared	with	2013	whilst	
the	currency	headwind	diminished	in	the	second	
half	revenue	was	£330m	or	57	lower	than	it	
would	have	been	at	2013	exchange	rates	
acquisitions	had	a	positive	effect	adding	£274m	
to	revenue	and	partially	offsetting	the	currency	
impact	reported	revenue	of	£5947m	was	28	
higher than the comparable period and 38 
higher on an occ basis
adjusted	operating	profit	grew	ahead	of	the	rate	
of revenue up 38 to £1572m delivering a 
margin	of	264	compared	with	262	last	year 	
growth	on	an	occ	basis	was	57	divisional	mix	
was	a	positive	influence	on	group	margins	with	
the	higher	margin	divisions	growing	and	fluid	
systems revenue declining albeit delivering 
improved margins on an occ basis the margin 
was	a	further	30	basis	points	higher	at	267	as	
currency	had	a	dilutive	effect	on	margins	due	to	
the higher proportion of sterling costs than 
revenues	within	the	group	the	effect	of	
acquisitions	on	margin	was	negligible	as	the	
average	margin	of	the	acquired	businesses	was	
close to the group average
review
financial
jonathan davis
finance director
“the acquisition in march of young t ech co 
ytc for up to £64m is rotork’s largest 
single acquisition to date” governance directors financial statements company information
31 rotork annual report 2014
strategic report
the	net	finance	charge	reduced	by	£02m	to	
£11m	the	effect	of	the	higher	level	of	loans	
required	during	the	year	following	the	acquisitions	
was	offset	by	a	reduction	in	the	interest	charge	
related to the pension schemes the impact of 
this	and	the	lower	effective	tax	rate	meant	
earnings	per	share	increased	by	37	or 	when	
based	on	adjusted	profit	by	54	to	1316p
acquisitions
we spent more on acquisitions in 2014 than in any 
previous year  the acquisition in march of y oung 
t ech	co	ytc	for	up	to	£64m	is	rotork’s	largest	
single acquisition to date the purchase of xylem’s 
uk	based	flow	control	subsidiary 	now	renamed	
rotork midland in july and masso ind spa in 
december increased the total spend in the year to 
£813m in addition there is a further potential 
£44m contingent consideration in relation to the 
three acquisitions made in 2014 rotork has a 
strategy	of	growing	through	a	combination	of	
organic	expansion	and	acquisitions	and	we	expect	
this to continue acquisitions are made on the basis 
that	they	will	provide	a	new	product	improve	our	
access to a geographic or enduser market or some 
combination of these objectives each of this year’s 
acquisitions met one or more of these criteria
t aking all three acquisitions together  £324m of 
the	consideration	was	attributed	to	intangible	
assets	which	will	be	amortised	and	£451m	is	
goodwill	which	will	be	subject	to	an	annual	
impairment	review 	the	increased	value	of	
acquisitions this year and last year has led to a rise 
in the amortisation charge related to acquired 
intangible	assets	to	£149m	2013	£121m	in	
order	to	adjust	the	income	statement	to	show	a	
likeforlike period for each acquisition 2014 
revenue has to be reduced by £274m and 
adjusted	operating	profit	by	£76m	the	profit	
margin	in	the	acquired	business	was	slightly	
accretive	in	aggregate	at	280	with	ytc	the	key	
contributor to this
currency
the relative strength of sterling throughout the 
year	led	to	a	marked	headwind	for	the	reported	
results	the	impact	was	most	significant	in	the	
first	half	of	the	year	with	revenue	reduced	by	
£204m	74	compared	with	a	£126m	42	
reduction	in	the	second	half	this	was	partly	driven	
by	the	comparatives	as	the	us	dollar	weakened	
progressively	through	that	year 	in	2014	whilst	the	
us dollar reversed the trend of 2013 and 
strengthened	from	midyear	onwards	it	was	the	
euro’s	turn	to	weaken	steadily	through	the	year 	
the	average	rate	for	both	us	dollar	and	euro	was	
53	weaker	than	2013	but	by	yearend	the	us	
dollar	was	62	stronger	than	it	had	started	2014	
whilst	the	euro	was	63	weaker 	these	two	
currencies	had	the	most	significant	impact	on	our	
results	with	us	dollar	representing	41	of	
revenue	and	the	euro	31	sterling	was	11	of	
revenue and various other currencies made up the 
remaining 17 amongst the other 19 currencies 
that are home currencies for one of our subsidiary 
offices	9	weakened	by	more	than	10	when	the	
average	rate	is	compared	with	that	for	2013
the impact of currency is both in the form of 
translation	and	transaction	differences	given	the	
locations	in	which	we	have	operations	and	the	
international nature of our supply base and sales 
currencies	the	impact	of	transaction	differences	
can	be	very	different	from	the	translation	impact	
we are able to partially mitigate the transaction 
impact	through	matching	supply	currency	with	
sales	currency	but	ultimately	we	are	still	net	
sellers of both us dollar and euros it is the net 
sale	of	these	currencies	which	we	principally	
address through our hedging policy  covering up 
to 75 of trading transactions in the next 12 
months	and	up	to	50	between	12	and	24	
months net of these mitigating actions 
operating	profit	was	£106m	70	lower	than	it	
would	have	been	at	2013	rates
in order to estimate the impact of currency  at the 
current	exchange	rates	we	consider	the	effect	of	a	
1 cent movement versus sterling a 1 euro cent 
movement	now	results	in	approximately	a	
£325000	adjustment	to	profit	and	for	us	dollar 	
and dollar related currencies a 1 cent movement 
equates to approximately a £550000 adjustment
return on capital employed roce
our	assetlight	business	model	and	high	profit	
margins mean rotork generates a high roce our 
definition	of	roce	is	based	on	adjusted	
operating	profit	as	a	return	on	the	average	net	
assets excluding net cash and the pension scheme 
liability net of the related deferred tax this means 
that	as	we	make	acquisitions	our	capital	base	
grows	when	the	associated	intangible	assets	and	
goodwill	are	recognised	during	the	year	
intangibles	and	goodwill	increased	by	a	net	£63m	
in	total	which	after	allowing	for	the	related	
deferred tax accounts for more than 60 of the 
increase	in	capital	employed	which	rose	35	to	
£379m as a result of this roce reduced to 476 
despite	the	improved	profit	margin	and	growth	in	
revenue this year 
t axation
this	year	the	group’s	effective	tax	rate	reduced	
from	279	to	269	the	mix	of	where	profits	are	
generated	from	within	the	37	countries	in	which	
we	have	a	presence	has	a	major	impact	on	the	
group	effective	tax	rate	where	we	pay	tax	the	
national	effective	rates	vary	from	17	to	35	
there	are	also	changes	to	tax	within	some	
jurisdictions	which	are	large	enough	to	impact	the	
group	effective	rate	the	reduction	of	chinese	
withholding	tax	rates	from	10	to	5	was	one	
such	influence	in	the	year 	as	was	the	impact	of	the	
patent	box	reliefs	in	the	uk	these	two	items	
accounted	for	a	reduction	of	120	basis	points	with	
geographic mix accounting for a 20 basis point 
increase our approach to tax continues to be to 
operate on the basis of full disclosure and 
cooperation	with	all	tax	authorities	and	where	
possible	to	mitigate	the	burden	of	tax	within	the	
local legislation strategic report
32 rotork annual report 2014
organic business growth
£m
2014 as 
reported
constant 
currency 
adjustment
2014 at 2013 
exchange 
rates
remove 
acquisitions
organic 
business 
at 2013 
exchange 
rates
2013 as 
reported
revenue 5947 330 6277 274 6003 5784
cost of sales 3092 161 3253 164 3089 3040
gross	profit	 480 2855 169 482 3024 110 485 2914 474 2744
overheads 216 1283 64 215 1347 34 218 1313 212 	 1230	
adjusted	operating	profit	 264 1572 105 267 1677 76 267 1601 262 1514
net	financial	expenses	 11  11  11 13
adjusted	profit	before	tax	 262 1561 105 266 1666 76 265 1590 260 1501
 adjusted is before the amortisation of acquired intangible assets
cash generation
net	cash	balances	finished	the	year	at	£468m	
£221m	lower	than	the	start	of	the	year 	the	three	
largest	categories	of	cash	expenditure	were	
£813m on acquisitions £430m of tax paid and 
£427m of dividends paid the increase in 
acquisition	spend	from	£435m	last	year 	was	the	
largest	increase	and	was	partly	funded	by	a	
£194m net increase in loans during the year  
capital	expenditure	was	higher	than	the	previous	
year	with	the	completion	of	the	leeds	uk	site	
project	and	the	purchase	of	a	new	factory	in	lucca	
italy	being	the	two	largest	items	the	lucca	
factory	cost	£34m	and	will	be	developed	during	
2015 for the business to move into late in the year 
our	cash	generation	kpi	shows	a	conversion	of	
974	of	operating	profit	into	operating	cash	
control	of	working	capital	is	key	to	this	
performance	and	this	year	working	capital	
increased	to	285	of	revenue	compared	with	
247	in	december	2013	the	weighting	of	
revenue	to	the	last	quarter	of	the	year 	which	
culminated in december 2014 being a record 
monthly revenue led to a £225m increase in 
trade	receivables	between	balance	sheet	dates	
of	which	acquisitions	accounted	for	£60m	
looking at this as days’ sales outstanding this 
measure increased by 4 days to 60 days the 
high revenue had a positive impact on inventory 
which	only	increased	£22m	on	an	occ	basis	
but	with	a	further	£48m	from	acquisitions	
yearend	inventory	was	£811m	which	
represented 136 of annual revenue compared 
with	130	in	2013
credit management
the group’s credit risk is primarily attributable 
to	trade	receivables	with	the	risk	spread	over	a	
large number of countries and customers and 
no	significant	concentration	of	risk	credit	
worthiness	checks	are	undertaken	before	
entering into contracts or commencing trade 
with	new	customers	the	majority	of	our	trade	
receivables are insured so the authorisation 
process	operates	in	conjunction	with	the	
insurer  taking advantage of their market 
intelligence	where	appropriate	we	use	trade	
finance	instruments	such	as	letters	of	credit	to	
mitigate	any	identified	risk
t reasury
the group operates a centralised treasury 
function managed by a t reasury committee 
chaired by the group finance director and also 
comprising the chief executive group legal 
director  group financial controller and group 
t reasurer  the committee meets regularly to 
consider foreign currency exposure control 
over deposits funding requirements and cash 
management the group t reasurer monitors 
compliance	with	the	treasury	policies	and	is	
responsible for overseeing all the group’s 
banking relationships a subsidiary t reasury 
policy restricts the actions subsidiaries can take 
and the group t reasury policy and t erms of 
reference	define	the	responsibilities	of	the	
group t reasurer and t reasury committee
the	group	uses	financial	instruments	where	
appropriate	to	hedge	significant	currency	
transactions	principally	forward	exchange	
contracts	and	swaps	these	financial	instruments	
are	used	to	reduce	volatility	which	might	affect	
the group’s cash or income statement in 
assessing	the	level	of	cash	flows	to	hedge	with	
forward	exchange	contracts	the	maximum	cover	
taken	is	75	of	forecast	flows	the	board	
receives	monthly	treasury	reports	which	
summarise the group’s foreign currency hedging 
position distribution of cash balances and any 
significant	changes	to	banking	relationships
during	the	year	we	spent	£813m	on	
acquisitions in order to fund these acquisitions 
we	restructured	our	borrowing	facilities	we	
started	the	year	with	one	facility	for	up	to	£75m	
although	only	£15m	of	the	facility	was	being	
utilised	at	that	time	midyear	this	facility	was	
renewed	and	the	expiry	date	extended	from	
january 2015 to june 2016 an additional one 
year	committed	facility	for	£20m	was	also	
entered into in may 2014
review continued
financial governance directors financial statements company information
33 rotork annual report 2014
strategic report
dividends
the board is proposing a 30 increase in the 
final	dividend	to	309p	per	share	when	taken	
together	with	the	192p	interim	dividend	paid	in	
september  this represents a 43 increase in 
dividends over the prior year  this gives dividend 
cover	of	24	times	2013	24	times	our	
dividend	policy	is	to	grow	core	dividends	in	line	
with	earnings	and	supplement	core	dividends	
with	additional	dividends	when	the	board	
considers it appropriate to do so having 
considered the nearterm expected cash 
requirements of the group
share capital
given the rise in the company’s share price over 
recent years the directors consider that it is 
now	appropriate	to	subdivide	the	shares	into	
smaller units at the forthcoming agm in april 
the board is proposing a subdivision of the 
company’s share capital to make the 
company’s shares more accessible particularly 
to	small	shareholders	and	our	own	employees	a	
subdivision may also improve the liquidity and 
reduce	the	bidoffer	spread	of	the	company’s	
ordinary shares therefore a 10 for 1 share split 
will	be	proposed	at	the	agm	which	will	mean	the	
existing	5	pence	ordinary	shares	will	become	05	
pence ordinary shares
retirement benefits
the group accounts for postretirement 
benefits	in	accordance	with	ias19	employee	
benefits	the	balance	sheet	reflects	the	net	
deficit	of	these	schemes	at	31	december	2014	
based on the market value of the assets at that 
date and the valuation of liabilities using year 
end aa corporate bond yields we have closed 
both	the	main	defined	benefit	pension	schemes	
to	new	entrants	the	uk	scheme	in	2003	and	the	
us one in 2009 in order to reduce the risk of 
volatility of the group’s liabilities
the most recent triennial valuation for the uk 
scheme	took	place	as	at	31	march	2013	and	was	
adversely	affected	by	the	lower	yield	on	
longdated	gilts	at	that	date	which	is	the	key	
driver behind the value of the scheme’s 
liabilities as a result despite better than 
expected investment returns and the agreed 
past	deficit	contributions	the	funding	level	was	
lower	than	at	the	previous	valuation	a	recovery	
plan	has	been	agreed	with	the	t rustees	which	
will	see	past	service	contributions	from	the	
company of £52m during 2014 £55m in 2015 
and	£55m	in	2016	at	which	time	the	next	
valuation	will	take	place
during	the	year	the	deficit	on	the	schemes	
increased from £202m to £361m and the funding 
level reduced from 87 to 81 although the 
company paid a total of £81m in contributions 
the	gain	on	scheme	assets	and	the	lower	inflation	
rate	were	not	enough	to	offset	the	effect	from	the	
reduction in the discount rate 
	 references	to	adjusted	profit	throughout	this	
document	are	defined	as	the	ifrs	profit	whether	
operating	profit	or	profit	before	tax	with	£149m	
2013	£121m	of	amortisation	of	acquired	
intangibles added back
occ	 organic	constant	currency	results	are	the	2014	figures	
restated	at	2013	exchange	rates	and	with	the	
incremental contribution from acquisitions removed strategic report
34 rotork annual report 2014
key performance
indica tors
sales revenue 
growth
return on sales cash generation return on capital 
employed
earnings per share 
growth
accident frequency 
rate
carbon emissions employee 
satisfaction
28 262 974 476 54 031 73 36
reasons for choice
this is reported in detail for 
operating segments and is a key 
driver for the business this 
measure enables us to track our 
overall	success	in	specific	
project activity and our progress 
in increasing our market share by 
product and by region
reasons for choice
this measure brings together 
the	combined	effects	of	
procurement costs and pricing 
as	well	as	the	leveraging	of	our	
operating assets it is also a 
check on the quality of revenue 
growth	but	is	heavily	influenced	
by divisional mix
reasons for choice
this is used as a measure of 
performance	where	a	target	of	
85 is regarded as a base level 
of achievement cash 
generation is also one of the 
constituent parts of the senior 
management	reward	system
reasons for choice
rotork has an assetlight 
business model by design and 
reporting this ratio internally 
helps management at group 
level monitor our adherence to 
this philosophy
reasons for choice
the measurement of earnings 
per	share	eps	reflects	all	
aspects of the income statement 
including management of the 
group’s tax rate
reasons for choice
the accident frequency rate 
afr	is	used	as	one	measure	of	
the	effectiveness	of	our	health	
and safety procedures
reasons for choice
this kpi compares this year’s 
carbon emissions stated as a 
function	of	revenue	with	last	
years and is a broad measure of 
our impact on the environment
reasons for choice
the	survey	as	a	whole	enabled	
the group to get feedback from 
across	the	businesses	on	how	
we	relate	to	our	employees	and	
what	we	can	do	better 
how we calculate
increase in sales revenue 
yearonyear divided by prior 
year sales revenue
how we calculate
adjusted	profit	before	tax	after	
financing	and	interest	shown	as	
a percentage of sales revenue
how we calculate
cash	flow	from	operating	
activities	before	tax	outflows	
and the pension charge to cash 
adjustment as a percentage of 
adjusted	operating	profit
how we calculate
adjusted	operating	profit	as	a	
percentage of average capital 
employed capital employed is 
defined	as	shareholders’	funds	
less	net	cash	held	with	the	
pension	fund	deficit	net	of	
related deferred tax asset added 
back	the	calculation	is	shown	
on page 119
how we calculate
increase in adjusted basic eps 
based	on	adjusted	profit	after	
tax	yearonyear	divided	by	the	
prior year adjusted basic eps
how we calculate
the	formula	we	have	used	for	
calculating our afr is the 
number of reportable injuries 
divided by the number of hours 
worked	multiplied	by	100000
how we calculate
energy	usage	data	scope	1	and	
2	is	collected	and	converted	to	
equivalent tonnes of co
2
 and 
then reported as a function of 
millions of revenue further detail 
is contained in the corporate 
social responsibility report
how we calculate
employees scored their responses 
directly into a prepared survey 
with	1	being	very	dissatisfied	and	
5	being	very	satisfied
comments on results
the	28	growth	in	revenue	was	
achieved despite our largest 
endmarket oil  gas declining 
16	compared	with	2013	
growth	in	the	power 	industrial	
and	other	endmarkets	was	
sufficient	to	deliver	growth	
overall on a constant currency 
basis	growth	was	85	reflecting	
the	strong	currency	headwinds	
we	faced	this	year 
comments on results
the improvement in margins 
within	fluid	systems	growth	in	
instruments	with	margins	
higher	than	the	group	average	
and a positive divisional mix 
impact all contributed to the 20 
basis point improvement in the 
year  equalling the record for this 
measure set in 2010
comments on results
cash conversion remained high 
despite the record monthly 
revenue	in	december	which	led	
to a rise in trade receivables at 
the year end
comments on results
average capital employed rose 
by 29 due to the 2013 and 
2014	acquisitions	whose	value	
on our balance sheet includes 
the intangible assets associated 
with	their	acquisition	this	kpi	
remains at sector leading levels
comments on results
the	lower	tax	rate	in	the	uk	and	
the	international	mix	of	where	
our	profits	were	generated	led	to	
a further reduction in the 
effective	tax	rate	and	therefore	
eps	growth	ahead	of	the	
underlying	profit	growth
comments on results
the investment in health and 
safety training audits to monitor 
compliance	with	procedures	and	
initiatives	to	embed	safe	working	
practices led to a further 
reduction in this kpi this year 
comments on results
the	slower	revenue	growth	and	
colder	winter	in	early	2014	meant	
a reversal of the year 1 gains 
whilst	already	a	low	energy	
consumer by virtue of our 
outsourced manufacturing model 
we	are	looking	at	ways	of	reducing	
energy	consumption	further	with	
a focus on lighting and our higher 
energy usage locations
comments on results
the number of employees 
completing the survey rose to 
2386 a 75 response rate the 
highest	scoring	questions	were	
those on employees planning on 
staying at least another year 
with	rotork	and	being	proud	of	
the	products	and	services	we	
provide our customers the 
latter	point	was	also	the	most	
improved score
financial kpis
growth	of	the	business	quality	of	earnings	and	efficient	use	of	resources	are	crucial	target	areas	for	
rotork	and	we	employ	a	number	of	performance	measures	throughout	rotork	to	monitor	them	the	
kpis	used	to	monitor	the	financial	performance	of	the	business	are	set	out	below
2010 2011 2012 2013 2014
177
76
143
130
28
2010 2011 2012 2013 2014
260
262
257
260
262
2010 2011 2012 2013 2014
896
957
954
996
974
2010 2011 2012 2013 2014
740
903
619
591
476
	 references	to	adjusted	profit	throughout	this	document	are	defined	as	the	ifrs	profit	whether	operating	profit	or	profit	before	tax	with	
£149m	2013	£121m	of	amortisation	of	acquired	intangibles	added	back governance directors financial statements company information
35 rotork annual report 2014
strategic report
sales revenue 
growth
return on sales cash generation return on capital 
employed
earnings per share 
growth
accident frequency 
rate
carbon emissions employee 
satisfaction
28 262 974 476 54 031 73 36
reasons for choice
this is reported in detail for 
operating segments and is a key 
driver for the business this 
measure enables us to track our 
overall	success	in	specific	
project activity and our progress 
in increasing our market share by 
product and by region
reasons for choice
this measure brings together 
the	combined	effects	of	
procurement costs and pricing 
as	well	as	the	leveraging	of	our	
operating assets it is also a 
check on the quality of revenue 
growth	but	is	heavily	influenced	
by divisional mix
reasons for choice
this is used as a measure of 
performance	where	a	target	of	
85 is regarded as a base level 
of achievement cash 
generation is also one of the 
constituent parts of the senior 
management	reward	system
reasons for choice
rotork has an assetlight 
business model by design and 
reporting this ratio internally 
helps management at group 
level monitor our adherence to 
this philosophy
reasons for choice
the measurement of earnings 
per	share	eps	reflects	all	
aspects of the income statement 
including management of the 
group’s tax rate
reasons for choice
the accident frequency rate 
afr	is	used	as	one	measure	of	
the	effectiveness	of	our	health	
and safety procedures
reasons for choice
this kpi compares this year’s 
carbon emissions stated as a 
function	of	revenue	with	last	
years and is a broad measure of 
our impact on the environment
reasons for choice
the	survey	as	a	whole	enabled	
the group to get feedback from 
across	the	businesses	on	how	
we	relate	to	our	employees	and	
what	we	can	do	better 
how we calculate
increase in sales revenue 
yearonyear divided by prior 
year sales revenue
how we calculate
adjusted	profit	before	tax	after	
financing	and	interest	shown	as	
a percentage of sales revenue
how we calculate
cash	flow	from	operating	
activities	before	tax	outflows	
and the pension charge to cash 
adjustment as a percentage of 
adjusted	operating	profit
how we calculate
adjusted	operating	profit	as	a	
percentage of average capital 
employed capital employed is 
defined	as	shareholders’	funds	
less	net	cash	held	with	the	
pension	fund	deficit	net	of	
related deferred tax asset added 
back	the	calculation	is	shown	
on page 119
how we calculate
increase in adjusted basic eps 
based	on	adjusted	profit	after	
tax	yearonyear	divided	by	the	
prior year adjusted basic eps
how we calculate
the	formula	we	have	used	for	
calculating our afr is the 
number of reportable injuries 
divided by the number of hours 
worked	multiplied	by	100000
how we calculate
energy	usage	data	scope	1	and	
2	is	collected	and	converted	to	
equivalent tonnes of co
2
 and 
then reported as a function of 
millions of revenue further detail 
is contained in the corporate 
social responsibility report
how we calculate
employees scored their responses 
directly into a prepared survey 
with	1	being	very	dissatisfied	and	
5	being	very	satisfied
comments on results
the	28	growth	in	revenue	was	
achieved despite our largest 
endmarket oil  gas declining 
16	compared	with	2013	
growth	in	the	power 	industrial	
and	other	endmarkets	was	
sufficient	to	deliver	growth	
overall on a constant currency 
basis	growth	was	85	reflecting	
the	strong	currency	headwinds	
we	faced	this	year 
comments on results
the improvement in margins 
within	fluid	systems	growth	in	
instruments	with	margins	
higher	than	the	group	average	
and a positive divisional mix 
impact all contributed to the 20 
basis point improvement in the 
year  equalling the record for this 
measure set in 2010
comments on results
cash conversion remained high 
despite the record monthly 
revenue	in	december	which	led	
to a rise in trade receivables at 
the year end
comments on results
average capital employed rose 
by 29 due to the 2013 and 
2014	acquisitions	whose	value	
on our balance sheet includes 
the intangible assets associated 
with	their	acquisition	this	kpi	
remains at sector leading levels
comments on results
the	lower	tax	rate	in	the	uk	and	
the	international	mix	of	where	
our	profits	were	generated	led	to	
a further reduction in the 
effective	tax	rate	and	therefore	
eps	growth	ahead	of	the	
underlying	profit	growth
comments on results
the investment in health and 
safety training audits to monitor 
compliance	with	procedures	and	
initiatives	to	embed	safe	working	
practices led to a further 
reduction in this kpi this year 
comments on results
the	slower	revenue	growth	and	
colder	winter	in	early	2014	meant	
a reversal of the year 1 gains 
whilst	already	a	low	energy	
consumer by virtue of our 
outsourced manufacturing model 
we	are	looking	at	ways	of	reducing	
energy	consumption	further	with	
a focus on lighting and our higher 
energy usage locations
comments on results
the number of employees 
completing the survey rose to 
2386 a 75 response rate the 
highest	scoring	questions	were	
those on employees planning on 
staying at least another year 
with	rotork	and	being	proud	of	
the	products	and	services	we	
provide our customers the 
latter	point	was	also	the	most	
improved score
nonfinancial kpis
we	monitor	nonfinancial	areas	in	our	businesses	particularly	in	the	environmental	health	and	
safety	and	quality	control	areas	and	we	place	strong	emphasis	within	our	organisation	on	improving	
our performance here
2010 2011 2012 2013 2014
175
96
136
143
54
2010 2011 2012 2013 2014
046
038
046
033
031
2010 2011 2012 2013 2014
179
192 192
2010 2011 2012 2013 2014
35 35
36 36 36 overall responsibility 
for maintaining the 
risk management 
process and 
determining risk 
appetite
audit committee 
provides oversight of 
the internal control 
framework
executive and senior 
management 
consider risk 
management for the 
group as a whole
detailed risk 
assessment
and consideration of 
mitigation is carried 
out at the divisional 
level
controls
division
fluid
systems
division
gears
division
instruments 
division
corporate
integrated business risk management incorporating 
review by the management t eam
audit committee
rotork plc board
strategic report
36 rotork annual report 2014
how we
manage risk
managing business risks
the assessment and management of risk is the 
responsibility of the board and the 
development and execution of a comprehensive 
and robust system of risk management is a high 
priority in rotork managing the risks to our 
business is essential to the longterm success 
and sustainability of the group and our 
approach to risk is intended to protect the 
interests of shareholders and all interested 
parties the risk management process is an 
established	way	of	identifying	and	managing	
risk	first	at	divisional	board	level	and	then	for	
the	group	as	a	whole	and	it	works	within	our	
governance	framework	set	out	in	our	corporate	
governance statement see page 54
the board’s role in risk management involves 
promoting a culture that emphasises integrity 
at all levels of business operations this includes 
ensuring that risk management is embedded 
within	the	core	processes	of	the	group	
determining the principal risks communicating 
these	effectively	across	the	businesses	and	
setting the overall policies for risk management 
and control the geographic spread of our 
activities makes communication of these 
policies and standards a key part of ensuring 
consistency across all of our operations
the group finance director is responsible for 
risk	management	within	the	group	and	leads	
the development of the risk management 
process and the tools used the board approves 
risk appetite for the group and considers the 
consequential actions in terms of mitigation 
where	possible	and	appropriate t est the controls
through management
review and internal audit
identify and assess
individual risks
review previously
identiﬁed risks and
the eﬀectiveness
of mitigation
design of controls to
mitigate identiﬁed risks
report any incidence
of control failings
consider the overall
eﬀectiveness of the
control environment
governance directors financial statements company information
37 rotork annual report 2014
strategic report
determining risk appetite
the board is responsible for determining the 
nature	and	extent	of	the	risks	it	is	willing	to	take	
in achieving its strategic objectives this risk 
appetite is not only considered during the risk 
review	meetings	but	also	during	a	number	of	
other board discussions during the year  these 
include strategy discussions consideration of 
insurance coverage setting of scope and timing 
of the internal audit health and safety audit 
programmes and amendments to group 
policies and procedures in areas such as 
whistleblowing	and	bribery	and	corruption	the	
remuneration committee of the board considers 
risks	related	to	staff	retention	and	the	
nomination committee considers the risk 
around	succession	planning	in	addition	where	
specific	risks	are	identified	during	the	year	these	
are	identified	in	the	written	reports	received	by	
the board each month
risk management process
the	major	risks	affecting	the	group	are	first	
identified	and	considered	by	the	divisional	
boards during their regular meetings once a 
risk	has	been	identified	it	is	allocated	to	one	of	
the directors to ensure the risk is appropriately 
considered and the risk is managed risks are 
categorised	on	a	matrix	reflecting	likelihood	and	
impact on the business the assessment of 
likelihood	is	considered	after	allowing	for	the	
effect	of	mitigation	whilst	the	impact	is	
measured	before	allowing	for	mitigation	such	as	
insurance recoveries the impact scale is 
determined	as	a	function	of	annual	profit	so	that	
each division has an appropriate benchmark 
once the assessment matrix is completed by 
each division the risks are then aggregated and 
reevaluated	in	relation	to	the	group	as	a	whole	
using an appropriate group impact scale
identified	risks	are	discussed	and	the	progress	
reviewed	at	both	rotork	management	board	and	
divisional board meetings during the year  
senior	management	in	association	with	the	full	
board	of	directors	meets	twice	a	year	to	
consider the group risk matrix and progress 
with	mitigating	actions	the	external	auditor	is	
invited to attend one of the meetings each year 
this is an ongoing process involving regular 
assessment	of	the	risks	with	clear	and	
consistent procedures for monitoring updating 
and implementing appropriate controls to 
manage	the	identified	risks	we	are	therefore	
confident	that	we	have	a	methodology	for	
ensuring that the group’s approach to dealing 
with	individual	risks	is	robust	and	timely
classification of key risks
we	identify	three	main	risk	types
strategic	–	risks	that	potentially	could	affect	
the strategic aims of the business or those 
issues	that	could	affect	the	strategic	objectives	
that the group is addressing
operational – risks arising out of the 
operational activities of the group relating to 
areas such as logistics procurement product 
development	and	interaction	with	commercial	
partners and
financial	–	issues	that	could	affect	the	finances	
of the business both externally from matters 
initially outside of our control and from the 
perspective of internal controls and processes
the risks considered during the process cover 
all aspects of the group’s activities and cover a 
far	wider	range	of	areas	including	
environmental reputational and ethical risks as 
well	as	product	competitor	or	financial	risks	
but not all of these areas are represented in the 
top	10	risks	which	are	listed	on	pages	38	and	39	
these are categorised by the three main risk 
areas	identified	above	mitigation	where	
possible	is	shown	for	each	risk	area	identified strategic report
38 rotork annual report 2014
stra tegic risks
description potential impact mitigation
competition on price as a result 
of an existing competitor 
moving to manufacture in a 
lower cost area of the world
where a competitor decides to use cost savings to 
reduce their selling prices this could lead to a reduction 
in the general market price rotork might need to 
respond	to	a	change	in	market	price	levels	whilst	still	
maintaining the price premium currently enjoyed for 
some products this could impact our market share 
and	would	impact	our	ability	to	grow	the	group	
revenue
rotork already has a direct presence in terms of 
production	sales	and	service	support	in	many	low	cost	
locations	and	regularly	reviews	opportunities	in	other	
countries there is a constant drive to maintain 
differentiation	from	the	competition	both	in	terms	of	
the	quality	of	our	products	and	of	the	service	we	
provide and thus ensure that price is not the only 
means of gaining a competitive advantage
not having the appropriate 
products either in terms of 
features or costs
in order to be able to compete on a project our 
products	must	meet	both	the	necessary	specification	
and pricing level a failure on either count could harm 
our	competitive	position	and	result	in	us	not	winning	
the project
development of products or acquisition of companies 
with	products	to	meet	the	required	market	driven	
specifications	and	broaden	our	product	portfolio	is	an	
ongoing activity as is the drive to take cost out of our 
products to meet target pricing levels
lower investment in rotork’s 
traditional market sectors
a reduction in capital or maintenance expenditure in 
one	of	rotork’s	key	market	sectors	would	result	in	a	
smaller	addressable	market	which	in	turn	could	lead	to	
a reduction in revenue from that sector 
identification	of	potential	new	endmarkets	or	ones	
which	are	becoming	more	active	takes	place	in	each	
location and is coordinated at divisional level this is 
supported by product development and innovation to 
address	new	markets	and	new	applications	in	existing	
markets at a group level our geographic and end
market	diversification	provides	resilience	to	a	reduction	
in any one area or market
princip al
risks and uncert ainties governance directors financial statements company information
39 rotork annual report 2014
strategic report
opera tional risks
description potential impact mitigation
major in field product failure 
arising from a component 
defect or warranty issue which 
might require a product recall
replacement of defective components or complete 
units	would	give	rise	to	a	direct	financial	cost	and	there	
could also be a reputational risk this in turn could 
impact our ability to achieve premium pricing
a comprehensive set of quality control procedures 
operates over suppliers these include supplier visits 
audits and a scorecard system to measure their 
performance in some markets legislation determines 
that this risk is entirely passed to the enduser  our 
global service coverage ensures that any product 
failure	issues	could	be	dealt	with	quickly	and	efficiently	
to minimise any reputational impact
failure of a key supplier or a 
tooling failure at a supplier 
causing disruption to planned 
manufacturing
where customer delivery expectations are not met 
this	could	lead	to	financial	penalties	and	damage	
customer relationships
dual	sourcing	for	key	components	wherever	possible	
provides the best mitigation for key suppliers regular 
monitoring and replacement of tooling at all suppliers 
reduces the risk of a tooling failure inventory levels are 
maintained	at	a	sufficient	level	to	protect	against	
shortterm disruption
failure of an acquisition to 
deliver the growth or synergies 
anticipated due to incorrect 
assumptions or changing 
market conditions or failure to 
integrate an acquisition to 
ensure compliance with 
rotork’s policies and 
procedures
whilst	growth	opportunities	cost	savings	and	
synergies	are	identified	prior	to	completion	these	may	
not	always	be	delivered	at	the	levels	anticipated	or	to	
the	timetable	expected	following	the	acquisition	
although	these	benefits	are	usually	not	priced	into	the	
purchase	consideration	a	significant	
underperformance could lead to an impairment of the 
associated intangible assets
during the due diligence process a 100 day plan is 
prepared to manage the important initial stages of 
integration consideration is given to the composition 
and	skills	of	the	management	team	with	the	necessary	
training and support provided by a variety of rotork 
personnel	this	should	ensure	an	effective	integration	
and communication of rotork’s policies and 
procedures	whilst	monitoring	delivery	of	the	financial	
plan
failure of it security systems to 
prevent penetration by 
unauthorised people and 
access to commercially 
sensitive data
sensitive data is stored and transmitted electronically 
around	the	world	the	group	is	therefore	exposed	to	
the risk of data loss by cyber attack this data might 
contain technically or commercially sensitive 
information	which	would	provide	a	competitor	with	an	
advantage
rotork has a range of measures in place to monitor and 
mitigate this risk
financial risks
description potential impact mitigation
volatility of exchange rates 
would impact rotork’s reported 
results and competitive 
position
significant	fluctuations	in	exchange	rates	could	have	an	
adverse impact on rotork’s reported results and 
adversely	affect	the	pricing	point	of	our	products	in	
other currencies
a clear treasury hedging policy addresses shortterm 
risk	and	this	works	together	with	the	natural	hedging	
provided by the geographical spread of operations 
sourcing	and	customers	whilst	this	will	protect	against	
some of the transaction exposure our reported results 
would	still	be	impacted	by	the	translation	of	our	
nonuk operations
political instability in a key 
endmarket
disruption	of	normal	business	activity	would	impact	
our sales in that country and might ultimately lead to 
loss	of	any	assets	located	in	that	country	as	well
the	wide	geographic	spread	of	rotork’s	operations	and	
customers diminishes the impact of any one market on 
the	results	of	the	group	as	a	whole
growth of the defined benefit 
pension scheme deficit
the	amount	of	the	deficit	may	be	adversely	affected	by	
a number of factors including investment returns 
longterm	interest	rates	price	inflation	and	members’	
longevity this in turn might lead to a requirement for 
the company to increase cash contributions to the 
schemes
both	defined	benefit	schemes	are	closed	to	new	
members	with	the	uk	scheme	closed	in	january	2003	
the group and trustees monitor the performance of 
the scheme regularly taking actuarial and investment 
advice	as	appropriate	the	results	of	these	reviews	are	
discussed by the board strategic report
40 rotork annual report 2014
corpora te  
social 
responsibility
direct presence in
37
countries
employees 
worldwide
3469 ethics 
committe
social issues
committee
environmental 
committee
health  safety
committee
corporate social responsibility committee
governance directors financial statements company information
41 rotork annual report 2014
strategic report
rotork believes that being a responsible business leads to being the 
best	business	which	can	benefit	operational	effectiveness	develop	
industry	leading	products	grow	the	business	and	build	on	the	trust	
of stakeholders
sustainability lies at the heart of our business and 
rotork is dedicated to making a positive impact 
around	the	world	to	ensure	the	group	continues	to	
be successful in the longterm the ongoing 
commitment to embed corporate social 
responsibility	csr	across	all	processes	and	the	way	
it operates is something that rotork is proud of
this report sets out our policies procedures and 
systems	on	how	we	manage	our	impact	on	the	
environment	how	we	conduct	our	business	how	
we	provide	a	safe	working	environment	and	how	we	
work	with	the	local	community	in	which	we	operate
the group’s approach is focused around four main 
themes
the environment
rotork is fully committed to reducing its impact on 
the environment by preventing pollution in all 
territories	in	which	it	operates	and	to	make	sure	it	
is	compliant	with	any	relevant	legal	or	regulatory	
requirements by complying it contributes to help 
sustain the environment and it brings cost 
savings by reducing the consumption of energy 
water 	waste	and	recycling	the	environmental	
programme is described in more detail on pages 
42 to 45
ethics and values
ethics	and	values	are	fundamental	to	the	way	
in	which	we	do	business	respecting	
internationally proclaimed human rights 
promoting an open and honest culture 
having a zero tolerance approach to bribery 
and	corruption	worldwide	and	selecting	
suppliers	with	sound	reputations	in	the	
marketplace are important aspects for the 
group to adhere to more details of the 
group’s ethics and values can be found on 
pages 46 to 47
health and safety
the health and safety of all employees and 
contractors is of paramount importance in 
providing	a	safe	working	environment	our	
fundamental principle ‘if you cannot do a job 
safely	we	will	not	do	the	job’	is	actively	
promoted to everyone this ensures that our 
people	remain	safe	and	we	enhance	the	
effectiveness	of	our	workforce	by	reducing	the	
risk	of	injury	and	costs	associated	with	injury	
or illness the group’s approach to health and 
safety can be found on pages 48 to 49
community involvement
the group considers it important to contribute 
and engage positively in the communities it 
operates in to be a good community neighbour 
around	the	world	and	as	a	corporate	entity	
community involvement is part of that 
responsibility one of our corporate values is to 
produce	a	positive	and	beneficial	impact	in	the	
areas	in	which	we	operate	and	more	details	on	
community involvement can be found on pages 
50 to 51
the group understands that shareholders are 
becoming increasingly focused on csr issues so 
we	take	into	account	the	guidelines	on	social	
responsibility issued by the association of british 
insurers the group has been a member of the 
un global compact since 2003 and continues to 
be included in the ftse4good index
rotork believes that the approach it takes to 
csr helps to meet the expectations of our 
stakeholders and contributes to the success of 
our corporate strategy by promoting an 
effective	and	sustainable	business
the chief executive chairs the csr committee 
and reports progress to the board the csr 
committee	is	a	management	committee	which	
has	four	subcommittees	with	each	
representing one of the aspects of csr 
described	below	presentations	are	given	by	the	
chairmen of the four subcommittees to the 
board on activity and progress in their areas of 
csr during the year 
the	diagram	below	sets	out	our	csr	structure leeds	uk	charity	race	to	raise	money	for	jane	t omlinson	appeal
strategic report
42 rotork annual report 2014
social
corpora te
responsibility continued
environment
introduction
rotork is fully committed to the prevention of 
pollution	to	comply	with	all	relevant	legal	or	
regulatory requirements and to reduce our 
environmental footprint by targeting key areas 
such	as	energy	consumption	water	
consumption	and	waste	we	continue	with	our	
assembly only philosophy in the majority of our 
business	units	where	we	utilise	specialist	
suppliers for most of our manufactured 
components and assemblies this philosophy 
has	resulted	with	the	majority	of	our	energy	
being used on lighting heating and cooling and 
it systems and a small amount of energy is 
used on machining processes as a responsible 
global	entity	we	continue	to	influence	the	
environmental performance of our supply chain 
through our supplier assessment programme
corporate objectives
there is a corporate objective of a 3 reduction 
in tonnes of co
2
 generated in scope 1 and 
scope 2 emissions per £m turnover  scope 1 and 
scope 2 emissions have increased from 
179tnco
2
e in 2013 to 1921tnco
2
e in 2014 an 
increase of 73 this increase is due to 
electricity	and	gas	consumption	at	our	new	
acquisitions and additional consumption at our 
existing facilities
progress
the baseline year remains at 2012 a number of 
new	acquisitions	occurred	during	2013	and	2014	
that	have	affected	overall	energy	consumption	
but	likeforlike	figures	have	been	published	to	
show	the	underlying	trends	in	the	organisation 2012 2013 2014
electricity consumption mwh
absolute
11193 11184
12605
2012 2013 2014
electricity consumption mwh
excluding new acquisitions
11193
10498
10961
gas consumption kwh
absolute
2012 2013 2014
594094
760628
769310
gas consumption kwh
excluding new acquisitions
2012 2013 2014
594094
710277
676624
lpg consumption lt
absolute
2012 2013 2014
394478
760628
338178
lpg consumption lt
excluding new acquisitions
2012 2013 2014
394478
430065
335505
houston	usa	donates	funds	and	nonperishable	items	to	the	local	food	bank
governance directors financial statements company information
43 rotork annual report 2014
strategic report
environment
energy consumption
due	to	the	growth	of	the	organisation	during	
2014 absolute electricity consumption 
increased	127	on	the	2013	figures	and	was	
also a 126 increase on the baseline year  
absolute	gas	consumption	showed	a	slight	
increase	of	11	on	the	previous	year	but	was	a	
significant	increase	of	295	on	the	baseline	
year 	this	can	be	directly	linked	to	weather	
conditions	which	have	driven	up	gas	usage	in	the	
usa since 2012 absolute liquid petroleum gas 
lpg	consumption	showed	a	decrease	of	
555 on 2013 and a decrease of 143 on the 
baseline year 
on	sites	excluding	new	acquisitions	during	
2014	electricity	showed	an	increase	of	44	
based on 2013 but a 2 decrease on the 
baseline	year 	gas	showed	a	47	decrease	on	
2013 but a 139 increase on the baseline year  
lpg	showed	a	22	decrease	on	2013	and	a	15	
decrease on the baseline year 
there are a number of energy related projects 
that	are	currently	underway	or	have	recently	
been	completed	which	will	start	to	show	
benefits	in	2015	some	of	the	energy	projects	
include	installing	energy	efficient	lighting	in	our	
nottingham	uk	melle	germany	and	
rochester	usa	facilities	the	changes	will	
reduce our energy consumption by 
approximately	50	per	fixture	this	has	allowed	
some of our more energy intensive sites such 
as	rochester	usa	to	cut	electricity	
consumption by up to 30 projects like this not 
only	offer	reduced	energy	consumption	and	the	
associated reduction in carbon emissions but 
also provide a reduction on operating costs for 
the lighting and reduced maintenance costs
as	we	develop	new	sites	or	upgrade	our	existing	
sites	we	will	be	introducing	energy	efficient	
solutions	into	the	building	design	this	will	help	
to reduce the environmental impact of our 
business in the future wa ter consumption m
3

