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Spirax-Sarco Engineering PLC Annual Financial Report

Date : 03/22/2013 @ 5:41AM
Source : UK Regulatory (RNS & others)
Stock : Spirax-Sarco (SPX)
Quote : 2666.0  -58.0 (-2.13%) @ 11:35AM
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Spirax-Sarco Engineering PLC Annual Financial Report

TIDMSPX

RNS Number : 6441A

Spirax-Sarco Engineering PLC

22 March 2013

22nd March 2013

Spirax-Sarco Engineering plc

2012 Annual Report and Accounts and

Notice of Annual General Meeting

Spirax-Sarco Engineering plc (the "Company") released its preliminary results announcement of annual results for the year ended 31st December 2012 ("Final Results announcement") on 7th March 2013. The announcement made on that date included inter alia a condensed set of the Company's financial statements and extracts from the management report.

The Company announces that its 2013 Annual General Meeting will be held at 2.00 pm on Thursday, 9th May 2013 at Charlton House, Cheltenham, Gloucestershire, GL53 8ER.

In connection with this, the following documents have been posted to shareholders:

- Notice of 2013 Annual General Meeting;

- 2012 Annual Report and Accounts; and

- Proxy form for 2013 Annual General Meeting.

In accordance with Listing Rule 9.6.1, printed copies of these documents have also been submitted to the National Storage Mechanism and will shortly be available for inspection on the National Storage Mechanism (http://www.morningstar.co.uk/uk/NSM).

The Company confirms that the Annual Report and Accounts and the Notice of 2013 Annual General Meeting are now available to view or download in a pdf format from the Spirax-Sarco Engineering website. The direct link to download the Annual Report and Accounts is http://www.spiraxsarcoengineering.com/pdfs/reports/2012-annual-report.pdf and the direct link to download the Notice of 2013 Annual General Meeting is http://www.spiraxsarcoengineering.com/pdfs/circulars/2013/Cicular%20to%20Shareholders.pdf.

A condensed set of the Company's financial statements and extracts of the management report including the Business Review, were included in the Company's Final Results announcement. That information, together with the Appendix to this announcement, which contains additional information which has been extracted from the Annual Report and Accounts for the year ended 31st December 2012, constitutes the material required for the purposes of compliance with the Transparency Rules and should be read together with the Final Results announcement, which can be downloaded from the Company's website at http://www.spiraxsarcoengineering.com/pdfs/news/News%20Release%202012%20Preliminary%20Results.pdf. This announcement should be read in conjunction with and is not a substitute for reading the full Annual Report and Accounts. Together these constitute the information required by DTR 6.3.5, which is required to be communicated to media in unedited full text through a Regulatory Information Service. Page and note references in the text below refer to page numbers and notes in the Annual Report and Accounts.

Appendix

Risks and uncertainties

A description of the Company's principal risk and uncertainties is extracted from pages 58 and 59 of the 2012 Annual Report and Accounts.

"Principal risks

A summary of the principal risks, their likely impact and an explanation of how the Group mitigates each risk is set out in the table below. The direction of change in particular risks during the year is explained in the 'Principal Risk' column and illustrated by the arrow in the 'Change' column. Finally, we have also set out the relevance of the risk to our strategy.

Please note that the 'Change' column shows the change in the risk and not the mitigation of the risk.

 
 Principal Risk   Change    Impact                                                     Mitigation                                                     Relevance 
                                                                                                                                                      to strategy 
----------------  -------  ---------------------------------------------------------  -------------------------------------------------------------  ------------ 
 
  Economic and 
  political 
  instability:     Ç      *    Fluctuations in profit from significant currency      *    Compliance with Group Treasury Policy                   Broaden 
  The Group                         movements                                                                                                          our 
  operates                                                                                                                                             global 
  worldwide.                                                                              *    Strong internal controls with internal audit and        presence 
  Economic                     *    Reduced profit due to impact on customers from             appropriate insurance 
  and political                     economic problems 
  instability 
  creates risks                                                                           *    Resilient business model (as explained in the 
  for our                      *    Potential redenomination of local currency,                Business Review on page 17). 
  locally based                     devaluation and high inflation. 
  direct 
  operations.                                                                             *    Well spread business - approximately 10% of Group 
  The Group                                                                                    sales originate in the higher risk countries of 
  has reviewed                                                                                 Greece, Ireland, Italy, Portugal and Spain. Sales in 
  country,                                                                                     Greece are immaterial. 
  credit, 
  liquidity and 
  currency risks 
  and, 
  in particular, 
  those 
  arising from 
  European 
  debt issues. 
 