absolute
2012 2013 2014
35471 35822
39801
wa ter consumption m
3

excluding new acquisitions
2012 2013 2014
35471
33365
33778
scope 1 and 2 emissions t nco2e
absolute
scope 1 scope 2
2012 2013 2014
55
51
54
45
49
46
9844
10341
11412
scope 1 and 2 emissions t nco2e
excluding new acquisitions
2012 2013 2014
9844 9850
10321
53
scope 1 scope 2
51 53
47
49 47
strategic report
44 rotork annual report 2014
environment
water consumption
absolute	water	consumption	across	the	group	
has increased by 111 on 2013’s consumption 
and 122 on the baseline year  on likeforlike 
sites the consumption remained fairly static 
with	a	1	increase	on	2013	consumption	but	a	
5 decrease on the baseline year  the majority 
of	water	consumption	is	for	domestic	purposes	
only though there are some additional 
requirements	related	to	process	water	in	a	small	
number of our sites any reduction in these 
processes	are	not	expected	to	have	a	significant	
impact	on	the	overall	water	consumption
social
corpora te
responsibility continued
waste and recycling
there are a number of local programmes in 
place	to	promote	recycling	and	reduce	waste	
our	facility	at	houston	usa	ran	an	event	in	
november	to	separate	different	types	of	scrap	
metals this has improved our recycling and 
given	a	higher	return	from	the	waste	that	was	
produced similar projects have yielded an 
overall recycling rate of 766 during 2014 
compared to a recycling rate of 714 in 2013 
and 736 in 2012
greenhouse gas is measured across three 
different	scopes
scope 1 emissions that are direct ghg 
emissions	from	sources	that	are	owned	or	
controlled by rotork these include emissions 
from fossil fuels burned on site emissions from 
owned	or	leased	vehicles	and	other	direct	
sources
scope 2 emissions are indirect ghg emissions 
resulting from the generation of electricity 
heating and cooling or steam generated 
offsite	but	purchased	for	heating
scope 3 emissions include indirect ghg 
emissions	from	sources	not	owned	or	directly	
controlled by the entity but related to the 
entity’s activities scope 3 ghg emission 
sources currently required for ghg reporting 
include	transmission	and	distribution	td	
losses	associated	with	purchased	electricity	and	
steam	and	welltotank	emissions	for	all	energy	
business travel and transport
environmental incidents
there have been no reportable environmental 
incidents during 2014 systems are in place to 
address any environmental incident that occurs 
at our facilities and the robustness of these 
emergency systems are included as part of our 
internal audit system
greenhouse gas reporting
in january 2015 eef undertook an assurance 
audit	of	the	greenhouse	gas	emissions	ghg	
report the business reports on ghg emissions 
in	line	with	the	ghg	emissions	protocol	
developed jointly by the world business council 
for sustainable development and the world 
resource	institute	highlights	from	the	audit	will	
be detailed in the annual environmental report 
that	will	be	published	during	2015	and	available	
on rotorkcom
waste recycling 
2012 2013 2014
74
71
77 governance directors financial statements company information
45 rotork annual report 2014
strategic report
there has been an increase of absolute 
emissions across scopes 1 and 2 by 104 on 
2013’s rates and an increase of 159 on the 
absolute emissions in the baseline year  when 
excluding	new	acquisitions	scope	1	and	2	
emissions increase by 38 on 2013 and 38 
on the baseline year 
summary of progress
though the emissions have increased as the 
size of the business has increased there are a 
number	of	projects	that	will	start	to	show	
benefit	through	2015	the	likeforlike	sites	
have remained fairly static in electricity 
consumption and decreases in gas and lpg 
consumption based on last year 
years	2012	and	2013	were	utilised	to	understand	
the	data	that	was	available	to	the	business	in	
2014	projects	were	formulated	and	started	to	
be implemented and during 2015 should start to 
show	a	reduction	in	our	ghg	emissions	further	
projects are planned during 2015 to assist in the 
reduction of ghg emissions
changes in temperature can account for some 
of the increase in utility consumption changes 
in the ‘ghg conversion factors for company 
reporting’	which	is	published	by	the	
department of energy and climate change 
decc	can	account	for	some	of	the	increase	in	
ghg emissions in some regions that rotork 
operates	there	was	an	increase	of	10	on	the	
emission factors compared to the previous year 
2015 t argets
a	number	of	projects	will	be	targeted	at	our	
highest	ghg	emission	sites	whilst	some	
behavioural	projects	will	be	rolled	out	across	the	
business to assist in achieving a target of a 3 
reduction in scope 1 and 2 ghg emissions 
normalised by turnover 
case study
new manufacturing facility in leeds
energy	saving	is	paramount	within	rotork’s	facilities	and	the	
rotork uk site in leeds is a prime example of this consideration
lighting	provides	a	significant	saving	
opportunity so throughout the factory and 
offices	the	new	facility	has	been	fitted	with	
occupancy sensing luminaires that dim 
automatically as natural light levels increase 
fresh	air	supplied	to	the	office	is	tempered	by	
energy recovered from the extracted air 
saving	energy	in	both	winter	and	summer 
natural ventilation in the factory utilises 
automatic	roof	and	wall	louvres	to	provide	
cooling air movement in summer months all 
these are controlled by a building management 
system for optimal comfort and minimum 
energy use bath	uk	took	part	in	‘it’s	a	knockout’	to	raise	money	for	wateraid
strategic report
46 rotork annual report 2014
social
corpora te
responsibility continued
ethics and values
overview
ethics	and	values	are	central	to	the	way	we	do	
business the group’s ethics and values 
statement	can	be	viewed	on	our	website	in	a	
number	of	languages	at	wwwrotorkcomen
investorsindexethicsvalues our ethics and 
values	can	be	split	into	four	strands
human rights and ethical business
the group is fully committed to respecting 
internationally proclaimed human rights as 
defined	in	the	international	declaration	of	
human rights and the international labour 
organisation’s standards the group does not 
accept any form of child or forced labour and 
embracing the un global compact principles 
throughout the business is a demonstration 
of this commitment
the group recognises that an open and honest 
culture	is	key	to	understanding	concerns	within	
the business and promises to uncover and 
investigate	any	potential	wrongdoing	the	group	
has	a	whistleblowing	policy	with	an	independent	
external	whistleblowing	hotline	to	facilitate	the	
reporting	of	any	concerns	of	wrongdoing	
confidentially
employees
the	group	has	a	firm	commitment	to	all	its	
employees	regarding	wellbeing	and	development	
many	of	the	group’s	offices	provide	health	checks	
for	their	employees	as	well	as	encouraging	
participation	in	sports	teams	or	oneoff	charitable	
events more details regarding charitable activities 
can be found in the community involvement 
section of this csr report
rotork has an objective and fair recruitment 
process	which	promotes	equal	opportunities	
across	the	group	inline	with	the	‘respect	at	
work and equality of opportunity’ policy  
rotork is committed to the principle of equal 
opportunities in employment to ensure that 
no employee or job applicant receives less 
favourable treatment on their age race 
nationality  ethnic origin disability  sex sexual 
orientation religion belief or marital status all 
employees therefore have responsibilities 
to ensure that the policy is successfully 
implemented including ensuring that selection 
for	hiring	promotion	training	and	work	allocation	
is carried out in a nondiscriminatory manner 
employee	views	and	direct	communication	
are	part	of	our	values	and	we	run	employee	
suggestion	schemes	an	annual	group	wide	
employee	satisfaction	survey	ess	and	several	
locations	have	employee	forums	where	
employees can raise issues to be further 
considered by management governance directors financial statements company information
47 rotork annual report 2014
strategic report
employees are briefed by management on various 
matters including the company’s performance at 
regular	intervals	as	well	as	the	employee	bonus	
performance	which	is	profit	related	most	
locations participate in the company’s employee 
profit	linked	share	schemes
rotork	has	built	a	strong	partnership	with	the	
institute	of	mechanical	engineers	imeche	to	
support its engineers in gaining incorporated 
and chartered accreditation and rotork 
continues	to	work	with	imeche	leeds	has	an	
imeche	industrial	liaison	team	who	support	
members of the institution and they help to 
promote	it	internally	and	to	the	wider	
engineering community
the group supports apprenticeship schemes for 
young	men	and	women	which	helps	to	increase	
access into all aspects of the group’s business
full details of rotork’s diversity policy and 
targets can be found in the corporate 
governance report on page 58
bribery and corruption
the group has a zero tolerance policy on bribery 
and	corruption	worldwide	irrespective	of	
country or business culture the group’s ethics 
and values statement makes clear that our 
employees	will	never	offer 	pay	or	solicit	bribes	
in any form and is published on the group’s 
website	in	a	number	of	languages	the	group	
does not make political contributions in cash or 
kind	anywhere	in	the	world
the	group’s	whistleblowing	policy	which	can	be	
found	on	rotork’s	website	gives	whistleblowers	
a platform to alert senior management 
anonymously	if	the	employee	wishes	to	any	
suspected bribery or corruption through an 
independent external hotline if necessary the 
group	has	an	open	culture	which	allows	
employees to raise concerns to management in 
various	ways	as	set	out	in	the	whistleblowing	
policy	all	whistleblowing	concerns	however	
received are investigated and reported to the 
audit committee during 2014 the hotline 
received	five	calls	covering	issues	related	to	
health and safety and employment issues all 
were	resolved	satisfactorily	the	ess	for	2014	
showed	an	increased	understanding	of	how	to	
raise	a	wrongdoing	concern	using	the	
whistleblowing	hotline	during	the	year	further	
steps	were	then	taken	to	publicise	and	promote	
the hotline
the group makes use of detailed background 
checks provided by specialist bribery and 
corruption due diligence consultants before 
dealing	with	unknown	third	parties	including	
agents	prospective	acquisitions	and	suppliers	
operating in higher risk jurisdictions or market 
sectors the group makes use of objective 
guidance on country risk such as the corruption 
perception index by t ransparency international 
when	working	with	the	unknown	third	party	and	
after the initial detailed background checks the 
group also continually screens these third 
parties against a large number of international 
sources	which	could	detect	unethical	behaviour	
including	watchlists	sanctions	lists	and	the	
media using its due diligence consultants’ 
proprietary databases these third parties are 
also subject to continual screening
the group has developed and delivered 
antibribery and corruption training including an 
assessment	to	all	employees	working	in	sales	
and	purchasing	roles	as	well	as	to	senior	
accountants all managers and directors 
including	executive	and	nonexecutive	
directors	the	antibribery	and	corruption	
training is delivered as an elearning module 
the course has been made available in 
numerous languages and almost 100 of 
employees required to complete the course 
have	done	so	within	the	required	period	
including	those	in	new	acquisitions
suppliers
the group has continued to operate an 
outsourced manufacturing model selecting 
suppliers	with	sound	reputations	in	the	
marketplace many of the suppliers have a 
longterm	working	relationship	with	the	
company ensuring ingrained product 
knowledge	within	the	supply	chain
suppliers are subject to continuous automated 
online monitoring against sanctions lists 
watchlists	regulatory	and	court	records	and	a	
large number of national and international 
media sources and the company is alerted 
where	any	derogatory	information	is	uncovered
the supplier assessment programme includes 
csr	themed	questions	associated	with	equal	
rights and equal pay antibribery and corruption 
policies charitable giving environmental impact 
and anticompulsory or child labour practices 
these surveys consider current and prospective 
suppliers the assessments are discussed 
directly	with	the	suppliers	and	any	corrective	
action	plan	is	agreed	between	the	company	and	
the supplier 
rotork controls limited and rotork uk limited 
the group’s main uk trading companies and 
rotork plc are signatories to the prompt 
payment code this ensures suppliers are paid 
according to the terms agreed and this 
encourages	good	practice	to	be	passed	down	
supply chains
progress
• a	further	16	existing	suppliers	and	all	new	
suppliers to rotork’s bath manufacturing 
facility	were	assessed
• a	ftse4good	score	of	38	out	of	5	was	
achieved
• presentations relating to bribery and 
corruption	were	given	by	senior	
management and the group’s legal 
department to group accountants internal 
auditors general managers and sales 
managers
• the	whistleblowing	policy	was	
communicated to all employees in every 
edition	of	the	internal	rotork	enewsletter	
and
• bribery	and	corruption	training	was	rolled	
out to relevant employees in french italian 
japanese portuguese russian and thai in 
addition to english korean german spanish 
and chinese
2015 t argets
• further	increasing	awareness	of	bribery	and	
corruption issues by circulating information 
to agents in the form of a tailored booklet
• continue to make progress in increasing 
diversity across the group
• ensure the group diversity policy in its 
broadest sense is communicated across the 
group and
• continue to communicate the 
whistleblowing	policy	regularly	through	the	
rotork	enewsletter  strategic report
48 rotork annual report 2014
social
corpora te
responsibility continued
heal th and safety
overview
rotork is fully committed to the health and 
safety of its employees and contractors we 
ensure compliance to all relevant legal and 
regulatory requirements and strive to 
continuously improve our health and safety 
performance
policies procedures and systems of safe 
working	are	in	place	supported	with	training	to	
ensure	the	health	safety	and	welfare	of	our	
employees	during	their	working	day	the	health	
and	safety	policy	was	reviewed	and	approved	in	
february of 2014 by the chief executive
fundamental principles
as	the	business	continues	to	grow	both	
organically and through acquisition the 
fundamental	principle	of	‘if	we	cannot	do	a	job	
safely	we	will	not	do	the	job’	is	maintained	and	
communicated	to	all	those	who	work	for	or	on	
behalf of rotork
progress
the	target	for	2014	was	to	have	an	accident	
frequency	rate	afr	below	042	the	actual	
afr	for	2014	was	031	which	is	a	decrease	of	6	
on the previous year and a decrease of 44 
since 2009
2012 2013 2014
accident frequency ra te afr
2010 2011 2009
046
033
038
046
056
031
the afr is a calculation of accidents resulting in 
over three days lost time divided by the average 
hours	worked	multiplied	by	100000
  
the	number	of	days	lost	due	to	workplace	
injuries decreased by 33 but the number of 
minor accidents has increased by 24 on the 
previous year 
dallas	usa		‘t oys	for	t ots’	campaign governance directors financial statements company information
49 rotork annual report 2014
strategic report
occupational health
there have been no occupational diseases 
reported during 2014
case study examples
gears – houston
a lean six sigma project introduced ‘7s’ 
standards	that	involved	a	detailed	review	of	the	
operational	workspace	that	assessed	and	made	
improvements on layouts general housekeeping 
cleaning routines scheduled preventative 
maintenance and all associated training this 
programme	will	support	other	work	that	is	
ongoing to reduce the risk of injury and help 
maintain	a	healthy	workplace
controls – singapore
a	number	of	activities	to	reduce	the	risk	of	fire	
were	carried	out	including	upgrading	electrical	
systems	fire	extinguisher	exercises	for	all	
employees improvements in housekeeping 
standards that included a designated outside 
smoking	area	with	a	safety	bin	and	improved	
storage of combustible materials
awards and recognition
t o ensure high standards of health and safety 
performance	a	number	of	businesses	within	the	
rotork group have gained or have maintained 
certification	to	ohsas18001	these	include	
facilities	in	leeds	uk	wolverhampton	uk	and	
singapore
assurance activities
during	2014	compliance	audits	were	conducted	
at 62 of our facilities on equivalent sites there 
was	a	slight	decrease	in	the	score	achieved	from	
86	to	85	this	is	believed	to	be	down	to	the	
interpretation	of	different	auditors	our	newly	
acquired	sites	scored	a	lower	average	of	80	
where sections of the business do not perform 
to the required standard corrective actions are 
identified	and	tracked	to	closure	during	2014	
there	were	no	actions	raised	that	would	require	
immediate attention by the local management 
teams
a proposal to rebalance the audit protocol to 
ensure a greater consistency in scoring and to 
focus on risk management processes and 
control	was	agreed	by	the	csr	committee	in	
december of 2014
employee satisfaction survey
during	2014	75	of	the	workforce	completed	
an employee satisfaction survey the question 
“i	believe	that	rotork	cares	about	my	health	and	
safety” had overall satisfaction of 80 a slight 
increase of 1 on the previous year  the 
question	“in	the	last	year 	i	have	seen	actions	
taken	to	maintain	safety	at	my	workplace”	saw	
an increase from 77 to 79
summary of progress
throughout	the	year	we	continued	to	keep	
health and safety as a priority for employees and 
contractors as can be seen by the positive 
results in the employee satisfaction survey we 
must continue to learn from events audits and 
inspections to continually improve our health 
and	safety	performance	as	we	move	forward	
we	will	be	looking	to	improve	our	processes	and	
will	look	at	innovative	practices	to	improve	our	
health and safety performance
2015 t argets
the method adopted to set the afr target is 
the calculated average of the previous three 
years afr results this sets the afr target for 
2015 as 036
houston	usa	supports	the	court	appointed	special	advocates	for	children	casa strategic report
50 rotork annual report 2014
social
corpora te
responsibility continued
community invol vement
overview
the group considers it important to contribute to 
and	engage	positively	with	stakeholders	in	the	
communities	in	which	we	operate	and	to	be	a	good	
community	neighbour	around	the	world	we	
regard this as part of our ongoing responsibilities 
as a corporate entity  the group seeks to be 
regarded as a good corporate citizen this links 
into	our	corporate	values	which	include	producing	
a	positive	and	beneficial	impact	in	the	areas	in	
which	we	operate	one	of	the	ways	the	group	
does this is by having local charity committees at 
each	of	our	sites	which	donate	to	local	charitable	
causes	this	empowers	local	employees	to	decide	
how	to	distribute	the	funds	in	their	local	
communities the group aims to contribute 01 
of	profits	to	local	charitable	causes
local community involvement highlights from the 
year	include
• langenzenn	germany	donated	towards	new	
equipment at their local primary school
• f alun	sweden	donated	to	local	charity	
makalosa	f oraldrar 	who	actively	support	single	
parents in f alun by organising fun activities to 
give both the children and parents a break from 
everyday life
• employees from our rochester and winston
salem	usa	offices	raised	significant	funds	to	
support	the	charity	united	way	who	focus	on	
education income and health of the local 
communities they engage in
• shanghai	china	donated	to	the	educational	
development f und of south china university 
of science  t echnology and
• t ulsa	usa	employees	produced	overwhelming	
responses to clothing and food drives in 2014 
the food drive hosted prior to thanksgiving 
resulted in turkeys and side dishes being 
donated to 10 families through the community 
f ood bank of eastern oklahoma
apprenticeships are increasingly being 
developed	throughout	rotork’s	global	network	
of subsidiaries bath’s apprenticeship scheme 
has run since the company began nearly 60 
years ago and similar established programmes 
now	exist	at	several	rotork	locations	rotork	
values its apprentices and believes in investing 
in	its	own	talent	in	order	to	succeed	for	
example	in	melle	germany	it	is	the	
combination of technical training at a local 
college	with	the	valuable	experience	within	
commercial departments that makes the 
apprenticeship programme unique as a result 
the	apprentices	will	emerge	from	the	
apprenticeship	as	allrounders	with	the	
capability	to	pursue	several	different	career	
paths	within	rotork	other	rotork	locations	that	
have run an apprenticeship programme during 
2014	include	bayswater	and	ballarat	australia	
langenzenn	germany	losser	the	
netherlands	and	bilbao	spain
case study
sightsavers
rotork	is	supporting	sightsavers’	work	to	eliminate	river	
blindness	lymphatic	filariasis	lf	and	trachoma	in	ghana	and	
help them achieve their goal of eliminating neglected t ropical 
diseases	ntds	by	2020
joseph baidoo is a 64 year old cocoa farmer 
who	lives	in	brekrom	in	the	juabeso	district	
of the western region of ghana joseph lives 
close to the bia river and during october and 
november 	when	the	rain	is	the	heaviest	
black	flies	come	in	droves
joseph has been taking mectizan
®
 for the 
past four years to prevent and control river 
blindness governance directors financial statements company information
51 rotork annual report 2014
strategic report
in addition to local charitable and educational 
activities	the	group	has	supported	two	major	
charities in 2014 wateraid and sightsavers a 
specific	wateraid	project	is	supported	and	the	
group receives regular updates throughout the 
year on the progress of this project
wateraid uses the group’s support to help fund 
the metuhurumu woreda wash project in 
ethiopia situated in the same area of ethiopia as 
the completed jeldu woreda project previously 
supported by the group this project targets 10 
villages	and	provides	over	128000	people	with	
safe	water	and	sanitation	the	project	is	a	
combination	of	water	supply	provision	water	
resource management and livelihood 
improvement	and	it	has	been	identified	that	this	
approach is of critical importance to improve 
the	wellbeing	of	the	communities	in	the	keber	
watershed	since	work	commenced	in	august	
2014 the project has provided 3422 people 
with	water 	4196	people	with	toilets	and	1913	
people	with	hygiene	education	rotork	will	
continue to support the development of this key 
project throughout 2015
in addition to our ongoing support for wateraid 
the group also supports sightsavers an 
international	charity	that	works	with	partners	in	
the	developing	world	to	combat	avoidable	
blindness	sightsavers	is	part	of	a	high	profile	
global	initiative	to	eliminate	the	world	of	neglected	
tropical	diseases	ntds	in	the	next	10	years	
diseases	which	currently	affect	over	14	billion	of	
the	world’s	poorest	people	rotork’s	support	is	
focused	on	ghana	and	is	split	between	the	
trachoma	and	lymphatic	filariasis	lf		river	
blindness programmes that helped to protect 
millions of people against these devastating 
diseases in 2014 rotork’s support has aided 
sightsavers	to	take	another	step	towards	their	aim	
of eliminating ntds in ghana by 2020
progress
• £60000 contributed by the group to 
wateraid
• £60000 contributed to sightsavers and
• variety of donations made to charitable 
causes relevant to the local communities of 
rotork’s operating sites
2015 t argets
t o increase donations to charitable causes the 
group	will
• donate	01	of	group	profits	to	rotork’s	
nominated international charity
• donate	01	of	group	profits	to	charitable	
causes local to rotork’s operating sites and
• t o continue to support wateraid and in 
particular the metuhurumu woreda 
wash project
contacts and feedback
the	group	welcomes	and	values	feedback	if	you	
have any comments regarding this csr report or 
any aspect of the group’s csr programme 
please contact stephen jones company 
secretary	by	writing	to	him	at	the	rotork	plc	
registered	office	full	details	of	which	can	be	
found in the corporate directory on page 131
case study
wa teraid
rotork continues to support wateraid and the donation made in 
2014	has	helped	local	communities	in	ten	villages	with	clean	
water 	improved	sanitation	and	hygiene	wash	wash
working	in	seven	kebeles	villages	of	the	
hurumu	woreda	district	in	the	oromia	
region of ethiopia wateraid and their local 
partner	followed	an	integrated	approach	to	
wash services  capacity building at both 
community	and	institutional	level	and	water	
resource and natural resource management 
through	conservation	of	the	area’s	wetlands	
this has helped to combat the severe 
degradation	of	wetlands	in	the	most	
ecologically important area of ethiopia 
where	many	rivers	contributing	to	the	nile	
basin originate 1
2
3
4
5
52 rotork annual report 2014
directors
1 peter france
chief executive
peter was appointed as chief executive of 
rotork plc in 2008 he joined rotork in 1989 as an 
inside sales engineer in 1998 he was appointed 
director and general manager at rotork 
singapore before becoming managing director 
of the fluid systems division and then chief 
operating officer
appointed to the board
2006
external appointments
chairman of the bath education t rust
committee membership
nomination
4 gary bullard
nonexecutive director
gary previously held senior management 
positions including sales and marketing roles at 
ibm and bt group plc and was a nonexecutive 
director of chloride group plc gary most 
recently held the position of president of logica 
uk until october 2012 and was a member of the 
executive committee of logica plc
appointed to the board
2010
external appointments
founder and ceo of catquin ltd
chairman of new model identity ltd
committee membership
remuneration chairman 
audit and nomination
2 roger lockwood
chairman
roger has been a nonexecutive director of 
rotork since joining the board and became 
nonexecutive chairman in november 1998 
he previously held ceo roles in automotive and 
engineering businesses
appointed to the board
1988
external appointments
chairman of hydro international plc
committee membership
nomination chairman
3 john nicholas
senior independent  
nonexecutive director
john was appointed as senior independent 
director of rotork plc on 20 june 2014 formerly 
john was group finance director of t ate  lyle 
plc and kidde plc
appointed to the board
2008
external appointments
chairman of diploma plc
nonexecutive director of mondi plc
nonexecutive director of hunting plc
member of the financial reporting review panel 
of the financial reporting council frc
committee membership
audit nomination and remuneration
5 sall y james
nonexecutive director
sally previously held senior legal roles in investment 
banking in london and chicago including managing 
director and emea general counsel for ubs 
investment bank she has also held the position of 
bursar of corpus christi college cambridge
appointed to the board
2012
external appointments
nonexecutive director of ubs limited
nonexecutive director of t owry limited
nonexecutive director of moneysupermarket
com group plc
nonexecutive director of abdi limited
t rustee of legal education foundation
committee membership
audit chair remuneration and nomination 6
7
8
9 10
governance financial statements company information
53 rotork annual report 2014
directors strategic report
6 lucinda bell
nonexecutive director
lucinda is a chartered accountant with over 
20 years of industry experience and has held a 
range of finance roles in the real estate industry 
lucinda has served on the board of the british 
land company plc since march 2011 and 
became finance director in may 2011
appointed to the board
2014
external appointments
finance director of the british land company plc
committee membership
audit nomination and remuneration
7 bob arnold
president of rotork controls inc
bob was appointed president of rotork controls 
inc in 1988 and has responsibility for all rotork’s 
interests in the americas he joined rotork 
controls inc in 1978 as engineering manager 
subsequently becoming vice president 
engineering prior to joining rotork bob worked 
for westinghouse in the usa as a design 
engineer in the nuclear valve group
appointed to the board
2001
8 martin lamb
nonexecutive director
martin has an engineering background and 
worked for imi for over 33 years where he held a 
number of senior management roles he served 
on the imi plc board from 1996 until may 2014 
and held the position of chief executive of imi plc 
from 2001 to 2013
appointed to the board
2014
external appointments
chairman of evoqua water t echnologies llc
senior independent director of severn t rent plc
nonexecutive director of mercia t echnologies plc
member of the european advisory board of aea 
investors uk ltd
committee membership
audit nomination and remuneration
9 jona than davis
finance director
jonathan joined rotork in 2002 after holding a 
number of finance positions in listed companies 
he gained experience of the rotork business 
initially as group financial controller and then as 
finance director of the rotork controls division 
and in 2010 was appointed group finance 
director
appointed to the board
2010
10graham ogden
research and  
development director
graham has been with rotork since 1985  
and has been closely involved in product 
development including our award winning  
iq series graham has been research and 
development director since 1997
appointed to the board
2005 54 rotork annual report 2014
governance
roger lockwood
chairman
the continuing success of rotork our reputation 
in its markets and our relationships with our 
stakeholders is dependent on and safeguarded 
by the leadership provided by an effective board 
good corporate governance supports the 
effectiveness of your board and contributes 
towards the longterm success of our company
our corporate governance report is set out on 
pages 54 to 63 and describes the roles 
accountabilities and expectations for our 
directors and board structures we are subject to 
the uk corporate governance code the code 
and whilst ensuring we provide detailed 
reporting we have sought to place emphasis on 
explaining how the principles of the code are 
applied across our group a summary of the 
business the board considered during 2014 is 
also set out opposite i am pleased to report that 
throughout 2014 the company complied with 
the code in all respects
corporate governance highlights for 2014 include 
the progressive refreshing of the board and its 
committees by the appointment of two new 
independent nonexecutive directors lm bell and 
mj lamb and change in the roles of je nicholas 
senior independent director and sa james 
chairman of the audit committee which 
followed the retirement of ig king from the board 
throughout the year  the nomination committee 
has held a number of additional meetings to 
consider board composition and succession 
planning and in particular  recommending to the 
board the appointment of two new independent 
nonexecutive directors and a new chairman
the audit committee conducted a tender for 
the appointment of our external auditor and 
following this process appointed deloitte llp 
on 2 june 2014 as the group’s external auditors 
replacing kpmg audit plc
i believe that good corporate governance when 
properly applied supports and protects our 
business and its long term success by creating a 
link based on trust and engagement between 
rotork and its stakeholders it is important for 
governance to focus on and resonate throughout 
the entire organisation and at rotork we seek to 
apply it across our activities worldwide in a 
consistent and unified way to create and maintain 
the right culture throughout our group i believe 
this allows us to produce a better business 
rotork’s products and services are offered in 
many markets and territories and we recognise 
that our business activities affect a diverse range 
of stakeholders with that in mind we must 
ensure that we consistently do things the right 
way through a unified approach our corporate 
governance arrangements underpin this by 
ensuring that our people know not just what to 
do but how to do it
corpora te
statement from chairman
governance governance strategic report directors financial statements company information
55 rotork annual report 2014
summary of 2014 board business
february – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – approval of the overall level of insurance for the group
 – consideration of the audit committee recommendation to approve the 2013 financial statements for presentation to the 
shareholders for their approval at the annual general meeting agm
 – consideration of the 2013 financial statements and potential final dividend amount
 – receipt of a presentation from the chief executive and finance director of the preliminary announcement of the 2013 financial results
 – review of 2013 top objectives
 – presentation from the group human resources director  group operations director and group legal director on corporate social 
responsibility
march – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – presentations from the group business development director and group research and development director 
april  
2 meetings
 – consideration of the audit committee recommendation to approve the interim management statement
 – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – consideration of the agm proxy returns and reports and consideration of the agm arrangements
 – review of third annual review of women on boards report by lord davies
 – presentation by divisional managing director of rotork fluid systems
may – approval of appointment of mj lamb as a nonexecutive director  following a nomination committee recommendation
 – approval of je nicholas as senior independent director and sa james as audit committee chairman
 – approval of appointment of deloitte llp as external auditor from 2 june 2014 following an audit committee recommendation
june 
meeting held 
at rotork’s plant 
in winstonsalem 
usa
 – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive and report from chairman on meeting with institutional investors
 – discussion of the half year interim dividend
 – group risk review
 – group strategy presentation by chief executive and board discussion on strategy
 – presentation from the divisional managing director of rotork instruments and local management
july – approval of appointment of lm bell as a nonexecutive director  following a nomination committee recommendation
august – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – receipt of a presentation from the chief executive and finance director of the half year results
 – consideration and approval of half year report and consideration of interim dividend
 – strategy discussion
september 
meeting held at 
rotork’s plant in 
leeds uk
 – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – consideration of legal and corporate governance developments
 – presentation from the divisional managing director of rotork gears
november 
2 meetings
 – consideration of the audit committee recommendation to approve the interim management statement
 – performance and business review including a review of prospective acquisitions
 – investor relations report from chief executive
 – consideration of risk appetite
 – review of the 2015 budget
 – consideration and approval of revised employment of former employees of the external auditor policy
 – consideration of legal and corporate governance developments including the requirements of the uk corporate governance code 2014
 – presentations from the divisional managing director of rotork controls and the managing director of rotork site services
december – performance and business review including review of prospective acquisitions
 – investor relations report from chief executive
 – discussion of potential 2014 final dividend amount
 – review of effectiveness of risk management and internal control systems
 – consideration of corporate governance developments
 – consideration of board performance evaluation
 – approval of directors’ situational conflicts of interests disclosures
 – review of risk management and internal control systems including consideration of the board’s additional responsibilities under 
the uk corporate governance code 2014 and associated guidance
 – approval of 2015 corporate objectives
 – approval of the 2015 budget 56 rotork annual report 2014
governance
uk corporate governance code compliance statement
the following section on pages 56 to 63 is a summary of the system of 
corporate governance adopted by rotork throughout the year ended 
31 december 2014 rotork plc fully complied with the uk corporate 
governance code the code the code is available to download at 
wwwfrcorguk
the board of directors
the board has a duty to promote the longterm success of rotork for its 
shareholders accomplished by entrepreneurial leadership within a 
framework of prudent and effective controls its role therefore includes 
approval of strategy risk reviews finance matters and internal control and 
risk management including major contract approvals
the terms and conditions of appointment of directors are available for 
inspection during business hours at the registered office of rotork plc and 
at the agm
board composition
rotork is led by an effective board which consists of ten members 
the chairman five independent nonexecutive directors and four 
executive directors apart from the chairman all nonexecutive directors 
are considered to be independent from rotork and are appointed for an 
initial term of three years upon the completion of this term the 
appointment is reviewed and if appropriate extended for up to a further 
two three year terms following which the director normally retires
the biographies of the directors and details of board committee 
membership are set out on pages 52 to 53
all directors are subject to annual reelection at the agm in line with 
the code
directors’ attendance at board and committee meetings during 2014
board 
audit 
committee
remuneration 
committee
nomination 
committee
no of meetings 12 6 3 4
rh arnold 12 3
i
na na
jm davis 12 6
i
na na
pi france 12 6
i
3
i
4
gm ogden 11 3
i
na na
lm bell
ii
2 1 1 0
gb bullard 11 6 3 4
sa james 12 6 3 4
ig king
iii
5 3 1 1
mj lamb
iv
5 3 2 1
v
rc lockwood 12 6 3 4
je nicholas 12 6 3 4
i by invitation
ii lm bell was appointed to the board on 10 july 2014
iii ig king retired from the board on 20 june 2014
iv mj lamb was appointed to the board on 2 june 2014
v mj lamb did not attend november nomination committee meeting where he was 
being considered as a candidate for the upcoming chairman vacancy
roles and responsibilities
there is a documented clear division of responsibilities between the 
chairman and the chief executive to ensure that there is a balance 
of power and authority between leadership of the board and 
executive leadership
all directors are entitled to seek independent professional advice at the 
company’s expense in order to discharge their responsibilities as directors 
rotork maintains appropriate directors’ and officers’ insurance cover 
how the board operates effectively
board activities
as part of rotork’s board effectiveness daytoday responsibility for the 
running of the company is delegated to executive management however  
there are a number of matters where it is not considered appropriate to 
do this the board therefore has a formal and documented schedule of 
matters reserved for its decision which includes
• approval of group strategy
• major capital projects and major contracts approval
• acquisition and disposal of any company business or fixed asset in 
excess of agreed levels
• changes to group corporate capital management or control 
structures or listing status
• approval of preliminary announcements and results annual report 
dividends and significant changes in accountancy policies and 
procedures and treasury policy
• approval of bank borrowings exceeding a certain percentage of the 
relevant company’s turnover
• undertaking an annual assessment of the group risk control process
• making appointments and removals following nomination committee 
recommendations and changing the size and composition of the board
• succession planning
• determining membership and chairmanship of board committees
• appointment reappointment or removal of the external auditor 
following audit committee recommendation
• approval of all resolutions and corresponding documentation to be put 
to the shareholders at a general meeting and the annual report
• approval of auditor  brokers and principal corporate finance adviser
• prosecution defence or settlement of any material litigation
• approval of overall levels of insurance for the group and
• major changes to the group’s pension schemes
in 2014 the board met 10 times at scheduled meetings and twice at 
additional meetings
corpora te governance continued
0 – 3 years 
3 – 6 years 
6 – 9 years 
length of tenure of independent 
nonexecutive directors  
as a t 31 december 2014
balance of independent nonexecutive 
directors and executive directors 
as a t 31 december 2014
nonexecutive chairman 
independent nonexecutive 
directors 
executive directors  governance strategic report directors financial statements company information
57 rotork annual report 2014
the chairman through the company secretary ensures that the board agenda and all relevant information is circulated to the board directors 
sufficiently in advance of the meeting the chairman and the company secretary discuss the agenda in detail ahead of every meeting and the chairman 
and chief executive hold a review meeting ahead of each board meeting
at least once annually the board travels to and meets at one of rotork’s locations other than its head office in bath this allows the board and in 
particular the nonexecutive directors the opportunity to gain a deeper understanding of overseas businesses and their markets and to interact with 
local management and staff as well as to view new capital investments and acquisitions in 2014 the board visited rotork’s manufacturing facility in 
winstonsalem usa and its new manufacturing plant in leeds uk the board met with and received presentations from local management
 