  The risk has 
  increased 
  as a 
  result of the 
  deterioration 
  in some 
  European 
  economies 
  and the 
  general world 
  economic 
  outlook. 
----------------  -------  ---------------------------------------------------------  -------------------------------------------------------------  ------------ 
 
  Breach of 
  regulatory 
  requirements:    Ç     *    Fines and regulatory action and resultant reduced     *    Robust internal controls, policies and procedures and    Create 
  The Group                        profit                                                     Group Management Code                                    strong 
  operates                                                                                                                                             market 
  in a large                                                                                                                                           positions 
  number of                   *    Damage to reputation                                  *    Establish strong ethical culture supported by 
  countries                                                                                   communication and training 
  across the 
  world and is                *    Diversion of management time. 
  subject                                                                                *    Review of commercial arrangements and regulatory 
  to many                                                                                     requirements with appropriate professional advice 
  different laws 
  and 
  regulations,                                                                           *    Maintain local quality accreditations. 
  including 
  the UK Bribery 
  Act, 
  the US Foreign 
  and 
  Corrupt 
  Practices Act, 
  health 
  and safety, 
  competition 
  laws and local 
  quality 
  regulations. 
  Breaching 
  these laws and 
  regulations 
  could have 
  serious 
  consequences. 
 
  This risk has 
  increased 
  in the year as 
  sales 
  in Asia 
  Pacific have 
  risen. 
----------------  -------  ---------------------------------------------------------  -------------------------------------------------------------  ------------ 
 
  Non-compliance 
  with 
  health, safety 
  and              Æ      *    Damage to reputation                                 *    Compliance with legislation and codes of best            Create 
  environmental                                                                               practice                                                 strong 
  legislation:                                                                                                                                         market 
  The Group                    *    Reduced profit due to fines, compensation and                                                                      positions 
  places great                      clean-up costs                                       *    Regular audits, checks and reporting to management 
  emphasis on                                                                                 and the Board on health, safety and environmental 
  health,                                                                                     issues 
  safety and                   *    Enforcement action by regulatory authorities. 
  environmental 
  issues in                                                                              *    Ongoing training 
  relation 
  to our 
  employees and                                                                          *    In the course of appointing a Senior Group Health and 
  operations,                                                                                 Safety Manager. 
  and those 
  of our 
  customers, 
  suppliers 
  and 
  communities so 
  as to avoid 
  the risk 
  of major 
  health, safety 
  or 
  environmental 
  problems. 
----------------  -------  ---------------------------------------------------------  -------------------------------------------------------------  ------------ 
 
  Failure to 
  respond 
  to 
  technological    Æ      *    Failure to achieve expected return on the R&D         *    Maintain market knowledge and monitor competitor        Generate 
  developments                      investment                                                 developments, making effective use of our direct        consistent 
  or customer                                                                                  field sales force                                       organic 
  needs:                                                                                                                                               growth 
  The Group has                *    Reduced profit 
  significantly                                                                           *    Maintain investment in R&D programmes                   Deliver 
  increased R&D                                                                                                                                        solutions 
  resources                    *    Loss of market share                                                                                               to reduce 
  and risks,                                                                              *    Maintain appropriate intellectual property              energy 
  this being                                                                                   registrations, taking enforcement action where          usage 
  ineffective if               *    Loss of intellectual property.                             appropriate. 
  we fail 
  to respond to 
  development 
  and customer 
  needs 
  or if we fail 
  to manage 
  and protect 
  our 
  intellectual 
  property. 
----------------  -------  ---------------------------------------------------------  -------------------------------------------------------------  ------------ 
 

There may be other risks and uncertainties which are unknown to the Group or which could become material in the future. These risks may cause the Group's results to vary materially from historic and expected results.

 
 
  Risk of 
  product         Ç     *    Damage to customer relationships                          *    Products designed and tested to international          Create 
  failure:                                                                                       standards and strict quality procedures                strong 
  The Group                                                                                                                                             market 
  provides                   *    Reduced profit due to increased costs to correct the                                                                  positions 
  a wide range                    problems caused at customers' plants                      *    Training of sales/installation staff 
  of products                                                                                                                                           Deliver 
  into many                                                                                                                                             solutions 
  different                  *    Litigation following product liability claim.             *    Appropriate conditions of sale and contractual         to reduce 
  plants and                                                                                     restrictions on liability                              energy 
  industries                                                                                                                                            usage 
  many of which 
  are in                                                                                    *    Insurance cover. 
  critical 
  parts of 
  our 
  customers' 
  processes. 
  A risk exists 
  that 
  products are 
  wrongly 
  specified or 
  installed, 
  fail, or 
  contain 
  design 
  or 
  manufacturing 
  faults. 
 
  This risk has 
  increased 
  during the 
  year as 
  a result of 
  the Group 
  providing 
  more fully 
  integrated 
  solutions. 
---------------  -------  ------------------------------------------------------------  ------------------------------------------------------------  ----------- 
 
  Loss of 
  manufacturing 
  output at any   È      *    Reduced sales and profit due to inability to meet        *    Group manufacturing strategy to regionalise            Broaden 
  Group                            customer orders                                               manufacturing base and increase resilience             our 
  factory:                                                                                                                                              global 
  The Group                                                                                                                                             presence 
  manufactures                *    Loss of market share                                     *    Business continuity planning and disaster recovery 
  most of the                                                                                    plans 
  products 
  we sell in                  *    Damage to reputation. 
  eight main                                                                                *    Stocks of components and finished products in sales 
  factory units                                                                                  companies 
  which 
  supply our 
  sales                                                                                     *    Regular and comprehensive back-- ups of IT systems 
  operations 
  worldwide. 
  Loss of                                                                                   *    Use of insurance audits/ inspections and business 
  manufacturing                                                                                  interruption insurance. 
  output 
  at any 
  important 
  plant 
  risks serious 
  disruption 
  to sales 
  operations. 
 