■ 2014 – winstonsalem usa
■ 2014 – leeds uk
■ 2013 – lucca italy
■ 2012 – chennai india
■ 2011 – houston usa
■ 2010 – bilbao spain
location of board meetings
all board directors constructively challenge executive management at board meetings and are entitled to unfettered access to information and 
management across the group should they require it rotork’s executive directors understand the distinction between their roles as executive 
managers and as board directors the chairman facilitates discussion by ensuring that all board members have the opportunity to fully contribute to all 
agenda items at board meetings and he always seeks to obtain unanimous decisions while allowing sufficient time for discussion and then drawing 
discussions to a close in an orderly manner  this means that a range of views are offered by both executive and nonexecutive directors when the board 
discusses any particular issue or topic rotork board members come from a variety of professional backgrounds including engineering legal 
accountancy and international sales and collectively possess significant managerial experience as well as experience of being company directors of 
other public limited companies
at each board meeting the board receives presentations from senior management regarding that senior manager’s area of responsibility the board 
has the opportunity to ask questions to senior management following their presentations
the chief executive and finance director present to the board the content of preliminary and half year results announcements and the board is invited 
to comment on and approve those announcements
the performance of the board is enhanced by the good working relationship between the chief executive and the chairman who continue to work 
together to ensure that the best use of the time and talents of the board are applied at board meetings
induction and development
new board members receive a suitable and tailored induction this is facilitated by the company secretary under the direction of the chairman in 2014 
lm bell and mj lamb were appointed as independent nonexecutive directors they both received a suitable induction which in addition to documentary 
content included arrangements for product training as well as visits to various rotork sites and meetings with management
directors are encouraged to continually update their professional skills and knowledge during 2014 development and induction activities for the directors 
included participation in external training seminars covering accounting and corporate governance developments and internal rotork related training
the chairman is responsible for reviewing the level and nature of training given to the board of directors at least annually 58 rotork annual report 2014
governance
corpora te governance continued
performance evaluations
during 2014 the board undertook a detailed review of its performance 
based on a written questionnaire which was designed after consultation 
with the chairman and company secretary by vivienne cassley of useful 
thinking an independent external consultancy who also provided an 
analysis on the responses
the feedback from the review was positive and the board is satisfied that 
progress continues to be made as the group expands although the 
structure of the board has changed during the past two years the level of 
trust and respect between members remains high and there is a spirit of 
constructive challenge
the review considered matters raised in 2013 and identified progress in 
most areas for example during 2014 the processes governing internal 
controls were further strengthened and the board’s diversity was further 
increased
board members identified key areas for focus in 2015 including
• ensuring that new organisational structures across the group are well 
implemented and supported
• accelerating organic growth and
• a continued focus on longer term strategy
je nicholas is the current senior independent director  as part of his role 
he annually arranges a meeting of the nonexecutive directors to appraise 
the chairman’s performance this feedback is used by him to discuss with 
the chairman his performance
diversity on the board
rotork recognises the benefits that gender diversity can bring to the 
boardroom and to the group as a whole having met its first published 
target of achieving 25 female representation in its independent 
nonexecutive directorate in 2012 rotork responded to lord davies’ call 
for action in the second annual review of women on boards in 2013 by 
announcing the future action it will take to improve diversity in senior 
management and throughout the organisation rotork has made progress 
towards its published targets rotork has also published a diversity policy 
which covers diversity on the board and throughout the organisation 
details of this policy are set out in the report of the nomination 
committee on page 63
internal controls and risk management
the board is cognisant of its responsibility to present a fair balanced 
and understandable assessment of the company’s position the 
board is responsible for rotork’s system of internal control and risk 
management and meets at least annually to review the effectiveness 
of it internal control can only provide reasonable not absolute 
assurance against material misstatement or loss as it is designed to 
manage the risks rather than remove them altogether
the system covers controls which enable rotork to respond appropriately 
to financial operational compliance and any other risks the system 
accords with the t urnbull guidance internal control – guidance for 
directors on the combined code and key elements include
• robust assurance processes and controls over financial 
reporting procedures
• a formal schedule of reserved matters for the board including 
responsibility for reviewing group strategy
• clearly defined levels of authority and a division of responsibilities 
throughout the group
• formal documentation procedures
• a formal whistleblowing policy with an external whistleblowing hotline 
and
• an internal audit function made up of accountants from head office 
and across subsidiaries supported by training in internal audit best 
practice and control procedures to monitor and identify weaknesses in 
internal controls
all members of the board receive full audit committee papers and prior 
meeting minutes additionally the audit committee chairman briefs the 
board on the main business of the previous audit committee meeting as 
well as making recommendations from the audit committee to the board 
board members therefore receive information and updates on the work of 
the audit committee in reviewing the effectiveness of the company’s risk 
management and internal control systems throughout the year  the 
board then carries out its review of the system of internal control
there is a continuous process for identifying evaluating and managing 
the significant risks faced by rotork details of which can be found on 
pages 36 to 39
the group continually learns from its experiences with internal controls 
and risk management which serves to further enhance the robustness of 
the internal controls and risk management in place around the group in 
2014 the annual review of the system of internal control identified no 
significant internal control failings or weaknesses
in 2014 the board considered the uk corporate governance code 2014 
and the financial reporting council’s guidance on risk management 
internal control and related financial and business reporting both 
applicable to the company from 1 january 2015 in order to comply with 
the revised requirements including those related to internal controls and 
risk management from the next financial year  the board has planned a 
workshop on internal control and risk management procedures in 2015 to 
consider the company’s internal control and risk management 
procedures and the requirements of the uk corporate governance code 
2014 and associated guidance
the group’s key risks change during the year under review and details of 
processes to manage these risks including the board’s approach to the 
significant risks the group is willing to take ie ‘risk appetite’ in achieving 
its specific objectives can be found on pages 36 to 39 governance strategic report directors financial statements company information
59 rotork annual report 2014
relations with shareholders
communication with shareholders is a priority for rotork and the 
company maintains a regular dialogue with its major shareholders rotork 
recognises the value of the uk stewardship code in 2014 the board and 
in particular the chief executive and finance director  have met with the 
shareholders in a number of ways including
• hosting conference calls
• hosting webcasts
• attending shareholder events
• hosting investor site visits
• attending conferences
• hosting and participating in roadshows and
• arranging ad hoc meetings with shareholders
the chairman ensures that all directors are made aware of major 
shareholder issues and concerns by ensuring the board receives reports 
from the chief executive on meetings with analysts and fund managers as 
well as shareholders
during 2014 the chairman and company secretary met with institutional 
investors at the invitation of the corporate governance director of a major 
shareholder to discuss various corporate governance issues after a 
response to a letter from the company secretary on behalf of the board 
seeking feedback on the level of contact they received from the board and 
in particular the chairman and the independent nonexecutive directors all 
responses received were positive and confirmed that the level of contact 
provided was satisfactory
rotork makes constructive use of its agm as an opportunity for the board 
to communicate with and answer questions from those shareholders who 
attend in person the entire board is normally available during the 
meeting and for lunch following the meeting to allow direct interaction 
between its directors and the shareholders
rotork also maintains a comprehensive investor relations section on its 
website which provides a variety of resources for investors including 
current webcasts presentations and press releases the website can be 
accessed at wwwrotorkcomeninvestors
electronic communications are also used by rotork to communicate with 
its shareholders all shareholders have been asked whether they would like 
to receive the annual report and accounts in electronic form rather than in 
hard copy form any shareholders wishing to receive corporate documents 
electronically can do this by registering for the service at wwwshareview
couk and clicking on ‘register’ under the ‘portfolio’ section rotork also 
make available electronic proxy appointment for shareholders who wish to 
appoint a proxy online to vote at the company’s agm
board committees
the board has audit nomination and remuneration committees each 
committee has formal written terms of reference which are available to 
download from the rotork website at wwwrotorkcomeninvestors
indexcommittees all board committees have four independent 
nonexecutive directors within their composition the group company 
secretary advises and acts as secretary to the committees
all committees have authority to take external independent professional 
advice at rotork’s expense for matters relating to the discharge of their 
duties
plc board
rc lockwood
audit 
committee
sa james
nomination 
committee
rc lockwood
remuneration
committee
gb bullard 60 rotork annual report 2014
governance
during 2014 embracing its role of protecting the interests of 
shareholders the committee focused on the integrity of the group’s 
financial reporting and the effectiveness of internal and external audit 
the committee conducted a tender for the external audit contract and 
on 2 june 2014 following a robust review and tender process the board 
appointed deloitte llp as the group’s external auditor  following a 
recommendation from the committee during 2014 chairmanship of the 
committee changed and following je nicholas’ appointment as senior 
independent director  sa james was appointed as chairman of the 
committee on 20 june 2014 the committee has also monitored changes 
in governance requirements including those relating to internal controls 
and risk management
all committee members are independent nonexecutive directors lm bell 
and je nicholas hold professional accounting qualifications and the board 
considers both to have recent and relevant financial experience biographies 
of each member of the committee can be found on pages 52 to 53 the 
chairman chief executive finance director  group financial controller  
internal audit coordinator and external auditor also regularly attend 
meetings by invitation
the committee operates under formal terms of reference which are 
reviewed annually a copy of the terms of reference is available on the 
rotork website at wwwrotorkcom principal responsibilities are to review 
and report to the board on
the integrity of financial reporting
• significant accounting policies and judgements
• internal control and risk management systems including monitoring 
the effectiveness of internal audit
• the appointment independence and effectiveness of the external 
auditor  including the policy relating to nonaudit work and policy 
relating to employment of former staff of the external auditor
• the external auditor’s remuneration and
• the whistleblowing policy
activities of the audit committee during the year
the committee met six times during the year  a summary of its principal 
activities is set out opposite
corpora te governance continued
sa james
chairman
members lm bell 
gb bullard mj lamb 
je nicholas
audit committee summary of 2014 audit committee business
month principal activities
february – review of the full year accounts including material 
judgments and estimates the draft annual report 2013 
governance reports and draft results announcements
– internal controls and risk management review including 
consideration of processes and procedures for risk 
management effectiveness of internal controls and fraud 
risk
– review of internal audit reports the internal audit 
programme its remit resourcing and effectiveness and of 
the need for a separate internal audit function
– consideration of and reporting to the board on the 
external auditor’s independence objectivity and 
effectiveness including the annual audit the auditor’s 
representation letter  views on the control environment 
and fraud risk management and reappointment of the 
external auditor  including whether it is appropriate to put 
the external audit contract out to tender 
– meeting with the external auditor without the presence of 
management
– consideration of accounting and corporate governance 
developments
– review of nonaudit services undertaken by the 
external auditor 
april – interim management statement review
may – recommendation to the board that deloitte llp be 
appointed external auditor 
august – review of the half year accounts including material 
judgments estimates and draft results announcements
– internal controls and risk management review including 
reviewing policies and procedures for preventing bribery 
and corruption and consideration of significant internal 
audit reports
– review of external auditor’s report on the half year 
accounts and the proposed full year external audit scope 
key risks materiality and year end issues
– review of nonaudit services undertaken by the external 
auditor 
– meeting with the external auditor without the presence of 
management
– consideration of accounting and corporate governance 
developments
november
2 meetings
– interim management statement review
– internal controls and risk management review including 
key risks and mitigating controls processes and 
procedures for risk management and consideration of 
significant internal audit reports
– review of the policy on employment of former audit staff 
and policy on and extent of nonaudit services provided by 
the external auditor 
– consideration of the external auditor’s fees engagement 
letter and risk of them leaving the market
– review of whistleblowing policy and hotline
– annual review of audit committee effectiveness and 
t erms of reference
– consideration of accounting and corporate governance 
developments including the requirements of the 
uk corporate governance code 2014 and 
associated guidance
– consideration of the audit committee schedule of work 
2015 governance strategic report directors financial statements company information
61 rotork annual report 2014
financial reporting
a key role of the committee in relation to financial reporting is to review 
the quality and appropriateness of the half year and year end financial 
statements with a particular focus on
• accounting policies and practices
• the clarity of disclosures and compliance with international financial 
reporting standards uk company law and the uk corporate 
governance code
• material areas in which significant judgements have been applied or 
where there has been discussion with the external auditor and
• upon request of the board advising the board on whether the annual 
report and financial statements are fair  balanced and understandable 
and provide the information necessary for shareholders to assess the 
company’s performance as a whole
t o assist the committee the group finance director and group financial 
controller present a detailed report at each meeting outlining significant 
matters and the external auditor presents a report on the work they have 
undertaken on the half year and year end financial statements
the principal matters of judgement considered by the committee in 
relation to the 2014 accounts and how they were addressed were
• goodwill impairment testing the year end balance sheet includes 
goodwill of £1497m this represents approximately 259 of the 
group assets the committee reviewed the carrying value of goodwill 
by examining a report from the group financial controller which set 
out the values attributable to each cash generating unit the expected 
value in use based on projected cash flows and the key economic 
assumptions related to growth and discount rates the committee 
also considered the work undertaken by deloitte in testing the 
assumptions the committee discussed the appropriateness of the 
assumptions used and compared expected growth rates to historical 
averages and the discount rate to the group weighted average cost of 
capital and appropriate risk premiums the committee also 
considered whether it was possible that a reasonable change in 
assumptions might indicate impairment following discussion the 
committee were satisfied that the approach taken by management 
was appropriate and that there was no requirement to record any 
impairments in the accounts
• acquired intangible assets during 2014 the group acquired three 
businesses the largest of these was y oung t ech co ltd which was 
acquired in march the committee reviewed the accounting and 
reporting in relation to these acquisitions in particular the 
determination and valuation of intangible assets prepared by the group 
financial controller  the committee considered this report together 
with comments from deloitte it also examined the disclosures in the 
report and accounts and concluded the judgements made were 
reasonable and that the reporting was accurate
• retirement benefit schemes the group operates two defined benefit 
retirement plans which are still open to future accrual the valuations 
are prepared by independent actuaries and are reviewed by deloitte 
the committee considered the report and the comments by deloitte 
and was satisfied the assumptions used were appropriate the 
detailed disclosure for these schemes under ias19 are shown in note 
24 and the committee is satisfied they are complete and accurate
• valuation of inventory the group has £81m of inventory which is 
spread across all of the group’s global locations the provisions made 
to write down slowmoving and obsolete inventory are based on an 
assessment of market developments and on an analysis of historic and 
projected usage the calculation of the provisions requires application 
of judgement by management management confirmed to the 
committee that there have been no significant changes to the 
approach used to estimate inventory provisions compared with the 
prior year  deloitte explained the work that they have performed and 
confirmed that based on this work no material inconsistencies or 
misstatements were found following discussion the committee was 
satisfied that the judgments that had been exercised and valuation 
methodology were appropriate and that the provisions were 
appropriately stated at year end
external auditor
kpmg and its predecessor firms had been auditor to the group for over 
fifty years and during this time a tender had not been conducted during 
2013 the committee considered how to achieve a high quality audit for 
the group as a whole and decided to bring all external audit work under 
one firm and considered it appropriate to offer all the external audit work 
for tender  the decision to tender also followed regulatory developments 
relating to external audit tendering
the committee invited a number of external audit firms with the requisite 
capability to tender for the external audit contract and the audit 
committee consulted the financial reporting council’s notes on best 
practice for audit t enders kpmg being the company’s former external 
auditor  was not invited to tender  following the conclusion of the audit 
tender process deloitte llp was appointed as the group’s external 
auditor on 2 june 2014 and will undertake all external audit work for the 
group deloitte’s continuing appointment will be subject to shareholder 
approval at the 2015 agm
the committee assesses the effectiveness of the external audit process 
the scope of the group audit and the quality of the audit work throughout 
the year 
the assessment considers
• any issues arising from the prior year audit
• the proposed audit plan including identification of risks specific to 
rotork audit scope and materiality thresholds
• staffing continuity and experience
• the delivery of the audit in line with the plan
• matters arising during the audit and the communication of these to the 
committee
• feedback from executive management
• private meetings with the auditor without management being present
• the independence objectivity and scepticism of the auditor and
• the financial reporting council audit quality review report on selected 
audits undertaken by deloitte
having completed this review the committee agreed that the audit 
process independence and quality were satisfactory
nonaudit services
in order to safeguard the independence and objectivity of the external 
auditor  the board has adopted a policy on nonaudit services which 
restricts the work and fees available to the external audit firm and the 
policy is reviewed by the committee annually to ensure it remains 
appropriate and in line with applicable requirements
the policy specifies certain activities which the external auditor may not 
undertake such as work relating to financial statements which may be 
subject to external audits or management or significant involvement with 
internal audit services
for work within the policy scope namely anything other than audit half 
year review or tax compliance work authority has been delegated to the 
finance director to approve fees of up to £10000 per project or £40000 
in aggregate for general work £50000 in aggregate for tax work and 
£10000 for acquisition related work nonaudit work above these levels 
requires the prior approval of the committee chairman or the committee 
as a whole 62 rotork annual report 2014
governance
at each committee meeting a summary is provided of all nonaudit 
services awarded to the external auditor during the year 
an analysis of fees paid to deloitte including the split between audit and 
nonaudit is included in note 8 of the report and accounts the total 
nonaudit fees for 2014 represent 27 of the total deloitte audit fee 
the majority of the deloitte nonaudit fees were earned prior to their 
appointment as group auditor 
internal controls and risk management
the committee has responsibility for reviewing and monitoring the 
effectiveness of the group’s control environment internal audit and risk 
management process
during the year  the committee considered reports on internal control 
from the group finance director as well as reports on procedures to 
prevent bribery and corruption from the company secretary the 
committee was satisfied with the arrangements in place during 2014 the 
committee considered the 2014 uk corporate governance code and the 
financial reporting council’s guidance on internal controls risk 
management and related financial reporting applicable to the company 
from 1 january 2015 to the extent it relates to the committee the 
committee commenced work with the board in 2014 which will continue 
into 2015 to review internal controls and risk management procedures in 
order to comply with these revised requirements
the group does not have a separate independent internal audit function 
but does have a well established internal audit approach of using staff 
from one division to undertake audits in a different division this 
arrangement encourages the sharing of best practice and provides career 
development for the staff involved during 2014 the company appointed 
an internal audit coordinator whose duties include managing the internal 
audit programme reviewing internal audit reports and when invited 
attending audit committee meetings external resource is used to 
supplement the internal team where specific technical or language 
expertise is required the committee receives a report at each meeting 
on the activities of internal audit any significant matters arising and the 
management response the committee reviews each year  the internal 
audit arrangements including the annual audit plan and staffing it also 
considers whether a separate internal audit function is required the 
committee is satisfied with the effectiveness of the internal audit 
arrangements at this time
the group has operated a risk management process for several years 
the process starts with divisional management considering and assessing 
the risks in each of their businesses this leads in due course to a group 
meeting at which the principal risks mitigation and management of those 
risks are reviewed all committee members are invited to this meeting 
and in 2014 all members attended the committee gains a detailed 
understanding of the risk management process and considers the 
process effective
other matters
in accordance with its terms of reference the committee led by the 
chairman carried out a review of its effectiveness by way of 
questionnaire including how it discharged its responsibilities and terms of 
reference
the committee’s activities were also reviewed as part of the board 
evaluation process referred to on page 58
throughout the year  the committee also considered relevant accounting 
and corporate governance developments
corpora te governance continued governance strategic report directors financial statements company information
63 rotork annual report 2014
the nomination committee is responsible for leading the process for 
board appointments and making recommendations to the board 
ensuring succession planning is in place regularly reviewing the structure 
size and composition of the board including its balance of skills 
knowledge and experience and making recommendations as appropriate
activities of the nomination committee during the year
the committee met four times during the year  a summary of principal 
activities is set out below
summary of 2014 nomination committee business
month principal activities
february – consideration of candidates for additional independent 
nonexecutive director appointments
march – ongoing succession planning discussions
– further consideration of candidates for additional 
independent nonexecutive director appointments
– recommendation to the board that mj lamb be 
appointed an independent nonexecutive director
july – recommendation to the board that lm bell be appointed 
an independent nonexecutive director
november – ongoing discussions and search relating to the 
succession of the chairman
during the year the committee led the search for and recommended 
to the board the appointment of two additional independent 
nonexecutive directors lm bell and mj lamb having considered the 
balance of skills experience and diversity including gender diversity on 
the board the committee engaged korn ferry an external search 
consultancy to search for suitable candidates for both appointments in 
conjunction with the committee korn ferry has no other connection with 
the company lm bell is a chartered accountant and she is the finance 
director of the british land company plc a ftse 100 company mj lamb 
is an experienced director and recently retired as chief executive of imi 
plc an international ftse 100 engineering company in line with all other 
directors lm bell and mj lamb will stand for election to the board by the 
shareholders at the 2015 agm
rc lockwood
chairman
members lm bell  
gb bullard pi france  
sa james mj lamb  
je nicholas
nomination committee the committee also considered succession planning in order to satisfy 
itself that plans are in place for an orderly succession for appointments to 
the board and senior management to maintain an appropriate balance of 
skills and experience within the group and to ensure progressive 
refreshing of the board in particular  the committee considered 
succession planning for the position of chairman which will be vacated 
when rc lockwood retires following the company’s agm in 2015 and 
recommended to the board that mj lamb be appointed as chairman of 
the board at the conclusion of the company’s agm in 2015 the chairman 
did not chair the committee and mj lamb did not attend committee 
meetings while business relating to the successor chairman was 
considered following the recommendation to the board it was resolved 
that mj lamb be appointed as chairman of the board at the conclusion of 
the company’s agm in 2015 on appointment mj lamb will step down 
from membership of the audit and remuneration committees
diversity policy
as part of it’s commitment to maintaining an appropriate balance of skills 
knowledge and experience on its board the board seeks to attain a 
diverse mix of skills experience knowledge and background in 
considering diversity gender will play an important role but the board will 
take account of ethnicity nationality background profession and 
personality
following the appointment of lm bell female representation in the 
company’s independent nonexecutive directorate is 40
the board will take a number of voluntary actions to improve diversity 
including only using external search consultants where such consultants 
are engaged to make an appointment which have signed up to the 
voluntary code of conduct for executive search firms and assisting the 
development of the executive pipeline by encouraging senior employees 
to take on additional roles such as seeking nonexecutive director roles 
to gain valuable board experience
the board’s diversity policy also applies more generally throughout the 
group and sets out other actions the group will take to contribute to a 
more diverse pool of talent
remuneration committee
the work of the remuneration committee is described in the 
remuneration report on pages  64 to 77 of the report of the directors 64 rotork annual report 2014
governance
directors’
statement from the chairman of the 
remuneration committee
the directors’ remuneration report is split into two parts
• the policy report which sets out the company’s policy on directors’ 
remuneration the policy was approved by shareholders at the 2014 
agm for a period of three years and
• the annual report on remuneration which discloses the payments and 
awards made to the directors under the policy and shows the link 
between remuneration and the group’s performance
the policy report is not subject to a shareholder vote this year  the annual 
report on remuneration together with this introductory statement is 
subject to an advisory shareholder vote at the 2015 agm
during 2014 the remuneration committee committee continued to 
monitor developments relating to remuneration throughout the year the 
committee has considered updates on best practice from relevant 
providers of corporate governance guidance including the investment 
association formerly the association of british insurers the national 
association of pension funds napf and institutional shareholder services
research recommendation and electronic voting issrrev the group 
supports the continued drive for improvement of best practice and for 
greater focus on transparency  moderation simplicity and a closer 
alignment of the interests of the directors with those of the shareholders
in accordance with the uk corporate governance code 2014 which the 
company is required to comply with from 1 january 2015 the long t erm 
incentive plan l tip and bonus scheme have clawback provisions allowing 
the committee to recover sums paid or withhold the payment of other 
sums in circumstances where financial results have been materially 
misstated an award was based on erroneous inaccurate or misleading 
information or where an individual ceases to be an employee or director of 
the group as a result of misconduct on the part of that individual the l tip 
and bonus scheme also permit the committee to lapse all or part of an 
award in similar circumstances to the clawback
as set out in the annual report on remuneration the company 
performed well in a challenging year against 2014 incentive targets 
resulting in an annual cash bonus payout of 66 of the maximum bonus 
opportunity available and a l tip vesting rate of 37 for the 2012 award 
which vests based on performance to 31 december 2014 at the end of 
2014 the share price and consequently the total shareholder return 
element of the l tip  was impacted by the oil price fall and so did not vest 
however  growth in earnings per share ensured a vesting of 37 of the 
total 2012 award 2014 profit growth and cash flow ensured a bonus 
payout of 66
details of how the policy will be applied in 2015 are detailed on page 76 
the committee continues to be mindful of employee remuneration 
conditions around the group and salary increases for executive directors 
will be 18 except for jm davis who received 25 which is broadly in 
line with the typical increase for other uk employees the annual bonus 
and l tip will operate in a similar format to 2014 under the approved 
policy l tip awards worth up to 150 of salary may be granted the 
committee does not intend to make l tip awards of more than 100 of 
basic salary to any executive except the chief executive who will receive 
an award of 125 of salary in 2015 the maximum bonus potential remains 
125 of salary for the chief executive and 100 of salary for other 
executive directors
during 2015 the committee intends to review the remuneration policy to 
ensure that it continues to support the business strategy  appropriately 
incentivises and rewards the directors for their role in the longterm success 
of the group and is aligned to the interests of shareholders the outcome of 
this review will be communicated in next year’s remuneration report with any 
changes to the policy if required submitted to shareholders for approval at 
the agm in 2016 any significant changes will be subject to prior consultation 
with major shareholders
gb bullard
chairman
members lm bell 
sa james mj lamb 
je nicholas
remunera tion report governance strategic report directors financial statements company information
65 rotork annual report 2014
activities of the remuneration committee during the year
the committee met four times during the year 
summary of 2014 remuneration committee business
month principal activities
february
2 meetings
– approval of ltip award levels and bonus opportunity for 
2014 for executive directors and other members of senior 
management
– approval of the remuneration report 2013
– consideration on executive remuneration principles of 
napf and others
august – review of ltip performance
– consideration of legal and corporate governance 
developments
– consideration of remuneration market trends
december – approval of the committee’s schedule of work for 2015
– consideration of current investor guidance from 
investment management association on remuneration
– consideration of corporate governance developments 
including the uk corporate governance code 2015
– consideration of a paper from nbs on executive 
remuneration as at december 2014
– review of nbs paper on chairman fees
– setting of basic salary for executive directors
– approval of ltip awards for the chief executive of 125 of 
basic salary
remuneration report
the company’s remuneration report is presented to shareholders by the board 
at the agm along with the annual report on remuneration the auditor is 
required to report on the information concerning the single figure of 
remuneration total pension entitlements scheme interests awarded during 
the financial year  payments made to past directors if any payments for loss of 
office if any and the statement of directors’ shareholdings and share interests 
shown within the annual report on remuneration
policy report
this report sets out the policy of the company on the remuneration of 
the directors this policy report was approved by shareholders at the 
agm of the company held on 25 april 2014 and took effect from that 
date the policy report is not subject to a shareholder vote this year but 
has been reproduced here for ease of reference the charts on page 70 
have been updated to reflect the current salaries of executive directors
role of the remuneration committee
the principal role of the committee is to determine the framework and 
policy for remuneration of the executive directors and the chairman 
ensuring that remuneration levels are sufficient but not excessive in order 
to attract retain and motivate directors of the quality required to run the 
company
the full terms of reference of the committee can be found on the 
company’s website at wwwrotorkcomeninvestorsindexcommittees 
key responsibilities include
• within the approved policy determining individual remuneration 
packages for the chairman and executive directors including the 
terms of any discretionary share schemes in which executive directors 
may be invited to participate taking account of the level of 
remuneration for other rotork management board members and being 
aware of remuneration conditions throughout the group
• agreeing the terms and conditions to be included in service 
agreements for executive directors including termination payments 
and
• selecting appointing and setting terms of reference with any 
remuneration consultants who may advise the committee
consideration of conditions elsewhere in the company
the committee is sensitive to employee remuneration conditions in the 
company and in determining remuneration takes account of 
remuneration conditions throughout the company while the committee 
does not consult with employees on remuneration it does invite the 
group human resources director to its meetings to provide amongst 
other things details of employee remuneration conditions and metrics 
such as pay rises awarded to employees
consideration of shareholder views
in formulating the remuneration policy the committee takes into account 
guidance issued by shareholder representative bodies including the 
investment association the napf and iss the committee also takes into 
consideration any views expressed by shareholders during the year 
including at the agm and encourages an open dialogue with its largest 
shareholders major shareholders would be consulted in advance about 
changes to the approved remuneration policy or any significant proposed 
changes to the way in which it is implemented 66 rotork annual report 2014
governance
overview of the directors’ remuneration policy
directors’ future policy table
element of
remuneration
purpose and how it
supports the strategy
how the element operates including
maximum amounts payable framework used to assess performance
base salary t o attract and retain 
executive directors of 
the right calibre and 
provide a core level of 
reward for the role 
salary levels and subsequent salary increases are set 
after taking into account the responsibilities of the role 
the value of the individual in terms of skills experience 
and personal contribution company performance 
internal relativities and pay conditions and external 
market data benchmarked against companies of a 
similar size and complexity and other companies in the 
same industry sector the committee also considers 
the impact of any increase to salaries on the total 
remuneration package
salaries are paid monthly and reviewed annually salaries 
are normally reviewed in december  with any changes 
effective from 1 january details of the current salaries 
of the executive directors are set out in the annual 
report on remuneration
any salary increase will ordinarily be in line with the typical 
increase as a percentage of salary applied to the uk 
workforce however  the committee retains the discretion 
to award a higher increase if appropriate for example 
where there is a change in responsibility progression in the 
role or to reflect the increased experience of the individual
na
benefits t o attract and retain 
executive directors 
of the right calibre by 
providing a market 
competitive level of 
benefit provision
the range of benefits that may be provided is set by the 
committee after taking into account local market practice 
in the country where the executive is based the executive 
directors’ benefits currently comprise a car and fuel or 
car and fuel allowance personal accident insurance for uk 
executive directors only and private medical insurance 
additional benefits may be provided as appropriate
executive directors are also entitled to membership of the 
allemployee rotork share incentive plan sip or overseas 
profit linked share scheme oplss within the maximum 
limits as set by hmrc
there is no prescribed maximum level but the committee 
monitors the overall cost of the benefit provision to ensure 
that it remains appropriately proportionate
na
directors’ remunera tion report continued governance strategic report directors financial statements company information
67 rotork annual report 2014
element of
remuneration
purpose and how it
supports the strategy
how the element operates including
maximum amounts payable framework used to assess performance
annual cash 
bonus
drives and rewards 
performance against 
annual financial and 
operational goals which 
are consistent with the 
medium to long term 
strategic needs of the 
business
the maximum annual bonus potential is 125 of salary for 
the chief executive and 100 of salary for other executive 
directors bonuses are paid in cash
the executive annual bonus is focused 
on the delivery of strategically important 
performance measures these include 
demanding financial and nonfinancial 
measures the financial measures which 
account for the majority of the bonus 
potential are currently based on annual 
profit target three year profit growth 
earnings per share and cash generation the 
nonfinancial measures currently include the 
accident frequency rate and co
2
 emissions 
however  the committee may use different 
measures andor weightings for future 
bonus cycles to take into account changes in 
the strategic needs of the business
for each measure normally a sliding scale of 
stretching targets is set by the committee 
which apply from the beginning of each 
financial year  the threshold level of bonus 
under each financial measure varies but 
accounts for no more than one third of 
the maximum bonus opportunity under 
any single measure under the terms of 
the bonus plan the committee has the 
discretion in exceptional circumstances to 
amend previously set targets or to adjust 
the proposed payout to ensure a fair and 
appropriate outcome
long t erm 
incentive plan 
l tip
t o incentivise long 
term value creation 
and alignment with 
shareholder interests 
the l tip permits an annual grant of shares which vest 
subject to performance and continued employment 
the l tip awards will be granted in accordance with the 
rules of the plan which were approved by shareholders 
in 2010 and the discretions contained therein a copy 
of the rules is available on request from the 
company secretary
under the rules of the l tip  the maximum award size is 
150 of salary details of the proposed award level 
for 2015 are set out in the annual report on 
remuneration
awards under the l tip may be granted in the form of 
conditional shares forfeitable shares nilcost options 
or cash where the award cannot be settled in shares 
awards are currently structured as nilcost options
the executive directors are also subject to a shareholding 
requirement to build and maintain a shareholding in rotork 
equivalent to 150 of salary
awards under the l tip are currently subject 
to two performance conditions half of 
the awards are subject to an earnings per 
share performance condition and half of 
the awards are subject to a relative total 
shareholder return tsr performance 
condition each measured over three 
financial years the tsr performance 
condition is also subject to an underpin 
relating to underlying financial performance 
a sliding scale of targets is set for each 
measure with no more than 25 of the 
award under each measure vesting for 
achieving the threshold performance hurdle 
the performance targets are set prior to the 
grant of each award different targets and
or weightings between measures may be set 
for future award cycles
under the l tip rules approved by 
shareholders the committee has 
the discretion to amend the targets 
applying to existing awards in exceptional 
circumstances providing the new targets are 
no less challenging than originally envisaged 
the committee also has the power to adjust 
the number of shares subject to an award 
in the event of a variation in the capital of 
the company 68 rotork annual report 2014
governance
element of
remuneration
purpose and how it
supports the strategy
how the element operates including
maximum amounts payable framework used to assess performance
pension t o provide a market 
competitive 
remuneration package 
to enable the 
recruitment and 
retention of the 
executive directors
the company may fund contributions to a director’s 
pension as appropriate this may include participation in 
the company’s defined benefit pension schemes which 
are now closed to new members contributions to a money 
purchase scheme andor payment of a cash allowance 
where appropriate
further details on the company’s policy on pension 
arrangements including maximum entitlements are set 
out below this table
life assurance is provided for executive directors based in 
the uk only
na
chairman and
nonexecutive
directors’ fees
t o attract and retain 
nonexecutive
directors of the
right calibre
fees for the chairman and nonexecutive directors are 
reviewed periodically
nonexecutive director fees are determined by the 
chairman and chief executive the fees for the chairman 
are determined by the committee taking into account views 
of the chief executive the chairman excludes himself from 
such discussions
the fees for the nonexecutive directors which are paid 
quarterly in cash normally comprise a basic board fee with 
additional fees paid to the senior independent director 
and for chairing a committee the fee levels set are set by 
reference to rates in companies of comparable size and 
complexity the fee levels are reviewed periodically taking 
into account the responsibilities of the role and the time 
commitment of the individual
the maximum aggregate fee level is £500000 as set out in 
the company’s articles of association
na
performance measures
performance measures are used to determine the extent of any awards made under the variable elements of the executive directors’ remuneration mix 
being the annual cash bonus and the l tip  the performance measures used are set out in the directors’ future policy table above the performance 
measures were selected because of their use as key performance indicators kpis to assess company performance and to align the interests of the 
directors to those of the shareholders nonfinancial kpis constitute part of the annual cash bonus award and these are selected to ensure that 
performance measured by financial kpis is not delivered at the expense of important nonfinancial considerations in this case the safety of rotork’s 
people and rotork’s impact on the environment
clawback and malus
the payment of any bonus is at the ultimate discretion of the committee and the committee also retains an absolute discretion to reclaim some or all 
of any annual bonus paid in exceptional circumstances such as misstatement of results an error in the calculation of the performance targets andor 
award size and gross misconduct
in terms of the l tip  the committee has the discretion to reclaim some or all of a vested l tip award in exceptional circumstances the categories for 
clawback being the same as for the annual bonus plan in addition the committee may lapse or reduce an award prior to vesting where the participant 
is found to be guilty of serious misconduct
pension policy
pi france and jm davis are active members of the rotork pension and life assurance scheme a defined benefit pension scheme if they remain active 
members of this pension scheme until their normal retirement age of 60 and 65 respectively pi france will be entitled to a pension of 667 of the 
earnings cap and jm davis will be entitled to a pension of 475 of the earnings cap which is set at £145800 per annum for 2015 but may increase in 
line with inflation these figures ignore any benefits transferred from another pension arrangement and the tax implications of remaining in the rotork 
pension scheme until normal retirement age in addition they receive a cash allowance on salary above the cap 225 for pi france and 18 for jm 
davis gm ogden is a preserved member of the rotork pension and life assurance scheme and now receives a cash allowance of 44 of salary in lieu of 
pension rh arnold is a member of the rotork controls inc pension scheme and a supplementary executive retirement plan which in aggregate are 
targeted to provide a pension of 60 of uncapped basic salary at age 65 the company’s defined benefit pension schemes in the uk and usa are closed 
to new entrants the pension arrangement that would be offered to a new executive director would be limited to a maximum 25 of salary cash 
allowance or contribution to one of the company’s defined contribution schemes andor continued participation in a defined benefit scheme if the 
executive is an existing member of one of the schemes
directors’ remunera tion report continued governance strategic report directors financial statements company information
69 rotork annual report 2014
differences between the policy on directors’ remuneration and the policy 
on employee remuneration
the board recognises that it is appropriate for a significant proportion of 
executive directors’ remuneration to be contingent on the performance of 
the company and that such remuneration is at risk subject to the 
satisfaction of stretching performance conditions consequently 
executive directors are invited to participate in the l tip where shares 
awarded will vest contingent upon performance conditions over a 
threeyear period executive directors are also invited to participate in the 
annual cash bonus scheme which will result in a cash bonus payment 
being made if targets are achieved for employee remuneration the board 
considers it more appropriate that employees share in the success of the 
company through a profit based bonus plan which is based on the 
performance of their business unit this is coupled with the opportunity 
for eligible employees to receive free shares from the company paid from 
the company’s profits
approach to recruitment remuneration
base salary levels will be set in accordance with rotork’s remuneration 
policy taking into account the experience and calibre of the individual and 
their existing remuneration package where it is appropriate to offer a 
lower salary initially a series of increases to salary may be given over 
subsequent years subject to individual performance benefits will 
generally be provided in accordance with the approved policy with 
relocation expensesan expatriate allowance paid for if necessary
the structure of the variable pay element will be in accordance with 
rotork’s approved policy detailed above the maximum aggregate 
variable pay opportunity under the policy is up to 275 of salary for the 
role of chief executive and up to 250 of salary for other executive 
directors different performance measures may be set initially for the 
annual bonus taking into account the responsibilities of the individual and 
the point in the financial year that the executive joined
in the case of an external hire it may be necessary to buyout incentive 
pay or benefit arrangements which would be forfeited on leaving the 
previous employer this would be provided for taking into account the 
form cash or shares and timing and expected value ie likelihood of 
meeting any existing performance criteria of the remuneration being 
forfeited replacement share awards if used may be granted using 
rotork’s existing share plans to the extent possible although awards may 
also be granted outside of these schemes if necessary and as permitted 
under the listing rules
in the case of an internal hire any outstanding variable pay awarded in 
relation to the previous role will be allowed to pay out according to its 
terms of grant
fees for a new chairman or nonexecutive director will be set in line with 
the approved policy
service contracts and policy on payments for loss of office
under the executive directors’ service contracts twelve months’ notice of 
termination of employment is required by either party except in the case 
of rh arnold see below should notice be served the executives can 
continue to receive basic salary benefits and pension for the duration of 
their notice period during which time the company may require the 
individual to continue to fulfil their current duties or  for pi france or jm 
davis may assign a period of garden leave the company applies a general 
principle of mitigation in relation to termination payments and the service 
contracts for pi france and jm davis which reflect the policy to be used 
for future hires expressly include the use of monthly phased payments 
following termination in lieu of notice which can be reduced to the extent 
that alternative remunerated employment is found
the service contracts for pi france and jm davis also enable the company 
to elect to make a payment in lieu of notice equivalent in value to twelve 
months’ base salary only
rh arnold does not have a signed service agreement in place instead the 
conditions of his employment are governed by local state law he is 
resident in the usa the company may terminate his employment 
without notice or compensation providing it meets any employer 
obligations such as the settlement of unpaid holiday entitlement and sick 
leave
in the event of cessation of employment the executives may still be 
eligible for a bonus at the discretion of the committee payable in cash on 
a prorata basis but only for the period of time served from the start of 
the financial year to the date of termination and not for any period in lieu 
of notice different performance measures to the other executive 
directors may be set for the bonus for the period up until departure as 
appropriate to reflect changes in responsibility
the rules of the l tip set out what happens to awards if a participant 
leaves employment before the end of the vesting period generally any 
outstanding share awards will lapse when an executive leaves 
employment except in certain circumstances if the executive ceases to 
be employed as a result of death injury retirement transfer of 
employment or any other reason at the discretion of the committee then 
they will be treated as a ‘good leaver’ under the plan rules the shares for a 
good leaver will vest subject to an assessment of performance with a 
prorata reduction to reflect the proportion of the vesting period served 
for awards granted in 2013 and prior  the awards for a good leaver will vest 
on cessation of employment for awards to be granted in 2014 and 
beyond the awards for a good leaver will vest on the normal vesting date 
unless the committee determines that they should vest early for 
example following the death of the participant in determining whether 
an executive should be treated as a good leaver and the extent to which 
their award may vest up to the prorated amount the committee will 
take into account the circumstances of an individual’s departure
outplacement services and reimbursement of legal costs may be 
provided where appropriate
any statutory entitlements or sums to settle or compromise claims in 
connection with a termination would be paid as necessary 70 rotork annual report 2014
governance
illustration of the application of the remuneration policy
the charts below illustrate how the remuneration policy would function for minimum on target and maximum performance for 2015 for each executive 
director 
0
250000
500000
750000
1000000
1250000
1500000
1750000
pi france
minimum on t arget maximum
100 56 34
31
33
13
33
£578600
£1008600
£1653600
0
50000
100000
150000
200000
250000
gm ogden
minimum on t arget maximum
100
91
86
9
14
£79300
£110600
£131500
0
250000
500000
750000
1000000
1250000
1500000
1750000
jm davis
minimum on t arget maximum
100 61 40
27
30
11
30
£389900
£623600
£974100
0
250000
500000
750000
1000000
1250000
1500000
1750000
rh arnold
minimum on t arget maximum
100 63 42
26
29
11
29
£335000
£524200
£808000
n fixed remuneration n annual variable remuneration n multiple period variable remuneration
footnote to charts
salary levels and consequently the other elements of the remuneration package which are calculated as a percentage of salary are based on those applying on 1 january 2015 t axable 
benefits are shown as the cost to the company of supplying those benefits for the year ending 31 december 2014 on target performance for illustrative purposes assumes achievement 
of 60 of the maximum available bonus and threshold l tip vesting 20 of the maximum maximum performance assumes achievement of the maximum bonus and full vesting of the 
l tip shares the l tip grant level for all executives is 100 of salary except for pi france who from 2015 is granted 125 of salary no share price growth has been assumed and for 
simplicity the benefit derived from participating in the company’s all employee sip or oplss have been excluded gm ogden is retiring in 2015 and will not receive an l tip award for 2015 
and the annual cash bonus will be awarded on a prorata basis
directors’ remunera tion report continued governance strategic report directors financial statements company information
71 rotork annual report 2014
annual report on remuneration
single figure of remuneration £000s audited
executive directors
salary benefits
i
annual cash bonus ltip
iiiv
 
pension and related 
benefits
total 
remuneration
name 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
rh arnold
iii
232 240 17 17 153 226 99 235 84 32 585 750
jm davis 285 270 18 18 188 255 113 262 80 116 684 921
pi france 422 412 18 18 348 486 173 410 131 126 1092 1452
gm ogden 205 200 18 17 135 189 84 203 90 88 532 697
i the benefit value consists of a car and fuel or a car and fuel allowance private medical insurance executive director only and the cash value on allocation of sip and oplss share 
awards as appropriate
ii the 2014 figures relate to the vesting of the 2012 l tip award which vests based on performance to 31 december 2014 the award vested at 37 and has been valued using the 
average share price for the period 1 october to 31 december 2014 the award will vest in march 2015
iii rh arnold is paid in us dollars
iv the 2013 figures have been updated to reflect the actual share price on vesting of the 2011 l tip award
directors not performing an executive function
base fees additional fees total remuneration
name 2014 2013 2014 2013 2014 2013
lm bell
i
20 – – – 20 –
gb bullard 43 40 7 6 50 46
sa james 
ii
43 40 4 – 47 40
ig king
iii
20 40 3 7 23 47
mj lamb
iv
25 – – – 25 –
rc lockwood 140 140 – – 140 140
je nicholas 43 40 8 8 51 48
i lm bell was appointed as a director of the company on 10 july 2014
ii sa james was appointed as chairman of the audit committee on 20 june 2014
iii ig king retired as a director of the company on 20 june 2014
iv mj lamb was appointed as a director of the company on 2 june 2014
additional fees relate to the supplementary fee paid to the chairmen of the audit and remuneration committees and the senior independent director 
all directors have confirmed that save as disclosed in the single figures of remuneration tables above they have not received any other items in the 
nature of remuneration
annual cash bonus for 2014
the annual cash bonus is calculated according to targets which total 80 and which are allocated to directors at 100 of basic salary  except for the chief 
executive where the allocation is 125 of basic salary the targets weightings and achievement in relation to performance in 2014 are as follows
performance 
required to 
trigger bonus 
payment
performance 
required at 
target 
 payable 
at target 
performance
performance 
required at 
maximum
 payable at 
maximum
performance 
outcome
 bonus 
awarded
accident frequency rate 042 042 5 042 5 031 50
co
2
 reduction 00 15 5 15 5 73 00
cash generation 85 100 10 100 10 975 83
eps growth 1249p 1374p 10 1374p 10 1316p 54
three year profit growth £1341m £1610m 15 £1788m 25 £1577m 131
annual profit target £1438m £1534m 15 £1597m 25 £1572m 210
total 60 80 528
overall this resulted in the following bonus payments
• rh arnold – £153000 660 of salary
• jm davis – £188000 660 of salary
• pi france – £348000 825 of salary
• gm ogden – £135000 660 of salary 72 rotork annual report 2014
governance
long t erm incentive plan
the company’s long t erm incentive plan l tip rewards the creation of shareholder value which is a strategic priority performance is measured over a 
three year period using a combination of earnings per share growth and relative total shareholder return tsr compared to a comparator group the 
performance measures and weightings are summarised in the table below
the awards granted and vesting under this plan to the executives are detailed in the table below
note year of grant
awards at 
1 january 
2014 
awards 
granted 
during 
the year
awards 
vesting 
during 
the year
awards 
lapsed 
during the 
year
awards at 
31 december 
2014 vesting date
rh arnold i 2011 12904 – 8645 4259 – 6 march 2014
ii 2012 11114 – – – 11114 5 march 2015
iii 2013 8362 – – – 8362 3 march 2016
iv 2014 – 8308 – – 8308 7 march 2017
32380 8308 8645 4259 27784
jm davis i 2011 14076 – 9430 4646 – 6 march 2014
ii 2012 12654 – – – 12654 5 march 2015
iii 2013 9292 – – – 9292 3 march 2016
iv 2014 – 10356 – – 10356 7 march 2017
36022 10356 9430 4646 32302
pi france i 2011 21994 – 14735 7259 – 6 march 2014
ii 2012 19314 – – – 19314 5 march 2015
iii 2013 14182 – – – 14182 3 march 2016
iv 2014 – 15344 – – 15344 7 march 2017
55490 15344 14735 7259 48840
gm ogden i 2011 10888 – 7294 3594 – 6 march 2014
ii 2012 9412 – – – 9412 5 march 2015
iii 2013 6984 – – – 6984 3 march 2016
iv 2014 – 7460 – – 7460 7 march 2017
27284 7460 7294 3594 23856
i the 2011 awards were based on tsr and eps performance to 31 december 2013 each condition accounting for 50 of the award the overall vesting of the awards was 67 and the 
total number of shares vesting in respect of all executives was therefore 40104 the shares vested on 6 march 2014 the share price on that date was £2781
ii the 2012 awards were based on tsr and eps performance to 31 december 2014 each condition accounting for 50 of the award tsr was measured relative to the ftse 250 index 
excluding all financial services insurance companies and investment trusts for the eps condition eps growth must be at least rpi  10 for 25 vesting increasing on a 
straightline basis to full vesting for eps growth of rpi  25 and above rotork’s actual tsr performance was 48 resulting in 0 of the tsr element of the award vesting rotork’s 
actual eps growth was 28 resulting in 739 of the eps element of the award vesting the overall vesting of the awards was 37 and the total number of shares vesting in respect of 
all executives was therefore 19394 the shares will vest in march 2015
iii the performance conditions for the 2013 awards are based on performance to 31 december 2015 the targets are the same as for the 2012 awards
iv the 2014 awards were granted on 7 march 2014 and are subject to the same performance targets as the 2013 awards albeit based on performance to 31 december 2016 further 
details on the awards are set out in the table below
l tip awards made during the year audited
share awards 
made during 
2014
basis on which 
award made
face value of 
award
number of 
shares vesting 
for minimum 
performance
i
number 
of shares 
vesting for 
maximum 
performance
end of 
performance period
rh arnold 8308 100 of salary £228636 1661 8308 31 december 2016
jm davis 10356 100 of salary £284997 2071 10356 31 december 2016
pi france 15344 100 of salary £422267 3068 15344 31 december 2016
gm ogden 7460 100 of salary £205299 1492 7460 31 december 2016
i vesting if the minimum performance eps and tsr conditions are achieved 20 of the maximum award the share price used at the date of award 6 march 2014 was £2752
directors’ remunera tion report continued governance strategic report directors financial statements company information
73 rotork annual report 2014
free sip and oplss share awards audited
in common with all eligible employees uk based executive directors receive an entitlement to ordinary shares under the sip which is approved by her 
majesty’s revenue and customs hmrc under the sip and the oplss an aggregate total of up to 5 of profits are distributed to employees each year 
in the form of ordinary shares the distribution is calculated by reference to years of service and basic salary details of free share awards under the sip 
and oplss made to executive directors in 2014 are set out below free shares awarded to all three uk executive directors under the sip are subject to 
the hmrc upper limit of £3600 by value this limit also applies to the oplss for the year under review
date of grant
free share 
awards made 
during the 
year basis on which award made
face value 
of award
rh arnold 8 april 2014 136 nonperformance based £3574
jm davis 8 april 2014 136 nonperformance based £3574
pi france 8 april 2014 136 nonperformance based £3574
gm ogden 8 april 2014 136 nonperformance based £3574
the share price used for the award was £2628
rh arnold in common with other eligible overseas employees participates in the oplss the scheme t rustee is based in jersey channel islands the 
figure shown for rh arnold relates solely to oplss
partnership sip share awards audited
in line with all eligible uk based employees uk based directors are entitled to purchase monthly partnership shares under the sip to a maximum of £150 
per month interests in partnership shares as at 31 december 2014 are shown in the table below
partnership share interest 
as at 31 december 2014
rh arnold na
jm davis 748
pi france 263
gm ogden 0
sharesave options granted to executive directors audited
in common with all eligible uk employees uk based executive directors are entitled to participate in the hmrc approved rotork sharesave scheme 
under the sharesave scheme employees are permitted to save up to £500 per month for a term of three or five years after which the employee is 
allowed to exercise the share option the option price is determined in accordance with the hmrc approved sharesave scheme rules and is calculated 
by taking an average of the share price over the five days preceding the invitation date
the option exercise period is six months duration after which the options lapse
shares 
under option basis on which award made option price duration date of grant date of vesting
jm davis 410 nonperformance based £2194 3 years 30 september 2013 1 december 2016
jm davis 402 nonperformance based £2236 3 years 30 september 2014 1 december 2017
pi france 1179 nonperformance based £1310 5 years 5 october 2010 1 december 2015
pi france 677 nonperformance based £2236 5 years 30 september 2014 1 december 2019
gm ogden 410 nonperformance based £2194 3 years 30 september 2013 1 december 2016
gm ogden 402 nonperformance based £2236 3 years 30 september 2014 1 december 2017 74 rotork annual report 2014
governance
statement of directors’ shareholding and share interests audited
the table below shows total beneficial shareholdings of the directors as at 31 december 2014
beneficial shares held
2014 2013
outstanding 
ltip awards 
2014
outstanding 
options 
2014
 
shareholding 
of salary 
achieved
i
 
2014
rh arnold 38703 33161 27784 – 381
jm davis 18572 17371 32302 812 152
pi france 61391 59382 48840 1856 338
gm ogden 38871 38735 23856 812 440
lm bell – – – – na
gb bullard 3506 2799 – – na
sa james 1050 1050 – – na
ig king
ii
 7013 7013 – – na
mj lamb 2000 – – – na
rc lockwood 500 500 – – na
je nicholas 500 500 – – na
i the share price used to determine the percentage of the shareholding of salary achieved is £2326 being the share price as at 31 december 2014
ii ig king retired as a director of the company on 20 june 2014
share retention policy statement
all executive directors are required to maintain a shareholding of at least 150 of basic salary the policy requires the use of shares vesting under the 
l tip to achieve this requirement all executive directors have met this requirement there has been no change in the directors’ interests in the ordinary 
share capital of the company between 31 december 2014 and 3 march 2015
t otal pension entitlements audited
value of pension related benefits £ during company financial year to
31 december 2013 31 december 2014
director
normal 
retirement 
age
total accrued pension
in the defined benefit scheme
as at 31 december 2014 £
defined
benefit 
scheme
cash in
lieu of 
pension total
defined 
benefit
scheme
cash in
lieu of 
pension total
rh arnold 65 128622 38280 – 32280 83250 – 83250
jm davis 65 27767 91920 23858 115778 53900 25290 79820
pi france 60 61246 63660 61785 125445 67360 63293 130653
gm ogden 60 99013 – 88129 88129 – 90332 90332
notes
1 the amounts above have been calculated in accordance with statutory instrument 2013 no 1981 – the large and mediumsized companies and groups account and reports 
amendment regulations 2013
2 the total accrued pension in the defined benefit scheme as at 31 december 2014 is that which would be paid annually on retirement from normal pension age based on service to 31 
december 2014 except for gm ogden who became a preserved member of the rotork pension and life assurance scheme on 5 april 2012 gm ogden’s total benefit as at 31 
december 2014 includes deferred revaluation applied to that date
3 the value of benefits in the defined benefit pension scheme is based on the increase in accrued pension over the year incorporating an increase for consumer prices index 
cpi inflation
4 gm ogden became a preserved member of the scheme as at 5 april 2012 and so did not accrue any additional pension during 2014 he receives a cash allowance of 44 of basic salary 
in lieu of this pension benefit which we have calculated amounted to £90332 in 2014
5 the pensionable salary used to calculate benefits in the defined benefit scheme for pi france and jm davis is restricted to a schemespecific earnings cap which was £141000 for 
2014 in consideration of this limitation on their benefits under the scheme they receive a monthly cash sum equal to 225 and 18 respectively of their basic salary above the 
scheme’s specific cap
6 the figures shown for rh arnold are in respect of his membership of the rotork controls inc pension scheme and a supplemental executive retirement plan so that in aggregate the 
pension arrangements for rh arnold are targeted to provide a pension of at least 60 of uncapped basic salary at age 65 the valuations of the benefits are affected by movements in 
the us dollar relative to sterling and are therefore not directly comparable with the directors in the uk scheme
7 the accrued pension figures for pi france include a fixed transferin pension amount of £5123 which is payable from his normal retirement date at age 60
payments to past directors audited
no payments were made to past directors during the year 
payments for loss of office audited
no payments for loss of office were made during the year 
directors’ remunera tion report continued governance strategic report directors financial statements company information
75 rotork annual report 2014
tsr performance graph and historic chief executive remuneration table
rotork plc t otal return index vs the t otal return index of the ftse industrial engineering sector for the 5 financial y ears ending 31 december 2014 
rebased as at 1 january 2010
rotork plc 
ftse industrial 
engineering sector
dec 10 dec 11 dec 12 dec 13 dec 14
0
50
100
150
200
250
300
350
year
chief 
executive
chief 
executive 
single figure 
remuneration 
£000s
annual cash 
bonus as a 
percentage 
of maximum 
opportunity
ltip vesting 
rate as a 
percentage 
of maximum 
opportunity
2014 pi france 1092 660 370
2013 pi france 1452 944 670
2012 pi france 1539 913 755
2011 pi france 1182 889 300
2010 pi france 1288 919 944
2009 pi france 1062 995 1000
percentage change in remuneration of director undertaking the role of chief executive officer
this shows the percentage change in remuneration salary benefits and bonus between 2013 and 2014 of the chief executive pi france compared to 
percentage change for uk employees being the group against which salary increases are compared calculated on a per head basis
the remuneration breakdown varies from country to country so the best comparison should be provided by looking at total remuneration t otal 
remuneration per employee has reduced year on year by 42 however  this comparison is distorted by currency movements as the average salary 
increase between 2013 and 2014 for overseas employees was 48 and for the uk workforce was 30
pi france chief executive average per uk employee
2014
 change from 2013
2014
 change from 2013
base salary 2 3
benefits 0 5
bonus 28 3 76 rotork annual report 2014
governance
relative importance of spend on pay
the following graph shows actual expenditure of the company and change in spend between current and prior financial periods on remuneration paid to 
all employees against distributions to shareholders
employee remuneration £000s
67
dividends £000s
10
instruments
2014 2013
143579
134526
42702
38735
2014 2013
 
instruments
2014 2013
143579
134526
42702
38735
2014 2013
 
2014 2013
percentage 
change
employee remuneration £000s 143579 134526 67
dividends £000s
i
42702 38735 10
i dividends paid were the only distributions to shareholders during the year 
statement of implementation of the remuneration policy in 2015
the base salaries for the executive directors were reviewed in december 2014 and the percentage increases shown below effective from 1 january 
2015 were agreed by the committee except for jm davis this is consistent with the typical increase for the uk workforce which was 18 jm davis 
received a marginally higher increase reflecting his experience and continued progression in the role
the salaries from 1 january 2015 are therefore as follows
• rh arnold – 389760 18
• jm davis – £292125 25
• pi france – £430000 18
• gm ogden – £208997 18
the annual cash bonus for 2015 will be based on annual profit target 25 three year profit growth 25 eps 10 cash generation 10 accident 
frequency rate 5 and co
2
 emissions 5 these targets total 80 and are then allocated to executive directors at 100 of basic salary except for the 
chief executive where the allocation is 125 of basic salary the specific targets relating to the bonus have not been disclosed as they are considered by 
the committee to be commercially sensitive but full details will be given on a retrospective basis in next year’s report
l tip awards of 100 of salary will be granted except for the chief executive where the l tip award will be 125 this is within the maximum policy limit 
of 150 of salary the committee considers that the higher award level for the chief executive in 2015 provides a better balance between the short and 
longterm incentive opportunity for the chief executive and is appropriate given the overall potential value of his remuneration package consistent 
with the approach used in previous years the performance conditions will be subject to tsr and eps performance conditions each accounting for 50 
of the award tsr will be measured relative to the ftse 250 index excluding all financial services insurance companies and investment trusts with 25 
vesting at median increasing to full vesting for upper quartile performance or above for the eps condition eps growth must be at least rpi  10 for 
25 vesting increasing on a straightline basis to full vesting for eps growth of rpi  25 and above the committee is satisfied that the eps targets 
remain appropriately challenging given the current outlook for the group
the fees for the nonexecutive directors were reviewed in december 2013 and no changes to the fees are proposed the fee for the chairman was 
reviewed in december 2014 as part of the search process for a successor chairman
gm ogden will retire from the company on 31 march 2015 he will not receive any compensation for loss of office he will receive a prorated annual 
cash bonus for 2015 the committee has exercised its discretion in relation to his outstanding l tip awards for 2013 and 2014 in line with the relevant 
scheme rules applicable for each award for the 2013 award there will be a pro rata award based on a hypothetical vesting at the retirement date for the 
2014 award there will be a pro rata vesting in the event that there is any vesting of the award at the end of the relevant performance period any 
outstanding sharesave or sip awards will vest in accordance with their terms
directors’ remunera tion report continued governance strategic report directors financial statements company information
77 rotork annual report 2014
consideration by the directors of matters relating to directors’ remuneration
the members of the committee are gb bullard chairman lm bell sa james mj lamb and je nicholas the committee invites the group human 
resources director to inform the committee of pay awards throughout the group when setting executive director remuneration the chairman and 
chief executive are also invited to attend meetings except when their own remuneration is considered the company secretary acts as secretary to the 
committee
new bridge street is remuneration advisor to the committee and was appointed by the committee in september 2013 following a retendering process 
new bridge street is a trading name of aon plc and a signatory to the remuneration consultants’ group code of conduct a subsidiary of aon plc is also 
the scheme actuary for the group’s usa pension plan the committee is satisfied that new bridge street is sufficiently independent to act as 
remuneration advisor to the committee
in 2014 the company paid £52068 2013 £13333 part year only to new bridge street for services to the committee
statement of voting at general meeting
at the 2014 agm of the company the percentages of votes cast ‘for’ ‘against’ and ‘withheld’ in respect of the directors’ remuneration report were as 
follows
resolution
votes cast 
‘for’
votes cast 
‘against’
votes 
‘withheld’
to approve the directors’ remuneration policy 980 14 06
to approve the directors’ remuneration report 966 34 0
‘ against’ votes cast at the agm were a very small proportion of the overall votes and accordingly the directors did not deem it necessary to take any 
remedial action regarding these votes 78 rotork annual report 2014
governance
report
of the directors
the directors submit their report which incorporates the management 
report required under the disclosure and t ransparency rules for listed 
companies and the audited accounts for the year ended 31 december 
2014 as set out on pages  84 to 128 in compiling this report the directors 
have consulted with the management of the group
directors
the names of the directors in office during the year still in office at the 
year end and their biographies and other details are set out on pages 52 to 
53 ig king was a director during the year and resigned from the board on 
20 june 2014
directors’ indemnification and insurance
the company’s articles of association provide for the directors and officers 
of the company to be appropriately indemnified subject to the provisions of 
the companies act 2006 the company purchases and maintains insurance 
for the directors and officers of the company in performing their duties as 
permitted by section 233 companies act 2006
powers of the directors
as set out in the company’s articles of association the business of the 
company is managed by the board who may exercise all the powers of the 
company
appointment and removal of directors
the board may appoint a director  either to fill a vacancy or as an additional 
director  any director appointed by the board must retire at the next agm of 
the company and put themselves forward for reappointment by the 
shareholders in accordance with the recommendations of the uk 
corporate governance code each member of the board submits themself 
for reelection on an annual basis
in addition to any power of removal conferred by the companies act 2006 
the company may by ordinary resolution remove any director before the 
expiration of their period of office and may subject to the articles of 
association by ordinary resolution appoint another person who is willing 
to act as a director in their place
political donations
no political donations were made during the year  the group has a policy 
of not making political donations in any part of the world
dividend
the directors recommend a final dividend of 309p per ordinary share 
2013 300p for the year  payable on 18 may 2015 to shareholders on the 
register on 10 april 2015 an interim dividend for 2014 of 192p per 
ordinary share 2013 1805p was paid on 26 september 2014
information required in the directors’ report set out in the 
strategic report
information relating to likely future developments of the company and its 
subsidiaries and information relating to research and development 
activities of the company and its subsidiaries is set out in the strategic 
report on pages 1 to 51
use of financial instruments
an explanation of the group policies on the use of financial instruments 
and financial risk management objectives are contained in note 26 to the 
accounts
postbalance sheet events
there have been no important postbalance sheet events
existence of branches outside the uk
the company has no branches outside of the uk
share capital
details of the company’s share capital including the rights and obligations 
attached to each class of shares and the ordinary shares issued during 
2014 are summarised in note 17 of the financial statements 5p ordinary 
shares represent over 999 of the company’s total share capital and £1 
95 cumulative preference shares represent less than 01 of the 
company’s total share capital
there are no securities of the company carrying special rights with regard 
to the control of the company
at the company’s last agm held on 25 april 2014 the shareholders 
authorised the company to make market purchases of ordinary shares 
limited to just under approximately 10 of its issued ordinary share 
capital at that time and of certain issued preference shares and to allot 
shares within certain limits approved by shareholders these authorities 
expire at the 2015 agm and appropriate renewals will be sought
the company did not acquire any of its own shares in 2014
the company’s articles of association contain customary restrictions on 
the transfer of shares as applicable only in certain limited circumstances 
eg in relation to transfers to a minor save for those provisions there are 
no restrictions on the transfer of ordinary shares in the capital of the 
company other than certain restrictions which may be required from time 
to time by law for example insider trading law in accordance with the model 
code which forms part of the listing rules of the uk listing authority as 
adopted by the company directors and certain employees are required to 
seek the prior approval of the company to deal in its shares
the company is not aware of any agreements between shareholders that 
may result in restrictions on the transfer of securities andor voting rights 
the company’s articles of association contain limited restrictions on the 
exercise of voting rights eg in relation to disenfranchised shares 
following the issue of a notice to shareholders under section 793 
companies act 2006
the company’s share schemes each contain provisions providing voting 
rights to the scheme trustee
amendments to the company’s articles of association
the company’s articles of association may only be amended by special 
resolution at a general meeting of the shareholders
significant agreements – change of control
the company is not aware of any significant agreements to which it is 
party that take effect alter or terminate upon a change of control of the 
company following a takeover  there are no agreements between the 
company and its directors or employees that provide for compensation 
for loss of office or employment that occurs because of a takeover bid
greenhouse gas emissions
the disclosures concerning greenhouse gas emissions required by law are 
set out in the corporate social responsibility report on page 44
disabled persons and employee involvement
the disclosures concerning the group’s policies on the employment of 
disabled persons and employee involvement are set out in the corporate 
social responsibility report on page 46 governance strategic report directors financial statements company information
79 rotork annual report 2014
substantial shareholders
as at 31 december 2014 the following notifiable interests in issued share 
capital had been received by the company under the disclosure and 
t ransparency rules dtr 5 of the uk listing authority it should be noted 
that these holdings are likely to have changed since notified to the 
company however  notification of any change is not required until an 
applicable threshold is crossed
identity
size of 
holding
nature of 
holding
axa investment managers sa 528 indirect
apg asset management nv 501 direct
blackrock inc 486 indirect
mondrian investment partners limited 499
i
direct
i the company was informed on 15 january 2015 that mondrian investment partners 
limited had increased the size of its holding to 501 of the voting capital no other 
changes to the above have been disclosed to the company in accordance with dtr 5 
between the end of the financial year and 2 march 2015
corporate governance
the company’s corporate governance report can be found on pages 54 to 63
disclosure of information to auditors
the directors who held office at the date of approval of this directors’ report 
confirm that so far as they are each aware there is no relevant audit 
information of which the company’s auditors are unaware and each 
director has taken all the steps that they ought to have taken as a director to 
make themselves aware of any relevant audit information and to establish 
that the company’s auditor is aware of that information
‘going concern’ basis of preparation
after making enquiries the directors have a reasonable expectation that 
the group has adequate resources to continue in operational existence for 
the foreseeable future for this reason they continue to adopt the going 
concern basis in preparing the financial statements in forming this view the 
directors have considered trading and cash flow forecasts financial 
commitments the significant order book with customers spread across 
different geographic areas and industries and the significant net cash 
position
statement of directors’ responsibility for preparing the annual report 
and financial statements
directors’ responsibilities
the directors are responsible for preparing the annual report and the 
financial statements in accordance with applicable law and regulations
company law requires the directors to prepare such financial statements 
for each financial year  under that law the directors are required to prepare 
the group financial statements in accordance with international financial 
reporting standards ifrss as adopted by the european union and article 
4 of the ias regulation and have also chosen to prepare the parent company 
financial statements under ifrss as adopted by the european union 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 these financial statements international accounting 
standard 1 requires that directors
• properly select and apply accounting policies
• present information including accounting policies in a manner that 
provides relevant reliable comparable and understandable information
• provide additional disclosures when compliance with the specific 
requirements in ifrss are insufficient to enable users to understand the 
impact of particular transactions other events and conditions on the 
entity’s financial position and financial performance and
• make an assessment of the company’s ability to continue as a 
going concern
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 are responsible for the maintenance and integrity of the 
corporate and financial information included on the company’s website 
legislation in the united kingdom governing the preparation and 
dissemination of financial statements may differ from legislation in other 
jurisdictions
directors’ responsibility statement
we confirm that to the best of our knowledge
1 the financial statements prepared in accordance with ifrss as 
adopted by the eu give a true and fair view of the assets liabilities 
financial position and profit or loss of the company and the 
undertakings included in the consolidation taken as a whole
2 the strategic report includes a fair review of the development and 
performance of the business and the position of the company and the 
undertakings included in the consolidation taken as a whole together 
with a description of the principal risks and uncertainties that they 
face and
3 the annual report and financial statements taken as a whole are fair  
balanced and understandable and provide the information necessary 
for shareholders to assess the company’s performance business 
model and strategy
directors’ statement pursuant to the disclosure and t ransparency rules
each of the directors whose names and functions are listed on pages 52 
to 53 confirm that to the best of each person’s knowledge and belief
• the financial statements prepared in accordance with the applicable 
set of accounting standards give a true and fair view of the assets 
liabilities financial position and profit of the group and company
• the directors’ report includes a fair review of the development and 
performance of the business and the position of the group and 
company together with a description of the principal risks and 
uncertainties that they face and
• having taken advice from the audit committee the annual report and 
financial statements taken as a whole are fair  balanced and 
understandable and provide the information necessary for 
shareholders to assess the company’s performance business model 
and strategies
the directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the company’s website 
legislation in the uk governing the preparation and dissemination of 
financial statements may differ from legislation in other jurisdictions
external auditor
upon the recommendation of the audit committee and approval of the 
board a resolution to appoint deloitte llp as auditor  and to authorise the 
directors to determine their remuneration are to be proposed at the 
forthcoming agm
on behalf of the board
stephen rhys jones
company secretary
2 march 2015 80 rotork annual report 2014
financial statements
independent auditor’s report  
to the members of rotork plc
opinion on financial 
statements of rotork plc
in our opinion
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs 
as at 31 december 2014 and of the group’s and the parent company’s profit for the year then ended
• the group financial statements have been properly prepared in accordance with international financial 
reporting standards ifrss as adopted by the european union
• the parent company financial statements have been properly prepared in accordance with united kingdom 
generally accepted accounting practice and
• the financial statements have been prepared in accordance with the requirements of the companies act 2006 
and as regards the group financial statements article 4 of the ias regulation
the financial statements comprise the consolidated income statement the consolidated statement of 
comprehensive income the consolidated and company balance sheets the consolidated statement of cash 
flows the consolidated statement of changes in equity and the related notes 1 to 30 the financial reporting 
framework that has been applied in the preparation of the group financial statements is applicable law and ifrss as 
adopted by the european union the financial reporting framework that has been applied in the preparation of the 
parent company financial statements is applicable law and united kingdom accounting standards united kingdom 
generally accepted accounting practice
going concern as required by the listing rules we have reviewed the directors’ statement contained within the report of the 
directors on page 79 that the group is a going concern we confirm that
• we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the 
financial statements is appropriate and
• we have not identified any material uncertainties that may cast significant doubt on the group’s ability to 
continue as a going concern
however because not all future events or conditions can be predicted this statement is not a guarantee as to the 
group’s ability to continue as a going concern
our assessment of risks of 
material misstatement
the assessed risks of material misstatement described below are those that had the greatest effect on our audit 
strategy the allocation of resources in the audit and directing the efforts of the engagement team
the description of risks opposite should be read in conjunction with the significant issues considered by the audit 
committee discussed on page 61
our audit procedures relating to these matters were designed in the context of our audit of the financial 
statements as a whole and not to express an opinion on individual accounts or disclosures our opinion on the 
financial statements is not modified with respect to any of the risks described above and we do not express an 
opinion on these individual matters
our application of materiality we define materiality as the magnitude of misstatement in the financial statements that makes it probable that the 
economic decisions of a reasonably knowledgeable person would be changed or influenced we use materiality 
both in planning the scope of our audit work and in evaluating the results of our work
we determined materiality for the group to be £69m which is 5 of pretax profit in 2013 the previous auditors 
set materiality at £97m on the basis of 7 of pretax profit
we agreed with the audit committee that we would report to the committee all audit differences in excess of 
£138000 in 2013 the previous auditor reported on all amounts over £450000 as well as differences below that 
threshold that in our view warranted reporting on qualitative grounds we also report to the audit committee on 
disclosure matters that we identified when assessing the overall presentation of the financial statements  81 rotork annual report 2014
governance strategic report directors financial statements company information
risk how the scope of our audit responded to the risk
impairment of the carrying value of goodwill
the gross carrying value of goodwill at 31 december 2014 was 
£1497m details of its valuation is included by management in the 
‘critical accounting estimates and judgements’ section on page 92 
and note 10 to the accounts
management perform an impairment review under ias36 impairment 
of assets on an annual basis and whenever an indication of 
impairment exists
a significant risk of material misstatement exists as a result of the 
application of management judgement and estimates in performing 
the impairment review in particular in relation to the forecasting of 
future cash flows and the discount rates used for each cash 
generating unit cgu
 
we challenged the reasonableness of the assumptions which 
underpin management’s forecasts with reference to recent 
performance and historical trend analysis we confirmed the 
forecasts used had been challenged by the board and approved by it 
we compared the identification and aggregation of the cgus against 
how goodwill is monitored within the business we performed a 
specific review and challenge involving internal valuations 
specialists of the discount rates applied for each cgu against the 
group weighted average cost of capital and third party data relating 
to premiums applied to take account of cash flows arising in overseas 
locations
we recalculated management’s sensitivity analysis on key 
assumptions and replaced key assumptions with alternative 
scenarios eg further changes in discount and growth rates
accounting for significant acquisitions
during the year the group has acquired three businesses ytc rotork 
midland and masso £324m of intangible assets have been identified in 
relation to the acquisitions in the year details of their valuation are 
included by management in the ‘critical accounting estimates and 
judgements’ section on page 92 and note 3 to the accounts
the valuation of intangible assets represents a key judgement area 
based on a number of inputs in the discounted cash flow and royalty 
relief valuations which include the discount rates growth rates and 
royalty rates
other provisional fair value adjustments have been made by 
management in the areas of inventory trade receivables and warranty 
provisioning 
 
our audit of the acquired intangible assets focused on management’s 
valuation model and compliance with ifrs3 ifrs13 and accepted 
industry valuation practice regarding discount rates growth rates 
and royalty rates we used our internal valuation specialists to 
support our assessment of these rates
we challenged the reasonableness of underlying forecast cash flows 
through discussions with management results of the business pre 
and postacquisition and review of any due diligence work
we evaluated any significant fair value adjustments made to align the 
historical accounting of the acquired entity with the group’s 
accounting policies
valuation of inventory
the group had inventory of £811m at 31 december 2014 held in 
numerous global locations across several product lines details of its 
valuation is included by management in the ‘critical accounting 
estimates and judgements’ section on page 92 and note 14 to the 
accounts
there are risks surrounding the absorption of labour and overheads 
and the obsolescence of stock in niche markets and industries where 
customer demand fluctuates over periods both raw materials and 
finished goods require assessment for provisions based on past and 
predicted future product usage there is a risk that local systems can 
present inconsistent data andor override occurs 
our work on provisions included agreeing the provision calculations 
to inventory usage data and product history we have recalculated 
provisions based on this data
we have benchmarked the various manufacturing components 
within the group regarding their use of absorption rates and reviewed 
individual overhead categories against ias2 criteria
defined benefit pension liability valuation
the group has a defined benefit pension liability of £361m at 31 
december 2014 details of the valuation of the liability is included by 
management in the ‘critical accounting estimates and judgements’ 
section on page 92 and note 24 to the accounts
there is a risk relating to judgements made by management in valuing 
the defined benefit pension plans as small changes in the key model 
input assumptions such as the discount rate mortality assumption and 
inflation level can have a significant effect on the valuation of the 
liability
we challenged the key assumptions supporting management’s 
valuation of the pension liability we used our internal actuarial 
experts to compare the discount inflation and life expectancy rates 
against externally derived data
we challenged management to understand the sensitivity of changes 
in assumptions and quantify a range of reasonable rates that could be 
used in their calculation
we also considered the adequacy of the group’s disclosures in 
respect of the sensitivity of the deficit to changes in these key 
assumptions  financial statements
82 rotork annual report 2014
84
16
92 8
revenue profit before tax
independent auditor’s report  
to the members of rotork plc continued
an overview of the scope  
of our audit
our group audit was scoped by obtaining an understanding of the group and its environment including groupwide 
controls and assessing the risks of material misstatement at a group level based on that assessment we focused 
our group audit scope primarily on the audit work at 30 components 22 components were subject to a full scope 
audit and audit procedures were performed on key account balances at the other 8 locations where the extent of 
our testing was based on our assessment of the risks of material misstatement and of the materiality of the 
group’s operations at those locations
 