  This risk has 
  reduced 
  in the year 
  due to 
  the 
  realisation 
  of 
  the Group's 
  manufacturing 
  strategy of 
  regionalising 
  the 
  manufacturing 
  base. 
---------------  -------  ------------------------------------------------------------  ------------------------------------------------------------  ----------- 
 
  Defined 
  benefit         È      *    Increase in liabilities                                 *    Use of independent professional advisers and 
  pension                                                                                       custodians for defined benefit pension schemes 
  deficit: 
  Defined                     *    Increase in pension costs and cash contributions 
  benefit                                                                                  *    Pension scheme de--risking strategy to automatically 
  pension                                                                                       reduce equity exposure and increase matching assets 
  schemes carry               *    Fluctuations in pension fund asset and liability             at pre--agreed trigger points. 
  risks in                         values. 
  relation to 
  investment 
  performance, 
  security of 
  assets, 
  longevity and 
  inflation. 
  Total defined 
  benefit 
  pension 
  liabilities 
  represent 
  approximately 
  52% of total 
  Group 
  assets. 
 
  This risk has 
  reduced 
  in the year 
  as a result 
  of the 
  operation of 
  the Mercer 
  'Dynamic 
  De-Risking 
  Solution'. 
---------------  -------  ------------------------------------------------------------  ------------------------------------------------------------  ----------- 
 
  Failure to 
  realise 
  acquisition     Æ      *    Failure to achieve expected return on investment         *    Evaluation of potential targets against Strategic      Grow 
  objectives:                                                                                    Plan and acquisition criteria                          market 
  The Group's                                                                                                                                           share 
  strategy                    *    Assumption of unexpected liabilities. 
  is focused on                                                                             *    Project management disciplines                         Deliver 
  organic                                                                                                                                               solutions 
  growth                                                                                                                                                to educe 
  complemented                                                                              *    Appropriate due diligence by Group personnel and       energy 
  by                                                                                             external advisers covering commercial, legal,          usage" 
  acquisitions                                                                                   accounting and environmental issues. 
  (as 
  explained in 
  the Business 
  Review on 
  page 17). 
  We risk 
  failing to 
  achieve the 
  expected 
  return on 
  investment 
  if 
  acquisitions 
  are 
  not properly 
  identified, 
  executed and 
  integrated. 
---------------  -------  ------------------------------------------------------------  ------------------------------------------------------------  ----------- 
 

Related Party Transactions

The following related parties transactions are extracted from page 118 of the 2012 Annual Report and Accounts.

 
                                               2012     2011 
 "THE GROUP                                  GBP000   GBP000 
------------------------------------------  -------  ------- 
 Sales to associated companies                  567      732 
 Dividends from associated companies          1,454    1,461 
 Amounts due from associated companies at 
  31st December                                  47       21 
------------------------------------------  -------  ------- 
 
 
                                                    2012      2011 
 PARENT COMPANY                                   GBP000    GBP000 
----------------------------------------------  --------  -------- 
 Dividends received from subsidiaries             16,500    99,000 
 Dividends received from associates                1,454     1,461 
 Loans and amounts due from subsidiaries at 
  31st December                                  143,748   203,172 
 Amounts due to subsidiaries at 31st December     23,941     1,277 
----------------------------------------------  --------  -------- 
 

The transactions above were priced on an arm's length basis and on standard business terms."

Statement of Directors' responsibility

The following responsibility statement is repeated here solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5. This statement relates to and is extracted from page 83 of the 2012 Annual Report and Accounts. Responsibility is for the full 2012 Annual Report and Accounts not the extracted information presented in this announcement and the Final Results announcement.

"Responsibility statement

We confirm that to the best of our knowledge:

-- 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 or loss of the Company and the undertakings included in the consolidation taken as a whole; and

-- The management 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 that they face.

Signed by

D J Meredith

Finance Director

on behalf of the Board of Directors

6th March 2013"

For further information, please contact:

Andy Robson, General Counsel & Company Secretary

Tel: 01242 535276

About Spirax Sarco

Spirax-Sarco Engineering plc is the world leader in both steam system management and peristaltic pumping. The Company provides a broad range of fluid control products, engineered packages, site services and systems expertise for its diverse range of over 100,000 industrial and institutional customers. The Company helps its customers to optimise production capacity, reduce energy costs and emissions, improve product quality and enhance the safety of their operations. Spirax Sarco is headquartered in Cheltenham, England, has strategically located manufacturing plants around the world and employs approximately 4,700 people, of whom around 1,300 are direct sales and service engineers. Its shares have been listed on the London Stock Exchange since 1959 (symbol: SPX). Further information can be found at www.spiraxsarcoengineering.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

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