the 30 locations represent the principal business units within the group’s four reportable segments across 12 
countries and account for 84 of the group’s revenues 92 of profit before tax they were also selected to 
provide an appropriate basis for undertaking audit work to address the risks of material misstatement identified 
above our audit work at these locations was executed at levels of materiality applicable to each individual entity 
which were lower than group materiality ranging from £23m to £33m
due to the significance of the 22 components’ operations subject to full scope audits to the group audit senior 
members of the group audit team designed and implemented a programme to visit the components we consider 
the united kingdom italy united states of america and china to be key components and we visited these locations 
in the current year our plan is that we will visit these each year as part of our first year audit we also visited 
components in australia canada germany and spain we plan to include these locations in our rotational visit 
programme going forward
for each of the businesses included within the programme of planned visits the group audit team also discusses 
audit findings with the relevant component audit team throughout the audit engagement and reviews relevant 
audit working papers for the remaining locations where full audits were completed we discuss audit findings with 
the relevant component audit team review audit working papers in relation to key issues and discuss key matters 
with divisional management where considered necessary in forming our group audit opinion in relation to the 
locations which were subject to an audit of key account balances we discuss the results of these businesses and 
accounting matters arising through our involvement in divisional meetings with management
at the parent entity level we also tested the consolidation process and carried out analytical procedures to 
confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial 
information of the remaining 24 components not subject to audit or audit of specified account balances none of 
these components represented more than 2 of revenue or profit before taxation individually
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 financial statements 83 rotork annual report 2014
governance strategic report directors financial statements company information
matters on which we are 
required to report by 
exception
adequacy of explanations  
received and accounting records
under the companies act 2006 we are required to report to you if in our opinion
• we have not received all the information and explanations we require for our audit or
• adequate accounting records have not been kept by the parent company or returns adequate for our audit have 
not been received from branches not visited by us or
• the parent company financial statements are not in agreement with the accounting records and returns
we have nothing to report in respect of these matters
directors’ remuneration
under the companies act 2006 we are also required to report if in our opinion certain disclosures of directors’ 
remuneration have not been made or the part of the directors’ remuneration report to be audited is not in 
agreement with the accounting records and returns we have nothing to report arising from these matters
corporate governance  
statement
under the listing rules we are also required to review the part of the corporate governance statement relating to 
the company’s compliance with ten provisions of the uk corporate governance code we have nothing to report 
arising from our review
our duty to read other  
information in the  
annual report
under international standards on auditing uk and ireland we are required to report to you if in our opinion 
information in the annual report 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
• 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 is 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 we confirm that we have not identified any 
such inconsistencies or misleading statements
respective responsibilities of 
directors and auditor
as explained more fully in the directors’ responsibilities statement the directors are responsible for the 
preparation of the 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 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 we also comply with international standard on quality control 1 uk and ireland 
our audit methodology and tools aim to ensure that our quality control procedures are effective understood and 
applied our quality controls and systems include our dedicated professional standards review team and 
independent partner reviews
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
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 and 
the parent 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 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
nicola mitchell fca
senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory auditor
london uk
2 march 2015 financial statements
84 rotork annual report 2014
consolida ted income st a tement
for the year ended 31 december 2014
note
2014
£000
2013
£000
revenue 2 594739 578440
cost of sales 309280 304066
gross profit 285459 274374
other income 4 277 206
distribution costs 5466 5623
administrative expenses 137832 129576
other expenses 5 211 116
operating profit before the amortisation of intangible assets 157167 151412
amortisation of acquired intangible assets
14940 12147
operating profit 2 142227 139265
finance income 7 1421 1173
finance expense 7 2483 2441
profit before tax 8 141165 137997
income tax expense 9 37963 38488
profit for the year 103202 99509
basic earnings per share 18 1190p 1148p
adjusted basic earnings per share 18 1316p 1249p
diluted earnings per share 18 1185p 1143p
adjusted diluted earnings per share 18 1310p 1243p
consolida ted st a tement of comprehensive income
for the year ended 31 december 2014
2014
£000
2013
£000
profit for the year 103202 99509
other comprehensive income
items that may be subsequently reclassified to the income statement
foreign exchange translation differences 869 4981
effective portion of changes in fair value of cash flow hedges net of tax 1810 1274
2679 3707
items that are not subsequently reclassified to the income statement
actuarial lossgain in pension scheme net of tax 15341 5528
income and expenses recognised directly in equity 18020 1821
total comprehensive income for the year 85182 101330 85 rotork annual report 2014
governance strategic report directors financial statements company information
consolida ted balance sheet
at 31 december 2014
note
2014
£000
2013
£000
noncurrent assets
goodwill 10 149679 105150
intangible assets 11 72270 53481
property plant and equipment 12 64050 45871
derivative financial instruments 23 – 804
deferred tax assets 13 15703 11778
other receivables 15 1976 1532
total noncurrent assets 303678 218616
current assets
inventories 14 81090 75081
trade receivables 15 128472 105976
current tax 15 1962 1145
derivative financial instruments 23 1913 2933
other receivables 15 12586 12152
cash and cash equivalents 16 46816 68873
t otal current assets 272839 266160
total assets 576517 484776
equity
issued equity capital 17 4346 4344
share premium 9422 8840
reserves 3970 6649
retained earnings 359057 312246
total equity 376795 332079
noncurrent liabilities
interest bearing loans and borrowings 19 1303 1678
employee benefits 20 38864 22705
deferred tax liabilities 13 20358 16920
provisions 21 1913 2628
total noncurrent liabilities 62438 43931
current liabilities
interest bearing loans and borrowings 19 20274 532
trade payables 22 40162 38019
employee benefits 20 16018 17479
current tax 22 15200 14836
derivative financial instruments 23 1119 32
other payables 22 35191 31002
provisions 21 9320 6866
total current liabilities 137284 108766
total liabilities 199722 152697
total equity and liabilities 576517 484776
these financial statements were approved by the board of directors on 2 march 2015 and were signed on its behalf by  
pi france and jm davis directors financial statements
86 rotork annual report 2014
consolida ted st a tement of changes in equity
issued
equity
capital
share
premium
translation
reserve
capital
redemption
reserve
hedging
reserve
retained
earnings total
balance at 31 december 2012 4340 8258 7649 1644 1063 246369 269323
profit for the year – – – – – 99509 99509
other comprehensive income              
foreign exchange translation differences – – 4981 – – – 4981
effective portion of changes in fair value of cash  
flow hedges – – – – 1598 – 1598
actuarial gain on defined benefit pension plans – – – – – 7669 7669
tax in other comprehensive income
– – – – 324 2141 2465
total other comprehensive income – – 4981 – 1274 5528 1821
total comprehensive income – – 4981 – 1274 105037 101330
transactions with owners recorded directly in equity
equity settled sharebased payment transactions – – – – – 143 143
tax on equity settled sharebased payment transactions – – – – – 632 632
share options exercised by employees 4 582 – – – – 586
own ordinary shares acquired – – – – – 5601 5601
own ordinary shares awarded under share schemes – – – – – 4401 4401
dividends – – – – – 38735 38735
balance at 31 december 2013 4344 8840 2668 1644 2337 312246 332079
profit for the year – – – – – 103202 103202
other comprehensive income
foreign exchange translation differences – – 869 – – – 869
effective portion of changes in fair value of cash  
flow hedges – – – – 2368 – 2368
actuarial loss on defined benefit pension plans – – – – – 19832 19832
tax in other comprehensive income – – – – 558 4491 5049
total other comprehensive income – – 869 – 1810 15341 18020
total comprehensive income – – 869 – 1810 87861 85182
transactions with owners recorded directly in equity
equity settled sharebased payment transactions – – – – – 2799 2799
tax on equity settled sharebased payment transactions – – – – – 274 274
share options exercised by employees 2 582 – – – – 584
own ordinary shares acquired – – – – – 6300 6300
own ordinary shares awarded under share schemes – – – – – 5427 5427
dividends – – – – – 42702 42702
balance at 31 december 2014 4346 9422 1799 1644 527 359057 376795
detailed explanations for equity capital the translation reserve capital redemption reserve and hedging reserve can be seen in note 17 87 rotork annual report 2014
governance strategic report directors financial statements company information
consolida ted st a tement of cash flows
for the year ended 31 december 2014
note
2014
£000
2014
£000
2013
£000
2013
£000
cash flows from operating activities
profit for the year 103202 99509
adjustments for
amortisation of intangibles 14940 12147
amortisation of development costs 1461 1214
depreciation 7996 6801
equity settled sharebased payment expense 5160 2178
profit on sale of property plant and equipment 88 25
finance income 1421 1173
finance expense 2483 2441
income tax expense 37963 38488
171872 161580
increase in inventories 1891 1740
increase in trade and other receivables 16349 10786
decrease in trade and other payables 1327 1778
difference between pension charge and cash contribution 5241 534
decreaseincrease in provisions 1379 863
increase in employee benefits 2176 2621
147861 150226
income taxes paid 42992 39866
cash flows from operating activities 104869 110360
investing activities
purchase of property plant and equipment 17518 10419
development costs capitalised 2676 2033
sale of property plant and equipment 224 159
acquisition of businesses net of cash acquired 3 81263 43235
contingent consideration paid 1463 250
interest received 1048 917
cash flows from investing activities 101648 54861
financing activities
issue of ordinary share capital 584 586
own ordinary shares acquired 6300 5601
interest paid 1120 653
increasedecrease in bank loans 19496 618
repayment of finance lease liabilities 36 34
dividends paid on ordinary shares 42702 38735
cash flows from financing activities 30078 45055
decreaseincrease in cash and cash equivalents 26857 10444
cash and cash equivalents at 1 january 68873 59868
effect of exchange rate fluctuations on cash held 4800 1439
cash and cash equivalents at 31 december 16 46816 68873 financial statements
88 rotork annual report 2014
notes to the group financial st a tements
for the year ended 31 december 2014
except where indicated values in these notes are in £000
rotork plc is a company domiciled in england the consolidated financial statements of the company for the year ended 31 december 2014 
comprise the company and its subsidiaries together referred to as the group the accounting policies contained below in note 1 and the 
disclosures in notes 2 to 30 all relate to the group financial statements the company balance sheet can be found following note 30 as the 
company has elected to continue reporting under uk gaap the applicable accounting policies are contained in note a and notes b to k relate to the 
company’s financial statements
1 accounting policies
the accounting policies applied in the preparation of these consolidated financial statements are set out below these policies have been 
consistently applied to the years presented unless otherwise stated
basis of preparation
the consolidated financial statements of rotork plc have been prepared and approved by the directors in accordance with international financial 
reporting standards as adopted by the european union ifrss as adopted by the eu ifric interpretations and the companies act 2006 applicable 
to companies reporting under ifrs
the consolidated financial statements have been prepared under the historical cost convention subject to the items referred to in the derivative 
financial instruments accounting policy below
new accounting standards and interpretations
the following amendments have been applied from 1 january 2014
• amendments to ias32 – offsetting financial assets and financial liabilities
• amendments to ias36 – recoverable amount disclosures for nonfinancial assets
• amendments to ias39 – novation of derivatives and continuation of hedge accounting
application of these standards and amendments has not had any material impact on the disclosures net assets or results of the group
recent accounting developments
ifrs15 revenue from contracts with customers has been issued but is not yet effective and has not been adopted as application was not 
mandatory for the year the new standard requires the separation of performance obligations within contracts with customers and the contractual 
value to be allocated to the performance obligations once a performance obligation is satisfied revenue should be recognised on that element of 
the contract the introduction of the standard is likely to have some impact on rotork but this is unlikely to be material due to the relatively 
straightforward contractual terms and conditions with customers an assessment will be carried to understand the impact of this standard prior to 
it becoming effective in january 2017
ifrs 9 financial instruments has been issued but is not yet effective and has not been adopted as application was not mandatory for the year the 
directors anticipate that the adoption of this standard will not have a material impact on the disclosures net assets or results of the group
the following narrow scope amendments which were issued as part of the ifrs annual improvement cycle are effective for the 2015 financial year
• amendment to ias19 defined benefit plans – employee contributions
• ifrs2 sharebased payment – definition of vesting condition
• ifrs3 business combination – accounting for contingent consideration
• ifrs8 operating segments – aggregation of operating segments and reconciliation of the total of reportable assets
• ifrs13 fair value measurement – shortterm receivable and payables
• ias24 related party disclosure – key management personnel services
application of these amendments has not had any material impact on the disclosures net assets or results of the group
going concern
after making enquiries the directors have a reasonable expectation that the group has adequate resources to continue in operational existence 
for the foreseeable future for this reason they continue to adopt the going concern basis in preparing the financial statements in forming this 
view the directors have considered trading and cash flow forecasts financial commitments the significant order book with customers spread 
across different geographic areas and industries and the net cash position
consolidation
the consolidated financial statements incorporate the financial statements of the company and its subsidiaries for the year to 31 december 2014 
the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date 
control ceases intragroup balances and any unrealised gains or losses or income and expenses arising from intragroup transactions are 
eliminated in preparing the consolidated financial statements 89 rotork annual report 2014
governance strategic report directors financial statements company information
1 accounting policies continued
foreign currencies
transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction monetary assets and liabilities 
denominated in foreign currencies at the balance sheet date are translated to sterling at the foreign exchange rate ruling at that date foreign 
exchange differences arising on translation are recognised in the income statement nonmonetary assets and liabilities that are measured in 
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction nonmonetary assets and 
liabilities denominated in foreign currencies that are stated at fair value are translated to sterling at foreign exchange rates at the dates the values 
were determined
assets and liabilities of foreign subsidiaries including goodwill and fair value adjustments arising on consolidation are translated into sterling at 
rates of exchange ruling at the balance sheet date the revenues and expenses of foreign subsidiaries are translated to sterling at rates 
approximating those ruling at the date of the transactions differences on exchange arising from the retranslation of the opening net investment in 
subsidiaries and from the translation of the results of those subsidiaries at average rate are reported as an item of other comprehensive income 
and accumulated in the translation reserve
any differences that have arisen since 1 january 2004 the date of transition to ifrs are presented as a separate component of equity translation 
differences that arose before the date of transition to ifrs in respect of all foreign entities are not presented as a separate component
revenue
revenue comprises the fair value of the consideration received or receivable for the sale of goods or services revenue is shown net of valueadded 
tax returns rebates and discounts and after eliminating sales within the group the group recognises revenue when the amount of revenue can be 
reliably measured it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the 
group’s activities
revenue from the sale of actuators gearboxes and flow control products is recognised in the income statement when the significant risks and 
rewards of ownership have been transferred to the buyer in accordance with the contracted shipping terms
revenue from service work is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet 
date no revenue is recognised if there are significant uncertainties regarding recovery of the consideration due associated completion costs the 
possible return of goods or continuing management involvement with the goods
business combinations
business combinations are accounted for using the acquisition method as at the acquisition date which is the date on which control is transferred 
to the group
for acquisitions on or after 1 january 2010 the group measures goodwill at the acquisition date as
• the fair value of the consideration transferred plus
• the recognised amount of any noncontrolling interests in the acquiree plus
• the fair value of the existing equity interest in the acquiree less
• the net recognised amount generally fair value of the identifiable assets acquired and liabilities assumed
when the excess is negative a bargain purchase gain is recognised immediately in the income statement
costs related to the acquisition other than those associated with the issue of debt or equity securities are expensed as incurred
any contingent consideration payable is recognised at fair value at the acquisition date if the contingent consideration is classified as equity it is 
not remeasured and settlement is accounted for within equity otherwise subsequent changes to the fair value of the contingent consideration 
are recognised in the income statement
goodwill is stated at cost or deemed cost less any impairment losses the carrying value of goodwill is reviewed at each balance sheet date and is 
allocated to cashgenerating units cgu an impairment loss is recognised whenever the carrying value of an asset or its cgu exceeds its 
recoverable amount impairment losses are recognised in the income statement
intangible assets 
i research  development
expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised 
in the income statement as an expense as incurred development costs incurred after the point at which the commercial and technical feasibility of 
the product have been proven and the decision to complete the development has been taken and resources made available are capitalised the 
expenditure capitalised includes the cost of materials direct labour and an appropriate proportion of overheads capitalised development 
expenditure is stated at cost less accumulated amortisation and impairment losses development expenditure has an estimated useful life of five 
years and is written off on a straightline basis financial statements
90 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
1 accounting policies continued
ii other intangible assets
other intangible assets that are acquired by the group as part of a business combination are stated at cost less accumulated amortisation and 
impairment losses the useful life of each of these assets is assessed based on discussions with the management of the acquired business and 
takes account of the differing natures of each of the intangibles acquired the assessed useful lives of intangibles acquired are as follows
brands and trademarks  4 to 10 years
customer relationships  2 to 7 years
product design patents   5 to 8 years
order backlog   3 months to 1 year
amortisation is charged on a straightline basis over the estimated useful life of the assets
property plant and equipment
freehold land is not depreciated long leasehold buildings are amortised over 50 years or the expected useful life of the building where less than 50 
years other assets are depreciated in equal annual instalments by reference to their estimated useful lives and residual values at the following 
annual rates
freehold buildings   2 to 4
short leasehold buildings  period of lease
plant and equipment  10 to 33
items of property plant and equipment are stated at cost or deemed cost less accumulated depreciation
leases
where fixed assets are financed by leasing agreements which give rights approximating to ownership the assets are treated as if they had been 
purchased and the capital element of the leasing commitments are shown as obligations under finance leases assets acquired under finance 
leases are initially recognised at the present value of the minimum lease payments the rentals payable are apportioned between interest 
which is charged to the income statement and liability which reduces the outstanding obligation so as to give a constant rate of charge on the 
outstanding lease obligations costs in respect of operating leases are charged on a straightline basis over the term of the lease in arriving at 
the operating profit
taxation
income tax on the profit for the year comprises current and deferred tax income tax is recognised in the income statement except to the extent 
that it relates to items recognised directly in equity in which case it is recognised in equity current tax is the expected tax payable on the taxable 
income for the year using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of 
previous years
deferred tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and 
liabilities for financial reporting purposes and the amounts used for taxation purposes the following temporary differences are not provided for 
goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profits the 
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using 
tax rates enacted or substantively enacted at the balance sheet date
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be 
utilised deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised
inventory and work in progress
inventory and work in progress are valued at the lower of cost and net realisable value in respect of work in progress and finished goods cost 
includes all production overheads and the attributable proportion of indirect overhead expenses which are required to bring inventories to their 
present location and condition the net realisable value in respect of old and slow moving inventory is assessed by reference to historic usage 
patterns and forecast future usage
cash and cash equivalents
cash and cash equivalents comprise cash balances and short term with an original maturity less than three months deposits bank overdrafts that 
are repayable on demand form part of cash and cash equivalents for the purpose of the consolidated statement of cash flows
equity
equity comprises issued equity capital share premium reserves and retained earnings
when issued equity capital is repurchased the amount paid including directly attributable costs is recognised as a change in equity repurchased 
shares are debited direct to equity and shown as a deduction from retained earnings 91 rotork annual report 2014
governance strategic report directors financial statements company information
1 accounting policies continued
provisions
i warranties
a provision for warranties is recognised when the underlying products or services are sold the provision is based on historical warranty cost data 
known issues and management expectations of future costs
ii contingent consideration
the terms of an acquisition may provide that the value of the purchase consideration which may be payable in cash at a future date depends on 
uncertain future events the amounts recognised in the financial statements represent a fair value estimate at the balance sheet date of the 
amounts expected to be paid
employee benefits
i pension plans
where the group operates a defined benefit pension scheme contributions are made in accordance with qualified actuaries’ recommendations in 
respect of all actuarial gains and losses that arise in calculating the group’s obligation in respect of the plans these are recognised in equity 
interest on pension scheme liabilities has been recognised within financing expenses
the group also operates defined contribution pension schemes the costs for these schemes are recognised in the income statement as incurred
ii sharebased payment transactions
the rotork sharesave plan introduced in 2004 offers certain employees the opportunity to purchase shares in rotork plc at a discounted price 
compared with the market price at the time of grant details of the scheme are given in note 25 the fair value of the rightoption is recognised as an 
employee expense with a corresponding increase in equity the fair value is measured at grant date and spread over the period between grant and 
maturity the rightoption reaches maturity when the employee becomes unconditionally entitled the fair value of the grant is measured using a 
blackscholes model taking into account the terms and conditions upon which the rights were granted the amount recognised as an expense is 
adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold 
for vesting
the rotork long term incentive plan grants awards of shares to executive directors and senior managers these awards may vest after a period of 
three years dependent upon both market and nonmarket performance conditions being met details of the grants are given in note 25 the fair 
value of the award is measured at grant date using a monte carlo simulation model which takes into account the market based performance 
criteria and spread over the vesting period the fair value of the award is recognised as an employee expense with a corresponding increase in 
equity for the share settled award the amount recognised as an expense is adjusted to exclude options that do not vest as a result of nonmarket 
performance conditions not being met
the overseas profit linked share scheme oplss and the share incentive plan sip are discretionary profit linked share schemes based on the 
prior year profit of the participating rotork companies the value of the award to each employee is based on salary and the length of service the 
value of the awards can be up to £3600 shares awarded under these schemes are issued by the trustee at the cost of purchase the costs of 
providing these plans are recognised in the consolidated income statement over the period to which the employee has earned the award
iii long term service leave
the group’s net obligation in respect of long term service leave is the amount of future benefit that employees have earned in return for their 
service in the current and prior periods
iv other employee benefits
the group offers a number of discretionary bonus schemes to employees around the world the costs of these schemes are recognised in the 
income statement as incurred
derivative financial instruments
the group uses forward exchange contracts and swaps to hedge its exposure to foreign exchange risk arising from operational and financing 
activities these are the only derivative financial instruments used by the group in accordance with its treasury policy the group does not hold or 
issue contracts for trading purposes forward exchange contracts that do not qualify for hedge accounting are accounted for as trading instruments
forward exchange contracts are recognised initially at fair value where a forward exchange contract is designated as a hedge of the variability in 
cash flows of a recognised liability a firm commitment or a highly probable forecasted transaction the effective part of any gain or loss on the 
forward contract is recognised directly in equity any effective cumulative gain or loss is removed from equity and recognised in the income 
statement at the same time as the hedged transaction the ineffective part of any gain or loss is recognised in the income statement immediately
when a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur the cumulative gain or loss at 
that point remains in equity and is recognised in accordance with the above policy when the transaction occurs if the hedged transaction is no 
longer expected to take place the cumulative unrealised gain or loss held in equity is recognised in the income statement immediately financial statements
92 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
1 accounting policies continued
dividends
interim dividends are recorded in the financial statements when they are paid final dividends are recorded in the financial statements in the period 
which they are approved by the company’s shareholders
critical accounting estimates and judgements
estimates and judgements are regularly evaluated and are based on historical experience and other factors including expectations of future 
events that are believed to be reasonable under the circumstances
the group makes estimates and assumptions concerning the future the resulting estimates will by definition seldom equal the actual results 
the estimates and assumptions that have a risk of causing a material adjustment to the carrying amount of assets and liabilities in the next financial 
year are listed below
i impairment of intangible assets
intangible assets other than goodwill are amortised over their useful lives which are based on management’s estimates of the period over which 
the assets will generate revenue the useful lives are periodically reviewed to ensure they continue to be appropriate changes to the estimates 
used can result in significant variations in the carrying value
the group assesses the impairment of intangible assets subject to amortisation whenever events or changes in circumstances indicate that the 
carrying value might not be recoverable additionally goodwill arising on acquisitions and indefinite lived assets are subject to impairment review 
the group undertakes an impairment review annually or more frequently if events or changes in circumstances indicate that the carrying value may 
not be recoverable
factors considered important that could trigger an impairment review of intangible assets include the following
• significant underperformance relative to historical or projected future operating results
• significant changes in the use of the acquired assets or the strategy for the overall business or
• significant negative industry or economic trends
the key sensitivities in the calculation are the discount rate and growth rates explanations of the estimates judgements and sensitivities in 
respect of the current year impairment review are detailed in note 10
ii valuation of acquired intangible assets
acquisitions may result in the recognition of customer relationships brands and trademarks product design patents and order backlogs these are 
valued using discounted cash flow models or a relief from royalty method in applying these methodologies certain key judgements and 
assumptions are made over discount rates growth rates royalty rates and tax rates where a group of companies are acquired further details of 
the accounting policies are shown earlier in this note and the valuation of the acquired intangible assets are shown in note 11
iii valuation of inventory
the group inventory is spread across all of the group’s global locations the provisions made to write down slowmoving and obsolete inventory 
are based on an assessment of market developments and on an analysis of historic and projected usage the calculation of the provisions requires 
application of judgement by management
iv retirement benefits
the group’s financial statements include costs in relation to and provisions for retirement benefit obligations the costs and the present value of 
any pension value of any related pension assets and liabilities depend on such factors as life expectancy of the members salary increases inflation 
the returns that the plan assets will generate and the discount rate to calculate the present value of the liabilities the group uses previous 
experience and impartial actuarial advice to calculate the present value of the liabilities the estimates and the effects of variances in the key 
estimates are shown in note 24 93 rotork annual report 2014
governance strategic report directors financial statements company information
2 operating segments
the group has chosen to organise the management and financial structure by the grouping of related products the four identifiable operating 
segments where the financial and operating performance is reviewed monthly by the chief operating decision maker are as follows
controls – the design manufacture and sale of electric actuators
fluid systems – the design manufacture and sale of pneumatic and hydraulic actuators
gears – the design manufacture and sale of gearboxes adaption and ancillaries for the valve industry
instruments – the manufacture of high precision pneumatic controls and power transmission products for a wide range of industries
unallocated expenses comprise corporate expenses
transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties
rotork has a worldwide presence in all four operating segments through its subsidiary selling offices and through an agency network a full list of 
locations can be found at wwwrotorkcom
analysis by operating segment
controls
2014
fluid
systems
2014
gears
2014
instruments
2014
elimination
2014
unallocated
2 0 14
group
2014
revenue from external customers 324539 180260 45771 44169 – – 594739
inter segment revenue – – 12035 1788 13823 – –
total revenue 324539 180260 57806 45957 13823 – 594739
operating profit before the amortisation of intangible assets 104709 31180 13011 14433 – 6166 157167
amortisation of acquired intangible assets
3477 1585 428 9450 – – 14940
operating profit 101232 29595 12583 4983 – 6166 142227
net finance expense 1062
income tax expense 37963
profit for the year 103202
controls
2013
fluid
systems
2013
gears
2013
instruments
2013
elimination
2013
unallocated
2013
group
2013
revenue from external customers 321902 186969 45353 24216 – – 578440
inter segment revenue – – 10682 706 11388 – –
total revenue 321902 186969 56035 24922 11388 – 578440
operating profit before the amortisation of intangible assets 105472 31010 12972 7833 – 5875 151412
amortisation of acquired intangible assets
4363 1920 403 5461 – – 12147
operating profit 101109 29090 12569 2372 – 5875 139265
net finance expense 1268
income tax expense 38488
profit for the year 99509 financial statements
94 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
2 operating segments continued
controls
2014
fluid
systems
2014
gears
2014
instruments
2014
unallocated
2014
group
2014
depreciation 4396 2012 813 715 60 7996
amortisation
– other intangibles 3477 1585 428 9450 – 14940
– development costs 1342 20 44 55 – 1461
noncash items equity settled sharebased payments 2779 1162 574 181 464 5160
net financing expense – – – – 1062 1062
acquired as part of business combinations
– goodwill – 1753 – 43301 – 45054
– intangible assets – 1346 – 31042 – 32388
capital expenditure 6082 6820 3875 613 2 17392
controls
2013
fluid
systems
2013
gears
2013
instruments
2013
unallocated
2013
group
2013
depreciation 4353 1692 427 329 – 6801
amortisation
– other intangibles 4363 1920 403 5461 – 12147
– development costs 1193 9 12 – – 1214
noncash items equity settled sharebased payments 881 427 271 35 563 2177
net financing expense – – – – 1268 1268
acquired as part of business combinations
– goodwill 19766 3688 1398 – – 24852
– intangible assets 19548 3277 1413 – – 24238
capital expenditure 7108 2350 581 281 – 10320
balance sheets are reviewed by operating subsidiary and operating segment balance sheets are not prepared as such no further analysis of 
operating segments assets and liabilities is presented
geographical analysis
i revenue by location of subsidiary
2014 2013
uk 57424 51027
italy 66447 64861
rest of europe 110790 117467
usa 144366 147039
other americas 36327 38201
rest of world 179385 159845
594739 578440
this disclosure has been restated to revenue by location of subsidiary because this gives a better reflection of the geographic distribution of where 
the sale occurred
ii noncurrent assets
uk
2014
rest of
europe
2014
usa
2014
other
americas
2014
rest of
world
2014
group
2014
noncurrent assets
– goodwill 14107 53409 42565 759 38839 149679
– intangible assets 11972 21767 16824 – 21707 72270
– property plant and equipment 21770 18257 7265 801 15957 64050
uk
2013
rest of
europe
2013
usa
2013
other
americas
2013
rest of
world
2013
group
2013
noncurrent assets
– goodwill 5691 55205 40154 770 3330 105150
– intangible assets 5538 27317 20351 – 275 53481
– property plant and equipment 16304 15176 6706 768 6917 45871 95 rotork annual report 2014
governance strategic report directors financial statements company information
3 acquisitions
i ytc
on 31 march 2014 the group acquired 100 of the share capital of young tech co ltd ytc for £68379000 ytc is a leading manufacturer and 
supplier of valve positioners and accessories which are certified for use in international markets based in seoul korea the acquired business is 
reported within the instruments division in the nine months to 31 december 2014 ytc contributed £13873000 to group revenue and £5580000 
to consolidated operating profit before amortisation the amortisation charge in the 39 week period from the acquired intangible assets was 
£3254000
 
if the acquisition had occurred on 1 january 2014 the business would have contributed £17899000 to group revenue £6917000 to group 
operating profit and £5330000 to profit attributable to equity shareholders
 
ii other acquisitions
the group acquired 100 of the share capital of xylem flow control limited midland for £20018000 on 2 july 2014 midland is a leading 
manufacturer of solenoid valves and instruments under the midlandacs alcon solenoid valves and landon kingsway brands based in 
wolverhampton uk the acquired business is reported within the instruments division
the group acquired 100 of the share capital of masso ind spa masso for £2973000 on 9 december 2014 masso is a marine valve remote 
control system manufacturer based in valduggia italy the acquired business is reported within the fluid systems division
 
in the period from acquisition to 31 december 2014 midland and masso contributed £6286000 to group revenue and £1202000 to consolidated 
operating profit before amortisation the amortisation charge in respect of these acquisitions during the year was £1049000 if these other 
acquisitions had occurred on 1 january 2014 midland and masso would have contributed £14990000 to group revenue £2569000 to group 
operating profit and £2014000 profit attributable to equity shareholders
 
iii acquisitions fair value table
the three acquisitions had the following effect on the group’s assets and liabilities
ytc other acquisitions total 
book value adjustments
provisional 
fair value book value adjustments
provisional 
fair value
provisional 
fair value
noncurrent assets
property plant and equipment 7889 – 7889 1565 – 1565 9454
intangible assets 226 23976 24202 – 8186 8186 32388
current assets 
inventory 3158 382 2776 2367 345 2022 4798
trade and other receivables 3311 254 3057 5662 41 5621 8678
cash 4514 – 4514 1197 – 1197 5711
current liabilities
trade and other payables 1099 1276 2375 3197 32 3229 5604
employee benefits 40 – 40 207 – 207 247
warranty provision – 30 30 25 132 157 187
corporation tax 292 53 345 236 48 284 629
noncurrent liabilities
deferred tax liability – 6154 6154 16 1908 1892 8046
total net assets 17667 15827 33494 7142 5680 12822 46316
goodwill 34885 10169 45054
purchase consideration 68379 22991 91370
paid in cash 64379 22595 86974
contingent consideration 4000 396 4396
purchase consideration 68379 22991 91370
purchase consideration paid in cash 64379 22595 86974
cash held in subsidiary 4514 1197 5711
cash outflow on acquisition 59865 21398 81263
the adjustments shown in the table represent the alignment of accounting policies of the acquired businesses to rotork group policies and the fair 
value adjustments of the assets and liabilities at the acquisition date of each of the businesses the contingent consideration in respect of ytc is 
payable in april 2015 dependant on a profit target being achieved
the goodwill arising from the three acquisitions represents the opportunity to grow by exploiting new routes to market via the rotork sales network 
and the technical expertise of the acquired workforce none of the goodwill recognised is expected to be deductible for income tax purposes
the intangible assets identified comprise customer relationships brands product design patents and acquired order books financial statements
96 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
4 other income
2014 2013
gain on disposal of property plant and equipment 111 125
other 166 81
277 206
5 other expenses
2014 2013
loss on disposal of property plant and equipment 199 100
other 12 16
211 116
6 personnel expenses
2014 2013
wages and salaries including bonus and incentive plans 117198 112497
social security costs 14891 13888
pension costs note 24 6085 6002
sharebased payments note 25 5160 2177
increasedecrease in liability for long term service leave 245 38
143579 134526
2014
number
2013
number
during the year the average monthly number of employees analysed by business segment was
controls 1801 1701
fluid systems 838 731
gears 354 322
instruments 231 138
3224 2892
uk 697 607
overseas 2527 2285
3224 2892 97 rotork annual report 2014
governance strategic report directors financial statements company information
7 finance income and expense
recognised in the income statement
2014 2013
interest income 1057 917
foreign exchange gains 364 256
finance income 1421 1173
2014 2013
interest expense 1159 653
interest charge on pension scheme liabilities note 24 788 1168
foreign exchange losses 536 620
finance expense 2483 2441
recognised in equity
2014 2013
effective portion of changes in fair value of cash flow hedges 667 3035
fair value of cash flow hedges transferred to income statement 3035 1437 
foreign currency translation differences for foreign operations 869 4981
3237 3383
recognised in
hedging reserve 2368 1598
translation reserve 869 4981
3237 3383 financial statements
98 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
8 profit before tax
profit before tax is stated after charging the following
note 2014 2013
depreciation of property plant and equipment
– owned assets i 7902 6699
– assets held under finance lease contracts i 94 102
amortisation
– other intangibles i 14940 12147
– development costs i 1461 1214
inventory write downs recognised in the year ii 1825 1816
hire of plant and machinery i 1893 1283
other operating lease rentals i 3512 2170
research  development expenditure iii 7187 6361
exchange differences realised iv 172 364
audit fees and expenses paid to deloitte 2013 kpmg audit plc
– audit of these financial statements 696 332
– audit of financial statements of subsidiaries of the company 75 161
771 493
other auditors of financial statements of subsidiaries of the company 18 95
total audit fees and expenses 789 588
amounts paid to deloitte 2013 kpmg audit plc and its associates in respect of
– taxation compliance services 8 144
– half year review 45 40
– corporate finance services 157 –
– other assurance services – 69
210 253
these costs can be found under the following headings in the income statement
i both within cost of sales and administrative expenses
ii within cost of sales
iii within administrative expenses
iv within financing income and expenses 99 rotork annual report 2014
governance strategic report directors financial statements company information
9 income tax expense
2014 2014 2013 2013
current tax
uk corporation tax on profits for the year 6122 7986
adjustment in respect of prior years 766 156
5356 8142
overseas tax on profits for the year 36283 34790
adjustment in respect of prior years 229 59
36512 34731
total current tax 41868 42873
deferred tax
origination and reversal of other temporary differences 3650 4177
adjustment in respect of prior years 255 208
total deferred tax 3905 4385
total tax charge for year 37963 38488
effective tax rate based on profit before tax 269 279
profit before tax 141165 137997
profit before tax multiplied by the blended standard rate of corporation tax in
 the uk of 215 2013 2325 30350 32084
effects of
different tax rates on overseas earnings 8841 6019
permanent differences 1444 1398
research and development credits 1880 901
utilisation of overseas tax holidays – 1
adjustments to tax charge in respect of prior years 792 111
total tax charge for year 37963 38488
a tax expense of £274000 2013 credit of £632000 in respect of sharebased payments has been recognised directly in equity in the year
the reduction in the effective tax rate from 279 to 269 is primarily due to the withholding tax rate on remitted dividends from china reducing 
from 10 to 5 and the patent box relief available in the uk being effective for a full year in 2014 the group continues to expect its effective rate 
of corporation tax to be higher than the standard uk rate due to higher rates of tax in the usa canada france germany italy japan and india
a credit of £4214000 2013 £3611000 in respect of acquired intangible asset amortisation is included in the deferred tax credit of £3905000 
2013 £4385000
there is an unrecognised deferred tax liability for temporary differences associated with investments in subsidiaries rotork plc controls the 
dividend policies of its subsidiaries and subsequently the timing of the reversal of the temporary differences the value of temporary differences 
associated with unremitted earnings of subsidiaries for which deferred tax has not been recognised is £292704000 2013 £249208000 financial statements
100 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
10 goodwill
2014 2013
cost
at 1 january 105150 80729
acquisition through business combinations note 3 45054 24852
exchange adjustments 525 431
at 31 december 149679 105150
provision for impairment
at 1 january and 31 december – –
carrying amounts 149679 105150
cash generating units
goodwill acquired through business combinations has been allocated to the lowest level of cash generating unit cgu and to the division in which it 
is reported where the acquired entity’s growth into new markets is through the group’s existing sales network the lowest level of cgu is 
considered to be at the divisional level
the carrying value of goodwill is allocated as follows
2014 2013
controls
 schischek 17874 19003
 other cash generating units 9428 9279
27302 28282
fluid systems
 rotork fluid systems 7143 7594
 rotork sweden 5965 6796
 other cash generating units 13786 11978
26894 26368
gears
 other cash generating units 8991 9069
8991 9069
instruments
 ytc 35729 –
 fairchild 28494 26722
 soldo 13853 14709
 midland 8416 –
86492 41431
total group 149679 105150
 
impairment testing
goodwill is not amortised but is tested annually for impairment value in use calculations are used to determine the recoverable amount of goodwill 
allocated to each of the cgus these calculations use cash flow projections based on actual operating results and management forecasts the key 
assumptions in the annual impairment review which are common to all cgus are set out below
i management forecasts
the three year plan is a bottom up process which takes place as part of the annual budget process the three year plan is prepared by each 
reporting entity’s management reflecting their view of the local market known projects and experience of past performance the annual budget 
and the three year plan are reviewed and approved by the board each year
ii long term growth rates
in the period after the three year plan growth rates are forecast at 6 per annum for the first two years and 2 thereafter for each cgu 2013 all 
years post three year plan were forecast at 2 the 6 rate reflects a more realistic market forecast for the flow control market up until 2019 
these rates are considered to be prudent given the significant organic growth of the business over the last 10 years 101 rotork annual report 2014
governance strategic report directors financial statements company information
10 goodwill continued
iii discount rates
discount rates for each of the cgus have been based on the geographic area in which the subsidiary is located and these rates range between 92 
and 103 2013 group wide discount rate of 105 applying an area specific discount rate more accurately reflects the risks and rewards for 
subsidiaries operating in various geographic sectors around the world
sensitivity analysis
sensitivity analysis has been undertaken for each cgu to assess the impact of any reasonable change in assumptions using the key assumptions 
above there is no reasonable change that would cause the carrying values of any cgu to exceed the recoverable amount apart from ytc and 
schischek the sensitivities for which are explained below
with regard to ytc which has only been part of the group for 9 months downside sensitivities have been assessed a decrease in the growth rate 
by 6 in each of the next five years would result in the goodwill being impaired if the discount factor were to increase by 2 to 122 growth 
would need to reduce by 1 in each of the next five years for the goodwill to become impaired it is anticipated that as ytc becomes more 
established within the group and leverages the sales network opportunities the long term growth rate should comfortably exceed the growth rates 
assumed in the forecast
schischek downside sensitivities have also been assessed a decrease in the growth rate of 7 per year over the next five years would be required 
to result in an impairment if the discount rate were to increase by 2 to 123 a decrease in the growth rate of 2 in each of the next five years 
would be required to result in a goodwill impairment
11 intangible assets
business combinations acquired intangible assets
 
research 
development
costs brands
customer
relationships other total
cost          
1 january 2013 9069 21954 26722 3842 61587
acquisition through business combinations – 7968 12298 3972 24238
internally developed 2033 – – – 2033
exchange adjustments 6 242 584 84 916
31 december 2013 11096 29680 38436 7730 86942
acquisition through business combinations 226 4808 22579 4775 32388
internally developed 2746 – – – 2746
exchange adjustments 16 135 82 77 114
31 december 2014 14084 34353 61097 12428 121962
amortisation          
1 january 2013 4850 4110 8792 3092 20844
charge for the year 1214 3816 6684 1647 13361
exchange adjustments – 201 456 87 744
31 december 2013 6064 7725 15020 4652 33461
charge for the year 1461 4188 8255 2497 16401
exchange adjustments 1 38 121 12 170
31 december 2014 7526 11875 23154 7137 49692
net book value          
31 december 2013 5032 21955 23416 3078 53481
31 december 2014 6558 22478 37943 5291 72270
other acquired intangible assets represent order books and intellectual property
the amortisation charge is recognised within administrative expenses in the income statement financial statements
102 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
12 property plant and equipment
land and
buildings
plant and
equipment total
cost
1 january 2013 27767 51805 79572
additions 2287 8033 10320
disposals 12 1530 1542
acquisition through business combinations 3519 1444 4963
exchange adjustments 508 1078 1586
31 december 2013 33053 58674 91727
additions 4063 13329 17392
disposals – 1883 1883
acquisition through business combinations 8144 1310 9454
exchange adjustments 383 644 1027
31 december 2014 44877 70786 115663
depreciation
1 january 2013 7750 33377 41127
charge for the year 745 6056 6801
disposals 11 1405 1416
exchange adjustments 76 580 656
31 december 2013 8408 37448 45856
charge for the year 1042 6954 7996
disposals – 1577 1577
exchange adjustments 173 489 662
31 december 2014 9277 42336 51613
net book value
31 december 2013 24645 21226 45871
31 december 2014 35600 28450 64050
the net book value of the group’s plant and equipment includes £18000 2013 £61000 in respect of assets held under finance leases
net book value of land and buildings can be analysed between
2014 2013
land 6004 2794
buildings 29596 21851
net book value at 31 december 35600 24645
it is the group’s policy to test assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be 
recoverable no impairment was identified in the year 103 rotork annual report 2014
governance strategic report directors financial statements company information
13 deferred tax assets and liabilities
 
assets
2014
liabilities
2014
net
2014
assets
2013
liabilities
2013
net
2013
property plant and equipment 162 987 825 282 1094 812
intangible assets 54 18383 18329 – 14731 14731
employee benefits 9487 77 9410 5890 – 5890
provisions 4551 – 4551 5535 – 5535
other items 2915 2377 538 1605 2629 1024
net tax assetsliabilities 17169 21824 4655 13312 18454 5142
set off of tax 1466 1466 – 1534 1534 –
  15703 20358 4655 11778 16920 5142
movements in the net deferred tax balance during the year are as follows
  2014 2013
balance at 1 january 5142 504
credited to the income statement 3905 4385
chargedcredited directly to equity in respect of sharebased payments 425 188
acquired as part of business combinations 8046 6624
creditedcharged directly to equity in respect of pension schemes 4491 2141
creditedcharged directly to hedging reserves in respect of cash flow hedges 558 324
exchange differences 4 122
balance at 31 december 4655 5142
a deferred tax asset of £15703000 2013 £11778000 has been recognised at 31 december 2014 the directors are of the opinion based on 
recent and forecast trading that the level of profits in the current and future years make it more likely than not that these assets will be recovered
a deferred tax asset of £1519000 2013 £1664000 has not been recognised in relation to capital losses this asset may be recovered if sufficient 
capital profits are made in future in the companies concerned there is no expiry date in relation to this asset
14 inventories
  2014 2013
raw materials and consumables 58590 51844
work in progress 10088 8445
finished goods 12412 14792
  81090 75081
included in cost of sales was £206104000 2013 £205092000 in respect of inventories consumed in the year financial statements
104 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
15 trade and other receivables
  2014 2013
noncurrent assets    
other nontrade receivables 1976 1532
other receivables 1976 1532
current assets  
trade receivables 130819 107801
less provision for impairment of receivables 2347 1825
trade receivables – net 128472 105976
   
corporation tax 1962 1145
current tax 1962 1145
   
other nontrade receivables 2161 1833
other taxes and social security 6046 5542
prepayments 4379 4777
other receivables 12586 12152
16 cash and cash equivalents
  2014 2013
bank balances 23777 40747
cash in hand 45 43
short term deposits 22994 28083
cash and cash equivalents 46816 68873
bank overdraft – –
cash and cash equivalents in the consolidated statement of cash flows 46816 68873 105 rotork annual report 2014
governance strategic report directors financial statements company information
17 capital and reserves
share capital and share premium
 
5p ordinary
shares
issued
and fully
paid up
2014
£1 non
redeemable
preference
shares
2014
5p ordinary
shares
issued
and fully
paid up
2013
£1 non
redeemable
preference
shares
2013
at 1 january 4344 40 4340 40
issued under employee share schemes 2 – 4 –
at 31 december 4346 40 4344 40
number of shares 000 86928 86871  
the ordinary shareholders are entitled to receive dividends as declared and are entitled to vote at meetings of the company
the group received proceeds of £584000 2013 £586000 in respect of the 57321 2013 62904 ordinary shares issued during the year £2000 
2013 £4000 was credited to share capital and £582000 2013 £582000 to share premium further details of the share awards are shown in note 25
the preference shareholders take priority over the ordinary shareholders when there is a distribution upon winding up the company or on a 
reduction of equity involving a return of capital the holders of preference shares are entitled to vote at a general meeting of the company if a 
preference dividend is in arrears for six months or the business of the meeting includes the consideration of a resolution for winding up the 
company or the alteration of the preference shareholders’ rights
within the retained earnings reserve are own shares held the investment in own shares held is £5393000 2013 £4520000 and represents 
202098 2013 162518 ordinary shares of the company held in trust for the benefit of directors and employees for future payments under the 
share incentive plan and long term incentive plan the dividends on these shares have been waived
translation reserve
the translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations
capital redemption reserve
the capital redemption reserve arises when the company redeems shares wholly out of distributable profits
hedging reserve
the hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments that are 
determined to be an effective hedge
dividends
the following dividends were paid in the year per qualifying ordinary share
2014
payment date 2014 2013
300p final dividend 2013 266p 19 may 26046 23082
192p interim dividend 2013 1805p 26 september 16656 15653
    42702 38735
after the balance sheet date the following dividends per qualifying ordinary share were proposed by the directors the dividends have not been 
provided for and there are no corporation tax consequences
  2014 2013
final proposed dividend per qualifying ordinary share    
309p 26861  
300p   26061 financial statements
106 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
18 earnings per share
basic earnings per share
earnings per share is calculated for both the current and previous years using the profit attributable to the ordinary shareholders for the year the 
earnings per share calculation is based on 867m shares 2013 867m shares being the weighted average number of ordinary shares in issue net of 
own ordinary shares held for the year
  2014 2013
net profit attributable to ordinary shareholders 103202 99509
weighted average number of ordinary shares
issued ordinary shares at 1 january 86708 86638
effect of own shares held 25 44
effect of shares issued under share option schemessharesave plans 7 9
weighted average number of ordinary shares during the year 86740 86691
basic earnings per share 1190p 1148p
adjusted basic earnings per share
adjusted basic earnings per share is calculated for both the current and previous years using the profit attributable to the ordinary shareholders for 
the year after adding back the after tax amortisation charge
  2014 2013
net profit attributable to ordinary shareholders 103202 99509
amortisation 14940 12147
tax effect on amortisation at effective rate 4018 3388
adjusted net profit attributable to ordinary shareholders 114124 108268
weighted average number of ordinary shares during the year 86740 86691
adjusted basic earnings per share 1316p 1249p
diluted earnings per share
diluted earnings per share is based on the profit for the year attributable to the ordinary shareholders and 871m shares 2013 871m shares the 
number of shares is equal to the weighted average number of ordinary shares in issue net of own ordinary shares held adjusted to assume 
conversion of all potentially dilutive ordinary shares the company has two categories of potentially dilutive ordinary shares those share options 
granted to employees under the sharesave plan where the exercise price is less than the average market price of the company’s ordinary shares 
during the year and contingently issuable shares awarded under the long term incentive plan ltip
  2014 2013
net profit attributable to ordinary shareholders 103202 99509
weighted average number of ordinary shares diluted  
weighted average number of ordinary shares for the year 86740 86691
effect of sharesave options in issue 112 103
effect of ltip shares in issue 238 277
weighted average number of ordinary shares diluted during the year 87090 87071
diluted earnings per share 1185p 1143p
adjusted diluted earnings per share
  2014 2013
net profit attributable to ordinary shareholders 103202 99509
amortisation 14940 12147
tax effect on amortisation at effective rate 4018 3388
adjusted net profit attributable to ordinary shareholders 114124 108268
weighted average number of ordinary shares diluted during the year 87090 87071
adjusted diluted earnings per share 1310p 1243p 107 rotork annual report 2014
governance strategic report directors financial statements company information
19 interest bearing loans and borrowings
this note provides information about the contractual terms of the group’s interest bearing loans and borrowings for more information about the 
group’s exposure to interest rate liquidity and currency risks see note 26
  2014 2013
noncurrent liabilities    
preference shares classified as debt 40 40
bank loans 1253 1607
finance lease liabilities 10 31
1303 1678
current liabilities  
bank loans 20259 502
finance lease liabilities 15 30
  20274 532
terms and debt repayment schedule
the terms and conditions of outstanding loans were as follows
  currency interest rates
year of 
maturity 2014 2013
nonredeemable preference shares sterling 95 – 40 40
bank loans and overdrafts sterling euro 0 – 45 2015–32 21512 2109
finance lease liabilities sterling euro  y en 0 – 56 2015–17 25 61
    21577 2210
repayment profile
finance leases and bank loans are payable as follows
 
principal
2014
interest
2014
minimum 
payments
2014
principal
2013
interest
2013
minimum 
payments
2013
bank loans less than one year 20259 45 20304 502 37 539
bank loans more than one and less than five years 494 87 581 736 105 841
bank loans more than five years 759 113 872 871 140 1011
finance leases less than one year 15 1 16 30 3 33
finance leases more than one and less than five years 10 1 11 31 2 33
  21537 247 21784 2170 287 2457 financial statements
108 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
20 employee benefits
  2014 2013
recognised liability for defined benefit obligations    
– present value of funded obligations 187918 152882
– fair value of plan assets 151786 132684
  36132 20198
other pension scheme liabilities 435 477
employee bonuses 13105 14726 
long term incentive plan 404 576
employee indemnity provision 1971 1833
other employee benefits 2835 2374
  54882 40184
   
noncurrent 38864 22705
current 16018 17479
  54882 40184
defined benefit pension scheme disclosures are detailed in note 24
21 provisions
 
contingent
consideration
warranty
provision total
balance at 1 january 2014 2809 6685 9494
exchange differences 85 36 49
increase as a result of business combinations 4396 187 4583
provisions used during the year 1463 752 2215
credited to the income statement 164 416 580
balance at 31 december 2014 5493 5740 11233
       
maturity at 31 december 2014      
noncurrent – 1913 1913
current 5493 3827 9320
  5493 5740 11233
       
maturity at 31 december 2013      
noncurrent 400 2228 2628
current 2409 4457 6866
  2809 6685 9494
the warranty provision is based on estimates made from historical warranty data associated with similar products and services the provision 
relates mainly to products sold during the last 12 months the typical warranty period is 18 months
contingent consideration relates to amounts outstanding in respect of the acquisitions of ytc flowco limited gta group and masso ind spa 
all of these amounts are due to be paid during 2015 109 rotork annual report 2014
governance strategic report directors financial statements company information
22 trade and other payables
  2014 2013
trade payables 40162 38019
 
corporation tax 15200 14836
current tax 15200 14836
 
other taxes and social security 8123 6922
payments on account 7617 7995
other payables and accrued expenses 19451 16085
other payables 35191 31002
23 derivative financial instruments
 
2014
assets
2014
liabilities
2013
assets
2013
liabilities
forward foreign exchange contracts – cash flow hedges 1243 576 3067 32
foreign exchange swaps – cash flow hedges 670 543 670 –
total 1913 1119 3737 32
less noncurrent portion
forward foreign exchange contracts – cash flow hedges – – 804 –
current portion 1913 1119 2933 32
the full fair value of a hedging derivative is classified as a noncurrent asset or liability if the remaining maturity of the hedged item is more than 
12 months and as a current asset or liability if the maturity of the hedged item is less than 12 months
there was no ineffectiveness to be recorded from the use of foreign exchange contracts
the hedged forecast transactions denominated in foreign currency are expected to occur at various dates gains and losses in respect of these 
derivatives recognised in the hedging reserve in equity at 31 december 2014 are recognised in the income statement in the period or periods 
during which the hedged forecast transaction affects the income statement financial statements
110 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
24 pension schemes
i defined benefit pension schemes
the group operates two defined benefit pension arrangements one in the uk called the rotork pension and life assurance scheme uk scheme 
and one in the usa called the rotork controls inc pension plan the schemes provide benefits based on final salary and length of service on 
retirement leaving service or death
the uk scheme is subject to the statutory funding objective under the pensions act 2004 a valuation of the uk scheme is carried out at least 
once every three years to determine whether the statutory funding objective is met as part of the process the company must agree with the 
trustees of the uk scheme the contributions to be paid to address any shortfall against the statutory funding objective and contributions to pay 
for future accrual of benefits
the uk scheme is managed by a trustee with directors appointed in part by the group and part from elections by members of the scheme the 
trustee has responsibility for obtaining valuations of the fund administering benefit payments and investing the uk scheme’s assets the trustee 
delegates some of these functions to their professional advisers where appropriate
the us pension plan is subject to the erisa funding requirements  a valuation of the plan is carried out annually to ensure the funding objective is 
met under erisa by contributing at least the minimum required contribution  as part of this process the company must contribute to the plan 
enough contributions to ensure at least the minimum contribution is deposited in the trust to pay for the accrual of benefits
the two defined benefit pension arrangements expose the group to a number of risks
• investment risk the schemes hold investments in asset classes such as equities which have volatile market values and while these assets are 
expected to provide real returns over the long term the short term volatility can cause additional funding to be required if a deficit emerges
• interest rate risk the schemes liabilities are assessed using market yields on high quality corporate bonds to discount the liabilities as the 
schemes hold assets such as equities the value of the assets and liabilities may not move in the same way
• inflation risk a significant proportion of the benefits under the schemes are linked to inflation although the schemes assets are expected to 
provide a good hedge against inflation over the long term movements over the short term could lead to deficits emerging
• mortality risk in the event that members live longer than assumed a deficit will emerge in the schemes
there were no plan amendments curtailments or settlements during the period
movements in the present value of defined benefit obligations
  2014 2013
liabilities at 1 january 152882 151501
current service costs 2579 2773
administration costs 132 345
member contributions 494 499
interest cost 7035 6448
benefits paid 4291 4079
actuarial lossgain 27827 4314
currency lossgain 1260 291
liabilities at 31 december 187918 152882 111 rotork annual report 2014
governance strategic report directors financial statements company information
24 pension schemes continued
movements in fair value of plan assets
  2014 2013
assets at 1 january 132684 122802
interest income on plan assets 6247 5280
employer contributions 8038 4999
member contributions 494 499
benefits paid 4291 4079
return on plan assets excluding interest income on plan assets 7995 3355
currency gainloss 619 172
assets at 31 december 151786 132684
expense recognised in the income statement
  2014 2013
current service costs 2579 2773
administration costs 132 345
net interest cost 788 1168
  3499 4286
the expense is recognised in the following line items in the income statement
  2014 2013
cost of sales 962 972
administrative expenses 1749 2146
net finance expense 788 1168
  3499 4286
remeasurements over the year
  2014 2013
experience adjustments on plan assets 7995 3355
experience adjustments on plan liabilities 1063 589
actuarial lossgain from changes to financial assumptions 27293 1715
actuarial lossgain from changes to demographic assumptions 1597 2010
experience adjustments on currency 641 119
  20473 7788 financial statements
112 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
24 pension schemes continued
reconciliation of net defined benefit obligation
  2014 2013
net defined benefit obligation at the beginning of the year 20198 28699
current service costs 2579 2773
administration costs 132 345
net financing expense 788 1168
remeasurements over the year 20473 7788
employer contributions 8038 4999
  36132 20198
liability for defined benefit obligations
the principal actuarial assumptions at 31 december 2014 expressed as weighted averages
 
uk scheme 
 per annum
us scheme 
 per annum
weighted average 
 per annum
  2014 2013 2014 2013 2014 2013
discount rate 36 46 43 50 37 46
rate of increase in salaries 36 39 30 35 35 38
rate of increase in pensions post may 2000 30 33 00 00 27 30
rate of increase in pensions pre may 2000 46 46 00 00 41 42
rate of inflation 31 34 30 35 31 34
the retail price index is used as the rate of inflation as it is a requirement of the pension scheme rules
the split of the schemes’ assets were as follows
 
2014
fair value
2013
fair value
equities 71928 68724
bonds 59748 46782
property 8717 7485
cash 1403 931
us deposit administration contract 9990 8763
total 151786 132685
actual return on the schemes’ assets 14242 8636
the mortality assumptions used are the s1nxa year of birth tables with future improvements in mortality based on the cmi2012 projections 
2013 cmi2012 projections with a longterm rate of improvement of 125 per annum 2013 125 113 rotork annual report 2014
governance strategic report directors financial statements company information
24 pension schemes continued
by way of example the respective mortality tables indicate the following life expectancy
 
2014  
life expectancy at age 65
2013  
life expectancy at age 65
current age male female male female
65 225 250 224 249
45 242 269 241 268
sensitivity analysis on the scheme liabilities
 adjustments to assumptions approximate effect on liabilities
discount rate
plus 05 pa
minus 05 pa
18000
20100
inflation
plus 05 pa
minus 05 pa
9200
8700
salary increase
plus 05 pa
minus 05 pa
4100
3900
life expectancy
decrease mortality rates by a factor of 10
increase mortality rates by a factor of 10
5600
5100
note that the above sensitivities are approximate and only show the likely effect of an assumption being adjusted whilst all other assumptions 
remain the same
for the life expectancy sensitivity we have increaseddecreased the mortality rates by a factor of 10 broadly speaking this decreasesincreases 
the assumed life expectancy by slightly less than 1 year
the sensitivity analysis shown above was determined using the same method as per the calculation of liabilities for the balance sheet disclosures 
but using assumptions adjusted as detailed above
effect of the schemes on groups future cash flows
the group is required to agree a schedule of contributions with the trustees of the uk scheme following a valuation which must be carried out at 
least once every three years the next valuation of the scheme will have an effective date of 31 march 2016 in the event that the valuation reveals a 
larger deficit than expected the group may be required to increase contributions above those set out in the existing schedule of contributions 
conversely if the position is better than expected contributions may be reduced
the group estimates that cash contributions to the group’s defined benefit pension schemes during 2015 will be £2900000 for regular payments 
2014 £2858000 and £5500000 of additional payments in relation to past service 2014 £5200000
the weighted average duration of the defined benefit obligation is 21 years
ii other pension plans
the group makes a contribution to a number of defined contribution plans around the world to provide benefits for employees upon retirement 
total expense relating to these plans in the year was £3506000 2013 £2884000 financial statements
114 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
25 sharebased payments
the equity settled sharebased payment expense included in the income statement can be analysed as follows
  2014 2013
sharesave plan a 361 285
long term incentive plan b 1501 1892
oplsssip profit linked share scheme c 3298 –
total expense recognised as employee costs note 6 5160 2177
volatility assumptions for equitybased payments
the expected volatility of all equity compensation benefits is based on the historic volatility calculated based on the weighted average remaining 
life of each benefit adjusted for any expected changes to future volatility due to publicly available information
a sharesave plan
uk employees are invited to join the sharesave plan when an offer is made each year all the offers to date were made at a 20 discount to market price 
at the time there are no performance criteria for the sharesave plan employees are given the option of joining either the 3 year or the 5 year scheme
 
3 year scheme 5 year scheme
  2014 2013 2014 2013
grant date 30 september 30 september 30 september 30 september
share price at grant date £2765 £2727 £2765 £2727
exercise price £2236 £2194 £2236 £2194
shares granted under scheme 49975 28822 72209 26137
vesting period 3 years 3 years 5 years 5 years
expected volatility 240 249 246 315
risk free rate 133 092 183 162
expected dividends expressed as a dividend yield 18 16 18 16
probability of ceasing employment before vesting 20 20 20 20
fair value £679 £682 £782 £903
movements in the number of share options outstanding and their weighted average exercise prices are as follows
 
2014 2013
 
average
exercise 
price in
£ per share options
average
 exercise 
price in
£ per share options
at 1 january 1528 227963 1224 242830
granted 2236 122184 2194 54959
exercised 1024 57321 896 62904
lapsed 1923 6383 1576 6922
at 31 december 1923 286443 1528 227963
of the 286443 outstanding options 2013 227963 14134 are exercisable 2013 4562
the group received proceeds of £584000 in respect of the 57321 options exercised during the year £2000 was credited to share capital and 
£582000 to share premium the weighted average share price at date of exercise was £2357 2013 £2651
the weighted average remaining life of 105627 2013 82224 awards outstanding under the 3 year plan is two years the weighted average 
remaining life of 180816 2013 145739 awards outstanding under the 5 year plan is three years 115 rotork annual report 2014
governance strategic report directors financial statements company information
25 sharebased payments continued
b long term incentive plan
the long term incentive plan ltip is a performance share plan under which shares are conditionally allocated to selected members of senior 
management at the discretion of the remuneration committee on an annual basis following shareholder approval of the ltip at the company’s 
agm on 18 may 2000 awards over shares are made to executive directors and senior managers each year
2010 ltip plan
following shareholder approval of the 2010 ltip plan at the company’s agm on 23 april 2010 awards of shares have been made annually to 
executive and senior managers half of these awards vest under a tsr performance condition and half under an eps performance condition
tsr measures the change in value of a share and reinvested dividends over the period of measurement the actual number of shares transferred 
will be determined by the number of shares initially allocated multiplied by a vesting percentage the actual number of shares transferred will be 
25 at the 50th percentile rising to 100 at the 75th percentile
the eps performance condition is satisfied with 15 of the awards vesting if the eps growth is rpi  10 over the vesting period up to a maximum 
of 100 vesting if eps growth exceeds rpi 25
the performance period for the 2011 awards ended on 31 december 2013 messrs pricewaterhousecoopers llp as independent actuaries 
certified to the remuneration committee that there was a 67 vesting of this award as the company was in the 59th percentile relative to the 
comparator group and the group’s eps growth exceeded rpi 25 over the performance period the awards vested during 2014
the performance period for the 2012 awards ended on 31 december 2014 the tsr element of the award will not vest as the company was in the 
40th percentile relative to the comparator group the eps growth was 280 over the performance period which exceeded rpi by 204messrs 
pricewaterhousecoopers llp as independent actuaries certified to the remuneration committee that there was a 370 vesting of this award 
these awards will vest during 2015
  2014 2013
grant date 7 march 2014 7 march 2013
share price at grant date £2752 £2905
shares granted under scheme 106402 98832
vesting period 3 years 3 years
expected volatility 251 257
risk free rate 10 03
expected dividends expressed as a dividend yield 17 15
probability of ceasing employment before vesting 5 pa 5 pa
fair value of awards under tsr performance conditions £1256 £1702
fair value of awards under eps performance conditions £2621 £2819
 
outstanding
at start
of year
granted 
during year
vested 
during year lapsed
outstanding
at end
of year
2011 award 124906 – 83672 41234 –
2012 award 122695 – – – 122695
2013 award 98832 – – – 98832
2014 award – 106402 – – 106402
  346433 106402 83672 41234 327929
at the date of vesting the 2011 awards were valued at £2763 the weighted average remaining life of awards outstanding at the year end is one year
 
c overseas profit linked share scheme oplss and the share incentive plan sip
these discretionary profit linked shares schemes are annual schemes based on the prior year profit of participating rotork companies the value of 
the award to each employee is based on salary and length of service the value of the award can be up to £3600 financial statements
116 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
26 financial instruments
financial risk and treasury policies
the treasury department maintains liquidity identifies and manages foreign exchange risk manages relations with the group’s bankers and 
provides a treasury service to the group’s businesses treasury dealings such as investments borrowings and foreign exchange are conducted 
only to support underlying business transactions
the group has clearly defined policies for the management of credit foreign exchange and interest rate risk the group treasury department is 
not a profit centre and therefore does not undertake speculative foreign exchange dealings for which there is no underlying exposure exposures 
resulting from sales and purchases in foreign currency are matched where possible and the net exposure may be hedged
a credit risk
credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations 
and arises principally from the group’s receivables from customers and cash on deposit with financial institutions
management has a credit policy in place and exposure to credit risk is both monitored on an ongoing basis and reduced through the use of credit 
insurance covering 80 to 90 of trade receivables at any time credit evaluations are carried out on all customers requiring credit above a certain 
threshold with varying approval levels set around this depending on the value of the sale at the balance sheet date there were no significant 
concentrations of credit risk
goods are sold subject to retention of title clauses so that in the event of non–payment the group may have a secured claim
the group maintains an allowance for impairment in respect of non–insured receivables where recoverability is considered doubtful
the group treasury committee meets regularly and reviews the credit risk associated with institutions that hold a material cash balance as well as 
credit ratings counterparties and instruments are assessed for credit default swap pricing and liquidity of funds
exposure to credit risk
the carrying amount of financial assets represents the maximum credit exposure the maximum exposure to credit risk at the reporting date was
 
carrying amount
  2014 2013
trade receivables 128472 105976
other receivables 14562 13684
cash and cash equivalents 46816 68873
foreign exchange contracts 1913 3737
  191763 192270
the maximum exposure to credit risk for trade receivables at the reporting date by currency was
 
carrying amount
  2014 2013
sterling 15207 13166
us dollar 37750 30128
euro 45014 42244
indian rupee 5001 3528
other 25500 16910
  128472 105976
provisions against trade receivables
the aging of trade receivables and the associated provision for impairment at the reporting date was
 
gross
2014
provision
2014
gross
2013
provision
2013
not past due 86682 93 73493 225
past due 0–30 days 21910 105 15873 56
past due 31–60 days 10363 40 9117 68
past due 61–90 days 3184 275 3107 143
past due more than 91 days 8680 1834 6211 1333
  130819 2347 107801 1825 117 rotork annual report 2014
governance strategic report directors financial statements company information
26 financial instruments continued
b liquidity risk
liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due the group’s approach to managing liquidity is 
to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions 
without incurring unacceptable losses or risking damage to the group’s reputation
the group is highly cash generative and uses monthly cash flow forecasts to monitor cash requirements and to optimise its return on investments 
typically the group ensures that it has sufficient cash on hand to meet foreseeable operational expenses it also maintains a £7m overdraft facility 
2013 £7m on which interest would be payable at base rate plus 15
during 2014 the group extended its £15m loan facility for a further 18 months to june 2016 increased the committed amount to £55m and 
renegotiated the margin from libor plus 10 to libor plus 055 in may 2014 the group also negotiated a new 364 day £20m committed 
loan facility interest is payable on this facility at libor plus 035 at year end £20m of the committed facilities were drawn resulting in 
£55m being available
the following are the contractual maturities of financial liabilities including interest payments and excluding the impact of netting agreements
 
analysis of contractual cash flow maturities
31 december 2014
carrying 
amount
contractual 
cash flows
less than
12 months 1–2 years 2–5 years
more than
5 years
bank loans and overdrafts 21512 21757 20304 254 327 872
finance lease liabilities 25 27 16 10 1 –
trade and other payables 75353 75353 75353 – – –
contingent consideration 5493 5493 5493 – – –
foreign exchange contracts 1119 1119 1119 – – –
nonredeemable preference shares 40 40 – – – 40
  103542 103789 102285 264 328 912
 
analysis of contractual cash flow maturities
31 december 2013
carrying 
amount
contractual 
cash flows
less than
 12 months 1–2 years 2–5 years
more than
5 years
bank loans and overdrafts 2109 2391 539 308 533 1011
finance lease liabilities 61 66 33 22 11 –
trade and other payables 69021 69021 69021 – – –
contingent consideration 2809 2809 2409 400 – –
forward exchange contracts 32 32 32 – – –
nonredeemable preference shares 40 40 – – – 40
  74072 74359 72034 730 544 1051
where a counterparty experiences credit stress then the foreign exchange contracts may be settled on a net basis but standard practice is to settle 
on a gross basis and the undiscounted gross outflow in respect of these contracts is £144706000 2013 £166745000 and the gross inflow is 
£145566000 2013 £170588000
c market risk
market risk arises from changes in market prices such as currency rates and interest rates and may affect the group’s results the objective of 
market risk management is to manage and control market risk within suitable parameters
i currency risk
the group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the business unit’s functional 
currency the currencies primarily giving rise to this risk are the us dollar and related currencies and the euro the group hedges up to 75 of 
forecast us dollar or euro foreign currency exposures using forward exchange contracts in respect of other non–sterling monetary assets and 
liabilities the exposures may also be hedged up to 75 where this is deemed appropriate
as part of the group’s cash management some of the overseas subsidiaries have loan and deposit balances where their intra–group counterparty is 
in the uk the balances are typically in local currency for the subsidiary so the uk holds a foreign currency current asset or liability which is usually 
hedged through the use of foreign exchange swaps at the balance sheet date only the ‘forward’ part of the swap remains and this is designated as 
a cash flow hedge to match the currency exposure of the intercompany loan asset financial statements
118 rotork annual report 2014
26 financial instruments continued
the group classifies its forward exchange contracts that hedge both the forecast sale and purchase transactions and the intercompany loan and 
deposit balances as cash flow hedges and states them at fair value the net fair value of foreign exchange contracts used as hedges at 31 
december 2014 was a £794000 asset 2013 £3705000 asset comprising an asset of £1913000 2013 £3737000 and a liability of £1119000 
2013 £32000 forward exchange contracts in place at 31 december 2014 mature in 2015 and 2016
changes in the fair value of foreign exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which 
no hedge accounting is applied are recognised in the income statement
sensitivity analysis
it is estimated that with all other variables held equal in particular other exchange rates a general change of one cent in the value of euro against 
sterling would have had an impact on the group’s operating profit for the year ended 31 december 2014 of £325000 2013 £325000 and a change 
of one cent in the value of us dollar against sterling would have had an impact of the group’s operating profit for the year ended 31 december 2014 
of £550000 2013 £450000 the method of estimation which has been applied consistently involves assessing the transaction impact of us 
dollar and euro cash flows and the translation impact of us dollar and euro profits
the following significant exchange rates applied during the year
 
average rate closing rate
  2014 2013 2014 2013
us dollar 165 156 155 166
euro 124 118 128 120
ii interest rate risk
the group does not undertake any hedging activity in this area all cash deposits are made at prevailing interest rates and the majority is available 
with same day notice though deposits are sometimes made with a maturity of no more than three months the main element of interest rate risk 
concerns sterling us dollar euro and renminbi deposits all of which are on a floating rate basis
the interest rate profile of the group’s financial liabilities at 31 december was as follows
  2014 2013
fixed rate financial liabilities 512 1010
floating rate financial liabilities 21065 1200
  21577 2210
the fixed and floating rate financial liabilities comprise finance leases preference shares and bank loans the floating rate lease obligations bear 
interest at rates determined by reference to the relevant libor or equivalent rate
the weighted average interest rate of the fixed rate financial liabilities is 17 or 19 excluding the zero rate debt 2013 16 or 20 
the weighted average period for which non zero interest rates on the fixed rate financial liabilities are fixed is 25 years
the maturity profile of the group’s financial liabilities at 31 december was as follows
  2014 2013
in one year or less 20274 532
in more than one year but not more than two years 237 297
in more than two years but not more than five years 267 470
in more than five years 799 911
total 21577 2210
notes to the group financial st a tements continued
for the year ended 31 december 2014 119 rotork annual report 2014
governance strategic report directors financial statements company information
26 financial instruments continued
d capital risk management
the primary objective of the group’s capital management is to ensure it maintains sufficient capital in order to support its business and maximise 
shareholder value the group has an assetlight business model and uses cash generated from operations to either invest organically or by 
acquisition the group manages its capital structure and makes adjustments to it in light of changes in economic and market conditions to 
maintain or adjust the capital structure the group may adjust the dividend payment to shareholders or issue new shares
the group defines capital as net funds and equity attributable to shareholders see note 17 there are no externally imposed restrictions on the 
group’s capital structure
the group monitors capital using the following indicators
i group net funds
  2014 2013
total borrowings 21577 2210
cash and cash equivalents note 16 46816 68873
group net funds 25239 66663
ii return on capital employed
  2014 2013
operating profit before the amortisation of intangible assets    
operating profit 142227 139265
amortisation of acquired intangible assets 14940 12147
  157167 151412
capital employed  
shareholders’ funds 376795 332079
cash and cash equivalents note 16 46816 68873
interest bearing loans and borrowings 21577 2210
net cash 25239 66663
pension deficit net of deferred tax 27950 15552
  379506 280968
average capital employed 330237 256203
return on capital employed 476 591 financial statements
120 rotork annual report 2014
notes to the group financial st a tements continued
for the year ended 31 december 2014
26 financial instruments continued
e fair values
the fair values of financial assets and liabilities together with the carrying amounts shown in the balance sheet were as follows
 
carrying
amount
2014
fair value
2014
carrying
amount
2013
fair value
2013
loans and receivables        
trade receivables 128472 128472 105976 105976
other receivables 14562 14562 13684 13684
     
financial assets    
cash and cash equivalents 46816 46816 68873 68873
     
designated cash flow hedges    
foreign exchange contracts    
– financial assets 1913 1913 3737 3737
– financial liabilities 1119 1119 32 32
     
financial liabilities at amortised cost    
bank loans 21512 21512 2109 2109
trade and other payables 75353 75353 69021 69021
contingent consideration 5493 5493 2809 2809
preference shares 40 40 40 40
finance lease liabilities 25 25 61 61
  88221 88221 118198 118198
fair value hierarchy
the fair value of the group’s outstanding derivative financial assets and liabilities consisted of foreign exchange contracts and swaps and were 
estimated using year end spot rates adjusted for the forward points to the appropriate value dates and gains and losses are taken to equity 
estimated using market foreign exchange rates at the balance sheet date all derivative financial instruments are categorised at level 2 of the fair 
value hierarchy 
 
the other financial instruments are classified as level 3 in the fair value hierarchy and are valued as follows
i trade and other receivablespayables
as the majority of receivablespayables have a remaining life of less than one year the notional amount is deemed to reflect the fair value
ii contingent consideration
as all the contingent consideration is contractually due for payment within 12 months 2013 18 months the carrying amount is equal to the fair value
27 operating leases
noncancellable operating lease rentals are payable as follows
  2014 2013
less than one year 4785 4568
between one and five years 8714 10349
more than five years 518 988
  14017 15905
of the £14017000 2013 £15905000 £10206000 2013 £12396000 relates to property and the balance to plant and equipment 121 rotork annual report 2014
governance strategic report directors financial statements company information
28 capital commitments
capital commitments at 31 december for which no provision has been made in these accounts were
  2014 2013
contracted 1037 4617
29 contingencies
  2014 2013
performance guarantees and indemnities 3735 5660
the performance guarantees and indemnities have been entered into in the normal course of business a liability would only arise in the event of 
the group failing to fulfil its contractual obligations
30 related parties
the group has a related party relationship with its subsidiaries and with its directors and key management a list of subsidiaries is shown on pages 
125 to 126 of these financial statements transactions between two subsidiaries for the sale and purchase of products or the subsidiary and parent 
company for management charges are priced on an arms length basis
mj lamb became a nonexecutive director of rotork plc during the year severn trent plc is a related party of rotork plc by virtue of mj lamb’s 
nonexecutive directorship sales to subsidiaries and associates of severn trent plc totalled £1352000 during the year and £226000 was 
outstanding at 31 december 2014
ubs investment bank are a related party by virtue of nonexecutive director sa james’s directorship of ubs limited ubs investment bank 
provides the group financial advice and stockbroking services  the current arrangement with ubs investment limited is that out of pocket 
expenses will be reimbursed and no fees will be charged for their regular advisory or broking services expenses of £8000 have been reimbursed in 
the year 2013 £4000 and no balance was outstanding at 31 december 2014 2013 £nil
key management emoluments
the emoluments of those members of the management team including directors who are responsible for planning directing and controlling the 
activities of the group were
  2014 2013
emoluments including social security costs 4594 4816
post employment benefits 298 287
pension supplement 251 206
sharebased payments 1134 1465
  6277 6774 financial statements
122 rotork annual report 2014
  note
2014
£000
2013
£000
fixed assets      
tangible assets c 1125 1183
investments d 43205 43205
    44330 44388
 
   
current assets    
debtors f 78010 79411
cash at bank and in hand e 148 4277
    78158 83688
     
creditors    
amounts falling due within one year g 4121 8045
net current assets 74037 75643
     
total assets less current liabilities 118367 120031
     
creditors
amounts falling due after more than one year h 40 40
net assets   118327 119991
capital and reserves    
called up share capital j 4346 4344
share premium account j 9422 8840
capital redemption reserve j 1644 1644
profit and loss account j 102915 105163
equity shareholders’ funds   118327 119991
these company financial statements were approved by the board of directors on 2 march 2015 and were signed on its behalf by  
pi france and jm davis directors
rotork plc company balance sheet
at 31 december 2014 123 rotork annual report 2014
governance strategic report directors financial statements company information
a accounting policies
the following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial 
statements notes a to k relate to the company rather than the group
basis of preparation
the financial statements have been prepared under the historical cost convention and in accordance with applicable uk gaap
under section 408 of the companies act 2006 the company is exempt from the requirement to present its own profit and loss account
the company meets the definition of a qualifying entity under frs100 issued by the financial reporting council frc accordingly in the year 
ending 31 december 2015 the company intends to transition to reporting under frs101 as issued by the frc  the company intends to take 
advantage of the disclosure exemptions available under that standard  any shareholders who objects to this proposal should write to the company 
secretary at the registered office address as set out at the back of the annual report and accounts
under frs 1 the company is exempt from the requirement to prepare a cash flow statement on the grounds that the group includes the company 
in its own published consolidated financial statements
the company has taken advantage of the exemption available under frs8 and has not disclosed transactions with entities which are subsidiaries of 
the group
the group financial statements contain financial instruments disclosures which comply with frs29 ‘financial instruments disclosures’ 
consequently the company has taken advantage of the exemption in frs29 not to present separate financial instrument disclosures for 
the company
where the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the group the company 
considers these to be insurance arrangements and accounts for them as such in this respect the company treats the guarantee contract as a 
contingent liability until such time as it becomes probable that the company will be required to make a payment under the guarantee the company 
continues to account for intra–group cross guarantees under frs12
foreign currencies
transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction monetary assets and liabilities 
denominated in foreign currencies are translated using the rate of exchange at the balance sheet date and the gains or losses on translation are 
included in the profit and loss account
investments
investments are measured at cost less any provision for impairment and comprise investments in subsidiary companies
depreciation and amortisation
freehold land is not depreciated long leasehold buildings are amortised over 50 years or the expected useful life of the building where less than 
50 years other assets are depreciated by equal annual instalments by reference to their estimated useful lives and residual values at the following 
annual rates
freehold buildings  2 to 4
plant and equipment  10 to 33
postretirement benefits
the company participates in a uk group pension scheme providing benefits based on final pensionable salary the assets of the scheme are held 
separately from those of the company the company is unable to identify its share of the underlying assets and liabilities of the scheme on a 
consistent and reasonable basis and therefore as required by frs 17 retirement benefits accounts for the scheme as if it were a defined 
contribution scheme as a result the amount charged to the profit and loss account represents the contributions payable to the scheme in respect 
of the accounting period
classification of preference shares
following the adoption of the presentation elements of frs 25 financial instruments the cumulative redeemable preference shares issued by the 
company are classified as long term debt the preference dividends are charged within interest payable
sharebased payments
the company has adopted frs 20 and the accounting policies followed are in all material respects the same as the group’s policy under ifrs 2 this 
policy is shown in note 1 to the group financial statements costs in relation to sharebased awards made to other group company employees are 
recharged to each subsidiary company
notes to the company financial st a tements
for the year ended 31 december 2014 financial statements
124 rotork annual report 2014
a accounting policies continued
deferred taxation
deferred tax is provided in full without discounting on timing differences that result in an obligation at the balance sheet date to pay more tax or a 
right to pay less tax at a future date at rates expected to apply when they crystallise based on current tax rates and law except for the items 
explained below timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from 
those in which they are included in the financial statements deferred tax is not provided on timing differences arising from the revaluation of fixed 
assets where there is no commitment to sell the assets or on unremitted earnings of subsidiaries where there is no commitment to remit those 
earnings deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered
dividends
interim dividends are recorded in the financial statements when they are paid final dividends are recorded in the financial statements in the period 
which they are approved by the company’s shareholders
b personnel expenses in the company profit and loss account
  2014 2013
wages and salaries including bonus and incentive plans 3064 3131
social security costs 295 457
pension costs 439 368
sharebased payments 551 663
  4349 4619
during the year there were 13 2013 12 employees of rotork plc plus the four 2013 4 executive directors the personnel costs accounted for 
within the company include the full costs of the employees the group finance director the group chief executive but the full costs of the other 
two executive directors who are reported within the subsidiary where they are based
disclosures required by paragraph 1 of schedule 5 of si2008410 are set out in the director’s remuneration report on pages 64 to 77
sharebased payments
the sharebased payment charge relates to employees of the company participating in the long term incentive plan ltip the disclosures 
required under frs 20 can be found in note 25 to the group financial statements the table below sets out the movement of share options under 
the ltip for employees of the company
 
outstanding
at start
of year
granted 
during
year
vested
during
year
lapsed
during
year
outstanding  
at end 
of year
2011 award 44386 – 29735 14651 –
2012 award 43503 – – – 43503
2013 award 32616 – – – 32616
2014 award – 31692 – – 31692
120505 31692 29735 14651 107811
at the date of vesting the 2011 awards were valued at £2763 the weighted average remaining life of awards outstanding at the year end is 
one year
notes to the company financial st a tements continued
for the year ended 31 december 2014 125 rotork annual report 2014
governance strategic report directors financial statements company information
c tangible assets in the company balance sheet
 
land and
buildings
plant and
equipment total
cost      
at 1 january 2014 1468 172 1640
additions – 3 3
at 31 december 2014 1468 175 1643
       
depreciation
at 1 january 2014 435 22 457
charge for year 28 33 61
at 31 december 2014 463 55 518
net book value
at 31 december 2013 1033 150 1183
at 31 december 2014 1005 120 1125
  2014 2013
net book value of land and buildings can be analysed between    
freehold land 60 60
freehold buildings 945 973
net book value at 31 december 1005 1033
d investments in the company balance sheet
shares in group companies
  2014 2013
at 1 january 43205 43205
increased investment in subsidiary undertakings – –
at 31 december 43205 43205
a listing of the principal subsidiaries of the group all of which are wholly owned is set out below
company and country of incorporation nature of business
rotork overseas ltd england and wales intermediate holding company for the following
   
rotork inc usa intermediate holding company
 
1
rotork controls inc usa manufacture and sale of actuators
 
1
remote control inc usa ““
 
1
flow–quip inc usa assemble and distribute fluid power solutions
 
1
ralph a hiller company usa
 
1
rotork thailand ltd thailand
 
1
ranger acquisition corp usa
 
2
fairchild industrial products company usa
 
2
k–tork international inc usa
 
2
rotork valvekits inc usa
 
3
rotork dallas inc usa
manufacture and sale of actuators
sale of actuators
intermediate holding company
manufacture of high precision pneumatic controls
intermediate holding company
manufacture of valve adaption kits
manufacture and sale of vane actuators
 rotork controls iberia sl spain
 
4
centork valve control sl spain
sale of valve actuators
manufacture and sale of actuators
rotork actuation sdn bhd malaysia ““
rotork controls deutschland gmbh germany ““
rotork fluid systems srl italy ““
rotork sweden ab sweden ““
rotork controls canada ltd canada sale of actuators
rotork motorisation sas france ““
rotork bv netherlands ““
rotork controls singapore pte ltd singapore ““
rotork australia pty ltd australia ““
rotork controls de venezuela sa venezuela ““
rotork ltd hong kong ““
rotork malaysia sdn bhd malaysia ““ financial statements
126 rotork annual report 2014
company and country of incorporation nature of business
rotork controls korea co ltd south korea sale of actuators
rotork africa pty limited south africa ““
rotork japan co ltd japan ““
rotork rus ltd russia ““
rotork controls comercio de atuadores ltda brazil ““
rotork norge as norway ““
rotork middle east fze jebel ali dubai ““
rotork servo controles de mexico sa de cv mexico ““
rotork controls italia srl italy
 
5
rotork gears srl italy
““
manufacture and sale of gearboxes for actuators
rotork gears bv netherlands ““
rotork italy holdings srl italy intermediate holding company
 
6
gt attuatori srl italy manufacturer of pneumatic rack and pinion
 
6
soldo srl italy design  manufactures control accessories for automation
 
7
soldo controls usa inc usa sale of control accessories
 
7
soldo asia pacific pte limited singapore sale of control accessories
 masso ind spa italy marine valve remote control system manufacturer
rotork germany holdings gmbh germany intermediate holding company
 
8
schischek produktion technischer geräte gmbh germany manufacturer of explosionproof electric actuators
 
8
schischek gmbh germany sale of explosionproof electric actuators
 
8
max process gmbh germany manufacturer of pneumatic rack and pinion
 
9
gt attuatori europe gmbh germany “”
schischek ag switzerland sale of explosionproof electric actuators
 
10
schischek eurl france “”
 
10
schischek srl italy “”
 
10
schischek ltd england and wales “”
 
10
schischek inc usa “”
rotork midland ltd england and wales
young tech co ltd south korea 
manufacture and sale of solenoid valves and instruments
manufacture and sale of valve positioners and accessories
rotork controls ltd england and wales manufacture and sale of actuators and intermediate holding company for 
the following
rotork uk ltd england manufacture and sale of gearboxes and actuators
rotork actuation shanghai co ltd china manufacture and sale of gearboxes and actuators
rotork trading shanghai co ltd china sale of gearboxes and actuators
rotork controls india private ltd india manufacture and sale of actuators
   
1
owned by rotork inc usa
2
owned by ranger acquisition corp usa
3
owned by k–tork international inc usa
4
owned by rotork controls iberia sl spain
5
owned by rotork controls italia srl italy
6
owned by rotork italy holdings srl italy
7
owned by soldo srl italy
8
owned by rotork germany holdings gmbh germany
9
owned by max process gmbh germany
10
owned by schischek ag switzerland
the company has taken advantage of the exemption under section 4102 of the companies act 2006 by providing information only in relation to 
subsidiary undertakings whose results or financial position in the opinion of the directors principally affected the financial statements
a complete list of subsidiary and associated undertakings is attached to the annual return of rotork plc filed at companies house
notes to the company financial st a tements continued
for the year ended 31 december 2014
d investments in the company balance sheet continued 127 rotork annual report 2014
governance strategic report directors financial statements company information
e cash at bank and in hand in the company balance sheet
  2014 2013
bank balances 148 4277
cash at bank and in hand 148 4277
f debtors due within one year in the company balance sheet
  2014 2013
amounts owed by group undertakings 77649 78377
other debtors 35 39
prepayments and accrued income 55 249
corporation tax – 474
deferred taxation 271 272
  78010 79411
a deferred tax asset of £271000 2013 £272000 has been recognised this asset principally relates to timing differences in respect of share
based payments the directors are of the opinion based on recent and forecast trading that the level of future and current profits make it more 
likely than not that the asset will be recovered
g creditors amounts falling due within one year in the company balance sheet
  2014 2013
trade creditors 151 80
amounts owed to group undertakings 1051 3653
other taxes and social security 43 39
corporation tax 143 –
other creditors 1817 3766
accruals and deferred income 916 507
  4121 8045
the company has a £25m gross overdraft facility 2013 £25m and is part of a uk banking arrangement see note i
h creditors amounts falling due after more than one year in the company balance sheet
  2014 2013
preference shares classified as debt 40 40
this debt is not redeemable at any fixed future date
i contingencies in the company
the uk banking arrangements are subject to crossguarantees between the company and its uk subsidiaries these accounts are subject to a 
right of setoff the performance guarantees and indemnities have been entered into in the normal course of business a liability would only arise in 
the event of the group failing to fulfil its contractual obligations
during 2014 the company extended its £15m loan facility for a further 18 months to june 2016 increased the committed amount to £55m and 
renegotiated the margin from libor plus 10 to libor plus 055 in may 2014 the group also negotiated a new 364 day £20m committed loan 
facility interest is payable on this facility at libor plus 035 these facilities are available to the company rotork controls limited rotork 
overseas limited and rotork controls inc of the committed facility £20m was drawn by one of these companies at year end resulting in £55m 
being available 128 rotork annual report 2014
financial statements
j capital and reserves in the company balance sheet
 
share
capital
share
premium
capital
redemption
reserve
retained
earnings
equity
shareholders’
funds
balance at 1 january 2014 4344 8840 1644 105163 119991
profit for the year – – – 38528 38528
equity settled sharebased payment transactions net of tax – – – 2799 2799
share options exercised by employees 2 582 – – 584
own ordinary shares acquired – – – 6300 6300
own ordinary shares awarded under share schemes – – – 5427 5427
dividends – – – 42702 42702
balance at 31 december 2014 4346 9422 1644 102915 118327
details of the number of ordinary shares in issue and dividends paid in the year are given in note 17 to the group financial statements
profit for the financial year in the accounts of the company is £38528000 2013 £55122000
k capital risk management in the company
the company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns 
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
in order to maintain or adjust the capital structure the company may adjust the amount of dividends paid to shareholders return capital to 
shareholders or issue new shares
the company’s net funds at the balance sheet date were
  2014 2013
preference shares 40 40
cash at bank and in hand 148 4277
company net funds 108 4237
notes to the company financial st a tements continued
for the year ended 31 december 2014 129 rotork annual report 2014
governance strategic report directors company information financial statements
 
2014
£000
2013
£000
2012
£000
2011
£000
2010
£000
2009
£000
2008
£000
2007
£000
2006
£000
2005
£000
revenue 594739 578440 511747 447833 380560 353521 320207 235688 206709 174839
                   
cost of sales 309280 304066 272199 236359 199742 187600 176046 127748 115603 95358
gross profit 285459 274374 239548 211474 180818 165921 144161 107940 91106 79481
                   
overheads 143232 135109 115081 99474 83094 74384 69272 52553 46017 42951
operating profit 142227 139265 124467 112000 97724 91537 74889 55387 45089 36530
                   
adjusted operating 
profit 157167 151412 131866 115921 99442 92103 76014 55461 45187 36709
amortisation of acquired 
intangible assets 14940 12147 7399 3921 1718 1153 1125 74 98 179
disposal of property – – – – – 587 – – – –
operating profit 142227 139265 124467 112000 97724 91537 74889 55387 45089 36530
                 
net interest 1062 1268 273 550 131 621 862 1866 972 127
profit before taxation 141165 137997 124194 112550 97855 90916 75751 57253 46061 36657
tax expense 37963 38488 34879 32149 28334 26884 22331 17957 14728 12043
profit for the year 103202 99509 89315 80401 69521 64032 53420 39296 31333 24614
                 
dividends 42702 38735 33924 49534 35912 24102 29970 24732 24140 13437
 
basic eps 1190p 1148p 1031p 930p 805p 742p 620p 456p 364p 286p
adjusted eps 1316p 1249p 1093p 962p 819p 747p 629p 457p 365p 287p
diluted eps 1185p 1143p 1026p 926p 802p 739p 616p 452p 361p 284p
 adjusted is before the amortisation of acquired intangible assets and the disposal of property
ten year trading history financial statements
130 rotork annual report 2014
the tables below show the split of shareholder and size of shareholding in rotork plc
ordinary shareholder by type number of holdings  number of shares 
individuals 2026 677 2578655 30
bank or nominees 898 300 83236953 958
other company 43 15 130118 01
other corporate body 24 08 983434 11
  2991 1000 86929160 1000
         
size of shareholding number of shareholders  number of shares 
1 – 1000 1856 621 623474 07
1001 – 2000 364 122 541430 06
2001 – 5000 314 105 989180 11
5001 – 10000 134 45 937431 11
10001 – 50000 168 56 3772200 44
50001 – 100000 49 16 3553083 41
100001  106 35 76512362 880
  2991 1000 86929160 1000
source equiniti
dividend information
the table below details the amounts of interim final and additional dividends declared in respect of each of the last five years
 
interim 
dividend
p
final
dividend
p
additional 
interim 
dividends
p
total 
dividend
p
2014 1920 3090 – 5010
2013 1805 3000 – 4805
2012 1640 2660 – 4300
2011 1450 2275 2300 6025
2010 1275 1975 1150 4400
financial calendar
3 march 2015 preliminary announcement of annual results for 2014
9 april 2015 exdividend date for final proposed 2014 dividend
10 april 2015 record date for final proposed 2014 dividend
24 april 2015 annual general meeting held at rotork house brassmill lane bath ba1 3jq
18 may 2015 payment date for final proposed 2014 dividend
4 august 2015 announcement of interim financial results for 2015
share register informa tion 131 rotork annual report 2014
governance strategic report directors company information financial statements
company secretary
stephen rhys jones
registered office
rotork plc
rotork house
brassmill lane
bath ba1 3jq
company number
00578327
registrars
equiniti
aspect house
spencer road
lancing
west sussex bn99 6da
stockbrokers
ubs investment bank
1 finsbury avenue
london ec2m 2pp
citigroup global markets ltd
citigroup centre
33 canada square
london e14 5lb
financial advisers
ubs investment bank
1 finsbury avenue
london ec2m 2pp
citigroup global markets ltd
citigroup centre
33 canada square
london e14 5lb
auditors
deloitte llp
2 new street square
london ec4a 3bz
financial public relations
fti consulting
200 aldersgate
aldersgate street
london ec1a 4hd
solicitors
messrs osborne clarke
no2 temple back east
temple quay
bristol bs1 6eg
corpora te directory financial statements
132 rotork annual report 2014
notes  rotork plc
brassmill lane
bath
ba1 3jq
uk
t  44 1225 733200
f 44 1225 333467
e mailrotorkcom
wwwrotorkcom
annual report 2014


Summary:
   turnover	£m
		 pre t ax	profit	£m
  core dividend  		 additional	dividend	paid	pence
25
130
124
21
122
108
27
122
118
22
93
93
15
54
80
70
25
109
101
19
80
91
77
14
13
11
10
52
57
51
39
8
6
27
30
33
37
43
48
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
strategic report
18 rotork annual report 2014
1988
roger	lockwood	joins	
the rotork board
1993
launch	of	the	first	iq	
nonintrusive 
intelligent electric 
actuator 
commissioning 
without	removing	
electrical covers
1995
dedicated	fluid	power	
division launched 
operating from the 
uk usa and 
singapore
1998
roger	lockwood	
becomes chairman of 
rotork’s board
1999
rotork acquires 
fluid system srl 
situated in the heart of 
the italian valvemaking 
industry at lucca
2000
the iq mark 2 actuator 
launched keeping 
rotork at the vanguard 
of intelligent valve 
actuation and the 
skilmatic 
electrohydraulic 
product range is 
acquired 26
139
134
138
481
578
57
217
37
158
175
46
182
207
31
151 59
116
93
115
115
230
147
28
148
136
91
284
354
76
260
320
98
325
381
113
373
448
124
430
512
236
141
501
595
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
governance directors financial statements company information
19 rotork annual report 2014
strategic report
roger	joined	the	board	in	1988	as	one	of	two	nonexecutive	directors	in	the	subsequent	27	years	
roger	has	seen	rotork	grow	and	establish	itself	as	a	global	leader	in	flow	control	equipment
in	1988	rotork’s	turnover	was	£341m	and	had	
an	operating	profit	of	£45m	the	business	was	
operating in 12 countries and had 584 
employees during the subsequent 10 years in 
roger’s term as a nonexecutive director  the 
group	grew	substantially	initially	under	the	
leadership of t om eassie as ceo and then under 
bill whiteley
in	1998	roger	was	asked	to	become	chairman	
at	this	time	the	board	composition	was	similar	
to	1988	with	two	nonexecutive	directors	and	
three executive directors in 1997 revenue had 
increased	to	£928m	and	the	operating	profit	
was	£204m	with	812	staff	in	19	countries
as chairman roger has been a central part of 
the team that has continued to drive rotork 
forward	making	it	the	company	it	is	today	
roger has set high standards and is passionate 
about the culture style and integrity of the 
business and its people he has promoted 
diversity and board performance and the board 
has	been	strengthened	during	his	tenure	it	now	
comprises	five	independent	nonexecutive	
directors four executive directors and the 
chairman roger leaves the group in a strong 
position	both	financially	and	operationally	in	
2014 the group had direct operations in 37 
countries	with	3469	staff	revenue	of	£5947m	
and	operating	profit	of	£1422m
roger	will	retire	from	the	company	at	the	
conclusion of the agm on 24 april in the history 
of rotork there have only ever been four ceos 
and	roger	has	worked	with	three	of	them	on	
behalf of them the board and rotork employees 
past	and	present	i	would	like	to	wish	him	the	best	
for	the	future	and	on	a	personal	note	i	would	like	
to thank roger for the guidance and support he 
has given me over the years
peter france
chief executive
2003
fluid systems 
relocates in lucca to 
factory four times 
larger than the 
previous one
2004
the iqt quarterturn 
version of the iq 
launched dramatic 
growth	prevalent	in	
electric actuator 
business
2006
iqpro third generation 
intelligent actuator 
and rotork site 
services created to 
provide lifetime 
support for all rotork 
and other 
manufacturers’ 
products
2008
launch of the cva 
actuator  born out of 
iq technology and 
offering	expansion	into	
new	process	industry	
sectors and smart 
valve	monitoring	svm	
technology added to 
fluid systems product 
range
2010
wireless version of 
pakscan launched 
keeping the product at 
the forefront of valve 
control technology
2012
introduction of iq3 
third generation 
intelligent actuator  
maintaining rotork 
predominance of 
nonintrusive actuator 
technology launch of 
cma compact 
modulating electric 
actuator 
complementing the 
successful cva range 
of process valve 
actuators